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Hello and welcome to decoder I'm Nila Patel editor-in-chief of the verge and Decoder is my show about big ideas and other problems. Today I'm talking to Anthony Castellana, the founder and CEO of Squarespace, the ubiquitous web hosting and design company. If you've been on the web, you've visited a Squarespace site. And if you're a podcast listener, you've heard a Squarespace ad. I was excited to talk to Anthony because it really feels like we're going through a reset moment on the internet, and I wanted to hear how he's thinking about the web And what websites are even for in

2023?

If you're a Virchast listener, you know I've been saying it feels a lot like 2011 out there. The big platforms like Facebook and TikTok are focused on entertainment content. Twitter is going through, let's call them, changes. People are trying out new platforms like Instagram threads and rethinking their relationships with old standbys like Reddit. And the AI explosion means that search engines like Google, which has really become the last great source of traffic for webpages, just doesn't seem all that reliable anymore because Google is starting to answer more and more questions directly.

It's uncertain and exciting. A lot of the things we took for granted just a couple years ago about how business on the internet worked are up for grabs, and I think that might be a good thing. Anthony's been there through all of it. He founded Squarespace in his dorm room in 2003, and over the past 20 years he's seen a lot of these web ideas come and go. So my question was pretty simple.

Why would anyone even make a website in 2023? Anthony's answer was fairly surprising to me. He said a lot of Squarespace clients think of Instagram and other social sites as their homepage, and they only bring people to their websites to complete transactions because they have more payment options on the web. That's a pretty huge shift in thinking and a radically different perspective on the internet and how users move around on it. The other huge shift in thinking is obviously AI.

Where does all the content on a website come from? And what does it mean if we just let AI write all of it? It's already happening in interesting ways and pretty obviously bad ways. And Squarespace is in the mix with new AI tools for generating sites and copy with OpenAI's tools. Is that good for the web?

Is it good for business? Is it good for people? I think these questions are pretty open, and Anthony and I got into it a little bit. Squarespace also just made a pretty big acquisition. They bought Google's domain registration business, which will make Squarespace the fourth largest domain registrar on the web.

I wanted to know how a deal like that goes down, how it works on a technical level, and of course how Squarespace is structured to support it. It is Decoder, after all. I love talking to people who have been building on the web for this long, and Anthony was no exception. We had a lot of fun with this 1. Also, I think this is the most we have ever talked about pressure washers on Decoder.

Okay, Anthony Castellana, founder and CEO of Squarespace. Here we go. Anthony Castellana, you are the founder and CEO of Squarespace. Welcome to Decoder.

Thank you. Pleasure to be here. Thank you for having me.

I am really excited to talk to you. Squarespace is 1 of the sort of OG web companies. I am very interested in the future of the web. It seems like there's a few parallel revolutions going on with the web. The social platforms are all changing.

Some of them are even in crisis. They're not sending traffic to websites anymore. Something's happening with Google and AI and how they're going to send traffic. And then AI itself, if there's a text box on the internet, people are shoving AI into it. And it's going to flood us all with stuff.

It just seems like a lot of things are changing around the web, around how we think about the web, how we might navigate the web, why people might even make websites. You've been at it for 20 years with Squarespace. How are you thinking about all this change?

We celebrated our 20th anniversary in April. So, you know, we're used to a web pre-social network phase, almost pre-YouTube, pre-iPhone, predominant browser was Internet Explorer. So we've seen a lot, blogging was a word I used to have to explain to people what it meant when Squarespace launched. And so, you know, we're no stranger to change on the web. And you know, it's with that that I'm actually super excited about what it means for the future.

I mean, when Squarespace started, publishing on the web was an intimidating thing. So we started as a blogging platform because, you know, starting a blog was easy. And so from that, over the years, as browsers got more sophisticated, we transitioned into more and more graphically rich websites, a lot of portfolio websites and artist websites started on Squarespace about a decade ago. Really, since then, we've been in an era of, really, the proliferation of a lot of different types of commerce on the web. And especially commerce it's in the hands of people who you know couldn't build a online store services based business.

You know 10 years ago in the web technology too difficult but now the use web for all kinds of things. And so I think having a space that you own on the Internet. Right now that's authoritative is almost more important than ever right this is your online real estate. You have a domain that you own Squarespace doesn't put anything on your domain or website that you're not putting there, we don't monetize through ads, nothing like that, and it's a way to transact, right? So Squarespace supports a myriad of ways to transact from selling physical goods to selling services to booking appointments to, you know, we've acquired companies that let us get into the hospitality space and with reservations.

And so a lot of what we're focused on is, you know, 1, our fundamentals, just being the best place to go for a website in terms of ease of use and expressibility, but also really helping our customers make businesses, helping them transact, and really being part of the future of entrepreneurship.

So that's a big spread, right? You start with, I wanna have a business. You sign up for a Squarespace account, you set up a website. Well, you gotta figure out how to get some traffic to it, which we should talk about. And then somewhere down the end of that road, you've started a restaurant and you're using talk to manage reservations and bookings and stuff.

And now you're kind of like inside the walls of the business, right? You're running some of their core functionality. That's a big spectrum, right? You start with, okay, this is a marketing platform all the way to now we're running your business. Where's your focus?

Well, it really is towards the latter part. Most of the time when people have a website up, they have a website for some reason, especially a paid website like you would have on Squarespace. And usually it's to facilitate some kind of transaction. You want someone to contact you. You want to book a reservation.

You want to book a hotel room. You want to book an appointment. You want to sell a product. You want to sell a service. You want to sell a digital download, a good.

And so a lot of our development efforts remain on this, I would say like enablement for entrepreneurs. You know, some of those entrepreneurs may not have a website with Squarespace. And that's just fine. We have a lot of tools for entrepreneurs that, you know, it works better with Squarespace as a website, but you can you might have your website hosted elsewhere. That's OK, too.

That's a split for me that is particularly interesting. That the growth and the activity is happening at the, you're running your business and people are gonna sign up or they're gonna book calendar slots or they're gonna buy something from you. You're launching a payments business in the fall. All that is away from you're gonna start a website. And that to me is, there's a break there that I think is just utterly fascinating.

