Conversations with Jack Dorsey frequently veer into obscure subject matter. Job interviews pivot into 30-minute disquisitions on the New York Yankees. Press briefings transform into critiques of Virginia Woolf novels. A comment about Dorsey's game-changing startup, Square—which lets anyone accept credit cards—triggers a lecture on the history of money. Although his manner suggests a taciturn introvert, calmly etching impressions in a notebook while the circus of life spins around him, Dorsey can be downright verbose when talking about one of his seemingly limitless obsessions—maps, journal-keeping, perambulation, CB radio.
This tendency can become a problem for the 35-year-old Dorsey, whose packed schedule would seem to afford little time for such digressions. In addition to his full-time job as CEO and unofficial chief design officer of Square—one of the Valley's hottest startups, which recently sought a valuation of $4 billion—he also serves as executive chair of Twitter, which launched in 2006 by springboarding off his idea that brief sneezes of communication could deepen human interaction. As the driving force behind the two startup darlings—and as a man who is often mentioned as the spiritual successor to Steve Jobs—Dorsey is in major demand by media bookers, angel investment prospects, and event organizers seeking edgy marquee names to engrave on trophies. (One recent honor: a Lifetime Achievement Award from the Tribeca Film Festival.)
Today Dorsey has blocked off a slot on his calendar to talk about Square and how the company hopes to infuse financial transactions with a dose of human intimacy. We are sitting in the Taste tea shop in the Hayes Valley neighborhood of San Francisco. It is midday, and we are the only customers. Dorsey has selected this teahouse because its customers pay with Square; instead of a register there is an iPad with the increasingly familiar white plastic cube that accepts credit card swipes. In addition, Taste is an early adopter of Square's newest offering, which lets patrons pay without even taking their cards out of their wallets.
But our discussion is sidetracked when the proprietor, Vincent Fung, starts a long and complicated explanation of the various tea options. Dorsey—like Jobs—is interested in Eastern thought, and after listening to a detailed rundown of the exotic choices, he approves Fung's suggestion to try a dark and musty chunk of Pu-erh tea from China's Yunnan Province. A few minutes later, Fung appears at the booth with a deep wooden tray and begins a carefully choreographed ceremony, pouring a continuous stream of hot water over tiny cups. Then he pours water on top of a lid that partially covers the bowl containing densely packed cakes of tea. Dorsey watches the ritual and appreciatively touches his finger to a worn corner of the tray.
"That's wabi-sabi," he says.
Dorsey has lots to say about wabi-sabi, a Japanese concept that beauty can be found in imperfection and impermanence. It's a complicated idea, involving not just art but philosophy as well. "I'll send you a book about it," he promises. Dorsey claims that this mysterious aesthetic is at the core of his design philosophy, a simple yet lived-in quality that pleases and engages users on a profound level.
Dorsey's PR man—who has been sitting uncomfortably while the tea has been offered, tiny madeleines served, and not a word uttered about payment technology—finally speaks. "I love it that you guys have been talking about tea for 40 minutes," he says unconvincingly.
But Dorsey is just getting started. In the spirit of wabi-sabi, I tell him that Jobs once compared the way the iPod ages to the weathering of blue jeans. This sends Dorsey off on another tangent, as it becomes instantly clear that he is not only an ardent admirer of Jobs but also a student of the denim arts. At one point in his career, just before starting Twitter, he took a course in apparel design, thinking he might become a jeans artisan, and now he leaps at the chance to educate me.
Blue jeans, he claims, were originally made for miners and sea divers. Divers would break them in by sitting in a bathtub until the shrunken fabric embraced their legs like tights. The unintended side effect was to transform each manufactured garment into a unique item that carried the imprint of its wearer's shape, like a personal journal written in denim.
Naturally, when choosing his own jeans, Dorsey prefers pants that reflect that heritage. He is an aficionado of those made by fashion designer Scott Morrison. Dorsey notes that he plans to make a pilgrimage to Morrison's shop in New York City's SoHo district, where they sell jeans made from cotton handpicked in Zimbabwe and woven by craftspeople in Japan. Once, Dorsey says with quiet awe, Morrison provided rigid, unwashed jeans to dishwashers at a New York City restaurant. They wore them constantly in the filthy steaming kitchens, creating a bewitching pattern of wear that was painstakingly replicated by Morrison's jeansmiths. It's an elaborate process, all in the pursuit of wabi-sabi.
