Square's Sexy Growth Curve
It is easy to be skeptical of Square, which — while very cool — also feels like it must somehow be overhyped. (Why did my local café stop using it? Why don't I ever see it in use? Can it really replace most cash registers? Etc.)
Context & Ripple Effects
SplatF's note lands a year after Technologizer's deeper look at how Square actually works, and it captures the tension that has defined the company since it joined the unicorn club in mid-2011 with a $100 million Kleiner Perkins-led round at a $1 billion valuation. The numbers say one thing — a steep growth curve — while anecdotal experience says another: cafés dropping the dongle, few visible register replacements.
The rebuttal Square is offering is distribution, not argument: on March 1 it pitched the New York Taxi and Limousine Commission on an iPhone/iPad payments setup for 50 cabs, putting its tech where skeptics will literally see it. COO Keith Rabois has also been working the counter-narrative since his September 2011 GigaOM Mobilize appearance, arguing NFC offers no value proposition to consumers or merchants. A rumored follow-on round at roughly $2 billion — unconfirmed, per sources — hangs over whether investors buy the curve or the doubt.
First-order effects
- Square's growth story now rests on winning high-visibility placements like the 50-cab New York taxi pilot, which directly answers the 'I never see it in use' objection raised by SplatF and echoed across the Engadget, CNET and Betabeat pickups.
Second-order effects
- Rabois's public case against NFC forces rival mobile-payments approaches — carrier and handset NFC wallets chief among them — to defend their consumer value proposition rather than rely on hardware momentum.
Third-order effects
- If the growth curve holds while skepticism persists, payments startups will increasingly be judged on shipped distribution wins (taxis, retail counters) over demo-day cool, pushing capital toward companies that can prove point-of-sale replacement rather than promise it.
The trend: Mobile payments is moving from novelty dongles toward replacing entrenched point-of-sale infrastructure, with visible merchant deployments becoming the currency of credibility.