The video centers around the transformative journey of Block, Inc., formerly known as Square, which was co-founded by Jack Dorsey and Jim McKelvey. Initially leveraging a credit card reader that connected via mobile audio jacks, the company aimed to empower small businesses by enabling them to accept credit card payments without traditional prohibitive costs. This initial leap positioned Block to redefine electronic payments, eventually broadening its product suite for broader financial services.

The narrative highlights key turning points, including strategic decisions like giving away credit card readers for free to build a large network despite initial financial losses. Another significant moment was a contentious distribution deal with Starbucks, which tested the company’s core values but ultimately offered valuable exposure and technological acceleration. Moreover, the evolution from failed consumer tool attempts to the successful launch of the Cash App underscored Block's adaptive culture and risk-taking ethos.

Main takeaways from the video:

Please remember to turn on the CC button to view the subtitles.

Key Vocabularies and Common Phrases:

1. prohibitive [prəˈhɪbɪtɪv] - (adjective) - So high in cost as to prevent purchase or use; unaffordable. - Synonyms: (exorbitant, excessive, expensive)

For a small business, these costs were prohibitive.

2. ubiquitous [juːˈbɪkwɪtəs] - (adjective) - Present, appearing, or found everywhere. - Synonyms: (omnipresent, pervasive, widespread)

The app store had launched the previous year, and smartphones were quickly becoming ubiquitous.

3. byzantine [ˈbɪzənˌtaɪn] - (adjective) - Complex and intricate. - Synonyms: (convoluted, complicated, elaborate)

Square simplified the byzantine fee structure of traditional credit card providers.

4. economy of scale [ɪˈkɒnəmi əv skeɪl] - (noun phrase) - The reduction in costs per unit due to increased total output. - Synonyms: (cost efficiency, production efficiency, scale efficiency)

We know we're going to lose money for a while, but we did the math and we felt comfortable that we could do it, achieving an economy of scale.

5. inflection point [ɪnˈflɛkʃən pɔɪnt] - (noun phrase) - A moment of fundamental change or decisive point in a situation or process. - Synonyms: (turning point, critical moment, juncture)

There was an inflection point within six or seven months of starting work on the project.

6. pivot [ˈpɪvət] - (verb) - To turn or change direction significantly. - Synonyms: (shift, turn, transform)

Companies typically pivot because they have no choice.

7. probabilistic [ˌprɒbəˈbɪlɪstɪk] - (adjective) - Based on or relating to probability or the theory of probability. - Synonyms: (stochastic, chance-based, statistical)

There's this idea of the world being probabilistic in nature.

8. conversely [kənˈvɜrsli] - (adverb) - Introducing a statement or idea which reverses or contradicts one that has just been made or referred to. - Synonyms: (inversely, contrariwise, oppositely)

conversely, there's an idea of not expanding into your core market.

9. divert [daɪˈvɜrt] - (verb) - To move away from a course or change the direction of. - Synonyms: (redirect, reroute, distract)

And by investing the resources to meet Starbucks needs, I worried that we would divert resources from other things that served the meaty potatoes of the business that we were in

10. virtuous loop [ˈvɜ:tʃuəs luːp] - (noun phrase) - A cycle of positive feedback that leads to continuous improvement or benefits. - Synonyms: (beneficial cycle, positive feedback loop, reinforcing cycle)

So we actually found this very virtuous loop, which had very little tax on our customers.

Block ft. Jack Dorsey - A controversial hack week project becomes the #1 financial services app

Nobody wanted us to work on cash app. The organization, for many years was trying to reject the organ like it's losing us all this money. Why are we doing this? It was in those moments in our company's history where, as a lead, you kind of have to sacrifice some of your credibility. And I was willing to take that credibility hit and willing to protect this thing because I believed in it.

Today's episode is about Blok, Inc. Formerly known as Square, which was founded in 2009 by Jack Dorsey and Jim McKelvey. Blok's first product was a little white square that plugged into your phone's audio, Jack, and turned it into a credit card terminal. It gave millions of small business owners who previously couldn't participate in the digital economy the ability to accept credit cards. While Block's journey began with a single product, today the company offers a suite of financial tools for millions of businesses of all sizes and for individuals as well.

