Congratulations to David, Chris, and Dan! I've always thought Weebly was one of the best startups in our batch, and the top one I would have wanted to invest in had I been in a position to do so (and I've said so a bunch of times over the years, even very early on).
This is, I think, a smart move for Square. Stripe has been moving up the stack aggressively (and much faster than Square, who were very effective in the beginning, but kinda stopped innovating), making it easier and easier for people without a dedicated software team to build out an online sales channel. Weebly has a lot of that stack already built. You can build a website and sell things in a very short time with Weebly already. I imagine Square will be making the "sell things" part of it even more core to the experience.
And, businesses do not change payment processing often. If you lock them in when they're brand new and tiny and using something like Weebly, while also providing paths for growth, you'll probably keep them basically forever. We've rebuilt our website and ecommerce basically from the ground up four times since we launched the company a dozen years ago and have only changed payment providers once (maybe twice, I can't remember if we launched with Authorize.net and moved to PayPal soon after or if we switched before launch...partly based on ease of deployment and management). That's a lot of money made on that initial customer acquisition. To get businesses earlier than that, you need to have a really clear path from "I don't have a website at all" to "I have a website and can sell things with it."
Enjoy your private islands, or the next project, or whatever y'all decide to do next.
Thing is, when you start processing normal sums of money (>$200k/month), both Square and Stripe start to bleed you in fees. If your sub-$5k a month in volume both make sense to use as a processor, but as you get up there in volume, changing to any of their (much larger) competitors can easily halve that cost and save you a few grand a month in fees.
Most businesses starting on Weebly (or similar) will never grow over $200k/month. Most small business isn't like the tech industry...it doesn't scale exponentially once market fit is found. It scales based on number of widgets and number of employees and how many physical locations or whatever the business has, most small business growth is governed by the laws of physics.
+1. I'd like to add that there's businesses that just don't want to grow after a certain size. Where I'm from there's plenty of small businesses that will make enough the family that owns it and their employees, and they're perfectly fine keeping it that way.
Not all businesses are about taking over the world.
I guess most "businesses" is just side projects, and doesn't make any money at all. But most importantly: They keep paying the monthly fees, (the same fee as those who actually make money).
Weebly is likely to be simpler or more user-friendly for people just starting out. They might not know what level they will grow to yet, hence starting out with something more basic initially.
Wow lots of bad information being said in the comments. My take as a B&M and online shop owner:
If I see a business using Square that's not a coffee shop, I will probably not go back because I expect them to not be in business too long. It's a terrible platform. Same goes for Weebly. If I see an ecommerce website ranking well and using weebly for ecommerce I will have a team member research the market and then we beat that website in ranking. That being said I've yet to run into that for weebly platform specifically. It's that BAD.
2.4 mm annually is considered a small business? On what Planet? My experience says that's a very successful SB to say the least.
200k per month and not on Amazon? And your using Stripe/Square/Weebly and not getting InterX Plus? Tell me your website again..?
Considering rates, square is usable at 5k/mnth or below, avg ticket $10 or below. Now if you were laundering money square is great since they do 0 background checks. I'm looking at pizza joints in Brooklyn... you know who you are.
TLDR Square and weebly are terrible platforms for people that dont know any better. Ditto for Wix. I LOL IRL when someone says they use either of these platforms.
It's not small for a business starting on Weebly. That was my point above. Weebly isn't where a business doing $2.4m in annual online revenue goes for a website. They have a team, or at least a person or contractor, responsible for building the website and ecommerce.
All of my comments above were about the cottage industry where Weebly shines. There's a whole bunch of people making a little bit of money online...they aren't big clients for Square, but in aggregate they add up, and some of them will grow and Square will keep them as customers as long as they provide paths for growth.
I think there's just a breakdown in what kinds of business we're talking about in this conversation. Yes, in many segments, $2.4m annual is a small business (it's well under 50 employees, probably well under 25 employees). But, as businesses with their sites on Weebly go, it's pretty big. Weebly has always been a place to go for a first website, particularly for non-technical businesses...it's just not the place you go when you're building a multimillion dollar business.
So, both things can be true: $2.4m annual revenue is a relatively small business, and most businesses on Weebly will never grow to that size.
I knew they had them, just haven't seen much enthusiasm behind them. I would think a large majority of Square's offline customers also take payments online and would imagine a small minority are using Square for online. The credit card processing APIs seem to get lost in all the rest of the POS/order mgmt APIs. And they're already on an incompatible v2 which doesn't really seem all that much better, just different.
