Square executive sees mobile bubble

Many new startups will fail because they have too many startup rivals, COO Rabois said

There is a venture investment bubble in the mobile industry as countless startups draw interest for what might be the next big application or tool, the chief operating officer of payments vendor Square said Tuesday.

Though some high-profile technology companies probably represent long-term value, there are so many small companies in the mobile arena that many are likely to fail, said Keith Rabois, chief operating officer of Square. He spoke at the MobileBeat conference in San Francisco. Good times can actually hurt a new company's prospects, he said.

"It is absolutely the case that with 1,000 companies funded every year, there is no way that all of them are going to be successful. And actually, there is going to be a suboptimal number of them that actually thrive, because they're all competing with each other," Rabois said.

The veteran of PayPal and other startups said that PayPal and Google both benefited from starting out in the aftermath of the 2000 tech-stock implosion because there were so few jobs for smart people in technology to choose from.

"In a tougher economic time, it would be very possible to take 200 of the companies and combine them with the founders of the other 750 and build a team that was talented enough that it actually had a shot at succeeding," Rabois said.

Rabois said Square is seeing rapid growth for its mobile payments system, which is based on apps for iPhones and iPads, plus a small, square dongle for swiping credit cards. The payment volume on Square is doubling every two or three months, he said.

Square is designed to make it easy for small merchants such as cab drivers to start accepting credit-card payments quickly. There are 26 million businesses in the U.S. that don't yet accept credit cards, but Square's challenge is to reach them with its message, Rabois acknowledged.

"We need to make sure that every American knows about Square, which is not a trivial exercise," he said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Stephen Lawson

IDG News Service
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