Actually, NOT Fair or Square...

Hey Fools,

Get a load of this…

So, I went back to re-read I.M’s post because after the first go, I thought, that was a strong defense of Dorsey and Square. Everyone loved the post - it has a staggering 235 recs as I write - and I thought maybe I need to give Square a second look. I’m also always interested in why one post gets a ton of recs where others, often very well written, get none.

Before I begin let me say, like Vito Corleone, this is not personal. It’s strictly business. I wish I.M., Dorsey, Twitter, Square and all Fools invested in these companies nothing but health, wealth and happiness. If anything this post is a great compliment to I.M. because as the old Yankee slugger, Reggie Jackson said, “They don’t boo nobodies.”

If you want to save yourself the trouble of reading this very long post here’s the TL:DR:

  1. The post - linked here -…

has 235 recs. That’s impressive. But to paraphrase Taleb I believe we were fooled not by randomness but velocity and footnotes. This post, which should serve as a shining example of what a great post is, is actually so poorly written it would not earn a “D” on a Jr. High English class homework assignment. It’s specious, puts up straw man arguments, fails to make its point and even defeats its own purpose.

  1. Though Dorsey is a talented person, he still deserves to be criticized and Square remains in this Fool’s eyes a questionable investment. I.M. fails miserably in his fawning attempt to lionize Dorsey.

If you read on, it’s gonna be a bit tough, but focused on the writing not the author. Again - this is NOT a personal attack. I am a champion of Foolish civility. But in the spirit of honesty and self-reflection, I, at times, favor a vapid civility to more valuable - if heated - discourse. I need to improve at this, to learn to endure discomfort of hurt feelings in order to provide greater value.

Okay, onto business…

The author was compelled to write the post to set the record straight about Dorsey and to make the case for both Square and the importance of focusing on numbers and business performance. The post is titled, “Fair and SQUARE Analysis.” He starts off with a quote,

Question everything, question everyone, especially yourself.
– My college Professor of Philosophy, an ex-Jesuit priest.

Okay, so he is a man of intellect and humility. He studied philosophy in college and takes the notion to question all, even himself, seriously. Great. He is going to provide fair and SQUARE analysis to combat the unfair and weak analysis leveled at the company.

He continues,

I too look at each company’s management but unlike the above author, a self-described Intuitive Investor who follows his gut, I distrust intuition, gut feelings, and CEOs who profusely praise the magnificence of their own product or the greatness of their own company. I also distrust a CEO’s “fascinating art of storytelling.”

This is sarcastic and flawed. His implication with “profusely praise the magnificence of…” implies someone has blindly applauded the value of huckster-like promotion. That never happened. I had applauded Trade Desk CEO Green’s performance on Mad Money and correctly asserted Cramer was downright smitten with him. I am not a Cramer fan, by the way. Watch it for yourself here…

The Trade Desk CEO Jeff Green on CNBC’s Mad Money with Jim Cramer

And again, if you missed in my first post, watch Green here keynoting a marketing conference in Germany…

The man is measured, mature, rational, smart, and to me comes off as authentic in his confidence in himself and his company. I would never describe his performance as “profusely praising the magnificence.” He is not Vince McMahon in the WWE.

I.M. goes on about the work he does to analyze investments…

I read the transcripts of the quarterly presentation but I will listen to the audio if any answers appear muddled or evasive. The SEC documents are quite dry and somewhat boring but they will tell me more than any CEO could tell me in a few sound bytes on public TV. I prefer to look at the numbers obtained from the company itself to see trends, as Saul and many other number wizards on this board teach us. Emotions and feelings cloud judgment–as some of my own poorer decisions when I did not focus on facts and the numbers, clearly prove.

To be clear, with this entire opening he told a story: I am smart, humble, hardworking, have learned from experience, control my emotions and am better qualified than those who rely on intuition, gut feeling and storytelling. My post rights a wrong about Dorsey/Square, therefore I am not only arguing on the side of intellect but justice. Awesome. He’s going to school me, and all of us on the NUMBERS behind Square and help us make a better investment decision using rigorous business analysis. Woo hoo! I’m excited. This may wound my ego but it will make a better investor.

He starts out with vigorous defense of Dorsey’s Habits…

After reviewing my Square file, I have come to the conclusion that the lopsided tale of Mr. Dorsey’s presumed deficiencies, especially his lack of focus, could not be further from the truth.