The conversation is beginning to sound like an episode of Portlandia coscripted by Aaron Sorkin and Andrew Ross Sorkin. But Dorsey has really been talking about Square all along. Face-to-face commerce today, Dorsey says, is socially impoverished. Human beings have been handling money for thousands of years, but it is still an awkward, time-consuming, unplugged, and uninspiring experience. What if it were beautiful?
Dorsey is trying to create magic in an industry where people have not previously sought wonder and delight. In short, he hopes to pull an Apple on the entire financial world.
Dorsey first showed me his payment app in the summer of 2009, when we met to talk about Twitter. It was bound to be a difficult conversation. Though he was listed as the chair of Twitter's board, and although the social network was his idea in the first place, he had been effectively shut out of day-to-day operations. Dorsey relinquished the CEO post just as the service was becoming a household word. Instead, cofounders Evan Williams and Biz Stone became the public faces of Twitter, and Dorsey watched from the sidelines as they took an extended victory lap, appearing on The Colbert Report and Charlie Rose. Dorsey was perilously close to becoming the Pete Best of social media.
Still, he shrugged off the humiliation, insisting he had volunteered to step down. "I think I rationalize it by saying Twitter is certainly bigger than me, bigger than anyone in the company. I hope we don't get bogged down with who the face of the company is." But wasn't it tough? "It was tough," he said. "I have honestly been working on this concept for like 15 years." (Later, in a less guarded moment, he would admit to writer David Kirkpatrick that the departure hit him like a punch in the stomach.)
After we finished our Twitter discussion, Dorsey asked me casually whether I wanted to see what his new company was all about. Its name—Squirrel—was not particularly descriptive. He took me to his apartment in a high rise overlooking the bustling plaza of the old US Mint. The half-renovated one-bedroom looked more like a construction site-cum-makeshift office than a domicile. Young engineers were tucked into dusty corners, working away at their computers. Hovering over the kitchen counter, Dorsey explained that he was going to empower everyone to accept cashless payments.
He took a piece of white plastic shaped roughly like an acorn, jammed it into the earphone jack of his iPhone, and asked me for my credit card. When I produced it, he swiped it through a slot on the acorn. Then he had me sign the screen with my finger and enter my email. When I checked my own iPhone, I had a message noting that I'd paid Jack Dorsey $1. A Google Maps image marked the location of the transaction. Dorsey was beaming like a proud parent.
Squirrel came about in a strange way. When Dorsey was growing up in St. Louis, he became fascinated with computer programming—"I'm a great programmer," he says in a rare moment of boastfulness. (He elaborates that his style is sparse and well structured—"like Twitter.") As a teenager, he had a summer internship with an entrepreneur and glassblower named Jim McKelvey. Even at 15, Dorsey was impressive enough that he was given lots of responsibility, far beyond that of the average intern. McKelvey and Dorsey remained friends throughout the younger man's early endeavors: working for a dispatch service in New York City, studying botanical illustration, training as a massage therapist, and finally creating Twitter.
Then, shortly after Dorsey left Twitter, McKelvey remarked during a phone conversation that he had lost a recent sale—a $2,500 blown-glass bathroom faucet—because his customer could pay only with a credit card. As McKelvey recounted this tale to Dorsey—both of them with iPhones pressed to their ears—they realized that a business was literally at hand. Those smartphones had more processing power than entire banks did decades earlier. Why couldn't they process credit card payments?
(That story has attained near-legendary status, like Pierre Omidyar's Pez dispensers or Steve Jobs' visit to Xerox PARC. But the details are in some dispute. As Dorsey tells it, the customer was in the store and wouldn't run out to get cash. McKelvey, however, says the customer was calling from Panama, and he couldn't accept American Express.)
Not long after that conversation, in February 2009, Dorsey, McKelvey, McKelvey's wife, Anna, and a friend named Greg Kidd drove north of San Francisco to a Muir Beach restaurant called the Pelican Inn. They spent the evening debating whether they should start a company based on the idea that the world needed an easier way to make payments in person. Eventually they decided to do it. On the way home, they stopped at a 7-Eleven to buy some water. Dorsey and Anna, who stayed in the car, saw a squirrel run across the hood. It got Dorsey thinking. Squirrels dart around and collect acorns—it's sort of currency for them! And like the word twitter, squirrel can also be used as a verb—people "squirrel" away their treasures! Dorsey could instantly envision acorn-shaped hardware—awesome branding!
