The gold rush is over - private equity is going to squeeze every little drop from the companies that have been built and we will move on to Web 3.0 - which will be just like web 1.0 - self-hosting, link directories, newsletters, and guestbooks.
It is interesting how most M&A transactions trend to have a 30% premium above the trading price. I have tried to investigate why but could not find a good explanation to why this number is so prevalent.
You have to pay enough to convince everyone to sell. The trading price is the marginal price of buying one more unit of stock, not a representation of the stock price at which every owner will sell.
That explains why there's a premium but not why the premium is ~30%.
it has to be high enough to give the board enough cover that they're doing their fiduciary duty to existing shareholders
Maybe I'm missing something basic but that still doesn't explain why it's 30% and not 50%.
I don't think purely qualitative arguments work here.
Maybe I'm missing something basic but that still doesn't explain why it's 30% and not 50%.
It's like tipping. There's no ideal value that can be picked; just agreed normal values. If 30% appears to work most of the time then that's probably why it's used.
It comes from the Doft (2004) ruling in Delaware courts that attaches a 30% control premium
At 50% it might be easier to just buy up shares on the market til they have a controlling share. The number to do that sets a cap on what the buyer will pay. I don’t have numbers on-hand, but trying to move a majority of a company’s stock (buy or sell) can cause crazy swings. When I worked in hedge funds, it was a thing we worked around. Our larger trades would execute over the course of a day or several days to minimize our impact on pricing.
At 10%, many shareholders will feel that their risk-adjusted returns on the stock would do better than the buyout.
30% is likely below the costs to acquire a controlling share on the market, and above any reasonable belief in risk-adjusted returns for shareholders (barring exceptional companies).
A lot of it is wishy washy because it’s based on math, but math with presumptions baked in. How much do shareholders think their stocks are worth? How much would it cost to buy them on the open market? How much does the buyer think the stocks are worth? There are approximate answers to all of these, from which an even more approximate price needs to be determined.
Is there a way to search for lawsuits from shareholders when the price per share of going private was less than 30%? There's probably no mathematical model here but more a way for the sale to insulate itself from getting dragged into litigation.
If you go much lower, shareholders become reluctant wondering if it's really worth it, or if the board are negotiating hard enough.
If you go much higher, shareholders start to wonder why someone is willing to pay so much for a stock. People start to get cagey and wonder what's going on. The sellers interest is to keep it lower as well.
It's just the region things have settled over time. It's generally enough that the board feel they're doing the right thing, it doesn't spook anyone, and it's what the buyer is expecting.
I don't think there's any more magic behind it, it's just what has become the norm over the years.
If the last transaction was 30% the board as to explain why this one isn't 30% (either to the buyer if they are paying more; or to the shareholders if they are paying less).
If I had to guess based on how small the big players in M&A are (as far as I know), it's probably a handshake rule.
Well, you have to pay enough to convince the board to force everyone to sell and not risk being sued for not doing their fiduciary duty. But yeah, that’s the gist of it. if you were to attempt to simply buy up all of the shares on the open market, it would cost more than whatever it closed at the day before you did that, all else being equal
It’s probably just a good rule of thumb.
10%? Go away.
20%? You can certainly negotiate it up to 30%.
30%? There’s considerable value here, and threats to walk away will be felt.
40%? Why, when you can get it to 30%?
Why is that a better rule of thumb than, e.g. 5%/10%/15%/20%?
Becuase it is the one that the system has evolved to consider the rule of thumb. The equilibrium appears to be 30% above asking and, and least local to our time period, appears to be stable.
I... what?
Great-Grandparent> most M&A transactions trend to have a 30% premium above the trading price. I [...] could not find a good explanation to why
You> It’s probably just a good rule of thumb.
Me> But why is 30% better than 15%?
You> The equilibrium appears to be 30% above asking
I still don't understand how that's supposed to explain why 30% is the stable value, instead of another, as the GGP was asking. How does what you are saying add anything more than "It is what it is" to the discussion?
The point poorly expressed is that public markets transactions are highly scrutinised, and it is easy for shareholders to be highly litigious toward the directors.
The directors therefore have a strong incentive to only accept offers at a normal premium to current price, which seems to be about 30% by back of the cigarette packet maths.
Bidders therefore have an incentive to bid around 30% so their bids are more likely to be accepted.
The key thing is an incentive to avoid liability and get deals done. If the equilibrium was 80% then bids would be all at 80% and there would be less of them.
unrelated, i'm trying to figure out where the phrase "back of the cigarette packet math" is more common than saying "back of the napkin math".
Sometimes complicated dynamical systems have equilibria that just are without a known reason. I can see that once 30% gained a bit of traction is just coalesced into an equilibrium. The common decision making analysis of just looking at what others have done and basing your decisions on that mean that things evolve to wherever “monkey see, monkey do” gains traction.
Not every number has to be derivable through some kind of formula. Realtors tend to take 6% as their commission. Why not 6.5%? or 5%? The answer is that sometimes they do, but it's just traditionally by default 6% unless one or more parties chooses to negotiate it. There's no math.
Remember that shareholders are in the stock because they expect some type of risk adjusted return. 5% is out because that's the risk free return. 7-10% can be gotten with lower risk by index investing. 15-20-30 we're starting to get into a range where the investor is willing to part with their stock given the risk they took on. 30% tends to be enough to get everyone to sell. If it was a hot, fast growing company, it would be higher - if it was possible to get everyone to sell at all.
why this number is so prevalent
It comes from a 2004 Delaware court case, which found “recent appraisal cases that correct the valuation for a minority discount by adding back a premium ‘that spreads the value of control over all shares equally’ consistently use a 30% adjustment” for the control premium [1]. (Under Delaware law, shareholders are entitled to the pro rata share of a company’s fair value. The courts can and do revise merger prices to reflect this.)
Also, this one is a 15% premium [2].
[1] https://casetext.com/case/doft-co-v-travelocitycom-inc-2
[2] https://www.prnewswire.com/news-releases/squarespace-to-go-p...
Can you ELI5 this?
Can you ELI5 this?
Companies have big shareholders and small. Absent controls, the big shareholders (and management) have an incentive to negotiate deals that are better for them than for the small shareholders. Delaware is good at designing these controls, which is why savvy investors like companies to be based there.
One of these controls allows shareholders to sue if they think the company they own stock in was sold too cheaply. In those cases, the court will step in to check the math. That happened in Doft.
Most of the case revolved around comparing Travelocity’s value to Expedia’s. But buying a share in Expedia is different from buying all of Travelocity, because the latter lets you e.g. pay yourself—the owner—all the money in the bank account as compensation or unilaterally sack management. The value of this privilege is called the control premium. After the court valued Travelocity conventionally, it added a control premium of 30% to come up with the final enterprise value.
Why 30%? Because that’s what most valuation consultants did. What Doft changed was now that convention was cited in case law. So a shareholder who is upset about their shares being sold at a 15% premium can credibly threaten to sue and win, which companies want to avoid, and so we get this circular convention of a 30% control premium (loosely defined) being the norm for converting companies from widely-held (usually public) to narrowly-held (usually private).
Perfect explaination, thank you.
Also, this one is a 15% premium [2]
Really? The sub-headline near the top of your link says 29%, so basically 30%.
It’s “a premium of 15% over Squarespace's closing share price of $38.19 on the NYSE on May 10, 2024,” the last business day before the buyout was announced.
That said, you see the bankers bending over backwards to find a metric that satisfies Doft.
Ah, good catch, yes.
The other replies explain the 30% with circular reasoning and I don’t find them convincing, so here’s a more absolute and testable hypothesis: at the average rate of S&P500 return adjusted for inflation, 30% is about 3-5 years of investment. What if that’s the average period of investment (i.e. time between buy and sell) for a typical retail investor for any given stock?
If that’s the case, 30% is the minimum premium at which not only are you speedrunning returns for existing investors, you’re also doing it for the average person who was going to invest in Squarespace today.
I thought about that too, but realized that it is double counting the returns. If you look at the Discounted Cash Flow (DCF) method for valuing the company, the current value of the company is already the sum of the discounted cash flows from the future. i.e. the next 3-5 year returns are already priced into the pre 30% hike value.
DCF and other tools to value companies make sense when the valuation is somewhat stable, but the real world often isn't. MSFT was worth $1T a few years ago because the world presumably expected $1T in profits over the lifetime of the company. But OpenAI came around and suddenly they're worth $2T. It wasn't because their lifetime doubled, it was because most people perceive AI as a major advancement. I believe this is the primary thrust behind the S&P500's 7-10% annualised returns in the last 20 years because most of the gains have come from the top.
Good effort to think outside the box but this is just an “acquisition premium”. Nothing to do with the public markets. It is a very well know concept in the M&A world
There is a baseline trading volume that still expects to have access to the stock. As you buy more stock, less stock is available to buy, driving up the price.
This is not the case because these deals are done privately to the board. Once an investor cross the 5% mark they have to file and companies may adopt a poison bill without the boards blessing.
Imagine ranking all the shareholders of the company. For each, you've asked them how much you'd have to give them to convince them to sell.
At the top of the list would be the one who is the most interested in selling, and thus is willing to take the lowest price. At the bottom of the list would be the person who is the least interested in selling, and is demanding the highest price.
In order to buy one share you ask the guy at the top of the list. But to get the whole company you need the guy at the bottom of the list to agree too.
That's definitely not a perfect analogy at all, there's more subtlety than that. But it accurately describes the underlying dynamic.
For the stock market quote, you're always talking about the guy at the top of the list.
Or at least, the 51st percentile…
But I think you’re spot-on. If someone owns the stock, usually it’s because they think the company is worth more in the future than it is currently.
And you need to convince the majority of the shareholders to sell it to you now.
So you need to take into account their expected future value on holding, and give them a reasonable risk-adjusted premium for that expected future value of their shares.
just works out to be a socially accepted level where the board has no choice but to accept the tender offer i guess. but nothing stopping it being 40% or 10%.
