Ed (00:04):

I am Ed Cowan, and this is Scaling Up.

Owen (00:15):

I think one thing that people tend to hand wave is the concept of network effects versus virality, and so a given business can have both of those. You can have one of those or you can have none of those. The amazing thing about Cash App was that we had both.

Auto (00:33):

This podcast aims to educate and inspire by telling the stories of great growth companies as told by their CEOs and founders. TDM is an Australian-based investment firm that invests globally in fast growing public and private companies. For more insights, visit our website tdmgrowthpartners.com.

Ed (00:56):

My guest today is Owen Jennings, the head of product at Block, and a key person around the executive table of what is now by Market Cap, one of the largest 500 companies in the world. Block, formerly known as Square. Today, is really several powerful ecosystems under one roof, Square – serving millions of merchants, Cash App – the consumer super app that’s become the financial home for tens of millions of people. And of course, Australian founded Afterpay, the global Buy Now pay later platform that connects these two bringing shoppers and sellers together. Owen is one of the rare executives that has truly grown up inside a company. Over the past 13 years at Block, he’s worn just about every hat from early roles in ops to becoming the COO of Cash app where he helps scale it from a scrappy side project into a FinTech powerhouse that now generates around $6 billion in annual gross profit.

(01:54):

More than half of Blocks total today Owen leads product across all of Block. He’s widely credited for the new sense of product velocity inside the company and the ability to ship faster, to experiment at scale, and to embed AI as a multiplier in everything they do. But most importantly, this is a story about scaling culture. Block has managed something that very few founder-led companies of its size and scale can achieve – re-engineering that startup DNA inside a scaled business, and Owen has been at the heart of this cultural reset, hands-on close to customers and unafraid to tinker with the new ideas himself. In this conversation we’ll trace his journey through blocks defining product cash app and talk about how he thinks about network effects as well as the discussion on the future of money. So, with that, here is my conversation with Owen Jennings.

(02:54):

Owen, I’m pretty pumped up to welcome you to scaling up today. I think to start with it’s probably worth setting some context for the listeners. Block is now a massive business, and it’s been on an incredible scaling journey since it was founded in 2009 by Jack Dorsey. Back then of course it had one product, a little square reader. It was a little white dongle that plugged into a smartphone and basically just let micro merchants accept credit card payments and it was really aimed squarely at helping those merchants who were excluded from traditional payment networks. And in many ways, it’s this theme of innovation based in this belief of financial empowerment that will be an overarching theme today. So, to bring you in your story in many ways is deeply intertwined with the Cash app story. You’ve been there from the early days; you’ve helped take it from a scrappy side project to over 6 billion in gross profit and is now really the growth engine of the Block business and in the process, you’ve scaled yourself from a simple operator to an admired and trusted executive. So welcome. Can you take us back to 2014 when you were at Square – this little side project just popped up those early days, this little internal project team that was led by Brian Grassadonia. What was the vision and why was it so important at the time to the overall Square mission?

Owen (04:22):

Thanks so much for having me, Ed. I appreciate it. Excited to chat today. So, as you said, I joined Block in early 2014 and I was originally focused on the Square side of the business and so that was a pretty interesting time for Square. We were really becoming more of a mature business. We had our eyes set on an eventual IPO and I really focused on building some of the business functions on the square side, things like sales and account management and international partnerships, marketing, etc. At the same time, cash App had become this idea that was being pursued really outside of the core business and so I can take you back there as you mentioned Brian, who’s our ecosystem lead now and was the CEO founder and CEO of Cash app for years and years along with Robert Anderson, who’s currently our principal designer at Block.

(05:13):

They were really the minds behind Cash App. In general, we were really focused on building vertically integrated experiences and there were a bunch of experiments and tests and betas that we had launched, and Jack had made the decision to kind of bend the rules on org structure, this is like late 2013 and really just have a project list of like these are the most important things we want to be building against. One of those things was this concept of a low-cost payment network and so if I take you back to 2013, it’s crazy to think about now, but there was no way to move money instantly from bank to bank in a low-cost way. The only way that existed in the US was wires and wires were typically larger dollar amounts and 25 or $50 to send a wire. As we pursued this topic, the concept of the ability to email money cropped up as this very simple way in which we might be able to move value, low dollar amounts but instant and cheap.

