181–185 of 185 posts
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Intuit's actually predates both Square's and PayPal's: http://venturebeat.com/2009/05/21/intuit-gopayment-lets-you-...
That article just says you type in the credit card number into a web page. Very different.
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What I was saying with the "destroyed" was something like a reverse stock split. (Your proportional ownership stays the same, but your number of shares reduce.) The idea I was communicating that the number of shares itself is not a meaningful judge of anything unless you understand what those shares represent. If covenants are not in place, you could also "destroy" the proportional ownership of shares by diluting dow…
Stock reverse splits don't "destroy" value anymore than exchanging four quarters for a $1 bill. You do not have less value just because you own 1 unit instead of 4, because the value of the unit increased proportionately. You can dilute proportional ownership, but there you just shifted the meaning of the term "destroy" and are using it in a funny way. Dilution does not decrease value. The reason your percentage of t…
Destroy can be used in both ways because language is context sensitive and the definition is somewhat broad. You can destroy value through dilution by getting less than you give. Example: If my company is fairly worth $100 and I own two shares and you own one, you own $33 worth of value. I can then issue my friend bob another share because he gave me a great lunch recommendation and I thought it was a big morale boost, something I can do because you don't have a covenant in place. My company is still worth $100, you now own one of 4 shares and only $25 worth of value. I have now destroyed $8 worth of your value. It's an ownership shift relative to the company, but a value destruction relative to you.
A combination of things are responsible - a super old/competitive market (processing), the ever changing risk dynamics and Square's targeting Let me illustrate points 1 and 2 with an example. a) Square earns $2 in revenue per $100 of transaction volume b) $0.5 would be their gross margin accounting for expenses i.e. bank/visa fees c) The next biggest line item to subtract would be risk. If there is a fraudulent trans…
I'm pretty sure Starbucks, the merchant, would have to cover the costs not square as the processor. I used to work at MBNA and when there was fraud on an card the retailer was responsible.
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> 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?
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.