Square is a mobile payments company, with a fairly healthy core business -- reporting $560 million in revenue for the first half of 2015.
According to the SEC document filed for the IPO, Square will not renew its payment processing agreement with Starbucks when it expires in the third quarter of 2016. Starbucks plans to begin transitioning to a different payment processor at that time.
However, some analysts have noted that Square loses money with every transaction at Starbucks -- so, despite the fact that Starbucks makes up a large portion of Square's business, stripping out the partnership will put Square firmly on the path to profitability.
Square has a number of stumbling blocks on that path, though. it will need to retain existing sellers, attract new sellers, and increase sales to both of those groups. Additionally, Square’s revenue stream is not really diversified beyond transaction fees, and it has little experience outside of mobile point-of-sale transactions.
Going public puts companies into a pressure cooker, and a lot of eyes will be on Dorsey in the coming months (as though they weren’t already).
Dorsey, who has been compared to Steve Jobs and Elon Musk for being CEO of two companies at the same time, seems to have learned some lessons from Twitter's IPO in 2013.
Specifically, Square has a much clearer path to profitability, albeit as a smaller business than some would expect, than Twitter did two years ago.
However, both companies have placed a lot of stock in Dorsey, and the risk section of the SEC document recognizes that fact: “Our future success is significantly dependent upon the continued service of our executives and other key employees. If we lose the services of any member of management or any key personnel, we may not be able to locate a suitable or qualified replacement, and we may incur additional expenses to recruit and train a replacement, which could severely disrupt our business and growth. Jack Dorsey, our co-founder, President, and Chief Executive Officer, also serves as Chief Executive Officer of Twitter. This may at times adversely affect his ability to devote time, attention, and effort to Square.”
Where Jobs juggled two companies that were relatively stable and established, Dorsey is stepping out on a tightrope between two companies that will both require a lot of attention.