He has a Square file. He continues…

Yes, some could call Dorsey a bit eccentric but he is one of the most disciplined and focused people–if you listen to those who have known him for more than a decade or have worked with him closely for many years instead of third hand gossip revealed in some of the posts.

I have no idea where there is “third hand gossip”. He makes a convincing case that Dorsey is an extremely focused individual who works 18 hours a day and states that since Square HQ is located near Twitter HQ he can easily split his time between companies because can quickly scoot back and forth between HQs.

He says,

Dorsey gets up at 05:00h in the morning, meditates, exercises and for the last couple of years walks 5 miles to work. His morning walk takes more than one hour, giving him time to think, focus on what needs to be accomplished that day or listen to music or podcasts. He calls that walk his best investment, and he is correct, not only medically speaking. Steve Jobs was another CEO who liked to take walks to clear his mind or discuss with a companion Apple’s possibilities or problems.

Steve Jobs took walks. Jack Dorsey takes walks. Argo, Dorsey is to be compared favorably to one of the great geniuses in business history. Steve Jobs also believed he could beat cancer by drinking fruit juice and this may have tragically shortened his lifespan and kept him from meds that might have - probably not - but might have saved his life.

He goes on…

Dorsey usually spends the morning at Twitter and the afternoon at Square, generally working up to 18 hours a day.

Hold on! The author claims that suggesting Dorsey is unfocused is the furthest thing from the truth. Actually, no. Focus would mean working all 18 hours at one company. And no one suggested that he is unfocused as a person. I am certain his meditation has given him a fantastic ability to focus. The author says that “All people who know Dorsey” believe in him, and claims the articles he cites are better researched than most cited on this board.

There’s hyperbolic, unprovable assertions here - Dorsey works 18 hour days, the people who know him vouch for him. A lesson in PR - there is no incentive for anyone to insult a powerful, famous billionaire in the media. And human nature calls us to rally for our friends. If someone called you up to ask about your famous friend, even if you thought the guy was not that smart or trustworthy, etc. - you will not insult him in public. You’d do right by your friend.

But fine, let’s say that Dorsey is a bright, hard-working talented man. I concede the point.

Still, as the VC who runs your family’s portfolio which would you prefer? Dorsey comes in and says, “Invest in my company. It’s my life. I work on it 18 hours a day.” Or “invest in my company, after I’m done working hard on my other ultra high stress company for nine hours, I work on this one for nine more hours but don’t worry, I take long walks, mediate, fast and can do this.” Hard to believe I even actually have to write this.

Okay, so we got inundated there with hyperbole and speculation, not the numbers we were promised. Hopefully the next section will put some numerical meat on the argument’s bone. Next up is…

On Running two Companies

Have mercy. He starts off with the argument that running two companies is a common thing and suggests that it must be very demanding but it can be done, though at a cost to one’s personal life. The idea there is the dual-focus harms the personal life as opposed to either company. He then mentions Bezos, the electric car guy and Carlos Ghosn (Nissan) as examples of successful CEOs that pull off running multiple companies.

  1. Bezos runs Blue Origin, a company in the space industry. It was started in 2000 - six years after Amazon started. But it’s a fair enough point. I believe Bezos and what he’s achieved is the most mind-boggling accomplishment in business history. Still this logic doesn’t flow: because Bezos can do X it means Dorsey can do Y. And if I owned Amazon, I’d rather Bezos quit Blue Origin.

  2. The electric car guy. I.M. writes “Somehow, none of the other multi-tasking CEOs running several companies have received the same castigation” - the electric car guy is widely and intensely criticized and his stock heavily shorted. The stock has been dead money for the last FIVE years. I invested originally in the killer story - create luxury car, sedan, affordable car all while putting clean power stations around world. Genius! Lean clean simple clear inspiring easy to understand. We all knew he was in Space X from day one so figured he could handle both. And maybe find synergies in design, materials. When he added tunneling, flamethrowers, creating a school for his 5 sons, got involved with celebrity romances, wiring brains and saving children from Thai caves while calling some diver a pedophile - I sold. A brilliant story turned into a convoluted mess. If this fella ever says, “I’m quitting Space X, Boring Company, creating schools, wiring brains to focus 24/7/365 on Tesla” the stampede to own the stock could tremble mountains.

  3. Carlos Ghosn - I lost track of this fellow when he was arrested for the 4th time and kicked out of the company at the last shareholders meeting.

