Dorsey’s masterplan

As a Stocktwits user noted this week, Square Inc is up 252% this year.

If you don’t know what Square is, it’s a payment platform for retailers and merchandise producers.

Its CEO is Jack Dorsey, who as its founder still holds a significant shareholding in the company which itself amounts to a large percentage of his net-worth.

Now part of Jack’s mission in life seems to be to prove most other CEOs of public companies are just plain lazy. To deliver on this he decided he’d also return as the CEO of another public company he founded, Twitter Inc. and prove that it is well within the capabilities of a single person to run two public companies and simultaneously increase their share price: Twitter is up ~25% this year.

Now, this is where it gets interesting.

Jack’s had a run at a few things whilst CEO of Twitter, throwing some idea-mud at the proverbial wall, but nothing’s really stuck. There was Moments, live TV, Sports tie-ups etc. but none have really moved the needle in a revenue / growth sense.

What is Twitter? Well, for a certain demographic it seems to be the mobile app that they use on a daily basis more than any other (and much to president-in-wanting Zuckerberg’s chagrin more than any of the ones that are in Facebook’s stable). And this demographic, although much smaller than other social platforms, is wealthier, more educated and more likely to live in urban areas. So it’s a very useful advertising platform, and for a certain type of retailer or merchandise producer it’s catnip.

Can you see where this is going yet?

If Dorsey merged Square and Twitter he’d have a vertically integrated retail machine with phenomenal reach and power. For instance;

  1. Integrate Square’s payment technology so your twitter handle becomes a payment account — send and receive payments instantly and for free with anyone
  2. Allow purchasing for any business that has a Twitter account (i.e. almost every business)
  3. Offer Square’s retailers and merchandise producers one of the world’s largest audience of wealthy, educated people

One of the massive screw-ups Twitter originally made was not recognising that a user’s Twitter handle had the potential to become one of main primary keys of the Internet. Facebook did and with their comprehensive API and their ‘Login with Facebook’ feature put themselves front and centre for most internet users. Twitter missed this completely and eventually shutdown their API — total disaster which arguably they’ve never recovered from.

By merging Square and Twitter Dorsey would put Twitter’s handle right back into play, making it the centre of a huge payment / business platform.