How hip-hop, bitcoin and stimulus checks made Cash App a $40B biz


September 7, 2020

PLUS: Buying a dog online? Read this first.
September 7, 2020
The Hustle
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We hope you’re enjoying Labor Day weekend. Stay safe out there and rest well knowing there won’t be any Halloween office parties this year.

The Big Idea

Hip-hop, bitcoin and stimulus checks: How Square’s Cash App became a $40B business

Since hitting a pandemic low in March, the fintech firm Square has seen its share price nearly quadruple.  

The catalyst behind this explosive growth: Cash App, the company’s digital wallet which facilitates payments and money transfers.

A research firm told the Wall Street Journal the app is now worth up to $40B — almost two-thirds of Square’s current $65B market value. The valuation is supported by 30m+ monthly active users, many of whom joined to receive stimulus checks.

Bitcoin and hip-hop helped fuel early growth

Dan Runcie, who covers the business of hip-hop for Trapital, writes that 200+ hip-hop artists have named-dropped Cash App in their tracks over the years.

These artists often also run cash giveaways on Twitter, asking fans to tag their $cashtag accounts. Recently, Cardi B and Megan Thee Stallion gave 2k random Tweeters $500 apiece — a total of $1m — via the app.

But there’s another key to the app’s success: its uptake boomed when it allowed Bitcoin trading during the peak of crypto mania in 2017. 

When the pandemic hit, many thought Square was in trouble

For a time, the firm’s business was heavily reliant on brick and mortar retailers, which use its ubiquitous card-swipe payment dongle.

While retailer payment volume reportedly decreased by 15% YoY in Q2 of 2020, Square benefited from an influx of money (including stimulus checks) into the Cash App. Excluding Bitcoin sales, the app’s revenue hit $325m in the quarter, up more than 2x YoY per WSJ.

Square charges a hefty (some say usurous) 1.5% fee to transfer Cash App funds to a bank account — but many users are eating the cost.

What’s next? (Other than sweet cash giveaways) 

The one-time nature of the government stimulus leaves many skeptical of Cash App’s current growth rate. And relative to the broader stock market, Square is already expensive on a price-to-earnings ratio.

The long term bull case for Square is outlined by Ark Invest, which notes that the market currently assigns a much lower value to publicly-traded digital wallet accounts (<$200/user) than it does to traditional retail bank accounts (>$3k/user).

This gap could narrow as Cash App adds more users and expands its banking services.

And if it does, expect Square shareholders to get their Cardi B on. 

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Snippets
  • The NASDAQ “Whale”: The free-spending Japanese firm Softbank was unmasked as the mysterious market player that recently bought billions of dollars in tech stock options. 
  • T-Mobile has a plan to offer free internet to 10m low-income households. 
  • Amazon’s Prime Air drone program received FAA approval this week — but widespread drone-delivery is still years away, probably.
  • Chiropractors are seeing a rush of patients with work-from-home-related injuries.
  • The city of Los Angeles has created a set of rainbow-tinged streetlights of the future
Arf Arf

Scammers are selling lonely quarantiners imaginary dogs

During quarantine, breeders have seen an unprecedented demand for canine companions. But some sellers aren’t who they seem to be.

In the biggest pet peccadillo since 101 Dalmatians, fraudsters are taking victims for a walk by selling them… imaginary dogs.

From mid-February through July, the Better Business Bureau has received 2k+ pet scam reports in the US and Canada — 3x last year’s figure.

Some scammers are super savvy

They build slick websites with dozens of pooch pics and fake testimonials from “satisfied clients.” Often, photos of the ultra-stylish Pugdashian posse and Norman the Pomsky are hijacked from their owners’ Instagram accounts and used to lure in victims. 

When these individuals out to purchase a pup, they’re told to pay online and the dog will be delivered in a few weeks. And that’s the last they hear from the Shih Tzu charlatans. 

Some have lost thousands of dollars buying dogs that don’t exist. And recouping losses is usually a no-go, since many scammers are located overseas.

The American Kennel Club’s got your back

How do you sidestep a swindler? Here are some tips:

  • If they insist on communicating only by email, they’re probably trying to hide that they’re overseas.
  • If a reverse image search shows photos on a seller’s website appearing elsewhere, that’s a red flag.
  • Just say no to Venmo. Asking for wire transfers or payment with gift cards also are signs of a sketchball.
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SPONSORED

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A massive frickin’ opportunity — and one that you have 10 days left to invest in. 

