4 ms·

Let's get this straight: Square/Dorsey have an amazing PR machine. We hear about him like some kind of startup God due to it, not necessarily because he is so

by gsibble 14y ago

Let's get this straight: Square/Dorsey have an amazing PR machine. We hear about him like some kind of startup God due to it, not necessarily because he is so incredible. To be clear, he's never had an exit and I don't see one for Twitter or Square anytime soon. There's hundreds of millions (billions?) of dollars of VC cash sitting in those investments without getting a return. Meanwhile, Square announced in April it was trying to raise $250m at a $4B valuation (Source: http://techcrunch.com/2012/04/25/square-now-processing-5b-in-payments-per-year-volume-up-25-percent-since-march/ http://techcrunch.com/2012/04/25/square-now-processing-5b-in...). They just finished that raise with $200m at a $3.25B valuation. That's a huge miss for such a big company. They're also burning cash at an enormous rate (see http://i.imgur.com/b1Sm9.png http://i.imgur.com/b1Sm9.png - leaked slide). So just remember that he may be an amazing person, but the PR engine surrounding him so distorts everything that we hear that at least for me, I've stopped paying attention entirely. PS: Don't even get me started on how much the press entirely screwed up the Starbucks partnership reporting. It's a tiny marketing ploy is all. PPS: This is mostly just my opinion obviously. I prefer businesses to focus on creating a viable, long-term business instead of a clever marketing machine with an unsustainable revenue model.

