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It must be nice for the founder to pocket $2 billion in cash from selling his company. For users, on the other hand, I'll hardly trust a PE firm with a SaaS pr

It must be nice for the founder to pocket $2 billion in cash from selling his company. For users, on the other hand, I'll hardly trust a PE firm with a SaaS product. There's just too much incentive to jack up prices to service the debt taken to acquire Squarespace, and cut costs on customer support and building new features.

throwaway12301 2y ago
Soon, most of the engineering and support will be over in India. I'd make a joke about innovation, but not sure how innovative Square has been the last five years.
- mattmaroon 2y ago
  Squarespace, very different company, though they do compete to an extent. I’ve seen a lot of changes from Square, though half of them were bad.
- schreiaj 2y ago
  Squarespace. Different company than Square.
- ethbr1 2y ago
  > I'd make a joke about innovation, but not sure how innovative Square has been the last five years. Honestly, isn't that a great match for PE? Once a company has run its innovation sprint, convert it to keep-the-lights-on and cut costs. In return, PE gets to buy a revenue stream.
  - chii 2y ago
    The unsaid thing is that the customer signed up to squarespace is going to get less value for their dollars. Profit has to come from somewhere, and it aint innovation as you said.
    - ethbr1 2y ago
      Flip side is that PE-owned companies probably run leaner than public, as they don't have to show growth. We're all familiar with the gut-and-life-support PE examples. But there are a lot of trim-the-fat PE examples too.
itsoktocry 2y ago
>There's just too much incentive to jack up prices to service the debt taken to acquire Squarespace, and cut costs on customer support and building new features. So what's the best ownership structure? Public companies have their issues (short-term thinking), acquisitions have their issues (getting closed down)... I mean, cutting costs and upping prices isn't awesome for the customer, but do you have more faith in a company that's scraping by versus working to be profitable?
- coldpie 2y ago
  What evidence do you have that the new owners are interested in making Squarespace profitable or sustainable? PE firms are the "selling the car for scrap" of business acquisitions.
  - cinntaile 2y ago
    They're trying to buy it and probably do some rationalizing to increase profitability. Classic PE play.
  - prmoustache 2y ago
    But can they "sell it for scrap" for more than they bought it in the first place?
    - coldpie 2y ago
      Presumably, or else they wouldn't have bought it. Plenty of ways to make a profit while hollowing out a company: fire as many employees as possible, steal as much as possible from their employees and vendors, raise prices on customers, make closing customer accounts as difficult as possible, do some silly accounting tricks to make someone else hold the bag, try to find someone to fob off the brand name to for a few bucks once there's nothing left to extract. The usual stuff, they know the routine.
- smaudet 2y ago
  > do you have more faith in a company that's scraping by versus working to be profitable Working to be profitable is not correlated with well-functioning. Its usually correlated with enshittification (https://en.wikipedia.org/wiki/Enshittification https://en.wikipedia.org/wiki/Enshittification), and poor functioning. The most profitable (at least in the short term) is to provide a costly product that you took no time to produce, with zero support.
coldpie 2y ago
Yeah. Sounds like the beginning of the end for Squarespace. Grats to the owners for cashing out, though, hope they enjoy their yachts.
- mattmaroon 2y ago
  They were already public, they could have cashed out already at a good sized chunk of this. The yachts were already within reach.
lotsofpulp 2y ago
What is the source for the $2B figure? The most recent SEC filing shows the founder owns 2.8M class A shares, and there are 88M shares of class A shares outstanding and 48M shares of class B shares outstanding. I do not see why they would pocket 28% of the sale price. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/5ba2ffc4-7d5d-40e1-a15e-63488cf31d5c.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/5ba2ffc... https://investors.squarespace.com/news-events-financials/investor-news/news-details/2024/Squarespace-Announces-Fourth-Quarter-and-Full-Year-2023-Financial-Results-and-500-Million-Share-Repurchase-Authorization/default.aspx https://investors.squarespace.com/news-events-financials/inv...
