Hacker News Reader

Comment by curiosCow | Hacker News Reader

I'm a newbie to startups and Silicon Valley so correct me if I'm wrong. It seems like Square has spent a lot of money over the years. They come to our campus recruiting, have hired multiple students from the university I attend, I heard they've moved into a new expansive office this year and put in such a big effort. If all of this is going to waste despite the fact that Square is solving a real business problem (unlike so many many other startups), doing a startup seems like such a small possibility of success - its scary. As a college student, a lot of engineers tell me how much they learnt while working at a startup etc, but is it even worth it if legitimate problem-solving startups are failing like this? Is this model of being funded millions of dollars and then failing worth it? Is this a bubble thats going to burst some day and people will realize the we've just been illogical all the way along?

View on HN

They did solve a real problem. They just tried to run a business organization more like a high-margin software business rather than a low-margin commodity business, which is what they are right now.

They can change that but they haven't yet.

Put another way, don't solve a problem if the cost to solve it is greater than solving it pays you.

The world of finance and credit card processing is one of the most ensconced and deep-rooted industries there is. It's one of those that can only be penetrated by a company with deep-pocketed backers, experienced executives, and ambitious entrepreneurs. You're literally going up against a global market of banks and institutions that control the transfer of money throughout the world. And they're going to do all that is in their power to keep the status quo. On top of that, anywhere there's transactions of money, you're going to have throngs of fraudster and hackers trying to game your system (refer to the history of Paypal for more on this). It's certainly a massive undertaking that also requires you to hire top-notch talent; hence, you also can't cut costs on things like expansive offices and recruiting perks.

> have hired multiple students from the university I attend, I heard they've moved into a new expansive office this year

It was their choice. They could've kept the company barebone-minimal and reached profitability at some point.

They chose to pursue a bigger story, and so far looks like their investors are on board with that.

The entire VC model is to give a companies money so they can grow faster than they could on their own income. Most fail, some succeed so big it makes up for all the rest. So you shouldn't consider the money wasted even when you see one of the many failures. Even very rich people starting their second startup still take VC money instead of using their own, because 1) why lose your own money and 2) the VCs will pull all their connections for you once they have skin in the game.

>>As a college student, a lot of engineers tell me how much they learnt while working at a startup etc, but is it even worth it if legitimate problem-solving startups are failing like this? Is this model of being funded millions of dollars and then failing worth it? Is this a bubble thats going to burst some day and people will realize the we've just been illogical all the way along?

I can't say one way or another what Square's future is, but I know the the knowledge gained from working in start-ups is _priceless_ in this engineering tech field. Assuming you don't have people depending[1] on you, the earlier you have this experience the better off you'll be. After earning my BSCS I wasted[2] nearly 6 years in a ridiculous situation with a big corp.

Next, is Square really solving a real problem? This[3] is a real problem being solved, imho. The credit card swiping with smartphone/tablet thing I think is just a extremely handy convenience, but still a convenience. Also, as other comments have pointed out, in the next year or 2 there will probably be a huge shift to cards with embedded chips thus magstripe readers will be of limited usefulness.

1. Spouse/children/aging-parents. That's a personal decision; but even then I'd still argue that if you can find anyway to go for it while minimizing the worse-case scenario of things-not-working-out... do it.

2. No experience is truly a waste. If nothing else, I learned to identify when I'm getting played a fool in a dead-end, high-politics job of low career value. It won't take me 6 years to figure it out if it happens again.

3. https://www.indiegogo.com/projects/gravitylight-lighting-for...

Reply on news.ycombinator.com