I have seen the same. There's likely a sort of "market price" effect here. If everyone is doing it, you should do it too. Some premium over the stock market price is expected - you are buying out all shareholders, not just the ones who want to sell at the current stock market price - but you would not expect "flat 30-40%" to be the premium.
It’s a “control premium”. The way the theory explains it is that you are making an offer to acquire control of the company, so you pay a control premium above what others are willing to pay on normal transactions in the market. In practice, how big of premium the acquirer pays is influenced by considerations specific to the history of the company, the shareholder base, its share price history, etc. …but theory and practice do link together, and you can trace the historical trend of control premia paid have changed over time, or even how they change from country to country.
It could be that is the number we always used, and deals seem to get approved with that number. Anything less might be questioned as not enough premium since there is precedent for a 30% premium during a buyout.
Wall St has rules of thumb like any field. 7% commission, 30% premium, 10% layoff, etc.
High enough to clear the fiduciary duty bar of acceptance, but not so high that the acquirer feels like they're over paying.
If everyone does 30% it quickly becomes what "you should do" and anything lower is looked at with suspicion, and anything higher is suspect from the other side or a "what do they know we don't" viewpoint.
In many transactions, being like all the other ones is the way to go.
buyers and sellers have a range of values where they are OK transacting, and historically those ranges has tended to overlap at the 30% point more than at, say, the 15% point
because of those precedents, taking anything below a "standard" premium opens the door for shareholders suing the board for a breach of their fiduciary duty, arguing they should have waited for a better offer. it's a bit of a self fulfilling prophecy. pay more than 30% and the buyers' shareholders will argue the same
which is not to say there aren't 10% or 80% premium transactions, but there's a higher bar to be met before everyone is willing to go outside of the 25-40% premium range (my own numbers)
It must be nice for the founder to pocket $2 billion in cash from selling his company.
For users, on the other hand, I'll hardly trust a PE firm with a SaaS product. There's just too much incentive to jack up prices to service the debt taken to acquire Squarespace, and cut costs on customer support and building new features.
Going from their financials, Squarespace makes no money: Revenues of $281.1 million for Q1 with Net Income of $0.1 million so it can be rounded to $0. They have debt of $556.9 million so yes, for the founder being able to pass on this pig with lipstick is great.
Permira is well known for what was their management approach with AA in the UK, so for the employees this will probably mean massive layoffs soon.
https://www.theguardian.com/business/2007/feb/23/privateequi...
"MPs accuse owners of asset stripping AA motoring group" - https://www.independent.co.uk/news/business/news/mps-accuse-...
Something is really wrong in this market when even a "successful" company like Squarespace deson't manage to be a profitable business.
If you look at the past 10 years (or more) this has been the case with nearly every single poster child of successful US tech company.
Look at YCombinator's top/most darling startups. Hardly any of them are profitable or sustainably profitable
My old fashioned view is, and notwithstanding periods of debt for grow investment, if you don't make a profit, you don't have a business.
If you have enough money, you can kill a lot of viable businesses though.
Seems like the model has been to sell it to the next sucker all along: an acquisition by a bigger company, the stock market, or just another PE company.
Never to actually create a proper business...
If growth is the goal, you sacrifice margin for revenue
And sometimes you sacrifice solvency as well?
Gambling on exponential growth and then having the growth fall short (say, because people moved their personal web sites to facebook instead of squarespace) is a risk in any time you go big or go home. Sometimes (often!) you ... go home.
I would say most of the time you sacrifice solvency
It sounds like investors invested billions of dollars making a product that makes million dollars per quarter?
So from that perspective, was this ever a successful company or just a grand party thrown by the investors? Isn't this just "how it works" ?
The vast majority of investors in the railroads lost their money; lots of people lost money running fiber around the world, iridium went bankrupt and lots of people use those phones, etc.
Not all investors are looking for the business to be profitable. NVidia investing in AI companies drives up demand for AI chips. NVidia is simply seeking to create a prisoner's dilemma around AI compute spending. If Nvidia is successful, then most of the money they invest will flow back into their coffers as margin + the forced spending by other parties to keep up.
Headcount and marketing spend required to be perceived as "successful" in the industry is commensurately high.
Because companies chose to not be profitable and invest all their money into growth.
Are they actually successful or just succeeded in marketing their brand recognition. Probably with absolutely massive spend... Just how many people are in their market with whatever monthly spend they have.
Those numbers don't tell you that Squarespace is a pig with lipstick. It might be one! But, SAAS economics treat the ability to hit near-zero profitability as a feature of the business model, not a problem.
Here's why -- income is taxed, and growth is rewarded, heavily, in the valuation of the company. If every dollar of business you make is worth $6 (Roughly $1.2bn in revenues = $7bn buyout), and every $1 of new business you earn costs $1, then by spending all your cash, you make 5x on it. In the alternative, you can keep $0.78 / dollar, so the net gain versus keeping earnings is $4.22. I like that trade, and I'd make it as the CEO of Squarespace.
What's unusual about SAAS companies is how easy it is to manage this part of the business economics as compared to, say a bean factory. Much of the spend is digital marketing, and sales teams are much easier to scale up and down than say factories.
Sales growth for 2023: 17%
So, we've achieved growth-valuation stasis: $1 in growth = $1 in valuation, give or take, Time to sell the company, or re-trench it for margin. Or both, in this case.
The people that don’t get this are the people that want their startup to turn a profit by next Tuesday.
You mean to tell me the best thing you can do with that revenue is put it in your pocket? There’s no way to spend it on your business to make more money? Sounds like you don’t have much of a startup then.
This is insane. I can't imagine (and be bothered to look if it's available) how much percentage of this is dedicated to marketing, but it must be a massive part.
There's just too much incentive to jack up prices to service the debt taken to acquire Squarespace, and cut costs on customer support and building new features.
So what's the best ownership structure? Public companies have their issues (short-term thinking), acquisitions have their issues (getting closed down)...
I mean, cutting costs and upping prices isn't awesome for the customer, but do you have more faith in a company that's scraping by versus working to be profitable?
What evidence do you have that the new owners are interested in making Squarespace profitable or sustainable? PE firms are the "selling the car for scrap" of business acquisitions.
But can they "sell it for scrap" for more than they bought it in the first place?
Presumably, or else they wouldn't have bought it. Plenty of ways to make a profit while hollowing out a company: fire as many employees as possible, steal as much as possible from their employees and vendors, raise prices on customers, make closing customer accounts as difficult as possible, do some silly accounting tricks to make someone else hold the bag, try to find someone to fob off the brand name to for a few bucks once there's nothing left to extract. The usual stuff, they know the routine.
They're trying to buy it and probably do some rationalizing to increase profitability. Classic PE play.
do you have more faith in a company that's scraping by versus working to be profitable
Working to be profitable is not correlated with well-functioning. Its usually correlated with enshittification (https://en.wikipedia.org/wiki/Enshittification), and poor functioning.
The most profitable (at least in the short term) is to provide a costly product that you took no time to produce, with zero support.
When I read the comment you are responding to, I just chuckled and thought of Amazon, which famously did not turn a profit for decades and nevertheless, proved to be one of the best run companies during that period (for investors - obviously their treatment of employees is miserable).
Soon, most of the engineering and support will be over in India. I'd make a joke about innovation, but not sure how innovative Square has been the last five years.
I'd make a joke about innovation, but not sure how innovative Square has been the last five years.
Honestly, isn't that a great match for PE?
Once a company has run its innovation sprint, convert it to keep-the-lights-on and cut costs.
In return, PE gets to buy a revenue stream.
The unsaid thing is that the customer signed up to squarespace is going to get less value for their dollars. Profit has to come from somewhere, and it aint innovation as you said.
Flip side is that PE-owned companies probably run leaner than public, as they don't have to show growth.
We're all familiar with the gut-and-life-support PE examples.
But there are a lot of trim-the-fat PE examples too.
Squarespace.
Different company than Square.
Squarespace, very different company, though they do compete to an extent.
I’ve seen a lot of changes from Square, though half of them were bad.
What is the source for the $2B figure?
The most recent SEC filing shows the founder owns 2.8M class A shares, and there are 88M shares of class A shares outstanding and 48M shares of class B shares outstanding.
I do not see why they would pocket 28% of the sale price.
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/5ba2ffc...
https://investors.squarespace.com/news-events-financials/inv...
As of December 31, 2021, the Reporting Person’s beneficial ownership consists of: (i) 387,500 shares of Class A Common Stock and 2,050,838 shares of Class B common stock, $0.0001 par value per share (“Class B Common Stock”) held directly by the Anthony Casalena 2019 Family Trust, for which the Reporting Person is the trustee, and
(ii) 4,930,175 shares of Class A Common Stock and 40,835,572 shares of Class B Common Stock held directly by the Anthony Casalena Revocable Trust, for which the Reporting Person is the trustee. Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A Common Stock.
The Reporting Person may be deemed to have voting power and dispositive power over the securities held by the Anthony Casalena 2019 Family Trust and the Anthony Casalena Revocable Trust.
https://www.sec.gov/Archives/edgar/data/1496963/000110465922...
He'll convert his 40 million+ Class B shares into Class A and sell them to Permira. His Class A and Class B shares total 47 million+.
At $44 per share, that sums up to slightly over $2 billion in cash.
Thanks, I assumed all holdings would have been reported on Form 3 and 4 under the beneficially owned section.
Yeah, SEC filings are complicated. It's taken me years of experience to understand them.
It's true that PE firms cannot be trusted with a SaaS product. It is also true that most SaaS companies are not profitable for the service they provide at the revenue they derive. This reset, which we will see a lot of since the entire SaaS category has to be re-priced, is the scalable way to clean up companies (why are SaaS employees paid so much?, why are customers paying so little etc..) and put them on a sustainable path. This trend will continue to grow.
