In other words, it's a great time to build the next Squarespace.
There's Wix, Webflow, and others already. Seems pretty crowded.
Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
161–170 of 414 posts
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#162I hear that PE destroys products and culture to make money at all costs, but i don’t get how that can net them back the >$6 billion they paid for a company with <$300 million yearly revenue and negative profit.
I think they just load up on debt, so they aren't really buying it with their money. But what I don't understand is how they get people to loan them money when they know that they are just going to strip mine the company for all valuable assets and leave a shell of a company for the lenders to fight over.
> how they get people to loan them money when they know that they are just going to strip mine the company
Because on average, target firms of leveraged buyouts become more productive [1]. That lets them pay back shareholders and lenders in most cases.
The reason public perception is off is the size effect and availability heuristic. The first shows that big deals do badly [2]. The second means the last widely-reported deal is likely to stand in for private equity in the public consciousness [3]. Add in inflation, which makes each sticker price seem more historic than it is, and the fact that the last deal in a cycle is doubly cursed by being financed and priced at precisely the wrong time and you have a consistent pattern of the most recently-memorable deal being a clusterfuck.
[1] https://www.jstor.org/stable/43495362
[2] https://www.sciencedirect.com/science/article/abs/pii/S03044...
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#163I don't understand how capitalism works now. So can people just forcibly buy stocks from you for $44 now?
Acquisitions work the same as they always have. Roughly, if half the voting shareholders approve of the deal it will go through. Edit: from the first result in Google: > Casalena and long-term investors General Atlantic and Accel, which make up about 90% of the Squarespace’s voting shares, have agreed to vote in favor of the transaction. So I guess the shareholders mentioned in the subheading of the linked press rele…
They must have super-voting shares...probably from being early (pre-IPO) investors.
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#164I hear that PE destroys products and culture to make money at all costs, but i don’t get how that can net them back the >$6 billion they paid for a company with <$300 million yearly revenue and negative profit.
They have 1800 employees and have been dancing around profitability each quarter. Also, yearly revenue is ~1.2B. PE is thinking with some ok management they can turn this around pretty quickly with some efficiency changes and keeping the ~18% YoY sales growth.
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#165Earlier quoted context omitted.
I'm already self hosting an e-mail server with no problems in deliverability or receiving. No limitations on aliases. No more artificial limits. Cyrus-imap + postfix. If I need to scale up, can migrate from sqlite to postgres.
I did this for about a decade (ending about a decade ago), and eventually gave up and went to gmail. I agree that it is a really easy thing to do and maintain, BUT when it did (rarely) break it was always at the worst possible time. The day a client was sending an important document. While I was on vacation. Etc. I probably only had to drop everything to fix my email server a handful of times, but that handful of tim…
I currently use google but am thinking seriously about self hosting. For those few times could the clients send it to you via WhatsApp?
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#166Earlier quoted context omitted.
Software people massively over-classify their work as "R&D" when most of it is basically the equivalent of tuning or plumbing. R&D involves at least a little bit of the "R" part, which usually means some risk that the work is worthless. If you are just doing the development part, which is what you are doing when you ask the question "how do I push this metric?", private equity is usually happy to fund that. I general…
> I also know that the IRS classifies software development as R&D, but we all know those are not the same thing in reality. I think you may have spent too much time writing software to notice how R&D it is. You can pick whatever citation you want [1] but writing software is a very risky endeavor (in terms of ROI). "Generic IT" or SRE is really not R&D. If your solution to a bug is to "reboot" the device; that's an op…
Setting up shopify integrations, building a domain name registrar, and writing new web templates is not R&D. It carries no technical risk and the product is already known to be valuable. The only chance of failure is that you build it and nobody comes to buy because there's no reason to choose you over all the other people offering the same thing.
I am sure that most software projects fail, but I am also sure that as a software developer, almost all of your work ends up in production. Sure, you will have minor technical setbacks, but not on the scale of actual R&D projects. In contrast, people doing R&D in pharma or other similar fields will spend months or years working on a single project that doesn't go anywhere because it is too hard. The same goes for civil engineers building bridges, for example: the work is highly technical, but it is not R&D.
I very much disagree with you that pushing a 10-line bugfix is anywhere near R&D. There's no uncertainty, and there is no research.
By the way, the act of thinking or problem solving does not make your work R&D. If it did, retail workers and construction workers would be doing a lot of R&D, too.
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#167Earlier quoted context omitted.
The current state of the markets and private equity is deeply troubling. Gone are the days when companies like Microsoft went public at reasonable valuations, allowing everyday investors to participate in their massive growth. Now, companies like Uber and Airbnb debut on the stock market at sky-high valuations, leaving little room for the average investor to profit. Worse still, the concentration of wealth has enable…
I would hope that this results in a reduction of companies seeking to go public in the first place. We've seen many cycles of: innovation -> growth -> IPO -> happy customers + employees -> not enough growth -> PE -> layoffs -> product/user decline. The demand for ever-increasing a growth demanded by the markets is not sustainable for a majority of businesses. IMO the employees, customers, and general public would ben…
> SquareSpace has ~44% of the self-hosted website market. Shouldn't that be enough?
They’re making hundreds of thousands of dollars of profit on hundreds of millions of dollars of gross profit [1]. Most of the cost is marketing & sales. Private equity is actually about focussing less on growth and more on sustainability; the logic of this acquisition is that 44% is enough.
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/d08174f...
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#168> Permira, the global private equity firm current Squarespace users about to get gouged
I've been procrastinating transferring my domains after Google sold them to squarespace. Now they're getting sold again... Are domains the new junk loans?
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#169I hear that PE destroys products and culture to make money at all costs, but i don’t get how that can net them back the >$6 billion they paid for a company with <$300 million yearly revenue and negative profit.
I think they just load up on debt, so they aren't really buying it with their money. But what I don't understand is how they get people to loan them money when they know that they are just going to strip mine the company for all valuable assets and leave a shell of a company for the lenders to fight over.
For a leveraged buy out, the most important thing are the cash flows. So if a business has enough $ to service the loan there should be no problem.
Also good to remember that the business model of PE firms is to buy a leveraged asset, hold for 5 ish years, resale asset at a higher price than it was bought from. Ofc easier said than done, but these investors don’t get involved to lose money purpose
Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira
#170Has the trend of PE owning things increased in the last decade? Has PE gotten more money in the past years so that they can hoover up companies?
For a more long-form answer to your question, I recommend checking out "Plunder - Private Equity's Plan to Pillage America" by Brendan Ballou [0]. He gives some insights into the tactics used by private equity firms to acquire, gut, and destroy existing companies and profit by doing so. Refs: 0: https://www.plunderthebook.com/
What solutions does he propose?