The Learning Leader Show With Ryan Hawk - 368: Jim McKelvey - How To Build An Unbeatable Business (One Crazy Idea At A Time)

Episode Date: June 3, 2020

The Learning Leader Show With Ryan Hawk Text LEARNERS to 44222 Full notes at www.LearningLeader.com 358: Jim McKelvey - How To Build An Unbeatable Business (One Crazy Idea At A Time) Jim McKelvey is the co-founder of Square, was chairman of its board until 2010, and still serves on the Board of Directors. In 2011, his iconic card reader design was inducted into the Museum of Modern Art. Jim also founded Invisibly, a project to rewire the economics of online content; LaunchCode, a non-profit that trains people to work in technology; and Third Degree Glass Factory, a publicly accessible glass art studio & education center in St. Louis. In 2017, he was appointed as an Independent Director of the St. Louis Federal Reserve. Sustaining excellence = The people you lead will eventually kick you out... This signifies your ability to hire, train, and develop excellent leaders. "I'm not a good leader. I don't run the business. I build the company and then get out of the way." "I have a weird skill set... I'm comfortable doing things that have never been done before." What it's like working with Jack Dorsey (Jim started Square with Jack): "He has the ability to administer and incrementally improve... That's something I value in a person. Jack is incredibly competent, very quiet, and very capable. He knows the difference between good and excellent." Jim sees himself as a normal guy without any gifts... "Don't disqualify yourself because you think other people are special (or gifted) and you're not." What if the activity had never been done before? The Wright Brothers were no more qualified to build the first ever flying machine than someone else. They made the choice to do it, and put in the work to make it happen. "To be excellent, you need to reach out to others who are." Interview process: "People who lie are not consistent. Ask similar questions in different ways multiple times." Tell people very honestly all the reasons they shouldn't work at your company. Be very honest. Then say, "I can't tell if you're lying to me, I won't be able to catch you now, however I will find out eventually and I will fire you." Jim describes what it's like to be a billionaire... Think of the companies that have done something that had never been done before: Bank of America Ikea Southwest Airlines Square "Commitment can be a great substitute for being qualified." "Admitting you don't know something frees your mind from constraints. To actually do something new requires the humility to admit that your solution may not work, followed by the audacity to try anyway." How to get people to perform at higher levels? "Go hang out with smarter people and raise their level of performance... Ask questions." Never interrupt Leave pauses in a sentence, give them a chance to keep going... An Innovation Stack = Series of inventions that create a new product. Doing something new. What it was like to prepare for a demo with Steve Jobs: "He can be nasty if he doesn't like you. You had to make it beautiful." Advice: "Consistently do something that makes you slightly uncomfortable." Jim flies planes and gives speeches (both make him uncomfortable) --> This will slowly expand the things that you like. It will create more friends, and you'll develop more respect for people who have differing views. "You'll learn it's possible to function even when you're uncomfortable." Continually do little things to strengthen yourself... It helps you continue to go when others quit. "Customers who trust you are more valuable than customers who love you. There's only one shot at trust, and Square was trustworthy because of its values and mission, and built its Innovation Stack around them." Here is WHY joining a Learning Leader Circle is a good idea...

I want people do new things. I want you if you have the interest in the potential to solve a problem for the rest of us that nobody's solved before, to go do it. And if you do that, you're going to feel scared. You're going to feel alone. You're going to feel this sense of just fear. And you can still function. So if as a regular matter of course, you continually do little things, to strengthen your ability to function when you were afraid or uncomfortable, then when you are in a situation where the only possibility is being uncomfortable because you're doing something totally new, and that's foreign to most humans, you might keep going where others quit. Are you curious about taking a more proactive approach to your leadership development?

Have you thought about the people you are surrounding yourself with as you strive to get better? if so, the new Learning Leader Academy may be for you. It's been designed to not only provide you with online trading videos. In fact, I filmed 30 of them sitting side by side with the greatest mentor of my life, my dad. But the Learning Leader Academy also gives you the opportunity to interact with an active community of leaders with growth-oriented mindsets. If this sounds like something that you would like to do, check out more details at Ryanhawk. That's Ryanhawk.me for the Learning Leader Academy. Welcome to the Learning Leader Show presented by Brixie and Meyer.

I am Ryan Hawk. Thank you so much for being here. Text learners to 4-4222 in order to join tens of thousands of learning leaders from all over the world. Receive Mindful Monday updates what I'm reading. watching, thinking about. Also, give you more details about my book. Welcome to Management. Text learners to 44222.

Now, On the night's featured leader is Jim McKelvey, serial entrepreneur, inventor, and artist. Jim's the co-founder of Square and still serves on their board of directors today. In 2011, his iconic card reader design was inducted into the Museum of Modern Art. He is also the author of a great new book titled The Innovation Stack, Building an Unbeatable Business, One Crazy Idea at a Time. A few of the topics we discussed, his unique interviewing and hiring process and how you could implement something similar in your business. Then, what it was like preparing a demo of his product Square for the legendary Steve Jobs. and then how commitment can be a great substitute for qualification. I think you'll find this one really entertaining and useful.

Ladies and gentlemen, it's Jim McKelvey. Jim McKelvey, it's so good to have you here on the Learning Leader Show. Welcome, man. Thank you, Ryan. This is going to be fun. That's for sure. So I'm curious because, as I told you before we started recording, I've read just about every article there is about you and watched all your use.

YouTube videos and obviously the written work that you've produced, great book, and you've lived and are currently living a life of excellence. And that's a big word and topic that I study on the show. So I'm curious, Jim, though, when you self-reflect as well as think about the people that are close to you who have also sustained excellence because you've done a great job of surrounding yourself with those types of people, what have you found that they all seem to have in common? Well, in the companies that I work with, specifically, they all kick me out.

