Even after plotting Square's year-long growth on a "sexy growth curve," Splat F's Dan Frommer is surprised by the company's success -- but he really shouldn't be. "It is easy to be skeptical of Square," he writes. "Which while very cool also feels like it must somehow be overhyped. (Why did my local caf stop using it? Why dont I ever see it in use? Can it really replace most cash registers? Etc.)," he continues. Whenever Square releases some landmark growth numbers, they've been met with a similarbit of surprise from tech bloggers, but the company's success is easy to understand.

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The company has a real stream ofrevenue. The thing about lots of tech start-ups these days, is that they rely on this idea of "value." Twee social network Pinterest, for example, has generated lots of traffic and interest and can theoretically channel all those page views into money. But, that's just a theory. For now, they only have an abstract notion of who they are valuable to (users, marketers, online retailers, etc.). Square, on the other hand, is makes money right now. Every new person who starts using Square to process payments makes the company money, as the company takes a 2.75 percent cut of every single payment, which Frommer estimates is around $300,000 gross revenue per day. Making real money is the simplest way to demonstrate value to investors (and the rest of the world).

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People actually use it. So many thatThe Atlantic's Alexis Madrigal called it "mainstream," giving us this chart below back in August. Frommer might disagree, as he doesn't see the gadget around much, but these bubbles are more proof that Frommer's personal experience. The company processes more payments than PayPal did at the same stage of its growth, adds Fast Company's Ellen McGrit, who placed Square as number five on this month's most innovative company's list. More than 1 million people use Square to process credit cards, she continues.

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Lots of money from the right people.Last summer square announced a $100 million round of funding, valuing it in the billion dollar range. A few months later, in October serial-entrepreneurbillionaireRichard Branson behind the many branches of Virgin,threw some money at the company. It's one thing for a startup to raise money from celebrity backers, it's quite another to convince celebrity backers to invest after a company is worth a billion dollars.

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Jack Dorsey magic. This is the man that founded Twitter -- he gets the Internet start-up thing. But, unlike Twitter, which has struggled to turn its value into money, Square, as we've already mentioned, is a revenue streams.

Link:
Zero Reasons to Be Surprised by Square's Success