Square to Investors: $1 Billion Valuation? Make It $2 Billion. • Hacker News Board

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#11

Post by dreamdu5t » Sat, Jun 18, 2011, 12:28 AM UTC

[deleted] wrote: post #8

ThomPete wrote: post #5

The sad reality is that if it wasn't Dorsey behind this it would have to prove itself like any other business. My guess is that you haven't solved payment if you have to get additional hardware. and even if that get solved what is to hinder Apple and Google from offering it natively which it should be.

[deleted]

Square has proved they can build something people want, but they haven't proved it profitable.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#12

Post by chailatte » Sat, Jun 18, 2011, 12:42 AM UTC

I think techcrunch writers are following the "AOL Way" of writing articles. (Although the occurrence of 5 foursquare articles in a day has stopped recently) I guess they're under pressure to sell their massively overpriced/slightly useful conference.

Jack Dorsey pantless in Paris? Who knew.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#13

Post by aashay » Sat, Jun 18, 2011, 12:46 AM UTC

Now Square just has to figure out a way to disrupt the market for ATM machines in "Cash Only" businesses. There are dozens of local business in Square's own San Francisco that, even given a novel payment solution like Square, refuse to accept credit cards and opt instead to host on-premise ATM machines.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#14

Post by jdp23 » Sat, Jun 18, 2011, 12:56 AM UTC

potatolicious wrote: post #7

jdp23 wrote: post #6

about that bubble ...

Normally I'd agree. Spotify for $1B? Jesus. But, assuming you believe Square can pull off what they're trying to pull off... a billion-dollar valuation is not hard to justify. I mean, these guys could be bigger than PayPal, all things executed correctly that is.

Agreed, there's huge potential upside if it all goes well. PayPal was acquired for $1.5B. A $2B for Square (at its very early stage, with a part-time CEO) seems pretty bubblicious to me.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#15

Post by deltapoint » Sat, Jun 18, 2011, 1:21 AM UTC

Many of these deals may have special terms as well. At a minimum VCs will get 1x and at times 2x or 3x of the first money made. That way, VCs can protect their downside while investing in some of the companies that have the biggest potential.

That being said, these valuations are still quite high.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#16

Post by chrisedge » Sat, Jun 18, 2011, 1:31 AM UTC

jdp23 wrote: post #14

potatolicious wrote: post #7

Earlier quoted context omitted.

Normally I'd agree. Spotify for $1B? Jesus. But, assuming you believe Square can pull off what they're trying to pull off... a billion-dollar valuation is not hard to justify. I mean, these guys could be bigger than PayPal, all things executed correctly that is.

Agreed, there's huge potential upside if it all goes well. PayPal was acquired for $1.5B. A $2B for Square (at its very early stage, with a part-time CEO) seems pretty bubblicious to me.

I would have to disagree with the comparison of PayPal and Square. I find that there are similarities, but there are much more profits to be found in enabling businesses to bypass the hardship of being able to process cards (which can be both time consuming and costly). I think the valuation of Square to be reasonable, considering that in that they are early-stage and are already processing three million dollars per day (which is increasing). Though the valuation of Spotify at one billion dollars is just plain ridiculous.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#17

Post by thinkcomp » Sat, Jun 18, 2011, 1:40 AM UTC

This is pretty ridiculous given that Square's market is a tiny fraction of retail, its distribution model is expensive, and it doesn't solve any of the problems with the payment industry. Granted, I'm a competitor, but $2 billion? Even $1 billion is absurd.

Sigh.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#18

Post by erikpukinskis » Sat, Jun 18, 2011, 2:11 AM UTC

thinkcomp wrote: post #17

This is pretty ridiculous given that Square's market is a tiny fraction of retail, its distribution model is expensive, and it doesn't solve any of the problems with the payment industry. Granted, I'm a competitor, but $2 billion? Even $1 billion is absurd. Sigh.

You do realize "retail" is a multi-trillion dollar segment, right?

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#19

Post by nir » Sat, Jun 18, 2011, 2:58 AM UTC

Timothee wrote: post #4

blhack wrote: post #2

It's strange to me that you're not a "big deal" anymore unless you have a valuation in the Billions of dollars. Not saying square isn't valuable (they're my favorite new company, and the one that I think will go the farthest), just making an observation.

Perceptions (and valuations) have shifted a lot in recent years, and, as the article points out, the "Billion dollar club" is getting crowded. YouTube was bought for $1.6B after all. That was a huge deal then. When Zuckerberg refused the $1B offer from Yahoo!, that was also a pretty big deal. Now we see a few young companies at these valuations, so, the perception is different.

You might ask, what objectively changed since those days when $1B was considered a huge deal? If not a lot, then we're in a bubble.

Re: Square to Investors: $1 Billion Valuation? Make It $2 Billion.

#20

Post by jackowayed » Sat, Jun 18, 2011, 3:07 AM UTC

nir wrote: post #19

Timothee wrote: post #4

Earlier quoted context omitted.

Perceptions (and valuations) have shifted a lot in recent years, and, as the article points out, the "Billion dollar club" is getting crowded. YouTube was bought for $1.6B after all. That was a huge deal then. When Zuckerberg refused the $1B offer from Yahoo!, that was also a pretty big deal. Now we see a few young companies at these valuations, so, the perception is different.

You might ask, what objectively changed since those days when $1B was considered a huge deal? If not a lot, then we're in a bubble.

Much of the new billion dollar club is special in that it actually has the kind of revenue and revenue growth to at least sort of justify the valuation. It sounds like Airbnb, Dropbox, and Square have serious profits with trends suggesting that they'll be even bigger soon. These startups look more like PayPal, which was a 1.5B acquisition where Ebay totally and unsurprisingly got their money's worth, rather than a social site with no revenue. (Did YouTube have any revenue when they were bought? And I think Facebook had ads, but they were still losing money fast when they were offered 1B.)

Even though it's looking like YouTube will pan out for Google, it's a lot more obvious that Square has the potential to be worth billions than that YouTube did.