If there is $300M revenue and no profit, lay off the half of the staff and you get $150M profit in a SaaS company. The Musk recipe.
How is untrustworthy companies implementing asset stripping and debt loading a scalable way to put already unprofitable and questionably sustainable companies on a sustainable path? That doesn't square.
Taking a company private CAN indeed counter short term profiteering if done by a group that actually cares about the company but I have yet to see a PE firm provide that.
Yeah. Sounds like the beginning of the end for Squarespace. Grats to the owners for cashing out, though, hope they enjoy their yachts.
They were already public, they could have cashed out already at a good sized chunk of this. The yachts were already within reach.
Also the model of squarspace is that they have your site and you can’t port it to another provider. So usually a customers options are “pay the new price or rebuild your site.”
And there’s lots of small businesses who could probably afford to pay $2k/year instead of $100.
I expect that prices will really go up. I always avoided squarespace because I didn’t like the idea of paying a monthly fee “just” to host content. I mean, Wordpress has flaws but at least you design once and then host on one of the billion Wordpress servers. And if one gets uppity or sells to PE, you can just switch.
In other words, it's a great time to build the next Squarespace.
There's Wix, Webflow, and others already. Seems pretty crowded.
Most young folks don't understand URLs anymore? "Find us on App Store" or "Find us on Social Media" is the new internet. QR codes that takes you directly into a walled garden is the new web.
I see people using "linktree" to crosslink all their different social media accounts together and it really bums me out in a way I can't describe.
Linktree became the go to because social media networks only give you a single link to display on your bio.
And they also don't like it when that single link points to onlyfans.
Who'd guess why, Onlyfans (and related) spammers are the scourge of the Internet these days.
Google is the scourge.
I don't see OF spammers blasting Google with spam, but I see tons of OF (and other porn) spam on Twitter and Reddit.
Sure, but depending on another single point of failure - as opposed to linking to a url you actually own - is what distresses me
Seeing the proliferation of Linktree makes me feel bad for the folks like about.me who had this idea years and years ago and never caught fire.
Linktree seems like the natural evolution of About.me.
Id argue that QR codes are doing pretty well at keeping bespoke URLs alive (although it pains me to see people use qrco.de or other qr code generators that automatically shorten the URL and thus could, at any point, maliciously redirect people to ads or malware instead. I don't see bitly doing this but it's unnecessary risk).
I agree, it's sad to see the QR URL redirects which may go offline and are presumably tracking when a pure option is built into the OS: https://education.apple.com/resource/250011714
Rember AOL keywords?
Most people never understood URLs.
Which is a pretty good sign the market is viable.
You only need to "be better".
And here "better", means eveything on can think of, including NOT spending money.
I'm curious, have MBAs made anything better for the masses, ever?
Couldn't you ask the same of most programmers? One way or another, everybody is pushing paper or pixels. Is the adtech developer at Google, FB, Amazon somehow morally superior to a finance bro that takes a job at Carlyle Group?
Depends on how you interpret what a programer's role and skin in the game is. by the Google/FB/Amazon level, the programmer is just another cog in the machine being told what to make by a director, who reports to/with some MBAs.
For smaller companies, I'd say programmers have done their share of good and evil. the AI sector is in real time gray area with some very malicious actions not too long ago to try and be first to market.
That means the TAM is fully owned and you have to work that much harder to grab a slice.
"Competition is for losers."
I suppose if you're really passionate about the space, go ahead, but it's incredibly crowded with dozens of players. Some are even owned by the fintech giants.
There's a whole ecosystem of adjacent services-for-SMBs providers in hosting, domains, online advertising etc. and all the companies are running the "commoditize their products complements" playbook. Anyone trying to enter the market is competing against prices that don't even make sense in isolation.
Sadly that often amounts to being more heavily marketed
That has been the game, money was "free" and VCs wanted that unicorn status. But that is also a huge liability.
When the asteroid came, only the small mammals survived.
Of course I'm talking about one way that could possibly lead to a sucessful business. There are many ways, nothing is garanteed but that also applies to failure.
Better here usually means finding a path to lower cost of acquiring customers.
Of course retention helps too but my gut is that Squarespace had reasonably low churn but increasingly elevated customer acquisition costs along with no real enterprise traction.
There's always a crowd of incumbents. They always think they have their little piece locked down. That's what makes it a good time to move.
Would it have gone private if it was such a great business at this moment ?
Squarespece looked like a fairly competent company, even as they were perhaps overspending on advertisement. Their competitors don't seem to be doing that much better except for Automattic perhaps.
Yes. Private equity likes cash making business machines.
Like Sears and Hertz?
There are different strategies. You can buy up dying companies and try to turn them around with management changes (and debt), you can sell off companies for scrap, you can buy up money printing machines and run them hotter.
Just to show that these bets are not without risk, the Sears bet failed bigtime. Lampert lost a ton of money.
It's still possible to make money in this situation. Buy a company, then have it buy itself back using debt. The PE firm gets most of its initial capital investment back then secures a revenue stream in the form of management fees. The company can still go bankrupt, but as long as it sticks around long enough to pay back enough to the parent company that it turned a profit, things worked out. The bond holders can fight over the scraps post-bankruptcy.
Ah, but stock market investors also like cash making business machines.
If private equity is able to outbid the stock market, they must have spotted a way they can extract more value. Sometimes that's by raiding the pension fund and cranking up prices. Other times it's a distressed business and better management can turn it around.
Neither is exactly good news for customers.
The market care more about growth
The bet is they make money now, but could be trimmed and squeezed to make even more.
When PE steps in, it usually means the growth is gone. They are often operators with teams who know how to run a lean business. If Squarespace had some huge growth estimates, PE would not have been able to afford to take them public.
So there may be an opportunity, but finding customers and funding will be hard.
I'm on it.
I 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...
Here's the PDF so you can read more than just the abstract [1].
It's always hard to analyze anything this big, especially with something as vague as "more productive":
First, employment shrinks more rapidly, on average, at target establishments than at controls after private equity buyouts. The average cumulative difference in favor of controls is about 3 percent of initial employment over two years and 6 percent over five years. Second, the larger post-buyout employment losses at target establishments entirely reflect higher rates of job destruction at shrinking and exiting establishments. In fact, targets exhibit greater post-buyout creation of new jobs at expanding establishments. Adding controls for pre-buyout growth history shrinks the estimated employment responses to private equity buyouts but does not change the overall pattern. Third, earnings per worker at continuing target establishments fall by an average of 2.4 percent relative to controls over two years post buyout
So if I'm reading this right, huge layoffs followed by lots of churn with an overall decrease in salaries. But I must be missing something because the framing & wording seems to suggest that this is a positive thing. That paper also only looks at 2 years of data following acquisition. But the criticism for leveraged PE takeovers like this is that the PE firm is starting a 5-10 year project to strip mine the company for all it's worth and leaving a husk of a company that's loaded with the debt that was used to acquire it and no real assets. I'm not sure how looking at the first 2 years tells you anything.
The PE firm's switch to cheaper labor and suppliers is also reflected typically in a significant decrease in product quality which isn't analyzed here.
The main argument for leverage PE buyouts are they are performing a valuable service as they're doing a more graceful shutdown of a company vs letting the company fail on the public markets. But that's a harder argument when squarespace doesn't seem to be particularly struggling - they just IPOed during the pandemic bubble when internet stocks were crazy overvalued but they've been working their way back up.
So if I'm reading this right, huge layoffs followed by lots of churn with an overall decrease in salaries. But I must be missing something because the framing & wording seems to suggest that this is a positive thing.
You read it right. Private Equity firms come in, and then lay off everyone they can and replace them with the cheapest folks possible, to churn down salaries and get rid of long-time staff with higher benefits costs. It's the classic playbook, and it's written here positively because if you're a soulless MBA beancounter, this is a positive thing. If you're a 50 year old engineer who is 12 years from retirement and just got a cancer diagnosis 6 months prior, it's not a good thing though.
the PE firm is starting a 5-10 year project to strip mine the company for all it's worth and leaving a husk of a company that's loaded with the debt that was used to acquire it and no real assets
Long-term default rates for private-equity targets are low across markets [1]. Banks and leveraged-loan lenders tend to get paid back.
Also, most targets that later go public have low enough leverage to be able to immediately pay dividends [2]. You just don’t tend to hear about the specialty farm equipment maker IPO in most circles.
that's a harder argument when squarespace doesn't seem to be particularly struggling
They’re turning hundreds of millions of dollars of revenue into hundreds of thousands of profits by spending hundreds of millions on sales and marketing.
[1] https://core.ac.uk/download/pdf/154670852.pdf
[2] https://www.darden.virginia.edu/sites/default/files/inline-f...
Public perception is negative because profitability is usually reached by cutting unnecessary jobs and projects in the poorly run firm. People don’t like their jobs being cut
Public perception is negative because profitability is usually reached by cutting unnecessary jobs and projects in the poorly run firm
I think private equity-induced lay-offs seem to create more negative PR than corporate ones, but I have no hard numbers.
(Private equity in healthcare has also been an unmitigated disaster, which obviously doesn't help its image.)
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
in tech, the LBO model is about selling at a higher revenue multiple than you bought it for, cashflows be damned.
traditional LBOs are not done on revenue multiples
ALL LBO models are about selling the asset for a higher multiple than it was bought for. Not just tech.
Also, CFs are the most important thing for an LBO. The point of this investment model is for an asset to pay for itself, so if it has no cash flows how can it possibly do that. Also cash flows =/= profit here. You can be cash flow positive and not be profitable.
And you are right about LBOs not being done on rev multiples
because frankly that is not what PE usually does, despite the extremely negative outlook in society and on HN
They gonna increase prices
not just increase prices but likely saddle the company with mountains of debt (which happens to be owned directly or indirectly by the PE firm).
red lobster acquired by Golden Gate PE in cash deal in 2020 [1]
red lobster subsequently squeezed for any value at all costs (cuts in labor, switching suppliers) [2]
[1] https://www.restaurantbusinessonline.com/financing/asian-inv...