(06:17):

At the same time on the Square side we were maturing in terms of payment processing for small businesses and there was this one transaction type called an unlinked refund, which basically let a seller refund a customer for a given purchase even if it wasn’t connected to an original transaction and that really was the nugget. I think Jack gave them two weeks to build a prototype and what they said was, okay, we want the experience to be when you send an email to somebody, you can cc pay@square.com or cash@square.com maybe, and when that happens we are going to do an unlinked refund from your account to the other person’s account and essentially it’s an instant debit transfer, but it’s modelled on these unlinked refund rails and that was the true magic. There was no application, there was an email that was tied into the debit rail system. Then you go from that one moment of magic to okay, now we have an application tied to the email client. Now we have an application and stored balance. Now we’re working with Visa and we’re co-developing AFTs and OCTs and these ways of moving money instantly on rails. But at the time, I mean Zelle did not exist. Venmo was tiny and was using ACH rails and so this was just a paradigm shift in terms of the ability to move money instantly and for free in the United States.

Ed (07:43):

It’s amazing. I think it also gives us snapshot of the culture that we’ll talk to later at Square at the time to be able to spin this up and the CEO founder give a little small internal project team two weeks to do it, and magic happens. So, hold that thought, but of course it did automatically hit some product market fit. As you said, it was a magical experience. It probably took three years to gain some momentum and maybe you can talk to this far better than I can, but in 2016 you came across to what was now known as the Cash App product team. Maybe it was causation, maybe it was correlation, maybe you can fill in the blanks here, but it was a breakout three years from there, it went from nothing to a billion dollars in gross profit over the following three years up to 2019. It went from 3 million monthly active users to over 30 million. So, we’re talking about breakout growth here and in my mind, it was really sparked by a bit of a redesign of the product to make it mobile first. Incredible viral adoption driven by network effects. Can you peel back the curtain to those three years? Give us a sense of the speed at which you were moving the product velocity and some of the imports that made you think about how it can go from nothing to something so significant so quickly.

Owen (09:08):

Great question. So on the causality side, the one thing that is causal is I joined Cash App basically as soon as we proved out monetization, so it’s actually a bit of a funny story, but Cash App was scaling fairly well, obviously off of a low base from let’s say 2014 through 2016, and the primary issue was we didn’t have a way to monetize at the same time. Our referral programme was one of the things that was contributing to the virality of Cash app and so we were spending a decent amount of money on it. During this period one of my primary focuses is taking the company public. That’s what I’m spending a lot of my time on and frankly at that time as we’re preparing that, we’re writing the S1 and we’re preparing talking, the perspective in the market is like this is a distraction, cash app is a distraction from Square and it’s expensive and you’re burning money and are you really going to be able to compete with Venmo and so on and so forth.

(10:04):

Luckily the sceptics we’re wrong, the first instantiation of Square Cash, you were moving money instantly on debit card rails from bank to bank, from Bank of America to Wells Fargo. With the app in 2016, we came out with the concept of a stored balance free instant peer-to-peer payments and then if you wanted to withdraw to another bank, you could either do that on ACH rails for free or you could do that instantly for a small fee. And I remember just how wrong we were. We thought the attach rate to instant deposit was going to be minimis like 2%, 3%, 4%, and I had to go back in and check the data schemas to make sure that this was correct, but we saw over a 50% patch rate and as soon as that happened it was like that’s when Square Cash in my mind at least became a juggernaut and a massive business with massive potential.

(10:59):

And so, I was not the zero to one person by any means. I had the benefit of coming in after we had found market fit, we had found our first monetization channel, and I’ve been the kind of one to one hundred person on Cash App in terms of just Cash App’s business and how I think about the evolution over the past several years. It’s an incredible thing to have a business that both has virality and also network effects – I’m happy to talk through that, but we found ourselves growing at a very healthy clip with essentially a $0 or low single digit CAC. That’s an incredible asset to have. And so, then you start thinking about what do I do with this asset? And really through talking with our customers and understanding the customers who we serve, which at the time and still to this day are predominantly those who are liquidity constrained, I think actually a majority of Americans are liquidity constrained.

(11:52):

It became clear that the path forward was to build a true ecosystem and to build basically a new financial service or a new product line every 12 to 18 months, and that’s what we started on. So as soon as I joined, we launched the virtual debit card and then the physical debit card. Soon thereafter, we launched Bitcoin buy sell, we launched our instant discounts programme, direct deposit, so on and so forth down the line and the basic concept being how can we bring the simplicity and the accessibility that Cash App stood for to the entirety of a consumer’s financial life and that still remains our mission. We talked about building the financial operating system for the next generation in earnings a few weeks ago, and I think that thesis is continuing to play out 8, 9, 10 years later.

Ed (12:39):

We might pick up the scaling journey and round it out in a second, but I do want to pick up on something that you said maybe it’s a good time to talk to the power of true network effects. It’s something that gets thrown around a lot, but in actual fact, direct network effects, which what you were building essentially with the peer-to-peer network to start with and then the product velocity around that was incredibly powerful, doesn’t happen by accident. And so how did you think internally around building those direct network effects in those days of 2015 to 2019?