The Crucible moments in today's episode hinge on the company's strategic approach to growth and expansion. We'll look at how Block sacrificed revenue early on in order to build its network, how a distribution deal with Starbucks tested the company's identity and its resolve when the hidden costs of the deal became clear, and how the company turned a hack week project called Cash App into one of the most popular consumer finance products in the world.

You'll learn how Block's culture of risk taking, its willingness to accept mistakes, and its refusal to let failure hold them back led to some remarkable outcomes. My name is Jack Dorsey, and I am Black's head, the blackhead. My second boss ever, this guy named Jim McKelvey. When I was about 15 years old in 1993, Jim hired Jack to work as a summer intern at a software company, Mira. Jim coined him Jack the genius. And the two worked together for the next two summers.

I went to college, moved away. We kind of lost touch. And after I left the CEO role of Twitter, Jim reached out and he was interested in working together again. I was, too. So I went back to St. Louis during the holidays, and we had a conversation and we decided that we wanted to build something. We didn't know what that something was, but generally we just wanted to work together cause we enjoyed it.

I think it was in January of 2009. He said, I know what we're working on. And I said, what he's like, well, I just lost a sale because I couldn't accept an Amex. Jim's side hustle was blowing glass. He ran a studio in St. Louis selling sculptural glass faucets, which are beautiful, by the way, if you look them up. But like millions of other small business owners, Jim was unable to accept credit cards before square.

If you were a merchant who wanted to take credit cards, you had to purchase expensive hardware, which locked you into a multi year contract and came with exorbitant, often hidden monthly fees. On top of that, as the merchant, you were on the hook to pay a range of transaction fees to credit card networks. For a small business, these costs were prohibitive. This meant if someone wanted to pay with a credit cardinal, as was the case with Jim, business owners had no choice but to turn down the sale.

There was an important why now? The app store had launched the previous year, and smartphones were quickly becoming ubiquitous. Jim thought, what if someone could accept credit card payments using their phone? And he said, why don't we build that? We wanted to build something that stood for small businesses giving them tools to level the playing field.

So we started with being entirely software based, and then we realized we needed hardware, and we figured out how to build the hardware and intersect with the networks and just constant iteration to get to a point within a month of a working prototype that we could actually take someone's card and then take money off the card. In 2009, when I first met Jack and Jim, the idea that there was this little reader that you'd plug into the audio jack of your phone that would transform your phone into a credit card terminal was pretty remarkable.

I remember Jack giving me one of the readers, and I ran around like a child in a candy store, showing it to all my partners at Sequoia and said, please give me a credit card, and I would charge $5 and I'd give them the money back. Obviously, it wasn't. I was trying to scam all my partners in this case, but it was just, it was so inspiring. When you think about the ability for a merchant to just run its business, accepting payments is just such a fundamental part of that. Block enabled these merchants that were unserved to become part of the electronic payment system.

We have a core purpose, which is economic empowerment. In 2011, Sequoia invested in Square, and I joined its board. Back in those early days, I was worried about Square's ability to gain distribution. At the time, Intuit had a payments product and they had a Bluetooth reader. So competitors in the credit card terminal space existed and square, this brand new company, would be up against them.

And there was a real question whether the simplicity of design that square offered and the seamless nature of the whole product experience would really resonate in a way that made distribution and growth efficient. So it was a little bit of competitive noise. And then a question about, is this a product that you needed to sell, or is it a product that customers would find? The risk was that if Square didn't figure out an efficient way to get sellers to embrace its product and then also develop a business model, the company would die before it even got started.

So there was an inflection point within six or seven months of starting work on the project, where on one path, we could have built hardware and software and sold it, much like some of our competitors were doing, like Veriphone and NCR and all these, all these terminals you've seen on countertops. The initial idea was, we sell this reader and we sell the software, and we could build a somewhat healthy margin business based off that.

But then we started watching how people were using square early on. So we had one merchant under my apartment in San Francisco named Lily Bell, and she sold flowers. And we kept going to her every week, asking her if she wanted to try what we were building, try to accept credit cards, because she was cash only and she consistently said no to us.

