
Square Raises $150M at a $6B Valuation - minimaxir
http://bits.blogs.nytimes.com/2014/10/05/square-raises-150-million-at-a-6-billion-valuation/
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dchuk
> "Square, a six-year-old start-up, spent much of its early years bringing
> small, square-shaped credit card readers to small and medium-sized
> businesses."

6 years old, just raised $150mn...yeah, that's not a startup anymore. It seems
some people consider tech companies and startups to be equivalent, but startup
is a term for business stage not business type.

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rcaught
I've come to understand a startup as a company that doesn't want to pay
overtime.

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georgemcbay
Nah, that's pretty much the entire industry, even the ones that don't call
themselves startups anymore.

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wjk
That couldnt be more incorrect, from my own experience at least where i live.

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freehunter
Every salaries job I've ever worked has put me in as an "exempt" employee,
paid for the job I do and not the hours I work, so not eligible for overtime.
This includes non-tech companies who have been in business for over 100 years,
across three states.

It's pretty standard when you're a salaried employee.

~~~
krschultz
Counter anecdote, I was an exempt salaried engineer at General Dynamics, and
got paid time and a half for every hour over 40, if I worked more than 45
hours per week.

It boosted my annual salary noticeably, because we worked 45-50 hours nearly
every week. I hear that the OT policy still exists, but few people still get
OT because of the DoD sequester. But in 2010-2012, it was very nice.

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freehunter
That's completely up to the discretion of your employer. The reason for
classifying an employee as an exempt employee is to exempt them from the Fair
Labor Standards Act, usually with the goal of excluding them from demanding
overtime pay. I'm not sure what the benefits are for classifying someone as
exempt but then still giving them overtime pay.

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kartikkumar
I don't really understand the payment-company wars. Living in Europe, I can
instantly wire money to anyone in the EU for free, so I'm wondering if
companies like Square are solving a problem that uniquely exists in the US, or
whether I've got the wrong end of the stick.

Does this have to do with the predominance of credit cards in the US otherwise
(a relatively uncommon mode of payment where I live)?

Seems to me like a high value for a problem that I can't relate to.

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masklinn
> Does this have to do with the predominance of credit cards in the US
> otherwise (a relatively uncommon mode of payment where I live)?

Likely, and the same problem exists in European countries with significant
CC[0] penetration (e.g. France, or Iceland where cash marks you as a tourist
and I've seen people buy a single packet of gum on card): you have to request
a quote from a payment processor, the first link I get (EMS) tells me to
"request an offer or contact the sales team".

[0] leaving it for posterity, but I actually meant "cards-based payment"
rather than "credit card": the payment processor issue applies to both. It is
true (in my experience) that euro countries tend to use debit cards rather
than credit cards.

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kartikkumar
Is it really that common to payment with credit card in France? I'm assuming
that's only the case in Paris? I regularly buy stuff on card, but always debit
if I can help it, and I would assume that that's also the case in the France.

I grew up in The Netherlands and I'm living in Italy now, and credit cards are
generally viewed with suspicion. I didn't get a credit card until a few years
ago when I needed one to live in the US.

A lot of people that I know are uncomfortable with credit cards. I'm guessing
that's because they're associated with fraud; banks here don't make it easy to
file reports in general. My card was used fraudulently for the first time a
few months ago and it took A LOT of paperwork for my bank to accept that I
hadn't made the purchases.

I've always wondered if it's a coincide that Paypal, Square, Google Wallet,
Apple Pay etc. are all US-based, or whether it's because they don't address a
significant pain point this side of the Atlantic.

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masklinn
> Is it really that common to payment with credit card in France? I'm assuming
> that's only the case in Paris? I regularly buy stuff on card, but always
> debit if I can help it, and I would assume that that's also the case in the
> France.

France doesn't really make a difference between "credit card" and "debit
card": it's essentially an implementation detail of your card's contract, the
former is called "deferred debit" and the latter is called "immediate debit"
(or "direct debit").

I believe the latter is indeed much more common than the former (and the
default), but even it can have credit-ish characteristics in the form of
overdraft (with variable depth and interests, and banks may waive part of the
overdraft fees under a certain amount, mine did when I was there).

My point was more about card-based payments in general (as opposed to cash,
bank transfer or cheques) than specifically credit-card and cards are
definitely extremely common in france (though not absolutely ubiquitous).

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encoderer
Apple Pay is certainly a threat to Square, but I'm sure Apple doesn't care
about POS terminals and that's a pretty huge market on its own.

On top of that, Square Cash is right now the absolute easiest way to send
somebody money. Just a moment ago I sent a friend $45 in less than 60 seconds
with a single email. Instantly I'm emailed back with a confirmation that the
cash will be in his account in 1 or 2 days. In my experience he'll have the
cash tomorrow.

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Keats
Not entirely sure how different it is in the US but I (UK) can send money from
my bank account to a friend's one and he/she gets the money in less than 20
seconds.

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qeorge
But wouldn't you and your friend have to exchange bank account numbers?

An advantage of Square Cash is it uses email as a proxy, and you probably
already know your friend's email.

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Keats
You need to know the sort code / account number you're sending money to which
is written on the cards the first time, after that it's already saved in my
bank portal and I can just select them

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chambo622
I get the feeling that what Square is doing now is just a glimpse of their
greater plan. They have a proven ability to execute and release polished
products that are enjoyable to use.

Nearly everyone I every need to pay is on Square Cash (and those who aren't
soon are, the barrier to signup is very low) and the app is just a pleasure to
use compared to the competition. It's second nature at this point.

