Leap Academy with Ilana Golan - Square Co-Founder, Jim McKelvey: How to Build a Business No Competitor Can Copy | E131

Episode Date: October 28, 2025

Jim McKelvey did the impossible. He beat Amazon. The tech giant launched a product similar to Square’s, undercut their pricing, and leveraged its massive brand. Everyone thought Square was doomed. But a year later, Amazon quit and even mailed Square readers to their customers. That left Jim with a bigger question: “How did we survive when no one else ever has?” The search for that answer inspired his book The Innovation Stack, a blueprint for building a business that cannot be copied. In this episode, Jim joins Ilana to reveal the secret to creating an unbeatable business, why ignorance can be a superpower, and how to survive the impossible as an entrepreneur. Jim McKelvey is the co-founder of Square (now Block), a billionaire entrepreneur, and author of The Innovation Stack. He also founded LaunchCode, a nonprofit providing free tech education and job placement. In this episode, Ilana and Jim will discuss: (00:00) Introduction  (02:04) Growing Up as an ‘Uncool’ Kid in St. Louis (04:01) The Early Hustle That Jumpstarted His Career (07:47) Launching a Business with 15-Year-Old Jack Dorsey (13:50) The Birth of Square: From Glass Blowing to FinTech (20:09) The Art of Selling and Capturing Attention (26:48) How a Single Demo Won Over MasterCard (31:04) Amazon's Failed Attempt to Crush Square (32:17) The Innovation Stack: Building an Unbeatable Business (35:55) Why Most Entrepreneurs Give Up Too Soon (41:32) Why the Best Innovators Are Always “Unqualified” Jim McKelvey is a serial entrepreneur, inventor, and philanthropist best known as the co-founder of Square (now Block), the fintech company that redefined digital payments. He is the author of The Innovation Stack, which explores how companies can survive by creating solutions that can’t be copied. Jim also founded LaunchCode, a nonprofit that provides free tech education and job placement for aspiring coders.  Connect with Jim Jim’s LinkedIn: linkedin.com/in/mckelveyjim Resources Mentioned Jim’s Book, The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time: https://www.amazon.com/Innovation-Stack-Building-Unbeatable-Business/dp/0593086732 Leap Academy: Ready to make the LEAP in your career? There is a NEW WAY for professionals to fast-track their careers and leap to bigger opportunities. Check out our free training today at https://bit.ly/leap--free-training

Wow, this show is going to be incredible. So buckle up, and I'm sure you're going to enjoy it. But before we get started, I want to ask you for a favor. See, it's really, really important for me to help millions of people elevate their career, fast-track to leadership, land dream rules, jump to entrepreneurship, or create portfolio careers. And this podcast is all about enabling this for millions of people to see a map of what it actually takes for big leaders to reach success. So subscribe and download.

never missed it. Plus, it really, really helps me continue to bring amazing guests. Okay? So, let's dive in. I have a very odd way of persuading people how to buy my stuff. And it's usually by explaining all the reasons they should. Jim McKelvie is a serial disruptor, innovator. He's the co-founder of a multi-billion dollar company called Block. He's also the author of the book, The Innovation Stack. With Jack and I started Square, back then it was not cool. And I am. sort of defined by a lack of coolness. The first time anything is done on this planet of significance, it is done by an unqualified person.

If you fly a plane right now without being qualified, you're an idiot because it's easy to get trained. But remember the Wright brothers, they weren't qualified, they did it anyway. Amazon decided they like Square's business and so much that they just wanted to steal it. Everyone was like, Square is debt. They copied our hardware.

Like they did the stuff that you would expect Amazon to do, and somebody's gonna ask me the question, well, what did you do to beat Amazon? And my answer is, Jim McKelvey is a serial disruptor, innovator. I mean, he's the co-founder of a multi-billion dollar company you probably use every day, called Square, and now it's Block. And he's also the founder of a nonprofit called Launch Code, providing free tech education, 2000. Jim had many, many ventures.

We'll talk about some of them today, but he's also the author of the book, The Innovation Stack, How to Build an Unbeatable Business, one crazy idea at a time. It's not a typical business book. I hate reading business books. They seem like horrible homework assignments.

So I certainly didn't want to add to the pilot. No, no, but to some extent, like the way you stack the problems and then how you solve it, Like, it is a business book. It's just told with a story, and I loved it. It is. It's just told in a way that hopefully is more fun.

