Mr. Jack Dorsey decided he would buy the coffee himself. We are at Sightglass, a San Francisco beanery and coffee shop owned by two brothers whose vintage roaster fills the cavernous space with a constant and rich aroma. "They were my first of three vendors," Dorsey says as he places his order, then mine, with the barista. "We also had a flower stand and an airline-pilot instructor." Sightglass signed up with Square back in 2010, when the company's only product was a simple credit-card reader that looks like a business-card holder with a headphone jack. Plug it into an iPhone, though, and anyone could accept credit-card payments. When Sightglass came on board, Square was so laughably small that it had no way to sign up businesses (unless Dorsey called on them), no pricing model, and no way to get your money if you did swipe a card and make a sale. Since then, the company has had a number of "resets" (as Dorsey describes new initiatives) that have brought to life the idea contained in that little reader, including an app that lets a business use its iPad as a supercharged cash register and inventory system and... Dorsey pauses midsentence, briefly taps his iPhone, and changes the subject.
He tells me a story about how his father, an engineer and semi-serial entrepreneur, helped him build a model of a mass spectrometer out of Legos, ball bearings, and magnets when he was 11. (A few weeks later, Dorsey's father, Tim, tells me his version of the story, taking the time to teach me the concept of mass spectrometry. In the Lego device, the magnets were there to encourage ball bearings of different sizes to arrange themselves by weight, just as a real device would do with gases of different weights. "Did it work?" I ask. "No! It was a disaster!" Tim Dorsey laughs. "But we had a great time!")
Dorsey and I take our cappuccinos and walk to a table. Quiet, intense, and almost preternaturally reserved, the 35-year-old amuses me with tales of his time in some pretty unreserved circles, from his Twitter town hall with President Obama (Dorsey wore Prada) to the bizarre #DinnerWithTheKings, a recently televised dinner party at Larry King's home, which included Russell Brand, Tyra Banks, Seth MacFarlane, Conan O'Brien, Quincy Jones, and Shaquille O'Neal, with dinner prepared by Wolfgang Puck. The celebrity chef delighted Dorsey with an unplanned Square product placement, offering to enable a credit-card ransom for a pair of panties that Brand had pilfered from Mrs. King's boudoir. "All in good fun," Dorsey says with a smile.
We're just a couple of people chatting about ideas, technology, design, leadership, and Dorsey's famous new friends, deep in conversation. "See?" he says, unable to resist a bit of inventor pride as he holds up his phone, tapping his app and showing off the coffee-purchase receipt. No muss, no fuss, no physical money, no paper receipt to be tossed or pocketed and forgotten. "Right?"
This is the magic of Dorsey's latest Square reset: Card Case, an elegant bit of payment choreography that lets consumers of coffee and other happy things pay for their items just by giving the cashier their name; the app activates the charge to their stored credit card.
Card Case is an example of the grace that Dorsey believes defines Square, a company he hopes will radically transform the generally unmagical burden of exchanging money for goods and services. The app, designed as a visual homage to the fashion house Hermès, can also show you your payment history, what's for sale in-store, and nearby places that take Square. Unlike the spectrometer, it works like a charm.
Dorsey is a source of wonderment in the business world, a modern Edison in a cynical age, a creator of platforms equally accessible to the celebrity, the major brand, and the everyhuman. Between Square and Twitter, that other little company he cofounded, he has helped generate a combined $10 billion in market value, an impressive figure even for those who scoff at valuations as sport. Dorsey stepped gently into the highly competitive world of payments in 2009, driven to create a business during a time when he'd been temporarily squeezed out of Twitter, a time that he once described as feeling like a "punch in the stomach." (He returned to the company late last March as executive chairman and head of product development.) He announced his new venture in December of that year, and then went quiet, taking 10 months to reveal a product. Since then, Square has moved fast; it processes more payments through its system than PayPal did at the same stage of its growth, which has helped Square become, according to the logic of COO (and PayPal veteran) Keith Rabois, the fastest-growing startup in history. More than 1 million small businesses and individuals use Square to process credit cards—a number boosted almost solely by word of mouth. Square has no business-development team and no sales force. At least 60% of those Girl Scouts, artists, farmers'-market vendors, political candidates, taco-truck vendors, accountants, designers, and babysitters have never accepted plastic before. They're people like Joey Garza, a massage therapist in Houston. "I was one of the first to get one," he says. "My clients get a kick out of it when I let them swoop [sic] their own card. Now, some also love Card Case."
And Square is wooing even those with merchant accounts to try Square because of its flat 2.75% processing fee per card swipe and its deft synthesis into the smartphones and tablets people already use. Folks like Jack Root, whose merchant account associated with his retail store is of little use to him when he wants to accept payments for teaching gigs and consulting at trade shows. "A three-minute sign-up and I thought, Oh my gosh, this is the way it's supposed to be!" he gushes. Root says he's not only been able to grow his extracurricular business by taking credit cards, but he's also moved part of his store over to Square. By using this instead of his merchant processing account and its 4.8%-per-transaction charge, he calculates that he's saving approximately $10,000 a year.