Owen (13:16):

It’s a great question. This was the first area that I focused on. So, when I came to Cash App, I came into Cash App to lead growth, which basically meant nothing and everything all at the same time. So, this is kind of mid 2016 Cash App is 25 people. There’s a couple of folks on the product and business side, and then I joined the team. The first two things that I’m asked to focus on, there’s one our Referral and invitations programme, and then second is our go-to-market and distribution specifically around targeted segments, targeted geos and college campuses and universities. And we understood how delicate and how critical the network dynamics were for Cash App. I think one thing that people tend to hand wave is the concept of network effects versus virality, and so a given business can have both of those. You can have one of those or you can have none of those.

(14:13):

The amazing thing about Cash App was that we had both. So, on the virality side, you get the benefit of our invitations and our referrals programme, which is essentially if you invite folks to join the programme, they get $5, $10, so on and so forth. That’s great at bringing customers into Cash App, but then it’s also a true network effect. The way I think about network effects is does the utility or the value of the product increase with every additional user who is on it? We know that’s true. When I talk to customers who don’t use Cash App right now, the main reason is well, my friends aren’t on it, my family isn’t on it. So, there is this organic evolution over time. The virality is bringing people into the ecosystem in the first place. The network effect is keeping folks engaged in the ecosystem over time.

(15:00):

And so, we were very, very deliberate in terms of how we approached building the core flows that would bring someone into Cash App and then also the core flows that were keeping them engaged. And so, I remember Dustin Mooring who was the head of product for Cash App, I remember it was almost more like a science experiment and a complicated machine with hundreds of knobs and dials, and that’s what I was focused on. It was a very data intensive job. It was like if we move this screen up, if we take this screen out, if we do a debit link before, if we do a debit link after if the invite friend screen has suggestions versus not, there’s hundreds of experiments that we’re running. And it’s such a delicate thing on the virality side because if your K coefficient is 0.999 versus 1.001, things look totally different in 2015, 2016, 2017.

(15:55):

So, I think it was that kind of data-driven approach. I think the simplicity and the design of Cash app obviously contribute on both sides. I think the difference between what Square Cash looked like in 2016 or 2017 and every other application, let alone financial application out there, was insane. We had this concept of graduated onboarding where we could get you into the experience and into the flow as soon as possible, get you attempting a payment and then to the extent you needed to do something else like linking a bank account or so on and so forth – we would prompt you in real time. And so, at the highest level I think about the virality side is kind of how you’re getting folks in the network effect side is why you’re getting folks to stay, and you only really get that sort of growth at a sub $5 CAC if you have both of those things, and then that is the base that is the foundation for everything. And then most of the other growth over the past 10 years has really been an engagement cross-sell upsell story, which is a really nice place to be in from a business perspective. If you build valuable products and you have a growing base of millions of engaged customers, you can find attach rates If you build things that are high quality enough and make customers say, wow.

Ed (17:09):

It’s such a wonderful breakdown and distinction and framework to rely on. And when you talk about engagement, we really saw this accelerate through COVID. You’d laid on a whole range of different products that you talked to, whether it was direct deposit, then cash card, stock trading, Bitcoin integration. There was really a deepening that allowed this digital wallet to transform itself and the lives of its users. And then of course the next big moment for Square (at the time – now Block) was the acquisition of Afterpay. You’ve touched on direct network effects, but that obviously brought a two-sided network to the platform as well. So maybe we can touch on those years. At the time you were COO of Cash App. I’m very keen to understand how you thought about integrating such a large business, a business with two-sided network effects, into the Square ecosystem, but specifically Cash App given how consumer-facing Afterpay was.

Owen (18:11):

It’s a great question. Following the acquisition of Afterpay, there was a couple of different setups, but I ended up being the co-lead of Marketplace along with Nick and Marketplace was this concept where we had Afterpay and Afterpay was serving as this bridge between Square and between Cash App. I think if anything during that period of time. The main thing is I became incredibly close to Nick and Ant, which was phenomenal, and they’ve shaped obviously so much at Block over and above just the Afterpay strategy. Some of my key reflections around the Afterpay integration, I think one is m and a is hard. Well, m and a at scale is hard. This is not a 12-person acquisition. And so, to some extent there were different approaches to how we build. I think Afterpay was more of a sales-led model, and I think Cash App was more of a development-led model.

(19:08):

From a cultural perspective, obviously, people working from home, COVID – if there was an interesting period of time, I think we’re just now, I would say now I feel incredibly strong in terms of where we are. I think we’re seeing the benefits start to flow through in terms of the Afterpay integration with Cash App and there’s more to see there. Maybe the other reflection that I have is that I think there’s a difference between the kind of deal thesis when you’re talking about something in principle and then the actual on the ground, what is going to happen when you build it. And so, I remember meeting with Nick and Ant and talking through things we could build in Cash App and it’s like, look, we can build a commerce tab, we can have Afterpay merchants, we’ll convert at some attach rate, and it ends up being way more complicated than that.