Within 10 days, Dorsey and his team had whipped up a prototype. Robert Andersen, a product designer for Apple who'd written an early Twitter app, was one of the first to see a demo. "I thought it was really bizarre that you would swipe a card reader through an audio jack," he says. Actually, it's brilliant—a credit card's magnetic strip stores information much like the tape does on an audiocassette. Dorsey's team also designed the device to be powered by the energy generated during the actual swipe. As a bonus, the sound it made when the card zipped through the slot resembled the squeak of a squirrel.
But the most outrageous part was how easy it suddenly became for anyone to accept credit cards, using a device they already owned. The process through which businesses are authorized to accept credit card payments is notoriously arduous and slow, particularly for small merchants. The issuing banks demand multiple proofs of creditworthiness and pile on extra fees. Square itself had difficulty negotiating that red tape—it took longer to get approval from Visa and Mastercard to accept a swipe than it did to create a prototype for the entire payment system. "Our sign-up process takes literally two minutes," Dorsey says. "You download an app, put in your name and address, answer three security questions, link your bank account, and you're done." Andersen saw the potential. Just as Twitter democratized broadcasting, Dorsey's new company would democratize the credit card industry. He quit his job at Apple and signed on with Squirrel.
Small problem: There was already a payment system named Squirrel. The team repaired to the dictionary and found, not far from squirrel, a new name. A square is a fundamental shape that suggests heft. A square deal is a fair one. And when two parties settle a deal, they square up.
Square was positioned to disrupt the payments industry, but it wasn't out to topple the credit card companies. Indeed, it could be a boon to them; payments that were once made with cash could now be made with credit cards. (Square charges 2.75 percent per swipe and gives the vast majority of that fee—the company will not say exactly how much—to the card issuers.) So Dorsey met with some of the biggest names in finance, like JPMorgan Chase CEO Jamie Dimon and Visa head Joe Saunders. The demo won over the bankers. "Jamie has a Square reader on his desk," Dorsey says. And Visa became an investor.
Since then, Square has signed up more than a million merchants; it expects to process more than $5 billion in transactions over the next 12 months. One symbol of its ubiquity can be found in the lobby of its headquarters: Anyone can come in off the street and grab one of the Square payment dongles that sit in a glass bowl on the receptionist's desk, like lollipops in a pediatrician's office. They're free. And just like that, you're a credit card merchant.
A few days after our tea ceremony, Dorsey is sitting outside another artisanal beverage shop—in this case Café Grumpy in New York City's Lower East Side—and quietly, sadly acknowledging that he never met Steve Jobs. "We were setting up a time to meet—that was my last email to him—but then he got really sick," Dorsey says. "I learned a lot from him, though, from afar."
In many ways, Dorsey and Jobs couldn't be more different. In conversation, Jobs focused on his products with laserlike intensity; Dorsey's sell is softer. Jobs' professional extroversion contrasted with a fierce privacy about his personal thoughts. Dorsey is enigmatic in person but more forthcoming about his interior state to the hordes who follow him on social networks, doling out aphoristic observations ("Life is short"), Instagram photos that look like postcards from a Zen hobo (telephone wires, empty bus seats), and surreal shout-outs to celebrity buddies like Larry King.
Yet when people talk about who might fill the vacuum left by Jobs' death, Dorsey's name keeps coming up. Talented geeks once dreamed of working with Jobs; now they fantasize about working with Dorsey. Keith Rabois, an early PayPal executive and a hot prospect, says he took the COO job at Square in large part because of Dorsey. "There are three things you need to do as a CEO-founder," Rabois says: "Think strategically, drive design, and drive technology. Some people who are really good at one can build a pretty foundational company. Most people who are very successful are good at two. But Jack is the only person in the Valley I've met who's all three. He's a first-rate strategist, a first-rate designer, and a first-rate technologist."
Like Jobs, Dorsey has proclivities that have helped him build something of a cult of personality. Every Friday he indoctrinates new employees with a forced march through the streets of San Francisco, beginning at the statue of Mahatma Gandhi at the Ferry Building, heading into the canyons of the Financial District, and emerging in the startup haven south of Market Street where Square resides. During the walk, Dorsey outlines what he calls the Four Corners of Square. "It's something that codifies our ethic," he says. "I really spent a lot of time on it." But he is mum on the details of this vaguely Masonic concept. "If I told you, you'd have to work here," he says with a tight smile.