Says, I.M., All CEOs running more than one company declined to discuss their job juggling with Barron’s.

They’re probably too busy, in jail, at the doctor’s, divorce court or sadly, like Jobs no longer living. Stress actually is medically terrible for you and keeping 18 hours days for long stretches is probably an awful idea.

Next up… He gives some numbers - hooray!

He details to his credit how subscription & service revenues are growing and links to a detailed post by TMF Cochrane from May 1st. He then notes that Gross Payment Volume is showing a steady increase and backs it with numbers.

In a tome that rivals War & Peace of length, this is the entirety of the actual business/finance analysis…

In 2019 Q1, the company created the Square Online Store to make it easier for sellers to integrate their online and brick-and-mortar businesses. This new online system uses Weebly technology and automatically syncs orders, inventory, prices, and data for both online and in-store sales, especially useful to larger sellers.

Primary growth drivers for Square were Instant Deposit and Cash App. The latter’s volume increased 250% YOY. It is listed as primary driver of growth for subscription and services-based revenue and its success is linked to Twitter. That would deserve a separate post.

So there’s an important point to be made about how Twitter generates revenue for Square?

Weebly is a company that makes it easy to build websites with e-commerce. Square bought them for 364M. They also bought a food delivery company called Caviar for 100M. So Square is in the payment processing business, website/ecommerce business, food delivery and they lend money. I do not want to put words in Saul’s mouth, and I don’t have time to track down the post, but I think he was recently skeptical of Shopify’s move into getting people to start ecommerce sites with them. Square also bought Eloquent Labs, an AI start up to help customers handle customer service related issues. It’s apparently a SIRI type thing.


TTD: Helps marketers around the world buy ads. CEO works on it full-time and has been in that space for his entire career.

SQ: Helps small businesses handle transactions, borrow money, set up e-commerce sites, deliver food, process pretty much all business functions and the CEO runs a 32B media company in the mornings.

Back to the post in question. I.M.goes on …

These numbers and trends are all positive and that’s what we should focus on instead of Dorsey’s personal habits.

Great. Enough about personal habits. I agree, let’s get down to business.

Meditation, fasting, eating only one meal a day (requirement for any Buddhist monastic), and regular sauna visits have been used for thousands of years in many cultures with proven health benefits and a dip into ice cold water after 15 minutes in the sauna was de rigueur in any sauna I’ve ever visited. It’s supposed to toughen your immune system. However, medical experts do not recommend it as it can produce a sudden raise in blood pressure. Meditation is being taught successfully to kindergartners right here in the US as I recently saw on PBS. The sensationalistic, gossipy media reporting on Dorsey’s habits only attests to the basic ignorance of the authors.

Wait, what? No more numbers? No discussion of how those growth rates justify a 35B market valuation? Nothing about the products, services, TAM, or Tinker’s CAP?

Back to storytelling and weak storytelling it is. The story was supposed to be "I’m going to tell you the NUMERICAL tale of Square and fairly analyze the business. What in bejeebus do kindergartners learning meditation have to do with hard business analysis? Because kindergartners benefit from yoga and Dorsey does yoga we should celebrate Dorsey’s leadership? Got it.

Surely the next paragraph is going to drop some serious science. I’m strapping on my napkin and greedily rubbing my fork and knife off each other cause I’m about to dine on red meat knowledge and maybe get some real insight into this investment opportunity.

Here it is…

Dorsey’s Time Management

Son of a bee sting!

In his youth, Dorsey worked in his mother’s coffee shop. He learned early the problems of payment processing: “muddled, unnecessarily expensive, and ugly, with hulking cash registers, mounds of paper receipts, hidden charges, and insulting credit checks for merchants.”

Four score and seven years ago, young Jack walked to school uphill, in the snow, both ways. A STORY! And another one…

Dorsey had initial problems selling himself and Square to venture capitalists. To counter their resistance, Dorsey courageously made a presentation slide entitled “140 Reasons Square Will Fail.” The project attracted funding with the help of Williams who had instigated his ouster at Twitter. Over the years Jack, as he likes to be called, led the company from the maker of a simple dongle…"

Whoa. Whoa! Not comfortable with the word, “dongle.” Courageously? Good grief. Courage is Jocko Willink leading a nighttime battle into the urban war zones of Ramadi, Iraq, not a wealthy hipster being clever with a Power Point as he begs even richer folks for money.