(19:52):

It’s not just a mobile application, it’s checkout and its brand awareness and it’s your approach to underwriting and so on and so forth. And so, I remember maybe 18 months after the acquisition having a series of meetings just one-on-one with Nick and Ant and really talking about our approach and what we wanted to build. That’s I think when we really started to lean into out of Network because also the entire Buy Now Pay Later space is evolving during this time. So, it’s not this static target of Afterpay as it was a few years ago. It’s the ongoing evolution and I think we’ve really hit the nail on the head here in the US where we’re bringing Afterpay onto the Cash app card. I think that that is just a fundamentally better instrument for consumer spending Buy Now, Pay Later plus a free debit card relative to the consumer debt cycles that folks are getting stuck in on the revolving side. And I think we’re at an advantage from a distribution perspective because we do have 20 odd million monthly active using Cash App Card relative to some of the other players. So, I would say it’s one of the areas where I’ve learned the most. It’s also one of the areas where I feel the luckiest. I think Nick is one of the top business leaders, sales and marketing leaders in the world, and I think having him now at the helm across Square and Cash App and more parts of Block is just, I feel incredibly lucky.

Ed (21:09):

You call out Nick Molnar and those in Australia are incredibly familiar with him, but a quick anecdote I saw on LinkedIn from a friend of mine who’s connected to Nick, how his psychology is still that very much of a founder and still hustling. He was emailing cold a cafe in the eastern suburbs of Sydney where he grew up. There’s no reason for him to be doing this as the sales lead of such a large organisation. Yet here he is still on the ground hustling for every dollar. So that gives you a sense of the type of person Nick Molnar is.

Owen (21:45):

Just to add on to that, I talk to Nick every hour, every other hour, every day. We’re incredibly close and we have to be in lockstep to drive the business forward. Obviously, Nick has done well after the acquisition of Afterpay. I think sometimes I get questions of folks of like, why is Nick at Block? And just fundamentally the answer is he wants to win. And the best part is that it’s contagious. It makes me want to win even more. It fires up our marketing teams, it fires up our sales teams, it fires up our product development teams. And so having that sort of energy in the room every single meeting, it’s inspiring and it’s magnetic and it’s contagious. I think he’s a unique specimen.

Ed (22:25):

I love that. And it’s amazing to hear you speak so fondly of one of Australia’s great entrepreneurs, leaders and technologists, maybe just around this Cash App story out to give some size and scale today over 60 million monthly active users, and to give people a sense, that’s kind of the size of a US mid-tier bank. We’re talking about a significant financial institution here, but maybe just some of your own learnings of your journey. So, from product manager to COO now an executive across the entire ecosystem, very few people can scale like this. So, has there been any reflection or a key unlock of your own learnings as an operator in that time period from 10 people sitting in a room to now 10,000 people across an organisation?

Owen (23:15):

Great question. Well first, 57 million monthly transacting actives for our last reported month. I’ve had an incredible journey at Block, and I feel incredibly grateful to Jack and Brian and Francoise, who is my early boss. Just to be even more clear, I started as a level three business associate then now I’m leading the business organisation. There’s thousands of folks in my org. Some of the key reflections for me are just the importance of great people and mentors and coaches. I tried to surround myself with incredible folks, but great operators, folks with great subject matter expertise, individuals who were willing to give me feedback. I think being receptive to feedback and craving that feedback is quite helpful. So, I don’t think I’d be close to being in this spot without some of the incredible people who have been at Block over the years and who are still in leadership positions at Block.

(24:08):

I think second is understanding what you’re good at and where you can add outsized value. So, I touched on a little bit. I wasn’t the zero to one person for Cash App. I’m more of a linear bottom-up thinker. I tend to think more in machines, and that’s helpful when you’re trying to scale a business that has market fit into a larger business that is driving more value for customers driving more enterprise value. Brian and Jack are more lateral thinkers, and I think that combination is really powerful. Where I find a lot of what I’m doing today is I’m working really closely with Brian and Jack and Brooke Ellis, who’s our chief design officer. And part of where I can be incredibly useful is translating a concept or a nugget or an insight that is there’s lightning in a bottle there, but how do we translate that into, okay, what can we build, when can we build it, how do we prioritise it, how are we monetizing it, how do we distribute it, so on and so forth.

