The digital payment company Square changes its name to Block tomorrow (Dec. 10). In practice, the name change doesn’t mean very much: neither the organization nor leadership will change. Its core payment app will still be called “Square.” Block’s portfolio of subsidiary businesses, including peer-to-peer payment service Cash App, music streaming platform Tidal, and experimental cryptocurrency developer TBD54566975, will all remain the same.
But the switch from Square to Block reflects CEO Jack Dorsey’s ambition to build a tech conglomerate in the image of Amazon, Alphabet, and Meta. Each of these parent companies has a core business (Amazon, Google, and Facebook, respectively) that essentially prints cash. This stable stream of revenue has allowed those tech conglomerates to launch expensive, experimental ventures with huge potential upside, like Amazon Web Services, Alphabet’s Waymo self-driving car division, and Meta’s bet on the metaverse. Each of these bets gives the conglomerate a chance to grow from a monopoly in a single industry to a sector-spanning behemoth that exerts influence over a larger and larger share of the economy.
Dorsey abdicated his position as CEO of Twitter on Nov. 29, explaining that the company was “ready to move on from its founders.” But it also may have been relevant that Twitter’s slow growth meant it had no hope of displacing Facebook as the dominant social media firm among users (or advertisers) or, more importantly, eclipsing its revenue. Twitter earns just 4% as much as Meta, its closest peer in Silicon Valley, and an even smaller fraction of other tech giants’ revenues.
That opposite is true at Square. The fintech company Dorsey leads makes three times Twitter’s revenue and has a clear shot at becoming a dominant player in the growing US market for digital payments. Square processed about $112 billion in payments last year—still a fraction of Mastercard’s $837 billion and Visa’s $879 billion. But Square is one of the biggest fish in the new school of US digital payment startups, and its transaction volume in the first three quarters of this year is already 40% higher than the same period last year.
Dorsey is following the same formula at Block as Facebook CEO Mark Zuckerberg and Google co-founders Larry Page and Sergey Brin did at their respective companies: channel money from their parent companies’ core businesses to fund a bunch of weird, fun, experimental side projects. Most of these experiments might fail to earn blockbuster returns, but a few have the potential to eventually rival or even eclipse the revenue the conglomerates earn from their main businesses.
Alphabet plowed billions of dollars into “moonshot” projects like developing general artificial intelligence, self-driving cars, and global internet service through hot air balloons. Meta is betting on technologies that will enable Zuckerberg’s vision for the metaverse (one largely owned by Meta), including virtual reality headsets, augmented reality glasses, and the software that allows people to work or design their own virtual worlds.
At Block, Dorsey appears ready to build out a portfolio of companies focused on cryptocurrencies. It’s a personal obsession: “Bitcoin changes absolutely everything,” Dorsey said at a June bitcoin conference in Miami. “I don’t think there is anything more important in my lifetime to work on.” Now, at Block, Dorsey finally has the revenue base and the corporate model he’ll need to build out the crypto conglomerate of his dreams.