Hey Everyone, and welcome back to the IPO Radar. I’m sure everyone is still giddy from Coinbase’s direct listing two weeks ago, where passionate crypto bulls saw the darling of the crypto economy briefly trade up to $400 per share, translating to a $100 BILLION market valuation. And yes, that’s billion with a B. The direct listing was a highlight of the 2021 IPO market, and firmly vaulted Founder & CEO Brian Armstrong into the ~tres commas club~ post-listing. For those of you who aren’t as keen on the other investors who benefitted from the COIN listing, both Nasir “Nas” Jones and Kevin Durant also received multi-million-dollar paydays as a result of their early investments in the Coinbase. We are truly SHOCKED that KD hasn’t been traced back to tweets about his IPO success from a burner phone yet…
Anyways, let’s get into the meat of this week’s IPO Radar. We do have a slight plot twist though, primarily because this week’s writer of the IPO Radar is not even Dez at all!! Who may this anonymous writer be, you might ask? It’s Dez’s buddy from college, Ty, who will be running the show for the brief 5-10 minutes I have your attention this week. As a result, today we will be rebranding the IPO Radar into the Ty-PO Radar, which, as aptly named, will be the either beginning of my illustrious writing career, or a massive typo that everyone wishes they never read. But enough with the chit chat; let’s get into it.
Today’s IPO Radar will be on Squarespace, which according to their website, is THE leader in providing website building technology capabilities for new businesses.
Squaresquare was founded in 2003 by fellow paisan Anthony Casalena (yes, I’m a proud Italian boy) and started as a blog hosting service while Anthony was still in college at University of Maryland-College Park. Wildly enough, Anthony was the ONE AND ONLY employee of his company for three years all the way until 2006, and he single-handedly willed Squarespace to $1 million in annual revenue in its early years. Needless to say, Mr. Casalena is the prototypical serial entrepreneur, founding his company by himself out of his college dorm and, in my opinion, is a BONA FIDE BEAST. From there, Anthony continued to give pride to the Italian American name by building Squarespace into a global leader that helps entrepreneurs build websites and other online tools to grow their businesses. This growth has been in line with the company’s mission statement which is, “We enable millions to build a brand and transact with their customers in an impactful and beautiful online presence.” A beautiful mission statement for a beautiful company.
Squarespace now offers an ecosystem of products to aspiring entrepreneurs, offering three primary pillars of resources for entrepreneurs:
Presence: Squarespace provides intuitive design tools that make it quick and easy to create a professional-quality, mobile and desktop friendly websites. The Company will help founders acquire a web domain and begin building a social media presence through chic website design options
Commerce: Through Squarespace’s comprehensive eCommerce solutions, the Company provides its customers with everything they need to sell physical products or services
Marketing: Squarespace provides brands with powerful, integrated marketing solutions such as email campaigns, search engine optimization, and customer CRM tools
Since the business’ humble founding, Squarespace has truly evolved into a “one stop shop” for company founders to build the website functionality they need to conveniently springboard their business and brand. As a result of its success, it has attracted many prominent investors to the business, such as Tiger Global Management, General Atlantic, and Accel, and most recently was given a $10 BILLION private valuation. This was their final private valuation, and on April 14, 2021, Squarespace filed for a direct listing on the NYSE.
Squarespace’s Revenue Model
Squarespace’s business model is highly attractive to investors primarily because of its Software-as-a-Service or “SaaS” revenue model. For those of you who are newer to such investor jargon, SaaS revenue models are when a business offers technology to a customer in exchange for a smaller monthly fee rather than a larger one-time purchase of said technology. That means that Squarespace will be generating recurring subscription revenue from its customers on a monthly basis, and as Squarespace brings on more customers, it will generate greater monthly revenue. SaaS models are highly attractive because they are what investors call “sticky” revenue, which means they will be continued to be paid by customers into perpetuity unless a customer stops using Squarespace’s services. BUT, since Squarespace already manages and analyzes its customers websites, it creates somewhat of a captive audience because Squarespace holds the keys to an entrepreneur’s kingdom (aka its website). Customers therefore tend to stay loyal to Anthony and the Squarespace brand!