[2] https://www.cnn.com/2024/05/03/food/red-lobster-seafood-rest...
Yes, that is the core PE playbook.
1. Acquire loan to buy company
2. Take money that was being spent on growth and use it to make the payments on the debt
3. Try to decrease operating costs while maintaining revenue or increase revenue while maintaining operating costs (or some combination)
4. Sell the company for more than you paid based on the improved profit margins
The key is finding a company who's still spending on growth but isn't really growing. If the company is actually still growing then you're going to have trouble making your money back if you cut growth activities (because your initial price would be higher due to implied growth in the future).
The challenge is in step three. Can you increase revenue or decrease operating costs without sacrificing too much goodwill? If you do too much to scare away suppliers or customers then step 4 is hard and the whole thing blows up.
..and fire people
...and have more site downtime
...likely while worsening the customer experience (less hands-on support, less engineering, less reliability).
For a company like SquareSpace unless they're massively overspending and they are rife with inefficiencies I don't see how this works out for the PE firm.
Squarespace spent 40% of revenue and nearly 60% of gross profit on marketing and sales last quarter [1]. You could literally generate over $200mm in free cash flow by cutting marketing in half. This is a forced pivot from growth to sustaining a good business.
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/d08174f...
It would be interesting to get better SaaS metrics, specifically on customer churn. I can't find that in the linked document. They are growing, but how much of that marketing spend is needed for growth vs just maintaining the customer base?
I don't know what the customer makeup of Squarespace is. It could be that by volume their typical customers are business that fail a lot, or have a high amount of churn (think sole proprietorships, businesses with 1 - 10 employees without in house tech experience, or part-time/side businesses like Etsy or Instagram stores). Depending on the makeup, a significant amount of this marketing could be required just to maintain a constant customer base.
could be that by volume their typical customers are business that fail a lot, or have a high amount of churn...significant amount of this marketing could be required just to maintain a constant customer base
If this is the case, Permira and its lenders are bailing the public out of a shit business on their own dime.
this is an interesting set of numbers from Jason Lemkin
https://cloud.substack.com/p/5-interesting-learnings-from-sq...
I was in the same program as the SquareSpace founder (we went to the same college but about a decade or so apart) and that program's professor talked to the founder quite a bit about their strategy for marketing, and he was lamenting that they spent so much money on Super Bowl ads, lol.
Probably not a good time to be a podcaster.
PE destroys products and culture to make money at all costs
Not always true. Certainly your impression is based on something real, i.e. people like Carl Icahn and other 1980's corporate raiders. But the fundamental way in which PE can add value is by forcing leadership change and removing the pressure (from public markets) to deliver better numbers every quarter, to instead make deep cultural change and deep investments in the business that will take years to pay off. One of the better examples from recent years was Dell: https://www.crn.com/news/data-center/dell-s-public-journey-f... .
Dell is an outlier because it it was reacquired in part by its founder Michael Dell, who was presumably motivated by pride to not destroy his namesake brand.
I'm interested in hearing other PE success stories where the product isn't ruined as a result.
Blackstone's acquisition of Hilton Hotels is another well-known success story, all the more inspiring because the LBO debt was issued in 2007, right before the 2008 recession: https://thestrategystory.com/2021/04/10/blackstone-hilton-lb...
It looks like in FY2023, Squarespace reported about $1B in revenue, a loss, but about $230M in cash flow from operating activities.[1] It is growing, which helps a lot.
Mainly when I look at this, I think "it doesn't seem like its that easy to make money in PE these days." Maybe in the 80s there were lots of large corporations that were so poorly run that you could buy them with debt, cut costs, and make lots of money (see RJR Nabisco/Barbarians at the Gate, that was a terribly run company). But in regards to this deal, someone raised $6B, had to find a place to put it, and found the pickings were pretty slim.
Still, someone apparently thinks they can cover the debt service with the cash flow.
https://investors.squarespace.com/news-events-financials/inv...
those are quarterly revenue numbers. they are at >1B in revenue
Fire half the staff, double the prices to users?
Next step is they buy out Squarespace's competitors. Then they move everyone to the same platform, after cutting expenses by 50%, and doubling prices. I assure you there is a spreadsheet somewhere that runs through all this....once that is done, they do an IPO in 5 years to cash out.
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.
Permira, the global private equity firm
current Squarespace users about to get gouged
Conveniently after taking over all of Google Domains too! I missed transferring a couple of domains before the cutover and now I’m in squarespace hell trying to get them out. They make it so much harder by putting artificial delays on everything.
I was about to go start the transfer process. How bad of a time am I in for?
I transferred 6 domains to porkbun and it was about 2 days to get the code and 5 days to transfer. Mostly painless, but DNS records were not copied over. I tried to see if I could manually copy them over in advance, but I got an error with porkbun. I probably didn't know how to do it correctly, but I needed up with a couple minutes of downtime. I don't remember having to do anything when I went from namecheap to google, but that was a while ago.
I'm migrating to Cloudflare
You can setup alternative nameservers first, they clone current DNS settings, then you update nameservers. Do the transfer after.
This worked while they were at Google Domains and about to be transfered. Haven't tried with squarespace yet, but it ought to work
Thanks, I will try that next time I have to migrate.
Took two days to get any authorization codes. No idea how bad the actual transfer will be. Ugh.
Also, and perhaps Google will finally find this, if you are an OWNER on a SQUARESPACE DOMAIN after the GOOGLE DOMAIN TRANSFER, you can't seem to create MX or TXT or other records.
But if you ADD A NEW USER as a DOMAIN MANAGER then you can create the records, as far as I can tell.
Its supposedly a mandatory five day wait after you initiate the transfer with the code. I had to contact support since the transfer code button wasn't making any requests to their server despite the modal saying it did.
It took me a total of two weeks to complete the transfer.
I didn’t need to contact support, but the process requires patience … and some downtime as I had no way of knowing exactly when the transfer happens to recreate the DNS records.
I transferred from Google Domains to Porkbun and it took about an hour. Half that time was changing over my dynamic DNS updater on the server
I had a couple of .dev domains on Google Domains. Unfortunately, you can't migrate those to another registrar as the .dev TLD is locked to Squarespace. I wonder if they will ever unlock the .dev TLD.
I was just able to finish transferring out my .dev domain from Google to Cloudflare. I had started the process when SquareSpace first took them over but forgot to finish until I saw this, but I was able to transfer out my .dev domain!
I just launched a site on Squarespace - $25 a month for a basic landing page.
That seems about right? I use Netlify to deploy my own 11ty static site, and it costs $19/month, plus there's no WYSIWYG editor like Squarespace.
What’s the reason for doing that? Can’t you host a static page for 5 dollars basically everywhere?
Even on expensive AWS it’s 5 dollars: https://aws.amazon.com/lightsail/pricing/
lightsail is basically the lowest tier of AWS offerings. It's designed to compete with providers like linode or digitalocean, not gcp or azure. Moreover, lightsail is IaaS - you get a vps that you have to set up and administer yourself. Squarespace/Netlify is PaaS or SaaS - all that is handled for you. Maybe you think all of that isn't too hard and isn't worth the $14 or whatever premium, but it's still comparing apples to oranges.
Any reason to go that route over just making an S3 bucket publicly accessible and pointing dns at it? Should cost roughly $0/mo unless you’re getting massive amounts of traffic.
Cloudflare pages has been excellent for my 11ty site. The free tier is great, prices after that are reasonable.
Also - there's a bunch of integrations with their other stuff (serverless, D1, etc.) You'll get more lock-in, but you can scale up the static site to become basically a full frontend-backend app from there.
I run a Wordpress site that gets tens of GB of traffic per month for about half of that (hosting + domain name registration)
I'm really unsure if that is unreasonable. We can do it for cheaper. But we are not the target market. For someone that would be buying a set up and even occasional updates and so on it is not that much money... That is what 300 a year? So not too many billed hours...
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?
Wait until you get Domain Backed Securitization.
Oh gosh wait until Amazon sells securities based on their v4 addresses then aggressively starts making their services v6-first lol.
No, domains are not junk loans
If you were a Google Domains customer even before this buyout you were gonna get gouged on renewals.
After like a year or maybe it was 2 I forget, the cost of my domain was going to double from $15 a year US to to $30 with Squarespace.
Moved it to Cloudflare, and now it's cheaper than it was with Google.
Just wrote that to someone I know who has a square space site
I was looking at hosted website/blog options a while back and it looks like pretty much everyone has teaser rates that blow up after some time period and have low-cost plans that almost work for a given need but you actually have to go up a tier of 2.
I have an existing blog on Blogger and have no need for ecommerce or a lot of business stuff. It's basically a home page and a blog. I came to the conclusion I should just leave things as they are and maybe add a second blog for a different purpose.
It's free and if it becomes a problem, I'll deal with it when it does.
Can someone explain why this is happening? Thanks!
Personally having used squarespace I'm not a fan of their product, but that's beside the point!
PE realises you can fire most of the team and stop R&D, jack up prices by 50-100% due to lock in, and have something low risk that returns like four times bonds.
What R&D was Squarespace doing over the last 10 years?
All software companies have R&D going on constantly.
“How do I push this user metric” “How do we increase conversion” “How can we increase conversion for our customers” “Can square space be easier to use”
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 generally wouldn't classify those (except for maybe the last one if you are developing fundamentally new user interfaces) as actually being R&D.
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 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 operational fix. If your solution is instead to read a stacktrace and write some code; that's R&D.
[1]: https://www.google.com/search?q=most+software+projects+fail
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.
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.
So does your argument boil down to “software moves faster than the sciences, so it’s not R&D?”
Initial development isn’t R&D. Like you said, setting up a webpage and hooking up payments isn’t R&D.