On a monthly basis, Square is now moving some $3 billion in annualized payments. Do the back-of-the-envelope math on that 2.75% and that's more than $82 million—although almost all of it goes back to Visa, MasterCard, and American Express. Rabois claims that Square even creates jobs. "We can identify 50 basis points in the U.S. for October that are related to Square," he states, sounding more like Paul Krugman than Paul Graham. Giving people a fast and free way to start taking payments creates businesses, he claims, and that means added jobs. "That's half of 1% of all jobs created in October."
Taking on the behemoth financial world takes guts. "Actually, the word we heard most often was naive," Dorsey recalls. Highly regulated and insanely complicated, the banking experience is particularly onerous for very small businesses lacking serious volume, a credit history, or a herd of accountants and inventory-control officers. "The small-business person has basically a calculator to work with," Dorsey says. "Their cash registers give them no meaningful analytics about their customers, popular items by date and time, their inventory, anything." To Dorsey, this lack of information and power gives him an opportunity to seek poetry in commerce. "Money is something that touches every single human on this planet, and at some point, every single human feels bad about it." After all this time, we can't do anything about that?
That frustration is something the folks at Square fully understand. Matthew O'Connor, director of engineering, recalls the company's early quest to solve problems caused by the arcane Automated Clearing House (ACH) system, the back-office protocol that moves electronic money between banking and finance accounts around the world. O'Connor and his team couldn't build software to talk to it. "[ACH] was designed in the 1950s, literally translated from punch cards into an antiquated file format," O'Connor says. His young 21st-century programmers—used to building cool stuff on top of open, modern platforms—were initially stymied. "It's older than their parents." Eventually, Square finessed the software to settle credit-card transactions every night, just like the lumbering and expensive old-guard banks.
"The smallest details became hugely important," says the CEO, and "highly dramatic." We're now chatting about Mrs. Dalloway, the classic by Virginia Woolf, a book so groundbreaking that it reset the development of the American novel. As Dorsey grew in his role as CEO, he decided to hone his storytelling skills, to fine-tune the narrative he shares both inside and outside the company. "As CEO, my main job is editor-in-chief," he says. He's been immersing himself in books by his favorite authors—Woolf, Salman Rushdie, Margaret Atwood, and Alice Walker. Dorsey is also talking about the process of making a business. He sees not the devil, but the humanity, in the details, particularly for his customers. "If we can perfect one experience for one individual, we can scale to every single one of the 7 billion people now inhabiting this earth," he says.
I ask how he plans to do this.
"How do you institutionalize creativity?" He smiles into his cappuccino and pauses, preparing to answer his own question.
Dorsey likes to walk. He always has. On our trek back to Square's offices from Sightglass, he explains his schedule: "All my days are themed. Monday is management. At Square we have a directional meeting, at Twitter we have our opcomm [operating committee] meeting. Tuesday is product, engineering, and design. Wednesday is marketing, growth, and communications. Thursday is partnership and developers. Friday is company and culture. It works in 24-hour blocks. On days beginning with T, I start at Twitter in the morning, then go to Square in the afternoon. Sundays are for strategy, and I do a lot of job interviews. Saturday is a day off." He is not kidding about any of this, and I'm pretty sure he also works on Saturdays; he does offer a wry smile to allow that he knows this might be a little nuts. "Actually," he says, "the word I'd use is disciplined."
Dorsey does a lot of his walking in a 14-block quadrangle of San Francisco. Square's offices are in the San Francisco Chronicle Building at Fifth and Mission; Twitter is headquartered four-tenths of a mile away at 795 Folsom; and Dorsey's apartment is just around the corner from Square, near the Old Mint. Square, born during late-night work sessions at Dorsey's spartan loft, has scaled quickly to 220 employees who now collaborate in one open and clean, well-lighted room designed with collaboration in mind. "Look around," Rabois says. "Conference rooms are glass, [semiprivate] conversation cubes have one side that is open. We are one big open office."
Meetings run the gamut from quick team "stand-ups" for rapid updates to major work and brainstorming sessions to "retrospectives," where teams meet to discuss the existential aspects of their work. Do you have what you need? Is your space adequate? Notes from every meeting are revisited at the next meeting, and all notes are shared electronically with everyone in the company. "Everything we do is about getting people to be more open, more creative, more courageous," Dorsey says. Regular off-sites stir excitement, stimulate the mind and soul. One staffer told me about a trip to SF MoMA to discover what Mark Rothko could teach them about design. Another talked excitedly about a mentor Rabois connected him with—a serious industry heavyweight who helps him grow his ability to work with people and not just his technical knowledge.
