20VC Squarespace Founder, Anthony Casalena on Scaling Squarespace from Dorm Room To Public Company with over $700M in ARR, The Decision to Direct List over Traditional IPO or SPAC & What Changes When You Go Public

In this episode of 20 VC, Harry Stebbings interviews Anthony Catalano, the founder and CEO of Squarespace, a comprehensive platform that allows users to build websites, market businesses, and manage online stores. Catalano details the journey from a dorm room startup in 2003 to a public company with over 1100 employees and a successful IPO in May 2021, emphasizing the importance of design and user experience. Despite the company's scale, Squarespace has been judicious with funding, raising significant capital principally through secondary offerings rather than primary injections, reflecting Catalano's preference for a self-sustaining business model. The discussion also covers the impact of COVID-19 on e-commerce, Squarespace's broad customer base beyond the creative community, and the potential for growth in the enterprise sector. Catalano shares insights on leadership evolution, the strategic approach to acquisitions, and maintaining innovation as a public entity competing with numerous startups.

• Anthony Catalina is the founder and CEO of Squarespace.
• Squarespace is an all-in-one platform for website creation, e-commerce, and business marketing.
• The company was started in a dorm room in 2003 and bootstrapped for many years.
• Squarespace has grown to over 1100 employees worldwide.
• Anthony Catalina raised over $948 million, leading to an IPO in May 2021.

"Now, Squarespace is the company that allows you to create a website and sell anything and market your business all online seamless."

The quote explains Squarespace's core offering as a comprehensive online platform for creating websites and conducting business.

• Anthony Catalina started Squarespace due to frustration with existing website creation tools.
• He desired an all-in-one solution with design centrality and aesthetics.
• The initial vision for Squarespace was not as a public market company but as a project of passion.

"I wanted something that was all in one... I wanted something that was really design centric and looked really good."

Anthony Catalina emphasizes his motivation for creating Squarespace was to combine multiple web creation tools into one platform with a strong focus on design.

• Anthony Catalina did not take on funding immediately; access to funding was limited compared to today.
• He started the company with a $30,000 investment from his parents and reached breakeven in seven years.
• The company grew with minimal primary capital investment, utilizing less than $50 million for 17 years.

"Squarespace has grown up with about $50 million in primary capital invested."

This quote highlights the conservative funding approach that Squarespace took for the majority of its development before going public.

• Squarespace's growth was organic, starting with small investments in AdWords.
• Anthony Catalina focused on reinvesting revenue into the business and maintained a disciplined approach to spending.

"I just did it very, very slowly... spent a couple hundred bucks on adwords and a couple of people subscribed."

The quote illustrates the initial customer acquisition strategy for Squarespace, which was gradual and based on reinvestment of earnings.

• Squarespace's bootstrap beginnings instilled financial discipline and efficiency in operations.
• The company was cautious with hiring and spending, ensuring sustainable growth.

"A lot of discipline around spending money and you can't take it for granted."

This quote reflects the financial prudence that was foundational in Squarespace's early days and contributed to its long-term success.

• When Squarespace received its first major funding round, the company's disciplined spending did not change.
• The funds served as a buffer but did not alter the company's efficient operations.

"It didn't change a thing... It didn't change the discipline."

Anthony Catalina explains that the influx of capital did not affect the company's careful financial management.

• Anthony Catalina does not regret the timing of Squarespace's funding, as the company's needs were not solely financial.
• He prioritized minimizing the amount raised and focused on product development and management challenges.

"I never needed the buffer... I was just trying to minimize the amount raised."

This quote conveys Anthony Catalina's rationale for the timing and amount of funding Squarespace pursued, emphasizing self-sufficiency over external capital.## Business Control and Fundraising

• Achieving a break-even status in business provides more control over one's destiny.
• Being break-even improves negotiating power in fundraising situations due to the option to take or leave investment offers.
• Dilution sensitivity is important; funds should have a purpose rather than being stockpiled or burned irresponsibly.

"If you are break even, you are more in control of your destiny and it puts you in a better negotiating position for when you do need to go or want to go and raise money because you can take it or leave it."

This quote emphasizes the strategic advantage of reaching a break-even point before seeking additional funding, as it provides leverage and control in negotiations with potential investors.

• Secondary transactions for founders were not the norm in 2010, but can be empowering and allow for risk-taking.
• Such transactions can facilitate company growth, team changes, and product development.
• Secondary sales can also help establish a board and attract high-level executives by validating the company with external investors.

"I was able to reach that deal with certain investors... it let me take more risks in the company... it let me establish a board. It let me validate the company with external investors, which let me get a different level of person in their career comfortable with the company."

Anthony Catalina discusses how secondary transactions helped him take risks, make significant changes within the company, and attract experienced personnel by establishing credibility through external investment.

