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Quotable Podcast Episode #79: NPR’s "How I Built This" Host Guy Raz interviews Square’s Michael Coscetta

Guest Interviewer: Guy Raz
There’s a story behind every company's sales growth, evolution, and innovation. Join NPR’s How I Built This Host Guy Raz as he interviews Michael Coscetta, Head of Global Sales at Square, to learn how company leaders are building their brand — and the special role sales plays. In 2009, Square founders saw an opportunity. Small businesses were missing out on sales, so Square created a small, square credit card reader that plugged into a mobile device. Now eight years later, Square is a small business giant that’s leaping into new areas like peer-to-peer lending and food delivery and pick up. Find out how sales fuels this successful business adventure.

Some of the greatest entrepreneurs have one thing in common: They were in sales.”

Guy Raz | Host and Editorial Director, NPR’s "How I Built This"

Episode Transcript

Guy Raz: Some of the greatest entrepreneurs, what they have in common is they were in sales. Mark Cuban, Sara Blakely, they walked door to door, sold computer stuff, or fax machines in the case of Sara Blakely, and they dealt with rejection after rejection, people saying to them, "Get lost," "No solicitors," "Not interested." They had to build up that resiliency in order to prepare themselves for what would come next.

Kevin Micalizzi: Welcome to the Quotable podcast. I'm Kevin Micalizzi, Executive Producer. I'm excited to share with you a special edition. NPR's Guy Raz — he's the host and editorial director of “How I Built This” and the “TED Radio Hour” — is interviewing Michael Coscetta from Square.

In Guy's wildly popular podcast, “How I Built This,” he interviews the founders of companies like Whole Foods, Airbnb, Rolling Stone, and many more to uncover the stories behind the movements they've built. Today we'll be taking a sales focus. Guy will be exploring how Square has built their sales business and how they continue to evolve and innovate over time. This interview was recorded live at the Quotable Sales Summit at Dreamforce.

Raz: So this is what I look like. That's a little weird to see the disembodied voice and then to see the human. I'm sorry, I hope it's not too disappointing. I am super-excited to be here and to talk about the story of Square with Mike Coscetta. He heads up global sales for Square. Mike is a self-described math and science nerd who is passionate for sales. He lives for sales. We're going to find out why and how you become passionate about sales.

What I think is particularly interesting about Mike is that he has a very deep interest in what he calls the neuroscience behind sales. We have a lot to talk about. We've got about 40 minutes to do that. Mike Coscetta, welcome to the stage.

Michael Coscetta: That is what I look like, to my own chagrin and my mother's disappointment. Thankfully there's a lot of Photoshop in that.

Raz: I'm going to assume that most people know what Square is or have an idea of it or have seen the plastic thing that you plug into a smartphone or maybe you've seen the terminal. But for the few of you who don't, like when you go on an airplane and they tell you to buckle your seatbelt, explain very briefly what is Square?

Coscetta: Square is largely a payments platform and point-of-sale product line for SMBs. The product was built, as you know, by the little white tile that plugs into a phone. We've built, I think, an amazing brand and an amazing visual recognition ability of that device and people know us by that. But we've grown far beyond what that little white device was built for.

We are now really a one-stop shop for SMBs to either start their business, grow their business, to run their business, and even more so, learning how to grow their business in a very challenging and innovative time, but a time that I think really freaks out a lot of business owners. Although we were built through simplicity and through really the ingenuity of that little white reader, we've been able to really grow what I think to be now a very intricate and complex network of tools that are there to support a business owner and to make their lives really a lot easier.

Raz: The white reader that so many of us know, that probably isn't even the biggest core product anymore.

Coscetta: Right. There's quite a bit that a business needs to operate. If you're a mobile seller and you know about Square at the food truck and you've seen us maybe at a farmers’ market, that little white reader is still a great tool. But businesses today are needing to learn how to sell online and offline, so we need to provide a set of API tools and platform tools for them to be able to do so. Fifty percent of commerce last year was online, and I believe that's growing 100% to 125% year over year, mobile as well.

So being able to help business owners — whether it be accept a payment through an application, accept a payment in store. We released just last week what's called our Square Register, which is really a larger and more robust version of our typical white [stand] that people have seen, but this one made for much larger and much more sophisticated businesses.

Raz: Mike, I think a lot of people think of Square and Jack Dorsey, Jim McKelvey. You joined the company about a year ago. You head up global sales. But you obviously know the story of Square. Tell us a little bit about the problem that Square was trying to solve when Jack and Jim started the company in 2009.