She said, I don't want to deal with credit cards. I want to keep it simple, use cash. Eventually, after about a month, we asked her and she said no again. And we were standing around and someone came up to buy flowers, handed over a credit card, and she said, we don't accept that. But there's an ATM around the corner. He kind of shrugs his shoulders and walks away. The guy never comes back. And she turned to us and said, I'm going to try this.

When we reflected upon it for Lily Bell, she doesn't care about accepting credit cards at all. What she cares about is making the sale. So if that's the case, and we want to help as many people make as many sales as possible, we need to give this away for free. We need to give the hardware away for free. We need to give the software away for free. We need to grow the network as quickly as possible.

And it was super scary. It was super risky. All the companies in the credit card terminal space were making money by selling their hardware and software. Square disrupted this business model by doing the opposite, give the hardware away for free and charge a percentage fee on each transaction. They envisioned they could succeed by growing a large network with lots of transactions. But this direction would mean incurring enormous initial losses just as the company was getting its start when everything was at risk.

And so the crucible decision became, should square stick with its initial plan to sell its hardware and software, or should it take the less obvious, riskier path and give it away for free? After a lot of back and forth, we decided to give it away for free and grow the network. And that moment led to the whole company. If we stuck with the hardware aspect, which we were intending to do, we would have been verifone and I wouldn't be talking on this podcast.

Square introduced the credit card reader in 2010, and it immediately took off. Customers flocked to the service. In addition to giving hardware and software away for free, Square simplified the byzantine fee structure of traditional credit card providers. At the time, these fees were anywhere from one to 8% of a purchase, depending on whether it was charged to a visa, Mastercard, Amex, etcetera. We want to make it simple for sellers to say yes.

And having a always changing rate table was not simple at all. So we decided we're going to have one price, it's going to be 2.75%, we're going to pay the difference. We know we're going to lose money for a while, but we did the math and we felt comfortable that we could do it, that we are willing to take the risk and see it through. And it ultimately worked out. While Square did lose money initially, the company was able to grow its network so much that eventually it became profitable.

And this opened the door for Square to develop other financial tools for merchants. Square has evolved a ton over the years. I'm Alyssa Henry and I'm the CEO of the square business at Block. When I started, we were primarily payments. It was a hardware dongle, and most of our payments revenue was really enter $10.50, hit, charge and go. And the majority of the revenue wasn't associated with customers using software and our commerce products to really run and optimize their business over time.

That's really kind of inverted because we latched onto this problem of no, we're helping sellers make the sale. There's other things that help them make the sale. In addition to accepting credit cards, the next thing that we found was we were giving the credit card reader to sight glass coffee, for instance. They were using it, but they had no way to track how many cappuccinos they sold that day, or croissants or espressos, or black coffee or whatnot.

We made a very simple register. And the biggest thing we did was just made a button for cappuccino, and it was programmable, of course. But what that meant is every time they hit that button for cappuccino, the price would automatically come up. And in the background that was now tracked. So now at the end of the day, they could see how many cappuccinos they sold.

They could remember that on Tuesday it was rainy and how that impacted their sales for the day. They could see the correlation between biscotti sales and espresso when they moved the biscotti jar across the counter away from the register. So suddenly they had all this data, and the data helped inform how they built their business. And what did that lead to? Led to them making more sales.

We did it again, recognizing that we had a salon, for instance, and if they could buy a new chair, which costs about $2,000 to install, they would literally double their sales. So we started looking at, like, what if we lend money? And we talked to a bunch of merchants, and it turns out if they go to a bank, if they ask for a loan, the floor is usually about 2020, $5,000. Like, banks just don't work at those small amounts.

So we said, okay, why don't we set up a very simple system where we can lend money to these sellers, send them an email, says, here's an offer for a $500 loan or a $5,000 loan, all based on the data that we had from them using our register and the payment device. You can accept it if you want. Heres the rates. And you pay it back every time you swipe one of your customers cards. And it was a hit because it was easy.

Our model became very, very simple, which was, if we help a seller make a sale and we help them make more sales, it benefits our business positively, and then we can support more sellers. So we actually found this very virtuous loop, which had very little tax on our customers, and our interests were entirely aligned. All we had to do was help the seller make more sales and our business would grow.