It is. Yeah, I hiked with you in my ear. If you don't get attention. I want to take you back in time, and we'll share some of these amazing stories because you, like, from a lemonade stand to writing your own textbook at age 18, like, who is Jim as a child as a teen? Like, what got you started in the hustle world? I mean, so I grew up in St. Louis, Missouri.

which is a town that has basically been in constant decline my entire life. Like, it was okay to be a kid there in the, you know, 70s and 80s, and then it got progressively worse and worse and worse in my hometown. I still consider myself a St. Louis. But look, I grew up in a middle class family. My dad was a professor. My mom stayed home. And I was never a cool kid.

I was never one of the, I always wanted to be, but I just, you know, clearly it didn't have what it took. at least to meld with the other kids. And after years of serial failure, I got used to not being one of the cool kids. Like it just became this thing that if at the beginning I was sort of comfortable with, later I became sort of defined by it.

To this day, if I feel like I'm blending in too much to the group around me, then I get nervous. So when stuff that I do becomes popular, like starting tech companies, like when Jack and I started Square, Like, that was considered a crazy thing to do. And now it's like, everybody wants to, you know, but back then it was not cool. And I am sort of defined by a lack of coolness.

And I want to take it there because you share so many crazy, funny, super creative stories in your book. And somehow you got into the hustle mode. And I'm fascinated to understand why you have like an incredible story about how you got speakers' attention in conferences. early in your career. And I thought that was like just brilliant. Can you share the story? And what, I mean, we don't grow up like this. So I'm just kind of fascinated about what made you do some of these things.

It was a thirst for knowledge. I used to ride my bike to the library and, you know, run through the books. And I thought, well, this is the best thing of the world. And then, you know, the Internet came out. And it was even better. And these days we've got, you know, LLMs that can give us instant access to knowledge. So I would always curious. but what I lacked in growing up was any sort of mentor.

Because my father was an academic, and he was a wonderful, wonderful man, but he was, you know, teaching thermodynamics. He was a scientist, basically, and I wanted to do something else. So right after graduating, I came up with this trick where I realized that any conference that was held in St. Louis, like the speaker probably had no good way to get to the airport because it was just pre-Ur Uber and Lyft, and the cabs in St. Louis are terrible, and they're sort of run by this, like, shitty mafia.

Like, it wasn't even, like, the good mafia. Like, the good mafia could, like, get the cabs to work. This is like a bad version of the mafia running a bad cab operation. So it was a known weakness in the system, which I exploited by basically offering rides to all these famous people. You know, I'd show up, and I'd say, hey, do you need a ride to the airport? And the answer was usually yes. And so I could get, you know, about a half an hour with somebody who was, you know, fairly famous. And I would always ask for advice.

What I realized was that the advice never really worked. And I couldn't figure out why it, I thought it was me. Like I thought I was just too dumb or somehow defective. What I realized quite later on was that I was playing a different game than they were. And that the game that they were playing was basically copying other people's successes. And most of what we do as humans is copying successful patterns from other people. Okay, and the reason for that is that copying almost always leads to success. Like the thing you want to do, if you want to be successful, is find somebody else who's got the same problem.

Look at their YouTube, go to their conference, you know, hires them as a consultant, like do something where you've derrisked it because you're implementing a known successful solution. And that works most of the time. And as a matter of fact, you can spend your entire life doing nothing but copying other people's solutions. It's only the rare moments when you're trying to do something that humanity has not figured out, that you actually have to invent something.

And at that point, you're sort of without resources. As a matter of fact, in what I discovered when I tried to write the book was that we were even without vocabulary. It just weren't words in the English language to capture the nuance of what I was trying to describe. And so it was this really interesting exercise where also I realized that what I had seen as a deficiency in myself was actually the fact that I was playing this totally different game,

that I was trying to solve problems that had not been done, and therefore all the advice that I was given, which, you know, was well-meaning advice from very famous and successful people. But it didn't apply because they were in markets where there was a known solution. So you want to start an insurance company today? I can show you the playbook for that. I was at a banking conference yesterday. Banks have been solved.