Coscetta: Sure. It's really an amazing story that I think any business owner can relate to. I owned my own business for 9 years.

Raz: You were a consultant.

Coscetta: I did. Yeah, I was a consultant, sales consultant mostly, mostly to tech companies. But the whole mission of Square was originally built to help a seller never miss a sale. The story goes back to Jim McKelvey, who was, outside of being a brilliant computer scientist and engineer, he's also a world-class glassblower. He builds art out of glass and art that actually is worth thousands of dollars to not just collectors but to buyers.

There was a buyer in front of him trying to buy this amazing faucet, that if you look at it you would never even know it's a faucet; it's that amazing and crazy of a modern design. The woman was from China. This was somewhere in the Midwest, and she was on vacation and she really wanted to buy the product. It was thousands of dollars; she didn't have enough cash on her. So she pulls out her credit card, and Jim said, "I can't accept that."

In that moment of the inability to accept her payment, he missed a sale, and up grew the spark for what would become the growth of Square — helping a merchant never miss a sale. Jim, I think, was pretty quintessential of what most SMBs are, which is they don't have a ton of business credit. They typically don't have good credit. It's very arduous and challenging for businesses to establish a merchant service account, especially back in the day — the amount of hurdles and the hoops the one has to go through.

He felt the pain of being rejected by the banking infrastructure in his ability and desire to be a credit card accepting merchant. So he paired up with Jack, and Jack obviously at that point had already founded Twitter and this was his next project.

Raz: They knew each other. Right?

Coscetta: They did have a connection. They're both from St. Louis. We have a very large presence in St. Louis thanks to the heritage where the company — the idea at least — was first created.

Raz: Does he still blow glass, by the way?

Coscetta: He does, yeah. He has a book on glassblowing. I can't even draw.

Raz: Is there glass all over the Square offices?

Coscetta: We have a lot of glass in the Square office, some courtesy of Jim McKelvey. Pretty cool stuff.

Raz: Yeah. They start this company. The idea is to make it easy for people to accept payments. That's kind of a big deal, because you've got the big credit card companies and you've got a whole infrastructure and apparatus behind credit card transactions. Was there resistance to the idea? Was there skepticism? Were people like, "This is never going to work. You're never going to be able to take on the big players"?

Coscetta: Yeah. I think there was a resistance on three different fronts. One, there was resistance from investors and just from anyone who said, "This is a crazy idea. You're going to go out of business. How can you possibly allow this individual or this small business, who a bank won't even allow, to accept credit cards? How are you potentially going to handle that risk?"

The second was from the banks themselves who said, "There's no way you have the infrastructure, or the knowledge, or the data, or the underwriting ability to understand how to potentially allow a business securely to be able to accept a payment."

And then I think the third was just from an implementation standpoint of how do you potentially monetize that, and how do you actually build a system that can not only support these businesses, which is a great feat. Our mission is economic empowerment, and that's all well and good. But if the company doesn't make money, it won't be around empowering people for very long.

So a tremendous amount of resistance, especially from the people who realized this could very well be part of their market that's now going to be given away to someone else. There was now no longer just this oligopoly of banks in charge of that.

Raz: Before we talk more about your background and more about some of the other things that Square does, from the perspective of a consumer — you go up, you hand your credit card or you put your credit card in a machine. We don't really care what it is. If it's Square, whatever the terminal is, it doesn't make a difference to us as long as it's convenient. But from the perspective of a retailer, what does it actually mean? What advantage do you have if you're using a Square system versus like a regular traditional credit card system?

Coscetta: Yeah. That could be a really long answer, and we spend weeks training our salespeople on just how to explain that value prop. But I would say there are several. It does matter to the consumer, and I think that's actually a really important aspect of Square that credit card companies traditionally had not really thought of.

But the simplicity to a business owner, especially if you're a small company and you just don't have people or don't have the resources to manage all these different systems, is that everything could be done in one system. Not only the ability to accept the payments or the physical hardware, but the actual acquiring business, the processing business, the UI which can connect to their inventory system or can connect to their CRM. It's not surprising that a lot of businesses in the past had different systems for each.