That if I wanted to start a business tomorrow and get customers tomorrow, I'm not sure that starting a website is the way to go. I might start with making a bunch of TikToks about my pressure washing business, or I might start with, I needed a guy to come and cut down a tree and I went and looked on Facebook before I went and did a Google search. And I found the guy on Facebook in 4 seconds in my area. That seems like the big split, right? That the marketing function for new businesses is happening on social platforms and it's not happening at the point of we should start a website.

Do you see that split Or is it, we just want businesses that are a little bit more mature and there comes a point when you will always need a website.

And I like the beginning with pressure washing business. That was not something I've heard anyone lead with before on the spectrum.

Small business TikTok is my absolute favorite.

It fits perfectly with Squarespace. But to answer your question, I mean, again, going back to that 20 year history, we are very used to social networks being around. They've certainly been around in parallel from every iteration of them from MySpace to Friendster to Tumblr, to Facebook, to Instagram, to TikTok, and sometimes they come and go, Sometimes they have more staying power. We actually see more demand than ever for websites right now. And the importance of owning that URL, because, you know, as you know, when you're within a social network, you're sort of beholden to them, right?

You're beholden to them in terms of reach you know when you're posting on the social networks not guaranteed. That all your followers you reach when you post. And you know again they come and go and so if you're really locked into an audience there. If you're serious about what you're doing at all, that becomes sort of dangerous. That being said, they're great for distribution.

We encourage all of our customers to be on whichever social networks are relevant to them, including incredibly niche ones, depending on, you know, where people start power washer businesses and how they all interact and collaborate.

The power power washing is a business that you should have.

I think vertical.

Yeah, it just feels like that's a

personally

that is such a creation of Tick-Tock. But that's so wild to me. Right. Here's a new social platform that showed up. I very much doubt that bite dance engineers in China built a platform with the intention of a bunch of 20 year olds in America starting pressure washing businesses.

But that's the content that started to go viral. And then people started, and now we're at the point of the cycle where it seems like the money in pressure washing is not actually pressure washing, but selling masterclasses about pressure washing.

There you

go. Right, and that cycle is just, is nuts to me, but it's a function of a distribution platform.

Yeah, and you know, what's really interesting is you see a different kind of content resonate across these different social networks. It's defined by the medium, right? A certain kind of content finds its way to Twitter, to Facebook, to Instagram, to tick tock, to any number of ones that have kind of gone away in the past. I'd say 2 things just to also build on what you're saying. 1 of the actually big initiatives we have that will be launching in a couple months is our classes and courses business.

So I completely agree with you that there's a great amount of money to be made in selling classes and courses. And then the other thing I would say is, again, towards our portfolio of brands, Squarespace bought a company called Unfold about 3, maybe 4 years ago now. And Unfold was an app for creators on social media to basically do formatting around Instagram stories. And the thesis there was that. Your homepage may not start as a web page but yeah I.

Your Instagram feed is the beginning of where you want to start. And we want to be around you and help you with the tools you need whether it's- you know a link in bio with our bio sites product, a full-fledged website, which might be too much for certain people or getting into the flow with commerce. And so that's something we've definitely contemplated and certainly have been watching over the past 2 decades as we've coexisted with social networks.

Would you describe Squarespace today or in the future with those kinds of products is still primarily a website company.

I think the brand Squarespace, we've spent a considerable amount of money associating with the word websites and online presence and domains and, you know, all the things to go along with it. I think as you get further away from the core of what Squarespace does, the other brands can resonate in a way that is just easier to explain to people. I don't need to explain to people that Squarespace actually does everything. And it's for every kind of entrepreneur. And it just It just gets overwhelming for people.

And we'll probably be launching more brands in the future.

So that leads into the decoder questions here. That's a lot of brands to manage. You've been at it for 20 years. How is Squarespace structured now, and how have you changed it over time?

As you might imagine, it's in transition. It's always in transition in some ways, but really this move from just the brand Squarespace to these other brands within a portfolio, and it's not that many of them, and they're hung together in a number of ways, right? I mean, they're all kind of in service of entrepreneurs and their shared services, like our payments platform, which you mentioned that they'll all use together. And we just started buying these brands and launching them probably only 4 years ago. So for the most part of our existence, Squarespace was structured very, very functionally.

You know, my background is product and engineering and design. And while, you know, we've had people running those functions here for quite some time, that's kind of like where I was kind of oriented, and of course, mostly towards the Squarespace product. And so we grew up very functionally. So around me would be an engineering head, a product head, a marketing head, a creative head, a customer operations and service head, and like all that sort of thing. And now, you know, with the acquired companies and with the brands we're launching, we're sort of experimenting more with, you know, I guess what would be considered like a general manager model for less of a better way of putting it, just to make sure that these independent work streams and products can do what is best for them without having to always roll up through 1 centralized point, which, you know, Squarespace is a multi hundred million dollar, almost billion dollar now revenue run rate company that's public.

Did the leaders of that company have time to focus on 5 different other brands? I would say they, they don't. And so you move to this GM structure to give those brands more autonomy so that they can pursue what's best for their customers and not all that roll up to just a, what would otherwise be kind of a corporate bottleneck.

Yeah, so you are going into some sort of divisional structure now, right?

We're partially there now.

And are you splitting up so that you have, I don't know, multiple designers in multiple places or multiple product leads in multiple places, or are you still centralizing all that?

Depending on what's appropriate for the brand and who the leader is, sometimes we'll be centralized, sometimes we'll be dotted line. There's no hard and fast rule. It's just whatever is working best. But there's certain things that I think. You know are obvious to be centralized yeah H.

R. Legal finance. And then there are certain things you want to have centralized like payments. And there's certain things that Squarespace is kind of- special at and- it should have centralized this brands can use the services. And that's like our internal creative agency.

So when Acuity goes out to do a rebrand, they don't need to go externally to do that. The people who worked on the Squarespace brand are more than happy to help those leaders make something that looks fantastic. I mean, that's 1 of our core strengths.

1 of these days I'm going to have a CEO tell me that they've decentralized HR, legal and finance. And I think that might be the end of Decoder.

That's the end?

No, it's No 1 does it. It's the 1 thing that everyone definitely centralizes. But the difference is, where do you put design? Where do you put product? Where do you put marketing?