Like, we know how to make a bank. Now, if we start a small business these days, we call you an entrepreneur, but the original definition of the word entrepreneur was this crazy person who was doing something new. It's lost over the last 150 years of that meaning, and it now just means, you know, somebody starts a business. But in the early days, the word entrepreneur meant you were

doing something weird. Well, we'll talk about some weird things. So in speaking of conferences, I think one of your, you know, first inspirations were you've seen the bag of brochures and you decided that you're going to solve that as well. What did you notice and what did you decide to fix and why? I started a software company with a, you know, friend from college and we built an early competitor to Adobe Acrobat, which you know how that one went, right? Adobe One, we got killed. So we pivoted to being a publisher who used Acrobat, and that business was going great, but then what we noticed was that the conference attendees at these trade shows that were supposed to bring, you know, paperless offices would leave with bags full of paper. And we thought,

well, that's crazy. So we started making CD-ROMs with all the brochures on it. And we'd charge companies, a lot of money to put their stuff on our CDs. And that business was growing like crazy. Like it was great. It made a ton of money except for one problem. And that was, this was like the early 90s. And the internet was just starting to gain traction. And it was clear to me that the internet was going to just destroy this business. There's no reason you would carry around a disc when everything's online. Okay. So I went to the team and I said, look, you know, guys, We have a couple of years at most before we're dead. So we have to change the business, and we need to move into this other area.

And Alana, nobody listened to me. What they did, it was funny. They all said yes. Oh, yes, Jim, this is important. Oh, yes. This is really exactly what we, you know, they would all agree with me in the room. And then they wouldn't do anything. There was only one guy that listened to me, okay?

It was my 15-year-old summer intern. Let's talk about that story. How did you meet them? So we hired this kid because his mother sold us chocolate-covered espresso beans, which before you could get Ridland and some other awesome stimulants was how we kept the programmers awake all night. So she was effectively our drug dealer, and her son liked computers. So he came by one day, and we hired him on the spot, and he became our summer intern,

actually pulled in all night with us the first night, and that guy was Jack Dorsey. Okay, so Jack and I have been working together since he was 15. For those who don't know, so Jack Dorsey later became CEO of Twitter, CEO of Square. So there's a lot of future there. But let's take us back to the 15-year-old Jack Dorsey. So when he was 15, he was super competent. And we headed off great. And I described the problem to him.

And instead of saying, yes, Jim, and then not doing anything, he's like, well, what should we do? And I said, well, we should do this. So Jack and I actually went off basically by ourselves. and built an entirely new company. We basically engineered for the future. That company still runs today. Like, I still own it. It's been 30-something years.

It pays me money every month. It makes money. And that is still based on the tech that Jack and I built 30 years ago. I love this story. So what do you think you spotted in him? Because, again, you needed to also spot the talent. And I think that's also a pattern later on.

You spot patterns. Yeah. What made you say this person is different? The main pattern I saw was that the work that I gave him always came back better than I expected. And it took a couple of rounds before that happened. You know, at the beginning, it's like, oh, he's an intern, right? After a while, I noticed that the stuff that he was doing was always high quality. And I didn't sit there and say, oh, he's 15.

I was like, oh, this guy actually does really good work. so then the question in my mind says well you know how deep does this river run so for the next couple of months i kept giving him more and more stuff and he kept delivering and i was like okay where's this guy break down and i finally um i finally came up with a project that he couldn't too i described the whole project to him like we need to do this and this and he looked at me and said jim i don't think i can do all this i was like oh oh jack i didn't tell you the best part I'm going to hire a team of people to do this grunt work. So you just need to do the important stuff, and then we'll just hire a team of knuckleheads

to do the other stuff. And so I was in the room interviewing the knuckleheads one day, and there were three of them. And, you know, these are all professional middle career people. That don't know that their boss will be 15 or 16, right? No, no, no, I didn't tell them that. And before I introduced them to Jack, I was, you know, running through the job. description and what they were expected to do one of the project was important and um i was like any questions and i raised his hand he says uh what's my job title we didn't use job titles i didn't think about it

i was like you're the assistant to the summer intern i said let me know if i need to print up some business cards for you and you know these guys got all these horrified look i said just wait so i put jack i think he might have been 16 at the time in charge of a group of 30-year-olds. And within a week, two of them came up to me and said, oh, well, we say why he's running the project. So he was just that good. It is rare to find that level of competence in a person, but it is not insanely rare. What I think is more difficult is seeing that where you might not expect it. So if you come in somebody with a great pedigree or, you know, fantastic credentials or some sort of, you know, halo, this was just some kid from the local coffee shop.

And so I think the trick was not treating him like a kid from the coffee shop, but in fact saying, oh, this is a guy who could actually be running a team like a manager. And the fact that he comes to work on a bicycle shouldn't matter. Disregard the bias, which is kind of an interesting one. You also have a hobby that became also another venture of yours, glass blowing? Like, how did that even form? That is so random, Jim. I went to a show of Dale Chahouli's that was in the St. Louis Art Museum as I was entering college, and I was fascinated by these forms that he made. And then my college, Washington University, which is in St. Louis,

it offered a glass blowing class. And so I took it senior year, had a ball. And then when I graduated, I only got one job offer out of college. And it was with a consulting firm. They had a thing called Method One, which was this row of books on how to solve every problem. And I was like, I will kill myself before I will join this army of robots. So I didn't have a job. And I needed a way to feed myself.