Squarespace by the Numbers
It’s always exciting to learn about a business high level, but like any good investor, we must also crunch the numbers to see how the businesses has fared to date! Here’s Squarespace by the numbers, per its S-1 filing, a document the company must file with the Securities and Exchange Commission before it is able to go public:
Squarespace generated $621 million in Revenue in 2020A, a 28% increase from the Company’s 2019A revenue of $485mm
Squarespace generated $117 million in EBITDA in 2020A, which translates to a 19% EBITDA margin
Squarespace currently has 3.8 million subscriptions on the platform, spanning a wide variety of industries such as small businesses, independent creators, restaurants, photographers, and wedding planners
94% of Squarespace’s revenue is subscription based and recurring
Squarespace now has over 1,200 employees with a global office presence
Squarespace and the Big Picture: A Bet on the Creator Economy
So, we now understand what Squarespace really does, but the real question we must now dig into is upon us. That question is, “So what Ty, it’s a website builder, who cares?”. Squarespace’s IPO has significance because it’s a major player in a handful of businesses that are helping vault the dawn of the creator (aka the passion) economy. The creator economy is the idea that there are now digital tools available for individuals to deviate away from mainstream desk jobs and pursue careers and producing their own independent content creation businesses. In other word, people are becoming more entrepreneurial!! 20 years ago, if you were told by a friend that they were going to quit their desk job to make YouTube videos, you’d most likely ask them to seek mental counseling. Now, content creators like Logan Paul are making millions of dollars through their online content and creative presence.
There are more digital tools than ever that allow independent creators to pursue their own entrepreneurial dreams. The younger generations of workers are using these digital resources to pursue making a career in freelance writing (Substack), music (UnitedMasters), viral videos (TikTok), and eCommerce (Shopify), and the craziest thing about this seismic shift in the economy is the best creators are being rewarded with some serious $$$$$$ due to their viral following and fire content.
Squarespace is just one of many companies that are at the forefront of helping younger individuals become more entrepreneurial and pursue a more independent path to build their brand. Funny enough, All Things Venture is a direct product of the creator economy, as it has been a way for Dez to flex his muscles as a passionate freelance writer. In fact, I believe it’s only a matter of time before Dez Fleming joins the ranks of Dixie DiAmelio and Addison Rae as a juggernaut the creator economy (we’ll be looking out for some ~tasteful TikTok dances~ to complement your next ATV article Dez 😉). Jokes aside, the creator economy is here to STAY and Squarespace stands to be one of a few companies that will directly benefit from its growth as entrepreneurs will need resources to build and manage their websites.
Overall, I believe companies like Squarespace will continue to grab more influence in the economy as individuals become more entrepreneurial in their ambitions to develop their digital brand. There are currently 800 million small businesses and self-employed ventures globally, and even in this digital era, it is estimated that 46% of small and medium sized businesses are STILL not online today. This leaves massive whitespace for Squarespace to continue to grow and help companies make the transition to digital in what is estimated as a $150 billion market opportunity, per the S-1 filing. I am bullish on Squarespace, but like all business ventures, there are risks to investing in any company. Squarespace has built a great digital presence to date, however the face stiff competition from the likes of Shopify ($140B market cap) and Wix ($17B market cap), both of which have already gone public and have seen huge growth over the past few years. Squarespace will soon join the ranks of their peers in the public markets, and from there, they’re off to the races!
Thank you all for listening to my rant on the creator economy, and a HUGE thanks to my good friend Dez for letting me write an article on his platform. Much love to ATV and the brand he’s building – TT
Squarespace is a website building platform that offers resources to entrepreneurs who are looking to build a business online. As the creator economy makes younger workers more entrepreneurial, there will be a great need for services like Squarespace. An investment in Squarespace is a vote of confidence in the creator economy.