• Relationship to money evolves over time; comfort with money can increase with experience.
• Financial discipline remains critical, regardless of the company's size or success.
• Money can be an enabler, but its impact depends on individual character.

"I guess I'm more comfortable with it... But look, I mean, time goes on, and you can be a little more. It's an enabler."

Anthony Catalina reflects on how his comfort with money has grown over time and how money serves as an enabler, though its effects vary based on personal character traits.

• Direct listing is suitable for companies that do not need to raise additional funds.
• The decision between direct listing, SPAC, and traditional IPO depends on the specific properties of the company.
• Direct listings can be volatile initially due to factors like lack of lockups and investor unfamiliarity.

"The direct listing just made a lot of sense for us as a format where it's sort of like, okay, here's the company... But the company didn't need further dilution from an IPO."

Anthony Catalina explains why Squarespace chose a direct listing over other options, highlighting the company's financial stability and lack of need for additional capital as key reasons.

• Transitioning from private to public markets introduces a new dynamic, with daily stock price fluctuations.
• Public market investors may have a broad portfolio, which changes the level of attention a company receives.
• The public market experience can be both exciting and challenging, with immediate feedback on company performance.

"We're private for 18 years, so I would say the past couple of months have been really fascinating because the entire dynamic really, really does change."

Anthony Catalina describes the significant shift in company dynamics after going public, noting the changes in investor behavior and the impact on company perception.

• E-commerce has been a crucial part of Squarespace's business for over a decade.
• The company has focused on multimodal commerce, recognizing the various ways to sell products and services online.

"E-commerce has turbocharged squarespace... We started investing in our e-commerce platform that's basically physical goods, digital goods eight years ago."

Anthony Catalina discusses the significant role e-commerce plays in Squarespace's business model and the long-term investment in their e-commerce platform, which has contributed to the company's growth.## Squarespace's Multifaceted Commerce Platform

• Squarespace offers a diverse array of selling options with significant depth.
• Physical commerce has been a focus for eight years, but they also offer digital goods and accept donations.
• The scheduling product, powered by Acuity Scheduling, allows for selling time.
• The member areas product lets users sell access to private content such as blogs or video lessons.
• Email campaigns can be combined with the platform to create a subscription-based product similar to Substack.
• Talk integration enables to-go ordering and reservations for restaurants.
• Squarespace encourages experimentation with different business models within its unified platform.

"We offer an incredible amount of ways to sell, each with an amazing amount of depth."

This quote highlights the variety and complexity of commerce options available through Squarespace's platform.

• Anthony Catalina explains why Squarespace opts for a bundled model over an unbundled one.
• Depth is achieved through acquisitions and internal development, allowing Squarespace to offer specialized features.
• A bundled model can simplify customer relationship management and streamline the user experience across various functions.
• Anthony sees convergence as beneficial, with different commerce elements coming together on one platform.

"Well, what's sort of interesting is that we've made it a point to go very, very deep into a couple of areas that we play in."

This quote emphasizes Squarespace's commitment to providing in-depth features and services within its platform, sometimes through strategic acquisitions.

• Squarespace faces the challenge of marketing its wide array of services to diverse customer segments.
• Upcoming campaigns will focus on showcasing the transactional capabilities of customer sites.
• The new tagline, "everything to sell anything," reflects Squarespace's comprehensive approach to commerce.

"It could be a sale, it could be a newsletter sign up, it could be buying a course, it could be making a reservation."

This quote outlines the various transactional functions that Squarespace aims to highlight in its product marketing campaigns.

• Squarespace monetizes e-commerce through both subscription fees and a portion of payment processing volume.
• They partnered with Stripe to facilitate online payments for their merchants.
• Anthony corrects a misconception about Squarespace only monetizing subscriptions, clarifying that they also profit from payment processing.

"We partnered with stripe to enable our merchants to get online and to accept payments."

This quote explains Squarespace's partnership with Stripe and its strategy for monetizing e-commerce transactions.

• Squarespace is often misperceived as being tailored only for the creative community or for New Yorkers.
• Anthony clarifies that Squarespace is designed for a broad customer base, including professionals like dentists.

"It's been for exposing the benefits of that kind of thing to a much broader customer base."

Anthony addresses the misconception, emphasizing that Squarespace's design and aesthetic appeal are meant for a wide range of users, not just a niche creative community.

• Despite high annual recurring revenue (ARR), only a small percentage comes from enterprise clients.
• Squarespace sees an opportunity for growth in the enterprise sector.
• Two primary growth strategies include targeting large resellers and adopting the Dropbox model of organic spread within companies.
• The company is developing tools for bulk administration of websites and features like single sign-on to cater to enterprise needs.

"We have a group inside squarespace called channels and services that has really started trying to figure out where we fit in enterprises."