So glass blowing, which was never intended to be a profession, just turned into this thing that I knew how to do. And if you make something, you can sometimes sell it. So I started selling my work. work. And to this day, I still love selling my work, even though I don't need the money anymore. I'm very commercial when it comes to glass. If you're feeling stuck, underpaid or unappreciated, or you're simply ready to take your career in life to the next level, I have the perfect solution for you. We have a program that helps you fast track and leap your reputation and career.

Become the best version of yourself. Get the dream role you deserve, move up to leadership, jump to entrepreneurship, or even build a portfolio career. This program helps hundreds a year, and it will help you gain the income, influence, and impact that will transform the second part of your life. Watch our free training today at leapacademy.com slash free hyphen training. The link is in the show notes. Now back to the show. You start the whole studio, and, you know, initially that's kind of a thing that you do.

What happened in 2008? Jack Dorsey is pushed out of Twitter, and somehow, both of you are deciding what's next? What happened there? So he comes back to St. Louis. We're both from St. Louis. And he and I are catching up. And he's telling me about this horror story about how they kicked him out of Twitter and tried to basically erase him from the history. I found it more upsetting than he did. Like, Jack is more composed than I am, but I was really upset. And I was like, well, I got nothing to do. Why don't we go get even with those guys? Like, just go out, just cause trouble. Like, it was a really negative spirit. And Jack, to his credit, said, well, why don't we do

something positive and just build something new and ignore those guys. I was like, okay, what do you want to do? So neither one of us had a really good idea. We were playing around with one of Jack's ideas and had already hired our first programmer who was an iPhone developer. So we knew we wanted to do something with mobile devices. We said, okay, these things are important. And we had this guy starting. And then I went back to St. Louis to pack up my stuff. And while in the studio, I got a call from a lady who wanted to buy this piece of glass. It was, first of all, it was hideously ugly. Secondly, it was really expensive.

And it had been sitting on the shelf for like three years. And I was going to get rid of this thing. And I needed the cash. So this is like perfect timing. But then she only has an American Express card, which I can't process because Amex charges too much. So we didn't take it. And so I was like, well, do you have a visa or master card?

She said, no, no, I don't. I lost that sale. And it pissed me off. So I immediately knew that my iPhone, which was this magic device that should turn into whatever I want it to turn into, like a book, it's a TV, it's a, you know, but it would not magically turn into a payment register. And I was like, I want to turn my iPhone into a credit card machine. And so that's what became square. So I called up Jack and I said, this is what we should do. And he was like, well, that's interesting. I think we're the first fintech.

company because back then it wasn't called fintech it was called what the hell are you doing and it's true for jim because you were going into a boring industry it's extremely complex there's a ton of politics and rules and regulations and you talk a little bit about that book and i'm sure it's like a fraction of what it actually was right and in fact i think you said that you pitch investors and you give 140 reasons why it's going to fail right or whatever the number was how do you not get overwhelmed? Well, ignorance helps. Not knowing how hard the task is when you start is a good way of shielding yourself from the enormity of what you have to do.

So we thought it would be very easy to do what we wanted to do, but that was only because we were so ignorant about what the rules were. And then, you know, halfway through the first day, I discovered that we were in violation of at least three or four laws. and by the first week, I had 17 rules or laws or other things that, like, what we were building was going to break all these rules. And I told the team, which was Jack and Tristan and his cat, the guys wanted to keep working. And I'm like, great, let's keep working. So we thought that we could eventually comply with these rules, but, like, we were shockingly ignorant. And because of that, we didn't invent anything that had been done previously. Like, we thought, well, why can't you click a user agreement.

Like, why do I have to have a 40-page six-point type carbon copy contract when every software product I use just lets me click a box? And it turns out, well, the bank said, no, you got to have this paper contract, you know, signed in blue ink, you know, just stupid stuff. And you sit there and say, well, why is everybody doing this? And the answers are terrible. The answer is, well, that's how we do it. And so our attitude was, well, we're not going to do that.

