Square's data goldmine

Adam Levy (TMFnCaffeine) published an article today pointing to the value of the data that Square collects on merchants and their customers. Worth a read…

I know what you think.

This is going to be an article about how Square (NYSE:SQ) is building out a broad ecosystem of merchant services. That the products it brought to market since 2014 – like Square Capital and Instant Deposit among others – accounted for 36% of the company’s adjusted revenue in the fourth quarter last year. That each new product one of Square’s merchants’ takes pulls it deeper into an ecosystem Square is building.

While it’s true those new products – mostly Square’s subscription and services products – are an important part of Square’s business, that’s not what this article is about.

Square isn’t just a payments company. And it’s not just a broader merchant services company.

Square is a data company.




This is very interesting, as it sounds like Square is doing exactly what Netflix does. Customer profile data has been absolutely critical to Netflix’s long-term success since the very beginning, and it exactly what gives it the edge over competitors like traditional cable companies. Amazon recognized this and has also built customer profiles into it’s various business lines like Prime Video and Audio, as well as it’s Kindle offerings. And since the same customer is highly likely to leverage many of Amazon’s different offerings, it can figure out which things from each offering any given customer is likely to be interested in.

Square, doing exactly the same thing across small businesses and merchants is brilliant if they can pull it off. Data analytics like this aren’t easy though. It will be very interesting to understand how they build these profiles and how they analyze their data.

Paul - who’s favorite coffee shop uses Square, and therefore is likely known by Square to be the coffee addict he is :slight_smile:

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