Yeah, that's true. But, my foresight was pretty spot on about Weebly, too. I think the first time I said basically the same thing here on HN was in 2007 while we were still in YC together (and, multiple times since then). Certainly by 2008, I'd said it a few times in public places.
Yeah, but lots of people predicted facebook's success at that point in time. I think the person I responded to was very much in the minority in thinking facebook wouldn't be able to ring the cash register when the time came. I'm more pleased to have been right about Weebly.
They weren't necessarily the hottest company from our batch with investors at the time, and they weren't the odds-on favorite to be among the biggest YC exits. There have been, what, maybe a half dozen bigger exits in all of YC history, thus far, if that many? I haven't really kept up with YC companies that I don't know personally, and I'd guess that in five-to-ten years this may seem like a quaintly small exit by YC standards, but for now, that's a lot of money.
I liked them based on their execution and pragmatism, not on their credentials or merely being smart (everybody in YC was wicked smart...it's the first time I'd been in a room where I was pretty confident that most of the folks in it were smarter than me), and I think investors may have been occasionally looking first at the companies out of Stanford/MIT/CMU/etc. I doubt they had trouble raising money but I never recalled them being widespread favorites among the Valley's cognoscenti either.
I assume this was a strategic move - Square seems to be buying businesses in adjacent markets that are more profitable than credit card processing and that are complementary to their offering.
I'm guessing that small local businesses tend to use website creators, and it's mostly profit (once you have a good tool).
My brother owns a coffee roaster and cafe in suburban Chicago. Like a lot of new retail businesses, they use Square readers to take credit card payments. He's now selling beans over the Internet; the way he did that was to set up a store on Square (like most retail business owners, he has better things to do than optimize how he sells stuff online).
But Square's current online store offering _sucks_. It won't soon.
Wix is roughly a fifth the size of Square by market cap (4B vs 20B respectively). Makes this Weebly acquisition seem like a great deal for Square.
Next Square will expand Weebly into offering more tightly integrated online presence management services for small businesses. E.g. a SinglePlatform competitor for restaurants. They can then use their existing relationships with small businesses to cross-sell (which has been their modus operandi for a while now).
Also improves their offering against companies like Shopify and Salesforce. Square's never really offered an online store option beyond allowing you to link your account with companies like BigCommerce, WooCommerce, Magento, etc. putting them at a disadvantage as most brands want a strong online presence that a horizontally integrated offering won't be as good at providing.
Precisely. Square has a sticky customer relationship with SMBs, a customer segment that has been tough to sell to because of high CAC and high churn. Now that Square owns this customer relationship, it is selling adjacent services to those customers and making more money over time (increasing LTV).
Square ecosystem partners will get replaced by Square directly over time; like how Twitter ate all its ecosystem partners with its own competitive offerings.
My guess is it has something to do with Shopify. Shopify has been getting into physical retail with a PoS system and I am assuming they were doing a good job of bridging the online offline experiences. So it’s an opportunity for Square to do better in this space.
Yeah, we're using Shopify for our online store. Recently started using their PoS system because we were already set up on their platform. I suspect this is a driving force for other customers as well.
Shopify, Square and Stripe are poised to become direct competitors if you follow this inertia.
According to Crunchbase Weebly has 50 million users and I'm guessing they're mostly small businesses which would all be perfect prospects for Square. Not a bad outcome for them as they sold for roughly 10X what they've raised.
Competitors Wix and Squarespace have raised much more money and would probably have been too rich for Square to buy. Wix is now a public company too.
Ok. Assuming that number has any merit, it'd be "websites built with Weebly". If we take a page from WiX's book, divide by 10^2 to get paying customers.
My wife and I launched a small winery a couple of years ago and Weebly has been essential for our online sales. They were the only affordable e-commerce solution offering zipcode- and state-based shipping charges and sales tax. We actually tried starting out with Square's Online Store because we were already using their PoS stuff, but it was just a bit too raw to suit our needs.
Great move for Square IMO. Congrats to the Weebly team.
I'm surprised that the price isn't higher. It was my understanding that Weebly is highly profitable, which would normally give them lots of leverage in any negotiation. What am I missing? Maybe there is a ridiculous amount of Square stock for the team on top of the price paid to shareholders? Or growth is flattening dramatically and they panicked?
It does seem low. I think all the stock compensation was included in the published amount. According to reports, Weebly raised a Series C in 2014 at $455m/$490m valuation. Competitor Wix which is public is currently valued at $3.9b on I would guess about 5x the revenues.
Yes it is absolutely a fantastic outcome for the team, probably life-changing for many of them. If their situation was what you described, they played their hand very well.