- blackhawkC17 2y ago
  > As of December 31, 2021, the Reporting Person’s beneficial ownership consists of: (i) 387,500 shares of Class A Common Stock and 2,050,838 shares of Class B common stock, $0.0001 par value per share (“Class B Common Stock”) held directly by the Anthony Casalena 2019 Family Trust, for which the Reporting Person is the trustee, and > (ii) 4,930,175 shares of Class A Common Stock and 40,835,572 shares of Class B Common Stock held directly by the Anthony Casalena Revocable Trust, for which the Reporting Person is the trustee. Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A Common Stock. > The Reporting Person may be deemed to have voting power and dispositive power over the securities held by the Anthony Casalena 2019 Family Trust and the Anthony Casalena Revocable Trust. https://www.sec.gov/Archives/edgar/data/1496963/000110465922019539/tm226272d1_sc13g.htm https://www.sec.gov/Archives/edgar/data/1496963/000110465922... He'll convert his 40 million+ Class B shares into Class A and sell them to Permira. His Class A and Class B shares total 47 million+. At $44 per share, that sums up to slightly over $2 billion in cash.
  - lotsofpulp 2y ago
    Thanks, I assumed all holdings would have been reported on Form 3 and 4 under the beneficially owned section.
    - blackhawkC17 2y ago
belter 2y ago
Going from their financials, Squarespace makes no money: Revenues of $281.1 million for Q1 with Net Income of $0.1 million so it can be rounded to $0. They have debt of $556.9 million so yes, for the founder being able to pass on this pig with lipstick is great. Permira is well known for what was their management approach with AA in the UK, so for the employees this will probably mean massive layoffs soon. https://www.theguardian.com/business/2007/feb/23/privateequity1 https://www.theguardian.com/business/2007/feb/23/privateequi... "MPs accuse owners of asset stripping AA motoring group" - https://www.independent.co.uk/news/business/news/mps-accuse-owners-of-asset-stripping-aa-motoring-group-6103972.html https://www.independent.co.uk/news/business/news/mps-accuse-...
- rqtwteye 2y ago
  Something is really wrong in this market when even a "successful" company like Squarespace deson't manage to be a profitable business.
  - klysm 2y ago
    If growth is the goal, you sacrifice margin for revenue
    - cduzz 2y ago
      And sometimes you sacrifice solvency as well? Gambling on exponential growth and then having the growth fall short (say, because people moved their personal web sites to facebook instead of squarespace) is a risk in any time you go big or go home. Sometimes (often!) you ... go home.
      - klysm 2y ago
        I would say most of the time you sacrifice solvency
  - lagniappe 2y ago
    Headcount and marketing spend required to be perceived as "successful" in the industry is commensurately high.
npalli 2y ago
It's true that PE firms cannot be trusted with a SaaS product. It is also true that most SaaS companies are not profitable for the service they provide at the revenue they derive. This reset, which we will see a lot of since the entire SaaS category has to be re-priced, is the scalable way to clean up companies (why are SaaS employees paid so much?, why are customers paying so little etc..) and put them on a sustainable path. This trend will continue to grow.
- miohtama 2y ago
  If there is $300M revenue and no profit, lay off the half of the staff and you get $150M profit in a SaaS company. The Musk recipe.
- hmmm-i-wonder 2y ago
  How is untrustworthy companies implementing asset stripping and debt loading a scalable way to put already unprofitable and questionably sustainable companies on a sustainable path? That doesn't square. Taking a company private CAN indeed counter short term profiteering if done by a group that actually cares about the company but I have yet to see a PE firm provide that.
prepend 2y ago
Also the model of squarspace is that they have your site and you can’t port it to another provider. So usually a customers options are “pay the new price or rebuild your site.” And there’s lots of small businesses who could probably afford to pay $2k/year instead of $100. I expect that prices will really go up. I always avoided squarespace because I didn’t like the idea of paying a monthly fee “just” to host content. I mean, Wordpress has flaws but at least you design once and then host on one of the billion Wordpress servers. And if one gets uppity or sells to PE, you can just switch.