colmvp 14y ago
Good points but as an aside, can we really trust a .png as a 'leaked slide?' I could easily Photoshop a pretty graph with a watermark and call it evidence of a company's burn rate.
mturmon 14y ago
Attributing credit for the Square hardware is tough. The WSJ article says Dorsey "engineered" the card reader. The blog post says no, it was Dorsey's friend, Jim McKelvey, who engineered the card reader. However, the blog post does not say that McKelvey, in turn, seems to have outsourced the engineering to Robert Morley, a hardware designer and EE professor in St. Louis (http://venturebeat.com/2009/12/15/professor-claims-square-took-his-credit-card-reading-technology/ http://venturebeat.com/2009/12/15/professor-claims-square-to...). This last connection seems plausible to me. I went to school with McKelvey and knew him slightly. Morley was a very well-known EE professor at our university, and a hardware hacker who founded a successful company called Micro-Term that made terminals, and later worked on hearing aid hardware which I'm not sure ever came to market. Exactly the kind of person a former CS major and glassblower like McKelvey might ask to do the design. The most recent summary I could find of the "who engineered the Square hardware" question is: http://techcrunch.com/2010/12/02/jack-dorseys-square-embroiled-in-nasty-litigation-over-card-reader-patent/ http://techcrunch.com/2010/12/02/jack-dorseys-square-embroil...
- philip1209 14y ago
  I didn't say that Jim engineered the card reader - I said that Square credits Jim. I linked to this paper, but I do not think you explored further: http://news.priorsmart.com/square-v-rem-holdings-3-l3t2/ http://news.priorsmart.com/square-v-rem-holdings-3-l3t2/ It is a filing by Square about the patent you mentioned that is held by Morley. Square is filing to have McKelvey added to the patent. Thus, Square as a corporation associates McKelvey with the device's invention, not Jack. All of the points you make were implicit from that link. PS - I'm a student at WashU, did you graduate from here?
  - mturmon 14y ago
    These seem like distinctions that matter little, and yes, I saw the paper you refer to. I posted here because I thought someone might have something new to add to this story -- the above info seems to be all circa 2010. Yes, BSCS, BSEE. My roommate worked in Morley's lab.
pg 14y ago
This is going in the middlebrow dismissal corpus. (I don't plan to mention that every time I find a new one, but this is the most perfect example I've found since I thought of trying to detect them algorithmically.) If a 3.25b valuation at Square's age is a huge miss, all but a handful of companies in history have missed worse. Do you actually know anything about Square's "PR machine," or are you just assuming he has one because he's in the press a lot? I don't know myself whether for example they have an in-house group that does aggressive outbound PR, or whether they have an outside PR firm, or both, or neither. It's possible the answer is neither; I get mentioned in the press a lot, and YC has neither.
- gsibble 14y ago
  Hi pg. Like I said, my evaluation is opinion and yours carries a lot more weight than mine, so I'd love any insight you have. Maybe I've got something wrong in my analysis. Do you feel that Square's raise was successful even though it was a lower amount at a lower valuation than it anticipated? Maybe not a huge miss, but that seems like a miss to me. Thoughts? (PS: I am using the term miss in terms of raise/valuation, not in terms of company success). As for PR, having worked hard to get press both with PR and without, I feel like I have a sense of when it is being used and when it is not. In this case, Dorsey's coverage seems extraneous, flashy, and sometimes out of nowhere. Why are there so many articles about him and Square from so many publications seemingly all the time? Why all this hype around someone that, while immensely impressive, is still only one of a large number of people doing amazing things? Why do we not see so many articles on Elon Musk and Space-X from every magazine on the planet? I can't seem to go a day without seeing a profile of Dorsey or about Square. Feels to me like a very well calculated PR plan. Again, I may be wrong and would appreciate your thoughts. Thanks and sorry for the entrance into the dismissal corpus. Promise to do my best to stay out of there in the future.
  - btyrad 14y ago
    Some companies go public on the stock market and don't even raise 200m of cash. To raise 200m in VC capital alone is an enormous task. As for PR, people love public figures and leaders. They want to associate with the individual strife to the top! It makes for an incredible story about your product/service and this is what you want to do. You want to strike an emotion with your users!
qq66 14y ago
It's amazing what people will dismiss as "unsustainable revenue models." A business that makes money from every single user, and does so in a way that scales exactly linearly with usage? "Unsustainable!"
- gsibble 14y ago
  You are correct. I mis-spoke. I should have said "profitability models" not revenue models. Now, you seem to have interpreted that statement correctly anyways. So do you have any evidence whatsoever that Square "makes money" (ie. turns a profit) from "every single user"?
  - qq66 14y ago
    I would consider "using" Square to be making a transaction through Square. Square takes 2.75% of that transaction regardless of its size. So yes, Square makes money from every user.
    - ssebro 14y ago
      His point is that he thinks that many people with the square card reader never read any cards. He's right - unless there's a government subsidy that I don't know about, Square does not make money from every user.
      - gsibble 14y ago
        I appreciate the help, but that's not actually my point. My point is that Square does not keep the 2.75%. It is doled out as cost of goods sold in the form of interchange fees back to card networks and issuing banks. No one has any idea how little of that fee that Square keeps but I would guess around 0.2 - 0.5% at most.
    - gsibble 14y ago
      And do you know the breakdown of that 2.75%? Most of it does not go to Square, it goes to card processing networks and issuing banks. Do you know what those are?

by gsibble 14y ago

colmvp 14y ago

Good points but as an aside, can we really trust a .png as a 'leaked slide?' I could easily Photoshop a pretty graph with a watermark and call it evidence of a company's burn rate.

mturmon 14y ago

Attributing credit for the Square hardware is tough. The WSJ article says Dorsey "engineered" the card reader. The blog post says no, it was Dorsey's friend, Jim McKelvey, who engineered the card reader. However, the blog post does not say that McKelvey, in turn, seems to have outsourced the engineering to Robert Morley, a hardware designer and EE professor in St. Louis (http://venturebeat.com/2009/12/15/professor-claims-square-took-his-credit-card-reading-technology/ http://venturebeat.com/2009/12/15/professor-claims-square-to...). This last connection seems plausible to me. I went to school with McKelvey and knew him slightly. Morley was a very well-known EE professor at our university, and a hardware hacker who founded a successful company called Micro-Term that made terminals, and later worked on hearing aid hardware which I'm not sure ever came to market. Exactly the kind of person a former CS major and glassblower like McKelvey might ask to do the design. The most recent summary I could find of the "who engineered the Square hardware" question is: http://techcrunch.com/2010/12/02/jack-dorseys-square-embroiled-in-nasty-litigation-over-card-reader-patent/ http://techcrunch.com/2010/12/02/jack-dorseys-square-embroil...