It took us a year and a half to finally get compliant with the laws to the point we could launch the product. But we had the product running in three weeks. And I think you also took some money from investors. And what was it? Right? You went to meetings and literally, like, showed them that this works. I'm a big pitch person. We were told by the senior partner at the.

best venture capital firm in the world. And I will let you guess which one it is. But they said this is the best picture they'd ever seen. That's incredible. I pitched one of my companies to Peter Teal, who had never funded a company in this space. And I got him not only to invest founders fund, but to invest personally with us. For 20 years, I sold shit nobody needed. I sell glass. I sell something that is completely worthless. It's pretty, but you don't need the stuff that I make. So I've learned over the years to, well, to sell. Can you break this down for me? Because I think selling, and maybe I know this only recently, but it's probably one of the most important skills that you need to acquire. I have a very odd way of persuading people how to buy my stuff.

And it's usually by explaining all the reasons they shouldn't. And we did this in the square pitch. There were two things about the square pitch that were absolutely magical. One was we got your attention better than any pitch in history by taking your money. We had a credit card reader that I hand-built plugged into Jack's iPhone and I would take your credit card and I would swipe it and then I would take money from you. And this was real money. This was not some demo. It was like, and the amount of money we charged you was inversely proportional how much we liked you. So if you were somebody we liked, it was like a buck. And if we didn't like you, well, I mean, there's some guys who paid $40 to see the

Square Product demoed. But the act of taking your money physically in front of you now gives me your attention for a very precious moment. And during that moment, we have to earn the rest of your attention. And so we do that not by doing what everybody does, which is telling you how great it is, but we dove right into how risky and insane this was. So we had a slide, 141 reasons we could fail. And, you know, some of them were jokes,

but there were also very, very serious ones like, you know, Amazon copies our product. Which turned out to be happening, so we'll talk about that. They did that, and we thought we're going to die. But I'm going to sell the book here. If you want to learn how to pitch, read the innovation stack. Because what we did there is in, some ways a formula you could copy. And I've never seen it not work. If you have something of value,

one of the first things that people realize who make something that's great is that it's really hard to sell something that's great. Even if it's great, it's hard to get people to pay attention to notice. It's amazing how many walls people have. And if you're not conscious of the ways to breach those walls, you can have the best product in the world and people will not buy it because they won't even notice it. And you will be so frustrated and think people are stupid, and they're not stupid. They're just people.

And we're all that way. And so one of the things that I do more consciously than I have in the past, but I'm looking for those moments when people pay attention. I mean, after this, I'm going to go home, I'm going to pick up my kid from school. That's why I'm wearing the Cookie Monster T-shirt. For those on YouTube, it's hilarious. But look, here's the thing.

I'm going to go, pick up a little girl. two of us tonight, mom's out of town, or we're going to be together for about three or four hours. I expect during that three-hour time, she may be paying attention to me for five minutes. As a parent, I know most of the time my kids are not paying attention to the stuff I say. My teenager, absolutely. But even my seven-year-old tunes out.

So if you think your cool product is going to win the day, you better learn how to get somebody's attention first. And unless you've got a gimmick like taking much, from them or some of the other gimmicks that, you know, I've used throughout my life, you need to earn that attention in some manner. And then with that moment, with that precious, you get maybe 10 seconds. But that 10 seconds, it gives you the chance to earn the next minute. And if you're in the minute, you can probably get 10 minutes. And 10 minutes is all you need to explain anything. Yeah. I think one of the interesting pieces about the innovation stack,

to some extent, yes, you solve a problem, you see another thing, you solve another problem, etc. But for me, it was also about the psychology, understanding the user behavior at a level that probably is also what makes you really, really strong in sales because you understand the user psychology, what exactly they're going to go through and what are the challenges that you need to solve next. And I think understanding that psychology is also part of it. Some of it is going to happen as it goes, but I mean, I think some of it is understanding the psychology. do? I mean, it helps to be your own user. It helps to be someone who deeply relates to the problem you're trying to solve. So, Square was easy. I needed to get paid. I knew what it was like to get

abused. And Square's product line in the early days was nothing but me whining to the team about all the stuff, all the indignities that I had endured as a small merchant. So let's fix. Let's just try to make Jim happy. That's sort of an easy sort of roadmap in the early days. It's also nice to be able to think about how things could be and imagine, well, what if we didn't have to do this? And that's where the ignorance comes in. So you want to have this, you know, sort of deep understanding of what the problem is. But then if you're ignorant to the current batch of solutions, you have the chance of coming

up with something that's new and unique. Yeah. And that's also aligned a little bit with not being biased, just like you weren't with Jack Dorsey and his age, right? Like, not being biased about some of it, some of it is ignorance, but also once you learn these things, it's not necessarily believing that this is the only way to solve these problems. Yes, and I mean, I won't claim that I'm not a biased person. I'm extremely biased and prejudicial, but these are very, very loose beliefs.