After a product is established, future work is R&D. A cycle of desired outcome, hypothesis for how to get there, and successive implementations until something sticks or the project fails and the hypothesis is proven wrong.
All software companies have R&D going on constantly.
I think the question is more like, "what is Squarespace innovating on that we're afraid of losing under new ownership?"
Their website builder and templates I imagine
What part of a website builder and template engine is fundamentally new and uncertain?
Squarespace certainly does a lot of development, but "R&D" (especially when it comes to things that PE firms will cut) usually means completely new stuff with significant uncertainty in terms of revenue impact.
If Squarespace, for example, had been a significant contributor to HTML standards to make website rendering easier, I would be unhappy about a loss of R&D.
https://www.squarespace.com/refresh
It's not like they've been sitting on their hands
Yeah slash equity grants for engineers by 20%, and then move into maintenance mode.
They'll recap the company, at the expense of IC grants.
Does that mean dilute the cap table and then suddenly the PE shares are equivalent to like 4 employee shares or something? Or the PE shares have some special dividend that the employee ones do not?
PE will "buy" you out of some of your unvested shares. And they offer new ones, possibly way out of the money to try and keep people around. When it happened to me, I lost like 60% of my unvested shares, which would have been worth way more long-term, than the short-term gain they forced.
"Warren Buffett: Private Equity Firms Are Typically Very Dishonest" - https://youtu.be/r3_41Whvr1I
Has 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?
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 enabled large private equity firms to gobble up what were once thriving small businesses across various industries - from veterinary clinics to engineering firms. This trend stifles entrepreneurship and limits opportunities for employees to rise through the ranks and become owners themselves.
America has lost half its public companies since the 1990s. The count of publicly listed companies traded on US exchanges has fallen substantially from its peak in 1996. Back then, the number exceeded 8,000 companies. Today that count has dropped by more than 50% to just 3700 [1].
[1] https://www.cnn.com/2023/06/09/investing/premarket-stocks-tr...
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 benefit from companies growing to a healthy size and then maintaining that plateau.
SquareSpace has ~44% of the self-hosted website market. Shouldn't that be enough?
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...
Isn't PE really focused on getting their fees?
Isn't PE really focused on getting their fees?
Sure? Most people are motivated by compensation.
Classic case of overregulation killing things. Stock markets were originally invented to fund very risky new ventures in the Netherlands. Now you need to spend millions on lawyers and various forms before being allowed to list, after which the regulatory nonsense only spirals upwards to more and more.
There is no reason that random mom and pop shops shouldnt be able to list their sandwitch shop and raise 50k to remodel. Will there be tons of scams and nonsense? Yes. Dont invest in tiny companies with no track record then, easy solution. Will productive stuff also happen? Also yes. People can already waste their money gambling/smoking/lotteries/drugs/stock options/supid luxury goods - all of which have a guaranteed chance of working out poorly for society, but this is apparently ok and we instead need to protect people from the stock market.
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?
IPOs have been declining for a while, which leaves private sale as a more attractive alternative.
Here's an article from last year, but if you search "IPO drought" in a news search engine you can find a lot of more recent articles https://www.forbes.com/sites/forbesbusinesscouncil/2023/02/0...
Squarespace is going private, it is already public: https://finance.yahoo.com/quote/SQSP/
The lack of IPOs is not from market demand, it is just easier to be private. If there are venture firms willing to invest or the debt market is accessible, then there is no need to for a company to go public.
Generally speaking, private equity sales are not more attractive than IPOs.
Absolutely, especially healthcare. Nearly everything PE touches gets worse. The only ones that benefit are those that work for PE companies (and esp. the partners).
I don’t know but I guess it’s cyclical?
The tax cuts passed during the Trump admin have funneled a lot more money to people who were already rich.
in Tech in particular, the QE period (post-GFC through covid) with low interest rates has seen massive PE activity. most of the "highest multiple ever" or "highest premium ever" or "highest X" have all happened in this time span
as the current rate hike cycle started, PEs were less willing to transact at higher rates, companies were less likely to transact at lower multiples and M&A markets cooled off
I'm not out of the industry, but from the outside, it seems like most parties are in a holding pattern waiting for the soft/hard-landing that is yet to come. I suspect sellers are still holding their breaths for valuations to go back to where they were
I know of at least two companies in the billion+ range that could have sold at 20%+ premium to their current valuations but walked away thinking those offers were too low, only to see markets melt in the 6-12 months that followed...
This makes the Google registrar change even worse. I need to get my act together and transfer my .dev domain. :/
I moved my .dev domains under Porkbun right after it was announced that Google Domains was being sold to squarespace, so you don't have to drop the domains. Porkbun is also quite friendly IME.
I don't know porkbun. I was looking at namecheap -- why porkbun?
A lot of features included that other registrars charge extra for. Vanity/forwarding email addresses is one of them that I use the most often.
I've just had a good experience with them. I don't remember where I heard about them before, it's been years.
Namecheap is fine, but I've moved all but one domain off of them.
Yeah what an annoying one two punch. I was going to transfer everything to cloudflare but apparently cloudflare can't handle .dev domains.
I believe they added support for .dev in mid-2023, if I'm not mistaken.
Unfortunately because the domains were just transferred days before this announcement, we're locked in for 60 days.
They can! I transferred my .dev domain to Cloudflare a few months ago.
If I read this (hard to find, hard to understand) page correctly, they do.
This was my visceral reaction as well, but does it really make the change worse?
There are tons of business that are private that are doing great. I host with OVH they are private, lots of the businesses I have worked for have been private.
Candidly without the pressure of "this quarter" it might be a good thing for Squarespace.
If we are talking about the same french hosting company, they have been public since late 2021
private is not the same as private equity which typically means an external manager is extracting as much from the business as they can. Its often at the expense of longer term growth too.
I'm in the same position. Looks like Cloudflare got all my billing info correct, so everything should keep on working.
That being said, the second Permira increases the prices of a single domain name I own, I'm moving my domains to somewhere else.
how odd, all my google domains just transferred to squarespace today. now thru no consent of my own all my domain and payment information are belong to this private equity shop i dont know anything about that is also likely to strip it for parts. idk how to feel about that
It was announced in mid-2023, and google sent out numerous emails to account holders over the last six months. https://support.google.com/domains/answer/13689670?hl=en
Feel free to migrate your domains somewhere else. I chose CloudFlare
It was announced in mid-2023
The Squarespace acquisition of Google domains was announced, yes.
I don't recall seeing anything about Squarespace immediately going private and being beholden to an investment firm showing up in those emails.
Feel free to migrate your domains somewhere else.
Thanks for the permission, that's exactly what I and I'm sure many others are about to do. Too bad the timing of this announcement is days after the migration from Google to Squarepspace, so I'm not actually allowed to migrate my domain for 60 days :)
Oh wow, did they actually do this as a registrar transfer (rather than by Squarespace stepping in as Google Domains' sucessor)?
It was temporarily the latter, as far as I was aware - I got out as soon as they announced it and migrated to CF. But yea basically, and it's going about as well as you'd expect it to.
Many domains didn't actually transfer to squarespace until very recently. Mine all finished transferring last week (it's probably a coincidence though)
I feel terrible and I’m transferring everything elsewhere immediately.
where to?
Cloudflare for the domains that it supports.
Do you have a list? I can't find the list of TLDs they support.
Don't forget the sharing of portco data which leads to you getting targeted offers from all of the other Permira companies like McAfee, Ancestry.com, Klarna, and FlixBus
Squarespace was my first experience with a hellish technical interview process back in 2014. I went through like 4 initial screens/take-home assignments for a {something} Analyst role that was considered entry level. I eventually gave up, and from that moment on, I hated Squarespace as a company. These take home assignments weren't even relevant for the role, yet they thought it made sense to inject it into the process. I'm glad they're 1 step closer to their demise.
Stock price up ~88% over the last two years and just valued in an all-cash deal at $6.9B.
Yup, they’re right on the verge of that demise.
This is some serious cherry-picking. It's going private at a price below the initial IPO price of $48 from 3 years ago, and has generally significantly underperformed other tech stocks.
They might not be about to die, but they're not exactly healthy either.
Me, demonstrating sustained performance over last 2yrs: cherry-picking.
You, choosing IPO price from the frothiest IPO environment of the last decade: elevated, rigorous, robust to outliers.
Okay, well, we can settle an accusation of cherry-picking pretty easily. Why did you pick two years?
Because it's an extended period, with a simple round time window that doesn't include the IPO pop from the frothiest IPO environment of the last decade. Happy to have gone with any time window outside of 2021. That should be clear from my comment.
"But, Creddit", the ignorant accuser of cherry-picking whine, "why after 2021?"
Because as anyone in tech knows, that was the frothiest IPO environment of the last decade. Source for those who aren't aware: https://site.warrington.ufl.edu/ritter/files/IPOs-Tech.pdf
Square space IPOd in a borderline delusional environment of retail investing, stimulus money, and massive free cash flow. Pretty much every IPO from that era looks awful on paper, but the companies are fine balance sheet wise.
Some companies use interviews processes not to test your knowledge but to check the level of inhumanity you’re willing to accept while working there
I always understood it as an artificial way to reduce the applicant pool. Too many people apply, you just want to make it annoying to keep a number of people you have capacity to review in depth.
It’s really shitty, of course.
Oh it's still allowing for self-selection of people who like abuse.
Podcast market is about to crash.
Why do you say that?
They buy a lot of ads/sponsorships
This. YouTube video sponsorships, too.
Would be really interesting to see a quantitative analysis of how this acquisition impacts the podcast/youtube ecosystem. I feel like Squarespace's podcast ad market share was a big deal 5 years ago but podcasts and youtubers have grown and diversified a lot since then.
I 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 release own a majority.
They must have super-voting shares...probably from being early (pre-IPO) investors.