And everyone seems to have very different opinions about this

stuff. There are examples of decentralized, all those things, and you just are called a holding company. Right? So they're actually holding companies that have brands where they don't attempt to mix those at all. We do Maybe there's a size where that's not appropriate I mean, I'm not exactly informed of how like Berkshire Hathaway works I think they wholly own those companies and I don't think they I think they got like 50 people their corporate office

Do you think that you would get so big that Squarespace has a website company and a scheduling company and your design services company?

The first couple of those, sure. It sort of already does. I'm not sure we would ever get into kind of like using our agency externally, we would try to help it with the portfolio brands than going externally with it.

How many people at Squarespace right now?

We are a little over 1, 700, I believe a little shy of

1, 800.

And how are those people organized? What's the biggest part of it? What's the smallest part?

Let's see, the biggest part by head count would be customer operations, but we're pretty lean across the entire company. You know, if you compare a company of our size, you know, 1, 700 people to, we call it 1, 750, to our revenue level, which, you know, is right under a billion for this year, it's a pretty lean company. So we've always had lean design teams, it's a very large engineering team, a medium-sized product team, a pretty tight marketing team, and then smaller legal and finance and support functions.

When I look at the chart of other big website companies, Automatic slash WordPress, I guess Automatic is kind of a holding company.

Even probably more than us.

I'm looking at sort of the market share charts of different CMSs. WordPress obviously dominates the internet. It's like 64% of websites are on WordPress. Then there's Shopify, Wix, Squarespace, around 3%. When you think about growth, is it pure market share?

We want more websites on Squarespace. We want to take share away from WordPress. Or is it we want to make more money from our existing customers?

It's a variant on your latter idea around money. I would say that, you know, you can look at all of the URLs out there in the world and think, well, okay, which ones are even appropriate for us to host? So some are apps. We're not hosting apps. Some are, you know, large companies, some are large content based sites, you know, and really there's just, they're just all across the board and what those URLs are out there and I think that there's a certain subset of those URLs.

That we are really good at managing. The ones focused around small business, the ones that are more creatively oriented, the portfolios, the them websites, that sort of stuff is really in the sweet spot for Squarespace. And then, you know, also it's not a free product. So, you know, we're never really going for just total count of URLs, because we want sort of a more serious user. And I think Squarespace is in no way expensive for what you're getting from it.

I mean, we're talking under $20 a month for just so much functionality that's been developed over those 2 decades and more every day. So it's not a URL count thing that I'm going for, it's which URLs and which are the more valuable URLs for us. And so that gets us into, How are these URLs transacting? Do we have permission to help them with the transaction? Is the transaction even happening online?

You know, and how much of that transaction can flow through us? You mentioned the payments platform we're launching later in the year. Yeah, that's a big thing for us. A lot of people, you know, for smaller URLs, they buy the URL and bandwidth and storage were commoditized long ago. Right.

You're not really paying attention to that stuff anymore. And so how do we grow with our customers if it's not functionality and features or customers they're managing? It's probably transaction volume.

So by transaction volume, you mean you've got all the dentists in New York and you just want them to do more dentistry. You want to help them market to well,

that's an interesting example, right? Because do the dollars flowing through when you actually go to the dentist, would that actually flow through us? It probably wouldn't. Versus, you know, if you're on top and you're booking a prepaid reservation, those dollars do flow through us. Or if you're building a, you know, you're selling a service online and you check out online, those dollars do go through us.

So it's really like a really interesting question around how many dollars are floating around Squarespace? I mean, unbelievable billions, tens of billions. But how many do we have permission to touch and make, you know, make that transaction easier for the entrepreneur? You know, it's a smaller number. But as we think about the product roadmap, we're always thinking about, you know, how do we get more in there?

We have to take a quick break. We'll be right back.

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We're back with Anthony Castellino, the founder and CEO of Squarespace. This is a fascinating way of thinking about Squarespace's business. I had not considered it before. You've got categories that you've put URLs into. And the best part of this conversation is I keep coming up with hypotheticals and you're already in it.

So like dentists are a bad hypothetical, but restaurants are a pretty good hypothetical in this case because you might be able to take some percentage of their transaction or build a tool and say, we're going to take a percentage transaction, but we're going to get you more transactions total. Have you segmented the customer base like this and said, OK, here are all the URLs in these segments. We're going to go try to conquest them 1 by 1.

Look, I mean, Squarespace has always been built as a general purpose tool, right? I kind of like didn't care what your website is. It's like if it's fitting into these patterns, we want to host it, whether it's a dentist website, an event website, you know, whatnot. And even though the dentist website is not transacting, you're not paying for that thing through Squarespace, it still doesn't mean they can't be a good website customer for us, an email marketing customer for us, all that sort of thing. It's just that our upside will probably be a little bit more capped than if we were like truly running back office sort of things there.

Right. That is not a.

I don't think you want to do dental insurance billing.

We're not currently going after that 1. But in a way what's interesting is it is an appointment based business. Yeah. And so some of the appointment booking side of it could go through acuity. And so it depends on what part of it we're going after.

It just seems like more of your growth is inside the walls of the business, right? It's not that we're gonna go out marketing. And I think of Squarespace as, I'm gonna put up a beautiful portfolio for my work, and then you're gonna come to me for a consultation, and I'll book you, and something else will happen, and I'll run my business out of QuickBooks, right? And then there's a part of this that you're saying, which is you show up in the office, or you show up in the restaurant, or whatever, and the point of sale is Squarespace or.

Well, that's not kind of where we are particularly right now. I think TOC is the example where we are much deeper into the operations within the walls of the actual business just due to how TOC is created. But that's sort of unique because you're booking the reservation online, you're pre-paying online. So that makes a lot of sense there. So most of our transactions and transaction volume and the way we're thinking about expanding is an online transaction first.

1 way you're definitely expanding is in domains. You just acquired Google's domains business. Walk me through that transaction. It seems like Google launches things, you get tired of it and they got to flip it and you were there to catch it. How did that come about?