throwaway12301 2y ago

Soon, most of the engineering and support will be over in India. I'd make a joke about innovation, but not sure how innovative Square has been the last five years.

mattmaroon 2y ago
Squarespace, very different company, though they do compete to an extent. I’ve seen a lot of changes from Square, though half of them were bad.
schreiaj 2y ago
Squarespace. Different company than Square.
ethbr1 2y ago
> I'd make a joke about innovation, but not sure how innovative Square has been the last five years. Honestly, isn't that a great match for PE? Once a company has run its innovation sprint, convert it to keep-the-lights-on and cut costs. In return, PE gets to buy a revenue stream.
- chii 2y ago
  The unsaid thing is that the customer signed up to squarespace is going to get less value for their dollars. Profit has to come from somewhere, and it aint innovation as you said.
  - ethbr1 2y ago
    Flip side is that PE-owned companies probably run leaner than public, as they don't have to show growth. We're all familiar with the gut-and-life-support PE examples. But there are a lot of trim-the-fat PE examples too.

itsoktocry 2y ago

>There's just too much incentive to jack up prices to service the debt taken to acquire Squarespace, and cut costs on customer support and building new features. So what's the best ownership structure? Public companies have their issues (short-term thinking), acquisitions have their issues (getting closed down)... I mean, cutting costs and upping prices isn't awesome for the customer, but do you have more faith in a company that's scraping by versus working to be profitable?

coldpie 2y ago
What evidence do you have that the new owners are interested in making Squarespace profitable or sustainable? PE firms are the "selling the car for scrap" of business acquisitions.
- cinntaile 2y ago
  They're trying to buy it and probably do some rationalizing to increase profitability. Classic PE play.
- prmoustache 2y ago
  But can they "sell it for scrap" for more than they bought it in the first place?
  - coldpie 2y ago
    Presumably, or else they wouldn't have bought it. Plenty of ways to make a profit while hollowing out a company: fire as many employees as possible, steal as much as possible from their employees and vendors, raise prices on customers, make closing customer accounts as difficult as possible, do some silly accounting tricks to make someone else hold the bag, try to find someone to fob off the brand name to for a few bucks once there's nothing left to extract. The usual stuff, they know the routine.
smaudet 2y ago
> do you have more faith in a company that's scraping by versus working to be profitable Working to be profitable is not correlated with well-functioning. Its usually correlated with enshittification (https://en.wikipedia.org/wiki/Enshittification https://en.wikipedia.org/wiki/Enshittification), and poor functioning. The most profitable (at least in the short term) is to provide a costly product that you took no time to produce, with zero support.

coldpie 2y ago

Yeah. Sounds like the beginning of the end for Squarespace. Grats to the owners for cashing out, though, hope they enjoy their yachts.

mattmaroon 2y ago
They were already public, they could have cashed out already at a good sized chunk of this. The yachts were already within reach.

lotsofpulp 2y ago

What is the source for the $2B figure? The most recent SEC filing shows the founder owns 2.8M class A shares, and there are 88M shares of class A shares outstanding and 48M shares of class B shares outstanding. I do not see why they would pocket 28% of the sale price. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/5ba2ffc4-7d5d-40e1-a15e-63488cf31d5c.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/5ba2ffc... https://investors.squarespace.com/news-events-financials/investor-news/news-details/2024/Squarespace-Announces-Fourth-Quarter-and-Full-Year-2023-Financial-Results-and-500-Million-Share-Repurchase-Authorization/default.aspx https://investors.squarespace.com/news-events-financials/inv...

