Why Does the World Need Another Web Publishing Platform?

If you make it beautiful, they will come. In essence, that was the business strategy behind Squarespace.com, a web publishing platform and content management system launched from a dorm at the University of Maryland in 2004.

“When I started this business, I had no connections, no money, and there were already 500 companies in the market,” says founder and CEO Anthony Casalena, 27. So how did this thing work?

“At the core, the answer is that we really care about the quality. Squarespace is really differentiated in its design and its function. We’re just going to sit there for as long as it takes to create something you didn’t expect, that delights you.”

An idealistic philosophy, perhaps— but it’s been profitable. According to its listing on the 2009 Inc. 500 list, Squarespace’s revenue grew 713 percent between 2006 and 2009, from $667,636 to $5.4 million. (Casalena won’t release figures, but TechCrunch estimates the company’s current value at more than $100 million.)

In seven years, the service has gained tens of thousands of customers. And with demand for cost-effective websites and blogs growing, driven by individuals as well as by small and mid-size companies, 27-year-old Casalena sees  no end in sight. Last July, Squarespace received its first real outside money: $38.5 million from Index Ventures and Accel Partners.

While Squarespace ran largely under the radar for a long time, it’s now got industry observers—and customers— eager to hear the answer to the question: What is Squarespace going to do with all that money?

Design makes the difference 

Squarespace isn’t free (beyond a 14-day trial), unlike the core versions of competitive content management systems such as Joomla!, Wordpress, and Drupal. Also unlike them, it isn’t open source, and there’s nothing to download; Squarespace is cloud-based. It makes money from the fees it charges, which run between $12 and $50 a month.

“When people tell me something is free I say, ‘You mean, like a puppy?’” Casalena says. “A lot of stuff comes along with ‘free.’ I decided a long time ago that we weren’t going to compete on pure volume. Our target is people who care about the product. And if you fundamentally believe your time is worth money, Squarespace has that value proposition.” 

The site offers more than 60 templates by brandname designers, and can be customized in all kinds of ways. They also offer numerous built-in functions—like a custom search engine, form builders, a statistics package—that, on other platforms, must be acquired through external plug-ins.

With all that included, you can call it DIY, even for the non-programming set. “It’s self-service. That’s how it’s designed,” says Casalena. “We dive in and do the work so that at the surface you have a very simple result.”

A self-taught entrepreneur

Casalena originally built Squarespace because he was frustrated with the options for building a personal website. He officially launched the company in January 2004, after persuading his parents to loan him $30,000 so he could buy servers. He ran the business himself for the first three years, and says it has been profitable since its first year.

Casalena moved the business from Maryland to Manhattan in 2006— before the city became a technology industry magnet—simply because “I just love New York. I love design, I love the environment, I’m a 24/7 person— it’s a great fit.” In 2007, he finally began to hire people to help him run the business.

“I had set goals for myself that I wasn’t hitting,” he explains. “There’d be three initiatives I wanted to work on, but I was so bogged down in operations that I had no time to spend on forward thinking.” His first hire was an engineer. He next brought in a CEO (a title he has since reclaimed for himself), then a creative director, then a customer support person. “I just followed the logic of what the company needed in order to run,” says Casalena.

Taking on partners, but holding the reins

The recent influx of outside money represents, for Casalena, the third phase of his company’s growth. Along with capital, he’s gained a board of heavyweights: Jonathan Klein, CEO of Getty Images; Andrew Braccia of Excel Partners; and Dominique Vidal of Index Ventures.

“The deal wasn’t about needing money; it was about getting the right partners in place to take this company to the next level,” Casalena says. “It’s a minority investment, so they don’t have control of the board,” he notes. “Control is largely perceived, anyway. I really enjoy reaching consensus with those guys and having them help guide the company.”

So what will Squarespace do with all that money? 

Though unwilling to be specific, Casalena drops some hints. He will build out the infrastructure so the company can keep up with demand. He’ll look to acquire select small companies in order to get the services of their people.

“We have very specific needs for both engineering and design. The people here are immensely talented and driven to produce something exceptional. So when we find people we like, we’ll fly them out here, we’ll do anything,” he says.

Whatever Squarespace eventually decides to do, Casalena won’t rush it. “One of our primary missions is to surprise people. You should almost be a little alarmed—‘Wow, I can’t believe they spent that much time on the way the button looks, or the dialogue, or the error message.’ That kind of thinking is the core of what we do.”

He cites Sony and Apple as companies whose design inspires him. “When you first saw an iPhone, it was like, ‘I didn’t think that was possible; that’s amazing.’ We really seek to hit that level.” “These things just take a while sometimes.”