Le Web: Q & A with Twitter, Square creator Jack Dorsey

Jack Dorsey, the co-founder of Twitter who just launched a new payments startup called Square, is on-stage at the Le Web conference in Paris today. I’m live-blogging as we go:

Loic Le Meur: How did you get the idea for Twitter?

Jack Dorsey: It took a long, long time. When I turned 15 years old, I became fascinated by how cities work. I became obsessed with maps. I taught myself to program to put a map on the screen. I taught myself how to put a map on the screen, and put dots on the map. But they had no meaning whatsoever.

So I found taxis and public databases to provide meaning for the dots. But more importantly, I had this very important picture of what was happening in Manhattan from St. Louis. But what was missing were the citizens.

So I built something in 2000, but no one was using it. And in 2006, I was working at Odeo — it was a Podcasting company with Ev and Biz. We were looking at SMS and how to fit podcasting in group communication. The idea for Twitter came up again, and we had two weeks to build it. So we did.

Le Meur: You knew the concept would be huge?

Dorsey: I worked in dispatch, then in medical devices and I saw that it could be huge in both — the idea is short-form messages. You can use it for medical devices and social movements.

It didn’t work the first time I built it but the thing is you have to keep working on your ideas. The hardest part is getting started.

Le Meur: What were you thinking about how fast it would grow?

Dorsey: I knew the concept was big. But the velocity it has taken is surprising. What’s most surprising is how users are redefining it and making it their own. The community has created @ replies, hashtags. None of these came from us. People just adopted the technology and made it their own.

Le Meur: How did you start Square?

Dorsey: As we were talking about Twitter — there are three concepts that emerged from it: Immediacy, Approachability and Transparency. Twitter does a great job at bringing these to the world. There are two other industries which are in dire need of this, which are health care and finance. There’s so much contentiousness around health care right now. It’ll probably be two years before we can build anything in that.

But the financial world is amazing right now because there’s a clean slate. A lot of these industries are looking for something very small and innovative. We looked at the field. My co-founder is a glass artist. He sells things that people don’t need — $2,000 glass faucets. They’re beautiful. If he could not take credit cards, he wouldn’t make the sale because no one carries around $2,000 in the cash.

So we looked at it. Ninety percent of the U.S. has moved to credit cards, but it’s still very difficult to accept them.

We’re starting with the iPhone and the iPod Touch. We’re calling it Square. You can take credit cards. I can take a picture of what I’m selling and who I’m selling it to. I can put in $3 here, take a picture of what I’m selling and start typing in the credit card number.

The second friction point of credit cards is entering in the card number. We looked at taking a picture of credit card and doing optical character recognition. The other thing we looked at the audio jack — and it’s on Macbooks, desktop PCs, Blackberries and Androids. We built this hardware. It’s a self-powered swiper. Powered by the magnetic power of the swipe itself, converts it to an audio signal, which the software interprets. So now I have the credit card swiper.

Le Meur: How expensive is it going to be?

Dorsey: They’re going to be free.

Le Meur: How do I get it?

Dorsey: You can go to the retail store, or send in your address and we’ll mail you one. We’ll also give a penny to charity with every transaction. The default one now is Charity: Water.

So I’m going to charge Loic $37, take his card and I just swipe away. [It shows a picture of Loic and asks Jack if it looks like Loic.] You can go to the Web site and upload a picture of your face. And then you can sign with your finger. [Le Meur puts his finger to the iPhone touchscreen to sign his name. It processes the payment.]

It sends a receipt to your e-mail and that is Square.

Le Meur: We can see this in San Francisco already?

Dorsey: We have a limited beta right now and we’re trying with a bunch of different profiles of folks in New York, San Francisco, LA and St. Louis, Missouri. There are piano teachers, flight instructors, and coffee shops. It can be used in a retail store like Apple all the way down to Craigslist or paying back a friend for dinner.

Michael Arrington: This must be the best product to demo. You get paid every time. How much have you made?

Dorsey: I’ve made $650 and I’ve charged VCs $25 for the pitch.

Arrington: When are you looking to launch?

Dorsey: We’re looking at next March. We’re working with a team to analyze all the activity in real-time to watch for fraud. As I was taking the transaction, we were tracking the location, the signature, the swipe, even how much the phone is shaking. We have a lot of information to protect both parties.

Arrington: We really don’t have wireless payment systems like they use in the U.S. All the Apple stores have moved to iPod or based payments. It’s clear they’re product-izing it. What are your thoughts on it?

Dorsey: We found out about it around the same time. They’re not only swiping credit cards — they’re doing iPhone activations and inventory management.

We have an API that you could use to tap into QuickBooks or your inventory. But right now we’re just focused on payments and making it really simple and easy for people to just get in. They might be product-izing it.