DealBook 2017： Squaring off with Jack Dorsey

Jack Dorsey is here, everybody. He is our finale this evening. And for those of you who've been with us all day, thank you. And thank you, Jack, for making your way from the West Coast. You just had earnings. I know you were having to jet over here to talk to us. There's so much to talk to Jack about both at Twitter and at Square. I want to start on Twitter, but I want to move to Square because I don't know if everybody here appreciates that Square is on its way now to actually being bigger than Twitter. And I want to understand how that even factors into your thinking and where that company is going. But given that it's in the news, I do want to start with Twitter. I want to start with this. As everybody saw the news last week, you eliminated President Trump's account on Twitter. And there's some people I know who are applauding and other people who may have other views. But just take us inside the room and help us understand what actually happened and why it was so easy for something like that to happen. Yeah, so we had an employee who, on this person's last day, took it upon themselves to deactivate the account. And there are a number of things that came out of this for us. First, that should never be possible. So we started looking into the controls that we have in place and what we can improve and where we have weaknesses and where we have gaps. Second, just the particular policies around what agents have control over and what they don't. The account was not removed. It was not suspended. It was deactivated, which is a very different state than what you would assume. So it was not deleted. It was put in a state waiting for the owner to come back to it and reactivate it, which is what happened. Did the owner? Yes. Otherwise, the president? Yes. He came back to it? He came back to it. And what had it? And he reactivated it. And did they call you? We have conversations. We have conversations, yeah. Real quick, you have policies. And we were talking to Monica earlier at Facebook about policies about divisive hate speech, things that can be said and can be unsaid or not said on Twitter. And there was a moment at which you kicked Rose McGowan off briefly, things like that. A couple of people emailed in today. Actually, a couple of people even put it on Twitter for me to ask you this. What would the president have to say on Twitter to be kicked off? Well, so first and foremost, we hold every single account to the same standard, to the same rules, and to the same policies. Where we haven't been great is showing the interpretations of our policies as it pertains to enforcement. If an account were to publicly attack or harass a private citizen, for instance, we would take action. And we would, of course, have conversations with the party involved in the abuse and the harassment. What do you said things about certain people? So we do have a clause in our terms of service that, unfortunately, we did not have publicly stated. But we operated internally, which is one of those gaps that I'm speaking to, around newsworthiness and public interest and keeping content up because it is of public interest, because there is reporting on it, because it is a record of inaction. And this is a subjective evaluation by us. And we work really hard to make sure that we are listening to voices, and specifically the journalists on our platform, to determine newsworthiness and to determine what is public interest and what's not public interest. In some cases, we're going to get it wrong. But as our peers have said, this is something that is evolving. This is something that's moving very, very fast. We're trying to learn as quickly as possible. And the only way we know how to help build trust in our process is to be transparent as possible around how we're thinking. And I wouldn't give us a high grade at the moment, but we do have the intention internally in the company to fix that. And it's flexing a muscle that we haven't had to flex or we didn't flex in the past around being very open and being very transparent. Now, the company has been transparent in many degrees in other ways, requests for information from governments, for instance. We have established a transparency report, which is industry-leading, but we haven't been consistent throughout all of our actions. And that doesn't inspire trust and that causes people to make assumptions that are probably incorrect against our intentions. So we're just trying to make those intentions clear. We're trying to close the gap between policy and interpretation and it's real work. And it's work that requires engineering, it requires legal aspects. One policy question, last week there were the hearings and all the companies sent lawyers. They didn't send the CEOs. Did you think about wanting to go? Was there a conversation about whether you or others should go? Absolutely, and I would be happy to stand up and represent our company at any point. We want to make sure that we are sending our experts and people who are familiar deeply with the knowledge and can speak to that. And Sean or GC was that person. If I was called specifically, I would go. And I would get prepared and make sure that I understand every single aspect of what happens and what we're doing about it, more importantly. But we want to make sure that we're showing not only our understanding of what happened in our investigations by the people who actually led them, but also by the people who can run with the work and push it to make a