This isn't my opinion, it's more like "business physics". Any company without network effects is going to have escalating acquisition costs as they have to convince more highly indifferent users/customers to come onboard.
This is why Weebly is a 360 million dollar company and Uber is a 30 billion dollar company (100x difference). Uber is building a monopoly that almost completely precludes competition. There simply isn't anything close to this in Weebly's business model.
Blue Apron is a good example of what happens when CAC gets out of line. Check it out.
> This isn't my opinion, it's more like "business physics".
Of course it's your opinion. You don't actually know their acquisition costs, or the strength of their network effects. You're out here making educated guesses, like the rest of us. Just because you're really confident about your guess doesn't make it automatically correct.
Life-changing for only a handful of people, including the founders. Weebly only had 5-6 employees before their series A fundraising. Considering how option grant size goes down from round to round, it's doubtful that anyone post series A is getting Lambo-life-changing money. Still, it will be welcome liquidity for an otherwise theoretical stock option (and probably new RSU grants for many).
I think the biggest life-changing event for most will be working at mid-Market vs their current office in Soma.
Those businesses are not very valuable. Their clientele is highly unstable (small businesses go out of business a lot), not very profitable and the space for revenue expansion is very small. On top of that there's a healthy amount of competition.
As much as I don't want it (I'm a web developer after all), I'm surprised Facebook hasn't tried to compete deeper in this space yet. They already have a firm grasp on many businesses. So many local businesses in my city only have a Facebook page and don't have a website, or if they do it's extremely outdated (hasn't been updated in years and lacks search engine ranking). Facebook is the website for many local businesses.
All Facebook needs to do is add a few more features:
- Online menus (most restaurants are just uploading a photo of their menus)
- Online reservations, and online ordering (for delivery/pick-up)
- Ecommerce store (payments, delivery, etc.) and management (inventory) for retail shops (boutiques, etc.)
A bit of a disappointing exit for what was considered an IPO candidate. I think they only knew how to make a great product and were clotheslined by Squarespace and Wix’s giant ad campaigns feeding a super optimized funnel management system.
At first I thought it was Squarespace since they are in a similar market, but it seems to be the financial company Square. I wonder what their intentions are?
Square and Stripe fit very different markets, there's some overlap in both could be used to power eCommerce sites but Square mostly targets traditional merchants selling products and services, Stripe targets developers looking to add payments to their product (SaaS, online marketplaces, etc.)
Either way, this is a perfect fit for Square - they already offer simple "one-page" web stores for merchants, tying in a full-featured website or store instead makes a lot of sense.
Square already does websites for your online store https://squareup.com/online-store easy way to get customers if you already have their website to offer a store for them as well.
I hope Square can accelerate Weebly’s growth. It’s disappointing that Wix has beaten them so badly in the starter website market because, in my experience and having used both backends, Weebly’s sites are way better for the same amount of user effort.
How come these card companies can have such huge margins !? It's effectively a 3% tax on everything going directly to a small set of private businesses. The government should issue a government sponsored payment alternative with free transactions, which would also solve the problem with micro-transactions.
It is quite insane something as foundational to a society, to an economy, the transaction of payments, isn't provided by the government - along with fraud protection.
This is nice to hear. Weebly was how I built my first website, inspiring me to learn how to code. I first used Weebly to make a website for my "lawn mowing business" almost 10 years ago. I remember trying to edit CSS rules in terrible ways and enjoying it anyway on an old Dell laptop with 512 mb of RAM.
Great exit for a team that hadn't raised much $ + great acquisition for Square given the easy upsell path to all its SMB customers.
For perspective, competitor Wix is a $4B market cap company at a ~$500M revenue run-rate. Shopify, which is quite different, has a $12B market cap at ~$1B run-rate. This is a massive market.
Great exit for the founders, horrible exit for the employees.
In 2014 Weebly was worth $455m [1]. 4 years later in 2018 it is worth $365m. Imagine how much more an employee could have made working for 4 years at a public BigCo with RSUs you can sell every year. This is just another startup lottery failure. Employees got screwed.
Saying employees got screwed without knowing deal details is a bit preposterous. Weebly pays engineers pretty well compared with bigco salary, has a cash yearly bonus, sabbatical program, etc. The only difference is stock comp.
What bigco are you going to work for in SF that gives those rsu grants? Salesforce, LinkedIn, and...? I wouldn't be willing to waste my life riding up and down the peninsula for that rsu grant.
and Dropbox, and Google (they have an SF office), and FB (opening SF office). Yes that's why you would just move to SF then. If you are in the Peninsula already then go work for FB, Google, LinkedIn, et al.*
My question was for people already living in SF who don't want to ride down the peninsula. The choices are limited for bigco rsu grants.
