A look at one of Square's receipts for Sightglass Coffee, a San Francisco establishment in which founder Jack Dorsey has invested.
(Credit: Square)Small business is front and center for Square, the new mobile-payments company founded by Twitter co-founder Jack Dorsey. Previously in a quasi-stealth mode (OK, more like San Francisco's worst-kept secret), Square has now launched in beta, is accepting e-mail requests for preliminary accounts, and has put up a basic Web site to explain the company's premise.
The Square hardware is a small, inexpensive card reader that plugs into the audio jack of a compatible device, including a mobile phone (it's starting with the iPhone and currently has job postings up for BlackBerry and Android engineers). It processes credit card payments, geotags their locations on a map, and e-mails a receipt to the buyer.
"Even though a majority of payments has moved to plastic cards, accepting payments from cards is still difficult, requiring long applications, expensive hardware, and an overly complex experience," the Square Web site explains, talking about how the company premise was hatched when now-executives heard about an artist whose sales were hindered by the fact that he was unable to accept credit card payments.
What hadn't been reported before is that loyalty programs and microdonations are built in as well. Square can track a history of your purchases at a given establishment for discounts and promotions, effectively replacing the buy-10, get-one-free card at coffee shops. Additionally, Square donates a cent of each transaction to a nonprofit organization that the merchant chooses.
CNET first reported the company's name (it had been code-named "Squirrel") as well as some of the details about its business model: low production costs, possibly to the point where the devices can be distributed for free, and profits from transaction fees. (It's not clear whether they actually will make them free.)
Square has set up offices in San Francisco, New York, and St. Louis, with a team of 11 employees announced on the Web site. It's backed by Khosla Ventures and some angel investors.
A test 'Square' in action, and a screenshot of the geo-tagged receipt.
(Credit: Engadget)Well, we finally have a glimpse at "Square," the new mobile payments venture coming from Twitter co-founder and chairman Jack Dorsey. As expected, it's a little hardware add-on that can turn an iPhone into a credit card reader.
The funny part: Details about the small-business-oriented project have been on the Web for months. It was just that nobody had put two and two together until some eagle-eyed folks at Engadget realized that a URL on a screenshot of the "Square iPhone Payments Venture" first reported by Coolhunting matched a domain registered to Dorsey.
Dorsey, who stepped down as Twitter CEO almost exactly a year ago, is headquartering the company in New York, though we hear he already has employees in both Gotham and San Francisco. Its Web site will likely be located at SquareUp.com. Currently, that site is a collection of links to a smattering of businesses, including Sightglass Coffee, a new San Francisco coffee shop in which Dorsey has invested. (Wanna bet they're testing Square out there?)
From Coolhunting:
The innovation is in a small, plastic card reader that fits in to the headphone jack of an iPhone (or iPod Touch) and transfers the credit card's swipe data to the app. After the employee enters the amount to charge, the customer confirms by scrawling their signature with their finger and then either one enters the customer's email address to send the receipt to. The payment is processed by Square for a small percentage plus a fixed fee; the funds are transferred directly to the store's bank account, cutting both time and complexity on the processing side. The customer's receipt includes a map showing the location of the transaction which is handy for those who record, sort and file such things.
We heard that the venture is being called Square rather than "Squirrel," its originally reported name (according to TechCrunch's MG Siegler, this is because it looks kind of like an acorn) due to some unclear legal-copyright-licensing-whatnot issue. CNET News first reported the name change along with the news that Dorsey had been an angel investor in location-based mobile navigation start-up Foursquare.
Funding a hardware venture is typically more expensive than a Web-based one for obvious reasons: the up-front cost of production and manufacturing.
But two sources with knowledge of Square's logistics said that Dorsey believes he can keep production costs extremely low, possibly manufacturing a "square" at a cost of about 40 cents apiece. The company may then even give the devices away for free, making money instead on transaction fees. That's the old Gillette razor business model--make the razors cheap or even free, but replacement blades more expensive.
Regardless, we hear Dorsey has been working on a funding round.