Their version of excellence is Jim leave. No, it's true. I wish it wasn't the case sometimes. But literally, today I'm in a office building that's got two of my companies co-located here. And my newest company is here. And this company that I've had for 31 years is downstairs. and the internet went off down in our offices, so I had to run down and, you know,

use the Wi-Fi downstairs. The company's been around 31 years. I haven't led it since the 90s. Okay? Yeah. And I am not a good leader. I'm not a good administrator. I'm not a guy who you want to run the business.

I'm a guy who builds a business and then gets the heck out of the way for the people who are going to run the business. business. So my lessons, and I want to put a giant asterisk by everything that I say here, because your listeners are probably, you know, it's like, oh, what can we learn to this guy? And this is, you know, maybe what not to do, okay? Because I'm a guy who's going to build it and then get out of the way. And over the last 30 years, I have gotten really good at getting out of the way. I fire myself now, as opposed to having some awkward meeting with my partners. But it's still the same pattern, and it continues to repeat. And why do you think that is?

Because I have a weird skill set. I am comfortable doing things that have never been done. I am one of these people that's fascinated with certain problems that have been unsolved, and I try new things. And I know that sounds like a bunch of platitudes, but I'm really talking about just a strange set of behaviors that allow me to build new stuff. But the problem with being really good at building new stuff is that it's hard to stop building new stuff. So, for instance, the company that's been around for 30 years, Jack Dorsey and I, so Jack, when he was 16 years old, he was a summer intern. And he and I built a product that 30, well, let's call it 25 years later, 26 years later, 26 years later is still running that company. Okay.

So Jack and I did maybe six months of work, built a product line. that is still making revenue and employing people and standing to this day. That doesn't mean I should be there. That doesn't mean Jack should be there. That doesn't mean either one of us should be there, but build it and then I have to get out of the way. So it's the building, it's the creating the new that's my specialty. And I would have to think that part of that, though, is you have a knack for seeing the talent and other people to actually run it.

Oh, yeah. agree? Yeah. Okay. Tell me more about that, that like your mindset towards understanding the genius and others to do what you have self-identified that you're not good at. So the ability to administer and incrementally improve and manage and, you know, do all those sort of operational things is something I tremendously value. And as a matter of fact, I always choose a part of when I'm starting something new, who has some of that. So, for instance, when Jack and I started Square, Jack wanted to run Square. I did not want to run Square.

We both wanted to build Square, but he wanted to be the CEO, and I had no interest in that. And so it was super easy to have the conversation of who's going to be the boss. Well, Jack's going to be the boss because he needs to run it, and I'll help him build it. Even companies where I'm the founder, I will always partner with another person who is going to run it. And those skills are tremendously prized because, you know, they're the ones going to the meetings. There's the ones making sure that every day we get a little better. They're the ones who are trying to see disruption on the horizon or some problem or, you know, get ahead of something. There's a skill set there that I deeply admire, but do not possess.

So you mentioned, you've mentioned Jack Dorsey a couple times. I had him in my notes for to talk about later, but let's just jump there now because I believe he interned for you when he was 15. Is that right? 15 years old. 15 year old high school intern. So Jack is also the CEO of a company or a service that I use extensively and I think is one of the greatest learning tools in the world. If as the user you use it right and that is Twitter. So Jack happens to be the CEO of two companies at the same time, Twitter and the company that you founded with him, which is Square.

I'm curious, what is it that you saw him and him at the age of 15 that you still see today to trust him to run one of your companies? Well, at age 15, he was incredibly competent. And at age 42 or whatever he is now, he's incredibly competent. I mean, Jack's one of these guys who, he's very quiet. He's not a showy person. And he is very capable. He knows the difference between something that's good and something that's excellent, which is, you know, a tough call to make sometimes and is very thoughtful about what he does.

And so, you know, that quality was evident even before college. And now he's had several decades to refine it and he's world class. When you say that someone knows a difference between good and excellent, and it sounds like Jack is someone who may have, have had that potentially innate in him or through his curiosity has developed that even more. What about for the rest of us here, the normal ones? Unlike, I would say you and Jack, how could I would not say that. So I would not sit there and say, as a matter of fact, that's one of the reasons I wrote this book, okay, is because what you're doing, Ryan, is you're perpetuating this myth that somehow people who, you know, end up in my position or Jack's position are,

are sort of abnormal. Now, I won't speak for Jack because, you know, he's his own self, but I'll speak for me. I'm a fairly boring normal guy. Okay. I have a, I have a weird skill set, and I'll share bits of that with people, but, you know, I'm not gifted. You know, I'm not particularly strong or handsome or brilliant or any, like, you'd pick any positive adjective and I have a, you know, I have a moderate serving. Okay. But what, what I noticed, and this is, get right to the point of the book. What I noticed was that the things that I felt as this sort of normal guy doing this stuff was that it didn't take more than being a normal person if you understood what game you were playing. And we failed to understand the game of entrepreneurship for a bunch of reasons, language being primary among them. But when I saw that, what I realized was that there were probably millions of people who also had the ability to do these world-changing things,

but were disqualifying themselves because they're saying, oh, well, I'm not qualified. Like, I don't know how to do that. Or, you know, they were making some sort of, they were coming up with the legitimate reason for not doing something, except for one thing. And that is, it is legitimate to disqualify yourself from an activity for which you could be qualified,

but what if no qualifications exist? In other words, what if that activity hasn't ever been done before, then nobody's qualified. So think about it this way, okay? I'm a pilot, okay? To become a pilot, I had to go take a bunch of training, fly a bunch of planes, pass a bunch of FAA tests,

I got to go take drug tests and do all this stuff to be a qualified pilot today. To legally fly an airplane in 2020, I have to do all sorts of stuff. But think about the Wright brothers. One of those guys had to get in the plane and fly it. Now, nobody had ever flown a plane in human history. The plane was new. So by definition, they were not qualified to fly that plane. I mean, what qualified? Like, they had no ground school.