First off, I mean, once in a lifetime opportunity for us, incredibly grateful that we were selected as the stewards of that business. I mean, we weren't like asking them like, hey, planning on shutting down domains or anything like, you know, it wasn't exactly outbound. I think they made the decision that it's not a business that they were going to be in. And they contacted a couple of legitimate parties who could potentially even, you know, take on a business of that size, right? Because we're, again, it's not the code or the employees are moving.

It's basically the domains themselves and the hosting services and the registrations, that sort of thing. So that really narrows it down to a number of companies that could even support that. And then the other thing that was a big factor is we've been a huge fan and big reseller of Google Workspace for nearly a decade now, which was very important to them. And we're just incredibly sophisticated in selling domains, selling Google Workspace, servicing it and managing that for millions of people. And so, we were able to find a transaction that worked for us and I think it's super exciting.

For me, it's really just the beginning. We're going to be investing a lot more in our domains product, especially the domains product for customers that might not use this as a website, right? I mean, that was kind of a theme the whole way through this conversation. Like, we want to just be the best place for you to have your domains, whether or not the website is with us or not. But yeah, it gives us the justification, the opportunity to really re-look at that product and re-look at that experience, make it world-class.

And then also just, you know, we're focused on making sure the transition period, when we start that is seamless. We're using a lot of Google's infrastructure that they're currently using in cloud DNS. So, you know, if you're just staying with the product, a lot of the backend will be the same, which is really important because, you know, moving registrars is a huge risk there.

Yeah.

And then the other thing in my mind is, and this is kind of funny, I'm a Google Domains customer. I use Google Domains. And I've had a number of domains there for over a decade. And why is that? Because Squarespace started very website first and then added domain second.

It's very valid to get multiple domains on Squarespace now, but just due to inertia and Google domains being a good product, I had left a couple of domains there. So I am extremely interested in making sure that a really good experience exists on the other side for all of our customers, myself, our employees who use this product. And, you know, we're familiar with it and I just see it as a great opportunity.

I've bought so many joke domains over the years and I'm confident that I have some Google domains. I'll let you know. Well,

you'll let me know. After me and some of the people here are getting pick us offer ourselves a getting a chance forever. But now, I mean, we have incredible resources dedicated to this. I'm confident it'll be a success. And yeah, for us, we've been on the internet for all of our lives.

You just pile up domains for some reason.

Yeah, it's just like a fun thing to buy. They're like the original NFT.

A little more utility.

Actually more utility than NFT.

More utility.

So you said you're just buying the domains. You're not buying the people. You're not buying the infrastructure. Is that, is part of it, okay, we're going to get these domains. We have the suite of services.

We can go market to those customers now too. Or is it, hey, Maybe some of them will actually move to our web solutions as well.

Look, we'd love it if they use Squarespace as a website. But again, I think that Squarespace Domain should be a completely legitimate option, whether or not you would like to use Squarespace or not. Will we try and show you things about our services? Sure. And if you unsubscribe from that, we'll leave you alone.

Again, I was a Google domains customer, so I am in that seat of understanding what that experience should be like. But we're using a lot of the same infrastructure Google is using in their cloud DNS product. And so, you know, I think it's gonna be a good outcome.

This leads into the other classic decoder question about decisions. This was a big decision to make. What is your decision-making framework? How do you go about making decisions and how do you apply it to this acquisition?

Well, this 1 was kind of complex, right? Because it's very confidential as it's going on, you know, very uncertain at various phases of it. I mean, this 1 for me, after the inbound and talking it over with some Corp Dev and engineering a little bit, This was almost purely a business decision. And it was interesting because we've been in the Domains business for almost a decade. And so it's not like this huge bill, we've resold workspaces for almost a decade.

So it's not this like huge build where it's like, oh, all these new things we're going to have to do. There are new parts of this deal that we will have to build to. And we've already got that staffed up. But I think to answer your question more broadly, depending on what the thing is, it generally starts with a much smaller group of people. And then I widen the concentric circles to either stress test the idea or get more people aligned with what we're doing.

And Google domains was no exception to this, right? I mean, had to start with a small group of people because it was so confidential. And then, yeah, we did that widening of concentric circles. I get more buy-in. I pressure test financial models with finance, with the board, try and just gain some conviction that this is something that's smart.

The other acquisitions, same way. Some of the product releases and product initiatives, same way. It's interesting because a lot of what we do actually starts from insights and feelings and an orientation we have for doing something for so long. We don't just sit there and wait for all of our customers to ask us for something to do it. So it's an interesting balance between like what we feel of the market needs just being in it for so long and, you know, external factors kind of either popping up as an opportunistic thing like Google domains or, you know, just something staring us in the face as just being a giant market that we really should have been in.

Did you send any emails that were like, we got to keep this away from GoDaddy?

We are very happy to welcome a large number of customers.

That's good. I've got a whole sequence of questions about AI and that was like a perfect AI. Go for it. Sand to the edges right off that answer. You mentioned your board.

You have a rare experience here. You're the founder, even at it for 20 years. You obviously started before you were a public company. Now you're a public company. You've been on the public markets for a little bit.

How has that changed your decision-making process?

So we've been public for just a little over 2 years now, which, you know, as I'm sure you and other, you've seen another guest would have mentioned is probably not the most fun time to be in public tech company, no matter if you're high flying or profitable or anything else. I mean, we at least have the luxury of being- we were running cash flow break even for 15 years and have been profitable for the last 5 so. You know we weren't in this like money losing phase or anything even close to that while being public which- you know help kind of. Kind of put a floor on things, if you will. How is being public changed who we are?

Aside from just the unfun nature of dealing with the volatility and dealing with all these new actors that are in the public market, I actually think that it's actually been somewhat of a, frankly, a good thing for Squarespace. You know, when you're private, your employees are waiting for tender transactions to happen. Those generally happen at a discount to your 499A, which is based on public comps. Over the past 2 years, Depending which comps you pick for us, we're trading at a premium to those public comps. So you could be unhappy with the share price, but I can almost guarantee you privately it would have been lower.

So that's been good. I think, you know, after getting into the cadence with the quarterly earnings, I think it brings a discipline to the company that I wouldn't say we didn't have before, because we certainly prepped for 2 or 3 years before going public, including having, you know, mock earnings calls and everything else. This wasn't like a giant surprise, but I actually think it's been a really good thing I mean the employees can get liquidity investors get liquidity. You have this lovely dynamic where. There's- analysts looking at square space all the time asking.