Dorsey’s style is not to talk much but to listen. Like very few people, he tolerates long silences.

I’ll just be silent here too so we can focus on the profundity of this enlightened man.

(((( - ))))


The executive who listens well created a company that listens well to its sellers.

Ahhhhh. Mmmmm.

Square will drop new features if the sellers are not happy with them and add features that the sellers want and suggest. It’s a company completely customer oriented. Look at their quarterly investor reports, each quarterly front page celebrates one of Square’s sellers. How customer friendly!

Amazing! And no other company we invest in is listening to its customers. I’m going to forward this to the management teams at ZS, AYX and TWLO. Instead of NOT doing what their customers love they should DO what their customers love. And this starts with listening. And customer celebration.

He knows his own weakness as introvert who likes to keep to himself and who had a speech impediment when young. Unlike TTD’s CEO Jeff Green, he is definitely not eloquent and not good at telling stories. To this day, he is visibly uncomfortable during TV interviews and left those to the more outgoing, eloquent Sarah Friar. Dorsey said of himself: “I don’t like to talk, I like to do.” One should not confuse eloquence with competence.

Fortunately we are not confronted by this challenge here. Yet again, straw man. No one ever remotely expressed confusion between the two. Green is both eloquent and extremely competent. This argument - that Dorsey is not good at public speaking, so had someone who is good at it but she left - is so full of holes it makes Swiss Cheese itself shake its head.

Dorsey also gets kudos for leading his employees on Fridays to devote themselves to volunteer work and he is active in a group called Girls Who Code, a nonprofit organization founded by Reshma Saujani.

Ohhhhh, Reshma Saujani. Everyone who is familiar with this person, raise your hand. Anyone? … Anyone? … This is a genuinely cool thing. That it may inspire the workforce and attract talent from future girls/women is possible. That it is a meaningful data point to help investors make more money… that’s a long walk.

The post then goes into…

Dorsey’s Choice of Leadership and Board

This part touts the benefits of diversity and lauds Dorsey for caring about bringing in People of Color and women to his executive staff. It ends with…

He does not have an office but carries an iPad as he walks around the office, directly discussing plans or problems with his engineers and staff.

Ohhhhh that’s so interesti-zzzzzzzzzz. What’s the take-away in relation to diversity? That having no office makes him more of a global citizen who can relate to all people on their turf?

The post then makes the convincing case that the company has a very strong board of directors including Internet analyst, Mary Meeker; a former PayPal CFO; and a Harvard/Govt bigshot who can help navigate regulation. Fair enough.

It then closes with this…

Jack Dorsey is a techno-esthete, a minimalist similar to Steve Jobs, obsessed with simplifying and streamlining everything. His obsession helped Dorsey to create Square. “Our niche is countertops and farm stands” said Dorsey some time ago. However, since his statement, the horizon of the company has kept on expanding as has its ecosystem, becoming increasingly sticky.

A “techno-esthete” - his little square card reader and that iPad-looking thing - which looks a lot like every other one I’ve ever seen - are not just practical they’re beautiful. They’re fine art. I’m snapping with both hands now. So, Dorsey’s a minimalist whose horizon and ecosystem keeps expanding. Makes sense. Sort of like a vegan whose horizon expands to devouring mutton.

Square with its simplicity and ease of use attempts to pare down the process of buying and Dorsey hopes, that Square technology will one day kill the cash register, simplifying commerce the way his other creation, Twitter, simplifies online communication.

The cash register is still alive? Twitter “simplifies” communication? Really? Yes, so often I’m sitting across from my wife and if the subject turns to something complex I’ll say, “darling, hold that thought, let’s finish this … with Tweets.” If Saul Tweeted out the entire knowledge base it would be so much simpler to grasp.

Now get load of this gem:

Says Dorsey, “Twitter is about moving words. Square is about moving money.”

“Twitter is about moving words.”

Read that again, Fool. Soak it in. Bathe in that wisdom which I.M. Young bolded for you.

This is blithering non-speak, Orwellian corporate mouth-gas. Twitter is about… moving words. Unlike every other site which prevent words from obtaining motion. This matters. When CEO’s spout nonsense it devalues all their communication/marketing efforts.

Square’s Investor website attests to that simplicity. It is streamlined and easy to use. Check out Square’s quarterly earnings, in my view one of the best organized: shareholder letter, 10-Q or 10-K, and audio file all in one place the very day quarterly earnings are announced, see Timely, easy, simple, and accessible!