change. So I want to know a little bit about your life, which is you are now the CEO of two companies. And as I mentioned, Square gets a lot less attention in all of this. How do you manage both of these things on a personal basis, daily basis? Yeah, I mean, it's evolved as things do. When I started, I just took in as much as possible. And then I figured out what I need to focus on and what mattered and where I need to prioritize. And both companies are in very different phases. Square is something I built from day one. I know every single detail of that system. And Twitter, I had to learn a few things in my absence. And I had to understand why we made decisions and what principles were and how we might change those or how we might evolve those. So both required very different answers. Both companies are right across the street from one another. So it makes it a little bit easier. But I benefit from, number one, a lot of structure. Number two, realizing that it's not about the amount of time I spend at one thing. It's about how I spend the time and what we're focused on. And are we focused on the thing that truly matters the most and is the most important? Are we ignoring everything else, at least for now? And then three, do we have the right team around to do the work and to make the decisions and move things forward? And Square had been building that team for a long time. And we had to do some research on Twitter throughout the company. And it takes time. It takes time for a team to gel. It takes time to understand how to collaborate with one another. And meanwhile, we have a lot of other things that were not expected that I was coming into that we had to deal with and we had to wreck. OK, so here's where I'm going with this. It feels to me like Square is your baby, really your baby. Twitter's your baby, too. But Square is appearing like it could really be on this remarkable ride. Is there ever a moment at which you think you're going to have to choose your children? Well, I don't have children right now. I am part of two amazing companies. And my goal is to make sure that we are building something that outlives me and that endures and that continues to serve generations beyond me. And that means I need to build structures that aren't dependent entirely upon me. That means I need to recognize the leaders who can succeed me. That means we need to get our decision-making rigor and process and understanding into the very DNA of our companies. And as I said, both companies are in different phases of that. Tell us about where Square is going. And the reason I ask is, I'm used to, and we all know Square, you can go to a store or a coffee shop and either slide it in. We had all sorts of taxi drivers using it as well, or they've been using it for years. But you recently bought a bank. And you look like you're on the way to becoming a bank, that it's going to be a different business. Am I wrong? Well, we didn't buy a bank. License. We didn't buy a license either. We applied. Applied for a license. For an ILC, which is an investment company. And that process takes about a year. So we're not through yet. Nothing has been confirmed or completed. But the reason we did that is because we have this really amazing business called Square Capital, which gives out loans to sellers. And owning a bank charter allows us to be more efficient than that. But it also allows us some freedom to make bigger moves or different moves in the financial space. And more and more, we've realized over time that when we started the company, we thought we were building a credit card reader. A lot of people accept credit cards. But then we realized that we were actually building a tool that helped people participate in the economy, because they were losing sales because they couldn't accept credit cards. And as we thought about that more, we looked more and more towards financial services instead of just hardware or point of sale. Square Capital came out of that. Installments, which is a consumer product, came out of that. Square Cash came out of that. And that is a big part of our future, I believe, is to continue to serve an underserved audience. That's who we were serving in the early days of sellers. And I believe we have a huge opportunity to do that with individuals as well. Most of Silicon Valley, though, tries to run away from regulated businesses. So that's why I was curious about the banking piece of this. And to the degree that if you get involved in the banking piece, does it therefore affect the other pieces? Regulation isn't always a negative. And we also have to realize that regulation evolves. And a big part of our role is to help educate the right way regulation might evolve, and what we've learned, and what we can invent, what we can do, what we can build, that can give access to more people. And that is our focus, is this word access, access to the financial system, both from a seller and individual standpoint. So when we first started the company, we were questioned by our banking partners and by their regulators, and said no hundreds and hundreds of times until we could show the intent, and we could show that we could reach a broader audience, and we could reach an audience that wasn't able to participate in the past. And that was good for everyone. And we had to change some things to do that. We didn't want to force people to go through a FICA score or a credit check to start accepting credit cards. It didn't make sense to us. It didn't make sense to them. So we changed that