Even after plotting Square's year-long growth on a "sexy growth curve," Splat F's Dan Frommer is surprised by the company's success -- but he really shouldn't be. "It is easy to be skeptical of Square," he writes. "Which — while very cool — also feels like it must somehow be overhyped. (Why did my local café stop using it? Why don’t I ever see it in use? Can it really replace most cash registers? Etc.)," he continues. Whenever Square releases some landmark growth numbers, they've been met with a similar bit of surprise from tech bloggers, but the company's success is easy to understand.
The company has a real stream of revenue. The thing about lots of tech start-ups these days, is that they rely on this idea of "value." Twee social network Pinterest, for example, has generated lots of traffic and interest and can theoretically channel all those page views into money. But, that's just a theory. For now, they only have an abstract notion of who they are valuable to (users, marketers, online retailers, etc.). Square, on the other hand, is makes money right now. Every new person who starts using Square to process payments makes the company money, as the company takes a 2.75 percent cut of every single payment, which Frommer estimates is around $300,000 gross revenue per day. Making real money is the simplest way to demonstrate value to investors (and the rest of the world).