Sometimes good sometimes medium questions about. You know how the business is going but- but in a way that that's that's that's a level of transparency that. You don't have in the private market. And it really forces you to think about, you know, what are we really doing here? Well, you know, if we're here for another year, 234 years, do we have a viable growing business or do we not.

I think it puts in your face all the time luckily. Because our business is mostly. A subscription and has been. Built over the course of 20 years. A lot of our revenues very very predictable.

Because we have all these existing cohorts coming over and so. You know it really is about what can we do for growth. And so you know I think the public markets generally greatly dislike unpredictability. We're more on the predictable side. You know we're not a money losing business.

We've been operating this way for quite some time. There's a million opportunities in front of us in terms of these services for entrepreneurs the payments business the other acquisitions things like Google domains. I think it's exciting. And so you know it's just a different kind of world. I think It's maybe hard.

Look the past few years has not been fun to be any public tech company outside of maybe like 3 or something. Even there it sort of sucked. So that's just been different because I think SquareSpace you generally plays are used to up and to the right. Maybe not as fast as they might have liked but up and to the right. So it's traumatizing to see the value, you know, change like that so rapidly, but we're here to stay and just so many great opportunities coming up.

So it's exciting. I mean, and you get kind of immediate feedback on that stuff in the public market. So, you know, it's just a different equation.

How has it changed your decision-making now? It's been about 2 years. Do you, have you perceived, okay, I'm making decisions more slowly or more guarded? Has there been an effect that you can, that you can call out?

People always seem to want to get into this, like, Oh, well, they're going to do all these short-term things to meet the quarter or something like that. There aren't that many short-term things I can do to meet the quarter. We're not like a sales force. There's not many tricks, you know? And so if anything, I think it's accelerated decision-making about things that aren't working so that we're optimizing more for the long term.

I think depending on if we needed to do something like super risky that would just you know change the whole model or something I think you know maybe I'd have a different feeling but yeah a lot of what we're doing is additive. I think it's actually accelerated decision making because it's like, hey, you're going to make this decision now or this is what it's going to look like this quarter, next quarter, next quarter. Like, do it. Move forward. It gives you in a weird way, I'll say air covers the wrong word, but you can point to some numbers and say, this thing's not contributing to this in year 2 or 3.

Do you ever see it? Or hey, do you really want this expense right now? Or do you really want another point of free cash flow, another 2 points of free cash flow, I guess, working in that direction, which then just opens up even more opportunities for us, right? I mean, to be able to fund a transaction. There's only so many companies that even fund a transaction like Google Domains, either out of cash or debt.

And so, you know, that's really important to us for when these things come around. Like, you know, imagine another world where, you know, we were private, burning cash. Maybe we couldn't even finance it, you know, like. So I think it's been positive.

All right. 1 more short break. We'll be right back.

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We're back with the founder and CEO of Squarespace, Anthony Castellano. We were just talking about Squarespace's payments platform that will be released later this year.

I think

I have a sense of Squarespace. I think I have a sense of how you make decisions, I have a sense of where Squarespace's business would be and where it would go, if not for the extremely disruptive shifts happening with AI and distribution on the web. So I want to take a second out of this conversation and really poke at that stuff because I'm extremely curious about it. Let's start with AI. At Squarespace, like every other company, you've launched some AI tools.

You can use AI to auto-generate some text on your website. Write me a paragraph about pressure washing and I'll do it. Right. Great. How does that work?

Were you, okay, we gotta go find an LLM partner and pay a license fee. Is that chat GBT or are you building your own? Just that turn of it. How did you integrate that?

First off, just to frame it all for us, I'll take it from 2 angles. 1 is we're a very tech focused forward company. I mean, my background is engineering from when I was a kid. So the AI machine learning is absolutely nothing new to us. I mean, obviously the leaps that the LLMs have provided are really kind of exciting and new.

And, you know, we're all excited to either integrate them like we've already done, you know, in the product for text generation or we are integrating them on onboarding in the form of prompt engineering into an LLM, which will feed back into the visual product of Squarespace or even a little further out for us. You know, just how do we incorporate that into assistance? But, you know, we've been incorporating machine learning models and squares for a long time. We've been having we've had, you know, some form of AI powered support for 4 or 5 years now that we've been training on our own data sets and getting better with. This will be an evolution on top of that.

That's super exciting. You know, I talked about this extensively in my last earnings call because there's such a overnight interest in all of this. I'm actually not as worried about the impact of the LLMs on Squarespace's core business for, frankly, a number of reasons. 1 is, we stopped requiring people to code websites 2 decades ago. And also, a lot of what we do on Squarespace is not the coding of the website.

It's storage, it's bandwidth, it's DDoS protection, it's CDNs, it's an SSL certificate, it's domains, it's payments, it's support, it's design assistance. It's our email campaigns product. It's anti-spam. There's 20 things that are happening in your subscription for something like $20 a month that it's just there's a lot of value that we do. That's not just like code me a website.

Yeah. And Even if you wanted to code a website, I would say that while I think the AI right now can get you to a great starting point, I think that the use of a visual tool is super useful even after that starting point is output to you because you might want to just grab a thing and move it an inch to the left. And there's sometimes no better way to do that than grab the thing and move it an inch to the left. And so I'm excited about the future of the core business because, frankly, the great reception we've seen in the past couple of quarters on the core product. But then I'm excited to integrate these new technologies and augment the ones we already have.

And hopefully that I'm pretty confident it'll create a tailwind for us.

That's a pretty interesting compare and contrast. Just giving your history. Like I remember when the first WYSIWYG web design tool showed up and they basically output bad code. Like it was just bad HTML sloppy all the way around. And the old school web community was like, this is garbage.

Yeah.

But eventually the WYSIWYG editors won, right. The visual web design systems all won, Squarespace won. And yes, some people still hand code their websites and I love them, they're my people. Yeah, no,

it's great actually.

But the sort of mass market all moved on to the easy to use tools. Are you saying this is the same with AI that a bunch of people are freaking out, journalists, writers are freaking out, but at the end of the day, we're still gonna, we're gonna be in balance.

