Feeds

Square gets $1bn valuation with $100m investment

So hip it has trouble seeing over its pelvis

The essential guide to IT transformation

Square has raised another $100m, giving the payment processor a valuation of $1bn and a new board member in the shape of Mary Meeker, a partner at investor KPCB.

The $100m investment follows $27.5m that was dropped into the business in January, and the original $10m raised on the back of Twitter-founder Jack Dorsey's idea. Based on the investment CNET pegs the value of Square at $1bn, despite the fact that the company has nothing to offer besides ill-fitting and insecure plastic boxes that can be balanced on top of an iPhone to read magnetic stripes on credit cards.

Square did create something of a perfect storm of buzz words when it was launched – iPhone/mCommerce/Twitter – and despite significant embedded competition, Square has managed to convince many people that it invented the idea of using a phone to take credit card numbers, while selling them boxes they can get free from the company's website!

And let's be clear: reading credit card numbers is all that the Square reader does, despite CNET's assertion that it "is being positioned as an alternative to the much-touted but still emerging near-field communication". Square works great in the USA, where magnetic stripes are still the cutting edge of credit card technology, but is next to useless anywhere else.

But America is where the capital is, so that's what matters, and Jack Dorsey's name is a lot more important than having a sensible business model. We know that when Square had 300,000 merchants it was processing about $1m a week in payments, so around $3.30 per merchant. That means each merchant is paying Square about 8 cents a week.

Square now claims to have 500,000 merchants signed up, so at current rates it could realise its valuation in a mere 480 years – though it will have to spend the first six months paying off the cost of the boxes (at $2 a box – our guess).

At a glance, Square would seem to have a business plan that extends hundreds of years into the future, or requires international expansion of a product that has no value outside the USA, not to mention an embedded competition that's price competitive and offers greater security: it's a good thing we're not in a tech bubble or $1bn might seem a trifle optimistic. ®

Next gen security for virtualised datacentres

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Kaspersky backpedals on 'done nothing wrong, nothing to fear' blather
Founder (and internet passport fan) now says privacy is precious
TROLL SLAYER Google grabs $1.3 MEEELLION in patent counter-suit
Chocolate Factory hits back at firm for suing customers
Mozilla's 'Tiles' ads debut in new Firefox nightlies
You can try turning them off and on again
Sit tight, fanbois. Apple's '$400' wearable release slips into early 2015
Sources: time to put in plenty of clock-watching for' iWatch
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?