Square IPO Postponed Indefinitely

http://www.foxbusiness.com/markets/2014/02/28/square-ipo-postponed-indefinitely/?cmpid=cmty_twitter_fb

by TDL • 12 years ago

73 17 12 years ago

TDL• 12 years ago

'“private-market valuation could not be substantiated by their revenues as a public company,” said one person with knowledge of the company’s activities.'

al2o3cr• 12 years ago

Hasn't been a problem for Salesforce... /snark

iambateman2• 12 years ago

"The mobile payment industry is saturated with competition"

No. No it isn't. The mobile payment industry is saturated with a lot of average products and tons of opportunity to do things better.

TheBiv• 12 years ago

If this was a play for consumers, then I would agree with you. However, this is a play for businesses, and there is not a day that goes by where SMB aren't hounded by mobile payments startups. Rarely does a B2B startup succeed bc they do things better, they succeed bc their sales staff is relentless.

Saying your product is nicer, cleaner, a better user experience rarely convinces a business.

myko• 12 years ago

Square's products lately have been amazing. Have you seen Square Cash?

https://play.google.com/store/apps/details?id=com.squareup.c...

I'm pretty much a Square fanboy at this point. I'm sure they could improve, and are actively working to do so - but I wouldn't label Square's products as average.

latchkey2• 12 years ago

Given that they don't make any money on it, isn't Cash really just a fantastic marketing tool for them?

iambateman2• 12 years ago

I used Square Cash daily until my roommate got a call: "do you know Stephen Bateman, he's trying to access your card from California."

The Square system does a chargeback to get money onto the card and it thought it was fraudulent. Kinda killed my Square Cash buzz.

Irishsteve• 12 years ago

Such as ? :-)

2pasc2• 12 years ago

Congratulations to Square for making people that it was in the mobile payment business.

Square is typically the kind of Company with a great initial product that raises too much money for its own good and end up chasing 500 battles because they have the team do so. Fab comes to mind as well.

Square has a significant problem: their product is mostly used by merchants with low average selling prices (ASP) and their pricing model (flat 2.7% vs. the usual X%+0.3) kills their margins at this price point. On the other hand, their POS, which could/should allow them to sign more sophisticated retailers or restaurants with higher ASP does scale with businesses because it does not have any of the workflow management features that are necessary.

Overall, they are stuck with an unprofitable customer base and with a (beautiful product) and are trying to throw things on top of this to create a consumer product (like the failed Pay with Square thing).

monkeyspaw• 12 years ago

Can you elaborate? My understanding is that most merchant accounts are in the 2% + .45 range. Are you suggesting that merchant margins depend on a 1% margin?

antr2• 12 years ago

2% can have a big impact. Many business have a gross margin of 20-30%. If you take Square's 2.75% from $100, that's $2.75 off a $20-30 gross margin – or 9.2% to 13.75% of the gross margin. That is a very large cost for a service seen as a commodity.

2pasc2• 12 years ago

Sure. If your ASP is $6, then 2.75% is $0.165. This is to be compared to a merchant account for which the 2%+ 0.45 is $0.57. As you can see there is a huge difference. The problem is that credit card processors (Visa, Mastercard...) are charging Square 0.1+1.5% or something which basically means that Square loses money on the transaction.

http://www.cardfellow.com/blog/interchange-fee/

sbisson• 12 years ago

I'm also guessing that they now have to figure out how to redesign their product for C&P, post-Target. That's going to be expensive, as it'll change the backend as well as the reader - and require significant certification as a two-part system.

Square IPO Postponed Indefinitely

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