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Food Delivery Startup Caviar In Talks To Be Acquired By Square

73 points by peterkchen 12y ago

joemaller1 12y ago
Honestly, I thought Square was kind of broke. Most of my contact with Square is in small cafes and restaurants, making this pivot kind of bizarre. Why would any food service company sign up for payment services with a company that's also competing with them? Stripe should be all over that angle.
- james33 12y ago
  That's a good point, but Square and Stripe aren't really competitors, so I'm not sure what the opportunity is for Stripe (unless you are suggesting they launch a card reader).
- saidajigumi 12y ago
  I've also seen a long-term upward adoption trend for Square in small businesses in my area. Some of these are at their first-time accepting credit cards, especially at local farmer's markets where Square's adoption has increased from a fringe payments player to near ubiquity (>90%) over the past three to four years. It's also been interesting to see an increasing trend in businesses switching to Square from traditional wired or wireless credit card systems. Every time I hear that Square isn't doing well financially, my heart sinks a bit. From my experience, it seems that they're nailing an underserved market and greatly improving the experience for these small businesses and their customers.
  - sheetjs 12y ago
    > they're nailing an underserved market There's a good reason the market is underserved. If it were wildly profitable to operate in that space, you'd see many more players.
    - dcpdx 12y ago
      I'm glad nobody told Larry or Sergey that before they started Google.
      - untog 12y ago
        Search engines had a lot of competition?
      - sheetjs 12y ago
        Sometimes it helps to do a little research before trying to make a clever retort. Wikipedia has decent coverage of search engines: https://en.wikipedia.org/wiki/Web_search_engine https://en.wikipedia.org/wiki/Web_search_engine https://en.wikipedia.org/wiki/Timeline_of_web_search_engines https://en.wikipedia.org/wiki/Timeline_of_web_search_engines Go.com, Lycos, AltaVista, Excite, Yahoo!, Dogpile, Ask.com, Yandex and many other search engines existed before Google entered. Most were wildly profitable.
        argonaut 12y ago
        Sometimes it helps to read the articles you link to. None of them show that "Most were wildly profitable." In fact, those articles mention that search engines before google struggled to make money.
hayksaakian 12y ago
Interesting that Square is looking for acquisitions in the industry. Payment processing by itself always lacked tangible lock in. From another article: > TechCrunch understands from a reliable source that Square was a “serious bidder” against Google for Appetas, a restaurant website building platform Google just acquired. http://techcrunch.com/2014/05/12/with-new-food-app-square-order-square-wants-a-bigger-bite-of-the-restaurant-industry/ http://techcrunch.com/2014/05/12/with-new-food-app-square-or...
- zachlipton 12y ago
  Exactly. Square is trying to build up a collection of services to offer local businesses, especially restaurants, of which payments is just one. Google has been playing in the same game, with the main aim of selling ads to local small businesses, but hasn't really moved fast enough in pushing payments.
gamblor956 12y ago
While it seems strange Caviar would seek to be acquired so soon after raising funding, it’s possible that the competitive environment is just too much for it to handle, and maybe it would do better to be part of a larger company. In any other environment, a failing or non-competitive company would be purchased for the value of its net assets. In this situation, that would be at most $20 million and likely for less than $10 million. It's silly stuff like this that convinces everyone outside of the SV echo chamber that the tech market is looking at another bubble.
- jasondc 12y ago
  I'm assuming this acquisition (if it does occur) would be paid for mostly in Square stock. $100 million cash vs $100 million in Square stock have two different values, depending on how you feel about Square's current valuation and future prospects.
  - presty 12y ago
    given the rise of square, I'd say a $100M in stocks is going to be worth a lot more than $100M in cash
    - smtddr 12y ago
      That's debatable - https://news.ycombinator.com/item?id=7322642 https://news.ycombinator.com/item?id=7322642 ...and... http://techcrunch.com/2014/05/02/with-ipo-hopes-fading-square-and-box-face-reality-of-commodity-products/ http://techcrunch.com/2014/05/02/with-ipo-hopes-fading-squar...
    - hkmurakami 12y ago
      Remember when Instagram was bought by Facebook right before its IPO, then FB proceeded to tank post IPO? Things have recovered since then of course, but that sort of thing can always happen.
- onewaystreet 12y ago
  It's not a bubble when one VC backed company buys another for more than the value of their assets alone. That's how business is done. You can't expect Caviar's investors to sign off on an acquisition where they get no return at all.
MattLaroche 12y ago
The actual headline is "Curated Food Delivery Startup Caviar In Talks To Be Acquired By Square For $100 Million" - this isn't a done deal.
- dang 12y ago
  Thank you. We changed it.
  - MattLaroche 12y ago
    Thanks for updating it. Wasn't sure if TC had changed it, or if the poster was editorializing.
curiousgorge 12y ago
I'm always curious as to who profits from a leak like this. is there ever any interest from the company or acquiring party to leak this deal to the press before it closes? It's happened with Twitch and now Caviar, so i've started thinking through reasons why it'd be in either party's interest to leak the deal. Any thoughts? Or should I take my tin-foil hat off?
- deleted 12y ago
  [deleted]
  - curiousgorge 12y ago
    On the acquiring party's side, isn't it then obvious what side is responsible for leaking the deal? I'd imagine this move breaches some level of trust and risks the entirety of the deal. To me, when I hear news like this before the proverbial money is in the bank I actually think the deal is likely to fall through
    - swiss2008 12y ago
      Completely agree here. I'd love to hear opinions on the motivation & risks of this news.
rokhayakebe 12y ago
If you acquire a company with $x million in cash. How is the money handled?
- stock_toaster 12y ago
  It is just another asset of the company being acquired, like a desk or a chair. As part of the acquire agreement, they may be required to pay down existing debt with any cash on hand or something too? Just guessing.
mandeepj 12y ago
Was n't there a news recently that Square is losing millions of dollars and struggling to survive? There were some buyout rumors also. May this be Caviar acquisition talk is kind of survival step by Square to diversify into other areas.
o0-0o 12y ago
Caviar is the only reason to order food in Manhattan. Time after time, they have done the right thing by me. They are on the top of the charts with customer service and relationship management. They could seminar school 99% of businesses out there on how to do right by people. And, this says nothing about the quality of the restaurants they provide. Truly world class, and I hope the GPs make a killing on their equity stake. ;p
kaltsturm 12y ago
Short question with regard to their marketing. How did they start? How do they do marketing? I am just wondering how they did that good job in such competitive landscape. Thanks. Best regards.
- 2pasc 12y ago
  Initially their growth was only word of mouth (and leveraging networks of Companies using them to order food for lunch).

