13 ms·

And something that's actually profitable.

by ethnt 13y ago

jonknee 13y ago
Square isn't profitable... Even the linked article makes this clear: > While the company is not yet profitable, Dorsey has done a number of things designed to generate profit within two years, including bringing on new board members. New board members always means profits!
- cylinder 13y ago
  Starting to think Dorsey doesn't have a clue about business and is just a good product guy. What a ridiculous comment. Why shouldn't a payment processor be profitable?
  - deleted 13y ago
    [deleted]
  - pbreit 13y ago
    There are a lot of ways to make a LOT of money on payment processing beyond the basic transaction fees. But you've gotta get big first. Square is playing this perfectly.
  - potatolicious 13y ago
    Because they're growing? There are two types of profitability of concern here: 1 - Is the product itself profitable. In this case: does the cost of providing a payment transaction cost Square more money than they charge for said transaction. A company that fails #1 is a really long way from success. 2 - Is the company itself profitable. You can have #1 but not #2, if you're pouring the bulk of your income into expansion. Square can very well be making money hand over fist, but still be in the red due to pouring all would-be profits into acquiring more market share and R&D into new markets (aka the Amazon model). Naturally, this is a risky move - it presumes that the the core product is long-term sustainable (i.e. the new market share you're acquiring is just as profitable as the market share you already have), and that the new markets you're investing massively in are worth it. All said and done, Square not turning a profit overall doesn't say much about the overall viability of their business model.
  - jonknee 13y ago
    That's not a terrible conclusion. Square loses money on lots of transactions (small ones--under ~$8 and they're losing money). Credit card processing involves a per-transaction fee which really adds up for small purchases and Square's pricing doesn't have a minimum or a per transaction fee. Then there are things like Square Cash that make no business sense (there's no revenue, only expenses and risk). Great for consumers while it lasts though.
    - biturd 13y ago
      CC merchants are not supposed to ask a minimum CC charge. Call the merchant and complain, they have to take a one cent sale or a million dollar sale.
      - jonknee 13y ago
        That's not true anymore for under $10 transactions (see Dodd Frank), but the point was that since Square has no minimum fee they actually lose money on small transactions. Square is used a ton for these sort of small transactions which goes a ways to explain why they have never made a profit (but have billions in revenue).
  - capkutay 13y ago
    Yeah remember that turning a profit means you pay taxes as a corporation. Growing companies with lots of revenues will, in many cases, take a loss since they are investing that money into their own growth instead of making some profit and throwing close to half that money to the government.
- throwmeaway2525 13y ago
  You've finally solved for the mysterious Step 2! It was board members, all along (nobody believed me).

And something that's actually profitable.

by ethnt 13y ago

And something that's actually profitable.

Square isn't profitable... Even the linked article makes this clear: > While the company is not yet profitable, Dorsey has done a number of things designed to generate profit within two years, including bringing on new board members. New board members always means profits!

cylinder 13y ago
Starting to think Dorsey doesn't have a clue about business and is just a good product guy. What a ridiculous comment. Why shouldn't a payment processor be profitable?
- deleted 13y ago
  [deleted]
- pbreit 13y ago
  There are a lot of ways to make a LOT of money on payment processing beyond the basic transaction fees. But you've gotta get big first. Square is playing this perfectly.
- potatolicious 13y ago
  Because they're growing? There are two types of profitability of concern here: 1 - Is the product itself profitable. In this case: does the cost of providing a payment transaction cost Square more money than they charge for said transaction. A company that fails #1 is a really long way from success. 2 - Is the company itself profitable. You can have #1 but not #2, if you're pouring the bulk of your income into expansion. Square can very well be making money hand over fist, but still be in the red due to pouring all would-be profits into acquiring more market share and R&D into new markets (aka the Amazon model). Naturally, this is a risky move - it presumes that the the core product is long-term sustainable (i.e. the new market share you're acquiring is just as profitable as the market share you already have), and that the new markets you're investing massively in are worth it. All said and done, Square not turning a profit overall doesn't say much about the overall viability of their business model.
- jonknee 13y ago
  That's not a terrible conclusion. Square loses money on lots of transactions (small ones--under ~$8 and they're losing money). Credit card processing involves a per-transaction fee which really adds up for small purchases and Square's pricing doesn't have a minimum or a per transaction fee. Then there are things like Square Cash that make no business sense (there's no revenue, only expenses and risk). Great for consumers while it lasts though.
  - biturd 13y ago
    CC merchants are not supposed to ask a minimum CC charge. Call the merchant and complain, they have to take a one cent sale or a million dollar sale.
    - jonknee 13y ago
      That's not true anymore for under $10 transactions (see Dodd Frank), but the point was that since Square has no minimum fee they actually lose money on small transactions. Square is used a ton for these sort of small transactions which goes a ways to explain why they have never made a profit (but have billions in revenue).
- capkutay 13y ago
  Yeah remember that turning a profit means you pay taxes as a corporation. Growing companies with lots of revenues will, in many cases, take a loss since they are investing that money into their own growth instead of making some profit and throwing close to half that money to the government.
throwmeaway2525 13y ago
You've finally solved for the mysterious Step 2! It was board members, all along (nobody believed me).