A guy I follow on X Jamie has posted his Block pitch. Copied and pasted it if your interested
The $SQ pitch.Key points▪︎ A dramatic change in mission and management style including passion and focus ▪︎ The idea of 0 to 1 and being a market leader ▪︎ Daily engagement of consumer apps changes the business model▪︎ A single unified platform▪︎ Urgency around productivity and cost management▪︎ $SQ is still distribution 1st, product 2nd but is catching up on sales and operationsI have no association with Block. My knowledge is from my own research including following the job postings for 2 years. I remember all the jobs listed but this data is no longer available. An ecosystem for the purposes of this discussion is a business unit (Square Seller, Cash App, AfterPay, Tidal, TBD).The changing cultureFor many years, $SQ was growing fast and managed in a unique way while
@JACK was CEO of Twitter. Jack spending 30 hours a week as a part-time CEO was appropriate because Alyssa and Brian were doing great work and for the most part these 2 units were separate, with separate cultures. However, in 2021, the penny dropped and overnight they recognized the true vision/mission and that connecting the sub parts of Block was essential. Jack resigned from Twitter around this time. This new mission changed a lot but initially connecting the ecosystems was done separately by the Square and Cash App teams and the cultures were kept separate. This strategy included buying AfterPay, hiring 2000+ new employees and creating the ‘Ecosystem on Ecosystems’ platform (more on this latter). Specifically, it was to throw as many people at this work as possible and then back fill duplication issues with the use of ‘shared services’. However, shared services wasn’t the best approach, the real issue was the split of culture and difficulties with cooperation between the various ecosystems. What changed mid 2023 was the recognition that the separation issue had to be fixed. Alyssa departing is a big part of this and cleared the way for Jack to take control of Square Seller (the job listings for shared services disappeared overnight). This indicates that Jack recognises the need to build a unified platform and culture from the ground up. We need to see more evidence that a single culture/platform is emerging.Evolution of a new platform - from the job listingsCreating the ecosystem of ecosystems is a tricky endeavour and where do you start? Ultimately you just start and then muddle through and refine. You can see this in the progression of job listings over the last 2 years. You could clearly see the aggression in 2022. They were hiring for hundreds of teams working on the various parts of the new platform, and mostly engineers/designers/product managers including AI roles. AI postings essentially started in 2022, they posted jobs for a group wide AI team including leadership to create the standards and strategy for the whole group, but you could tell that they were unsure of the correct path to take. So, they essentially hired talent first and then tried to figure out latter how to use them. Hiring in 2023 was a lot more focused and structured, and expanded out to non-technical roles. This included priority hiring of salespeople and account managers for Square Seller, and included group wide hiring for operations, compliance, marketing, legal, and accounting. The 2024 job listings indicate where Block is on their roadmap. You can tell from the dramatic reduction in jobs listed (178 at time of writing, 475+ at peak) and what’s now not listed and what is. AI and analytics is still showing strong job listings, this has been consistent for well over a year and hasn’t slowed. The main technical area they are currently hiring for is ‘Sell Anything Anywhere’ extensions. This includes Square Inventory/orders APIs, reworking of Square Online and building customer sales analytics and reporting. There’s a lot of jobs relating to user safety & support/identity/trust/engineering and code quality/fraud. There’s been new listings for cost management roles including corporate card and travel and there’s been department head listings for banking, marketing, restaurants, and account management. In 2024, it looks like $SQ has essentially finished its new platform and is fine turning and focusing on releasing products. While at the same time they are now hiring business focused employees (non engineers).Infrastructure and Technical DebtThe microservices and backend architecture rework has been ongoing for many years and will continue. This work is essential for joining ecosystems. My interpretation is that an ecosystem can call another ecosystems functions either by calling microservices on a shared platform or by using the Blocks API gateway to call functions on different platforms (whether monolith or microservices). For more information on the API gateway:developer.squareup.com/blog/connectin…I’m assuming that $SQ is moving more and more to microservices that can be called directly but I will dig for more clarity here. This unified backend platform is essential for the success of Block.The ecosystem of ecosystems, the grand vision!I include a graphic below to visualised the new platform. Essentially, it’s all about building a single unified platform for everything. It includes an enterprise grade 'Sell Anything Anywhere' infrastructure which has been released (version 1.0). This is like $SHOP's version, which turned out to be Shopify’s superpower. This infrastructure includes selling any type of SKU or variation and extents to shipping, tracking items and handling issues. Sell anywhere includes selling on $META, TikTok, $GOOG, $AMZN, AI chatbot, Cash App, AfterPay, Square Go, Tidal, etc. Its not just connecting Square Seller to Cash App it’s about connecting everything to everything.New products, soon to be available on Cash App?▪︎ Search & Buy Products/Services (including subscriptions)▪︎ Find Local Offers (coffee, burger, yoga, accountant)▪︎ Book an appointment (already available through Square Go)▪︎ Book a table (restaurants)▪︎ Order Food (Square APIs are currently being used by $GOOG UK)▪︎ A single place for rewards▪︎ A single place to manage money (Cash App Borrow & AfterPay together) ▪︎ More financial products.To facilitate these new products, Cash App needed a facelift. Cash App will soon be launching a new Operating System or User Interface that will greatly reduce future development time/cost and significantly increase their screen real estate. It will be like $SNAP minis but not 3rd party apps.The ecosystem of ecosystems solves the fragmented company issue. Having Square Seller and Cash App combined into a single culture and platform allows for a true holistic approach to creating products. Cash App can have AfterPay balances and features, Cash App can offer products from Square Sellers. Square Sellers can have an AfterPay business account so they can purchase and manage cashflows, Square sellers can add their Cash App Business cash tag and make purchases which can lead to a B2B platform. In summary this unified platform allows $SQ to build a truly unique experience for both square sellers and cash app consumers and thus becomes a 0 to 1 product. Cash App and AfterPay may now finally be enabled for daily engagement!$SQ, a B2B provider of services?There is potential to expand into the API space, like Stripe. $SQ has a comprehensive backend with microservices, APIs, and SDKs for 3rd party developers to build apps and incorporate payments. Stripe & Braintree do this with payments, rewards, and marketing. $SQ can do the same but can add POS hardware, bill management, team management, websites, commerce, and payroll. Companies who have partnered using this with $SQ include Jane - Canadian Marijuana, Morel Technologies, and Reference Health.The bull thesis▪︎ Accelerating gross profit growth▪︎ Cost management and productivityThe turbo chargers to the flywheel include 'going upmarket' and 'global expansion'. See the graphic below.If Gross Profit is $7B in year 0 and Operating Expenses are $7B in year 0, you have Operating Profit of $0. What you happen if Gross Profit Grows 25% and Operating Expenses falls 5% over the following 12 months.Gross Profit $8.75B, Operating Expenses $6.65B in year 1 which is now operating profit of $2.1B. If you add a 50x multiplier you get a market cap of $105B.
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