Jim McKelvey brings forth his experience as both a small artisan business owner and the co-founder of Square to talk about his theory of innovation. The book starts with a little of his life story; he has always been a student of entrepreneurship, spending much of his early career talking to business leaders giving talks in where he lived. He observes, astutely, that most of them however are not innovators but shrewd operators, and thus taught him nothing about innovation. He had to learn most of it himself.
Back in the day, Jim was a proprietor of a glassblowing business. He had first hand experience with the difficulty of accepting credit card as a small business and had lost sales because of that. Small businesses were simply not attractive customers for banks and payment systems, and thus the myriad of rules written to govern the system either excluded them or left them as an afterthought.
Square was born from that frustration. As Jim recalls, getting Square started meant needing to tackle the fossilized rules and even getting to viability was far from a shoo-in. At a crucial make-it-or-break-it moment, in order to not get kicked off the payment processor’s network, Square had to get both Visa and Mastercard to change their rules. They gambled on it working, and through both ingenuity and perseverance, got one high level exec to oblige and the rest was history.
Innovation, Jim theorizes, always requires a series of innovations to happen. As Square demonstrated, these inventions happen one on top of another, with the earlier innovation informing and prescribing later problems that have to get solved. This stack then becomes the moat that prevents competitors, even well-funded and ferocious ones like Amazon, from making serious inroads. In addition to the story of Square’s founding, Jim draws upon the early founding stories of the Bank of Italy (now Bank of America), Ikea and Southwest airlines, and their stacks of innovations that grew those businesses, to illustrate this principle at play.
The book closes with an optimistic note: some problems may seem insurmountable. The solution will not be obvious and there will be naysayers all around. However, the creativity and tenacity of diligently chipping away at the problem can and will lead to new innovation stacks being created. And this act of innovation is what propels change and move us forward.
I particularly enjoyed the retelling of Square’s founding story, especially as narrated by a first party. That said, while bucking the trend and solving real problems are great advice, I’m not sure how actionable these are. The observation is keen, but I have to wonder how much of this is summoned romance only when peered at in the rearview mirror.