It's a funny thing to respond to because I'm gonna preface it by saying I'm blown away by the developments in AI. And I think that the LLMs and the experience of that are amazing. And I think with the prompt engineering and that on top of tools we have is ultra exciting. Do I think people have gone into this like all the jobs are gone tomorrow, next week thing like a little too fast? It sure seems like it.

And you know this is something that's going to be disruptive to many many industries and something we're incorporating. But you know I think it's this phenomenon where like you know just because everything could be eventually possible it's not all possible today and even next week or even next month. And so again a lot of those things I listed out that Square does. Nobody is sitting there going. Bandwidth will now be completely different because of the large language or at least right not right now.

You could paint yourself a way of getting there because it's going to, you know, all the coders are 10X productive and then you can get there somehow. But it doesn't currently seem like outside a number of very specific use cases, Wall Street has modeled in that all of the company's workforces are going to go down by 50 percent. And then thus all the profit margins are going up, you know, by whatever equivalent is, you know, or this business is completely gone because it's replaced by I don't know what. So, you know.

But there's 1 place.

There's those words, but a lot now, a lot of model updating for some of this.

I got you. But there's 1 specific place where I can say, hey, I is going to radically change this thing. And that is the web for 2 reasons. 1 flooding the web with text is pretty easy. If you have a Squarespace account, it's not built into the tool.

I can set up a new website and have some LLM, you still haven't told me which 1, but I can have some LLM, like fill a website with text. Sure. That has implications just for the web at whole. And then on the other side of it, there's distribution, right? Like Facebook is not sending a ton of traffic to websites.

It's all Google and Google's incentives have really shaped the web for the past decade. And now we're at a point where Google is gonna start eating some of those search results. And they're just, maybe AI is overheated in some places, but on the web, it seems like the issues are fairly clear.

Yeah, so to be clear, we currently have in production the ability for you to auto-generate text using, you know, in the background is called OpenAI, and there are LLMs, And we make that accessible to all of our customers right now. Now, if you were trying to, as you put it, flood the web with text, using Squarespace would probably be a pretty bad way of doing that. I think you'd want to script stuff and output it and, you know, all that. But but they're.

No, but I'm saying I'll give you the example, just a really dumb example. Every time I pick an example, you tell me the, the, all the details of this example, which is my favorite part of this conversation, but I'm going to pick car dealers. Yeah. Car dealer websites are full of garbage, right? They are basically SEO honeypots.

Like you search for a feature in a car that you're interested in and a car dealer has a webpage that may or may not be accurate designed to just rank and search. That's what I need. It's going to be a lot easier for that set of actors who are doing something that could be described as honest content marketing, but it is actually underlying it pretty insincere, right? They're just trying to get traffic.

So maybe we live on different webs, but like hasn't garbage and content farms on the web been there for like an extreme amount of time?

But now you're handing those people a bazooka.

Correct. But I would wonder what percentage of their articles are actually generating the majority of their revenues. And I wonder how Google is either giving them credibility or not credibility. What I think of more is how the web has been a massive input to these models. And I think a lot of disruption can happen to certain businesses where If you've ingested the entirety of a reputable set of content, right, a Wikipedia, a Stack Overflow, right, that the LLM model can sometimes do a bit better of actually giving you a response on top of that corpus of knowledge, that's really interesting.

I wonder how people are going to feel about the lack of attribution within the LLMs that Google fought with for a while. Like right now, if you type into Google various search terms, many summaries and cards appear that are not websites that are attempting to answer that question for you. Some of them have attribution some of them are just computations the Google will just do in. That's cool. The website or maybe the website is a click.

Later because the transaction is still occurring on the website. But I think it's really interesting to think about how the web and private data even will flow into these models and for which examples the LLMs will be a better alternative to search and when there'll be a worse alternative to search. Now, I mean, 1 of the examples that comes to mind for, this is hypothetical, but like a better alternative to search is, you know, I'm a coder, you know, or I used to be, now I joke that I'm a HR and comms person, but I used to be a programmer. And, you know, I honestly like looking up those coding snippets and getting started, not writing the whole program for me, but getting started with like, how do I do an X in Python if it's like this in Java? That's a magical result it's giving you.

It's really, really, really interesting. And so I think you'll see reduced traffic to certain kinds of things on the web, whereas you'll see increased traffic and usage of the LLMs.

But- Are you going to watermark Squarespace pages that are made with AI? This is like a hot topic, right? That you should be able to somehow detect what content has been made with AI or somehow mark content that's authentically made by humans. And it seems like for a provider of webpages in the most abstract sense, Squarespace could say, okay, if you use AI tools, we're gonna tell Google the content on this page is made by AI, or we're gonna tell Google actually a human made

this. Is there an effective way of telling if a content block is generated by AI? Because obviously we know if you click the button on Squarespace, but if you went to some other model and pasted it in, I don't know if you typed it into a text editor or not.

I'm wondering if you had this conversation because I talked to Microsoft or Google or whoever, and they're constantly talking about cryptographic solutions to at least imagery and video.

Oh, imagery and video would be different.

Right, and then even to some extent, they talk about text. Yeah. So you can, to some degree of confidence, detect when an AI has generated a piece of text.

I mean, not to make a joke about it, but what if the AI generated stuff is better than some of the humans

generated stuff? I'm not saying that never happens.

Caution, this one's generated by a human.

No, I ask this because this seems like where you would impose a regulation is on a vendor like Squarespace, it's making the web pages. And the reason you would want to impose something like that is like you said, right now, these LLMs are being trained on data that the majority of which is generated by human beings. Yeah. The internet up until now, basically. And we're about to hit a point where Squarespace is gonna publish a bunch of content generated by AI.

WordPress or Wix or whoever, they're all gonna do it. And then the models are going to start training on that. And then you end up with a number of bad outcomes, 1 of which is model collapse, right? Where the models start failing.