There will be a shareholder vote, but they only need a majority to approve the sale (assuming their equity shareholder structure is "normal" and voting rights exist for common shareholders). However, the majority of any given public company tends to be owned by institutional asset managers like Blackrock and Vanguard. They owe a fiduciary duty to their customers to act in their best interests, and when a deal offers those shareholders a large margin over the market value of their holdings, it's almost impossible for them to vote against it, even if they wanted.
It's not forcibly; a company is a group of people that sign a special type on contract (often called memorandum of association and bye-laws but other terms exist.)
That contract can govern all manner of different circumstances including the circumstances in which the allocation of shares are transferred.
Sometimes only a motion of the board is required, sometimes additionally a motion by a general meeting with various options for requiring super majorities across and within the different classes can be required too.
Fiduciary duties often require the Board to act in the objective best interest of the members.
In my opinion it is better model to think of a company as a club (hence shareholders often being called a Member) rather than something that you own.
Sorry, you have been blocked You are unable to access web.prd.q4inc.com
Why have I been blocked? This website is using a security service to protect itself from online attacks. The action you just performed triggered the security solution. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data.
What?? I'm just trying to open the page in the link.
That will show up as a prevented attack in some dashboard
But why?
I'm behind a CGNAT (if that's the trigger because of possible same external IP with bots that have nothing to do with me), there's nothing I can do.
Shit code executing security theater so an executive can check a box and cover their ass. It doesn't matter if it actually works or not.
Private equity will only own about 20% of the company, only 20% of the stock was public to begin with. Why is everyone singing songs of doom and gloom?
I guess you are new the PE game. It's okay, give it a few more years and you will understand.
private equity will own 100% of the shares but owe the equivalent of [80%] of the value, which is not exactly the same as before. they control the company, so they make decisions
This is a bit disappointing, as I really like Squarespace's website builder. IMO it's far superior to anything WordPress, Shopify, or Wix have put out in the last decade.
When I was choosing between squarespace and Wix, sqspace didn’t have a simple backup/restore function. Maybe they do now? That’s a really big product hole.
I honestly don't remember. I just used it for one site and enjoyed their page builder.
Thanks to Google, I’m now a Squarespace customer…
Does anyone have a new favorite domain registrar?
I miss being able to search the search capabilities of Google Domains, specifically the exact match and TLD-specific filtering.
Porkbun
Really like cloudflare.
It’s like a huge if in statement:
Forward-looking statements often contain words such as "expect," "anticipate," "intend," "aims," "plan," "believe," "could," "seek," "see," "will," "may," "would," "might," "considered," "potential," "estimate," "continue," "likely," "expect," "target"
That's boilerplate for basically anything that a public company sends out, otherwise they might get sued for securities fraud if their statements don't come to pass.
Wait, squarespace isn’t a division of square?
Nope. Totally different company and founded about 5 years earlier than Square.
The timing of this is borderline malicious. My domain was just transferred to Squarespace from Google on April 24th, which means that I cannot transfer it for 60 days. This news means I want to transfer it -- I'm sure I'm not the only one -- so it's awfully shitty of them to wait until just after domains were transferred to announce this.
While I was previously on the fence about keeping my domains with Squarespace, mainly because of laziness, this announcement and the timing of it means that I will be transferring my domains the minute I'm allowed to.
I mentioned this already in a different thread but private equity behave just like adware companies that buy popular chrome extensions then ruined them for a quick buck. [1]
[1] https://arstechnica.com/information-technology/2014/01/malwa...
I still need to get all my converted Google Domains out of Squarespace as it is... I got about 20% done a few months ago... I kind of wish the process were a little easier.
If there wasn't incentive to change after the Google Domains transition before...
For dev tools does this more realistic funding environment preserve the status quo (same companies & offerings if at higher prices), lead to more consolidation, or lead to a return of smaller players?
[delayed]
It happened.
My decision to pick wordpress paid off.
I find private equity's enthusiasm adorable but the temporary hiatus on anti-trust enforcement that first gained momentum during the Reagan era is no longer in effect.
Some expensive lessons are about to be learnt.
(assuming democratic governance remains in effect, otherwise all bets are off)
Time to build a squarespace competitor!
I remember TravisCI being bought by PE. As soon as announcement came out, we migrated out of it just in time before they jacked up the prices 2X.
Don't know where TravisCI is nowadays.
Looking forward to all my podcasts being sponsored by Permira in the future.
I think a lot of tech companies are getting lost in a situation where Venture Capitalists ideally want to invest in companies that will eventually fit in the large capitalization growth stock category. But many tech companies will never fit that model.
Squarespace is an example of a company that was never going to fit that model, for a host of reasons.
Furthermore, if a company is highly unlikely or never going to become a large cap growth stock, providing extra working capital, acquiring ancillary services, funding additional advertising and marketing, will not change those prospects. Only revolutionary increases in functionality will.
I'm worried -- and perhaps over-reacting here. To me, this leads to a question: "Why should a company go public at all?"
The growing number and net worth of so many equity firms, as well as very, very wealthy individuals, seem to indicate that the value stream of public investment isn't _really_ needed at all. At least for the right product / market.
I mean, the hassles of public stock (of which there are many: filing constraints, very "impressionable" public opinion, entanglements with Wokeism vs. Conservatism, etc.)
Basically, my thought here is that "Billionaires breed billionaires." They do not, in any way, breed richer "masses" investing their 401Ks.
Today, the AI can do it for you.
I always wanna know who’s pushing these deals through because there’s like a handful of five or 10 people who are making this happen because they see some kind of “strategy” somewhere
Fundamentally these are the people who are fucking everybody over and it’s really literally just a handful of managers at these massive private equity funds
As much as I'd like to see a web 1.0 revival, this won't happen.
The traffic is controlled by Google and social networks. Most people don't have the skills needed to run their own website. A lot of valuable content is created by people without these sorts of skills.
I feel like making it easy to how your own website is something that can be solved with an ingress service (Tailscale funnel?) + DNS management and a small box that someone buys and leaves in their living room. It doesn't have to require any technical expertise, you just need to build a lot of things to make it that way.
I’ve thought about making my own homepage to replace my instagram/fb and share my life with my friends, but how would anyone find it? I guess I could email everyone and tell them. I’ve wondered if there is a way I could easily get that to the top of Google for my name, but there are a few famous people with my name.
does it make sense to have a "social" network that in essence is _only_ a directory? looking up someone works well, and links to some external site. full stop
I’d love something like that. Ultra low cost and simple. But I don’t know if it really has a purpose.
This reminds me of Hotline[0]. Chat, message board, file sharing. Late 90's, early 2000's, but apparently there is still a small community around it going.
Super easy to run your own server to host content from a desk/laptop and super easy to use a client to visit other servers. You could find servers using trackers (name severs that kept track of hotline servers) or keep the server private and only give out the server info to people you want.
[0]: https://en.wikipedia.org/wiki/Hotline_Communications
I feel like Fediverse/Mastodon and/or Bluesky sort of solve this problem though. Fediverse in particular has a pretty rich ecosystem with niches for Twitter-like, Instagram-like, Reddit-like, and (I think) even Facebook-like.
There's also RSS feeds
I look at those Fediverse things and they just feel like toys.
Horrible, confusing UX. Very limited feature sets. Mediocre performance, at best.
if that's supposed to be the future, call me a luddite I guess.
If you're sharing it with your friends and family, why does it matter if Google can find it? And if they are your friends why wouldn't you share it with them directly? The Internet felt a lot better when people were making the content for themselves and a community that they were part of.
well that's the issue. There is no "small community" these days like there would be in the Usenet days. At least not a genreal purpose one for blogging whatever is on your mind. My parents wouldn't really care much about the content so much as supporting me. My friends don't necessarily share all the same interests as me. So you want to seek out like strangers on the internet to bond with.
That's part of why we transitioned to early web 2.0 of utilizing a middleman to host content, and use that to attract a community. The internet grew and people could focus exclusively on what they were genuinely interested in, as opposed to subscribing to users directly.
You could get the URL out. I would like to have it require some authentication, and I don’t see too many easy ways to add authentication. I use Google Workspace for hosting and I guess it would default to Google IDs? Does SquareSpace provide access control for low cost accounts?
I made placeholder accounts on meta and other platforms and in my tagline I told people looking for me how to contact/find me.
I’m working on exactly this. Would love to collaborate. Reachableceo@turnsys.com.
Cloudflare dynamic dns and cloudflare tunnels get you there. Of course, now you're relying on Cloudflare's free tier to continue to exist.
I think that the right place to provide this is at ISP level, positioning as a beefier router with extras.
I was part of some social computing facilities and burnt my own and friends’ money to offer basic stuff for people to publish basic html pages, small twitter like service, one nextcloud and one invidious instance. Within weeks, nextcloud was filled with pirated content sharing, html pages were hosting fake bank login phishing pages and moderation became horror. Our colo provider sent us some written warnings to sort this out immediately.
While I still inspire to launch a twitter 1.0 plain old less featured version, but the thought of moderation kills my motivation immediately. :(
There are still public computing facilities here, like sdfeu, envs.net etc, am not sure how they handle the moderation of spam and pirated content attack.
As a positive example, Mastodon seems to work fine.
Mastodon effectively democratizes the moderation to the huge group of server admins - who do a massive amount of unpaid labor. It definitely keeps some people away, and burns others out.
I'm still focused on the "effectively" part, since the other part has always been endemic to the Internet (and communities!).
Indeed. But unlike machines (and AI, in the future), humans don't scale well. managing a potential audience of 10000 user with a few hundred commenters focused in a few countrie is an order of magnitude different from the millions of users with thousands of commenters and a very well established malicious actors with no respect for community.
It's more work, for more people, for less appreciation. It's also harder than ever to pay for labor as a small community, unless you are very well off.
Other than playing whack a mole to block all the neo nazi and other hate filled instances, which are legion.