They had no air. They didn't know what a stall spin was. Like, they didn't know any of that stuff, but they flew it anyway. So this is the thing. What I talk about in the innovation stack, and the reason I wrote this book, which wasn't even a book to begin. It was a cartoon. But the reason I did this was to reach out to people who have that potential to be excellent in what they accomplish, but might not feel excellent in the knowledge that they currently possess. Does that make any sense? It does. And so I think that the second part of what I was going to get to, and I love the passion you have for this. So I'm glad that you cut me off.

But the second part I was going to say is for people in general. So I won't separate you and Jack from the rest of us. But for people in general, having the developing the skill to understand the difference between good and excellent. My question to you is what like how can we develop that skill or what can we work on to get better at that? Because like you said, we all are capable. We all have this ability within us, but we have to nurture that. We have to figure that out. Are there any exercises or thoughts or mindsets or frameworks that you have to say this is how someone can identify, whether it's in hiring people or ideas or building companies?

It could be for anything. I'm curious about that specific part of recognizing good and excellent. So I wish I knew where it comes from in every case because I would like to do it more myself. And what I find is, and this is not a great answer, because I think you're asking for a, a task or an exercise or something that somebody can do. And what I'll tell you is in my case, I just have areas where I can do it and areas where I can't. So, for instance, I can't tell the difference between any,

I'll give you a stupid example, wines. Okay, I've got all these friends who can, you know, they can date a bottle by closing their eyes and tell you where the grapes grew. Like, I can't tell the difference between red and white with my eyes closed. Like, I'm so, like, my, my palate is just, really terrible. And that's because I probably grew up

drinking too much cheap beer. But I go out with one of these guys, they can literally do it because I make them do blind taste tests. Yeah, sure enough, they pick out the whatever hell chardonnay it is. But I can't do that. On the other hand,

you put two products in front of me, two physical products, and I can tell you in great detail which one is going to perform better and which one's going to feel better. And that's just my thing. And so what I would say to your listeners, I'm sorry I don't have an exercise to develop this skill, but I would say that look into

what you do have and recognize where you happen to have those extra receptors. So if you're particularly good at determining people, like if you're good at reading people, which I'm terrible at, by the way, like people can lie to me. I've been suckered so many times. Like I'm Terrible. As a matter of fact, I've developed an entire hiring process that allows people who lie to me to get sort of outed later. I mean, I mean, what's that? Oh, it's this crazy interview I do where I ask a bunch of questions that then sort of cross-reference with later questions. It's really quite tricky and excruciating. And I used to use it at the beginning of square. People would hate it when I interviewed it because it would take two hours. Did it work?

Yeah, it worked great. Oh, my God. But it's just brutal. It's just freaking brutal. Can you go into it a little bit? This is one area that's very important to me, and I think it is important to a lot of listeners. I'm not saying, like, you could advise say, hey, don't do this, but this is something I did maybe. Or maybe there are bits and pieces of it that we should, we should do. Well, okay.

I'll explain the general philosophy, and again, I'm not an expert in recruiting. I'm just telling you that I. But, but you have built teams that have been very successful. Yeah. So I do two things that may be a little tricky. Okay. And I'm not going to give away the track. trick. So you can all sort of have to come up with new stuff after I tell everybody how to do this.

The first is that people who are lying will generally not lie consistently, serially. So in other words, if you ask three questions, if you ask the same question three different ways, you will typically not get the same lie in three different formats. So you can ask people what they enjoy doing. That's typically hearing people list their strengths. You can ask people why, and people are not particularly good at coming up with stuff on the fly. Or if they do, they come up with pat answers, which are typically not true. So if an answer is too clean, that's not accurate.

If an answer is too inconsistent with previous answers, then you know they're hiding something. So I've got a whole series of questions that are sort of scientifically designed to do that. And you can do that. As a matter of fact, there are whole things like if you've ever used cultural index, that's a tool. that you can use for determining this stuff. So they're sort of psychological tricks you can play. But I've come up with an even simpler one, and this is one that I can definitely recommend. I tell people very honestly when they sit down to work for me or work with me, all the reasons

they shouldn't work with me. I am completely 100% honest about everything that I don't know, all the shortcomings of the company, all the problems that we're expecting to have. Like, I am brutally, deadly honest, you know, in a way that is uncharacteristic for somebody who's trying to recruit. And then I say to them, and again, this is completely 100% truthful. I say, look, I can't tell if you're lying to me. Like, I cannot catch you. If you want to pretend that you are a good fit for this job, now knowing all the downsides that I've just enumerated, I will not be able to catch you.

You can bluff me long enough to get this job. However, I will find out eventually if you are lying. And I am capable of firing you. Like one thing I've learned how to do is get rid of you if you are not a fit. For your sake, for my sake, and for everybody who works here, if you've misrepresented your interest or ability, that will eventually be obvious. maybe not after a month, but I'll catch you soon enough. And when I do, two things are going to happen. One, you're going to lose this job really fast.

And two, you're going to be looking for something new. And that's not pleasant. Have you always been this way or have you become? I got that way out of desperation. I got that way out of desperation because I hired all these people. I fell for the lies. so many times because people in job interviews. So first of all, understand your your goal in a job interview is to lie.

Okay. Wait, what? You're going to try to misrepresent you. Whose goal? The interviewees. Really? Why do you say that? I'm curious.

Because that's how the game's played. I don't know. Really? You think so? Yeah. Oh, my God. I've interviewed hundreds and hundreds of people. And look, it's a game we play.