Lions, tigers and bears, oh my! Have mercy.

I have gotten similar feedback about the simplicity and ease of use from people who use Square, like the small Estate Sales Agency I have used, the two skinny lads from a small moving company who delivered some of the furniture, the owner of the motel where I stayed for several months. The latter, a bit over a year ago, groused about a price increase of Square’s products. When I asked him if he would switch companies, he shrugged, turned both palms up in a helpless gesture and grinned. He still uses Square, apparently it has become too sticky to change.

So the motel owner feels he’s getting ripped off but is too lazy/defeated/helpless/stuck to change. This is anecdotal and not even positive. Imagine the ad: Once you use us, and we jack the prices, it will be too late to change because you’re stuck. Bwahahaha! And Lord, how I hate when fools post about the film they watched on Netflix or the underpants they got from Stitch Fix as if one of 100s of millions, if not billions of interactions is a valuable data point.

Next the post goes into the importance of the CFO and Sarah Friar whom we all agree was great. She had less experience than the new CFO. But here the author goes off the rails.


After star CFO Sarah Friar went on to become CEO at another startup in January of this year, Jack Dorsey replaced her with Amrita Ahuja. Why would Dorsey and his board have suddenly less judgment when choosing Ms. Ahuja?

This is not logic. Why would people who made a good decision make a bad decision? Because it’s impossible to know, ultimately, how anyone will perform. Sports teams sign great players then awful ones every day. Why would FC Barcelona pay 130M for Philip Coutinho who was awful for them after coming from Liverpool when before that Luis Saurez came from Liverpool and was fantastic? Because the future is unknowable.

She was born in the USA to Asian Indian immigrant parents who were small business owners. I suspect that having grown up in a family running a small business, would help her more than anyone else to understand the needs of small business owners and the problems they face. She too has been unfairly criticized; it included her good looks.

I had stupidly brought up that maybe Dorsey was smitten with her good looks. I admit on that - my bad. That was dumb speculation. But here is yet another story from the bloke who doesn’t factor stories into his investment theses. There are more stories in this post than Aesop has fables. Because her parents ran a small business this would help her “more than anyone else” - “to understand the needs of small business owners and the problems they face.” When I’m hiring the CFO of a 30+B company, the careers of their parents are between #89 and #147 of importance.

“More than anyone else” is actually thigh slapping comedy. More than someone who, say, has been CFO of Mastercard? Or another successful 30B public company in fintech?

As second generation Asian Indian and woman she probably studied more diligently than anyone else.

Mingye. We’re now speculating about her study habits compared to all other humans.

Research shows that Asian Indians are generally better educated than U.S. natives. High achievement seems to also hold true for the second generation if the results of U.S. Spelling Bee and Geography Bee for the last ten years are any indication.

That settles it, then. Asian Indians are crushing not only the Spelling Bee but the Geography Bee. If it was just spelling I may not have been convinced but Geography too. That is when things get real.

This is heavy stuff Fools. Are you getting uncomfortable now? We should give a higher valuation to companies based on the ethnicity of leaders? Not a fan of this type of thought. Here’s the logic that strains itself like a brutally constipated hippo: Because research shows that Asian Indians are generally better educated than U.S. natives … and Asian Indian kids win spelling and geography bees … this one Asian Indian woman is likely the best pick for CFO.

If Evel Knievel tried to jump his rocket cycle across this chasm he’d have been lost forever.

They are overly represented among the innovative business leaders, especially in the IT space, e.g., Zscaler’s Jay Chaudhury, MongoDB’s Dev Ittycheria, Nutanix’ Dheeraj Pandey, Arista Networks’ Jayshree V. Ullal, praised as competent. Why should Amrita Ahuja be less competent than Jayshree Ullal?


Why should a 30-ish year-old with almost no experience as CFO be less competent than Jayshree Ullal? Ahuja might be a genius and turn out to be a star. She is very well-educated and accomplished for her age. Ullal was far more experienced when she started Arista and was long considered a thought leader in her space. And also, and this is really important THEY’RE DIFFERENT PEOPLE. Wayne Gretzky and Leonard Hachborn are both white males from Brantford, Ontario born in 1961. Why didn’t they both put up 2,857 points? Because they’re completely different human beings. Also it takes a special kind of chutzpah to use Dheeraj Pandey, whose company, Nutanix is for now in free fall.