(25:07):

I think that that sort of self-reflection for what sorts of things can you really add value to is an important reflection. And then I think third is learning. Jack pushes really hard on learning, which I find to be quite helpful. I’ve tended to find at Block and at other companies that the more curious an individual is, the more desire there is to get stuck in and figure out what’s going on in a given problem space. The reward for figuring something out is you get the opportunity to figure another thing out. And so that’s kind of been my story over the past 10 years is surrounded by great people looking for feedback, looking for coaching, and just a willingness to get stuck in and try to understand our business and understand what our customers need.

Auto (25:52):

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Ed (26:03):

I think that’s a perfect segue to kind of unpick a big theme to me that emerges over the last 10 years of the Cash App story and that is culture at the Heart of innovation as a theme. We’ve heard the scrappiness of how it all started and by the time ‘21 rolled around there were 8,000 people. In ‘22, there were 12,000 people. This is an incredible scaling journey from a culture point of view, but like many things, they don’t move in a straight line and things slowed down, be it product or integrations and business units developed and all of a sudden it was decided that the company needed a full re-org and you are far better to talk to this than I am, but broke down the silos far more. And it feels like from the outside in, this has been a huge rebirthing of the culture of Block. And so, let’s maybe talk to this cultural revolution because the business has done something that very few can do and that is re-engineer a startup, DNA inside a scale business. So maybe under that heading of culture at the heart of innovation, give a snapshot of the before, the after and what it took to really re-engineer the culture at Block over the last couple of years.

Owen (27:23):

I think first and foremost, it took the foresight and courage of Jack. I think that’s one of the beautiful things that you get from a founder led company is the right to make those sorts of decisions. Jack was very pointed in what he wanted to do with the company, so I think there’s a few contributing things to what we’re feeling right now, which feels really, really good. And I have been framing this internally and externally as a new chapter. There’s been a few chapters that I’ve been a part of at Block, but we’re definitely at the start of a new chapter now. One of the key drivers is Jack came back in as the interim CEO and got closer to the businesses – both Square and Cash App, and there were some leadership changes. That’s one dynamic to talk about. I think the second dynamic to talk about is AI and how AI tools are flowing through and what that means in terms of what a small scrappy development team can do.

(28:23):

And I think the third is the benefits of a functional org structure relative to the business unit structure. Maybe I’ll just go in order there – I think Jack had set up a business unit structure. He was spending his time steering the overall business at the Block level, but Square and Cash App were operating pretty separately. And I think when Jack stepped back into that interim CEO role, he was able to diagnose some of the areas that he thought that we needed to fix. One of them was customer focus, one of them was velocity and he put the things in motion to get back onto the right course. Second, from a functional org structure perspective, there’s pros and cons to every org structure and I believe every company at a given point in time will choose to be in more of a structured GM model relative to a functional model.

(29:10):

Sometimes you think that there’s a trade-off between decision-making speed, but the real benefits that we’re getting in the functional org structure are one, our ability to create centres of excellence. I believe I’m a reasonable leader on the business side and I still don’t think that the best designers and best engineers in the world want to report to me. They want to be in a center of excellence for design and engineering, and that’s how we get the best design and engineering talent and that’s great. We’ve seen that flow through to retention and hiring, bringing in top talent. I think also you uplevel the thinking of the executive team where we’re all now focused for the first time ever on Block overall, so we have an overall roadmap for the entire company and we can move more flexibly so we can say if we need to drive network expansion on Cash App, let’s move these 30 people here.

(29:56):

If we need to focus on a given feature for Food and Bev on Square, we can move these folks here. That never would’ve happened in the business unit model because there was these strict lines, there was these hard barriers between Square and Cash App and some of the emerging bets. And then I think fundamentally there’s massive new product lines that are connecting our ecosystems, which are just impossible to build if you’re not in a functional org structure. So that was part of Jack’s thinking as well of when we think about Cash App local and connecting Cash app to Square, we need a different operating model. We need a different org structure if we’re going to be successful there. And then if you layer on top, I don’t even, Jack probably saw it coming, I don’t think I did, but if you layer on top the usage of AI tools, you’re now able to just move so much faster. And so, it’s just yet another tailwind where we’re moving from idea to prototype or idea to the features in the app in days or weeks instead of weeks and months. Right now, it feels completely different on the ground than it did six months ago, and I would presume that in six months from now, it’s going to feel even more different. We have product folks and designers who are coding and building features and building prototypes and it’s incredibly clarifying, and it does feel like a new chapter.

Ed (31:09):

We’ll come to the product velocity in a second, but just to unpick this one layer further, it feels like all of a sudden, the entrepreneurialism is back and fired up. Nick Molnar – a fantastic entrepreneur, yourself, Jack’s back on the tools. It’s amazing. We’ve kind of been through this evolution of for many years it was founders letting people grow inside businesses and just to stand back and to scale a business in many ways, they had to scale the people around them. This is a case study of almost the opposite of letting great people be autonomous but still be in the weeds as a founder. And that must be inspiring to be a part of.

