
Square Raises $27.5 Million - ssclafani
http://blogs.wsj.com/digits/2011/01/10/square-raises-275-million/
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zbrock
Also, we're hiring: <https://squareup.com/jobs>

Square is a great place to work. It's an awesome team that's working on
solving a big and real problem. On the server side we're mostly writing Ruby
and practice pairing, TDD and aggressive refactoring. We're also looking for
talented iOS and Android developers for the client side. If all this sounds
interesting, feel free to email me: zach -at- squareup.com

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hop
All smartphones will have NFC chips in the next year or two which will allow
payments from your phone. I see a much bigger future in small merchants using
that than a card swipe via audio port, but maybe Square will have an NFC
solution as well.

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loire280
Credit cards are going to be the best form of payment for vendors for another
decade.

Even if next year all smartphones have NFC built-in, it will take many more
years before there are enough users with NFC to make it worth supporting for a
small vendor. Besides, just having the capability doesn't mean a user has
created an account -- and connecting to your cell phone bill doesn't count.

~~~
hop
Magnetic cards will surely be around for a long time, but the second NFC comes
out on the iPhone 5 (or 6), which Apple has hired a lot of NFC engineers for,
I think it will be the thing to have for all merchants. And many do already -
my BofA card has an embedded rfid which I have used at a lot of places with
non swipe readers. They have been widely used in Japan for the last decade.

My point is the playing field will be much more open, because it will be only
a software solution, not a hardware+software solution which has more barriers
to market - There could essentially be a Visa merchant app that accepts
payments from other phones.

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sundae79
Can somebody tell me who the target market for Square is: \- For brick and
mortar stores, obviously this is not the answer. \- For payment to friends
online transfer is far easier than carrying hardware in my pocket. \- For
online stores obviously there are many choices and many of them better. Is
there some other advantage to Square that I dont understand?

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techsupporter
As a Square customer through the non-profit cooperative I help run, I can tell
you that we chose Square because they are a quick and inexpensive method of
accepting swiped card payments from our members at a monthly meeting. Many
providers offer mobile payment solutions, but at a cost of $25-50 per month in
addition to the discount fees. Square's lack of a monthly charge (even with
the slightly higher discount rate) is a big deal for an org with a sub-$1000
budget.

Plus, they accomplished something PayPal couldn't: Creating an account for us
that didn't result in a subsequently-frozen account and reams of paperwork
being faxed to an abyss.

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aresant
Square is setting themselves up as an absolutely prime acquisition.

Square is innovating the features that small businesses care about, building a
dead simple interface around it, and expanding the traditional definition of
"small businesses" that can do this affordably to babysitters, dog walkers,
etc.

EDIT - Sorry to ramble but I am lit up by all that we can learn from Square's
biz-plan to build an incredible business that's a no-brainer $1b+ aquisition
target:

a) Find an entrenched, old school market like merchant processing.

b) Show up with such compelling technology and such a simple billing model
(that is still wildly profitably) that you get incredible free press to drive
aquisitions.

c) Prequalify the market by understanding that winning or making a DENT means
an easy $1B aquisition target for said entrenched monsters.

END EDIT

I wish I had $25m to have led this round myself :)

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acgourley
The problem they face is that their technology is simple enough and they have
no real barriers to entry. If their model proves successful expect to see a
lot of other competitors with similar hardware all competing on rates with
them. That will seriously drop the margins.

I like them as a company and wish them well, but I could also launch a
competitor to them if I felt so inclined. And that has to be a problem for
them.

~~~
jnovek
"but I could also launch a competitor to them if I felt so inclined."

Do you have the experience to make the card-reader hardware? The iOS software?
Do you have the cash to have the device produced for sale?

Perhaps you do have all those things at your disposal, but the vast majority
of people don't. I would say that simply by virtue of being hardware, the
barrier for entry is at least high enough to eliminate most of the "garage
hacker" types.

~~~
dotBen
Anyone who is already in the card payments market can answer yes to those
questions. And they have the advantage of already having the back end payment
processing heavy lifting AND existing relationships with real customers.

Sure, none of the existing players wanted to get into this space and be
disrupted - or perhaps even able to come up with this creative alternative
mechanism for taking benefits.

But we're now seeing them take notice, switch gears and offer rival services.
I'm hoping Square does well, but I think they face some stiff competition.

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jdp23
"The funding is also the latest sign of the optimism around Silicon Valley
start-ups, with many companies garnering large funding rounds at high
valuations recently." Yeah really. Good timing. If it is in fact a bubble,
nice to have the money in the bank ...

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jschuur
Did they get their payment via Square? That would be a hilarious way to eat
you own dogfood.

~~~
davidu
No, by wire. No need to pay those kinds of credit card fees for such a large
transaction.

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cletus
Square does seem poised for success/acquisition but m confused.

Square makes money on credit card processing right? So they have a revenue
model. What exactly do they need $25m for?

I'm 100% sure they have a plan. I guess what I'm really saying is there must
be more than meets the eye.

~~~
onwardly
Having a revenue model isn't the same as having revenue. The $25M is a runway
until either A) their next financing, or B) the point where they're _actual_
revenue will pay for all the brilliant engineers, other salaries, hardware
costs, overhead, marketing, etc. will ensure they have more than $0 in the
bank at all times.

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pitdesi
Also- see <http://feefighters.com/square-calculator> if you haven't... pretty
good calculator to see if it makes sense to switch to square... Surprisingly
it actually makes sense for a lot of small businesses - if they can capture
the long tail of the market that's pretty cool

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pitdesi
Intuit is competing, and they have a huge small biz network already...
[http://tech.fortune.cnn.com/2011/01/09/intuit-takes-a-
swipe-...](http://tech.fortune.cnn.com/2011/01/09/intuit-takes-a-swipe-at-
square/)