Full disclosure: my wife worked for a fantastic company with offices in Bangalore. Many of our personal friends are Indian. The company was very successful, giving me, if anything a very pro-Indian bias. I know for a fact how hard - and I mean hard - the kids I’ve met from India work. Still, Never in a million years would I say automatically give the edge to someone based on ethnicity. If three candidates stood before me, one white, one Mexican and one Indian, I would factor in intelligence, vision, passion, knowledge, authenticity NOT ethnicity.

I.M. then continues on about how a CFO is really a Chief Future Officer, some vague term that implies much more than merely someone who has the already herculean task of managing the finances of a massive public company. They manage … wait for it… the future. Woooo.

Impossibly, the post gets even worse. Next up is an attempt to put a positive spin on Dorsey’s trip to Burma.

It amazes me that Dorsey gets chastised for taking 10 days off. There was no indignation or outrage anywhere when Jeff Green moved to Hong Kong and was absent from his headquarters and staff in Ventura, CA, for nearly all of 2017!…… Green wants to expand into China. In my opinion his move was an excellent idea to get a feel for the land just as Dorsey’s trip to India and Burma was an excellent move to help him assess possibilities there for future expansion. I’d say, good for both of them.

This post has 235 recs. This … this… bafflegab. Saul himself said he was in “awe” of it. Seriously, I will bet I am literally the only person who actually read it from start to finish. AGAIN - No one chastised Dorsey for taking time off. That never happened. This is objectively false. He was chastised for coming off like a pretentious billionaire lecturing people about enlightenment in a place torn by war. And most people are turned off by billionaires - who have mastered the material world - lecturing us about how to live more spiritually fulfilling lives. Countless people including 40M Americans live in poverty. Working people struggle to make car payments, are one illness away from ruin. They don’t give a flying **** about Dorsey’s enlightenment. THAT is why he was chastised.

Jeff Green’s building a global company with a massive emphasis on China - and closed deals with Alibaba, Tencent and Baidu.…

Jack Dorsey meditated for 10 straight days and said that he went there with “the singular objective of working on myself.”…

What logical sense does it make to ask why people didn’t criticize Jeff Green for doing something so obviously intelligent, successful and on point - that the author agrees with? This post is so dizzingly awful reading it is the literary equivalent of spinning around as fast as you can while trying whack gumballs out of your mouth with a hammer.

But saving the best - make that the worst - for last… I.M., the rec king, in a paragraph supposedly about the CFO, includes this travesty:

He (Dorsey) doesn’t reward himself with a salary for running Twitter either.(12), (13). Compare that to the generous compensation of TTD’s CEO Green of $10,782,252 in 2018 while running a money-losing business.

Trade Desk is not a “money-losing” company. In fact, since I do not do math, here’s a recent Fool article,…

Several other software-as-a-service companies display high revenue growth similar to the Trade Desk’s 55% growth in 2018 and its 41% growth last quarter. But many such companies still generate operating losses, creating uncertainty as to their future profitability.

The Trade Desk is different. It’s been profitable since 2014, a full two years before its IPO. Last quarter, the company had an adjusted EBITDA margin of 20% and an adjusted net income margin of 19.1%. Even better, management has given a long-term target of 40% adjusted EBITDA margins, double the current level.

So, the author, who AGAIN - started this post with a great and powerful declaration about the importance of analyzing actual business performance, who italicized the word “numbers” doesn’t even know that The Trade Desk is profitable? AND he is long TTD.


That Dorsey doesn’t pay himself a salary. This is vintage Silicon Valley donkey wind. It’s borderline fraud designed to promote man-of-the-people, flowery please-don’t-regulate-me garbage. JACK DORSEY SOLD EIGHTY MILLION DOLLARS WORTH OF STOCK in 2018. (All caps denotes shouting through a bullhorn.)…

That he makes a fortune is fine. He built a 30+ billion dollar company. He deserves big dough. But, what’s galling is when he tries to pass off the bad joke that he doesn’t take a salary. Get real. (oh how I wanted to drop a much-needed expletive in there.)

Trust in my CEO is my #1 factor in making an investment. The CEO is the Hero of the story, Fools. He must be impeccable. Anyone who puts out the ludicrous assertion that stock is not “compensation” gets a strike against them. This “I don’t take a salary” is not straight talk.

Here, Forbes analyzed five statements Dorsey’s made, including the guffaw-worthy claim that’s not a billionaire because he owns gazillions in stock, which is not really money.

