Plenty of skeptics for Jack Dorsey’s next move
Jim McKelvey shows off Square. (Dawn Majors, St. Louis Post-Dispatch)
My colleague Tim Barker had a story this past weekend for our business section about the next business venture for Jack Dorsey, the St. Louisan who co-founded Twitter and has just started generating buzz for his latest venture, Square.
The mobile credit card payment system depends on a small piece of hardware that plugs into the audio jack in a user’s smart phone. With that dongle, a user can accept a credit card payment by swiping the card through it, getting the buyer to sign with his finger on the phone and, bingo, the transaction is done.
Tim (who is one of the reporters I edit) interviewed Jim McKelvey, a co-owner with Dorsey in Square and the guy who helped inspire the idea, thanks to a lost sale at his Third Degree Glass Factory in St. Louis. McKelvey couldn’t take a payment from a customer who wanted to pay with American Express.
The initial coverage we read on TechCrunch (here and here) was fascinating. And, of course, Dorsey is a local guy, so we wanted to delve a little more deeply into the story.
I especially like that Tim found a Washington University professor who says he’d been working with Dorsey and McKelvey on the concept for Square:
Bob Morley, an associate professor of electrical engineering at Washington University, worked with the pair earlier this year and has applied for a patent on the device. But after months of negotiations over compensation failed, they basically agreed to go their separate ways, with Square saying it would use something different for card reading.
The professor says he has no ill feelings toward Square: “I just want to get my story out there. It’s actually my idea and it’s for sale.”
Both of us were also fascinated by the skepticism of the idea from conventional credit card watchers — although TechCrunch had reported investments in Square that valued the company (already) at $40 million. Tim quoted a couple of market watchers:
“He’s really going after the bottom-of-the-barrel merchants,” said Andy Kleitsch, chief executive for Seattle-based Billing Revolution, which has a system that lets merchants send bills to customers’ cell phones.
And this…
“It’s largely just hype at this point,” said Aaron McPherson, of research firm IDC Financial Insights in Framingham, Mass. “I wouldn’t put too much stock in it.”
And then, of course, there are the competitors. Even still, Tim wasn’t able to get the Square folks to discuss many details about how they’re going to make it happen — and how they’ll assume any risk for credit card sales issues.
Since Tim’s story ran the Sunday after Christmas, I wanted to put it out there again in hopes that a few more people might read it. Cheers.
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