Owen (31:46):

It’s incredible. I feel lucky every day to get to work for Jack, especially in this era where AI tools are transforming everything and I feel like Jack is spending his nights and weekends coding and vibe coding, bit chat and that’s pushing all of us. I do think to some extent there’s a new cast of characters, so there’s a lot of optimism. Look, I think Jack has always been focused on the craft and the taste and the entrepreneurial spirit, but maybe the formula like the exact machine that we had set up wasn’t allowing that to come through in a certain way. And so, I feel like we just have the blocks in the right, no pun intended. We have the blocks in the right place right now to operate at scale. And here’s one thing about Jack is I think Block is going to be one of the few companies that has built billion-dollar businesses internally from scratch.

(32:38):

And Jack has created that environment with the emerging portfolio, giving folks space, giving folks runway, and to some extent there’s been backlash over the past several years for certain bets that didn’t pan out, but I would take that trade off all day. I think his slugging percentage, I mean let alone Twitter, but I think his slugging percentage is out of this world. And I think we’re set up with a culture and an environment right now that’s going to allow for the next Cash App and the next proto and so on and so forth. And I think that’s the power of the ecosystem and the way that we’re approaching development at Block.

Ed (33:14):

Super interesting insight because from the outside in, Jack Dorsey is an enigma in many ways, but those inside universally love him. And at the end of the day, he’s one of the greatest entrepreneurs that has ever walked the face of the earth, full stop. And his ability to do exactly as you’ve just described to see the future and then enable people to go and get it cannot be sneezed at in any capacity. So, let’s talk to product velocity as a competitive advantage. This is another theme that has emerged over the years but is particularly pertinent at the moment. This cultural reset, as you’ve just described, has really enabled the business to get back to this core competitive advantage that it had scrappy experimentation inside a scaled company. And many are giving you personal credit, and I’m sure you’ll deflect it, for this big push on velocity and for that follows you on social media. That’ll get a sense of the products that are coming out of the ecosystem. Why do you believe this to be true? At a certain scale, often speed is intentionally sacrificed for control, for product perfection, but let’s talk to the belief product velocity as a competitive advantage.

Owen (34:31):

I believe fundamentally that velocity is an advantage and there’s a number of ways in which it can flow through. We can talk about first mover advantage. You can talk about mean time to learning is a concept that we’ve been talking about. So, if you can spend six weeks getting something that you think is going to be perfect or you can spend two weeks and ship three versions and then learn what customers like better, I’ll choose the latter every day. And so basically, we’re operating a machine where we’re trying to produce value to customers generally through hardware and software. And so, the quicker that you can learn what’s going to resonate and what’s going to deliver utility, the better off you are. I do think that we’ve made massive improvements over the past several months and quarters. I do deflect all attribution on that, but I think we still have room to go.

(35:15):

I think increasingly what you’re going to see is smaller teams and smaller companies be able to more quickly produce incredible utility for customers. And I really do think that this is fundamentally tied to AI. If we didn’t have Goose and some of the internal tools that we’ve built, I think it would be slightly different. We would still be pushing on velocity, but it would’ve been more similar to how we talked about product velocity for the past decade. Now, I think that there’s a tremendous, beautiful thing that’s happening, particularly in software development where if I have an idea tonight, it takes me 45 minutes to build a good iPhone app using Goose. And I’ve done this multiple times. My technical capabilities stopped with sequel, and so I was like, oh, I’m never going to be the sort of person who can build, I’m going to be an ideas guy, but now I’m sending prototypes and screenshots and concepts to Cam who’s the head of design for Cash App that I’m building myself.

(36:13):

And so, you’re compressing the amount of time to go from idea to Pixel to customer. And then I think there’s an attitude thing, and I credit Jack and Nick mostly with this attitude, which is we’re in meetings discussing work, discussing road maps, and I think at some companies you can kind of accept the status quo. So, all right, we’re going to build a feature, we need to do one or two weeks of ideation, then we’re going to do an idea review, and then we’re going to do discovery, and then we will check in with all of the cross-functional partners and then we’ll build it, then we’ll do a review. And the primary question that Jack and Nick and increasingly myself now in this environment are asking is like, how can we do that faster? It used to be the case, I think it’s a false binary now, but it used to be the case that to move faster you had to sacrifice quality or you had to take shortcuts, not the case anymore because of these AI tools and because of how much you can offload and how much you can offload asynchronously and have an agent run a migration for you so you can focus on what you’re actually building.