Raz: They had a bunch of different vendors that would [bring] them out and they were —

Coscetta: Yeah, someone would knock on their door from First Data and sell them a payment-processing solution, and then they would call up Verifone and they would order a terminal, the little bricks that people are used to seeing. And then they would need someone to help them with their employee management. Then they would need someone to do receipts and all the reconciliation at the end of the week. What we've provided is a set of software tools that really do all of those things, but in a really turnkey way.

What we've learned is that even though these were built for small business and were built for typical SMBs, larger companies want the same thing. They love the transparency. They know what they're paying, they know how much, they see it. It's very easy for them to track their rates. There are no ambiguous or strange fees layered on top.

They're able to track their data on a day-to-day basis, which to a business owner is crucial. They're much easier able to track their customers and to figure out how to get loyal customers to return, including knowing who their loyal customers are, and building some of those using our tools or using a set of partner tools.

Another interesting thing is they get their money the next day. We're not holding on to money for three, four, five days because there is risk there. But that's one of our main value props. They get that set of dollars the next business day into their bank account.

Raz: I guess a big turning point pretty on, a year and a half in, was when Starbucks started to accept Square. Right? Because all of a sudden it's not this sort of niche thing that some people or experimental companies are using; it's Starbucks.

Coscetta: Sure. The Starbucks brand is one of the most powerful brands in the world. It's one of the most recognizable images and logos. The experience if you've been to a Starbucks in Beijing, or Singapore, or the only one in Italy, or the 10,000 of them here, it's the same and it really is incredible. What also Starbucks has is just an amazing breadth of exposure. I believe it's the third-largest food and drink brand in the world.

Raz: Yes, after McDonald's and Subway. Subway and McDonald's, yeah.

Coscetta: So to see Square in such a pervasive environment and such a large, complicated environment, I think was really an incredible thing to really anointing us as a real company and saying, "Wow, if Square can handle payments for Starbucks and the amount of volume and transaction numbers that go through — it's millions of transactions per day — then they could do just about anything." It's not a surprise that since then you've probably seen the vast majority of coffee shops having Square sitting in their store.

Raz: That's because they saw Starbucks do it initially?

Coscetta: I think it's that halo effect. Right? If it's good enough for the largest coffee chain, it's probably good enough for my single location in Idaho.

Raz: But probably not just for coffee shops. That probably was a game changer.

Coscetta: Yeah. I think that forced us to really build the infrastructure not just in terms of stability and volume, but also in terms of risk mitigation and machine learning applied to how do we prevent fraud at such a large scale. It's really an amazing thing that the company was, not forced, but really inspired to build to support that partnership. It also taught us a lot about how companies are thinking about the future.

I think the pairing of Howard Schultz and Jack was amazing because two very innovative minds who were thinking about retail of the future and food and drink of the future, which is also a really important thing that we have to instill in all of our salespeople every day, which is not just to think about Square, but to think about the environment these companies are operating in. And not just today, but the environment that they're likely to face tomorrow, six months from now, 10 years from now.

Most businesses want long-term partners. They typically don't like to change. I think it was a great step in our history, and I think it was a really important step that put us on the map and helped us build what we have today.

Raz: When Mike and I first met a couple of weeks ago over the phone, he said to me, "I'm just really passionate about sales. Like I love sales, like I talk about sales." I just thought, "Wow, really? That seems weird." But it's not weird. It's really true.

Coscetta: It's the wrong environment to call salespeople weird, by the way.

Raz: I know, I know. And so you have this incredible passion for sales and an interest in the science behind it, which I'll ask you about in a sec. But first of all, how did you end up getting connected to Square?

Coscetta: They recruited me from my last company. We were at a marketing automation and sales automation company that actually works very closely with Salesforce. We were selling in the enterprise space, and Square was looking at the time to really make a bigger push into the larger sellers or midmarket sellers. So when I first came over, that was the original mission, to help us really move upmarket. This was just around IPO time, so it's an important thing that investors and merchants also wanted to see. So again, can they support me as I grow?

But it's a great fit. The culture of the company is phenomenal. To me, it was really what I wanted, which was a company that was being very innovative, that was making a ton of money, but helping people by making them make a ton of money and helping businesses owners grow. Like I said, as someone who owned a company and knows all the ups and downs and the arduous misery sometimes of owning your own business, here was a company really genuinely helping people, and that I loved.

Raz: Just out of curiosity, is it weird to go from running your own company and being your own boss to actually — ?

Coscetta: A 100%. Totally weird.