It's definitely a thing, but IME hosting a small instance, it's really not that bad. My advice for new admins would be to 1. find a small, decently up-to-date block list as a starting point (I can recommend FediNuke [0]), 2. check the #FediBlock hashtag (using any Mastodon UI or the RSS feed automatically generated) once a day or so for any warnings about bot attacks, or any other things you would like to be super proactive about, 3. promptly respond to the (likely very infrequent) reports you get from your users.
I could see why this might not scale as well to instances with thousands of users, or if a user is a frequent target of harassment (where opt-in federation might be the only solution), but for our lab, the existence of all the nazi or whatever instances has been resolved via a simple "Oh, these again. click, click, click There, the whole instance is banned." a few times a year. I have a suspicion that Dunbar's number or lower might be the optimal size for any federated social media instance, since knowing every user on my instance makes it a lot easier to tailor the little effort I have to put in.
[0] https://seirdy.one/posts/2023/05/02/fediverse-blocklists/
Following the URL in your bio loads a gambling page.
Is your email still valid as listed?
I’m working on this. Would love to collaborate with you. Reachableceo@turnsys.com
This is why I'm wary of starting a new community. I don't want to be an online janitor taking out the worst kind of trash for no pay.
Maybe Web 1.0 won't return as the "dominant culture," but I wonder if something like it could return as a subculture.
Maybe we just need an new MS Frontpage for the new millennium?
I know someone that just has a folder with word docs and exports them to html
With so many static site generators, I wonder how hard it’d be. Not that it’s simple, just thinking that an opinionated structure, a gui, and gluing it all together.
I’m shamelessly link to this thing I’m running[0] because I personally believe that subculture is already (still?) there and I’m doing what I can to help other people discover this fact.
Just recently I added a guestbook to my site and I’m having fun seeing other people doing the same.
Webrings are also doing a comeback. I have hope for a return of a more personal web, even as just a small subset of the whole web.
[0] https://peopleandblogs.com/
there's nothing technological stopping a subculture. It's just that network effects are extremely strong.
That and financial incentives. Substacks seems to be the most successful "web 1" implemenation in the past decade, but that still monetizes the idea (anthetical to a web 1 era).
That's a function of technology. It would absolutely be possible to integrate something like Nextcloud into operating systems or devices. It will never happen, because every party in a position to do such an integration is also in a position to become a middleman and extract money, which is much more profitable.
I'm curious what an integration would look like. Are you thinking Google Play Services but Nextcloud Services instead?
Opera, before it got Chrome-ified, had a built in web server. I used it to share files with my buddies. Super simple.
Didn't support scripts IIRC but with webassembly it doesn't have to be too difficult to support something like NextCloud I'd think.
No, it's a function of economics. Division of labour still works. It is not more profitable to run your own cloud and pay for your own traffic when you're specialized in producing content. It makes financial sense to pay someone to do that for you. The middleman is cheaper, that's why they exist. The internet looks like it does for only one reason, in any system of increasing complexity there are increased returns to specialization and trade.
How hard is it come up with community run maker spaces supported by the city for putting such things together? Not every thing has to be owned by large private companies.
As someone who works with a non profit who does this… don’t ask the city, they rarely care about thing’s like this. They will talk about support, but it’s talk. Most are too involved with crazy politics, campaigning, etc. Better to seek out other non-profits and community services to work with.
Libraries are a good starting point for your idea, but they are already being defunded.
If the web progresses in a bad enough direction, it will happen.
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 times was painful enough to make me just let google worry about it.
I currently use google but am thinking seriously about self hosting. For those few times could the clients send it to you via WhatsApp?
“Please send me that critical requirements document over WhatsApp, my email isn’t working” is a terrible thing to hear from a vendor/partner/etc.
I do a fair amount of business internationally and WhatsApp is increasingly becoming a default. There is Signal, Slack, Telegram, iMessage, etc plus a multitude of many other options including uploading via our website. Places like Japan and Germany are still pretty big on faxes so I guess it depends where on the continuum the customers are. Thus far our only email issues have been on the client side and they're the ones asking to send it via WhatsApp. It would make sense to me to have a non-email contingency for email.
That might work for small businesses, but no real mid-sized or bigger company is going to be using Whatsapp or any other consumer messaging service for their critical or non-critical business communications. It just screams unprofessional. You’re not going to see Meta employees do business over WhatsApp, and it’s their product.
Like, sure, you could probably get away with it. Once at most places. And even then, it would still likely leave a sour taste in your client’s mouth if their new vendor couldn’t even get their shit together to keep their email up and running smoothly.
Again, I think that view is US centric. Many other countries have WhatsApp as the default. I'm not even suggesting that they should have WhatsApp as the default, just describing the reality as I am seeing it. And yes even the biggest companies and government entities are using WhatsApp. When I was traveling through LATAM they were taking pictures of passports on their phones and sent off for checking via WhatsApp - a US passenger freaked out over it and I had to explain to her that this is just how it's done in LATAM.
You had a mid-sized to corporate business sending passports over WhatsApp? I highly doubt that.
This is not even coming from a “US-centric” view. This is coming from a “that will never pass any sort of compliance or hell corporate governance” sniff test.
Italy here. Photo ids via WhatsApp is not normal but it happens. WhatsApp video calls as proof of identity are normal: showing your face and a photo id is a way to get formally identified by many of the identity providers for the state digital id platform.
I am describing reality as I see it, at this point you're basically calling me a liar. You could have simply googled it yourself; e.g. "is it normal to use WhatsApp for business in Latin America?" to which the resulting summary is "Across LATAM, WhatsApp is used by citizens as a way to communicate with family and friends and is being increasingly used by businesses big and small to provide customer service, make sales, take bookings, and more." Note the --> big <-- part of that. You don't need to rely on my assertions the when there is so much evidence readily available. I have no idea why you're arguing with me and do not care that you don't believe me - what on earth would I have to gain by lying to you in this way. It makes no sense.
Before the Russian/Ukraine war, I worked for a US company that did business operations on Russian cloud providers - one (very major one I don't want to name here publicly) had their main support in some sketchy all-russian telegram channel that I only could access via my personal device. You'd type your issue in english, get a bunch of russian responses, and then sometimes hours/days later your issue would mysteriously vanish.
"Oh shit the Americans have some issues. Hey Andrej, what the fuck is Ivan doing with the server room?"
"I don't know, dude is usually black out drunk I will go check on him"
5 min later
"Yeah he was passed out on the floor, I threw a bucket of water on him and rebooted the thing it should come back up shortly."
...and yet WhatsApp Business exists to do exactly that. In developing countries, some businesses use WhatsApp as the only written-communication channel (supplemented via voice calls). For over a billion people, their smartphone is the primary - oftentimes only - computing platform. Business communication over WhatsApp is not as awkward as you suppose it is, and all businesses, including large ones, have to meet their clients on whatever platform(s) they happen to be on.
The problem with an email server being down is the email goes nowhere. So, the client sends you an email and you just never receive it. Often you don't even know you missed something. It's far from ideal.
To answer your question, no I've never corresponded with a client via WhatsApp
Do you happen to remember what the handful of issues were?
In particular, I’m wondering how much a self hoster can expect to have this sort of downtime because of breaking changes to the mail server application(s) vs. misc. server outages (e.g., breaking OS upgrade unrelated to the mail server) vs. having to fix “my mail was marked as spam” problems.
I don't remember the specifics, but it was catastrophic failures. Like I couldn't receive any emails, and because of the nature of email that means you just don't receive them at all ever.
Over 3 years running mailinabox. Zero problems after first month of hiccups.
Installed a second server last year. That had 0 problems since day 1.
I feel like people overblow the whole email thing. Want you to pay for tuta et al when you can build your own and manage it.
I havent updated both servers in a year. Zero problems.
Again, people maybe confuse miab and other email servers maintenance with maintaining nextcloud which is a real pita
When you send a cold email (initiating a thread or first email to someone) does it land in the recipients inbox or spam?
This was what eventually broke my self hosting plan.. too many emails sent and never received.
And the worst part is this stuff is damn near undetectable.
Maybe my buddy hasn't responded because he's got a lot going on at work at the moment. Or maybe my DKIM/DMARC records aren't playing well with his mail forwarder. Pretty difficult for me to tell - I'm not in the habit of phoning someone to tell them I sent them an e-mail.
Nope. Not in the last 2 years. Hotmail in the first days and gmail now if you send a dozen emails at once but not otherwise
Similar here, but mailu (docker-compose) setup... which works very well, aside from deliverability issues to some outlook.com domains. Gmail, and most others (even other MS domains) deliver fine.
My ISP blacklisted my mail server within a couple weeks. I am not even particularly active in email.
Heck, the company I work for gave up trying to host our own email blasts to customers as we were fighting with different places around the world *constantly* (we had a dedicated position just for dealing with this shit, and they were becoming overwhelmed).
I'm not really sure I follow this logic. What connection are you drawing between PE and Web 3.0?
People like to hate on PE, it's just negativity bias. Most people don't hear about all of the PE success stories. If PE just ruined companies as a matter of fact, it would not be a good business...and it's an objectively good business to be.
People hate on PE for good reason - they often make money by destroying good businesses. They sell off the valuable parts for profit, load the debts on what is left, and declare bankruptcy, leaving employees and customers holding the bag.
PE is good business for the raiders, bad business for the raided.
That’s a strange cartoony impression that people here have but not generally what they do, even in the case of LBOs which I assume is what you’re referencing but only a small part of what PE firms do. They generally buy businesses that are managed poorly, manage them well, and fix them.
And when they part one out like you are referencing, it’s usually a bad business. While what Eddie Lampert did to Sears/K-Mart was criminal, or at least should be, they were not a good business and hadn’t been in a very long time.
A good business is rarely worth more parted out than whole. It’s most often good business for the “raided” too because they are failing and the alternative is bankruptcy. A company that survives after laying off 25% of its staff still employs more people than one that dies entirely.
