Square’s Jim McKelvey talks about the messy business of becoming a world-changing entrepreneur
It’s a strange thing to say, but for a long time Jim McKelvey – co-founder of Square and now chairman of the St. Louis Federal Reserve – felt like his career was a “dumpster fire.” .
He had written engineering textbooks in college, started successful businesses, including a digital publishing company and a manufacturer of CD storage cabinets, in his hometown of St. Louis. He made his living as an artist – a glassblower. Then he founded Square (now Block) in 2009 with Jack Dorsey, also from St. Louis, who had worked for him as a teenager. But when McKelvey looked back on his career, there was plenty of success, but not much trajectory. And sometimes he struggled as a manager. He didn’t even stay in an operational role at Square after 2010, although he is still a member of the board.
“Career has all these connotations,” he told me in an interview last week. “If you say career, what I imagine is someone better dressed, and second, with professional credentials. And almost implied in the word career is ‘path’. And I had none No. I mean, my path looks like a ping pong ball.
Eventually, McKelvey realized he was wired differently. The kid who went to college in striped socks pulled up to his knees and old jeans that had been let down more than once for his lanky waist, someone who didn’t fit in, learned to think of himself as a contractor.
How to become familiar with an entrepreneurial identity is one of the themes of his book, The Innovation Stack. It’s about the messy process of innovation and the people – wired differently – who do it. Entrepreneurs, for McKelvey, are defined by their willingness and ability to engage in this messy process, despite being unqualified in any traditional sense. (More on that later).
And they’re not just in the tech world. The four companies he examines are Southwest Airlines, SquareIKEA and the Bank of Italy.
The Innovation Stack serves two good purposes. First, it breaks down the innovation process in a new way. Second, it’s a lightly written and somewhat comforting guide to the uncomfortable reality of life as an entrepreneur. “If you’re going on a trip, and it’s going to be tough and scary and kind of loaded, it’s kind of comforting to know that at least it’s supposed to be a dangerous trip, isn’t it?” he said.
What is an Innovation Stack
The Innovation Stack breaks down the innovation process in a new way. The central idea is McKelvey’s conclusion that innovation is a process of creating interlocking solutions that together form the backbone of a business or organization. It’s a business book, and it looks through the lens of today’s capitalism, but stacks of innovation can exist in systems everywhere, he says.
Entrepreneurs can be disruptive, he told me during a E time an event, but it is more often people who create new markets. He spends a few pages slightly confusing Silicon Valley. “Hidden – often well hidden – within…the grounds is the implication that the invisible hand of the economy will reallocate resources so that we are all better off and enjoy a more effective after the carnage.”
The news sector is a prime example of where this has not happened, he notes.
“But a more dangerous aspect of the disturbance is its retrograde focus. Just as having the lowest price means focusing on competitors rather than customers, worshiping disruption means focusing on old systems that somehow need to be taken down or destroyed.
When he did his research, he found… “there is another way. The vast majority of entrepreneurial businesses have not stolen customers from established businesses, but rather brought new people into a market. »
Bank of Italy
The most interesting example of The Innovation Stack is the story of the Bank of Italy, founded by AP Giannini, the son of farmworkers, just before the San Francisco earthquake of 1906. (In a chapter of the company’s history, AP hides the bank’s gold in the ashes of his family’s fireplace.) “What you consider a bank today is what the Bank of Italy invented. And it became the biggest bank in the world,” McKelvey said during our interview.
At the time, the bank was a service reserved for the New York elite. Small business owners, women and farmers were among the groups excluded from the financial system and forced into loan sharks.
In solving the problem of getting finance to the people who needed it, AP developed a series of inventions, mindset shifts and innovations that together form, according to McKelvey, an innovation stack.
Here are a few: Focus on “the little guy”. Find out how to serve women. Offer low rates. Create a direct sales force. Low minimums. Offer car credits… and so on, each step leading to the next in the chain.
I loved the story of the Bank of Italy because it has so much to say about one of the great problems of today, namely how to develop a capital system that serves everyone, rather than people who already have money. But The Innovation Stack leaves unexamined one of the central questions of innovation in a world of widening inequality: how we define, value and encourage innovations that are not producing returns for today’s capital class? One of the assumptions of McKelvey’s work is that there are stacks of capital that correspond to stacks of innovation, propelling worthwhile ideas to fruition.
Today’s PA, born poor, of a “race” – Italian – deemed inferior – and driven as much by the idea of fairness as profit would probably struggle to get a business off the ground.
What is the contractor’s equipment?
Like writing a book or a long article, an innovation stack is one series of good judgments after another that, in retrospect, seems much easier than it is. Entrepreneurs are therefore people with critical thinking skills, an emotional drive that helps them persist, a vision of rewards at the end of the journey – and perhaps most importantly, luck.
“Let’s define success as flipping 10 coins in a row. Imagine a thousand people in the same room trying to do that. The chance of someone succeeding is 2ten or one in 1,024. So there is probably someone who will make it. … after the ninth flip, there should be two of us, and maybe one of them explains, ‘Oh, I dry my hands after every flip and visualize the heads.’ The other person says they lower their hand very slowly after tossing their coin, and it has always worked for them.
This exemplifies most business advice. Suspect it when it is too specific and not based on general knowledge.
The emotional reality of life in the future
The Innovation Stack is perhaps most important because of McKelvey’s honesty about the unease of being an entrepreneur – a contrast to many slicked-back, sycophantic narratives emerging from the business world. In our interview, he told me that it took him a while to come to terms with the idea that the most valuable time he has on projects or businesses is at the beginning, in the phase where the messy and uncomfortable process of innovation occurs most intensely. . This is the phase in the life of a business or a project where nothing is coherent, where an outsider would judge it as a failure and where an entrepreneur regularly feels like giving up.
McKelvey is up to the task again: he has a new company, Invisiblely, which is looking to monetize content in a way he says puts consumers in control of their data. A key problem with social media is that companies have removed the element of transparency from the relationship between advertisers and media consumers.
10 This is an example of McKelvey’s humor in the book, where he writes: This is not a footnote, it is from 2 to 10and Powerful.