Raz: Because then working —

Coscetta: Yeah, I loved it. My last CEO was the one who convinced me to come out of my semi-retirement as a consultant to go work for him. It was a great time. I realized I needed to learn more. There was a bigger world that I wasn't exposing myself to. I think I was doing a good job, and I had a great business and I had a great life as that business owner.

But to me, I get inspired by learning. When I'm not learning or when I don't feel like I'm ahead of the curve, I feel like I'm behind and I feel like I'm starting to die mentally, emotionally, intellectually, and that drove me crazy. Yeah, it was a good move at the time. I'm glad I did it, and I'm having more fun now than I ever did.

Raz: I know your background is in economics but also biochemistry and mathematics. You're a real science person, psychology. Some of that is tied in with economics. You are really interested in the relationship between all of those things and sales and sales motivation. Just explain how they're connected.

Coscetta: They were weirdly connected for me at the beginning, but I grew up as a math and science nerd. I grew up in Long Island and did every science project and math fair and all the geeky things that people made fun of me for. But over time I realized that there was actually a massive world out there to learn. When I got to college, at Harvard, you couldn't really double major. You can only take a lot of classes and get no credit for them, which was kind of a shitty thing but I did it.

Economics was fun because I loved the mesh of math and politics and math and the growth of finance. I took all these classes in biochemistry because I still wasn't sure what I wanted to do. I thought about going to med school, I thought about potentially being a surgeon, and then I just saw how miserable all the doctors were in med school. I'm like, "No, I'm not going to do that." I'd probably still be in school right now, no offense. Right? My sister is a doctor, loves her life, but it wasn't for me. I realized that there were other things out there.

Randomly when I was in college — I come from a very blue collar background. My parents didn't have a ton. I got a job on summer selling Cutco knives. It was kind of a joke, but I'm like, "Hey, this seems goofy and fun." I made more money in that summer than I ever could've imagined. I did it again a couple more times just under the premise of I'm never going to ask my parents for another dime.

Raz: You went door to door and sold knives?

Coscetta: Yeah, isn't that weird?

Raz: Yeah, did you have a set of knives in your jacket?

Coscetta: Yeah. Hell yeah. Yeah.

Raz: Selling Cutco knives?

Coscetta: Not like that. That'd probably get you arrested.

Raz: That would be weird.

Coscetta: New York City, that doesn't last very long. NYPD sees that two seconds away, like, "What do you got in there?" No. But it was a good experience. I was surprised that I liked selling. To me, sales was always the thing that you either hired someone to make 500 calls a day or you hired sleazy people to pull one over on someone. That's what the old sales, at least myth, was, and that was my fear about it.

But then I realized sales is about people. Although sales is probably one of the purest number-driven aspects of an organization — it's got to be predictable, it's got to be repeatable, it's got to be profitable, it's got to be scalable, all the basic stuff — but that's all created by people. So I realized aside from just learning how to connect with a customer, it was how do I motivate salespeople to think differently, to tap into inspiration that might not have existed elsewhere, to think about how do they help a customer as opposed to just winning a deal. That was all psych.

The psychology side is fun. But to me the really crazy side is that this is all driven by biochemical reactions, and really diving into the biophysics and the biochemistry underneath, things like habituation, sensitization. What is motivation? How does our brain perceive this cost-benefit analysis of taking an action step toward a goal with only a probability, not a certainty, of happening?

Learning how to apply some of those things to large organizations is really what my business was built upon, which was to teach non-salespeople speaking in their own language of typically math and science, product engineering. How do they apply that to not only run their business, but how to actually inspire a sales organization to do things that in their own mind they had no ability to do themselves?

Raz: How do you apply some of that thinking when you work with your team? How do you say, "Let's think about the psychology behind what you're doing, or how you connect with a customer, or how you think about pitching your product"?

Coscetta: Again, I think it becomes less about Square, and I think it really becomes a lot more about the person. Think basic sales. What are the pain points? What are their goals? What are their aspirations? Business owners typically also want to spend a lot more time thinking about growing their business than saving money or making things more efficient. Now if they're about to be bankrupt, they might need to understand cost cutting. But most businesses want to talk about things that excite them, not things that they're afraid of.

Teaching the sales team how do you tap into that and how do you potentially ask certain questions that really pull these positive things and these goals and inspirations out of the merchant's mouth so that you know exactly what they're looking for and why they're looking for it.

I think managing a sales organization is all about culture. I think that's one of the first things I realized when I was very young is that if you create an environment and talk about that environment, talk about what you want to create and instill that, that that's exactly how people start to operate, and they start to fulfill the expectations you have of the environment and taking very clear action steps about that.

