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Square Prices Its IPO at $9, giving it a $2.7B valuation

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Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#171

Post by brwnll »

abalone wrote: post #165
jes5199 wrote: post #142

Earlier quoted context omitted.

Square does high enough volume to negotiate better rates than you'd expect.

Your source, or is this pure speculation? Even Walmart can't negotiate Visa/MC interchange fees.[1] And they do ~400X Square's volume. It's not just a matter of merchant/processor size. Once enough consumers have adopted it as their primary/only card, the card network has an extremely strong position. (This is why AmEx rates are more negotiable; it's usually an alternate card.) [1] They do lawsuits instead. http://ww…

That lawsuit isn't about lowering the transaction rate, it's about collusion between credit companies to keep their rates in line with each other.

First hand, I've seen a small ecommerce shop have rates lowered a 1/4 percent doing less than $1m/y.

Second hand, Costco, who in the US and Canada just switch from AmEx to Visa as their accepted card, went through long negotiations that resulted in booting Amex for not matching the discounted rates Visa was willing to offer.

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#172

Post by brwnll »

steven2012 wrote: post #166

This is brutal. I know someone at Square that exercised his options, and I guess he is underwater by a massive amount now. And since VCs are generally move like flocks of birds, this will likely create a massive chill in terms of funding. Either they are going to take a pound of flesh from the founders coming for their next round of funding, or they will just pull away. It looks like 2016 is going to see a lot of uni…

I assume you are referring to follow up rounds when you refer to a chill? Or do you expect angel/seed funding to be reduced because they are going to lower guesstimated valuations?

Will be Interesting to see if this pattern has an effect of pushing tech companies to IPO sooner.

Is this behavior being replicated cross sector? It seems commonplace for a tech company to write down a valuation of a purchased company (eg every company MS has ever bought), I don't hear about it in health, finance, retail, etc sectors.

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#174

Post by westi »

tadfisher wrote: post #113
throwaway2048 wrote: post #81

Earlier quoted context omitted.

Are people really going to care if their joint of choice changes payment providers? Do people care how cool their bank and credit card company is? Id almost certainly guess not.

> Do people care how cool their bank and credit card company is? The company I work for has built a business based on applying this predicate, and so far we have been successful.

The company being Simple?

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#175

Post by chkuendig »

brwnll wrote: post #172
steven2012 wrote: post #166

This is brutal. I know someone at Square that exercised his options, and I guess he is underwater by a massive amount now. And since VCs are generally move like flocks of birds, this will likely create a massive chill in terms of funding. Either they are going to take a pound of flesh from the founders coming for their next round of funding, or they will just pull away. It looks like 2016 is going to see a lot of uni…

I assume you are referring to follow up rounds when you refer to a chill? Or do you expect angel/seed funding to be reduced because they are going to lower guesstimated valuations? Will be Interesting to see if this pattern has an effect of pushing tech companies to IPO sooner. Is this behavior being replicated cross sector? It seems commonplace for a tech company to write down a valuation of a purchased company (eg…

You might not have heard about it, but most companies write down the value on acquisitions to some degree.

IANAL, but legally you can be forced to realize tome deprecation on goodwill payments...

https://en.wikipedia.org/wiki/Goodwill_%28accounting%29

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#176

Post by trhway »

calcsam wrote: post #79
josephjrobison wrote: post #75

I've always wondered - why was it so easy to replicate Square's scanning device? Seems like about 6 months after they really started gaining traction, PayPal came out with their copycat triangle one, and then a cascade of copycats. It went from not being a thing to there being tons of them overnight. I would imagine there would be somewhat of a barrier to entry, but it seems it's a fairly easy device to create?

"The Shakespearean model holds true today. Consider the Square card reader. Square was the first company to do mobile handset credit card processing right. It did the software piece and the hardware piece, and built a brand with the iconic white square device. Then there was a proliferation of copycat readers. PayPal launched one. They shaped it like a triangle. They basically copied the idea of a simple geometric-sh…

>How will this all end? Do you really want to get involved in making a new card reader at this point? One gets a distinct sense that the companies focused on copycat readers are in a great deal of trouble. Much better to be the original card reader and stay focused on original problems, or an original company in another space entirely." - Peter Thiel

tell that to MS of 198x-199x and actually of 21st century too...

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#177

Post by jackgavigan »

rdl wrote: post #126

I don't really care about Square's investors (sunk costs are sunk, plus ratchets and other protections), but what does this do to employee retention (and hiring ability)? I assume people who joined years ago will still do fine, but what about people who joined in the past 6-12mo? Will they get repriced options? Are cash salaries all people care about? Square has (and still does) have some great people, and it's a "ro…

> As recently as September, the company [Square] handed out stock options to staff — one of the main perks of jobs in the Valley — valuing it at $15.39 a share, or more than 50 per cent above what the shares were deemed to be worth only six months earlier.

Source: http://www.ft.com/cms/s/0/6ad992e6-8792-11e5-9f8c-a8d619fa70...

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#178

Post by outside1234 »

I think its amazing Square could do an IPO at all - $2.7B is an insane valuation for a company that hasn't proven a scalable business model.

Frankly, its sort of irresponsible and short sighted for VCs to take something like Square public. It will have all sorts of repercussions on real businesses that want to go public in the future.

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#179

Post by Camillo »

untog wrote: post #140
omegaham wrote: post #137

Earlier quoted context omitted.

I have a quick question about this - there is exactly one business in my area that has actually switched over to chipped cards, and that's Home Depot. Everyone else goes "lol we don't do that, use the magnetic swipe like a normal person" when I try it. I thought that the adoption date was in October, and seeing as how everyone has the machines already... what the hell is going on?

There's an interesting set of incentives at play. The October deadline was actually a shift in liability - now businesses still using swipe transactions will become liable for any losses due to fraudulent transactions, while the card companies will continue to be liable for chipped ones. Beyond that I don't know too much - maybe the price of the hardware is such that it makes sense to risk it for a little while befor…

C&P seems noticeably slower than magnetic stripe at the moment. Possibly due to stores still running their POS on PSTN connections. I wouldn't be surprised if some places were still using stripes to avoid slowdowns at checkout.

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#180

Post by andirk »

omarchowdhury wrote: post #123

$9 is a good psychological price. This is going to pop tomorrow.

Just opened at 11.20, already up to 13. The company who helps small businesses accept Visa, Mastercard, Apple Pay at 2.75% of all those transactions. This company makes too much sense to me.

Going to the Blue Bottle coffee downtown SF in front of their office if anyone wants to join me. Pat them on the back.

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