This is stupid.
We need to fix this.
Those were the words of the creator of Twitter--Jack Dorsey.
After being kicked as CEO, he ended up creating another platform.
A platform to help mom-and-pop stores gain more customers.
This is all started because of a friend who called him to vent
about how "stupid" his iPhone was.
That's when the two stumbled upon the idea of turning their
iPhone into a credit card machine.
This machine would later give birth to Cash App.
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Cash App’s story begins with two tech entrepreneurs born 11
years apart in the city of St.
Louis, Missouri: Jim McKelvey, and Jack Dorsey.
Following high school, Jim studied computer sciences
at Washington University.
After graduating, he spread himself between a number of professions.
Not only did he work as a freelance engineer for IBM, but
he also picked up glass blowing, and worked as a cabinet maker.
But soon, he would find his life flipped upside down, and his interests
focusing on one particular endeavor.
Jim’s mother had suddenly passed away, and Jim found himself
re-evaluating his priorities.
“I just asked myself, do I want to be mediocre at everything?
And so I decided that one of the things I had not done in my life was focus.”
Soon after, Jim decided to focus on one pursuit: building
a software company called Mira.
A year later, he would finally cross paths with Jack through Mira.
One day, Jim discovered that an error erased 200 hours of
work from a company project.
In need of caffeine to help stay awake to fix it, Jim headed
over to a nearby coffee shop.
There, he started chatting with the owner, Marcia, and ended
up telling her about Mira.
When Marcia mentioned her son, Jack, enjoyed working on computers, Jim
asked if he was looking for some work.
Soon after, Jack ended up working for Mira as an intern but was quickly
promoted to manager after Jim saw he was not only a capable programmer
but hard working and efficient.
After graduating from high school, Jack headed to the Missouri University of
Science and Technology for computer science but transferred to New York
University two years into his studies.
Jack’s decision had been prompted by a job offer.
While attending University, he hacked into the website of a courier company, Dispatch
Management Services, then emailed its chairman, Greg Kidd, with instructions on
how to fix the vulnerabilities he found.
Greg was impressed, and offered Jack a job at his company.
There, Jack learned about SMS and tracking couriers in real time, and
found he got along well with Greg.
Just before graduation, he dropped out again and moved out to Oakland,
California with Greg to start up a new company called dNet.com.
However, it failed a year later, leaving Jack unemployed.
Jack bounced around for the next few years.
He got a job at a dispatch company that he was fired from, leaving
him to move back home to St.
Louis.
There, he toyed with the idea of making a chair-massage service for
programmers to help with wrist pains.
Instead, he moved to San Francisco, living in a shed in exchange
for looking after Greg’s kids.
While there, he took a contract job for a ferry company but
eventually got a job working for a podcasting startup called Odeo.
Within the year, Odeo was devastated by Apple’s introduction
of podcasts onto iTunes.
Odeo’s CEO, Evan Williams, decided to hold a hackathon to determine
a new direction for the company.
Jack was still enthralled with the idea of SMS and real time networks,
so he came up with the idea of a website that would bounce people’s
statuses by each other in real-time.
With help from Odeo co-founder, Noah Glass, and German programmer,
Florian Weber, Jack made the prototype in two weeks.
That idea became Twitter.
One year later, Twitter officially launched and Jack became the CEO.
Unfortunately, it wasn’t long until his management ability was questioned and
he was kicked out of his own company.
By then, Jack had been embroiled in so many feuds with his Twitter co-founders
and their users that he was hated by many.
When Jim found out, he was so angry with the situation that he offered
to help Jack get even with Twitter.
Jack pushed back and told him he wanted to do something more positive:
building a new company with Jim.
Jim was immediately on board and headed out to San Francisco to meet
with Jack and brainstorm ideas.
After 10 days, the two struggled to come up with anything that stuck.
Little did they know, their new business idea would come just days later…
Two days later, Jim received a call at his glass blowing studio from a
woman who wanted to buy a $2,000 piece.
However, when payment came up, Jim couldn’t accept her
American Express credit card.
Losing the sale frustrated Jim.
With his iPhone in hand, Jim called Jack to vent about what had just happened.
“The iPhone is this sort of magical thing that transforms into whatever you need
it to be but it couldn’t turn into a credit card machine,” Jack complained.
“This is stupid.
We need to fix this.”
At that moment, the two realized they had finally stumbled upon a
great idea for their next venture.
Both were all in.
Soon after, Jim and Jack built a tiny card reader that could be plugged into
an iPhone headphone jack, and named their company after its hardware shape: Square.
Afterward, the two pitched their idea to venture capitalists
in hopes of raising capital.
Many of the VCs believed that the device wouldn’t work, but Jack and Jim proved
them wrong by charging them between $1 and $40 using their card reader.
