The (No Longer) Secret Square IPO
Last year, nearly half a billion payments were made using Square, Inc. technology. On Thursday, the payments processing company revealed it had applied for an initial public offering (IPO) weeks ago. But thanks to a handy little provision in the JOBS Act, we’re only just hearing about a Square IPO now.
The company’s decision to go public seems ill-timed. Don’t get me wrong, there’s a lot of enthusiasm for investing in a Square IPO, but the firm’s CEO is Jack Dorsey. If you haven’t heard of Jack Dorsey, then you haven’t been paying attention. He co-founded Twitter, Inc. (NYSE:TWTR); not only did he help launch one of the most successful social media companies of all time, but he recently filled in as CEO, too.
Twitter was stagnating. Rumors abound that Dick Costolo, the previous CEO, was forced out. Dorsey returned to serve as interim CEO till the board found a permanent replacement, but they apparently couldn’t think of anyone better. Last week, they confirmed Dorsey to the role, meaning he’s pulling double shifts—Dorsey is still the CEO of Square.
That’s why the timing is a little inconvenient. The market is bullish on Dorsey’s talents as a founder and they’re starting to trust him as a manager. However, running two large firms is next to impossible; it’s a feat reserved for the rarest of business savants. Just ask Elon Musk or Steve Jobs.
Elon Musk Offers Jack Dorsey Some Advice
Steering two ships of commerce at the same time is a challenge. Elon Musk is currently running both SpaceX Technologies Corp. and Tesla Motors, Inc. (NASDAQ:TSLA).
The sheer breadth of his work is breathtaking, from the cutting edge of electric car making to the cutting edge of space exploration. However, having such a wide scope can be a double-edged sword.
When asked about his experience with SpaceX and Tesla, Musk offered some sober advice: “I wouldn’t recommend running two companies,” Musk said onstage at a Vanity Fair summit. “It decreases your freedom a lot.” (Source: “Elon to Jack: ‘I Wouldn’t Recommend Running Two Companies’ at Once,” Re/Code, October 6, 2015.)
Any interest in a Square IPO may fall short because of Dorsey’s double duties. In any case, Square stock will premiere on the New York Stock Exchange under the ticker symbol “SQ.” The Goldman Sachs Group is running point on the deal, with JPMorgan Chase & Co. and Morgan Stanley also taking part.
Even if Square has a successful IPO, they need all hands on deck for the uphill fight that awaits them. The company is taking wider and wider losses, losing $77.6 million in the first half of 2015.
After Square IPO, Jack Dorsey Should Resign
In order to poach market share from market incumbents, Square needs a monomaniacal CEO, someone who is battle-tested and irrepressible. Dorsey may well be that man, but he’s a little busy defending Twitter stock from the vultures.
Think about Jack Dorsey’s week last week: he stepped in as interim CEO of Twitter, wrested back control of his first brainchild by getting confirmed as Twitter’s permanent CEO, then filed an IPO for his second company. Now that’s what I call a productive week.
But how long can that scenario last? How long can he continue to divide his focus?
Well, here’s a clue: in its IPO filings with the Securities & Exchange Commission (SEC), Square acknowledged the difficulty of sharing its CEO: “Jack Dorsey, our co-founder, President, and Chief Executive Officer, also serves as Chief Executive Officer of Twitter,” the filing reads. “This may at times adversely affect his ability to devote time, attention, and effort to Square.” (Source: “Square Inc. Form S-1,” Securities & Exchange Commission, October 14, 2015.)