Protocol | Fintech

How Afterpay could fulfill Jack Dorsey’s digital-wallet dream

Square has struggled for years to reach consumers, including an embarrassing failure with Starbucks. The Afterpay deal is its second chance.

Square CEO Jack Dorsey and former Starbucks CEO Howard Schultz

Square CEO Jack Dorsey greets then-Starbucks CEO Howard Schultz in 2012.

Photo: F. Carter Smith/Bloomberg via Getty Images

At first glance, Square's $29 billion deal to buy Afterpay looks like a smart move into the fast-growing "buy now, pay later" space. But it's far more significant than just offering consumers the short-term installment plans that have grown popular among credit-wary young shoppers.

With the Afterpay deal, Jack Dorsey is making a strategic turn, linking the core Seller and Cash App businesses more closely after years of fostering them as independent units under the Square umbrella. Afterpay could turn into a $29 billion bridge between Square's many businesses, bringing Square's business success and customer ambitions into a single product. In doing so, Dorsey's also potentially fulfilling a decade-long dream of having a brand that dominates the way people shop and pay. It just won't be called "Square."

Square struggled to get consumers to adopt its apps in its early years, despite having a charismatic founder, distinctive design and an almost cult-like following among small business owners. It didn't help that it kept changing the name: Pay With Square, Card Case, Wallet, then Order (R.I.P., all of them).

Even a huge deal with Starbucks to let customers order lattes with the Wallet version of the app in 2012 — two years before Starbucks would introduce its own app — couldn't realize Dorsey's ambitions of getting space on people's home screens. Square eventually faced up to this reality, killed off the app, undid the Starbucks relationship and called the business unit that processed payments and made hardware for merchants "Seller."

So where's Buyer? As Wallet was floundering, Square launched a side project called Square Cash in 2013. Now known as Cash App, what started as a simple Venmo knockoff is now a major money machine for Square. In 2015, Cash added business payments. Rappers started dropping their cashtag in lyrics. By 2018, you could buy bitcoin; by the next year, stocks.

Seller, meanwhile, was branching out from physical retail into online. It added website building (with the Weebly acquisition), invoices and a host of other features. Those proved crucial during the pandemic when lockdowns forced many small retailers to rely on ecommerce to survive.

"Buy now, pay later" is still a small part of consumer credit. But merchants like the installment plans, because they lift conversion rates. And companies like Affirm and Klarna are betting that once a shopper uses their services, they'll come back for their next purchase too. Klarna has gone on an acquisition spree to add features to its app. Square is betting that Afterpay will turn Cash App from a money-sending and investing app into a spending app too — a financial super-app.

There's also PayPal, which also wants to make its already popular mobile payments tool a super-app — one app to pay for almost anything. It also offers "buy now, pay later" plans. Square will be tackling PayPal in an area of strength, ecommerce, while fending off PayPal's attempt to chip away at its in-store payments with its iZettle acquisition. (Past attempts by PayPal to compete with Square were kind of embarrassing: Remember that triangular dongle?)

Square's strategy most resembles Klarna's, including adding tools for discovering merchants. (Shades of the past: Discovering Square sellers nearby was a key feature of the Card Case app.) But it has the huge advantage of the installed base of Cash App, which, after the deal closes, will be where Afterpay shoppers go to manage their payments.

That will mean tighter links between Seller and Cash App. Though Cash App has obviously benefited from the company's payments expertise, it hasn't found many ways to benefit from Square's seller base, or to benefit them. Cash App users can spend their balances at Square registers, if they get a physical debit card or persuade a harried clerk to find the Square point of sale app's QR code to scan.

In this scenario, "buy now, pay later" is a way to get Cash App users to start thinking about using the app to do more than send money to friends. Cash App users might tap a pay-in-four plan, or might use a linked credit or debit card, or spend a stored balance. What that adds up to: Dorsey has finally gotten his wallet app.

Protocol | Enterprise

How Cloudflare thinks it can become ‘the fourth major public cloud’

With its new low-cost R2 cloud storage service, Cloudflare is jumping into direct competition with the AWS service that launched the cloud computing revolution.

Cloudflare will not charge data-egress fees for customers using R2, taking direct aim at the fees AWS charges developers to move data out of its widely popular S3 storage service.