model, and we went from a merchant acquisition process that only accepted 30% to 40% of those who applied to 99% of those who applied. So we constantly question the regulatory, but we also realize the benefits to it is that it does have protection, not just for our customers, but also for our industry. And we need to do our work to make sure that we're showing solutions that evolve thinking. There's been a lot of folks in Silicon Valley who've tried to think about how do you rewrite the FICA score? What is it? How do you get the new algorithm taking other new pieces of data to try to let the unbanked become banked? What have you done? How does it work? We've just questioned a bunch of the fundamentals. I mean, I think a lot of the reason why we found so many people left out of accepting credit cards in the first place is a lot of our banking partners just had inertia around understanding identity and changing the system. These are very old legacy systems that work and are predictable, and they don't fail. And when you build something new, there's an element of failure, there's an element of risk, and you have to manage that. And it creates a lack of momentum. So we just want to take that on and question that and make sure that we are understanding new forms of identity and we're agile around it. So I think what we brought to bear was not a specific solution, but a mindset of agility to be open to different forms of data. What's the data? Give us an example. What are you seeing that you're willing to give somebody a loan that a traditional bank would not even look at that? Well, I think, first and foremost, Square Capital is unique because we actually see their business. So they use our registry. They use our PANF. They enter all their employees first. We see all their customers. We see their competition. We have a very deep understanding of how they're doing and who they are. And we don't make a judgment until we have a pretty strong understanding to make that risk assessment. So our own data is one thing we're seeing because we built our platform in such a way that we are the tool that's being used to run our business. So we have an advantage that others mostly do not. But outside of our walls, we look at how sellers are engaging with Yelp, or Facebook, or Instagram, or Twitter, or all these signals that people are sending around the world. And of course, other aspects that are available to us. But a lot of our assessment comes from our own understanding, our own data. You have a product called Square Cash. It competes with something called Venmo. Some of you may know that. But recently, the numbers have been off the charts with your business. But there's been a big question of how these type of transfer payments that are coming among each other, where there's actual money. Meaning, how are you going to make money doing that? Yeah, so I've been really, really proud of Square Cash's progress. It's consistently broken into the top 23 apps in the iOS app store, which is a huge feat for a finance app. It's consistently been the number one above our competitors, Venmo and PayPal, over the past few months. And the way that we've done that is we haven't seen it just as peer-to-peer. We've evolved past peer-to-peer. And we've realized and we've observed that people are using it as a spending device. And the more ability we add and the more capabilities we add to spend it in more places, the more adoption we see and the more retention we see. So what we've done is quite simple and intuitive. We started with the most critical thing, which is sending money between two people. And then we moved on to issuing a card that could be used online and offline. Why even the big banks haven't figured this out? I mean, why has JPMorgan Chase not been able to do a Square Cash or a Venmo? They're trying, but they haven't gotten there. I don't know, but I know what has worked for us is focusing on our strengths. Simplicity is a strength. Speed, access to funds is a strength. Building something that feels cohesive is a real strength. Building something that is self-serve, where you don't have to talk with anyone or engage with any system outside of just downloading the app and getting going is a real strength. So that's the formula that works for us in the seller side and the individual side. And we've just wanted to do it. We've wanted to make it happen. We didn't want to wait for it to happen. We wanted to make it happen. We took on that mindset. And I think 80% of our success is just willing it into existence and pushing through every barrier that we found in order to serve people in a different and unique way. We've had a raging debate all day up here on the stage about Bitcoin and cryptocurrencies. And since you're here, and we should say Ken Chenault was here earlier today, also in the payment space of sorts. What's your take, both on Bitcoin and cryptocurrencies? Is it a fraud? Is it the next Enron? Or is it here to stay and very real? I think it's easy to get lost in the superficial aspects of it and ignore all the amazing technology underneath. I think the Bitcoin white paper is one of the most seminal works in the past 20 years in computer science. I think it has impact far beyond currency. I think it has impact on trust. It has impact on identity. But it's a continuation of decentralization. We saw decentralization work with the internet. We saw decentralization work with data in the cloud. We saw decentralization work with compute more and more with platforms like AWS and