You're told a lot to listen to your customers, and I think people take that somewhat literally. Like, if a customer tells you to do this, then you do that. Whereas we had a different approach, which was, we're going to observe what our customers are trying to do, and then we're going to learn why they're trying to do that over a base of customers, and then we're going to iterate based on that. So this cycle of observe, learn, improve, and that really set the tone for the business for the next two years or so.

So in 2012, we had Starbucks reach out to us, and it was Howard. Howard Schultz, then CEO of Starbucks. Square got onto their radar, and Howard reached out and they were interested in using square at all their stores, moving all their processing over to us, which was pretty crazy given that we were only three years old and we built a really great scalable system. But we never imagined, like, going to the level of a Starbucks, which had 10,000 stores all around the US and even more internationally.

As I mentioned, I was worried about Square's ability to gain enough distribution to get off the ground. Here was a chance to get a lot of distribution quickly, but it also came with a lot of risk. One of my earliest memories of the Starbucks deal was discussing it at a board meeting where the management team presented this as a potential avenue for growth.

How do you gain wider distribution for your product? And one of the paths is to do a big partnership deal. And that is always brought with risk, as was the Starbucks deal for square, as it was known at the time. And I was, I'd say initially I was a little resistant to the idea. The gap between where our product capabilities were and what Starbucks needed was very big.

And by investing the resources to meet Starbucks needs, I worried that we would divert resources from other things that served the meaty potatoes of the business that we were in. I realized that doing that would also stretch our capabilities and maybe that then would trickle down and benefit everybody else. It's a difficult trade off decision. I've seen companies where they were smothered by one big customer, really overwhelming them, and you almost become the R and D extension or product development extension for some big company.

And I've seen instances where it can catapult you. So there's no single formula to say you should or should not pursue these sort of distribution deals. And so this became a crucible moment. Should square take the deal with Starbucks? It's hard because Starbucks is a big name, and of course you want to be associated with this giant name, and of course you want those headlines, and, you know, it would feel good.

But it was challenging emotionally because we were building this company that stood for small businesses, giving them tools to level the playing field on competing with the larger businesses, like a Starbucks. We had so many coffee stores at this point, and they were all competing against Starbucks. My mom had a coffee store when I was young in St. Louis, Missouri, and she was actually put out of business by Starbucks.

Explaining it to our customer base, I said, you know, there's an opportunity for us potentially to work with Starbucks, your coffee store. Would you be opposed to that? And I was assuming that they would not be comfortable with it. But what they said consistently was, no, I feel you should do that, because if you can handle Starbucks, you can handle me. And by the way, my coffee is better than Starbucks. I'm not really competing with them.

I went to my mom, I said, Starbucks wants to work with us. Would you be upset? She's like, no. If we could have used square at the time, we would use it and maybe I wouldn't have been out of business. I don't know. And then it was square employees. And that's where the mini revolt kind of happened. There's this mindset of we are for the underdog.

We're solely focused on helping them against the Giants. And we had a big conversation. I think we were about 200 people at the time. Those moments come with a lot of pain, a lot of conversation, a lot of stubbornness. But eventually you arrive at the right solution if you're asking the right questions.

One of the things that came to me through the conversations is that if we cast ourselves as for the underdog, for the smaller sellers, leveling this playing field, and we're successful and they actually grow, are we going to tell them to go elsewhere? Because philosophically we don't want to handle them at this arbitrary line of growth that they just passed? No. So what if instead we change our mindset a bit and grow with our sellers? If we can grow with them for whatever ambition they have, we're fulfilling the promise that we made to them when they came to us.

So that eventually resonated and we decided to sign the Starbucks deal. Certainly it ended up being somewhat of a one sided deal that did not benefit us, and it is what it is. In August 20 twelve Square became Starbucks exclusive processor of in store payments for 7000 us stores. But in 2015, Squares s one filing revealed that this partnership had caused losses of $70 million. Square had been promised a percentage of the transaction fees, but the terms of the deal were such that with each transaction, Square was required to pay an even higher transaction rate.

The credit card companies. And so ultimately, on every Starbucks swipe, Square lost money. There's this good medium article that talks about the clock and the news cycle that companies go through, where noon is your high, riding high, everyone loves you. 06:00 everything starts to turn sour and then you've got the two sides in between. At this point we were in the second half.