blackhawkC17 2y ago
> As of December 31, 2021, the Reporting Person’s beneficial ownership consists of: (i) 387,500 shares of Class A Common Stock and 2,050,838 shares of Class B common stock, $0.0001 par value per share (“Class B Common Stock”) held directly by the Anthony Casalena 2019 Family Trust, for which the Reporting Person is the trustee, and > (ii) 4,930,175 shares of Class A Common Stock and 40,835,572 shares of Class B Common Stock held directly by the Anthony Casalena Revocable Trust, for which the Reporting Person is the trustee. Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A Common Stock. > The Reporting Person may be deemed to have voting power and dispositive power over the securities held by the Anthony Casalena 2019 Family Trust and the Anthony Casalena Revocable Trust. https://www.sec.gov/Archives/edgar/data/1496963/000110465922019539/tm226272d1_sc13g.htm https://www.sec.gov/Archives/edgar/data/1496963/000110465922... He'll convert his 40 million+ Class B shares into Class A and sell them to Permira. His Class A and Class B shares total 47 million+. At $44 per share, that sums up to slightly over $2 billion in cash.
- lotsofpulp 2y ago
  Thanks, I assumed all holdings would have been reported on Form 3 and 4 under the beneficially owned section.
  - blackhawkC17 2y ago

belter 2y ago

Going from their financials, Squarespace makes no money: Revenues of $281.1 million for Q1 with Net Income of $0.1 million so it can be rounded to $0. They have debt of $556.9 million so yes, for the founder being able to pass on this pig with lipstick is great. Permira is well known for what was their management approach with AA in the UK, so for the employees this will probably mean massive layoffs soon. https://www.theguardian.com/business/2007/feb/23/privateequity1 https://www.theguardian.com/business/2007/feb/23/privateequi... "MPs accuse owners of asset stripping AA motoring group" - https://www.independent.co.uk/news/business/news/mps-accuse-owners-of-asset-stripping-aa-motoring-group-6103972.html https://www.independent.co.uk/news/business/news/mps-accuse-...

rqtwteye 2y ago
Something is really wrong in this market when even a "successful" company like Squarespace deson't manage to be a profitable business.
- klysm 2y ago
  If growth is the goal, you sacrifice margin for revenue
  - cduzz 2y ago
    And sometimes you sacrifice solvency as well? Gambling on exponential growth and then having the growth fall short (say, because people moved their personal web sites to facebook instead of squarespace) is a risk in any time you go big or go home. Sometimes (often!) you ... go home.
    - klysm 2y ago
      I would say most of the time you sacrifice solvency
- lagniappe 2y ago
  Headcount and marketing spend required to be perceived as "successful" in the industry is commensurately high.

npalli 2y ago

It's true that PE firms cannot be trusted with a SaaS product. It is also true that most SaaS companies are not profitable for the service they provide at the revenue they derive. This reset, which we will see a lot of since the entire SaaS category has to be re-priced, is the scalable way to clean up companies (why are SaaS employees paid so much?, why are customers paying so little etc..) and put them on a sustainable path. This trend will continue to grow.

miohtama 2y ago
If there is $300M revenue and no profit, lay off the half of the staff and you get $150M profit in a SaaS company. The Musk recipe.
hmmm-i-wonder 2y ago
How is untrustworthy companies implementing asset stripping and debt loading a scalable way to put already unprofitable and questionably sustainable companies on a sustainable path? That doesn't square. Taking a company private CAN indeed counter short term profiteering if done by a group that actually cares about the company but I have yet to see a PE firm provide that.

prepend 2y ago

Also the model of squarspace is that they have your site and you can’t port it to another provider. So usually a customers options are “pay the new price or rebuild your site.” And there’s lots of small businesses who could probably afford to pay $2k/year instead of $100. I expect that prices will really go up. I always avoided squarespace because I didn’t like the idea of paying a monthly fee “just” to host content. I mean, Wordpress has flaws but at least you design once and then host on one of the billion Wordpress servers. And if one gets uppity or sells to PE, you can just switch.