Dorsey also boasts a Jobs-like obsession with design and detail. In early 2011 he became captivated by the idea of using a wallet metaphor in a Square app. William Henderson, a former Apple operating system specialist who now works as a software engineer at Square, says, "Jack got so excited that he came to work one day with a stack of 10 leather wallets." For hours, Dorsey and his team deconstructed every detail. He was especially fond of the Hermè8s. (He adores the brand and pronounces its name "air-MEZH," as if he were raised in a duty-free shop.) The team designed a digital wallet that faithfully replicated its austere majesty, down to the stitching. It even carried a monogram, extracting initials from the user's registration information and dropping the trailing dot after the second initial, just as Hermè8s does. The credit cards, which fit into their slots at slightly asymmetrical angles, were stamped with holograms that changed color when the screen was tilted.
But perhaps Dorsey's most Jobsian trait is his knack for disrupting entire industries and forcing them to follow his lead. The established companies that process merchant transactions—like PayPal and VeriFone—were caught off guard by Square. Now they've launched competing offerings. PayPal has created PayPal Here, with a stylish triangle-shaped card reader that the company says is more structurally sound than Square's. PayPal president David Marcus thinks that all of PayPal's 110 million users will eventually adopt it. VeriFone, the leader in credit card swiping machines, built a Square knockoff called Sail, which has a flap that extends down the back of the smartphone. (Intuit has offered its own mobile credit card system, called GoPayment, since 2009.)
The message from those giants seems to be, thanks, kid, we'll take it from here. "There's no question they've innovated," PayPal's Marcus says. "It's been good for the ecosystem. And Jack is a good guy. But people need a multichannel solution." Jennifer Miles, an executive vice president at VeriFone, adopts a similar tack: "Square took a sleepy industry that was doing things the same way for years and innovated. But that process is replicable."
Dorsey is unimpressed. First of all, he thinks it's wrongheaded to build those flaps on readers that plug into smartphones: "We don't want to add things—we take things away to make them more simple," he says, once again sounding like Jobs. More broadly, Dorsey takes issue with the implication that Square is too naive to compete with the ultrasophisticated finance industry. "Yes, we're naive," Dorsey says. "But that's a strength, not a weakness. We literally have fewer than five people in a company of 250 who have worked in the financial industry. So our approach is to engineer and create and build what we want to see." (In any case, should Dorsey get stumped on some intricate issue of high finance, he can seek enlightenment from former Treasury secretary Larry Summers, who sits on Square's board.)
Square's Rabois, the former PayPal exec, has a harsher take on his old employer: "It's sad that what qualifies as innovation there now is trying to replicate, piece by piece, something that someone else is doing."
If VeriFone and PayPal spent as much time studying Jobs' legacy as Dorsey did, they'd understand the risk in mimicking another company's products. Indeed, in the same way that Apple introduced new versions of its devices just as competitors caught up to its previous model, Dorsey has already released the next iteration of Square—a swipe-free version. It began at an all-hands meeting in late 2010, when Dorsey issued a challenge to his staff: "I want to have a payment experience that's so smooth that when I walk out I won't be able to remember if I even paid." Imagine if customers were checked in automatically via Wi-Fi any time they walked into a participating store. When they wanted to buy something, they could just give the merchant their name. They'd never even need to reach into their pocket!
The vision—swipeless pay, if you will—was a logical extension of Square's mission of turning payment into an intimate experience. But instead of merchants doing all the work, this required customers to download an app too. They dubbed it Card Case. The first version—which featured the passionately designed digital wallet, including virtual credit cards for each participating merchant—launched in the spring of 2011. A few months later, while interviewing with Dorsey for a job at Square, an Apple iPhone product manager named Shuvo Chatterjee pointed out that, while he loved the service, the wallet metaphor didn't really work. "I'm collecting those cards, but it's not really scaling," he said. "In my real wallet, I don't have one card for every merchant I buy from." Dorsey hired Chatterjee and made him the Card Case product lead. In March 2012, they released an update. The beloved Hermè8s wallet was gone, replaced by a cleaner interface that more effectively promotes discovery of new places. (Once you establish a relationship with a merchant, it's like opening a bottomless ledger, one that can easily handle things like loyalty programs.) The app also acquired a new name, Pay With Square, an indication that it was no longer a side project but had become crucial to the company's mission. No dongle required.