They know they're trying to bring their best self for it. like a first date. Okay, first dates are lies. And I was like, really? Are you that? Nice. No, you're not. Come on. It's this, it's this game we play. And what I realized is I tended to hire people who played that game really well. Okay. As opposed to people who did the job really well. So after a while, what I, just out of desperation, because I was sick of hiring bad fits, is I said, look, I'm going to do the opposite and I'm going to tell the person, all the reasons they shouldn't want to work for the company. And sometimes people would tell me all the reasons that I didn't want to hire them. You know, well, you know, I drink and sometimes I show up late. And I'm like, that's not a problem. In your job, you can be drunk. Like, I have, I have, there are some people who can come to me, work for me, you know.

A lot of like reverse psychology happening. You're both telling each other how bad you are at what you do. Yeah, but it's honest. I got you. But here's the thing, right. What I would find, nobody in the interview would ever admit to the fact that they were misrepresent themselves or that they couldn't handle what was going to happen, but they just didn't come back. Just self-select out. Oh, I got another offer.

Oh, and then if, you know, occasionally I'd get somebody in who was not who I thought they were and have to take action. But, oh, man, it was like 10% of what it used to be. So there's my hiring hiring trade. I got you. No, it's interesting. I'm curious, though. I think it takes a lot of security in oneself, confidence to openly talk about your shortcomings. And so my question is, is it a lot easier to do that now?

I mean, you're a multi-billionaire, correct? I don't, probably. Yeah. I mean, I can say that I don't check the stock price ever. because it stresses me up. And I'm not saying that's the only measure of success, but it's a measure. It's one of the measures. It shows that you've built companies that people want to pay for the products.

So a multi-billionaire who's built multiple companies that are employing a lot of people and helping put food on the tables of a lot of people's families, is it easier for you now looking back as a multi-billionaire to say, I can just put all of my shortcomings on the table because it's obvious that I have a lot of strength. or else I wouldn't be where I'm at right now. Because I'm trying to relate this to the person who currently right now runs a team of 14 people working in the middle of a huge company trying to grow their career, that they're not necessarily, you know, not every aspect of what you're saying will relate because of the current position you're in. You were in those positions at one point, but aren't right now. You know what I mean?

Yeah, yeah. And what I would say is that none of the stuff that I've talked about so far, has is new knowledge to me. The only new knowledge that I've gotten in the last couple years is this thing called the innovation stack. And, you know, that's, that was something that was profound enough that I was like, oh, crap. I wish somebody had told me this 25 years ago. I better write a book so that, you know, my kids don't have the same problem. But short of that, there was, you know, these, these skills evolve before, at least in my case, before any of the sort of super success hit. And, you know, these interviewing skills I developed by having screwed up, you know, dozens of hires.

You know, my sort of work life was set years and years before Square. And by the way, I considered myself effectively, there's no nice way to say this, a rich way before Square. Like I had an epiphany one day coming to the, office. I actually wasn't coming into my office. I was coming into my studio. I was coming into blow glass. And there was a radio contest that was giving me a chance to win 10,000 bucks. And the radio announcer said, well, think I'm earning, think I winning $10,000 would change your life. And my immediate reaction was sort of weird because I thought about it. I was like,

wait a second, $10,000 would not change my life. Like, it wouldn't change anything. So then I thought, well, how much would change my life? And I came up with a number that was just super huge. And I said, well, I'm never going to earn that much. So I guess I'm already rich. You know, because like the only thing in my life that was going to change was that I was going to like get a faster plane. You know? Yeah. Like I have a little plane that's a, I have a $23,000 plane. Like if you want to know numbers, my plane cost $23,000. It's a 1960s six Mooney M20C. Single engine, four cylinders. It's old 1960s sort of slide rule built with a flyed rule technology.

Nothing cool. Wow. It's a great little plane. And, you know, I thought, oh, if I was rich, I'd buy a faster plane so I could, like, climb over clouds as opposed to, like, get my ass kicked flying through them. And I thought, well, that'd be cool. And I could bring some more friends. But that was it. And you know what?

That's literally the only thing that's gotten that's changed since all the stuff with square and all the money and all that. Like, the only thing is I now, well, I still have the old crappy plane, which I still fly. And then I have a new plane that I can fly over clouds if I need to. You mentioned that you're a glass blower. And so I'm curious that how does one go from being a glass blower to being the founder of a major payments company in this case Square? So that's an interesting question. The answer is if you're doing something totally new, you don't have to have any questions. qualifications because you can't have any qualifications.

So what I do in the book is I trace some of the world's most dominant companies in their field back to their origins. And I look specifically at their founders. Biggest bank of the world. So some of the companies, IKEA, Southwest Airlines, Bank of America, right square, which is yours. So, yeah, okay, go ahead. And then a bunch of other companies as well. But like, let's just take the four you listed. Okay.

Bank of America. founded by a produce salesman who dropped out of school at 15. Wow. You know, IKEA, founded by a 17-year-old kid. 17-year-old. Southwest, founded by an attorney, right? An old attorney who didn't know anything about airplanes. Like Square, founded by a massage therapist and a glassblower.

So what do all these things have in common? And the answer is, and why are you laughing? Okay, so you're laughing because you'd say, well, that's no qualification for starting a bank, or that's no qualification for building the world's largest furniture empire. But the answer is this. In each of these cases, these organizations built something that had never existed before. They built something new.

And therefore, qualifications goes out the window. Like, nobody's qualified if you're going to build something new. Or I should say the qualities that matter are not ones that you can measure easily at the beginning. So, like Southwest, for example, I mean, obviously there are airlines before. So when you say something new, do you just mean the manner in which it was run or the attention to their customers? What do you mean by that? So that's a perfect question. Because what Southwest did was they enabled normal people to fly.