None of the VCs had seen anything like it before.
Jim and Jack then followed up on their impressive demo with 140
reasons why Square could fail.
This included both serious reasons, like fraud and bank regulations, and
joke reasons, like a robot uprising.
“Give us the money, or suffer the consequences.”
Despite the light-hearted tone, the VCs became convinced that the two had
thought through all potential problems and weren’t unafraid to tackle them.
Collectively, they invested $10 million in Square at a $40 million valuation.
Later that year, Square officially launched.
The company’s card reader accepted Visa, Mastercard and American Express and only
charged 2.75% plus 15 cents per swipe.
Meanwhile, larger companies charged upwards of 4% per swipe plus other
fees and required businesses to make at least $10,000 annually.
Only a few years later, Square caught the attention of Starbucks.
The major coffee chain invested $25 million into Square at a $3.2
billion valuation, and even made the company their exclusive processor of
debit and credit cards in the U.S.
Having grown so much, Square soon decided to go head-to-head with peer-to-peer
payment services like Venmo and PayPal by creating a competing product: Cash App.
At launch, Cash App allowed users to send and receive money via email and
deposit payments into their bank accounts — without having to sign-up and for free.
What Jim and Jack didn’t realize was that this expansion would not only enter it
into a new, larger market, but would also change the future direction of the entire
company and make it billions in revenue.
But as it jostled for space in a larger market with more competitors, Square would
soon find itself targeted by a giant that threatened the very survival of Square…
When Square was just over five-years-old, Amazon sent Jim and Jack their own
entry into the market: Amazon Register.
It was a black rectangular card reader that worked better than Square’s,
charged 1.95% per transaction compared to Square’s 2.75%, and had
a live customer service department.
It was a warning shot fired just so closely over Square’s heads that the
shell practically brushed their hair.
Jim and Jack scrambled to find a way to compete, but soon found
that Amazon hadn’t lost a fight yet, with companies like Netflix
opting to change industries entirely over directly competing with them.
Jim and Jack then decided to continue business as usual.
Surprisingly, Square managed to not only attract new talent,
but grow nearly 10% every week.
Systems doubled every 50 days, and they were pushing their servers and
their physical space to their limits.
All the while, Square had no idea how Amazon was doing.
They hadn’t seen any of the Amazon Register card readers in stores, but Jim
worried that they were missing something.
In spite of the uncertainty, Square forged ahead with expanding and
made several updates to Cash App, including opening it up to businesses.
Businesses could create a Cashtag — a personalized screen name — and
share it with customers to get paid more easily and securely.
Soon after launching, both small business owners and major organizations were
quick to leverage the new service.
Later that year, Square found itself the victor in their battle with Amazon.
Seemingly out of nowhere, Amazon announced that it was discontinuing
its Register card reader, and then sent each and every customer a Square one.
Jim could hardly believe it.
He later discovered that Square was the only company that had ever
survived a direct attack from Amazon.
After looking into it, he realized that along with creating one innovation on
top of another, Square was ahead of Amazon in dealing with fraud since it
had years worth of data to learn from.
Over the next few years, Square continued to focus on Cash App
and made bigger updates, including offering physical prepaid debit cards,
permitting direct deposit paychecks and stimulus payments, enabling buying
and selling Bitcoin and no-fee trading, and allowing teenagers to use its
service with parental authorization.
All the while, Cash App’s users grew to an impressive 30 million, partially thanks
to its adoption amongst hip-hop artists and the loyal fans who sent their favorite
artists money through the service.
While there are some drawbacks, Cash App has become an effective bank
for the 85 million Americans who are underserved by their banks, or
unable to get a bank account at all.
In many cases, these individuals do not have enough money to
meet the minimum monthly balance requirements to avoid paying a fee.
And in other cases, they can’t even find a branch close to them since more
and more have closed over the years, especially in lower-income areas.
Finally, with Cash App, they can conveniently send cash to others,
manage their money better, and access otherwise out-of-reach financial services.
To date, Square is now known as Block and worth over $66 billion, with Cash
App bringing in more than $3 billion.
As for Jim, he remains part of the company as a board member
while Jack serves as CEO.
Both are credited for revolutionizing the way small businesses serve customers.
It may have never happened if Jack hadn’t been kicked out of Twitter and
Jim hadn’t missed out on selling his art.
“If you leave the world of the known, you are either an entrepreneur or a
corpse” Jim wrote in one of his books.
Both he and Jack have shown they are both true entrepreneurs.
This is the story of how a humble artist and one of the most hated men from Twitter
built Cash App, and turned it into the go-to app for the underbanked — all
the while earning billions of dollars.
For more interesting stories about today’s biggest companies, don’t
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