One of the two simple things I mentioned were habituation and sensitization, which habituation is the ability to react less to something that happens more. Salespeople deal with rejection constantly. If a salesperson gets habituated to rejection, they don't care. It's no big deal. They brush it right off. That's not a skill, that's a learned behavior.

Sensitization is the overreaction or the over-response to a specific stimuli that might only happen here and there, but when it does it's ultrapainful. And ensuring that people aren't sensitized to rejection, that they're habituated. Ensuring that people are inspired as opposed to castigated to do these things.

Raz: That is a learned characteristic, a learned attribute. Some people, of course, have it.

Coscetta: Sure.

Raz: But you're saying that is a trait that can be learned.

Coscetta: Yeah, I think some people have it. I'm writing a book called The Sales Gene, which is about the things that people do naturally and that I do think they have instilled in them, and the things that are absolutely learned behaviors and adaptations. The reason why I think that could be learned is because it's typically their response.

Think of a little kid. When a little kid falls and they probably bang themselves, they immediately look up and almost ask, "Should I cry?" If the parent freaks out, the kid almost always cries. If the parent is like, "No big deal, keep going," a lot of times that kid just, they're probably hurting, but they just keep moving for whatever reason. I think salespeople it's very similar. It depends on how that environment is created around their actions and how managers respond to failure. I love rewarding failure. As long as failure is in an attempt and in a process of going toward a longer-term achievement.

Raz: Yeah. Yeah, it's interesting. Because if you hear my show, “How I Built This,” some of the greatest entrepreneurs, what they have in common is they were in sales. Mark Cuban, Sara Blakely, they walked door to door, sold computer stuff, or fax machines in the case of Sara Blakely, and they dealt with rejection after rejection, people saying to them "Get lost," "No solicitors," "Not interested." They had to build up that resiliency in order to prepare themselves for what would come next.

Coscetta: Yeah, I used to tell people at the end of every day, call me with the worst thing that happened to you today and let's talk through it. Actually after it happens, call me if you feel like "There's nothing that's going to beat this; this was terrible. Let me tell you about it." Just the framing. Right? Again, it goes back to really basic psych concepts of framing and priming and the way we anchor to certain feelings and certain results. It's not hard to get someone to realize this is no big deal.

The old joke, the person who got the most yeses probably also got the most noes, is just a truism in anything that's "a numbers game." Sales really is a numbers game, but those numbers are driven by the activities of people.

Raz: You look at baseball players. Right? New York Yankees and Aaron Judge is the strikeout king as well.

Coscetta: You rubbing this in right now? We lost.

Raz: What was a humiliating sales experience that you had in your life?

Coscetta: My first one. Literally the first appointment I ever did when I was in college was a rejection outright by someone I knew really well. That's a brutal thing when you're 18. But you realize, "I'm 18. It's no big deal. There are a lot of other things I'll be able to tackle in life."

But even when I built my company, the first company that I advised and that I built their sales organization for, their first five people all quit within three months. That was on me, that was entirely on me. Not a great way to build up a track record in my first business. Thankfully the owner was someone who trusted me really well and realized there were other factors in the case.

It's not humiliating because I think, again, humiliating, that's something that taps into your humanity. These are just things that happen. I think that's also in a framing aspect that's really important, which is these are just things that happen. They're not about you, and they're not judging you, and they're not a response to you. This is just all part and parcel for being in a results-driven business.

Raz: Let me ask you about your team at Square. On a day-to-day basis, who are their customers, who are they going out and trying to sell to? Is it business that's coming in? How are they interacting with potential customers? How does that happen?

Coscetta: We're amazingly lucky. To the salespeople in the room hearing this, but the majority of our leads are inbound. The majority of businesses that are interested in Square come to us. They fill out a form on our site, they call us, they see us at an event, they see a merchant that has Square and ask where do I get that, and then all of a sudden that produces an inquiry. It's not everyone, but it is the vast majority. We're excited about that because I think there's tremendous power in the value that we're offering.

Our typical customers are actual businesses. Again, to go through our sales organization, they do a quarter million dollars plus a year. This is not your typical food truck. It's not your dog walker. There are hundreds of thousands, if not millions, of Square merchants who are those. So that's an amazing base that our business is built upon. But these bigger businesses and these multi-location businesses that are changing and that are part of industries that are changing rapidly.

