You’d think there would be more overlap between Square and Starbucks on the Venn diagram of company cultures. Technology enthusiasts thrive on caffeine, and Starbucks offers free Wi-Fi for harried startup-ers. Both deal in life’s constants: cash and coffee. Starbucks has perfected the use of preloaded cards to pay for its mochaccinos and 500-calorie pastries while Square is promoting a cashless economy. Yet the companies have struggled to integrate their products, as Starbucks employees and customers alike encounter error after error as they try to pay with Square.
The two companies trumpeted their partnership in August of last year, with Square CEO Jack Dorsey and Starbucks CEO Howard Schultz expressing excitement over the deal. Starbucks reportedly denied every other payments startup that approached them for partnership and instead sought out — and invested $25 million in — Square, giving the nascent payments startup an “in” to Starbucks’ 7,000 retail locations. It was love at first over-caffeinated sight.
And then it came time to see how the pairing would work in the real world. As Fast Company reports, the answer is “Not well,” as some Starbucks employees were not trained to use Square and, in some cases, were not even aware that customers could use it to pay for their cuppa. That’s a bit like a Starbucks barista not knowing how to make a Venti skinny vanilla no foam latte.
Schultz has a history of well-intentioned efforts that don’t work out quite as planned, including the launch of Sorbetto and the Vivanno drinks, both of which created problems for Starbucks. Sorbetto was described as “an enormous flop” that relied on machines that took two hours to clean, and Vivanno’s reliance on bananas highlighted supply chain issues at the coffee company. Starbucks’ road to Hell is paved with banana-flavored good intentions (or however that saying goes).
Part of the issue, according to Starbucks, was unanticipated demand to use Square. Well, I guess on the plus side that this means there was as strong a demographic overlap as the two companies hoped. But it also speaks to two different things. The first is how quickly consumers will adopt new technologies meant to solve annoying real world problems when they are well done.
The second is that Square is going to have to rethink any expansion plans via retail chains. Starbucks baristas are probably the more tech-savvy, well-trained, well-educated front lines of any major global chain. On average they are paid well, they are given full benefits and treated with respect — which is why Starbucks is one of Fortune’s top 100 companies to work for.
The service they provide — knowing how to make every permutation to any pretentious coffee request and knowing a regular’s name at the same time — is one of the biggest reasons Starbucks has succeeded at making something we used to pay $0.50 for a $3-$5 purchase. If the Starbucks machine couldn’t train them for a roll out it’s doubtful that a Safeway, a McDonald’s, or any other major national chain will be able to do so.
At the same time, Square is a pretty intuitive technology. It’s meant for the most untechy small businesses to get and be able to use right out of the box, and it’s generally pretty good at that. If it created this much of a stumbling block, other payment platforms are hosed.
These aren’t trivial considerations for Silicon Valley’s hot trends like the Internet of Things, hardware, and the greater collision of the real world and the digital world via mobile. People thought getting individual users to change behavior would be the hard part. Apparently, it’s not.
Starbucks chief digital officer Adam Brotman tells Fast Company that Starbucks “didn’t want to wait on innovation.” The company has “taken an approach that’s not always perfect” in its attempt to reach as many customers as quickly as possible. Rather than take the time to ensure a smooth rollout and fix any technological issues before they affect a large number of customers Starbucks just went for it.
The issue here is one of scale and expansion. More customers are using Square than Starbucks expected, which means employees, lacking proper training, are stumbling through the sales process with Square. At the same time, there aren’t enough people using Square for this to be considered a genuine problem that is in need of a solution. If more or fewer people were experiencing problems the issue would likely be fixed or have never garnered attention in the first place.
Customers probably won’t deal with a buggy, nigh-unusable system if they can just swipe a card or toss a bill instead. Why should they? Paying with Square is supposed to be more convenient than the alternative, but if it causes as many problems as it solves, customers will avoid it and stick with tried-and-true payment methods.
Instead of getting Square in front of the many coffee-addicted Starbucks customers and raising awareness for a nascent platform Starbucks has shown exactly how ill-prepared big companies are for the payments platform. Seriously — if one company can mess up the scanning of a barcode so badly, it wouldn’t be the least bit surprising if other companies did the same thing.
[Image courtesy Stephan Geyer]