How Square grew from a scrappy hardware start-up to payments powerhouse in a just over decade
In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.
It all started with a tiny square card reader.
Tech entrepreneurs Jack Dorsey and Jim McKelvey set out to find a straightforward way for artists and vendors to accept credit cards. The solution came in the form of a plastic, stamp-sized dongle that could be plugged into an iPhone jack.
The two St. Louis natives launched their start-up in 2009 and rode the wave of smartphones and online payments. In the thirteen years since, Square, now called Block, has grown into a $54 billion financial powerhouse.
“We happened to recognize a problem: more of the U.S. was moving to paying with plastic cards which was great for individuals because it's convenient, but the problem was, a lot of sellers couldn't accept cards,” Dorsey said in a recent interview with MicroStrategy's CEO. “We didn't realize that was just the tip of the iceberg.”
The early iPhone dongle quickly evolved into an iPad app to get rid of the need for cash registers. Square struck a deal with Apple to sell its hardware in stores, and later with Starbucks, becoming its official card processor. From there, Square started focusing on all things small business, including loans and payroll. It bought food delivery service Caviar, then a few years later sold it to DoorDash.
Block now operates an FDIC-insured bank, consumer payments platform, stock and cryptocurrency trading and physical debit cards. The San Francisco-based company also bought Jay-Z's music streaming service Tidal and buy-now-pay-later provider Afterpay.
Like most Disruptor 50 companies, Square's growth was fueled by venture capital dollars.
Its first official round of funding in 2009 was led by Khosla Ventures at a roughly $45 million valuation, according to Pitchbook. Early investors in that $10 million round included Virgin Group founder Sir Richard Branson, former Yahoo CEO Marissa Mayer, Twitter co-founder Biz Stone and Napster's Shawn Fanning. Later funding brought in the venture capital arms of Visa, Citi, Starbucks, Goldman Sachs, as well as Silicon Valley giants Sequoia and Kleiner Perkins.
An initial public offering came in 2015, with Square listing on the New York Stock Exchange, under the ticker SQ, with Dorsey at the helm. The newly public company was valued at just under $3 billion with shares pricing at $9. Its stock has climbed nearly 900% since.
Square's consumer facing business grew fast and organically. The Cash App now makes up roughly half of revenue for the company and was one of the biggest drivers of growth during the pandemic as Americans pivoted to digital banking.
In the early days of Cash App though, few people internally thought it was worth pursuing, Dorsey explained recently.
“The Cash App was something that everyone in the company, at the time we started, didn't think we should be doing,” Dorsey said at the Microstrategy conference in February. “It was a very hard sell... we weren't seeing much traction in the market, and every day I was losing credibility, which I was hyper-aware of defending this thing. Eventually, the team found a model and made it work.”
‘Native currency of the internet'
Dorsey has applied that experimentation model in other areas of Block's business — especially bitcoin.
Square started experimenting with cryptocurrency within the Cash App back in 2014, Dorsey said, and enabled online stores to accept cryptocurrency. Square saw few transactions, and it “didn't really go anywhere.”
The company took it up in earnest again years later, and now facilitates the buying and selling of bitcoin on the Cash App, in addition to equities. In the first quarter last year, bitcoin trading added $3.5 billion to revenue, more than half of the total for the three-month period.
Block now holds bitcoin on its balance sheet as an alternative to cash, and has launched multiple, open-source crypto projects within the company. It's working on a decentralized cryptocurrency exchange and a mining project and has a bitcoin-focused division of the company, called TBD.
Dorsey has been one of the most high-profile advocates of bitcoin, and often refers to it as the “native currency of the internet.”
He stepped down as the CEO at Twitter late last year, and said he believes the company is “ready to move on from its founders.”
The 45-year-old will have more time to dedicate to Block's growing portfolio. But Dorsey's also expected to focus on his well-documented commitment to cryptocurrency.
The rebranding to Block is a nod to the company's crypto ambitions and a focus beyond its original credit card-reader business.
“We built the Square brand for our Seller business, which is where it belongs,” Dorsey said in a statement. “Block is a new name, but our purpose of economic empowerment remains the same. No matter how we grow or change, we will continue
在这个每周系列中，CNBC 回顾了 10 年后首次入选 Disruptor 50 榜单的公司。 这一切都始于一个小小的方形读卡器。
科技企业家 Jack Dorsey 和 Jim McKelvey 着手寻找一种让艺术家和供应商接受信用卡的直接方式。解决方案以塑料、邮票大小的加密狗的形式出现，可以插入 iPhone 插孔。
这两位圣路易斯本地人于 2009 年创办了他们的初创公司，并顺应了智能手机和在线支付的浪潮。从那以后的 13 年里，现在被称为 Block 的 Square 已经发展成为一个价值 540 亿美元的金融巨头。
“我们碰巧意识到了一个问题：越来越多的美国人开始使用塑料卡付款，这对个人来说非常方便，因为它很方便，但问题是，很多卖家不能接受卡片，”多西在最近的一次采访中说与 MicroStrategy 的首席执行官。 “我们没有意识到这只是冰山一角。”
早期的 iPhone 加密狗迅速演变为 iPad 应用程序，以摆脱对收银机的需求。 Square 与 Apple 达成协议，在商店销售其硬件，后来又与星巴克达成协议，成为其官方卡处理器。从那里开始，Square 开始专注于所有小企业，包括贷款和工资单。它收购了送餐服务 Caviar，几年后将其卖给了 DoorDash。
Block 现在经营一家 FDIC 保险银行、消费者支付平台、股票和加密货币交易以及实物借记卡。这家总部位于旧金山的公司还收购了 Jay-Z 的音乐流媒体服务 Tidal 和先买后付提供商 Afterpay。
与大多数 Disruptor 50 公司一样，Square 的增长是由风险投资推动的。
据 Pitchbook 称，其 2009 年的第一轮官方融资由 Khosla Ventures 领投，估值约为 4500 万美元。这轮 1000 万美元的早期投资者包括维珍集团创始人理查德布兰森爵士、雅虎前首席执行官玛丽莎梅耶、Twitter 联合创始人比兹斯通和 Napster 的肖恩范宁。后来的资金引入了 Visa、花旗、星巴克、高盛以及硅谷巨头红杉和 Kleiner Perkins 的风险投资部门。
2015 年首次公开募股，Square 在纽约证券交易所上市，股票代码为 SQ，由 Dorsey 掌舵。这家新上市的公司估值略低于 30 亿美元，股价为 9 美元。自那以后，其股价已上涨近 900%。
Square 面向消费者的业务快速而有机地增长。 Cash App 现在约占该公司收入的一半，并且是大流行期间随着美国人转向数字银行业务的最大增长动力之一。
Dorsey 最近解释说，在 Cash App 的早期，内部很少有人认为它值得追求。
Dorsey 在二月份的 Microstrategy 会议上说：“在我们刚开始的时候，公司的每个人都认为 Cash App 是我们不应该做的事情。” “这是一个非常艰难的销售......我们在市场上没有看到太大的吸引力，而且我每天都在失去信誉，我非常清楚要捍卫这件事。最终，该团队找到了一个模型并使其发挥作用。”
