Ben Gilbert: belief

Transcript context

…Yeah. And we talked about this a little bit in the Starbucks episode with Dan. But I think a couple of things. One, Square wasn’t ready; this was a really bad deal. And I joked earlier that the end of the fun story in this episode for Square, at least until the very end of this episode, but this was the beginning of the end of the fun. But I read a lot of things written by Jack and interviews with him looking back on this in preparing for the episode and, you know, he does say and he’s probably right that what this deal forced Square to do was become enterprise class in terms of payments and fintech and security really quickly. They basically had no choice. Yeah, that's interesting. And it really also I guess gave them those product features to move a lot more of their business to this point of sale market instead of the mobile card payments. I think the difference is subtle and I mean it’s best simplified as going from iPhone to going to iPad. But they forked the code base. It became Square and then a different app called Register. If you look at the vast majority of their revenue today, they have on a per quarter basis 482 million in transaction-based revenue, and everything else pales in comparison. It’s like 59 million in subscription and services based, hardware revenue. They do 10 million but 14 million of that is a loss. The vast majority of that 482 million is really in the Point of Sale category that is not quite where they started. I mean, they’ve used that as a wedge to get into the merchants that otherwise wouldn’t have been able to get an account, but now they’re in this rising tide of cloud point of sale. I was thinking about this before the episode. A lot of the growth ahead of them is really just this industry of cloud POS growing much more so than Square being able to continue to bring on more people that wouldn’t have been able to be merchants before or perhaps stealing share from other cloud POS providers like Clover or there’s all these other new ones launching that it’s really like they kind of pioneered this category and then really solidified their position in the category by forcing themselves to do all this work, much of it probably from the Starbucks deal and now it’s just like they get to sit on top while that industry accelerates. Yeah. Well, I would agree but I would argue for a slightly different framing of it which is it’s not just cloud POS and I actually think that the software and data products line item of other revenue they have is hugely important. What this really did is it took Square from being just a payments rails system for anybody to accept credit card payments, to a whole suite of a solution for a merchant of any size really but a world-class suite of tools for a merchant to run their business of which payments is probably the most important part that's accessible to anybody from the coffee shop down the street to Starbucks. And that's what I think this deal did. So if you look at the Point of Sale system itself and the Square Register, it’s no longer just about taking payments. It's about managing your inventory, managing your skews, managing your employees, time punching in and out, and then since then, Square has added so many different features. Payroll for employees, Square Capital to do lending against your revenue. Appointment booking. Basically everything you would need if you’re a business to manage and run your business. And I think that all really happened or started because of this Starbucks deal.…

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