Anthony discusses the internal efforts to expand Squarespace's presence in the enterprise market.

• Squarespace is learning to integrate a sales-oriented culture to cater to enterprise clients.
• Challenges such as customer success, support, and security are acknowledged but not seen as deterrents.
• Anthony is optimistic about adopting new ways of working to support enterprise customers.

"I'm excited to embrace new ways of working and helping these customers."

This quote reflects Anthony's positive outlook on adapting Squarespace's culture and services to meet the demands of enterprise clients.

• Anthony reflects on his growth from starting Squarespace in a dorm to leading a public company.
• He has become more flexible, self-aware, and adaptive in his leadership style.
• Building and maintaining executive relationships have become a strength for Anthony over the years.

"I try and be much more self aware when something has gone wrong around me and really ask why and what was I missing and what weren't people telling me."

Anthony shares his approach to leadership, focusing on self-awareness and understanding the dynamics around him.

• Anthony believes management skills are developed through experience and making mistakes.
• Emotional maturity and the ability to manage team dynamics are crucial in leading effectively.
• He has learned to identify and foster productive personalities within teams and to support those who struggle with emotional challenges.

"I think you just develop it over trial and error and making probably every mistake possible, which is how I've developed whoever I've become right now."

Anthony acknowledges that his management skills have evolved through experience and learning from a wide range of mistakes.## Self-Skepticism vs. Confidence

• Anthony Catalina distinguishes between self-skepticism and a lack of confidence.
• He emphasizes the importance of questioning decisions without being paralyzed by doubt.
• Anthony maintains a positive outlook with a dose of realism.

"I think I'm incredibly self skeptical, but that skepticism isn't the same as a lack of confidence."

This quote highlights Anthony's approach to decision-making where he balances self-questioning with forward momentum, ensuring that he remains proactive rather than hesitant.

• Anthony categorizes decisions into reversible and irreversible ones.
• He advocates for quick action on reversible decisions and careful consideration for irreversible ones.
• The approach reflects a balance between agility and contemplation in business choices.

"There's reversible ones and irreversible ones. And so I think that if you're looking at things in those two categories. I think if it's a reversible decision, let's go. I think if it's an irreversible decision, I think we spend time on it."

The quote explains Anthony's decision-making framework, which prioritizes speed for decisions that can be undone and deliberation for those that cannot.

• Anthony discusses the challenges of maintaining innovation and speed as a company grows.
• Squarespace competes in various sectors, each with different competitors.
• The company invests in branding and partnerships to stay innovative.

"I'm a product person and I really focus on that. And also when we see an opportunity partner with great other small teams that have maybe accomplished something that we don't think we can accomplish in any reasonable period of time."

Anthony's quote reflects his commitment to product development and strategic partnerships as a means to foster innovation within a growing company.

• Anthony views acquisitions as partnerships with entrepreneurial teams.
• He emphasizes empathy and sensitivity to the nuances of acquired companies.
• The strategy involves protecting the unique aspects of these companies while integrating them.

"I think of them as partnerships with great entrepreneurs for the most part."

This quote shows Anthony's perspective on acquisitions, viewing them not just as business transactions but as collaborations that respect the entrepreneurial spirit of the acquired teams.

• Anthony reflects on the evolution of his role and the constant learning required.
• He discusses the shift from hands-on technical work to managing large teams.
• The goal is to focus on aspects of the job he enjoys while minimizing less enjoyable tasks.

"It really is just constant learning, which is frankly why I'm able to do this for so long."

The quote underscores the necessity of continual adaptation and learning in Anthony's journey from a solo founder to the head of a large organization.

• Anthony admits to struggling with taking time to appreciate success.
• He often advises others to slow down and enjoy the moment, though he finds it difficult to follow his own advice.
• The challenge is to balance problem-solving with recognizing achievements.

"I think I'm really bad at stopping, letting it all in and enjoying it sometimes."

This quote reveals Anthony's personal challenge of pausing to reflect on and enjoy the milestones in his career, despite his tendency to focus on the next challenge.

• Anthony is excited about Squarespace's future as a public company.
• He anticipates continued growth, innovation, and enabling entrepreneurship.
• The focus is on building products that help people express themselves and transact online.

"We're just so well positioned to help so many people out, and so I'm excited to be part of that story."

Anthony expresses optimism about the potential for Squarespace to expand its impact, highlighting the company's strong position to support entrepreneurs and online expression.

• Anthony prefers monochromatic outfits for their simplicity.
• He values insights into human psychology, as reflected in his favorite book, "Thinking, Fast and Slow" by Kahneman.
• His approach to clothing reflects a desire for simplicity and focus, paralleling his approach to business and decision-making.

"I always like thinking fast and slow by Kahneman."

This quote indicates Anthony's interest in understanding the complexities of human thought processes, which informs his leadership and product development strategies.