The SaaS Industry Is Booming! Here’s Why You Should Join In…
Software as a service, better known as SaaS, is a massive, ever-growing industry that’s showing no signs of stopping. In fact, statistics reveal that the industry is worth a whopping $171.9 billion so far in 2022, up $26.4 billion from 2021.
Of course, it’s no surprise why. SaaS offers companies and individuals access to personally-tailored, subscription-based services that cater to their daily business needs. But should you decide to purchase a SaaS business for yourself, what might you expect your success or returns to be?
To better illustrate the potential of the SaaS business model, let’s dive into this Squarespace case study to see how they managed to grow into a billion-dollar company so rapidly.
Squarespace: From Humble Beginnings
Squarespace is an all-in-one website hosting and design company that makes it easy for anyone to create their own website, blog, or eCommerce store. In fact, if you’ve ever considered creating a website or you listen to business podcasts, chances are you’ve come across them before.
Originally, Squarespace was founded by Anthony Casalena in his dorm room at the University of Maryland in 2003. The next year, Casalena officially launched this project with $30,000 from his father.
Now, if you’re familiar with startups, you know that their success rate isn’t the best. In fact, one Forbes article states that over 70 percent of startups fail because of premature scaling. But for this specific and early SaaS model, this wasn’t the case.
In fact, Squarespace managed to bring in $50,000 in revenue in its first year alone. In 2006, it had grown its annual revenue to over $1 million. Today, it’s grown by leaps and bounds. A report from Backlinko states that Squarespace brings in $754.2 million in annual revenue and currently has 3.79 million subscribers.
That’s 15,000 times the initial amount it made in its first year! Today, Squarespace is valued at $10 billion dollars.
So, how did a small startup in a dorm room manage to grow so rapidly and achieve such success in their chosen industry? Here are some of the top reasons why Casalena was able to make Squarespace the SaaS company it is today.
The Reasons Behind Squarespace’s Success
1. Squarespace wasn’t afraid to stand out and carve out a niche of their own.
Take a moment to step back in time to 2003. Web design wasn’t as elegant or polished as it is today. In order to really stand out from other website builders or website designers, Squarespace needed a major selling point that allowed it to be a viable business.
Casalena made a point to not only provide a builder that could make website development easier, but also produced great results as well. After all, whether you’re creating a blog or a portfolio, you need something that provides you with top-tier results to attract an audience and spur action.
Clearly, their efforts paid off. And their decision to focus on creating something unique and valuable helped them distinguish their company from similar offerings.
The lesson here is when you decide to purchase your own SaaS business, it’s important to focus on your niche. What do you offer your customers that they can’t find with any other SaaS company? What type of value is built into your services that make your company worth paying attention to?
The moment you find what defines your company and what will resonate with consumers is the moment you’re on track to a viable business plan.
2. Squarespace has never been afraid to step into the spotlight and take risks.
Businesses don’t thrive by avoiding risk or refusing to attract attention, and Squarespace is a company that understands this intimately.
In fact, they’ve actually released five Super Bowl ads to increase brand exposure. Their marketing team believes this is the best time to advertise given everyone’s needs to pursue goals and make changes. Given that they’ve continued to pay millions for these Super Bowl commercials year after year, it’s certainly paid off.
Of course, Squarespace hasn’t stopped there. They’ve also targeted podcasts like NPR and This American Life, which let them reach a more mainstream audience. By inserting themselves in areas where they’ll get more exposure like this, they’ve been able to scale quite successfully.
So when you buy your own SaaS company, focus on getting your services out there. If you know they’re helpful and offer something else no one else does, the results of your marketing strategy will speak for themselves.
3. Squarespace developed deeply ingrained company values and hire based on these values.
Your company values set the tone for how your company functions, how customers feel about your company, and how well your employees support it. Like most thriving companies, Squarespace has a very well-developed list of powerful values that drive the organization forward.
These include items like, “Simplify”, “Be the customer”, and “Design is not a luxury”. These values define how they provide the stellar services they do for their customers. However, these values define something else: how they source the talent that works for them.
Squarespace is focused heavily on finding applicants that align with their core values. This not only ensures their hires are happy and successful with Squarespace, but that they produce high-quality work that supports the organization and customers.
To keep your SaaS on track, you want a strong mission statement and values so you can center your hiring, customer service, and product creation around them.
4. Squarespace used a DIY approach that supported long-term growth.
Remember the statistic about over 70 percent of startups failing to succeed because they scale too fast? This is exactly why Squarespace managed to achieve the long-term growth that it has today!
Rather than focusing on getting as much funding as possible and scaling rapidly, Casalena emphasized making money and decisions (fixes, changes, etc.) that support the company’s long-term growth.
This made Squarespace a much more efficiently run company that didn’t run out of money due to overspending.
Put simply, you don’t want to buy a SaaS and only emphasize how much you can raise. Think long-term, make smart decisions in-house, and work on creating a vision for your company that can sustain it for decades rather than months.
Let Squarespace Inspire Your First SaaS Purchase With Flippa
Squarespace is a great example of why SaaS companies are an excellent investment. However, it’s not the only one. Whether it’s major brands like Slack, MailChimp, or Typeform, companies and individuals alike thrive with the support of these SaaS solutions.
Are you looking to take advantage of this growing industry and invest in your own SaaS that you can scale over time? If so, Flippa is here to help!
Flippa is the number one global online marketplace that makes it simple to buy online businesses like SaaS companies. You can easily browse our SaaS business and websites for sale now. If you have any questions about our listings, you can search our knowledge base to learn more or reach out to us for further help!