Like, if you show me that you're not that person, I immediately discount it. I remember in college, I learned a lot of math. from a homeless guy. His name was Fred. He was a fixture on the Washington campus. And I was talking to him one day. He's like, you look pretty upset. And I said, well, I'm having trouble with my class. He's the class. I was like, well, it's Diffy Hugh. He's like, what kind of problem you're having? It was like, well, I've got a second order non-homogeneous differential equation and I don't know how to solve it. And he was like, well, let me see that. And he's like, oh, well, that's because you need to factor it. You need to take a homogeneous part.

and then you're not home with Jesus apart. You could solve this using a 40 years ago. Like, I don't remember exactly what he did. But here's this homeless guy who's doing my DiffyQ homework from the engineering school, right? And to me, it was perfectly normal that some homeless dude was really, really good at math. You know, have your biases that don't worry about being not biased. But don't hold on to them too hard. So I want, if that's okay, two more stories.

One, you needed MasterCard and Visa to approve in order to get a green light. Yeah. And you were violating some of the rules, clearly. Can you share a little bit of that story? Like, what made MasterCard or, you know, Visa eventually say yes, and how did that happen? So, first of all, the operating regulations of both major card networks, specifically forbade what we were doing, which was something called card present aggregation. So there's no way around this.

We have to get them to change the rules for us, otherwise we don't exist. And we tried and tried with Visa, which was headquartered in San Francisco. We figured we had a natural advantage because we knew all these people that knew people. We figured, oh, we'll get it done with Visa. No way. Visa could not think. But we got a meeting through an intermediary with the guy who, you know, pretty much was in charge of MasterCard. And so Jack and I go to purchase New York and sit down for the make or break meeting at the company.

because like if MasterCard had said no or if they had done nothing, we would have been dead. So this is an important demo to get right. And Jack and I, fortunately, we're a good team. Okay. Jack is very quiet. I am not. We have different strength. But one thing both of us can do is shut the hell up.

so we did this demo and the demo was awesome like this was one of the best demos we've ever done and we had done this demo because we'd already raised money we'd done it maybe 40 or 50 times so we were very good at doing the demo we also knew when to pause we knew when to listen we never interrupted but it came down to this moment where I had taken a dollar from the head of master card off his master card and he said oh that's really cute I assume that's a demo and I said no sir that money just left your account and is in my account and he looked at me and said you realize that violates our operating regulations and I said yes sir I know full silence in the room he's got his staff there jack doesn't say a word and I'm sitting

they're going, the first person to talk loses. Like, this is that moment where if anybody had interrupted him, he would not have had the time to process what he needed to process. It took about 20 seconds, which is an eternity of silence. It feels. Like 20 seconds of silence, I would never do that to your listeners right now. Like, it would kill your, it would kill your ratings. If we gave 20 seconds of silence, it would wipe out your, you know.

It feels like forever, especially in a conversation. like this. Like, it's scary as heck. We both shut up. And during those 20 seconds, he thought about it. He turned to his team. He said, so I guess we need to change our operating regulations. And he left the room.

Darn. And that's how square became square. Like, that was the moment. And it was a combination of this masterful demo when we showed in the future like if we had just had PowerPoints and stuff but no we did a live demo we took his mind

we showed look this works you just need to give a yes and it works there's no magic it's sitting here fully functional just say yes

and he did and that's why you should learn how to sell people underestimate the value of the pause if you're teaching something that actually requires people to think or you're explaining something that's new, they need that little bit of space for that connection to be made. You step on that space,

lost. So silence, very, very important tool. That was powerful. Maybe one, that story because we alluded to it, we talked about Amazon. That can take your nights away. Like, it's scary. completely terrifying. So what happened? Amazon decided they like Squares business and so much that they just wanted to steal it. And so what Amazon does when they want to do this to a company is they copy your product. They undercut your price, always by 30%, by whatever, for whatever reason. And then they add the Amazon brand name, which is trusted worldwide. I mean, that combination always works. The startup always dies.

That was 100% true when Amazon did. exactly that to Square. And remember, we're selling credit card processing, something that is effectively seen as a commodity. They're undercutting us 30%. Everyone was like, Square is dead. They copied our hardware. They did the stuff that you would expect Amazon to do, and it always worked. The reason I know no other company has ever survived this is I looked for one, because, you know, of course, I'm a normal human. And I said, well, surely somebody must have beaten Amazon. How did they do it? And the answer is, no, nobody's ever beaten them. this this is death this is 100% fatal and so we were like oh crap what do we do and the answer was

well we wanted to do a bunch of stuff but we couldn't because look you're competing with amazon they have like a trillion dollars that they can access we have you know whatever we can from VCs, and it wasn't that much. They have a brand name. They have a listening device in your house. There was no level playing field. So we just ignored them. And miraculously, after a year, they quit.

