Three reasons to invest in the Square IPO (when it finally arrives)

Here are three reasons to invest in the Square IPO, even before we’ve gotten a chance to look at any financial documents.

One of the more exciting start-ups in the tech space comes in the form of a pocket-sized, half-inch plastic square. Said plastic square can be plugged into the audio jack on your iPhone, Andoid, iPod or iPad and transformed into a mobile credit card processor. That’s the premise behind Square – an inspiring start-up with 100 employees based in San Francisco. The IPO rumors haven’t started up yet, but there are lots of reasons to be excited about this small company (even before we’ve gotten a chance to look at any financial documents). Here are three reasons to invest in the Square IPO (when it finally arrives):

1) Leadership. Investing icon Warren Buffett argues that you shouldn’t invest in companies but rather people. “You can have the greatest goals in the world, but if you have the wrong people running it, it isn’t going to work,” he said recently. “On the other hand, if you’ve got the right person running it, almost anything is possible.”

Without question, Square’s got an excellent pedigree. One of the company’s co-founders, Jack Dorsey also co-founded Twitter, rising at one point to serve as CEO (he’s now a chairman working on product development and growth). That takes up a mere 8 to 10 hours of his day. After that, he ambles down the road to clock another 8 to 10 hours of work at Square.

“Most people have major positions at companies and they’re also raising families,” Dorsey told Fortune last week. “They have two-year-olds. I have it easy.”

Best of all, Dorsey seems to possess a sense of a wonder that he uses to inspire the developers working below him. He does that in part with his weekly “town square” meetings where he takes 15 minutes or so to talk values and aspirations with his employees.

In a recent town-square meeting, he compared what Square’s doing to building the Golden Gate Bridge: “Every single aspect of this is gorgeous,” he said (per TechCrunch). “So your homework this weekend is to cross this bridge, think about that, and also think about how we take those (design) lessons into doing what we do, which is carry every single transaction in the world.”

2) The volume game. Numbers aren’t readily available, but we do know that Square is “processing millions of dollars in mobile transactions every week,” according to NPR. Let’s conservatively say the site’s processing $2 million in transactions weekly. That’s good for more than $225,000 in revenue. Not bad for a company that just opened its doors to clients nine months ago. The key here is scale. By poaching a huge number of transactions and reaping 2.75 percent of every sale, the company needs to consistently grow it’s user base to move toward profitability. The numbers look good so far.

3) The writing on the wall. Your head is planted firmly in the sand if you’re not convinced that credit cards are going the way of the dodo bird. In fact, I’d argue that it’s not just your head that’s buried in sand; it’s your torso, midsection, legs and feet, too. The smartphone is transforming into a mobile wallet. Every major credit card company in the world has started forays into the mobile payment processing realm and few have made it as simple as Square.

Merchants get their card readers for free. They pay no monthly fees, and they can use it as little or as often as they like. In fact, we might even use it to give our friends a few bucks for the cab we’re sharing one day. If Square can keep gobbling up marketshare while PayPal, Visa, Mastercard and others are still scribbling on whiteboards, they’re either going to IPO or get bought out. And either scenario will likely be a boon for shareholders.

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Should I buy Tesla stock? (NASDAQ:TSLA)

Yes, their stock looks overpriced, but here are three reasons why I say still Tesla’s a buy.

At a time when car manufacturers are building boxy-looking electric vehicles that have the sex appeal of a Rubix Cube with its stickers torn off, Tesla Motors, Inc. (NASDAQ:TSLA) makes sleek, lust-worthy, high-end speed demons.

The luxury electric car maker epitomizes a sexy stock with its David-versus-Goliath attitude and tech start-up management style. That’s not to mention the fact that the company’s at the cutting edge of an industry that just might revolutionize the way Americans travel.

Still, I keep teetering back and forth on whether or not I should buy into Tesla. It’s hard to believe the founder of PayPal could decide to take on monolithic heavyweights like General Motors (NYSE:GM), Ford (NYSE:F) and Toyota Motor (NYSE:TM) and actually get in a few punches. There are a raft of start ups to deal with, too (like Warren Buffet’s pick, BYD Auto).