73 points by peterkchen 12y ago

Honestly, I thought Square was kind of broke. Most of my contact with Square is in small cafes and restaurants, making this pivot kind of bizarre. Why would any food service company sign up for payment services with a company that's also competing with them? Stripe should be all over that angle.

james33 12y ago
That's a good point, but Square and Stripe aren't really competitors, so I'm not sure what the opportunity is for Stripe (unless you are suggesting they launch a card reader).
saidajigumi 12y ago
I've also seen a long-term upward adoption trend for Square in small businesses in my area. Some of these are at their first-time accepting credit cards, especially at local farmer's markets where Square's adoption has increased from a fringe payments player to near ubiquity (>90%) over the past three to four years. It's also been interesting to see an increasing trend in businesses switching to Square from traditional wired or wireless credit card systems. Every time I hear that Square isn't doing well financially, my heart sinks a bit. From my experience, it seems that they're nailing an underserved market and greatly improving the experience for these small businesses and their customers.
- sheetjs 12y ago
  > they're nailing an underserved market There's a good reason the market is underserved. If it were wildly profitable to operate in that space, you'd see many more players.
  - dcpdx 12y ago
    I'm glad nobody told Larry or Sergey that before they started Google.
    - untog 12y ago
      Search engines had a lot of competition?
    - sheetjs 12y ago
      Sometimes it helps to do a little research before trying to make a clever retort. Wikipedia has decent coverage of search engines: https://en.wikipedia.org/wiki/Web_search_engine https://en.wikipedia.org/wiki/Web_search_engine https://en.wikipedia.org/wiki/Timeline_of_web_search_engines https://en.wikipedia.org/wiki/Timeline_of_web_search_engines Go.com, Lycos, AltaVista, Excite, Yahoo!, Dogpile, Ask.com, Yandex and many other search engines existed before Google entered. Most were wildly profitable.
      - argonaut 12y ago
        Sometimes it helps to read the articles you link to. None of them show that "Most were wildly profitable." In fact, those articles mention that search engines before google struggled to make money.