Think retail, think restaurants. The customer experience is changing so much in those. They want a partner who can not only serve their needs today, but really provide thought leadership and guidance to how these businesses should be thinking in the future. It's not just about a payment; it's not just about the point of sale. It's about how do I think about data. How do I think about growing my business. How do I think about online plus offline. How do I think about on a mobile application.

This is becoming a much more common thing that they're coming to us with. Again, not just because we are a little white reader and not just because we're a point-of-sale company, but because we're seen really as a leader in thought innovation in many of these spaces. I think that's what our team is very excited to continue.

Raz: What about the other products that you guys are expanding into? Because point of sale is what most of us think about, but increasingly you're doing loans, you're lending money.

Coscetta: Yeah, absolutely. One of the ways that Square, I think, is a little different: We really listen to our customers. I know a lot of companies talk about that. One of the things our customers ask for, so we help them never miss a sale. We help them run their business.

One of the complaints many of them had, not about us but in terms of the gaps that were in their portfolios, "We need money. I need money to grow. I want to add a second location to my coffee shop, but I can't get money from a bank." "I'm a salon, and I have too much demand. I need to add a chair, but a chair costs 20 grand. I got to hire someone. I need to order supplies. So how do I get access to that money?"

Lending is something we decided to do because we have all the data on their business. Instead of relying on a business owner to fill out a 40-page application, go to a bank, and wait 2 weeks and likely not get the loan, we proactively offer loans to our businesses based on the data we have on them.

Raz: Let me just clarify. Most people, most businesses, small businesses, when they need a loan, obviously there's a credit score and there's a whole variety of factors that a bank will weigh and it's a long process.

Coscetta: Sure.

Raz: You have access to all their data because you have access to all their transactions. You're not evaluating credit scores.

Coscetta: No. Yeah, we use the data we have at hand. It's an amazing machine learning-driven model of having real-time data. Instead of asking a business what your revenue is, we don't need to ask; we already know. We already know what you're charging. We can see inventory amounts. We see how many employees the business potentially has. Things like FICO scores and credit checks, those are traditionally very biased means of also offering loans or not offering loans. Typically they also result in quite a bit of discrimination about who gets a loan, especially through traditional means.

Raz: So you don't apply for a loan?

Coscetta: Nope. Merchant cannot ask us for a loan. They can; we're just going to ignore it. But in their dashboard we'll proactively offer a certain amount of money that we deem to be a valuable addition to them with clear transparent information as well about the loan.

Raz: And it'll be based on an algorithm that looks at the transactions and then will send them an email and say, "Hey, it looks like you're doing pretty well. You're pre-approved for 10,000 bucks."

Coscetta: Absolutely. It gives them all the terms and it's really simple. They just click accept. And if they accept, the money is in their bank account the next business day. It solves an amazing problem of access to capital, which is the first and foremost thing that most SMBs talk about being their barrier to growth. If they have questions, of course they call us and we're there to help them. But it's really a simple transparent process. Many of our merchants have now taken three, four, five, six loans with us because they pay one off, they take the next one.

It's also a really unique payback method because instead of saddling them with this fixed fee every month or these crazy rates, it's just every transaction a slight addition in fee goes, and that fee goes to cover their loan. If they have a slow month, they're only paying a certain percent of that. If they have a really strong month, they can actually accelerate the payback of that loan.

Raz: Let me ask you sort of an anxiety-of-the-times kind of question. At a Salesforce conference in 10 years, you might not be interviewed by me; you might be interviewed by a robot who's just really good at doing what I do.

Coscetta: I'll have a robot in my spot.

Raz: And so you now have algorithms that can make these determinations and can send this information, make this offer. At what point should a human meat sack, or whatever you want to call us, be scared, be worried? If you are a sales representative and you see this incredible technology being able to do this incredible stuff, is there a reason to be worried?

Coscetta: Listen, I'm worried about a lot of things, and that's not one of them. The reason why is I think AI and machine learning is used — I heard this actually mentioned in the previous session — it's not meant to make things more efficient. At least I think that's a really limited way of applying machine learning is just to make things less costly or less burdensome. It's to be more productive.

What we're using machine learning and data for are to make new avenues out there, to create new channels that didn't exist, to offer loans at scale. One of the beauties of what machine learning allows is we have millions of Square merchants. If we were doing this by eyesight and by human beings, we would be able to only help a fraction of a percent of the merchants we currently do. So to me, this is a great example of how you can seek new ceilings of what a business is capable of by applying data in ML.