So if your listeners are old enough and they remember the 60s and 70s before airline deregulation, it used to be a big deal to go on an airplane. And only rich people and people with corporate expense accounts ever flew. Everybody else drove or took the bus or didn't travel. And the government actually did a study of air travel and concluded that only rich people and business people wanted to fly. Like the government's official position was only the rich want to fly. Normal people don't want to fly. And Southwest came along and said, well, wait a second. That's idiotic.

Okay. Why wouldn't a person want to go visit their grandma? or why wouldn't a person want to be able to, you know, travel and, you know, do business? And why wouldn't a person want to be able to see new places? It's just that they can't afford to. So Southwest cut the airline fares by like 60 or 70 percent. I mean, their fairs were so ridiculously cheap that they were stealing passengers from the buses. Southwest was competing with Greyhound and Trailways, not United and Braniff.

And so, yes, they were flying planes. And it's one of the reasons I profile them in the book is because you say, oh, well, it's just air travel. But I'm saying, no, no, no, it ain't air travel because air travel used to be the super exclusive thing that only the rich could do. Just like banking, you think, oh, well, everyone's got a bank account. Actually, there are a lot of underbanked people right now, so I shouldn't say that. But like, most normal middle class people have some sort of banking account. But 100 years ago, that wasn't true. You had a bank account if you were really in the upper crust, and the banking system back then was super elitist.

And normal people couldn't get loans. They couldn't get a house loan. They couldn't get a business loan. They couldn't – like all the services you think of as a bank were invented by a produce vendor, you know, who wasn't even in New York, which was the banking center. He was in California, which was like the frontier. One of the other things you write it. So we're talking about Jim's book called The Innovation Stack Building an Unbeatable Business, one crazy idea at a time.

And I was curious about something you write about when it comes to commitment and how that can be a great substitute for qualification. I think the Wright Brothers are great. By the way, I'm a massive Wright Brothers fan because their bicycle shop was right down the street from where I've born and raised and still currently live here in Dayton, Ohio. And so David McCullough's book is one of the, ones that I reread every year because of my love of the Wright brothers and all their work and what they did in Kitty Hawk, North Carolina as well. So, and when you talk about commitment,

I would say Wilbur and Orville are two of the best examples ever, especially considering the fact that they were underfunded in comparison to others who were trying to do the same thing and they were able to do it first. So talk about why commitment can be a great substitute for qualification. So first of all, let's understand what qualification is. Qualification is some official stamp that you are given by people who have done it before you. You can only be qualified to do something that has been done before. Okay, so I can be qualified to be a pilot now because there are a lot of pilots that preceded me. I can be qualified to be an accountant because they're standards. Okay. But if you are looking for qualification and you don't have it, commitment can be a very

powerful substitute. In fact, in cases where qualifications is imposterous, it is impotification. So in the case of the right quality, they couldn't be qualified, right? Nobody could be qualified. Then commitment is the, that's the thing you've got. And so the problem, Ryan, is that we are conditioned as people to value qualification so highly, right? So what's our educational system? Well, it's, you know, grades, like the grade, you get a grade, you progress through grades. You're given these tests.

You're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, you're, stamps, little stickers, you know, go through the Boy Scouts, you get merit badges, like go through anything, you're going to get these stamps, these seals of approval. And we're conditioned as humans to value these qualifications. And then, surprise, surprise, you're presented with a situation where you're not qualified. And you immediately say, well, therefore, I won't do it. Okay. And maybe, okay, so I don't want some guy getting in an airplane and start flying around without being qualified because that's stupid and dangerous and there's a way to get qualified.

So if you can get qualified, get qualified. But if you can't, now you're down to one thing and that's your commitment. Like how much pain can you endure? How much can you deal with the fact that your engine isn't generating enough horsepower to turn these propellers that nobody has figured out how to shape?

And how do you make the engine block out of aluminum? And actually, the rights like painted their engine to look like a steel engine so that people wouldn't realize it was an aluminum block. I mean, like, stuff like that, you know? But they were, they were hugely committed. And I discovered this as a, well, basically as a teenager because when I was a, you know, freshman in college, I got a terrible textbook from one of my teachers. You rewrote it, didn't you?

I rewrote it. I rewrote the school's, I rewrote the textbook from my own class. I love that story. I read about school. Just insane. Right. I would imagine then your kind of intellectual wattage had to be pretty high from a young age. You're born.

No? No. No. You got to understand. Look, it was a computer textbook. Okay. It is not hard to write a computer textbook. It's just a ton of work.

Like, it's just, you got to figure out what each stupid statement does. Like, what does this statement do? What does this statement do? What do you do in this case? Like, you can figure that out. And if you figure that out and you write it down and you do it in a little, you do it in a way that's entertaining for other students and you get a bestseller. And that's what I got. I got this bestseller. And it wasn't because I was super knowledgeable. It wasn't that I even knew that much

more than the students. It was just that I was kind of like one chapter ahead of them at all times. And I had a way of explaining it that was, you know, sort of fun. And so a lot of students bought my book because, well, they could have a boring book or they could have my book, which was like borderline offensive. And they chose mine. And so it's not a question of, you know, sort of intellectual wattage. I've always, I've always been really, well, actually, this is something else that was sort of interesting. So the assumption you made just there, which that I was somehow brilliant, because I wrote and published a textbook when I was 19, a lot of other people made the same assumptions. Like a lot of people.

And I got a lot of cred that I didn't deserve. out of that. And here's what happened. So I was, I transferred it to the engineering school. And engineers work in teams because the problems are really tough, so they team up. I was always on the teams with the really bright people, like the ones who really were legitimately superstars. And I wasn't a superstar. And so what I learned how to do was I learned how to work with people who were way smarter than I was. So I'm the guy who, if I, if I, join your meeting, all of a sudden, the superstars become more productive. Like, I'm not very good at producing stuff myself, but I am great at getting other people

around me to play their best. And that's what I learned how to do. And so the guys, I mean, like literally, there are people who carried me through engineering. So I'll give you one name because I don't think she'd mind me telling her. Anna Patterson. Anna Patterson, if you're listening, she makes $10 million a year, like, as a salary at Google. She's now running a VC fund. But like Anna's like, badass, huge.