GCP. And we continue to see it in one of the last fundamental utilities that we use as a society, which is the ledger. It's a decentralized ledger, and that has extreme power. So I want to make sure as a company, and this is not just Square, but also Twitter, that we're looking at technologies like the blockchain, like cryptocurrency, and learning from it, and learning how we can apply it to create new experiences or create new efficiencies, or to do things that we were always trying to do but were hampered in the past because of X or Y or Z. But now we suddenly have this amazing accelerator that we can apply in very unique ways. You expired, but you accept Bitcoin. We accepted Bitcoin in 2014. And then what happened? And a lot of our sellers at the time were selling things like incense and candles, and it turns out people in 2014 weren't using Bitcoin to buy incense and candles. So we didn't see very many transactions, but we learned a bunch from it. And we've integrated that thinking, and I think it's fascinating. So I would not get caught up in the trap of writing it all because of the surface level aspects of it. I would look really deeply in the technology and how we can use it to improve things and improve another form of communication around the world, which is how we transact and how we trade money. There's the traditional competitors to your business, but I'm curious, and I've always been curious, why are you wearing an Apple Watch 2? Why do you think Apple hasn't gone into this space and owned it? And do you think Amazon or some of the companies that we're probably not even thinking of will ultimately be where you are or try to be? Amazon did try, and we're very aggressive in competing with us through price. And we saw some customers go over to them, and then we saw those same customers come back to us. And I think you have to focus on your strengths, and our strength there was cohesiveness. We're not just building a register, we're not just building payments, we're not just building a loan product, we're not just building payroll. All of them work together. And we've taken this approach of what is the most critical need for a seller and just go after them line by line by line and make them work so that there are no seams. And you don't have to think about connecting them at all. So you download one app and you're done. So we just haven't seen that approach, but certainly Apple and Amazon could go after the same thing. But this is our focus, this is our DNA. When we get to partners with companies like Apple who we've learned so much from and Square only exists today because of Apple, we're honored and we learn and we hope to contribute to the ecosystem that they created that made us even possible in the first place. I wanna sneak in two questions from the audience before we have to say goodbye. So let's bring up the lights if we could. While we're getting the microphone, by the way, 140 characters or 280 these days, where are you living? Both. Both? Yeah. What are you gonna average, you think? Under 140. Under 140, okay. We have a couple people, a couple of hands right here in the front. Buddy Rojas for Capital. Bringing it to the theme of plans for the long term, can you speak to the value of founder-centric companies and founder-run companies in the public markets that have greater capacity to plan for the long term? And so here I'm thinking about Facebook, under Mark Zuckerberg, Tesla, Netflix, and of course your own experience as a founder. I have a great fortune of being on the board of the Walt Disney Company, which is also a very strongly founder-led company. And the founder has died and the company thrived. And what Walt was able to do to imbue his values and his creativity and his direction into the company lives on. And you feel it in every single thing the company does, every single conversation at the board level, all the way down. So I have the fortune of being on that board because I get to learn how to do that. As Laureen said, death is life's greatest invention. We are all going to die. And that forces a bunch of considerations around how we prioritize our work. But more importantly, it puts this constraint on us that if we want to leave something that actually has impact, we need to make sure that we're leaving something that isn't dependent upon us living and isn't dependent upon us being there in the first place. So that's what I aspire to every single day. I think it's a failure if I have to make a decision. There's something wrong with the organization that we need to fix. Whether it be the people, the context, the organization, the problem we're trying to go after, the articulation, the fact that we might be doing too much. That's the criteria that I start looking at when I'm forced to make a decision, or God forbid, our board has to make a decision. So that's how I'm measuring myself is, are we building a structure that isn't dependent upon me, isn't dependent upon our current leadership, and ultimately isn't dependent upon anyone in the company today? And that forces a bunch of considerations that are really hard to do, but will allow us to ultimately thrive. And that's what I want to build. That's what I want to leave behind. You know what, on that note, I'm gonna say thank you. Thank you for the conversation. Thank you so very much. And let me also say thank you to everybody here. It has been a tremendous day. I want to thank everybody for the questions, for sticking with us. Jack Dorsey, everybody, thank you. We hope to all.