Google doesn't have engineers working full time in the SF office. They highly discourage it. The SF based engineers have a stigma that they're lesser than the MTV counterparts.
FB doesn't have an SF office. Dropbox wasn't liquid until this year. To say people wasted time or got screwed 4 years ago by not going to work for bigco isn't fair.
Weebly was founded in 2007. Their series A was in 2007 and their series B was in 2011. Isn't it likely the bulk of employee options were granted before 2014, before their big Series C? I wouldn't be surprised if their Series B valuation was south of $100M, maybe way south of it. Perhaps it took awhile for those options to go liquid, but I doubt those employees were banking on those options, anyway. They were such early employees that they just wanted to build a great company, and the rational ones knew the options were lottery tickets.
$365m exit = 4.5x revenue
compared to 12x for Shopify and 8x for Wix. Quite a discount.
Late stage investors from 2014 who put in money at $455m valuation just getting their cash back. 0 return for 4 years of capital being tied up (vs. 80%+ for even an SP500 Index fund)
Back in 2004 I built a similar platform for a guy that was in love with MLM stuff. Too bad he was focusing on the wrong stuff and I was completely unexperienced in regards to entrepreneurship. We could be in a much better situation today. Sigh
I wouldn’t be too hard on yourself, I think a lot of people were in this position. A GUI for creating websites was not really a groundbreaking idea; weebly hit the market with the perfect product at the perfect time, just as frontend tech became powerful enough to enable a solid GUI.
I myself had dinewebs.com with the same idea for the restaurant vertical, but as a 14 year old I couldn’t even finish the project!
I agree... that was when DHTML and VBScript were a thing. Not even JQuery was created. "AJAX" was just JS loading content in hidden frames... good times though.
Not long ago Weebly was neck and neck competing with Wix & Squarespace and had a superior product in some areas (ex. eCommerce). Unfortunately, the product became stale and lacked vision over the last 3 years. As a result deserting many of their users.
This was a "take what you can get" deal for the founders. Hope Square can recharge the product with an innovative vision.
It's really annoying when a page ignores my language settings and displays the language they want based on location. It's double annoying when there's no way to give feedback without registering.
I thought it was interesting that the article mentioned Weebly competes with Medium. Wouldn't they be competing more so with someone like Squarespace than a blogging platform? Or am I missing something?
I'm not sure if anyone uses weebly these days. Back in my college, when I was running a solo business, weebly hosted my website and I proudly printed the site url on my business card. It was the same time when Wix had flash based design. And when Flash vanished one would expect similar fate for Wix. But instead Weebly vanished which is a shame. Squarespace is something that Weebly could have built. But it's ironic now to see Weebly joining Square which is another bunch of missed opportunities. The touted Jobs 2.0 Jack Dorsey never seemed to have turned around it.
I'm not sure you're talking about the same company as everyone else. Weebly, AFAIK, always had consistent growth; there was no time in the past where you could say they were doing better than today, I don't think.
Is valuation what really matters? I mean, I understand from an investment perspective and from the perspective of people who were hired at that time that valuation matters. But, from a business health perspective, doesn't number of users and revenue matter (a lot) more? Aren't they up from 2014 on those metrics?
Likely depends on when you joined. The Series C investors had to get ~10% of the company for $35MM to get their money back so I doubt they did so well, but I bet it's a win for early investors, employees, and of course, the founders.
I mean, any exit could be spun as a 'win' for the founders. Still surprising that a company that was by all reports highly profitable decided to sell for what is basically a down round.
This is, I think, a smart move for Square. Stripe has been moving up the stack aggressively (and much faster than Square, who were very effective in the beginning, but kinda stopped innovating), making it easier and easier for people without a dedicated software team to build out an online sales channel. Weebly has a lot of that stack already built. You can build a website and sell things in a very short time with Weebly already. I imagine Square will be making the "sell things" part of it even more core to the experience.
And, businesses do not change payment processing often. If you lock them in when they're brand new and tiny and using something like Weebly, while also providing paths for growth, you'll probably keep them basically forever. We've rebuilt our website and ecommerce basically from the ground up four times since we launched the company a dozen years ago and have only changed payment providers once (maybe twice, I can't remember if we launched with Authorize.net and moved to PayPal soon after or if we switched before launch...partly based on ease of deployment and management). That's a lot of money made on that initial customer acquisition. To get businesses earlier than that, you need to have a really clear path from "I don't have a website at all" to "I have a website and can sell things with it."
Enjoy your private islands, or the next project, or whatever y'all decide to do next.