Square's product chief on the death of the penny and the future of money
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This episode features Willem Avé, head of product at Square, discussing the evolution of the payment platform from its humble beginnings as a magnetic card reader that plugged into iPhone headphone jacks to a comprehensive commerce platform serving everyone from farmers market vendors to Chase Stadium. (02:18) Square, now part of Block (Jack Dorsey's parent company), has undergone a major organizational restructuring from divisional business units to a functional structure, allowing for shared engineering resources across Square, Cash App, Tidal, and Afterpay. (04:15) Willem explores how Square is positioning itself for "Square 3.0" by heavily investing in AI automation to help small business owners make better decisions through natural language interfaces that can query their business data and generate actionable insights.
- Main theme: Square's transformation from a simple payment processor to an AI-powered comprehensive business platform that aims to democratize sophisticated technology for small businesses
Speakers
Willem Avé
Willem Avé is the global head of product at Square, where he has worked for over eleven years. He's responsible for the Square brand from a product perspective and has witnessed the company's evolution through multiple phases, from the original white card reader to the current AI-powered comprehensive commerce platform. Under his leadership, Square serves sellers across multiple verticals including food and beverage, retail, health and beauty, and services, managing everything from simple payment processing to complex business operations for venues as large as Chase Stadium.
Key Takeaways
Embrace AI as a Platform Revolution, Not Just a Feature
Willem argues that AI represents the biggest technological shift in 20 years, comparable to mobile computing. (50:29) Companies that treat AI as a side project with a small team will fail, just as many did during the mobile revolution. The key insight is that successful companies must reimagine their entire business around AI capabilities, not just add AI features to existing products. Square is implementing this by making automation one of their top company priorities, applying it to both customer-facing products and internal processes like support, sales, and compliance.
Design Natural Language Interfaces That Generate Deterministic Actions
The breakthrough in AI applications comes from combining non-deterministic language models with deterministic computer systems. (61:58) Willem explains how Square's AI allows sellers to ask natural language questions like "How are my tips different on rainy days?" which then generates real SQL queries against actual databases rather than relying on potentially hallucinated responses. This hybrid approach provides the intuitive interface of conversational AI while ensuring accurate, actionable business insights. For implementation, focus on building robust tool-use capabilities and MCP (Model Context Protocol) ecosystems that can connect AI to your existing data infrastructure.
Functional Organization Enables Better Resource Allocation and Innovation
Square's transition from divisional business units to a functional structure across all of Block's companies has improved alignment and resource allocation. (34:54) While divisional structures allow teams to move fast in different directions, functional structures enable companies to move fast in aligned directions with shared priorities. This is particularly valuable when building interconnected products that benefit from shared engineering, design, and product expertise. The key is maintaining stable squads at the ground level while implementing top-down strategic prioritization through a single shared roadmap with clear directly responsible individuals (DRIs).
Build Hardware-Software Integration as a Competitive Moat
Square's ability to design hardware from the chip up provides significant differentiation in creating end-to-end customer experiences. (18:28) Willem emphasizes that the point of sale is front and center for every customer interaction, making it crucial to design workflows that are delightful and simple on both sides of the counter. This hardware control allows Square to iterate faster on software-hardware integration compared to competitors who rely on third-party hardware. The strategic advantage comes from making technology fade into the background so the seller's brand stands front and center, while ensuring reliability and ease of use that directly impacts customer experience.
Democratize Technology to Strengthen Local Business Communities
Square's mission extends beyond payments to democratizing sophisticated technology traditionally available only to large corporations. (13:54) Small business owners face incredibly complex challenges from staffing to inventory management to cost optimization, and many fail because they lack access to the tools needed to make data-driven decisions. By making enterprise-level capabilities accessible through simple interfaces, Square aims to help revitalize main streets and neighborhoods. The practical application involves building products that constrain complexity while providing powerful capabilities, ensuring sellers never outgrow the platform as they scale from single locations to multiple venues.
Statistics & Facts
- Block employs approximately 12,000 people and is capped at not growing past this number, with Square representing roughly 4,000 of those employees. (40:34) This constraint reflects the company's focus on efficiency and functional organization rather than unlimited growth.
- Square moves at least 16,700,000 pennies between merchants and customers every week, a significant operational impact that will be affected by the U.S. discontinuation of the penny. This statistic was confirmed by Square after the recording and demonstrates the massive scale of cash transactions the platform handles.
- Only 54% of electronics shoppers buy headphones out of necessity, with the rest making impulse purchases or chasing new product launches, according to Amazon Ads research mentioned in the episode. This challenges assumptions about consumer behavior in the electronics space.