They just got out of the business entirely. So the thing was, you know, like first day, I'm like, great. Amazon's given us their business. And by the way, they did give us their business. They actually mailed a square reader to all of their soon-to-be former customers. They said, we're out, use square, here's a reader. We're not going to do this again.

They just got out of the entire business. Okay, so that was a great, great day. Okay, great day, great day. Then on day two, here's the problem with me. What the hell happened? Because I don't know what we did. Somebody's going to ask me the question, well, what did you do to beat Amazon?

And my answer is, I have no clue whatsoever. So I spent two years looking for the answer to that. And that led me, that's why the book exists, because the book is the answer to what happened. And the answer to save your readers' 300 pages of reading is that Square was forced to invent things. and what I realized, there was this pattern, and it's not a frequent pattern, but it is absolutely a timeless truth that I'd never heard anyone discover or discuss that was this thing where

almost everything you can do can be copied, but there are some things that can't, and when you are in that situation, when you cannot copy, most of the time you die, but in the case where you don't, you actually invent something new. And that new thing has different rules. And so my book is all about analyzing these rules and figuring out how the new thing is different and how communication is different, how pricing is different. So for instance, in my book, I'm having a lot of fun with this because I actually predicted the demise of Southwest Airlines because I got to interview Herb Keller, and Herb was telling me what was happening at Southwest. Now, at the time, Southwest stock was in the stratosphere, and I went on record in my book saying, it's not going to

last. Southwest is going down because they violated one of my rules. I said, the test of whether or not I'm right will be proven by Southwest Airlines over the next decade. And it's only took them five years, and they tanked the thing. They've lost half their value. For an airline. Most profitable airline? Well, they used to be. I mean, these guys did everything wrong. But it wasn't wrong, them because they were following nobody had ever written these rules down so that's what the book does it talks about how we were able to beat amazon and then how other companies throughout history have been able to do similar things because it's not that unique and that's what the innovation stacks about it's it's about this process that we don't even have words to discuss and and it's

just created through so many examples and such a great story if there is one thing that you would tell yourself, kind of you can talk to your younger self, what would be your biggest thing? I wish I'd known this stuff a lot younger. I still consider myself sort of a kid, but I'm not a kid anymore. And I have often thought that it was my fault, that the things that I was doing were failing. And sometimes that is true. Absolutely. But a lot of times it was because I was playing the wrong game. I was playing, I was using baseball rules and we were playing football. It was that much of a disconnect. For years, I just blamed myself for my failure. Like, I was like, well, you're just stupid. Because here's the thing. I would have a problem.

I would go to my friend who had a successful business. And I would say, here's the problem I have. He says, oh yeah, I got the same thing. Here's what I did. And it worked. And I would go back to my world and I would implement it. And it wouldn't work. And the only thing I could think of was that I was incompetent, that it was my failing. And then when I realized, wait a second, his world works on a different set of principles than my world. And you think that a business is a business, but a business that is building new stuff has a different workforce. It has different pricing. It has different math. I mean, I can prove that the book does, but like it's a different animal. And if you treat it like a normal business, you will often fail for terrible reasons.

And the most heartbreaking thing in my book, which was not a story that I tell often, but when I was publishing the thing, I had a couple of guys who were super successful, you know, got to read the book and review it. And I was sitting in this guy's living room. And he has a painting on his wall, okay, that is worth more than everything I own. And this was post-IPO, okay, so I'm rich as hell. But there is one painting on this guy's wall that if you took everything that I own on the planet it and sell it at full retail does not buy this one you know canvas and i'm listening to this guy

you know talk about the book and he says to me he said jim i wish i'd read this 20 years ago well he said because we were doing exactly what you described and it was as painful as you describe he said if i'd known that what we were feeling was the way you were supposed to be feeling we would have kept going and I would have had that product today and I'd be more successful and me looking up at a freaking Rothko

but you know it was a even this guy whom you should not feel sorry for and I will not use his name but I will tell you this sitting in the shadow is this $63 million painting

I felt for the guy because I know what it's like to quit I know it's like to give up I don't give up that easily, but I do give up. And one of the things that will happen, and I want to have happen if you read the book, is just to understand how fantastically painful it is to do something that's new. Because when you do something new, all the people who love you, all the people who care most about you,

their natural urge is to say, Alana, come back. Don't do that. I mean, for Christ's sake, you're an F-16 pilot? I mean, I don't know if that's cool in Israel, but like in the U.S., at least where the U.S., I grew up, like women didn't become fighter pilots. You know, you're not supposed to pull four negative Gs as a good girl, like that. So maybe Israel's way cooler than the U.S. But I will tell you that you would have gotten a ton of people who said, it's too dangerous. You'll kill yourself.

