Last week, I met Jack Dorsey, who came to CMU to recruit for Square. My blog entitles me to press status I guess, so I got to spend a half hour with him and about three other people. Thank you Catherine Copetas!
Square is the cute little white square that fits on the end of a smartphone which enables the phone to accept credit card payments. My students use it; my friends who are crafts people use it; many small businesses use it; now Starbucks uses it! The device is brilliant in its simplicity. Of course, “it is much more challenging to create simple,” Jack tells me. In 2011, the iconic card reader design was inducted into NYC’s Museum of Modern Art (MoMA).
Square was founded because co-founder, Jim McKelvey, is a glass artist. Once he had the chance to sell an expensive work but he couldn’t make the sale because he couldn’t accept the credit card on his iPhone. Hence, the pair of computer scientists took a month and built the Square prototype. “And it worked,” Jack recalls. “One swipe and I had money in my bank account.”
The idea resonated with other people so they built the company around it:
“We used the demo to show that we had something that worked. The first thing that an individual said was ‘wow.’ Banks said sort of ‘wow’ too, but they weren’t sure what to think or what to do. We had to prove that people want to do this. I knew that users would sell for us. They would desire it in mass. The market will prove it. We had huge conviction around what we wanted to do.”
Today, Square is 400 strong. The company has grown quickly. Square was 150 people a year ago. Now they are scaling up. “We were processing $1B annually a year ago; now we are at $8B. We need to expand beyond the US. The service can’t go down,” Jack emphasizes. “We need 100% reliability.”
They started looking at several banks. First 10 were on the short list, then three, then only one – JPMorgan Chase. “They were innovative in their thinking,” Jack tells me.
He talked about the challenges of building a hardware device:
“We had not built hardware before. We had to learn on the fly. We had to take our software learning and apply it to hardware. We got some help. The lead time is so long. No one knew how to make the things that we make. We had to go offshore. But now we are trying to simplify the device so that we can bring manufacturing back here. There are challenges with that.”
Square made its dent with small businesses. Square enables small businesses to compete with the big guys. Now Starbucks is using the device. Jack tells me why this is important:
“Square was used by individuals and small businesses. And now by one of the largest organizations in the world. We needed to prove that we could do that. If Starbucks uses us, it levels the playing field. It makes commerce easier. It allows people to make their own decisions.”
Square is located in San Francisco, across the street from the US Mint. Jack talks about the significance of this, how important it is that banks look like they won’t fall down. In fact, the US Mint survived the 1902 earthquake in the region. He tells me that, for Square, the architecture of their office has to inspire trust. “And it does,” he relates. “It’s all open; you can see everybody and everybody can see it all.”
The company is what I would call tidy tense, “We are adamant about our work space and how we keep it. Desks are clean; that’s part of our work ethic.”
The company’s guiding principles are really important too. “We like taking away things in the world rather than adding to it.” Every week, all 400 employees gather by the Gandhi statue behind the Ferry Building. They all walk together through the SF Financial District to the office (which is south of Market). The walk is designed to encourage high energy and total transparency – like their device.
Jack is the co-founder of Twitter. He had no experience in finance. But he was driven to use his skills and vision to solve a very real problem. He tells me that he made some mistakes in Twitter. He doesn’t make the same ones in Square. “I make new mistakes in Square,” he jokes. He talks about learning from his mistakes.
Jack uses a newsroom as an analogy for his management style:
“It’s very bottoms up. You have all these great journalists and they come to you from everywhere with these great stories. As editor, you give direction from above. But you don’t create those stories.”
Jack is on campus to help grow his company through hiring our best and brightest. He tells me that the first question that he asks is,
“Why are you here? The wrong answer is of course, ‘because you are interviewing me.’ The right answer is, ‘My mother runs a small business and you have helped her grow because now she can accept credit cards. You do it ok, but I know that I can do it better.’ That’s the kind of computer scientist or engineer that I want!”
Jack notices that young people today have more confidence. They have the desire and ability to take risk. And he wants them to work for Square.
“These kids never knew when there was no Internet. They have always had phones that fit in their pocket. That changes things. Attitudes. This generation is working at a different velocity than other generations.”
Lessons learned. What are the lessons from this serial entrepreneur? Probably something like this:
- Keep it simple. Simple is hard, but it is beautiful and users love it.
- It’s ok to take on the big guys, like banks. BUT, you have to have something that works, that is unique, that appeals to customers/users. You have to have to have a market that WANTs what you have.
- It takes a couple of smart people to build a prototype; it takes a village to scale to a real business.
- Culture and environment are important. Create a culture that people want to be in and a work environment that people want to work in – and they will come.
Square is revolutionizing ecommerce. It is making it easier and simpler, for everyone, every time.