Q&A: Anthony Casalena, founder of Squarespace, on e-commerce and startup strategies

When it comes to advice from the startup world, the first thing Anthony Casalena says is: "Be profitable."

Strangely enough, being profitable from the start is not the model many startups, including well-established companies like Twitter, take. Casalena, the founder and CEO of the online publishing platform Squarespace, known for giving small businesses the opportunity to create beautiful websites inexpensively, credits the company's healthy development to the early years of financial freedom. In essence, if you have no shareholders you can do whatever you want, when you want to.

Frustrated with the "$2.99 bargain bin hosting solutions” of the early 2000s -- a time when blogging was just getting started and social media sites as we know them didn't exist -- Casalena took on the challenge of building a sleek personal website. It soon became clear that there was a need for user-friendly publishing platforms.

"I launched Squarespace in 2004 from my dorm room in the University of Maryland with $30,000 I borrowed from my father," Casalena said. "Money is an excellent proxy for gauging real user interest in what you’re making, and it’s important for a company to be able to operate out of its own income."

Now, with almost 170 employees and a revamped platform called Squarespace 6, the company's paying user base is rising five times faster annually. A particularly buzz-worthy feature of the new version is its e-commerce capabilities.

SmartPlanet sat down with Casalena to talk about financial strategies and how small businesses can thrive in an e-commerce driven economy.

Ecommerce has been a recent focus for Squarespace. When I spoke with Alexis Ohanian, the co-founder of Reddit, he argued that the proliferation of ecommerce sites has meant faster innovation – more competition and idea sharing. How do you think ecommerce has affected business in a larger sense? How has this changed the landscape of how we exchange goods?

Twenty years ago you couldn’t publish or sell anything online. So that was off the table. Now you have these very big networks – like Etsy, Ebay, and Amazon. They have a wide amount of distribution. And on the other hand you have things like Squarespace – sites that enable individual publishing. In the middle of those you have things like Facebook, Tumblr, and Twitter providing glue. Essentially assisting with discoverability. Without this all the small independent sites would be tiny islands no one would ever find.

In a world where everyone has equal access to a publishing platform, the act of curation becomes all the more important. You’re being presented with streams of information from Twitter to Facebook to Tumblr and it becomes un-parsable unless you control and filter this information.

It’s not enough to just be there. You have to have a great store and an amazing way of presenting your content.

It’s interesting -- this map you’ve drawn between these three levels of players. What direction do you think this is going in?

It’s a good question. I think that it’s easier for small players to compete based on story and style. That will continue.

When I think about what I buy, I get some things from big stores like Amazon -- but that’s always the commodity stuff. When it comes to, “Hey, where can I find a great backpack that looks exactly the way I want?” These items are coming from smaller venders. And those venders are able to get my attention in a way that they couldn’t even five or six years ago when Facebook and Twitter didn’t allow them to attract followings. These channels open up a new realm of discoverability. They change small brands’ ability to compete.

Do you have any interesting examples of this process of social media platforms bringing people to the smaller fish in the pond? What is the best way for small businesses to approach online communication?

There’s a Squarespace user who owns a yarn store called The Purl Bee. She gets millions of hits every month. I’m not sure how she could have done that 10 years ago.

She’s got an amazing personality and blogs very authentically. I think that’s something that’s universally attractive. It’s not about putting content out there for the sake of having a content strategy. It’s about putting content out there because you care about it.

The lines are now blurred between our social media lives, our personal lives, and our professional lives. Not everyone has a great blogging voice. What are some other ways that people can present their story and try to engage in an authentic way?

I think the key is being authentic. For instance on Squarespace we operate across a number of different verticals. We have bloggers, portfolios, restaurants, offices – and someone with a great portfolio may not need a great blog because their content comes across in imagery. But it’s about not attempting to tack on a strategy that doesn’t reflect who you are.

What does “authentic” mean to you?

It means you have a reason for doing it that isn’t solely centered on making money. To take The Purl Bee as example, that site exists because you have an individual who loves the act of creation and loves the community around her. She makes money too. She probably does very well. But the point was something else.

One of the internal things we talk about a lot is this concept of being driven by ideals and having metrics follow. From a personal perspective, these are my favorite stories to follow. People who have created something and let numbers guide them after – observing what was well received and adjusting from that to pave the path forward.

What are some words of wisdom for those who want to create a really successful ecommerce site?

There are two kinds of commerce I see on Squarespace. One is a store selling a product or service and the other site is driven by something else – a band’s site for example. It might sell merchandise, but if the t-shirts don’t sell out, the band isn’t going out of business.

I don’t have a lot of insight around the first type of site other than the basics: engagement, great design, not wasting peoples’ time, making things simple and straightforward, and having a product that resonates with people.

We are really excited about the second kind of site.  It means the ability for commerce to interact with editorial in an honest way. For example, you go to the band’s website, you listen to the music and it’s great. Then you buy some merchandise related to the concept you’re already engaged with in another way. So you’re connecting with a story. Tacking on commerce was a second step.

Let’s talk about being driven by ideals and having metrics follow.

Squarespace operated out of its own profits for seven years. The only money that was raised initially was $30,000. This puts us on strong footing against competitors that have vanity metrics.

There’s this tendency to want to talk about stories of unbelievable things – Foursquare, Tumblr, X Y and Z “who raised amazing amounts of money and don’t make a dime.” We’ve come a really long way just by being organic and having a different way of doing things versus a lot of our peer set in New York.

I’m not saying anything negative about those companies; there are different ways to start a business. But you don’t need a million dollars to start a company. You don’t need 20 million or 120 million. It dovetails with this idea of democratizing design. There really are very few barriers these days to doing something great. This company celebrates that in its user base, but it’s also an example of that.

We’ve changed a decade down the line. You raise money for different reasons. But it’s not where Squarespace came from. The company has had three lives. It’s had a life where it was just me. It’s had a life where we were building a small team. And it’s had a life where we tried to make something substantial and epic that would inspire all of us internally and would get us through the next decade. Each phase was roughly three years.

Version 6 was a huge risk for us. We completely re-architected our entire platform. The technology decisions you make in 2004 are not the ones you would make in 2011. We launched that platform a year and two months ago. That was the driver for this wild growth. Everything you see on the web right now is version 6, even down to our website – which is a normal Squarespace site.

Now that you’re experiencing this rapid new growth, where do you see the company in five years? 

You can really see a path right now internally to millions of paid subscribers. And we’re just going to keep solving fundamental problems as time moves forward. Can you get a great looking website? Does it solve your content management problems easily? Can you communicate with your customers effectively? Can you see what’s happening with your statistics platform? We’re broadening our ambition and making sure we solve these fundamental things.

Do you have any screen shots of your very first website?

Oh my god. If I did I wouldn’t share them. But I actually don’t. I wish I did.

This post was originally published on Smartplanet.com