That's what people who care about you. They tell you don't do this. it's very hard to keep going building something that has not been built before. And the reason I wrote the book is I want people to know, first of all, how to do it, but secondly, that it is painful and difficult. And if you recognize that, you might keep going a little bit further. And that's what this guy with the fancy painting said. He was like, if I'd known this when I was younger, I would not have stopped.

I wish I'd read your book 20 years ago. And that to me was both heartbreaking and really funny. And powerful. Oh my God, Jim. This was so beautiful. Because again, I think, you know, it's kind of what you said. It's not the challenges that stop you. It's the belief or the meaning that you're giving these things that I should quit. Right. And I just love what you just said because it's hard on everybody. I think the only question is, how crazy are you willing to go? I think. Yeah. And I think we do a disservice to entrepreneurs by trying to make them seem cool. I mean, as we said, at the beginning of the interview, like, I've never been cool. Absolutely. And that is freeing

in a way because once you give up trying, well, I'll speak for people, once I gave up trying to be cool, but that's a painful process. Like I would have much rather been cool and had, you know, all this other. But that didn't happen. So, okay, you learn to live without. If you think that forming a company that's innovative, not just forming a company, you can go copy whatever the hell you want, start an AI company. Yeah, have fun with that now. But if you wanted to start an AI company 10 years ago and build it LLM, people look like that. You like, it was crazy. Insane. Right? Yeah. This is the moment where if you expect that you're going to be cool because you're doing something new and you expect to get some sort of street cred or some sort of, you know, ego boost, man, it's not coming.

you only get that later like when it doesn't matter when the IPO happens or when the product is accepted or you know you get the Nobel like that it's too late then all the accolades come way too late to keep you going through the tough times so you read the book and I hope you get a little bit of an inoculation if you ever do something that's truly innovative like if you're one of these people like and I'm I'm only speaking to probably one percent of your audience here but like most people in their lives will never confront a problem that they care about that somebody else hasn't solved first and that's a good way to be just just count yourself lucky if you find yourself confronting a problem nobody knows the solution to and if you decide that you're

going to be the person first person on the planet to solve that thing then don't expect to be comfortable. It is scary, painful, and weird. And that's what most people quit. You and I are both qualified pilots. But Wilbur and Orville Wright flipped a coin to determine who would be the first person to fly. And the question is, were they qualified as pilots? No, and that's so for is of course not. I can't even like imagine that. Yes. They did not understand what a stall spin was. They didn't, like they didn't, too, the end of the split us and stuff, right? Like nothing, yes. All the stuff. They, because they couldn't. Piloting was this thing that didn't exist. They had to get in that plane and fly it anyway. And neither one of them were qualified.

So here's my message to your listener. If you do something for the first time, one of the first signals you will get in your body is, I'm not qualified. I shouldn't be doing this. I need to get more training or better prepared or I need to do something because I'm not qualified. And most of the time in your life, that is a life-saving, rational fear. Like, don't go fly a plane. If you fly a plane right now without being qualified, you're an idiot because it's easy to get trained. But remember the Wright brothers. They weren't qualified. They did it anyway. The first time anything is done on this planet of significance. It is done by an unqualified person. And by the way, even if you are qualified, like even if you are trained, the first time you do anything will be out of your

comfort zone. So, but it's part of it. Jim, this was so fun. I can probably talk to you for hours, but thank you so much for coming to the show and writing this incredible book and listeners, go get it. Like seriously, just a fun read. You enjoy it. And enjoy it. And you learn a ton, which is so fun. It's the best combination. Thank you. Thanks for the plug. And for what you do. I mean, I love the fact that you're making knowledge available. And we need more people doing what you're doing. So, thanks so much. Congrats.

I hope you enjoyed this. I hope you enjoyed this as much as I did. If you did, please share it with friends. Now, also, if you're you're feeling stuck or simply want more from your own career, watch this 30-minute free training at leapacademy.com slash training. That's leapacademy.com slash training. See you in the next episode of the Leap Academy with Ilan and Golan Show.