B2B Payments

Jack Dorsey Says Square Just “Wants To Make Commerce Easier”

Mel Brooks famously observed that it is good to be the king, but while few of us will ever intentionally pass up a turn in the throne, there are downsides to the crown. When the going gets tough, the king is the person most at risk of having his head separated from his shoulders.

Such has been the trial of Square for the last year, and of its famous founder Jack Dorsey. Hailed as the service that launched a thousand mobile points of sale, the buzz turned to blow back around this time last year with the publication of an article in the The Wall Street Journal that implied the company was bleeding money, shelving their IPO and looking for a sale (probably to Google).

“It didn’t match reality, it didn’t match what was actually happening,” Dorsey argued to BuzzFeed News. “The most negative press — the loss, the acquisition, the IPO — was just not based on reality. We invested our money to grow the company, which every single company out there does. We chose not to focus on profit in order to focus on growth.”

That focus on growth has included moves like the creation of Square Capital, a small business lending platform, the acquisition of food delivery startup Caviar and the creation of Cashtags, a new take on P2P payments that cuts out the necessity of exchanging personal information to make payments. The service is also open for organizations.

But “focused on growth, not profit” has become something of a standard line and obscures the answer to an important question: At the end of all this growth, will the company be able to flip the switch on actually making money?

“The reason that we have been successful in our margin and have the choice to make payments profitable is [because of] risk. And that’s all around data. If we can take all the data and minimize risk, then we can create an extremely healthy margin,” Dorsey noted.

Data is the essential element, the driving element, for much of what Square is trying to accomplish – particularly with its new CRM and also with the Capital program. And Square certainly has access to a lot of data.

But it begs the question: Is Square now a data-based business services firm, with a sideline business in payments, instead of a payments player?

“I think the connection is payments at the core, the underlying financial services, which we’ve been doing for five years, and the marketing services — which we knew there was something there, we just didn’t have the right answer,” Dorsey said. “CRM is a first start to that right answer. Caviar is another take on that right answer, with the other concern that we just don’t want to build a restaurant point of sale right now because of the table management complexities, but we can go above the physical constraint by adding delivery, without the restaurant having to do anything.”

Dorsey also noted that although Square has been criticized for bolting on services like Caviar, it is often because critics don’t see how such a move gives Square more access to the market for their core service package.

“If we do that well, we may have the opportunity and we will have the opportunity to show the restaurant our other products, such as Capital. We have a bunch of requests today from Caviar restaurants around, ‘Hey, delivery is working out really well and I want to build a whole separate line for my restaurant just for delivery. Can I use Capital? Can I get an advance of cash to actually build that up?’ Even without that, Caviar represents a new behavior, which represents new customers.”

However, Dorsey did admit that the lack of obvious intutive connection between his firm’s recent moves probably contributed to the bad press.

“I think the biggest thing that the year of bad press put upon us and focused us on was how important it is to make sure that we have not just an internal cohesion but an external cohesion, and that there are visible connections between everything that we’re doing,” he said.

And that connection, says Dorsey is essentially easy to see. He says at base his firm – through a variety of tools – just wants to make commerce easier on everyone.


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