This is why they prefer companies with high revenue and low profits. That’s nearly always the sign of a business that has been mismanaged and can be fixed.
I have come to the conclusion that people in tech are as largely ignorant of finance as people in finance are of tech.
it's like saying drugs are bad. there are definite harms done by cocaine, but penicillin has saved the world. PE'a easy to hate because, as a group, there are hateful things that happen. we don't have any mechanism for not letting the group be represented by an outlier individual.
Drugs are a perfect example. They are a controlled market because the common person lacks the knowledge to safely use these by themselves. Good or bad.
PE's, meawhile, don't really have that control. They are shooting all the hell up and we don't know if they are self destructively OD'ing or are curing cancer. Most high profile results are sadly the former. There's simply less financial incentives these days to invest in "saving" a company if you don't emotionally invest in it.
The control (assuming we are talking about LBO specifically) is that they have to borrow the money from someone, and those someones are giant banks who also like money and aren’t stupid.
not stupid but not infallible either, 2008 should have taught us that. Even money managers themselves are gambling at the end of the day. They know they will be saved on the off chance they lose (and likely take a part of the economy with them for a while)
Right and if your entire knowledge about PE was watching Barbarians at the Gate and/or reading about Martin Shkreli, you’d come to that conclusion, just as if your entire knowledge of the pharmaceutical industry was based on Purdue Pharma.
LBO is just one type of PE, and even among LBO, there are lots of stories about firms fixing a business. For every K-Mart there’s a Dollar General.
And even with the K-Mart type stories, those businesses were 100% failing without intervention anyway. They might have done so in a way that was better for shareholders, and that’s an egregious example. But they’re not generally parting out thriving companies and leaving banks holding a bunch of bad debt. Banks are smart and good companies are almost always better off whole, just as a running car is almost always worth more than the parts.
Okay, fun question... (Honestly not sure where I sit on this...)
I've always been very skeptical of the sale/spinoff of various divisions of automakers in the 80s/90s. To me it always felt like they were looking for a short term profit vs the general 'steady pace' of government contracts and the like, I also can't help to feel amazed nobody even showed a good second option for the next gen mail carrier... but again, I feel like it's because everyone sold the farm already.
I think it’s a mixed bag. There’s obvious efficiency in having a small number of companies make parts and sell them to the many auto makers. There are obvious downsides to outsourcing too.
I think Tesla is a good illustration. They make a lot of parts other auto makers outsource, and they also have a whole lot of quality control issues. I am sure I suffer from observational bias here, as my GF has a model Y and I notice all the parts that fail that never would on any other car (like vent fans, door handles, etc.) but the upside exists in some engineering document or p&l I don’t see.
Well I'm you can certainly speak for yourself, but that doesn't mean the rest of us are, so maybe keep your opinions to yourself. I was responding to the premise that people hate on PE because of negativity bias - there is a negativity bias toward Private Equity, and it is entirely on the fault of the industry for their mendacity and lack of empathy. The fact is, there are more than enough examples of this bad behavior (recently, Chuck E Cheese and Toys'R'Us come to mind). There are also plenty of examples of PE "improving management" by crushing labor, degradation of product quality and screwing customers, so that is is the reputation for the entire industry.
I'm not even specifically criticizing the industry - they have a role to play in the economy. What I am saying is don't go crying about the public perception - if they want the big money, they get to own that reputation and be the bad guy. No one likes a parasite.
That’s logically equivalent to saying average black people get a bad reputation because of the few who are criminals. It may be true but there’s nothing they can do about it and the fault really lies with the person who lumps them all together.
PE is a giant thing. There is a lot of it. The ones who don’t run companies out of business have no control over the ones who do. You’re using “they” to refer to thousands of people as if they’re a monolith.
And I don’t disagree that the bias you mention is accurate, I was pointing out that it’s because the people who think that way simply don’t understand finance. And judging by the comments here every time it comes up, the bias you mention is very popular.
Keeping opinions to ourselves would make these comments sections pretty sparse. Why is mine not ok but yours is? I was largely agreeing with you and expounding anyway.
Unless the company has a very negative outlook with outstanding debts (which Squarespace is not AFAIK), the price they have to pay to take over is much lower than the value of their assets.
And even with a negative outlook and debts (i.e. liquidation), extracting value without making bigger issues is not at all simple.
That's not entirely accurate. The easy way to make a crazy amount of money is to buy a well-credited company, sell / mortgage anything of value, ramp up user fees and debt over a short period (3-5 years), and then cast aside the husk via bankruptcy.
I’m curious how the people who believe this is what happens think the LBO firms keep getting credit. The banks that end up holding the bag in this imaginary bankruptcy scenario are just idiots who keep falling for it over and over again? Like Charlie Brown with the football?
If this is a thing that they all do all the time and the creditors always lose, how do the creditors not learn?
Or is it possible that that’s just a story based on events that happened a few times and were extrapolated to be believed to be the norm?
There is no logic. The point is to express that private equity is bad and will immanentize the eschaton leading to their preferred utopian technological world of decentralization.
"Web3" was hijacked by cryptocurrency promoters as the marketing term for various get-rich-quick token schemes. (Generally what made them "web3" was simply that some venture capitalist had bought a bunch of the tokens early and would get to dump them on Coinbase.)
If there's going to be a web 1.0 revival, maybe it needs to jump straight to version 5 to leave enough of a gap from the taint of blockchain...
I propose “Web 95”
Web++ would get my nod
Web#, since it's going to be full of octothorpes anyway.
Web X.
Wait, shit--
I'm partial to Web ME my self.
tangential. when i was learning to program BASIC, one of advices that i got is to number your lines with 10 increment. 10, 20, 30 etc, so later you don't need to rewrite a lot when you need to insert some line. Yes you had to number your lines. I didn't question why though.
It's a good thing that the average person doesn't think of the web in terms of historical eras with arbitrary date cutoffs.
Web3 was never part of the Internet in the public consciousness. Nothing that requires logging in with a crypto wallet ever was.
Ya for me it's been over for quite some time, almost a quarter century since the Dot Bomb around 2000/2001.
What happened was that the original web architects, loosely people like Jimmy Wales, had a different vision of the future than the one we're living in now:
1) The web was supposed to make nearly all information freely accessible with sites like Wikipedia and infrastructure like Coral CDN and BitTorrent.
2) The next step was to make computing freely accessible with stuff like One Laptop Per Child and distributed computing with SETI@home, BOINC, and something like a p2p Docker cluster running on idle CPU time, presented as virtual CPUs on your computer to run any platform code you want, perhaps 1000 to 1 million times faster than today, which hasn't been invented yet.
3) The final step IMHO was to make money/resources/time freely accessible with a p2p UBI system similar to Bitcoin, where joining it would start depositing money into a wallet by virtue of need (potential) instead of ability (productivity), like Patreon on steroids.
Instead the powers that be chose greed around 2007 after a long politically regressive period which undid much of the social progress of the 1990s, ending Moore's law and starting the transition to walled gardens and surveillance capitalism.
My life experience has basically felt like living in the alternate timeline in Star Trek TNG when the Enterprise went through the temporal rift and Tasha Yar was still alive. Not only did we NOT get #2 or #3 above, but even #1 has been steadily eroded to the point that search engines have started to not work anymore. It's not just that nobody is able to get real work done because they're working too hard to make rent, but that rent is increasing exponentially faster than wages. And that any forward progress is eclipsed by transnational moneyed interests who can use regulatory capture to control the US Supreme Court for example, cementing corporate money in politics, preventing the breakup of any monopoly/duopoly and defunding the IRS/criminal justice system to prevent enforcement of even the most basic fraud/antitrust laws on financial elites.
Which brings us back to what you said: just like every other time in history, it will be volunteers working in obscurity without financial support who bring us the next revolutionary tech. I really wanted to be one of them. But after so many failed ventures, I'm realizing that I could have made more money delivering pizza and gambling on the stock market. I'll probably have to get a regular job soon to cover expenses for my aging self and family, then be too tired to work on interesting projects. So nothing much will change - the cavalry never arrives.
If someone really wants to change the world, open source something that eliminates a whole market. 3D printed hand-wound cell phone charger cases, I don't know. Something that liberates someone from suffering and removes all profit so it can't be ruined by subscription spyware.
Where is this Web 3.0 that I can move to? Do you have a link?
I can't wait for this time to arrive, sick of big companies controlling everybody's attention
I agree about private equity: it's merely the latest incarnation of rent-seeking or enclosure-building. The playbook is the same: cut costs, jack up prices, load up with exploding debt, go public or resell before the debt explodes. There is absolutely no value being created here. We saw the same thing with the corporate raiders of the 1980s (who bought companies below book value and scrapped them for parts).
But I do not agree that Web 3.0 will rise from the ashes. IMHO that's pure hopium. And you hear the same thing whenever people talk about federation.
Web 3.0 (and federation) offers nothing users actually care about. It complicates everything and makes everything more expensive. Centalized services won for a reason.
Companies like things like Web 3.0 and NFTs because they simply want to restrict or profit of secondary sales of digital goods. That's it. You don't own your identity or your data. You can just as easily be cut off from the related services. We've seen it with games and NFTs.
Financial transactions are generally reversible. That's a feature not a bug. A Web 3.0, just like with crypto wallets, will generally result in irrecoverable identities (ie wallets). Trying to build that into the contract through a consensus method of trusted contacts is just another potential vulnerability.
I really wish we, as tech-savvy people, were more cognizant of user benefits here rather than having some idealistic utopic view of a federated world.
Publicly-held companies aren't any better. The only companies that care about customers are those where founders and employees hold most of the stock.
As soon as it is owned mostly by investors, everything becomes about shareholder value.
but w/ exponentially much higher compute requirements since they insist on that crypto/blockchain whizbangery
I’d love this to happen but the average person is not skilled enough
Until Web 3.0 is disconnected from blockchains, I don't see this happening