We were probably seven or 08:00 there had been some bad press, somewhat dark hours, and then the IPO was rough as well. The revelation about the Starbucks deal and this very specific focus on the losses incurred in the payment processing part of it was something that cast a shadow over Square and raised more questions about the company's ability to be profitable long term. Right when we're going public? Right when you're unable to respond to these criticisms because you're in the middle of a quiet period. And so it was one of several headwinds we faced as we moved into the IPO.

Square had been valued at $6 billion, but on the day of the IPO, we were priced at just $9 a share, meaning a valuation of just 2.9 billion. I felt sick to my stomach. The key is obviously how a company performs in the long run. People often talk about the only share prices that matter are the share prices that the day you buy and the day you sell and everything else in between kind of is irrelevant.

As filings showed, we essentially lost $70 million on that deal. But that's one way of framing it. Yeah. Did we lose $70 million or did we pay $70 million to get the exposure and to grow the network? I don't know.

I mean, certainly there were a lot more things that we wanted to do with Starbucks that they did not fulfill. But I don't regret the move because it hyper accelerated. Number one, our technology stack. Number two, our awareness with both customers and potential candidates that wanted to work with us. And number three, it broke us out of a box, which was, we are building hardware and software for small sellers. So it definitely changed the company for the better.

In company or business building, there will always be dark hours. No company, no business is immune from these periods of time. Square was going through those moments in 2014 and 2015, but I think we were planting the seeds then that have led to the success of block overall. Today, it's helped us expand to support a larger range of sellers and grow up market as well.

And then, of course, transition from kind of hardware only or hardware focused, in person focused and payments focused to omnichannel software, such that sellers can meet their buyers wherever their buyers may be, whether it's in person, online, or over the phone, or over social media. One of the questions I always wrestle with when one reflects on decisions made is you don't have a parallel universe where you knew what all the other choices could have been. So in assessing the Starbucks deal on its own, I think it was worth doing it the way we did.

It taking a step back? Did it enable the company to succeed long term? Did we learn from that experience? Did it provide enormous value to us? It absolutely did. The thing, which I'm not sure about is was there some other decision that we could have made that might even have been better for the company in the long run?

And obviously, yeah, I don't know that, but I'd certainly encourage anybody listening. As you evaluate your own decisions, key crucible decisions, strategic options you're weighing, is have as wide a set of choices as possible that you're evaluating. And if you find yourself deciding between only two choices, maybe you need to widen the aperture. Is there a third or a fourth option that you haven't even considered that you need to throw into the mix to really test whether that is the right path?

Something that maybe is not obvious to people that have studied Square's history or looked at square over the years was very, very early on the company, we were just culturally obsessed with trying to figure out how we could build a consumer product. My name is Brian Grassidonia. I'm the CEO of Cash app. We launched the Square credit card reader in October of 2010. And by January of 2011, we thought that the product that we were building was really interesting, but we didn't think that the business that we were building was very compelling unless we could bridge both sides of the counter.

So figuring out a way for sellers to connect with their customers and helping them engage their customers, helping them understand who their customers were. So in 2011, we started hacking on this idea of a product called Square Wallet. And it was a product that worked at Square merchants, and you could walk up to the counter at a square merchant and you could pay. And that product never really got off the ground.

We just could not find the right approach to grow it. And we just did some stupid things early on. Like, we assumed that a bunch of people who would be sellers would also have this square wallet, so that it was a one binary that was both the seller app and also the wallet. Unfortunately, we ripped it out, but it continued to be this thing of like, we wanna build daily utility for individuals as well, not just sellers.

So it was another two years of many different attempts of us trying to figure out products on the consumer side that we could build, that would bridge both sides of the counter. Cash app was born out of kind of trying something entirely new. It was maybe December of 2012. We wrote down ten initiatives on the board, and then we just put people's names next to these initiatives. My name got put next to the build a low cost payment network line item.

After the Starbucks deal happened, we were looking at ways to minimize our cost on the networks. One exploration was using the debit card rails, effectively. Forcing a refund onto a debit card actually bypassed the interchange fee completely. And then right around that time, this idea started to swirl around the company, and it was this idea of emailing money.

