

Back to Square One - arms77
http://www.fastcompany.com/3033412/back-to-square-one

======
jblow
I don't know a lot about Square, but this article reads like a hit piece,
wherein the author has an agenda to write a negative article about the company
and to cherry-pick facts and bend descriptions to build the narrative.

All magazine-style writing is like this to some degree, but this one is just
too extreme. It is basically junk writing.

Look, for example, at what Vinod Khosla says about the Starbucks deal, all of
which is totally reasonable, but he is turned into some kind of guilty-person-
in-detective-fiction with phrases like "he says defensively", which strengthen
the desired narrative but have no relation to verifiable facts.

------
nwenzel
I'd be willing to bet that counting out Jack Dorsey and Square is going to
look a lot like counting out Jeff Bezos and Amazon back while they were
investing in AWS.

To me, it looks like Square used credit card readers as an entry to point-of-
sale which was then an intro into vertical specific applications (Square
Appointments, restaurant and delivery are 3 examples that immediately come to
mind). These evolutionary steps all take time and investment.

As another commenter pointed out, looks like a hit piece.

~~~
nrao123
Actually, I didn't think it was a hit piece. I interpreted the article the
same way you did (Bezos/AMZN) use the payment data/merchant network for
"products that Square is launching--Market, Cash, Feedback, Invoices, Order,
Open Tickets, Capital, Dashboard, Appointments" In "THE SEARCH FOR NON-
PAYMENTS REVENUE."

Once they build out the non-payment revenue, they will come back to building
back the payment network to squeeze out Visa/Amex/Mastercard.

I think their initial plan was to directly build out the payment network but
given the lower margins, they would have to wait a long long time. However,
because of the hype/valuation trap, investors didn't have the patience. So,
they have course corrected to add higher margin SAAS/software/financing
products (open tickets, invoices....). Once the margins get built out, then
they can get back to the payments business.

Surprising, that they are not anonymising credit card data and selling that to
Hedge Funds. That could be a $25-50M EBITDA business. Majestic Research did
that and sold to ITG research (for a "small" amount). But Square's data set
will be more valuable than Majestic:
[http://blogs.wsj.com/economics/2010/06/30/using-starbucks-
du...](http://blogs.wsj.com/economics/2010/06/30/using-starbucks-dunkin-
donuts-to-track-economy/)

Here is another example of MasterCard's research products:
[http://www.masterintelligence.com/](http://www.masterintelligence.com/)

------
callmeed
It's weird that they list Stripe as a competitor given that one is focused on
in-person/retail and the other online payments. They currently aren't really
substitutes.

That being said, I always thought Square should have offered an online API
long ago.

------
abalone
"The following year, the company would lose $25 million from Starbucks
transaction costs alone (and will continue to incur losses until the contract
expires next year)."

I can't find the link but I distinctly recall Keith Rabois claiming that
Square would make money on the deal. I thought this was highly dubious at the
time -- it just didn't make sense when you considered how big Starbucks was
already, meaning could already demand the best rates possible.

Not that that means it was a bad deal.. it was clearly a marketing move.
"Starbucks uses Square". But that kind of marketing quickly loses its value
once the public knows it was a result of loss-leader promotions, not intrinsic
product value.

------
elyrly
I didn't know Square was under the scrutiny of the tech press. Seems to me the
company will continue to exist without major disruption (buzz-word) in the
payment market.

------
dang
Url changed from [http://www.businessinsider.com/the-future-of-
square-2014-8](http://www.businessinsider.com/the-future-of-square-2014-8),
which points to this.

~~~
read
(off-topic: dang, if you see this, can I ask you to reconsider HN's approach
to downvoting? The arguments are:
[https://news.ycombinator.com/item?id=7963116](https://news.ycombinator.com/item?id=7963116))

Thanks.

(Edit: Great, more downvoting)

~~~
dang
There's a much easier way to get us to see something: simply email
hn@ycombinator.com.

~~~
read
If you already have an HN account, which I do, email is not much easier than
posting with HN. Unless one goes through the trouble of creating a new email
account, to some extent email can reveal your identity.

But I understand that what you are trying to say is you prefer to receive
email for HN issues.

I would also like you to see this:
[https://news.ycombinator.com/item?id=8176055](https://news.ycombinator.com/item?id=8176055)