Photo: Martina Albertazzi/Bloomberg via Getty Images

Cloudflare is ready to launch a new cloud object storage service that promises to be cheaper than the established alternatives, a step the company believes will catapult it into direct competition with AWS and other cloud providers.

The service will be called R2 — "one less than S3," quipped Cloudflare CEO Matthew Prince in an interview with Protocol ahead of Cloudflare's announcement Tuesday morning. Cloudflare will not charge data-egress fees for customers using R2, taking direct aim at the fees AWS charges developers to move data out of its widely popular S3 storage service.

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Tom Krazit

Tom Krazit ( @tomkrazit) is Protocol's enterprise editor, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire, and served as executive editor of Gigaom and Structure.

The pandemic won't be over until the economy recovers. While cities, states and regions across the U.S. are grappling with new variants, shifting mask policies and other factors that directly impact businesses large and small, it is nevertheless time for brands and enterprises to jumpstart COVID-19 recovery strategies.

Data will undoubtedly be critical to such strategies, but there is one type of data in particular that is poised to yield greater impact than ever in the COVID-19 Recovery Era: location data.

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Michele Morelli, Foursquare
As SVP of Marketing, Michele is responsible for overseeing the brand strategy, communications, and product and performance marketing of Foursquare’s apps and enterprise products. Prior to joining Foursquare, Michele held several senior leadership positions with wide-ranging responsibilities at AOL, Toluna, Citibank and Yahoo!.
Power

VR pioneer The Void is plotting a comeback

Assets of the location-based VR startup have been acquired by a former investor, who plans a relaunch with key former team members.

The Void's New York outpost closed during the pandemic. Now, the company is planning a comeback under new ownership.

Photo: The Void

Location-based VR pioneer The Void may rise from the ashes next year: A former investor has acquired key assets of the defunct startup and is now looking to relaunch it with key team members, Protocol has learned. The company is said to be actively fundraising, and is getting ready to start hiring additional talent soon.

The Void's patents and trademarks were recently acquired by Hyper Reality Partners, a company headed by former OneWeb CEO Adrian Steckel, who also used to be an investor in and board member of The Void. Hyper Reality Partners is actively fundraising for a relaunch of the VR startup, and is said to have raised as much as $20 million already, according to an industry insider.

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Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Protocol | Workplace

A new McKinsey study shows that women do more emotional labor at work

The 2021 Women in the Workplace report from McKinsey found that women are far more likely than men to help their teams manage time and work-life balance and provide emotional support.

Senior leaders who identify as women were 60% more likely to provide emotional support to their teams and 26% more likely to help team members navigate work/life challenges, according to the report.

Photo: Luis Alvarez via Getty Images

Over the last year, emotional support, time management skills and work-life balance have become drastically more important and difficult in the workplace — and women leaders were far more likely than men to step in and do that work for their teams, according to the latest iteration of McKinsey and LeanIn.org's annual Women in the Workplace report.

Senior leaders who identify as women were 60% more likely to provide emotional support to their teams, 24% more likely to ensure their teams' workload is manageable and 26% more likely to help team members navigate work/life challenges, according to the report. In addition, about one in five women senior leaders spend a substantial amount of time on DEI work that is not central to their job, compared to less than one in 10 male senior leaders.

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Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Amazon needs New World’s launch to be a success

New World arrives Tuesday. Whether it flops could determine the future of Amazon Games.

New World launches on Tuesday, after four delays. It could be Amazon's first big hit.

Image: Amazon

Amazon's New World launches on Tuesday, marking the end of a long and bumpy road to release day for the company's most pivotal video game release to date. There's a lot riding on New World, a massively multiplayer online game in the vein of iconic successes like Blizzard's long-running World of Warcraft and Square Enix's immensely popular Final Fantasy XIV.

If the game succeeds, New World will mark a rare success for a technology company in the gaming space. With the exception of Microsoft, which entered the console game industry nearly two decades ago, tech firms have tried time and again to use their engineering talent and resources to crack the code behind making successful video games. Almost every attempt has failed, but Amazon is the closest to having a hit on its hands. If it flops, we could see Amazon's gaming ambitions go the way of Google's.

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Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
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