Forbes Fact-Check: Jack Dorsey Is Still A Billionaire, And No, He Did Not Give Away Most Of His Square Stake To Charity…

Basically it’s about five things he said - two true, two half true and one false. That doesn’t cut it. If Fools want to ride with guys who wear nose rings, have strange personalities, who meditate, run other companies and make ludicrous assertions about their wealth/honor, who have a complex story - payments, lending, e-commerce, food delivery - and who are not good at promoting their own company - more power to you. I realize the company has solid products and might definitely be a winner in a space with great potential. But to me, the story is muddy. The CEO is not entirely reliable. And I don’t need to look at spreadsheets and scour 10Ks and 10Qs to see it. Also, I don’t care about their next ER - if they tank or go up - I’m still convinced they will mightily lag our other more popular stocks, namely AYX, ZS, TTD, TWLO.

Bottom line:

  1. This illogical, unfocused, self-congratulatory, self-contradictory, ill-informed, factually inaccurate post generated record-breaking recs - including from yours truly. The writer lambastes the importance of story then tells 100 stories – almost every one of them poorly told. Awful. Just awful. This should make us all question – as I.M. Young said to do, mind you – everything, including our current faith in message board posts. If this claptrap passes for “awe” inspiring profundity, and serves as the shining example of what message boards produce, something is wrong. We put too much trust in velocity - and footnotes - over substance. For me, this is a wake-up call, a reminder that pro newsletters are vetted and much more valuable than 99% of message board posts. Obviously, Saul is the king, but I consider him a pro analyst.

  2. Story is unavoidable, inescapable, as essential to human thought and perception as breathing. Some CEOs get it: Jeff Green. Dorsey is an impressive person, but I still don’t like his story and I still don’t trust him. If my CEO is not working for my money full-time, he’s not getting any. There is zero wiggle room on that. Ever. I’m not shorting SQ – I have no clue how high they can rise. I only know that if I lost serious $ on it I would never stop kicking myself. Below is a link to an article by the scientist, Edward O. Wilson called “The Power of Story” - it makes the case that we literally could not process the bombardment of information we take in without telling stories.

The Power of Story - E.O. Wilson

Fool On,



Actual Footage of me re-reading I.M.'s Post:

Stanford Business School: Centers and Research Initiatives…

Link to the MIT AI Lab’s deep learning visual translation of my analysis of I.M.'s post:

Link to a Baby Gorilla hitting his chest for the first time

Link to Institute for Research on Poverty

Link to kids singing Abe Linc-oln’s “Four Score and Seven Years Ago” to make my argument appear stronger by bombarding you with links

Link to the Mod Squad opening featuring a character named Linc, played by Clarence Williams III

Link to links you get from Googling the word “Link”…

Link to a video about the history of Lincoln Logs


Great post!


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Thanks - I read most of it. Some of it resonated with me, other parts did not.

I agree that having a weird CEO is not necessarily a good thing. I’m not sure if Jack Dorsey is weird like Steve Jobs, or he’s weird to emulate Steve Jobs, but it’s not necessary.

Steve Jobs success was not based on his weirdness. Furthermore, he wasn’t always successful, and he could be a world-class jerk. Read Small Fry, by Lisa Brennan-Jobs, to have your bubble burst.

While it’s fair to criticize someone’s arguments and conclusions, but when you use terms like unfocused and self-congratulatory, you’re crossing the line into an ad hominem attack.

And you used a lot of bold and caps to state, “But, what’s galling is when he tries to pass off the bad joke that he doesn’t take a salary.”

I’d also point out that you’re confusing salary with compensation. He doesn’t take a salary. Stock is compensation. His compensation is made up of benefits, stock-options, bonuses, a salary, and so forth. You could say it’s disingenuous to claim no salary while having a huge compensation package. But he doesn’t take a salary.

And that $80 million might not even be compensation - it might be a portion of his stock from founding the company - he’s just selling stock he owns.

Anyway - Square - piggybacking payments on mobile phones was genius. The company is a giant in mobile payment processing, and has popular new products like Cash App. Personally, my wife uses Square and has no complaints - she hates technology, so any little issue and I’d get an earful. The reports she gets - revenue over time, busiest days and times, are also very helpful.

We’ll see tomorrow how Square has been doing.



Good grief!