I don't know if I should have told her salary. But like she's freaking well, well paid. She's a total badass engineer. She carried me through part of my undergraduate school. Why? Because she's way smarter than I am. She's just freaking better. But when I'm on a team with her, she becomes better.

I learned how to be the weakest member of the team intellectually, but still contribute by getting the other people to do even more. than they would normally do. How do you do that? Oh, man, that's a lot of just listening. That's a lot of just, you know, like, read the people. Who's there? Who's working with you?

How do they feel? How do they work? I mean, are they mourning people? Do they like drama? Do they like deadlines? Do they like quiet? Like, I mean. So you're really observant, it feels like.

Yeah, you got to be. When you're an imposter, like when you, when you've just been put on the biggest, like, I'll do it right now. They're probably going to get me kicked off the Fed. Like, I'm the, I'm the, I'm the, I'm the, I'm the weakest guy on the Fed right now. I get to vote on interest rates. Do you think they would say that? I don't know, but I feel that way.

I doubt it. I sit around the table. I listen to these guys and they're like, wow. So, one of the, no, no, one of the reasons that I, I, I'm diving a little deeper here, Jim, is because as the people who are listening who are running teams or trying to build successful businesses or teams within a business is that that right there is a really critical skill because as the leader of the team, that's your job. That is your job is to get people to perform at levels that are higher than they were before you were their leader.

So that is a great form of leadership, even though you've mentioned that you're not a good leader, but that skill right there. I mean, that's the best leaders in my life, the coaches, whether it's in sports or in business. who were the best, they did that. That exact topic right there that you're talking about. So that's why I'm thinking, how does one develop that skill? Because if you can do that, and it's obvious, your track record speaks for itself.

It's obvious that that's something that you figured out and implemented it and it's worked. Yeah. Well, I got really lucky as a young student because people did exactly what you just did. They assumed something that was not true, which is that I was smarter than I actually. am. They threw me on teams with the smartest people. And then I had to learn how to deal with that environment. And that's a weird environment. And I developed a set of coping skills for it. So like what I would say, if you want to go, you know, to run with it, maybe we could distill a lesson from it, although I've never tried this personally. Like, you know, go hang out with people who

are way smarter than you. And don't try to match them on wits. Try to make them more productive. Like, see how that works. And I think the question is, I do get tactical quite a bit. So the question there is that's the first part. And then the part where you say go try to do that, I think the natural, the listener, the person who's right now on the treadmill or driving to work, they're thinking, love it. Wait, the second part to those seems way harder. I mean, I could go find people way smarter than me and sit in a room with them, no doubt.

But then the part of getting them to perform at higher levels, that's the really hard part. And I don't know, maybe it is an unspoken skill that it's hard to really deconstruct right now. But that's what I'm most curious about is the actual how-to of being surrounded by a bunch of intelligent people and getting them to perform at even higher levels than they were before you came in the room. So, I mean, and again, this has become almost second nature to me because I've been doing it as a survival skill for years. But, you know, I still remember being put on that first team in the industry. during school right after the book, the first book came out, where I knew I totally didn't deserve to be sitting with these guys. It was just this panic moment. I was in this room with all these guys who were clearly awesome. And I didn't deserve to be there. And I was like, shit, they're

going to figure out that I'm not that good. So I learned to do a couple of things. First of all, I never interrupt. You will never hear me interrupt. If you start talking, I will shut up. I don't care who you are. I will give you the air. Very good skill to have. Secondly, I've learned how to leave pauses in a sentence. So you say something. Sometimes I'll take a breath and let you continue your thought, because sometimes the best stuff, especially, and this is true, especially with really smart people, sometimes really smart people won't tell you what they're thinking the first time. They'll just spit out some platitude because most people just are only into their own heads and never want to listen past that.

Somebody who's really thoughtful may pause for 10 or 15 seconds and then say the thing that's really insightful. I don't step on those pauses. Those are some tricks. I mean, look, I'd love to help people get this goal because I think the world will be a better place if they had it. but look I mean here's the thing join the condo board or the neighborhood associate like nobody wants to serve on the condo port right like there's a great time you get to spend

other people's money and meet your neighbors and you know they'll always let you on the condo board and then and then when you're on the condo board see if you can get the other people to be more productive see what does like just just ask yourself the question even being aware of the even sort of understanding that the game is to get more productivity about the people who are around you as opposed to being sort of an individual contributor who just kicks ass. It's a different way to look at it stuff. Okay. I want to talk a little bit more about the book. I could have talked about that for three hours. So I'm going to, I don't have to transition myself out of it. But I really appreciate

you humoring me, Jim, because it's important. And I know we're kind of deconstructing in real time here. Can you define what an innovation stack is? Yeah, an innovation stack is a, series of inventions that collectively create a new market. And what do I mean by that? I mean that if you're solving what I call a perfect problem, this is a problem that is solvable but has never been solved before. Okay, so you're doing something new. Then almost certainly you're not going to find a one-step solution.

You're going to have to find a lightweight engine and a new way to make a propeller. and an airfoil and a way to warp the rings to turn the airplane and and and and and a way to steer when you're in the air like to use the right breaders as an example since you like that i mean but take any invention frozen food like how do you freeze peas you know you got to get the temperature below 40 degrees but you also have to figure out a way you know to transport them so that they don't brew like there's all these tricks you know and um what i've noticed is that the companies who build these Or the organizations, I should say, who build this, because they're not just always companies. Sometimes it's non-profits. Sometimes it's just people doing things differently. End up with this thing that allows them to dominate their industry. And when I say their industry, I mean almost always a new industry. So Southwest Airlines, you say, well, they dominate air travel.