What if you could send money as easy as sending an email? And the idea was like, you put any amount in the subject line, it would look at an account that was linked to a debit card, it could take from the debit card, it could push the debit cardinal extremely cheap to do both operations. Somehow these two ideas got combined together, and that was the setting that cash app was born out of.

So the time that the cash app idea was floating around, first I was a little bit worried that it wasn't obvious. Why would it hit a nerve given that person to person payments companies had predated cash apps launch? And then there's this question about whether does a merchant facing company also have a consumer product payments company. If the company were to pursue cash app in earnest, it would mean building out a new division within Square, a business unit focused on consumers.

Developing a product for consumers would take time and resources and delay overall profitability. Would it divert focus from Square's primary business, its hardware and software? For merchants, companies typically pivot because they have no choice. But in this case, Square's initial product worked and it was thriving. Often people place a limit on their own potential by becoming risk averse.

When they initially succeed, they don't push further. And so Square faced a crucible decision. Do you risk taking the company in this brand new direction, potentially putting your core business in danger and pursue cash app? Nobody wanted us to work on cash app because, again, we are for sellers. We're helping them grow.

Why are we doing this thing that is competing with PayPal or Venmo? It's a solved problem. We're not going to add anything new. And we just didn't believe that. It felt really good. It felt interesting, it felt electric, and it was in those moments in our company's history where you have to, as a lead, you kind of have to sacrifice some of your credibility.

And I was willing to take that credibility hit and willing to protect this thing because I believed in it. I believed in Brian and the team he was assembling. And it was enough to give me confidence that we should continue to see this thing through, despite the fact that everyone wanted to kill it. Cash app was given the green light. Brian and his team got to work.

We started to just build. I think we gave ourselves a week to build an experience where anybody within the organization could send a payment to somebody else. I was empowered to kind of approach the work, completely untethered from anything that we were doing at square. It was a startup within our startup, but that's a tired term.

There's a lot of products or a lot of businesses that are being built within companies, or you like to think about them like startups, but this truly was. It was truly firewalled. Cash app launched in October 2013. It began to see adoption, and the square team observed something interesting about how the product was being used.

We found that it wasn't just about people sending money to one another. People were literally looking at this app as their bank account. It opened the door to us seeing a lot of folks who were challenged in just participating in the economy, could not get a card, could not get a savings account, couldn't get a checking account. They had a job, but they had no way to direct deposit it into an account that they could actually use the money.

In the United States, approximately 6 million people are unbanked. Like the Square reader, Cash app became a tool for economic empowerment. And this differentiated it from other peer to peer payments services. At the time, it wasn't on college campuses like Venmo. It's not in this millennial crowd like Venmo is.

It's with people who don't have any other option for a bank account, and they're actually, you know, asking their family or their friends for money and then using that money to send to other people. So they completely bypass the bank account need and just using cash app all the time. Despite Cash app's popularity with users and its alignment with Square's purpose of economic empowerment, its existence was constantly threatened.

The organization, for many years was trying to reject the organ. So the early days of cash apps formation, initially, we just had to figure out if we could actually make customers happy, could this service grow, could it be adopted and can ensure strong engagement? And it did. But the more it did, the more it added to the company's losses. And understandably, the company CFO and other executives are starting to worry, you know, we can't just continue to fund something indefinitely.

It's losing us all this money. Like, why are we doing this? It started to create a culture war within the organization, something that we really had to manage. There were millions of customers joining the network, but we hadn't figured out a business model.

So this was you know, maybe 2016. I think we gave it nine months, and if we didn't figure out a business model for cash app within those nine months, we were going to either divest it or I shut it down. That was another. Almost like a crucible moment within a crucible moment for cash app. I think that constraints can oftentimes really, really force clarity and force creative problem solving.

And we were able to invent a business model around cash app. The team built out features such as Instant deposit, which gave users the option of paying small fees to expedite deposits into their bank accounts. They launched the cash card, a debit card that charges withdrawal and interchange fees. They also introduced Cash Boost, which allows companies to advertise on cash app and rewards customers when they spend money at those companies.

Today, these are just a few among many revenue generating features. We went from losing money on every single payment that was being sent to making money on every single payment that was being sent, which created this amazing positive reinforcement for the business where we were able to finally reinvest money. It was a breakthrough moment for us.