Twitter just closed a massive funding round that reportedly has given it a billion-dollar valuation. Meanwhile, co-founder and chairman Jack Dorsey is making investments of his own: he's one of the undisclosed angel investors in geolocation start-up Foursquare, quite a few sources have told CNET News.
News of the New York-based Foursquare's venture round, led by Union Square Ventures, leaked earlier this month via an SEC filing. A source with knowledge of the deal's terms said that about $200,000 of that $1.35 million in funding was taken up by the angel investors, including Dorsey, but that there are quite a few hats in the ring so none of them has a particularly huge stake in the company.
Foursquare's executives have chosen to keep the names on the list quiet.
Twitter and Foursquare already have an investor in common: Union Square Ventures, which participated in Twitter's Series A and B rounds but sat out on the most recent one. AllThingD's Peter Kafka speculates that a $100 million funding round may have been out of the question for Union Square, which specializes in early-stage investments.
Jack Dorsey, meanwhile, was Twitter's inaugural CEO, but stepped down in favor of fellow co-founder Evan Williams, a more seasoned tech industry veteran, about a year ago. Dorsey remains an important face of the company even as he works on his next company, reportedly a mobile payment gadget start-up code-named "Squirrel."
A source with knowledge of New York's start-up scene says that Squirrel's real name will actually be "Square." No relation to Foursquare. We think. (Dorsey wasn't immediately available for comment.)
Side note: Squirrel, or Square, or whatever its final name is, may be headquartered in New York rather than the Bay Area. That may have been what set into motion some erroneous rumors this month that Twitter itself would be relocating to New York. Twitter's definitely hunting for new office space to house its rapidly growing workforce, we hear, but it's staying in its home city of San Francisco.
But back to Foursquare. What's interesting is that Twitter's application program interface (API) will soon expand to include geolocation data, something that could potentially make it compete with the core business of Foursquare--a tiny start-up that was basically built from the ashes of ill-fated Google acquisition Dodgeball and launched this year at the South by Southwest Interactive Festival. Dorsey's investment is obviously personal, not on behalf of Twitter, but now he's got a stake in both companies' success.
UPDATE at 8:26 a.m. PT: This post was updated to clarify that the name of Dorsey's new start-up may be "Square."
UPDATE at 12:16 p.m. PT: Business Insider reports that veteran angel investor Ron Conway is also one of Foursquare's numerous individual investors.
NEW YORK--Twitter executive Jack Dorsey says he's looking forward to the day when the world stops talking so much about the company he co-founded.
"I think Twitter's a success for us when people stop talking about it, when we stop doing these panels and people just use it as a utility, use it like electricity," said Dorsey, who was on a "Future of Media" panel here Wednesday as part of Internet Week New York. "It fades into the background, something that's just a part of communication. We put it on the same level as any communication device. So, e-mail, SMS, phone. That's where we want to be."
From Jack Dorsey's Twitter feed.
(Credit: Twitter)For those who stepped in late, Twitter blew up from a cult following of geeks and news junkies into a full-out phenomenon earlier this year, when actor Ashton Kutcher kicked off a challenge with CNN to be the first account to hit one million followers and Oprah Winfrey gave Twitter her seal of approval on the air.
But Dorsey, who served as the company's CEO until he stepped down last October (retaining his chairman post), did say he isn't tired of people asking him what Twitter's business model will ultimately be--a persistent nag among pundits who are skeptical of how fast it's risen without a clear way of making money. He said that the reason why Twitter hasn't come up with a business model yet is because the company needed to let users and developers shape it first.
"I like that question because it speaks to how Twitter came to be," Dorsey said. Many features of Twitter were "behavior(s) that we did not invent. That was usage that we saw, that we made easier. The hash tags that you're seeing today, same thing. The search engine was something that was outside the company."
It's sort of a Catch-22, if Dorsey is to be believed: Had Twitter rushed in with a moneymaking strategy early on, it could have hampered the company's growth. "We took VC money so that we can be patient in that endeavor, and we're going to be patient, we're going to do it right," he insisted. "We're not going to put something on top of it that doesn't fit."
- prev
- 1
- next