Dorsey says that he learned a lot during the early days of Twitter—including what not to do. "I wrote down everything that happened at Twitter, and we corrected all the mistakes," he says. Twitter's rise was hampered by managerial whiplash and frequent outages. So with Square, Dorsey says, "we focused on the culture immediately. We focused on reliability and uptime. We focused on having a design team immediately. Pretty much everything was a reaction to those early years."
In March 2011, Twitter CEO Dick Costolo hired Dorsey back, both for his design savvy and, as he puts it, a "sincere appreciation for the vision of the founder." Today Dorsey splits his time between the two companies. "It's unusual, but the companies have a lot of parallels," he says. "They're both utilities. They both can be used by a dynamic range—from individuals to the largest organizations in the world. They both have social aspects; payments are just another form of communication. Both are exchanges of value."
Some have criticized Dorsey's dual role, arguing that he is spreading himself thin. "I will do whatever it takes to make sure both succeed," Dorsey insists. "It's like two family members you care for and love deeply."
For Square that means continuing to expand the company's offerings as it moves up the retail food chain. Earlier this year, Square saw the popularity of the iPad as an opportunity to expand its business beyond individuals to boutique-level merchants. It released Square Register, an app that makes it easy to use an iPad as a full-featured cash register. Vendors can set up buttons for each item they sell, much as McDonald's lets cashiers simply press Shake instead of entering the price. It can also connect wirelessly to a cash drawer.
But Register's real value is that it offers sophisticated analytics for free. Its users get data that allows them to identify which products are selling and when, and future versions will be even more powerful. "As a customer enters the vicinity of the establishment, a notification will spring open on the merchant's screen," says Megan Quinn, Square's director of products (who has since left the company). "It will show the customer's name and suggest their most likely order, based on an algorithm that knows past purchases and things that sell well at the store."
Henderson, the engineering lead on Pay With Square, points out that the company collects all kinds of information about its users, data that might be invaluable to merchants and customers alike. "First of all, we know your location," he says. "Second, we have a decent sense of your history. We know the kinds of places you've been and what you like. But we also know lots of other things—like if there's a whole bunch of food trucks that pull up nearby, we'll see the spike in activity and can point you to those trucks. I think you'll see us get really good at this."
Analytics and data-mining might provide Square's real business model. So far, the company has charged a very small fee for each transaction, and merchants aren't likely to pay much more. And while Square has been giving participating merchants access to analytics about their businesses for free, it is also aggregating that data, real-time information about what people are buying in every region of the country, complete with detailed demographics. It's reasonable to think that might be very valuable in the near future.
Square is still focused on smaller merchants, but its executives believe that even tier-one retailers will use Square before long. "The Neiman Marcuses and the Walmarts will want to have an emotional attachment with their buyers, where anybody can walk in and pay with their name and have an electronic receipt," Rabois says. "That's what we're going to deliver."
In other words, Square aims to provide shoppers with an emotionally satisfying experience—and it is using the Apple playbook as its guide. "My challenge to our product team is to build the app that they themselves really want," Henderson says. "That's something I learned at Apple. That's the reason it's able to consistently surprise consumers." Communicating the Apple way really isn't too hard for Henderson, because "almost every one of my team at Apple now works for Square."
And just as Steve Jobs did, Jack Dorsey works hand in hand with his designers. "It's almost as if the whole of Square is a manifestation of Jack's mind—everything has to be artisanal," says Twitter's Stone, who has remained close to Dorsey and is an investor and adviser to Square. "He was always that way, but now he has the gravitas and authority to make it happen."
Recently Dorsey oversaw a rejiggering of the icons for Square's iPhone apps. He took special care with the one for the now-classic Card Reader app. The design he ultimately settled on was a version of the company logo, set atop a blue background. There's something evocative about that backdrop—it isn't an antiseptic patch of blue. It's a bit weathered, textured, striated. It is, in fact, a photograph of a swatch of denim from Scott Morrison's high-end jeans, shot directly from Jack Dorsey's leg.
Wabi-sabi heaven.