Dorsey holds weekly town-hall meetings with the entire staff. He evaluates developments in the world—the growth in smartphone usage, a rise in geolocation, the birth of the iPad—and challenges employees to move Square in new directions. Let's not just take payments but let people make them. Surprise me! "It's empowering to be asked to look at what's possible," he says, "not told how to do it."
Not that "empowering" necessarily means fun. "All of the things we did in the last year were hugely contested," he says, citing the iPad app and Card Case. William Henderson, a software engineer, sidestepped debate over when smartphones would include chips that let them act like credit cards and rendered it moot. Henderson's cobbled-together solution of Card Case's signature "wow" moment—paying without removing your phone from pocket or purse—could make everyone feel like a big shot. Dorsey encouraged him to demo it for the company; then he made Henderson the product lead. "It says a lot about Jack and the process, and how we grow here," says the Apple alum, one of many who have migrated to Square. "He wants us to think about what makes us excellent, and what makes a product excellent."
I am sitting in the kitchen of Dorsey's childhood home with his parents, over coffee (of course). The kitchen is filled with a lifetime of framed treasures from their three sons—paintings, self-portraits, school photos. In the living room, Dorsey's pointillist portrait of Kurt Cobain has a place of honor. It's clear that Dorsey, Tim and Marcia's eldest, comes by his love of art, data, and small business honestly. This house is in Compton Heights, a historic neighborhood in St. Louis that was created in the late 1800s. The city's beer barons commissioned the homes (big for themselves and small for their mistresses) and adorned them with woodwork, stained glass, and beaux-arts fixtures created by many of the artisans who came to build the 1904 World's Fair. By the time the Dorseys arrived in the late 1980s, the neighborhood had seen better days. "When the real-estate agent showed us the house, the doorknob came off in her hand," says Tim with a laugh. Jack chose the smallest bedroom in the house. "He's always been a minimalist," says Tim.
Dorsey found the neighborhood and downtown St. Louis endlessly inspiring. "It was my first love," he says. The buildings and streets stoked his curiosity. He consistently found reasons to walk the city, from leafleting for political candidates to spending hours at the rail yard with his brother making movies of trains. Unlike most teens, he refused to learn to drive. Marcia, recalls picking him up at all hours from his various jobs. "Three a.m. leaps to mind," she laughs.
He collected maps, fascinated in particular by what messy and interesting thing might be happening right then on the city's perfect grids and intersections. When the family first acquired computers, a Mac and an IBM PC Junior, Dorsey taught himself programming so he could make his own maps. He put dots on a rudimentary St. Louis map and moved them around. The dots didn't mean anything. Then he noticed that the family's CB radio and police scanner both offered what geeks would come to call "real-time user data." "Ambulances, fire, taxis, and police are constantly reporting where they are and what they are doing," Dorsey says. Suddenly, the dots came to life, and next thing the Dorseys knew, young Jack was making something known as dispatch software. "We thought it was a little strange," says his father, "but also really great."
Dorsey's own dots connected slowly after that. He ended up leaving his first college, University of Missouri in Rolla, to write code for a dispatch software company in New York. A brief stint at New York University was followed by a sudden move to San Francisco and random programming jobs. (Have you taken the Blue and Gold line to Alcatraz? Dorsey wrote its ticketing program.) The pathlessness worried his mother. "He didn't have a plan. And, of course, no benefits." But there was new technology to play with, like SMS. And new business partners, like Ev Williams and Noah Glass. Which is how what began as a childhood fascination with city maps morphed into Twitter, the real-time grid of what real people are doing every minute all over the world. Complete with a world-class benefits package.
Other teenage experiences imprinted Dorsey with the impetus for Square. He worked as a barista at his mother's own roastery and coffee shop, an endeavor felled by a hypercaffeinated interloper from the Pacific Northwest hell-bent on growth. Dorsey's brow darkens at the memory. The loss has stuck with him all these years, though his mother says kindly, "The shop may have been on the way out before Starbucks got here."
Another teen job found him working for engineer Jim McKelvey, who is also a talented glass artist. McKelvey once "lost a $2,000 sale because he couldn't take credit cards," Dorsey says. McKelvey became Dorsey's cofounder at Square, and "we made the solution he needed."
It turns out to be the solution a lot of people need. Square's primary challenge in early 2012 is to find more customers in other parts of the world, first in Latin America and then in parts of Asia and Europe. This will bring new financial systems to wrestle with, and perhaps more rewards. "The potential for growth globally is massive," writes Richard Branson, who is an investor in both Twitter and Square, via email.
Branson is most impressed by Dorsey himself. "By inventing Twitter, Jack may have well brought down dictators in North Africa and the Middle East. That's not bad going for one guy." But unlike most people, Branson thinks that Dorsey's schedule is not full enough. "I do wonder if his talents are wasted running two companies," writes the man whose Virgin Group consists of more than 200 companies. "Perhaps he should let other people run the companies and use his brilliant brain to start more companies and create even more jobs."
There's a thought: Dorsey in 2012, the Square Deal candidate.
Photograph by Jeff Minton