They invented new ways of earning revenue for a service such as this that I'd never seen before. True, true innovation. But it was the constraint of needing to focus on eventually generating revenue and becoming a profitable unit within the business that enabled that innovation to take place. If you go back to the creation of cash app, maybe it was 50 50 that that idea would have succeeded.

But today, half of Block's revenue is cash app. And I find in companies, people are often scared to garden a limb to recommend things that are maybe controversial. There's this idea of the world being probabilistic in nature. And if you always make only safe decisions, you know, very high probability payoff decisions, you probably are not making the best long term decisions, because what about that decision? That's maybe a 50 50 decision, but the upside of that decision is enormous.

Our culture was to do a lot of things and to have small teams of people focused on really big ideas. And Starbucks was one of them, and Square Wallet was one of them, and cash app was one of them. Part of bets and risk taking is that you will have some that fail. But if you don't take a swing, if you don't make bets, you can guarantee that you're never going to have a bet that massively pays off.

So when we started square, we were starting with one product, and that product was this credit card reader that helped the seller make more sales. And then we added the point of sale, the cashier, and then we added square loans, we kept adding tools for sellers. We added CRM and analytics and issuing cards and all these things.

And what we realized we were building as not just a single product, but an ecosystem of tools. And then cash did the same thing. We saw that same sort of build out of ecosystem for individuals as well. So they were using us for peer to peer, using us as their primary payment card, using us now to buy bitcoin and to deposit money, all these things.

And then we asked the question, well, we have these two ecosystems. They're both serving different audiences. Could we connect them? Because if we could connect them, it's really powerful. None of our competitors are really doing that.

And we did some smaller things, and then we did one really big thing, which was afterpay. Afterpay is a buy now, pay later product. What it does for sellers is it gives them a new tool to make more sales. And what it does for individuals is it gives them discovery of merchants around them or on the Internet that they could pay in installments so they could get their merchandise much faster than they otherwise could. We, as buyers all know, the landscape is changing.

And we were hearing from many sellers that they were interested in offering buy now, pay later to their customers. We were looking at it on the square side. Concurrently, there's a small group within cash app that was also starting to explore and consider buy now, pay later from a consumer perspective or consumer lending perspective. Afterpay, based out of Australia, was one of the fastest growing buy now, pay later companies.

In August of 2021, Block made another bold, forward looking decision and agreed to acquire Afterpay for $29 billion. This represents this connection between these two, at scale, massive ecosystems. You're creating this bridge between what had been previously with square and cash, say pretty like actually very siloed, different businesses with no connections or communication between the two. We were just operating independently. By putting afterpay in the middle, it starts to build this bridge and this two way communication.

And in order to make it successful, we have to bring these two businesses and our operating rhythms and portions of our culture closer together. And so it's been phenomenal. Brian and I have never worked so much together. It's great. Afterpay team, it's been a much more of an enterprise sales motion where they're a really, really strong sales led culture that has really, really helped us as we think about bringing these two ecosystems together and finally helping cash app and square build one network.

Lots more to go do. It's going to be a multi year integration, but excited about us seeing and ticking off the pieces of the deal thesis that we believed in. Looking back at all these moments, I think the most important part is we built a company that is willing to face entirely new challenges.

We're willing to ask really tough questions of ourselves and do so with humility of not knowing what's on the other side of them. There's never one point or a set of points that you can point to and say, that's why we were successful. And we certainly talked about some of those things that look like that during this conversation.

But all of this is very small things adding up together very quickly and compounding into where we are today. And that's all the successes and all the mistakes and all the learnings we made. There's a ton of mistakes that we made. That because we made them has given us more success. And while these moments were important, it's everything in between them that really made us who we are and gave us the success that we did.

And I don't think enough people talk about that. But when you really consider and you go back and you reflect, that's what matters the most. It's just these little tiny things that add up quite quickly, and it's moving so fast you don't even notice them. Then you bucket them into this larger thing so it's easier to talk about.

I'm just proud that we built a company that continues to learn and is good at observing and asking those questions and being uncomfortable.

Innovation, Technology, Entrepreneurship, Jack Dorsey, Cash App, Growth Strategies, Sequoia Capital