(37:13):

So, it’s a combination of all of these things. I will say that my perspective for Cash App, for Square, for anything else that we’re building at Block is that it is fundamentally a strategic advantage or a disadvantage depending on how you approach velocity. And I think that I’m more on the spectrum of let’s iterate, let’s learn, let’s build incredible things for customers versus let’s take as much time as it takes to try to get something perfect. And I think that’s helpful.

Ed (37:40):

And let’s bring this to life, and you talked about yourself tinkering with Goose and you can maybe give a bit more colour and context to that internal AI agent that’s been built and is of course open source. But a great example of this is Cash App Pools from ideation to execution in, I don’t know, eight weeks probably.

Owen (38:02):

I think Pools is a great public example. There’s a handful of other examples that I’m in the midst of, and that’s what I was spending my time on earlier today. But Pools is a great example where it’s not just a new feature, but it’s a new feature that you’re shipping into a core flow that’s operating at scale with tens of millions of actives every single week we’re using it. And so, we went from conception and kind of final reviews to in customer’s hands, as you said, in a matter of weeks that’s faster than the clip of development that we’ve seen over the past several years. And I think fundamentally what it comes down to is some of the things that I was talking about, but first and foremost, it’s cultural. To some extent, Pools internally and externally has been this emblem of is Block back and does Block ship with velocity.

(38:51):

I think that from an external perspective, whether it’s true or not, I think there was a perception that the pace of development slowed down a bit over the past couple of years, and I think that there is nothing standing in our way in terms of our ability to build incredible features and incredible products in a short period of time. I think that comes down to the people and I think we have world-class folks across disciplines. I think it comes down to leadership and really the principles and values that we have at the company. And then increasingly it will come down to the adoption of AI tools. So, pools is great, but I want there to be five or 10 or 15 examples that we’re talking about next time I’m in Australia where it’s not just like, okay, they built one feature, they built one product quickly.

(39:32):

That’s not what it’s about. It’s the overall portfolio and how you orchestrate a machine with thousands of people. We have thousands of people in our development organisation to do this on a recurring basis. The best tool from my perspective, it’s actually an org structure and a people design question. What I’ve found is that you need smaller unencumbered teams where you can remove dependencies and then have a clear goal, a clear primary metric, and let them cook, let them run. And so that’s what we’ve been doing at the block level. Instead of having 50 different teams or work streams or departments that are chugging along on their roadmap, we have a stack rank of the 15 most important things for the company. We put a believable person as the DRI on top of those, a directly responsible individual, so I’m the DRI for network expansion, which it’s the team that built Pools.

(40:24):

You’re laser focused on the goal and the primary metric, and then you staff that team with folks who are hungry and who are good at what they do and who want to run. And so, it’s more believable to me that 20 of these unencumbered small teams with great people and clear goals will just reliably, from a portfolio perspective, develop incredible software and incredible hardware. Then if you had an org, it doesn’t matter the size, 500, a thousand, 2500, 3500, what ends up happening is that the dependencies creep and creep and creep and it’s, I can’t do this because this team has to approve it, and they can’t approve it until this team reviews it and so on and so forth. And so, functionalization is not just a window dressing and a thing that we talk about, it’s a fundamental shift in terms of how we operate and how we build for our customers.

Ed (41:10):

I get excited just listening to how you talk to that with such passion, but to let them cook, you’re really throwing some oil into the fire in many respects with Goose and the AI agents allowing these people to not just run fast but run exponentially faster than they have before. So maybe that’s a good segue to looking ahead more broadly. We talked to the founder and CEO, Jack Dorsey being this incredible futurist. A big part of his vision is money management more broadly, and whether that’s cryptocurrency and you talk to proto the mining rig that has just come to market as you deepen the consumer base with Cash App, as the two ecosystems become closer, how do you think about the future of money management more broadly?

Owen (42:05):

One, I won’t pretend to know what happens in the future, but I think there’s two main vectors that I’m thinking quite a lot about. One is AI and the platform shift around AI, and then the second is money itself, and that ends up being related to Bitcoin and stable coins. So, in terms of the AI flow through, I think we’ve seen a pretty meaningful shift in the consumer marketplace over the past couple of years. Ever since Chat GPT was announced, that was a step function change, and I think the chat modality has generally taken over and there’s not that many different UIs or operating systems on top of the AI stack other than chat. I think that’s likely to change, and I think that’s where Block can play a meaningful role. When I think about Block at the highest level, I would say what we’ve done well across verticals and across industries is really focus on the interface – that can be anything from the industrial design of our hardware products to the simplicity of the tip screen on Square Register to the cash pad or the green payment pad on Cash App.