A 6,025 word hit piece, essentially attacking the author as if he writes full time for the Wall Street Journal. We get it. You hate Square, Jack Dorsey, and IMYoung. You missed the big ride from $14 to $80.

Also, I never thought for a moment IMYoungs post was meant to be a deep dive into the company financials.



I agree with a lot of what you noted. When I got to the part where it said people of Indian descent are smarter, I knew exactly what I was reading - liberal fan fiction.

You spent a lot of time on this for what I assume to be a personal grievance despite all the forewarning otherwise. Me thinks thou dost protest too much. I enjoyed your post, I got a genuine laugh out of the baby gorilla.

Despite the word count, we still don’t see the meat of the investing thesis so here it is from my perspective…

Revenues are still growing despite gross payment volume tapering. That’s because the subscription revenue is growing very fast and they are capturing more revenue from other areas.

They are checking a lot of the business buzzwords that make a good investment. Let’s see…

  1. Sticky once implemented.
  2. Revenue growing (43% YOY, slightly down from Q1 last year of 44.9%). Adjusted revenue is growing even faster, this takes out transaction costs, at 59%!
  3. Subscription revenue is also growing fast, how about 125%? 218M vs 97M YOY! and the percent of total is increasing.
  4. Their strategy of moving to larger sellers seems to be working. 51% of gross payment volume from sellers with GPV > 125k and increasing from 47% last year. When Tinker talks about the numbers must match the story, this is a good example, and one of two big reasons I like this stock right now. This metric was 8% at IPO.
  5. Gross margin is increasing. Last report was 41% up from 33% prior year. Double that when using adjusted revenue.
  6. New product launches in their own ecosystem… They are launching new services and products and each time it strengthens the platform. This is a key strategy point. Being a platform to run your business is much different than a payment processor. So far all signs and numbers are backing up the story. When SQ made funds available in a day, it was very popular with sellers. Invoice launched recently, not a lot of data, but appears to be fast adoption, too. Square Card launched in Q1. Based on the success of previously making funds available quicker, this could be a big upside surprise in Q2. This is the second big reason I like SQ. Optionality and potential upside with this new product/service.

What’s not to like?

  1. Deceleration in revenue growth.
  2. Deceleration in gross payment volume. In fact, it didn’t grow last QTR, but also partially due to seasonality.
  3. SHOP is competition and could have a serious advantage if they actually build out a fulfillment and distribution network, but that is a very capital intensive and brick and mortar asset affair that is a longer term concern.

Both posts exceeded my attention spam.

About Steve Jobs, he was of the opinion that people didn’t know what they wanted until you gave them “insanely great products.”

Denny Schlesinger

October 10, 2011
Steve Jobs and Creativity

Steve Jobs is associated with a long list of “insanely great” products none of which he invented (as far as I know). He is being called a visionary along with many other accolades. What is a visionary? Just how does this “vision” thing work?…


Let’s kill this thread. I agree it’s inches from off topic in that it’s not really red-meat analysis of Square. I will not respond further.


I used SQUARE before it went public. Liked it.
Bought the stock, as soon as I could…doing well. Considered buying more before earnings, tomorrow…had decided to wait.

I am new to this board and have been trying, in vain I think, to catch-up.

I own both TWTR and SQ. I think the fact that Dorsey is running two separate companies is a red herring. I submit that running these two companies is certainly no more difficult than running Microsoft, for example. There are many companies that have multiple, unrelated business that are run by one CEO. Granted, he must deal with 2 boards, 2 sets of SEC filings, 2 quarterly conference calls, etc. but the day to day running of the businesses is no different than if they were one company. In fact, I suspect that if SQ and TWTR were one company, there would be no noise about divided attention, lack of focus, etc.

Rather, in my opinion, the focus should be on his management skills and the strength of his management teams. For example, the fact that Dorsey works 18 hours a day (assuming it is true) is much more concerning to me. This is an indication that he is not as focused as he should be, that he does not have strong management teams and/or lacks the ability to appropriately leverage himself by delegating to his teams. I highly doubt that Satya Nadella works, at least on a regular basis, 18 hours a day – it is neither effective or sustainable (I don’t in anyway intend to suggest that Jack Dorsey is the next Satya Nadella -just an example!).

Just my two cents…

Long both SQ and TWTR (and TTD for that matter)


OUTSTANDING!!! One of the top 10 posts I have ever read on this or any other site in 20+ years of investing message board involvement.