Even on the sales side, we use machine learning constantly for things like lead scoring, for things like opportunity management, for pipeline forecasting and all the other stuff that as a business leader, as a sales leader, I need to have more eyes and more brain cells than I have applied at looking at all these different diverse channels. To me, that's not what worries me. I'm more worried about how fast the world is changing, and the fact that a business has to keep up with innovation that right now is happening at a breakneck speed. In my lifetime faster than I've ever seen. To me, that's a really challenging to be.

Raz: Yeah, what keeps you up at night? Who's going to come along and threaten your business model? What are the things that you're thinking about as you look ahead for the next five or 10 years of your business?

Coscetta: Listen, I think with the world changing so much, especially the aspects of the world we touch: retail, food and beverage, online, payments in general. These are areas that have changed so much in 12 months that in the last 12 months they've probably changed more than they had even in the past 12 years.

Again, the growth of mobile commerce, the concept of omni-channel being a requirement and not just a really cool thing, the idea of cryptocurrency being a way of not only paying a bill but of transferring money, the ability to transact globally instantly as opposed to needing two weeks for international wire transfers to clear. That stuff fascinates me.

Now because it's changing so fast and it's really exciting, that means there are a lot of eyes on it, and there are a lot of really smart people, much smarter than I am, looking at all these different aspects. My fear. Of course I live a paranoid life. I live in a state of permanent positive paranoia about the world. It's like I just want things to get — I want to make sure things are great, and I want to make sure we are absolutely at the forefront of all that.

That's something I really try to instill in our sales team. Again, their job is not to sell Square. Their job is to help this business. And if helping that business owner means you have to know more about what the next five years looks like than they do, then that's exactly what we should be doing. That includes thinking very innovatively and having really innovative partners.

Shake Shack came to us recently. Their CEO is on our board, Randy Garutti, founder Danny Meyer, two absolutely brilliant minds who are amazing operators and amazing executors of running a business. But they had a different idea, a different concept for a cashless store in Manhattan. They now have more than one. But they said they wanted a partner for that who could really not only be innovative to solve that today, but who can bring them ideas continuously for the years to come.

But how do you grow that business model and how do you think really differently about retail, the future of the customer, the future, online ordering, self-ordering, all that stuff? That's the part that freaks me out, that eventually that stuff gets crazy, and the amount of possibilities out there are endless. So can we stay on top? I think we have one of the most futuristic visionaries as our CEO in Jack. Thankfully his brain is constantly thinking about staying at the forefront of every innovation.

Raz: Clearly there are some significant successful and good companies out there, competitors out there: PayPal, Stripe, even Venmo to a certain extent. Is there enough differentiation between all three of those companies where you're pretty confident that they're not going to be a threat?

Coscetta: First, there's room for everyone. That's a fact. Second, I don't ever talk about competitors because, to me, I can't control anything that happens out there. I don't know what's happening within their four walls. I know what's happening within ours. There are a 125 million businesses in the world who do less than $100 million a year. That is a really wide landscape. For us to be able to support that and to tap into that globally is one of the things that I have no doubt that there's room for us to continue to grow.

I don't worry about competitors because, like I said, I can't control that. What I can control is what our team works on, how we stay focused on empowering our merchants and helping them continue to never miss a sale, but while also helping them grow. If other businesses are thinking the same thing, then, to me, all that ever engenders is more ideas, more innovation, and more creativity around how to solve some of those big problems.

Raz: What are some of the growth areas for you guys? When you look out into the future, what are you going to be selling?

Coscetta: I think the easy thing you could see is our continued growth in the large sellers.

Raz: And a large seller is a company that does — ?

Coscetta: Let's say over $125,000 in credit card processing, what we call [EPB].

Raz: So that's a large seller?

Coscetta: That's a large seller for Square. In the real world that might not be that large of a seller. But considering where our base was built from, that's still considered a pretty large seller, continuing to accelerate the growth of that type of cohort of business. That means we, of course, have to stay on the forefront of all innovation to be able to continue to support them. Like I said, I think they look for the same things that even our small businesses do, which is a great partner, someone to support them, transparency, reliability. They want to make sure that we're going to be in business as long as they are, and I think that's a great way to start a partnership.