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How? Because Graze is 100% electrically powered (with support from top-mounted solar panels).

Plus, thanks to machine learning paired with smart features like a localization GPS, an optical suite, and proximity detection, Graze can map and mow job sites with maximum efficiency. 

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Common Scents

How do you design a body-wash scent?

During the 3 years that Lisa Wilson trained with a master perfumer, she tested scents while sitting in bumper-to-bumper traffic. 

That meant holding blotter strips to her nose and sniffing.

“I think people thought I was doing cocaine,” she said. 

Wilson runs her own fragrance consulting biz, called Scent and Strategy, where she creates scents for shampoos, body wash, and more. 

Er, how do you make a scent? 

With each new job, Wilson samples similar fragrances on the market. Every scent has 3 parts. Take Chanel No. 5 Parfum:

  1. Top note: Your first whiff — bright and citrus-y, but it disappears fast.
  2. Midnote: The defining rose and iris scent. Lasts 10-15 minutes.
  3. Base note: Woody and warm on the finish.

Wilson mixes and matches based on what worked for other brands. Maybe a base really caught her, while a top note fell flat.

Then she takes her ideas to a fragrance house to produce them. She’ll sometimes go through as many as 250 scents before she lands on the right one.

What’s next for scents? 

Out: Gourmand odors — like heavy vanilla or coffee — that blew up 10 years ago.

In: Wellness-inspired aromas. That means a lot of woodsy whiffs.

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My Type

The best productivity software is a keyboard from 1993

Since the start of quarantine, companies have done everything imaginable to make you more productive. 

They’re teaching you how to cut down on your tabs. They’re using AI to fix your digital calendars. And some of their trusty partners, like the project manager Asana, are filing to go public.

But to really get your work done these days, it turns out all you need is a glossed-up typewriter from 1993.

A growing number of writers are raving about a discontinued word processor called the AlphaSmart. Some claim the device has revolutionized their writing process.

Here’s the beauty of it 

The AlphaSmart is just a keyboard. It doesn’t connect to the internet, which means:

Writing a proposal? A blog post? A long email? Pulling out the AlphaSmart forces you to focus. One author, Alexis Henderson, told OneZero that she penned much of her first novel using the device.   

Anti-distraction software is getting distracting 

It’s a perfect sign of the times that, even during an explosion of new tech tools, anyone would turn to the early ‘90s for help.

But as we enter month 6 of quarantine, productivity tech is getting exhausting. Next time we draft a presentation, we want to do it on a janky word processor, dammit. 

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*This is a sponsored post.

TRENDS

Pon de Replay

In 1981, George Benson released a sweet, sweet tune to the name of “Never Give Up On A Good Thing”. Besides the silky smooth brass melody, we couldn’t agree more with Benson. 

Back in April, we had Julian Shapiro come in for a Trends Hacker Hour. Over 800 people signed up. Needless to say, it was a hit. So, we’re keeping a good thing going by bringing him back for 20 more growth marketing tactics. 

This time, he’ll be going over

  • How to significantly improve email open rates.
  • All major ad channels ranked from best to worst performing in 2020.
  • How the most successful Twitter accounts approach follower growth.
  • How to use LinkedIn organic to get vetted B2B leads.
  • Advanced Facebook/Instagram retargeting strategies.
  • How to get referral programs to actually work.
  • And a lot more.

If you’re not familiar with Julian, he’s the founder of Demand Curve, where he’s worked with 100+ Y Combinator startups. And if you sign up for a $1 Trends trial today, you’ll get to attend his next session live, get access to his last one, and much more. 

Get access → JOBS

Head of Product, Toggl: (Apologies to Tina Turner.) What’s KPI got to do, got to do with it?

Product Marketing Manager, Breezy: Lead this team into the great outdoors outbound marketing.

Customer Educator, Brook Farm: Oh, hey animal lovers. This is your opportunity to talk about pet preventative health while scheduling appointments and converting leads.

Technical Account Manager, Mission: As the official “voice of the customer”, you’d support customer experience. Great power and great responsibility and all that.

SaaS Marketing Tactician, NextPaw: Another one for the animals. Here you’d be helping independent pet stores compete with Big Pet.

See more →
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Today’s email was brought to you by Michael Waters, Caroline Dohack and Trung Phan.
Editing by: Zachary “What’s your $cashtag” Crockett, Kay C. Deech (Communications Specialist, Rome Office).

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