And yet, Tesla seems to be doing everything right. Their designs are strikingly beautiful. Their partnerships have been designed to make them an integral part of the supply chain for larger companies, and they’re attracting capital from the same companies they’re supposed to be competing with. There just might be something to this stock, after all. Indeed, here are three reasons why I say Tesla’s a buy:

1) Innovative technology. Tesla’s batteries are actually groups of batteries. Rather than building one massive unit, they link together thousands of small lithium-ion batteries (much like laptop batteries) in every car. According to the Mercury News, this keeps their costs lower than the larger lithium batteries used in the Nissan Leaf and the Chevy Volt. Lower costs per car means more profits despite what might be a lower sales volume than their competitors will snag. Indeed, Tesla’s battery costs per kilowatt hour are estimated to be a quarter of the cost of equivalent power for the Leaf and the Volt.

2) Great management. Tesla’s co-founder Elon Musk nearly bankrupted himself trying to get Tesla’s first cars to the market. He’s got the proverbial “skin in the game,” and that means he’s going to do everything in his power to see the company succeed. This wouldn’t mean much if Musk didn’t have a track record for creating game-changing companies. He did just that in 1999 when he helped launch PayPal.com. PayPal was acquired by eBay Inc. (NASDAQ:EBAY) for $1.5 billion just two years later.

3) Well-placed partnerships. You’d think Toyota wouldn’t want to give a penny to Tesla, but they’ve actually hired the company to produce the electric components for their upcoming RAV4 electric SUV. Tesla will generate some $60 million in revenue from the deal, and the company will be able to refine their manufacturing process as they turn out the batteries, motors and other components for the RAV4.

This has been part of Musk’s plan from the very start: if Tesla can become not just a manufacturer of EVs, but a electric powertrain supplier for some of the world’s biggest carmakers, it’ll have its fingers in a much larger piece of the pie, and I suspect that will pay off in the end.

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Flattr makes micropayments easy

The WikiLeaks press has helped thrust Flattr into the public consciousness, but more importantly, it could fuel the growth of micropayments for years to come.

Flattr MicropaymentsOne of my favorite bloggers, Steve Pavlina, talks a lot about how easy it is to lose the forest for the trees when you’re trying to make money. In a great post called How to Earn $10,000 in One Hour, he urges creative people not to focus on their hourly earnings rate, but rather the big ideas that will change the world and/or change your life in a single hour.

I think Flattr is one of those concepts. Founded by one of the original creators of The Pirate Bay, Peter Sunde, Flattr charges members €2 a month for an account. Those users can then click the “Flattr” button when they’re on a Web site, listening to a song or browsing art by an artist they like online. At the end of the month, Flattr will pool all the Flattr buttons you’ve clicked and divide your €2 (minus a 10 percent fee) among all those artists, writers and bloggers, and give it to them. It’s a brilliant way to make it easy to donate to the Web sites and creatives you respect and want to reward.

Flattr was officially launched in August, and I only heard about it after reading in the mainstream press that it was one of the few remaining ways to contribute to WikiLeaks now that the dossier-dishing site has been hog-tied by PayPal, Mastercard (NYSE:MA) and Visa (NYSE:V). The WikiLeaks tie-in has helped thrust Flattr into the public consciousness, but more importantly, it could fuel the concept’s growth for years to come.

I know it’s made me into a convert. I haven’t opened a Flattr account yet, but I plan to this weekend. I’ll also explore adding Flattr buttons to TradingStocks.me, and I’ll donate to other sites whenever I get a chance to reward someone’s good work. It could be a great new source of revenue for a lot of people. Or it could go completely ignored. The important thing is, it’s evidence that truly creative people like Flattr’s co-founder Peter Sunde make it a habit of looking at old problems in new ways and attempting to find solutions. If it works, generating the idea probably took less than an hour, but it has the potential to be worth a whole lot more than $10,000.

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