philip1209 14y ago
I didn't say that Jim engineered the card reader - I said that Square credits Jim. I linked to this paper, but I do not think you explored further: http://news.priorsmart.com/square-v-rem-holdings-3-l3t2/ http://news.priorsmart.com/square-v-rem-holdings-3-l3t2/ It is a filing by Square about the patent you mentioned that is held by Morley. Square is filing to have McKelvey added to the patent. Thus, Square as a corporation associates McKelvey with the device's invention, not Jack. All of the points you make were implicit from that link. PS - I'm a student at WashU, did you graduate from here?
- mturmon 14y ago
  These seem like distinctions that matter little, and yes, I saw the paper you refer to. I posted here because I thought someone might have something new to add to this story -- the above info seems to be all circa 2010. Yes, BSCS, BSEE. My roommate worked in Morley's lab.

pg 14y ago

This is going in the middlebrow dismissal corpus. (I don't plan to mention that every time I find a new one, but this is the most perfect example I've found since I thought of trying to detect them algorithmically.) If a 3.25b valuation at Square's age is a huge miss, all but a handful of companies in history have missed worse. Do you actually know anything about Square's "PR machine," or are you just assuming he has one because he's in the press a lot? I don't know myself whether for example they have an in-house group that does aggressive outbound PR, or whether they have an outside PR firm, or both, or neither. It's possible the answer is neither; I get mentioned in the press a lot, and YC has neither.

gsibble 14y ago
Hi pg. Like I said, my evaluation is opinion and yours carries a lot more weight than mine, so I'd love any insight you have. Maybe I've got something wrong in my analysis. Do you feel that Square's raise was successful even though it was a lower amount at a lower valuation than it anticipated? Maybe not a huge miss, but that seems like a miss to me. Thoughts? (PS: I am using the term miss in terms of raise/valuation, not in terms of company success). As for PR, having worked hard to get press both with PR and without, I feel like I have a sense of when it is being used and when it is not. In this case, Dorsey's coverage seems extraneous, flashy, and sometimes out of nowhere. Why are there so many articles about him and Square from so many publications seemingly all the time? Why all this hype around someone that, while immensely impressive, is still only one of a large number of people doing amazing things? Why do we not see so many articles on Elon Musk and Space-X from every magazine on the planet? I can't seem to go a day without seeing a profile of Dorsey or about Square. Feels to me like a very well calculated PR plan. Again, I may be wrong and would appreciate your thoughts. Thanks and sorry for the entrance into the dismissal corpus. Promise to do my best to stay out of there in the future.
- btyrad 14y ago
  Some companies go public on the stock market and don't even raise 200m of cash. To raise 200m in VC capital alone is an enormous task. As for PR, people love public figures and leaders. They want to associate with the individual strife to the top! It makes for an incredible story about your product/service and this is what you want to do. You want to strike an emotion with your users!

qq66 14y ago

It's amazing what people will dismiss as "unsustainable revenue models." A business that makes money from every single user, and does so in a way that scales exactly linearly with usage? "Unsustainable!"

gsibble 14y ago
You are correct. I mis-spoke. I should have said "profitability models" not revenue models. Now, you seem to have interpreted that statement correctly anyways. So do you have any evidence whatsoever that Square "makes money" (ie. turns a profit) from "every single user"?
- qq66 14y ago
  I would consider "using" Square to be making a transaction through Square. Square takes 2.75% of that transaction regardless of its size. So yes, Square makes money from every user.
  - ssebro 14y ago
    His point is that he thinks that many people with the square card reader never read any cards. He's right - unless there's a government subsidy that I don't know about, Square does not make money from every user.
    - gsibble 14y ago
      I appreciate the help, but that's not actually my point. My point is that Square does not keep the 2.75%. It is doled out as cost of goods sold in the form of interchange fees back to card networks and issuing banks. No one has any idea how little of that fee that Square keeps but I would guess around 0.2 - 0.5% at most.
  - gsibble 14y ago
    And do you know the breakdown of that 2.75%? Most of it does not go to Square, it goes to card processing networks and issuing banks. Do you know what those are?