~~~
abalone
Cold water:

Square Wallet was a big dud, as was the Starbucks partnership. That was their
"greater plan" at one point.

Square Cash is easy to use.. but operates at a structural loss of over 20
cents per transaction.

There's plenty of issues when you look past the surface, particularly with the
business model. They have not yet delivered a polished product that's
enjoyable to use _and makes lots of money_.

~~~
larzang
> They have not yet delivered a polished product that's enjoyable to use and
> makes lots of money.

The small business I work for recently switched to Square Register via an iPad
and the Square Stand for all POS and it's pretty brilliant. It's a big step up
from using a phone plus the regular little reader, and setup and use are quite
simple even for our tech-illiterate employees. Judging by the popularity of
the related receipt printer and cash drawers on Amazon, we're far from the
only ones to make this jump recently.

I don't know how much money they're making per $100 stand, but they've made
the barrier to a modern flexible POS system so low that I'd be surprised if
their share of the payment processing pie isn't growing quickly.

~~~
abalone
It's not the stand they make money on, it's the 2.75% payment processing rate.
That is higher than what competitors charge (closer to 2%), and as business
grows that can add up to a significant premium. That is what drives them off
of Square. So there's a kind of glass ceiling there.. to keep those customers
Square would need to renegotiate a lower rate that trims down their gross
margin.

Square does have a really good niche in the mom-and-pop shops where 2.75% is
an ok price given the easy of signup and free POS system. But at the same time
there may be significant customer acquisition and support and fraud costs in
that niche.

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AndrewKemendo
Looks like they blew past their valuation projections from 2011:

[http://www.pitchenvy.com/gallery/square-pitch-
deck/](http://www.pitchenvy.com/gallery/square-pitch-deck/)

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msoad
I wonder how this kind of money raising impact employees? (compared to going
IPO)

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netcan
For those that own stock or options earned and vested, it's a weighty
validation about the value of that asset. Assuming the there is a core of
early programmers that collectively own 5-15% of the stock but are not
involved in the financing side of the business, I am sure they feel
differently following this investment/valuation. A 0.1% stake is a big deal
now.

IPOs of this decade in tech seem to be a different beast. Much bigger.
Companies seem to be successfully raising large (+100m+) sums without going to
pubic markets.

Understanding the implications of this is beyond my pay grade, but I imagine
there are some complex relationships with early employee and investors. IPOs
allow stockholders to cash out and the company itself to raise capital.
Companies have an alternative way of raising capital which many now prefer. I
imagine that all demand for their stock from later stage investors can be
channeled into to company's coffers this way without dilution by stockholders.

Either way for employees that have some tenure at Square, being now valued at
$6bn is much better than being valued at $600m or $60m.

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letsride
When Square will open their platform for Indian Users ? Any Idea ?

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kolev
Totally unrelated: $6B is Bitcoin's market cap times 15.

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kolev
Edit: "... times 1.5."

