Jack Dorsey: 'We are optimizing for growth'May 14, 2013: 11:45 AM ET
Square CEO Jack Dorsey spoke to Fortune exclusively about his company's new hardware, Stand, a $299 countertop point of sale system.
FORTUNE -- On Tuesday, fast growing mobile payments startup Square introduced Stand, a hardware device that cradles an iPad, turning it into a countertop point of sale system. Square CEO Jack Dorsey and Jesse Dorogusker, a former Apple (AAPL) exec who led the development of Stand, spoke with Fortune on Monday about what Stand means for the company. What follows is an edited transcript of the conversation.
Fortune: You're introducing Stand to appeal to a different kind of merchant, right?
Dorsey: It opens the door for brick-and-mortar, high-volume (businesses). It takes another excuse off the table (for not choosing) Square.
How does Stand compare with more traditional point of sale systems?
Dorsey: It's a complicated question because there are many different answers to that. If you go to the very, very bottom of the line, a cash register, you can buy one from Sharp, Panasonic for $300 dollars to $600 dollars. These are unfortunately calculators on top of cash boxes. When you start getting analytics, when you start getting into some of the features that we have built into the software, integrated cards swipes, you are talking more than $5,000 and close to $10,000 dollars. That usually includes a two-year lease or a two-year agreement for service.
Dorogusker: And when you think about the aesthetics of those products, it is a new universe we are creating here. To be able to match our merchants' pride in their own work with something that is appropriate for their countertop, something they can be proud of, compared with everything else Jack has described, is really powerful.
What's your business objective. Is Stand meant to be a profit center, or is it a tool to get more merchants into the Square payment ecosystem?
Dorsey: We are optimizing for growth. We are optimizing to appeal to more merchants, as we did with the card reader. We see this is as another door we opened to another class of merchants.
Square started catering to very small merchants, and the company's identity was built around that. What does this product say about the kind of company Square is now?
Dorsey: It says that Square grows with our customers. When we started the company it was always about building a general utility that could scale from the smallest individual to the largest entity in the world. This is definitely moving up. But there is a nice path. I can start my business, making cupcakes and start with the reader and an iPod touch. Then I can get a cart, or I can get retail space in a mall and have a solution there as well. I can add as much as I need. If I need a receipt printer, I can add that; if I need a cash register, I can add that.
Many people have designed cool countertop stands that turn iPads into point of sale systems. Why build your own?
Dorsey: We believe in this perfect marrying of software and hardware. With a lot of those solutions today, you do have a Square card reader hanging off the iPad. One of the benefits of the longer track (for swiping cards) is that you don't have to think about it. When you are trying to move a bunch of people through your line, you need something different.
Dorogusker: We also see a lot of opportunity in taking ownership of the hardware software connection. The Stand can be smart about the register software and vice versa. Our software now knows what peripherals people are using and how, and we can make recommendations based on that. A bamboo stand can be very beautiful and there's a lot of great craftwork out there, but it doesn't have the intelligence of this system.
How much did your Apple experience inform this product?
Dorogusker: Obviously the Apple experience helps knowing how to make beautiful things at volume. But this is a business product with a consumer in mind, sold though a consumer channel for people trying to run a business every day. So we are really in a new space and we are bringing a new flavor to it.
You include a drill in the Stand box. It's hard not to think about Nest, the maker of a learning thermostat, which was started by your former Apple boss Tony Fadell, and includes a screwdriver with their product. Were they an inspiration?
Dorogusker: Tony has been an inspiration in a variety of ways over a decade. It was a great idea. We included the exact drill you need to drill exactly the right size hole in your countertop, because we know that drilling a hole in your countertop is a big deal. Taking a cue from them on that was a great idea.
Is there a size of merchant for which this is not a robust enough solution?
Dorsey: People have always surprised me in the ways they find to use Square. I think we'll be surprised. I don't think there's any limit to this. You could see this with an individual, and we could see it at large institutions.
Will we see these at Starbucks (SBUX)?
Dorsey: We have been talking to them about it. We're excited about it, they're excited about it.