hayksaakian 12y ago

Interesting that Square is looking for acquisitions in the industry. Payment processing by itself always lacked tangible lock in. From another article: > TechCrunch understands from a reliable source that Square was a “serious bidder” against Google for Appetas, a restaurant website building platform Google just acquired. http://techcrunch.com/2014/05/12/with-new-food-app-square-order-square-wants-a-bigger-bite-of-the-restaurant-industry/ http://techcrunch.com/2014/05/12/with-new-food-app-square-or...

zachlipton 12y ago
Exactly. Square is trying to build up a collection of services to offer local businesses, especially restaurants, of which payments is just one. Google has been playing in the same game, with the main aim of selling ads to local small businesses, but hasn't really moved fast enough in pushing payments.

gamblor956 12y ago

While it seems strange Caviar would seek to be acquired so soon after raising funding, it’s possible that the competitive environment is just too much for it to handle, and maybe it would do better to be part of a larger company. In any other environment, a failing or non-competitive company would be purchased for the value of its net assets. In this situation, that would be at most $20 million and likely for less than $10 million. It's silly stuff like this that convinces everyone outside of the SV echo chamber that the tech market is looking at another bubble.

jasondc 12y ago
I'm assuming this acquisition (if it does occur) would be paid for mostly in Square stock. $100 million cash vs $100 million in Square stock have two different values, depending on how you feel about Square's current valuation and future prospects.
- presty 12y ago
  given the rise of square, I'd say a $100M in stocks is going to be worth a lot more than $100M in cash
  - smtddr 12y ago
    That's debatable - https://news.ycombinator.com/item?id=7322642 https://news.ycombinator.com/item?id=7322642 ...and... http://techcrunch.com/2014/05/02/with-ipo-hopes-fading-square-and-box-face-reality-of-commodity-products/ http://techcrunch.com/2014/05/02/with-ipo-hopes-fading-squar...
  - hkmurakami 12y ago
    Remember when Instagram was bought by Facebook right before its IPO, then FB proceeded to tank post IPO? Things have recovered since then of course, but that sort of thing can always happen.
onewaystreet 12y ago
It's not a bubble when one VC backed company buys another for more than the value of their assets alone. That's how business is done. You can't expect Caviar's investors to sign off on an acquisition where they get no return at all.

MattLaroche 12y ago

The actual headline is "Curated Food Delivery Startup Caviar In Talks To Be Acquired By Square For $100 Million" - this isn't a done deal.

dang 12y ago
Thank you. We changed it.
- MattLaroche 12y ago
  Thanks for updating it. Wasn't sure if TC had changed it, or if the poster was editorializing.

curiousgorge 12y ago

I'm always curious as to who profits from a leak like this. is there ever any interest from the company or acquiring party to leak this deal to the press before it closes? It's happened with Twitch and now Caviar, so i've started thinking through reasons why it'd be in either party's interest to leak the deal. Any thoughts? Or should I take my tin-foil hat off?

deleted 12y ago
[deleted]
- curiousgorge 12y ago
  On the acquiring party's side, isn't it then obvious what side is responsible for leaking the deal? I'd imagine this move breaches some level of trust and risks the entirety of the deal. To me, when I hear news like this before the proverbial money is in the bank I actually think the deal is likely to fall through
  - swiss2008 12y ago
    Completely agree here. I'd love to hear opinions on the motivation & risks of this news.

rokhayakebe 12y ago

If you acquire a company with $x million in cash. How is the money handled?

stock_toaster 12y ago
It is just another asset of the company being acquired, like a desk or a chair. As part of the acquire agreement, they may be required to pay down existing debt with any cash on hand or something too? Just guessing.

mandeepj 12y ago

Was n't there a news recently that Square is losing millions of dollars and struggling to survive? There were some buyout rumors also. May this be Caviar acquisition talk is kind of survival step by Square to diversify into other areas.

o0-0o 12y ago

Caviar is the only reason to order food in Manhattan. Time after time, they have done the right thing by me. They are on the top of the charts with customer service and relationship management. They could seminar school 99% of businesses out there on how to do right by people. And, this says nothing about the quality of the restaurants they provide. Truly world class, and I hope the GPs make a killing on their equity stake. ;p

kaltsturm 12y ago

Short question with regard to their marketing. How did they start? How do they do marketing? I am just wondering how they did that good job in such competitive landscape. Thanks. Best regards.

2pasc 12y ago
Initially their growth was only word of mouth (and leveraging networks of Companies using them to order food for lunch).