I think the second is growing global. We've added markets in the past 12 months. Of course, we're always going to continue to look at new markets. Like I said, 125 million businesses in the world that do under 100 million. Trust me, I want the ones that do over 100 million, too. But that's a big world, and I think there's tons of space for us to grow into.

The third I think, which Jack is fascinated with and recently gave a message about, is AI and machine learning and the way we can apply the vast amounts of data that we have in our system, but also to take advantage of the incredible computing power that now exists to gain insights, to find patterns, to even create new ideas and new channels that previously didn't exist that all of a sudden these highly intelligent data systems make us aware of.

Raz: When we think about transaction today, we think about them in a very straightforward way. You go somewhere or you put your credit card down, and then you get your product and then you leave. Right? But at some point it's going to be seamless. It's all going to be integrated. You even see this with that Amazon store they're piloting where you walk in, you put stuff in a basket, and you walk out.

Some of the big credit card companies are talking about wearable technology or that everything will be a point of sale: your coffee machine, your car. You'll drive to a gas station, you'll pump gas and you'll leave. You'll go to the grocery store, you'll put stuff in your bags, you'll leave. There's going to be no credit card transactions, no cash transactions. It's all going to be seamless. How do you guys fit into that future, if that is the future?

Coscetta: I hope it is, because I think we could fit perfectly into it, which is if someone is going to build a card that's going to accept the payment. Because when you show up at a gas station or an electronic charging station, whatever, and it automatically charges, someone has to process that payment. That could be us; that could easily be us. If your wearable has your identification inside of it, which means it knows how old you are and it has your information to potentially buy an airline ticket, we would like to be able to power that payment.

If walking into a store triggers a transaction that requires a payment, we would like to be part of that as well. Those big companies — Visa, MasterCard, AMEX — they're our biggest partners. Because what we do at the end of the day is enable more businesses in the world and more consumers in the world to be able to either use a credit card, or use a form of digital payment, or help the merchant accept a credit card or a form of digital payment that previously did not exist.

One of our big pushes in the past couple years has been Apple Pay, Android Pay, and Samsung Pay. I was the gym last week and I went to buy a sandwich and I realized, "I don't have my wallet." They had an old terminal, and I literally had to leave my damn sandwich, and I was starving, right there. I was like, "You really don't have something that accepts Apple Pay?" They're like, "No." I was like, "Never mind. It's too late." I wish they had Square or something that accepted Apple Pay, because that is the future. And I wish more companies were thinking about the customer of the future as opposed to just what's sitting on their counter.

Raz: Some of you may have seen the stories in the press recently, which is that your partnership with Starbucks ended after five years, I think, which would seem like a big deal. It would seem like a really devastating blow. Starbucks was accepting Square for a long time and then it stopped. Has it been a big blow for the company?

Coscetta: No. No, not at all, actually. The economics of the agreement didn't work, which is why we decided to mutually sever that relationship. What the Starbucks agreement and distribution had done for us was put us really on the map. It helped build Square as a brand that consumers saw, that merchants saw, that of course Starbucks saw, and I believe loved, because the transaction volume was there to justify the stability and reliability of a system at that scale and size. They pushed us to really think bigger.

Having Howard on the board and having him and Jack connect on innovation and how we potentially support millions of businesses at that scale I think is really what came out of that. Although the economics didn't work — it was costing us money and you could see all the disclosures we had about that. Financially it works for us to not have that relationship. At the same time, they really pushed us to put our brand on the map and pushed us to build the system that not only can operate at that type of scale, but of course visibly that brand was now put in front of 20,000 businesses and millions and millions of customers every single day.

Raz: Last question for you, Mike. If you are in sales, why would you want to work at Square?

Coscetta: I think Square is the most unique place if you want transparency. If you appreciate transparency, candor, and a really challenging work environment because things move so damn fast, then it's a great place to be. Because we have so many businesses who rely on us and we have so many leads coming in. Again, it's a very positive problem. But it's one of those businesses where if you appreciate agility, innovation, ingenuity, and want to know that you're not only having a really cool job and you're doing really well by the company, but you're helping every business owner at the same time.

You're helping empower them. You're helping them never miss a sale. You're helping them grow, which at the end of the day this country is really largely built on millions and millions of small businesses, the employees who work for them, and the consumers who rely on them. Our mission is to continue to empower that cohort. I love what I do, and it's been a blast working there. I love selling, even the nerdy side of me.

Raz: Mike, thank you, thank you.

Coscetta: Thank you, Guy. Appreciate it.

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