Well, no, no. What Southwest did was they enabled tens of millions of people who couldn't fly to them. fly and those were Southwest customers and Braniff and United and all the other carriers had their own sort of different flyers but these companies that build innovation stacks really expand markets and they create massive opportunity for everybody and by the way that's that's the reason I wrote the book is like once I saw this pattern I was like oh my God first of all it's it's something I'd lived through a couple times so I was like okay it right it's it seems familiar But then all of a sudden I said, wait a second, this doesn't help me that much to know it.

I mean, it helps me a little bit. But what would really be helpful is if I could get a million people out there who have the potential to create new markets to realize that potential by just showing them what the path looks like. I mean, I can't tell them what it's going to feel like in their case because it's going to be totally new by definition. But I can at least show them that, look, you're not the only person who's been in this situation and confronted these challenges. At one point in your career, you had a demo set up with Steve Jobs. Oh, yeah. And Steve, obviously, he's a design fanatic, as you said. Oh, my God.

And you're in charge of the hardware of this product. I'm curious, what was your mindset like leading up to the demo for Square with Steve Jobs? The best word, Ryan, would be terror. Like, total fear, okay? Because first of all, you don't understand Steve Jobs. Like, he's a legend. But he was also a really nasty person. He didn't like you or your product.

Like, he could get, like, we've got a couple of the, I think we have like the, one of the first five Apple employees still works for Square. Like, great guy. And so, and we've, we've taken a bunch of employees from Apple, and I've got a bunch of friends who used to work for Steve and knew him well. And so I've heard a ton of the stories. And, you know, for all his exceptional accomplishments, he could also be exceptionally cruel. Okay. And his thing was hardware.

Like, he liked beauty. And he liked aluminum. And he liked all this stuff. And, and I was the hardware. guy. And I was, you know, building these pretty crude prototypes at the time. And I thought, man, I got to make this beautiful because it's going to go in front of Steve Jobs. And, um, and I was terrified. So I went into the Apple store to look at all his, look at all the products and see what he liked. And I saw this aluminum, you know, because the MacBooks were all, had these aluminum cases. And I was like, oh, my God, Steve likes aluminum. Right. That was my conclusion from walking through the app store. It's like, Steve likes aluminum. So I got a big block of aluminum. And

And I milled out the prototype out of a solid block of aluminum. And then I crammed all the electronics in there and made a demo. The first square reader was a solid aluminum prototype for Steve. And it was a disaster. Because the aluminum shorted some of the electronics out, which had the interesting effect of turning the first square reader into a cardiac monitor. So if you would touch it with it. your fingers, it would pick up your heartbeat.

And instead of recording the credit card swipe, it would record your heartbeat. And so we discovered this, like the day that we were going to do a demo. And, oh, my God, what a mess. How did it go? So it was funny. The first demo that we were doing, we were set up to demo it to Mike Bloomberg before Steve. So it was going to be Mike Bloomberg and then Steve Jobs. And I was handing it over to Jack.

And we discovered this that I accidentally built a heart monitor. So we trained Jack how to how to swipe without touching the thing. So he'd get through the demo with Mike. And he got through the demo with Bloomberg pretty well. And then the demo with Steve Jobs got canceled because Steve was really sick. So we were on his calendar and then, you know, he was, he was fighting for his life. So he canceled. And I never ended up meeting him.

I never got to me to me. Yeah, that never happened. Jim, I could hear you tell these stories all day. I really appreciate your investment of time with us today. I have one final question. Let's say you're sitting in one of your offices and a young, ambitious, recent college graduate said, Jim, I want to live a life where I'm making a positive contribution in the world. What are some basic pieces of life advice that you could share with me? Wow. The best advice I could give would be to constantly, not constantly, but to consistently, regularly do something that makes you slightly uncomfortable. And there are two huge advantages from that. And so I'm a guy, so I told you I fly planes. Okay, I'm scared when I fly a plane. Like flying a plane for me is terrifying. You know, I could literally kill myself.

I mean, I haven't yet, but the point is there are times when if I'd done the wrong thing, I would have died. Okay. And that's a sort of a different way of being. I do a lot of public speaking. Public speaking terrifies me. I still get scared when I get up on stage, but I enjoy it now, but I'm still scared, but I've sort of learned to enjoy it, which is weird. Here's what happens if you constantly do a little bit that you're uncomfortable with.

Like, you know, eat some food that you're not, you know, interested in. You know, like sourcrow. Like, I eat sourcrow. I never used to like sourcrow. Now I eat sourcrow. I like sourcrow. Yeah. How did that happen, right?

I don't know. But the first benefit is that you will slowly expand the things. that you like because you try new things or try meeting new people. Like I have a, you know, pretty strong political leaning. But because I'm now on the Federal Reserve, the Fed, like the rule is if you're on the Fed, you're politically neutral. Okay. So when I join the Fed, I basically resign myself from getting into politics. Like I no longer say, oh, I'm this or that. So I'm neutral. And I've got way more friends. I also have way more respect for people who have different views. So once I adopted this idea of neutrality and it forced me into situations where I was literally working with people

who have, you know, sort of diametrically opposite views of me on politics, I realized that, wait a second, no, like we're not actually all that totally different. We value a lot of the same stuff and I've become way more open-minded. So what will happen as a first side effect of this is your world will expand. There'll be foods you've discovered you like or you didn't like and now you do like. And there are people that you didn't like and now do like. You know, like your world expands. But the second lesson, and this is where the entrepreneur may benefit, is that you will learn that it is still possible to function even though you are uncomfortable. So if you're doing something that makes you uncomfortable, you're someplace that makes you uncomfortable, and you learn that you can still function. One day I was flying a plane and I got into a storm.