I have 2 responses to that. If you're looking to generate a large number of web pages, call it

10, 000, 100, 000,

Making 100, 000 Squarespace trials and injecting that in is probably a really bad way to go about that. So that being said, from an AI perspective though, what I've started to contemplate and it's kind of more interesting is, and for a long time the internet has had robots.txt, which tells crawlers what they're allowed to do with the content on your site. And we've also had creative commons licenses and other things you should put on your site so that humans know if this is free, if this requires attribution, all that sort of thing. So where I think is a bit of the wild west is have we equipped people or even equipped the LLM creators to understand what is allowed to be used, who is restricted, what requires attribution, right? Cause that's kind of an interesting 1.

Like, you know, if I'm asking an LLM a question, I would love to know if it could tell me sort of whereabouts some of the sentences were sourced from. Like is this 80% Wikipedia type stuff? Is this

80%

Mayo Clinic or whatever, pick your company and has a large number of URLs. So I was thinking more about it like that from a user perspective and less about it from like a, all of a sudden we're gonna be the host to a hundred thousand AI generated articles that, you know, and I'm sure somebody's already going about doing that.

No, but I don't, just to be clear, I don't think it's a single bad actor. Although if somebody tries to start 100, 000 Squarespace trials and do AI, you know, I respect the hustle. I'm saying-

It would hit a big anti-bot filter.

Yeah, I don't think that's the bad outcome. I think the bad outcome is all of your customers start using the tools. And sometime, and it doesn't seem that far out, you will be serving

100, 000

AI-generated data. I see what you mean. Basically, you're worried that there'll be no creative writer, imagery.

Yeah, because it'll be cheaper and easier to say, again, I'm a car dealer and I know I just installed a booster seat for my kid. This is why I had this example in my head.

It's power washing in cars. That's really where.

That's my whole heart.

It's a very car oriented entrepreneur conversation. Yeah,

it's always in my head, in the back of my mind. Actually, our first set of guests was all car CEOs. It was very obvious what was happening. Our kid got a little bit older. We got her out of her car seat.

We put her booster seat in the car. And I was just Googling, like, I need to be able to install this thing right, like any parent would do. And like 10 of the first results were just car dealerships, whatever. Like I, I have a neutral opinion on that. They're doing content marketing.

That's fine. Yeah.

Yeah.

There comes a point where the car dealer is going to say, look, I am tired of paying for anyone to write this copy.

Right.

Just have the intern write me 5 paragraphs about installing a booster seat and put that on the Squarespace page. And that will be easier and cheaper at scale for more businesses to do for more things. And Eventually that stuff will get indexed into Google and that will be kind of a recursive loop that leads to bad outcomes. And at some point, someone's gonna say we should stop it. Google could say, we could stop it in a pretty dramatic way, or they could come to you and say, hey, start letting us know when this is happening so we can down rank it, or the government could tell you to stop it.

But at some point, that cycle gets to a place where there's more garbage in the ecosystem than not.

So, but kind of what you were saying towards the end of that, and I'll respond to the beginning of it. Like when you say someone should flag that this is a garbage and we don't want to rank it. Google has as much authority or more as a third party observer to make that determination than we do, because then you have to trust us. And I actually don't trust, because we haven't invested billions into it, our ability to tell them, because you can just paste something in if it's completely AI generated or not. I'd say 1 other thing that as technology evolves, take Squarespace from 15 years ago.

Squarespace is replacing web developers. There will never be more jobs for web developers. Lo and behold, there are still jobs for people who help people with creativity and content on the web. There are more of them. They've just changed.

So if you are capable of coding really generic websites, yes, Squarespace totally did displace that, the need to do that a long time ago. And so when you talk about copy, or you talk about image generation, First off, there's a lot of things in that realm that are totally unique and a unique story and you need to, you know, you might start with some, you help me in the paragraph, but you need to write more. Secondarily to your car dealership example, how do you know which one's good? Well, probably you have some human filter for like, no, that's actually a picture of the real car dealership, I think they could lie completely and fool you. But at some point that will end when you show up at the car dealership.

It's not the thing it said it was right. And so I think these tools will displace a certain amount of bad writing or something like that. But I do not think right now in their current form, they're a replacement for human creativity and storytelling in its deepest forms. And I think they could be an assist on that, But maybe that's just a romantic me holding out for creativity in the world.

It's served you well for the past 20 years. Does most of the traffic to Squarespace sites come from Google?

I would imagine. I actually, I wish I had a better answer for you on that, because it would probably depend on the segment, right? For some segments, it might be Google and Google rankings, as you know, for keywords for a few sites that rank for those. Obviously, Squarespace is too great at Google. We've been around for 2 decades, we know about SEO.

But depending on the personality, a lot of your traffic might come from your Instagram page, it might come from where you have a following. So I don't think there's any 1 answer to that based on just the entirety of Squarespace.

When you say you're good at SEO, this is actually something I'm really curious about. You do a lot of design services. You have a lot of templates. Do you feel the tension between, OK, here's where we think the web should go or here are some experiences we'd like to build? And here's what Google needs in order to rank.

I don't think those 2 things are in tension the way they used to be maybe 10 years ago. I think that there's ways we can mark things up in ways, you know, Google can. Like 10 years ago, for example, a classic instance of that would be like, well, we want to push the web in this direction and we want these huge images and the pages rendered by JavaScript and Google's not interpreting the JavaScript and so it doesn't rank right. And like that stuff kind of went by the wayside a while ago. We have better ways of structuring content, delivering site maps and things that make these forward looking experiences more crawlable.

So less of a thing today, more of a thing, I think, 10 years ago, specifically related to visuals and indexing of content at Google. Look, I hope that for most people who are not programmers, Squarespace will continue to exist as a place that pushes forward what they're able to do creatively by themselves. And we'll always have a place on the web for completely custom coded one-off content that is beautiful and creative and amazing. And it may be some time before a CMS replaces those sorts of things. But look, both can coexist.

Well, I'm just curious, because you can have a website. Your website's not worth a lot without traffic. And so a lot of my silly car dealer example or whatever is they're just trying to get traffic, right? They're looking at what people are searching for and they're firing out content to just try to get 1 click onto their website in the search result. And Google is the last big funnel of traffic from what I can see.

Maybe some people have links on their Instagram page or links on their, the pressure washer guys all have links on their TikTok pages. But the last big source of traffic is Google. And it seems like the influence is getting correspondingly bigger as well. Buzzfeed, for example, was a Facebook product, right? They were not organized around SEO.

