When they were young

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When Square was young: the early years

Square was originally called Squirrel, because the dongle looked like an acorn

Innovation series by Steven Loeb
October 26, 2016 | Comments
Short URL: http://vator.tv/n/47cc

As our readers know, Vator has started a series called: When they were young.

It's a look back at the modest days of startups, how they evolved in their first few years, and what traction they had at the time. In the end, we hope to have a good glimpse into what great startups looked like in their first three years.

Stories like these are always well received, because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent and committed. If we can follow their footsteps, maybe we too can have similar success.

Today's segment is on Square.

Square's First Year ------ 

Founded: Square is founded in February of 2009

Founders (ages at the time): Jack Dorsey (32), McKelvey (43)

Initial product description: The idea of Square originated when McKelvey, who made high-end faucets and fittings out of blown glass, was unable to accept credit cards at his studio.

The company is originally called Squirrel, but when Dorsey goes to pitch it to Apple, he finds out that the company is calling its own internal payments system by the same name, forcing him to change the name to Square. 

"The basic idea behind Square is that everyone has this little, plastic device in their pocket, today, which is a payment card. A credit card, a debit card, a pre-paid card, and they're using these things everywhere, and they use them to buy anything. It's really become this social interaction, where no one thinks about the transaction anymore. So, we found that very interesting, and we wanted to turn on the other side of that," Dorsey said at product launch in December 2009. 

"We wanted to allow people to very easily, and quickly, within 10 seconds, be able to accept these plastic devices as payments. Be able to accept credit cards easily, and officially, and just really design the product experience. Really design the payment experience, which, to my mind, really hasn't been designed before. That's what excites us."

First media coverage, at three months from founding: In May 2009, Dorsey Tweets about his new startup, though offers no details.

The same day, TechCrunch writes the first cover of the company, and describes it this way: 

"Though Dorsey declined to comment on what his new startup is right now, we hear from a source knowledgeable about the new company that it’s code-named Squirrel. Here’s what else we know so far: It’s a service that allows anyone with an iPhone to become a merchant. Just like the wireless credit card swipers you see at certain shops and restaurants, you can carry around your iPhone and take payments. Apparently, the idea is that this will allow any individual to take credit card payments on a mobile device, kind of like what PayPal does for the web," wrote MG Siegler.

"Squirrel is both a physical device add-on to the iPhone as well as an iPhone app. Ingeniously, the device derives enough power from the physical swiping of the credit card to then read the card, so it requires no external power from the iPhone or anywhere else. The physical device apparently looks something like an acorn, thus the code name Squirrel."

Product, at five months from founding: In July 2009, Dorsey and McKelvey show off the product at the Allen & Company Conference in Sun Valley, Idaho.

First funding, at nine months from founding: In November 2009, Square raises $10 million in a Series A round led by Khosla Ventures, with participation from First Round Capital and a long list of angel investors, including Ron Conway, Foursquare co-founder Dennis Crowley, Napster creator Shawn Fanning, Google executive Marissa Mayer and Twitter co-founder Biz Stone.

It values the company at $40 million.

Launched, at 10 months from founding: On December 1, Square unveils its website, squareup.com, for the first time.

Square launches is first device, the Square Reader, which lets users accept physical credit card payments on their mobile phones, without any contracts or monthly fees. 


Square's Second Year ------ 

Product, at one year and two months from founding, four months from launch: In April 2010, Square for iPad launches in beta trial, with limited use.

Traction, at one year and three months from founding, five months from launch: By May of 2010, there are 1,000 users using the Square card swipers as part of the pilot program.

Product, at one year and eight months from founding, 10 months from launch: In October 2010, after a ten month long private pilot, which is limited to just 50,000 users, Square is made available to the public

Traction, at one year and eight months from founding, 10 months from launch: Square is processing millions of dollars in mobile transactions every week.

Second funding, at one year and 11 months from founding, one year and one month from launch: In January 2011, Square raises a $27.5 million Series B round of funding led by Sequoia Capital, with Khosla Ventures participating. It values the company at $240 million.

Square's Third Year ------ 

Product, at two years and three months from founding, one year and five months from launch: In May of 2011, Square announces Square Register, a point of sale system that offers analytics, staff management, transaction history, inventory management, customer loyalty and rewards tools.

The company also unveils Square Card Case, a mobile payment solution which allows shoppers to browse daily menus, store digital receipts, and pay by saying their name. 

Traction, at two years and three months from founding, one year and five months from launch: By May 2011, 500,000 Square card readers have shipped, and the company is now processing $3 million in mobile payments per day. That month alone, Square sees one million transactions. 

Third funding, at two years and four months from founding, one year and six months from launch: In June of 2011, Square raises a $100 million Series C round of funding led by Kleiner Perkins, with participation from Tiger Global Management. The round values Square at $1 billion. 

Traction, at two years and four months from founding, one year and six months from launch: According to its pitch deck for its Series C round, Square said it was adding over 100,000 customers a month.

Traction, at two years and nine months from founding, one year and 11 months from launch: In November 2011, Square passes one million merchants on the platform

Traction, at two years and 11 months from founding, two years and one month from launch: In January 2012, the Obama and Romney presidential campaigns begin using Square to collect donations.

Square's Fourth Year ------ 

Product, at three years and one month from founding, two years and three months from launch: In March 2012, Square Card Case is renamed Pay With Square

Traction, at three years and one month from founding, two years and three months from launch: Square is now processing $4 billion in payments annually.

Traction, at three years and six months from founding, two years and eight months from launch: In August of 2012, Starbucks and Square enter into a partnership to accept Square payments in 7,000 locations around the United States. 

In addition to this Square compatibility, Starbucks also announcs that it will invest $25 million in the startup, as part of its fourth round of funding, and president and CEO Howard Schultz joins Square’s board. 

Fourth funding, at three years and seven months from founding, two years and nine months from launch: In September 2012, Square raises a $200 million Series D round of funding from Citi Ventures, Rizvi Traverse Management, and Starbucks Coffee Company. 

Square is valued at $3.25 billion.

Expansion, at three years and eight months from founding, two years and 10 months from launch: In October 2012, Square launches its first international market when it expands to Canada. 

Traction at three years and eight months from founding, two years and 10 months from launchOver two million individuals and businesses can accept credit cards with Square, and Square is processing over $8 billion in annualized payments.

Traction, at three years and nine months from founding, two years and 11 months from launch: In November 2012, Starbucks Coffee Company begins accepting Square Wallet.

Square today ------ 

Square went public in November. It priced at $9 on November 18, 2015, and began trading on November 19. The company's valuation dropped 30 percent in IPO pricing. The company has been valued at $6 billion, but dropped to $4.7 billion.

The stock is currently down 15.43 percent year-to-date. It is trading at $11.07 a share.

(Image source: twitter.com


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