I mean, I shouldn't have. I mean, it was like, all the pilots are there, idiot. You know, I can hear all these guys on your podcast going, yeah, you're not supposed to do that, idiot, right? Yeah, I know, I was. I wasn't. I was trying to get home. I was trying to get my girlfriend, you know, home to an international flight, and we got caught. Okay.

And I got surrounded, and I had to land up, land of the plane in a 25-knock gusting crossed one, which at the time was probably way more than I should have been flying in. And I get the plane on the ground really fast, and I did. And I was terrified. But here's the thing about being terrified. It's like, I've always been terrified when I fly a plane. So I'm completely familiar with how to fly a plane even though I'm terrified. Like, it's a good skill to have if you're going to be terrified to also have flown planes for hundreds of hours in a state of terror.

So, oh, I'm still terrified. And now, you know, it's probably real or more justified. But here's the thing. And this is the reason I wrote the book. I want people to do new things. I want you, if you have the interest. in the potential to solve a problem for the rest of us that nobody's solved before, to go do it. And if you do that, you're going to feel scared.

You're going to feel alone. You're going to feel this sense of just fear. And you can still function. So if, as a regular matter of course, you continually do little things to strengthen your ability to function when you were afraid or uncomfortable than when you are in a situation where the only possibility is being uncomfortable because you're doing something totally new, and that's foreign to most humans, you might keep going where others quit. And one of the best things that happened to me in the sort of lead up to this book is I got

to send my book to a bunch of reviewers, like people who were, in some cases, like, mega successful. And I'm thinking of one guy who's literally his art collection in his living room is worth more than my house. I just looked at the stuff on his walls like, oh, wow. Like that one painting is worth more than where I live. Okay. And he said to me, he said, Jim, I wish I'd read this book 25 years ago. He said, I wish I'd had this book in my last company because if I'd understood what was happening to me, I might not have quit.

And this is a guy who, like, I was looking up to him. I was like, this guy is super successful. but even he feels the same thing and I wish I'd had this book when I was a kid I just wanted to share it and look originally my book

was a cartoon like I don't know did I tell you that it was originally a graphic novel yeah yeah the whole thing was a graphic novel and my publisher sort of put an end to that

because you can't use a graphic novel these days because it doesn't work on e-readers or audiobooks so the publisher made me rewrite it but but the spirit of the comic book is still there

because look, the stuff is sometimes funny, sometimes tragic, but always sort of epic. And so, you know, let's tell the story in a way that's, you know, that's a story. That's exciting. But I just want people to understand that, you know, there are a lot of good reasons for not doing something. But if you're doing something new, qualifications. or the lack thereof is not one of them. But Jim, thank you so much, man, for being here.

Where would you send my listeners to learn more about you online? So I've recently put up a website, jimmikelvey.com. I'm not on social media. I apologize. I mean, if you see me on LinkedIn or Twitter or Facebook, that's not me. I'm sorry. Those are people who work for me. Yeah, I was going to say, I think you have some people helping you out. I know. I do. And they're great people, and they're trying to promote this book, and I love that.

But I apologize. I don't use social media because it just sucks way too much of my energy. And I'd rather spend that with family or friends or even just goofing around. So I don't, I've never used WhatsApp in my life. Or I've never used a Facebook product. Never once. Never been on Facebook, Instagram, WhatsApp, zero. ever. But Jim McHelvey.com is a site that I put up where basically I try to share stuff that I think is cool. You know, so I'm not, it's not like all about me because that would be pretty boring. But you can get the book there.

Oh, and if you pre-order the book, you get a free copy of the comic. So if you want the book in a graphic novel form, or at least chapter nine of it, it's there. It's free. And you pre-order, we send you the comic or let you download it. So, yeah. Love it. Well, thank you, man, so much again for investing your time with me today and for all the people who are listening. And I would certainly love to continue our dialogue as we both progress, man. Absolutely. And a way to go on the Midwest, Dayton, Ohio.

Yeah. Great city. I would feel very comfortable there. Awesome. All right. Well, thanks so much. Jim. It was great talking to. Thanks, Ryan. Bye. Bye. Bye. Well, what an interesting talk with Jim. A few of the parts that really stuck out to me. having the mindset of thinking, what if that had never been done before? And there are stories in history like one of my favorite examples, Orville and Wilbur Wright here in Dayton, Ohio,

and creating the first ever flying machine. But taking that thought process towards you as a leader with your team, not being afraid to try something new, perhaps something that has never been done before. And then his interesting process when making hiring decisions, being up front, laying it all on the table, the good, the bad, the ugly, and letting the candidate know, we will find out if you're lying. Maybe not today, but at some point, but just putting it all out there. I think that's a useful method to use. And then why it's also a great idea to surround yourself with brilliant people who force you to level up.

Jim mentioned that he feels like the dumbest person in the room or at the table. As you heard, I don't fully agree with that given his track record of incredible performance. However, the mindset I do agree with and think that is a good idea. I hope you enjoyed this one as much as I did. If so, I would love it if you would tell a friend or two, perhaps one that has never listened to the Learning Leaders show that this could be helpful for them. because you continue to do that. It gives me the opportunity to do what I love on a daily basis. And for that, I will forever be grateful.

Thank you so much. Talk with you next week. Can't wait. Perfect. Thank you so much, man. Really appreciate you going into depth into a wide range of topics and areas. That's a great interview, man. Fantastic questions.

That was fantastic. So, way to go. Yeah. I appreciate. I appreciate it. I will certainly be in touch with your team once we ship this off. Get it all intro, outro, put it on it some music, and then I'll get it out and I'll make sure I'll let you and your team know when it's going live. Thanks, man. Awesome. All the best. All right. Thanks. Bye. Bye, right.