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NY-based Squarespace is announcing the launch of version 5 (v5) of their online publishing platform today. Squarespace v5 is a total rewrite of the platform and is "completely different" than previous versions. Squarespace is a hosted publishing platform focusing on blogging similar to WordPress’ hosted version. There’s a new user editing interface which allows complete control inside of a Web browser. There are a variety of widgets including search and data collection. The Squarespace team has invested in the backend architecture as well and is using Peer1 in NYC for hosting.
Squarespace is different than most other hosted blogging platforms as there is no free option available. All Squarespace clients pay for their usage and Squarespace Founder Anthony Casalena explains that this is part of the contract between the client and Squarespace. He says that people put their money in and expect a high level of service or will leave. By charging all clients, everyone is treated at the same level and it has helped the team to put their priorities in place. By charging clients for their usage, Squarespace doesn’t have to worry about the drop in online advertising fill-rates and pricing. Without a free version, their total users will always be lower than other free services, but their revenue per user should always remain higher.
I spoke with Casalena this morning who tells me that the company has grown to seven employees and he has also brought in Dane Atkinson as the new Squarespace CEO. I can never seem to get Anthony to share any stats but he did say that Squarespace is generating revenue in the "multi-million dollar" amount yearly and that the business is "more than supported" by their paying customers. Casalena also noted that the customer makeup is evenly split between companies and individuals.
I am going to try to get over to their offices next week for an in-person demo and also get Anthony’s thoughts on the new crop of commenting services on the market and how they differ from what Squarespace offers. Check out our Squarespace interview with Casalena along with my thoughts on free vs. paid services.
Here are some screenshots of the new Squarespace v5:
When I met with Anthony from Squarespace last week, one of the topics we discussed at length was charging users vs. providing a free ad-supported service. Squarespace provided a free service when they began operations but quickly moved to a paid-only service. Anthony said the members actually appreciated the paid plans and he didn't have to support another 250k customers on a free ad-supported plan.
This past weekend, Nick from Techcrunch wrote about a new iPhone service from a company called Mundu. He believes the service should be free, here is his comment:
“So why in the world will they eventually charge $11 for it? There are way better ways to monetize software. Offer a free version and drop an advertisement into the conversation every once in a while, for example. But if Mundu wants to get a lot of users fast before Apple adds their own apps, they can’t be screwing around with charging customers. The marginal production cost of software is zero. That’s what the price should be.”
While the marginal production cost might be $0, the actual cost to produce the software is not $0 and keeping the company running and the software up-to-date is not $0 and neither is paying the labor costs.
Brad from 37Signals had this to say in response to Nick:
They forget that not everyone has Google’s search subsidies, Yahoo’s traffic, or Apple’s hardware revenues making up for their “free” bundled software. The rest of the companies in the world have to put a price tag on their wares and sell them on the public markets. And surprise!… The public is happy to pay for great products. Advertising-subsidized product revenue is just a teeny tiny sliver of the overall economy. Most of the rest is buying and selling of goods.
It seems at every conference I get into a discussion of free-vs-paid services. The accountant in me always wants to charge for services rendered. I never hear anyone say that eBay, Paypal, or Microsoft should give their products away for free. Yet every startup it seems has to be free or face the wrath when they decide to charge. I think many startups are afraid to charge because as soon as they stick their shingle out there with a price, they fear the Google free-monster will invade their territory. It's simple: you charge for a service, you might have less customers than free but you will most likely generate more revenue from that set of customers. The downside to paying is that competition might hurt and the customers you do have will be much more demanding of service and satisfaction.
Question: When you started working on your product or service, did you have a plan in mind of how to generate revenue? Was it assumed amongst the team that you would just be free and ad-supported?
This morning I met with Anthony Casalena who is the Founder and CEO of Squarespace. To be honest, before I was contacted about the company I never heard of them. Anthony provided me with a demo of Squarespace and we discussed the industry in general. Anthony is a bright guy and from what I can tell, his company is poised to take percentage points from WordPress.com.
Here are my notes from our discussion:
- Squarespace is a sophisticated publishing tool. It handles more than say WordPress but less than a complete CMS package
- Launched three years ago. Created by Anthony after his struggle to find a tool that could do what he needed
- Anthony notes that the components are called legobricks and they fit together to form a customer’s Squarespace
- Squarespace has thousands of paying customers; they do not offer a free or ad-supported model
- Serving over 1 billion pages a year not including admin pages – very impressive!
- Revenue has continued to increase and has risen each month since launch
- Pricing – $7-65 per month; Anthony notes that the majority of users are on the $17 plan
- The Squarespace team is currently four people
- Company is unfunded but is currently looking at vc options
Squarespace looks very well built and feature-rich. It has tons of Web 2.0 type features along with a robust set of user options. I asked about their marketing plan to which Anthony replied that outside of word-of-mouth, the only other marketing they do is using Google Adwords. While he wouldn’t share how much they spend, he said they continue to maintain 1st position for “blog” in sponsored and that they spend, “a lot.”
We ended our discussion with the future for Squarespace. Anthony had three bulletpoints for the future:
- Catering to developers – they will be expanding the ability to build on the Squarespace platform
- Video hosting – they are working on adding the ability for sites to host videos within the platform making it extremely easy to get a video onto a Squarespace site
- Predefined segments – they will be creating predefined templates for certain segments. Anthony noted their first will most likely be photographers and will have the features and templates initially set for this segment. Targeted marketing is a good idea for expansion
The demo looked absolutely sweet. Shockingly sweet. It’s rare that I am “wow’d” by a demo, but this one did it. In fact, I have two clients that I might propose we move to Squarespace. Check out the full feature list and see what you think. My suggestion to him is to look at creating user groups. This way sites that are similar in nature can share features such as the search engine if they both agree. Could be pretty powerful if executed correctly.
Are you using Squarespace or have you tried the tool? Share your thoughts in the comments.