And now they're getting more organized around SEO because the Facebook traffic has fallen off. That's just a big example I can give you. Do you see that pressure inside your own business? Okay, we help people make websites. In order to market those websites or get traffic, we have to increasingly push them towards what Google wants.

I would question whether or not if you are, you know, the new power washing company, just starting out.

This episode has done more for power washing than like any other podcast. We should just do an entire episode.

Just on this. Do

you have 1?

I do not have a power.

What are you doing, man?

I don't know. I mean, I mean, I'm using it. I mean, it's messy.

It's a good time.

I mean, it's a good time to buy. And when I do buy 1, okay, so it's a great, okay, let's get the point of course, but you were talking about it was relation to Google. So why are people putting this content on Tik TOK? Why are they putting it on Instagram? Why are they putting it on Twitter?

Because to, to rank on the first page of that on Google is maybe not where you should start. Yep. Right. You should start with something that's more niche, a community around you. You know, for blogs a million years ago, you would participate in the comment section and leave your link and get authority that way.

There's different ways to get authority on Twitter, Instagram, TikTok, name your social network. But I think when people flock to those, greenfield opportunities, it is specifically because ranking on a very common term on Google is not where anyone is starting. It's impossible. That's more the result of success versus the, for a generic term of course, versus the way you become initially successful.

Have you found Squarespace's ideas about the web getting more or less influenced by Google over time?

I think less because of what we were just talking about. For instance, if your homepage and your mind is your Instagram profile.

Yeah.

How much does your actual top level URL matter as much as if you were trying to sell a product? The detailed URL that you link to from your Instagram page. That is something that has nothing to do with Google that we need to really, when we do, think about where is the traffic coming from and how are they gaining popularity and how do our URLs and whatnot present themselves in those environments. At the end of the day, most of the transactions that are occurring, maybe almost all of them, are not actually happening on the social network themselves. They're not happening on Twitter.

They're not happening actually within Instagram. There are some examples where that might be the case, but a lot of the complex things need to occur. It's still happening at a URL somewhere at some point because there's a lot of backend logistics and a lot of things need to happen, a lot of delivery needs to happen, and that has to hit an endpoint somewhere.

And that you're saying all that's better on the web, so people just, they convert over to the web and you're going to be there for them.

I'm saying it's only on the web. Unless you're in a walled garden, right? Unless you're selling through Amazon, for instance, a physical product. But, you know, as sites like the success of Shopify has showed us, there's a massive demand for people to go direct to consumer and disintermediate those experiences. Otherwise, we wouldn't even have a Shopify.

They're a great company, they do a great job. We of course have ways to sell physical products. We have many other things you're selling on Squarespace that are not a physical product, service, an appointment, et cetera.

Are you thinking about the next generation of social media services, the decentralized products like blue sky and mass on whatever Reddit clones are. Let me came in. Right. You're talking about your new homepage is going to be Instagram. We went out and bought a company and made a product to make your homepage better at Instagram.

Are you thinking, okay, We got to get ahead of it on mass don or whatever.

I'm not sure we approach those in any way that's substantially different than how we've approached them appearing in the past. Because again, there has to be, there's usually this link out somewhere. If there's not this link out somewhere, people can't really transact on the platform. And so their businesses are just gonna be so limited there. I mean, I think it's gonna be very interesting to see whether or not content moderation sits on the server or in the client and what's more appropriate for that.

And what I think is interesting about something like a mastodon from what I know about it or blues from what I know about, I could be getting this part wrong is by decentralizing the servers, You create an environment almost like old school IRC, if you remember, which is something I grew up on and programmed.

We used to run the whole verge on IRC.

That was amazing. Pre-slack, right? Yeah, it's a precursor to slacks. I learned to program and that was, from people on that, I should say, from when I was 14, 15. But remember, there were different networks and it was all the same protocol, but there were different networks.

And so if you didn't agree with 1, you could switch to the other. They could interoperate, they could merge, they could split. So that was sort of interesting. It's interesting to see a bit of a return to that. So do I think everyone's going to run their own servers?

No. Do I think in some context, something more decentralized, but sharing a protocol could work? Maybe. I mean, it used to work for email until spam would have ended that 1, right?

Yeah, for sure. And you've given me a ton of time here. I feel like I go for another hour on just what the future holds. It is refreshing to talk to someone as optimistic as you about this stuff. Even that the AI people who should be the most optimistic based on the valuations have a twinge of like, oh, so it could kill us all.

So- Well, yeah, I mean, we didn't get into all those like the criticals, but I, you know, I was mostly talking about it in the context of the business and not, you know, the context of like a dystopian five-year view.

We're all, look, the car dealers are gonna be armed with AI and they're gonna pressure wash us all the time.

They'll always be power washers though. They're not coming for that.

I'm going to send you a list of some things to check out. It's going to be great. They're mostly tech talks and power washing guys. What's next for Squarespace? What are we looking out for?

Yeah, I mean, so many exciting things. Towards the end of the year, the new product launches we've got for service-based sellers, classes and courses, all the improvements we're making around Google domains, our payments products, hopefully some new brands soon, enhancements to the existing brands, and just a really powerful portfolio of products for entrepreneurs. It remains incredibly rewarding to work on that and there's just a lot left to do.

Amazing. Well, this was so much fun. We'll have to have you back soon. Thanks for coming on Decoder.

Thank you so much for having me. I really appreciate it.

Thanks again to Anthony Castellano from Squarespace for taking the time to join Decoder today, and thank you for listening. I hope you enjoyed it. As always, I'd love to hear what you think of the show. You can email us at decoder at the verge.com. I read every email, or you can hit us up directly on Instagram threads.

I'm at reckless 1280 and on TikTok at decoder pod. The TikTok is a lot of fun. If you like Decoder, please share it with your friends, subscribe wherever you get your podcasts. If you really like the show, hit us with that five-star review. Decoder is a production of The Verge and part of the Vox Media Podcast Network.

Today's episode was produced by Raghu Manavalan and Jackie McDermott. It was edited by Callie Wright. The Decoder music is by Breakmaster Cylinder. Our editorial director is Brooke Minters, and our executive producer is Eleanor Donovan. We'll see

you