(43:15):

And so, what I’m spending a lot of time and others of the company are spending a lot of time on is what is the UI? What is the experience for how a customer is going to interact with an application in the future? Apps haven’t changed that much since the App Store came out. If you look at a screenshot of Uber from year one versus today, it’s not tremendously different. And I think that starts to get into a number of different things that I’m really excited about. So, one concept is the AI prompting you. In my world, the way I interact with these AI tools is I’m prompting the AI tool that doesn’t need to happen. The AI tool, Cash App for instance, Square for instance, can have a full understanding in real time of who I am and what I should be doing. So, I want the AI prompting me.

(44:00):

I want it saying – Hey, you should relook at where you’re buying your onions from because you’re spending too much money, or, Hey, you have a rent payment coming up. I want the AI to be prompting me. I think two is more personalization, and so everyone has been using by and large the same application. It doesn’t matter if we have completely different lives that’s going to change. I think that’ll change fundamentally and it will change really quickly. I think for a customer who’s using Cash App and predominantly interacting with stocks and Bitcoin, it should look and feel different than a customer who’s predominantly selling goods and services with cash for business. And that starts to get into this concept of generative UI. And so, we’ve seen a lot on the generative side. I can create a bedtime story for my kid or create a funny meme or a funny image, and we can generate that, but it’s pretty clear to me that we’ll start to just be able to generate UI.

(44:51):

And so, I’ll be able to use the same data set and the same core primitives and the same systems to interact with a given application. And I use the word application loosely here and it can kind of mold to how I want to use it in the world. I think that the last piece is really around automation. There’s things that we’re building and that I’m testing internally that have been able to automate a tremendous amount of the menial mechanical tasks that are typically required of someone in my role. So, you can imagine every morning I want to look at a lot of data. I want to know what’s going on across all of our brands, all of our products, all of our flows. And two years ago, the way you do that is you pull up a whole bunch of dashboards and you can expand that to email and Slack and Calendar and so on and so forth.

(45:35):

I think you’ll see all of that stuff get automated, and we’re already there. We’re kind of on the cusp of that happening. And it’s true for your financial life as well. So, if I’m a square seller or I’m a Cash App customer, there are parts of my financial life that I want to automate. And where we can play a role is where do you need the human in the loop? Where do you want an approval? Where do you want a checkbox? But I think we’re on the cusp of a pretty fundamental change for just the human computer interaction model, and I think that’ll flow through all FinTech apps. And it’s just a question of when I think we’re in an interesting time just in terms of how we think of money and what good money is. For me, one of the reasons I joined Block is that I worked at a hedge fund called Bridgewater Associates before I joined Block and I studied monetary policy and macroeconomics, and I was fascinated by Bitcoin in the early days, some of what seemed like fringe conspiracy theories in 2012 and 2013.

(46:28):

I think we’re starting to see that play out. So, we’re seeing debt levels increase, we’re seeing deficits increase, we’re seeing developed world countries run inflation higher than target, and we’re also starting to see the ways in which money that is not censorship resistant perhaps doesn’t work well for everyone across the world. And so, our perspective is that there is going to be a native currency of the internet. Our perspective is Bitcoin is really the only candidate because of the way in which it was founded and because of the underlying principles. And so, our goal right now is to bring about the transition from Bitcoin being viewed more as digital gold to a world where Bitcoin is viewed as everyday money and is used as everyday money. And if I had to guess, I would guess that way, more of the FinTech ecosystem in 10 years is built on top of Bitcoin than it is on top of the US dollar or the Yen or the Euro.

(47:23):

And I think that we’re playing a role here. I think Block has done more for Bitcoin than any other public company, and I think that’s because it’s part of our DNA and our leadership team has really strong thoughts on what’s best for not just the US consumer, but consumers globally. There’s a lot of talk around stable coins, and I think there’s utility to stable coins, but ultimately stable coins are just a digital version of the same thing. It’s still centralised. And so, from my perspective, if we can add some utility to consumers, that’s great and we’ll do that. But fundamentally, I think there’s a reasonable chance that Bitcoin does become the global reserve currency. And kind of like wherever you stand on that spectrum, it matters less to me because to the extent that there’s a non-zero chance that that’s true, and you’re the leader of a company like Block, you want to be leading there, and you want to be innovating. You don’t want to take that chance that happens and you’re stuck on traditional rails. And so that’s why we were so early on Bitcoin, and that’s why we continue to push, and we have way more work to do. I have a meeting with Jack tomorrow where we’re reviewing some of our plans, and I’m going to go work on that after this call.

Ed (48:29):

An amazing way to tie this in a bow, because it takes us right back to what I said at the start, and it still holds true. This mission in 2009 was rooted in economic empowerment, and what you just described then was exactly how it is today and will be in the future. So, this mission still holds. You’re at the forefront of that. Owen, this has been an absolute treat. Thank you for joining us on Scaling Up.

Owen (48:56):

Thank you so much. Appreciate it.