Ep. 19 Jim McKelvey headshot on the Decoding Digital podcast

Decoding Innovation: Jim McKelvey on "The Innovation Stack"

A CONVERSATION ABOUT SURVIVAL & GAME-CHANGING INNOVATION

37 min

Ep. 19 Jim McKelvey headshot on the Decoding Digital podcast

37 min

If you think great innovators have superpowers, Square co-founder, Jim McKelvey, will make you think again. After Square survived a direct attack from Amazon in 2014, Jim was determined to find out why. In this episode, learn what it takes to build a world-changing company, and why solving difficult problems is the true key to creating resilient businesses.

Read transcript

“Occasionally you can't copy something that hasn't been invented yet. And what I want the world to understand is that all of us, if we're ready to do that little bit of innovation, the two or three times in our life, when it matters, the world's going to be a better place.”

Quick takes on...

The “Hero” Myth


“The people that I studied are not heroes. They are people who for one reason or another ended up in these weird situations where they had to become adventurers. They had to learn how to survive in the jungle. And learning that survival skill set is something that we're all capable of.“


Survival and Innovation


“Occasionally somebody gets dropped in the jungle. For some reason or another, they get put in a very hostile environment and then just don't die. And the process of not dying is what I study in the book. And it turns out to have this repeatable path. And that's what I call an innovation stack.”


The Role of Disruption in Innovation


“Throughout history, there were these companies who not only survived existential threat, but they then grew up later to become the biggest in their business. The biggest bank in the world, the biggest furniture company in the world, the biggest airline in the United States, the biggest frozen foods company in the world, the biggest automaker… There's a pattern here that's powerful.”


 

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Meet your guest, Jim McKelvey

CO-Founder, SQUARE

Jim McKelvey spotlight on the Decoding Digital podcast

Best known for co-founding Square, Jim McKelvey is also a master glass artist. His industrial design work is part of the permanent collections of the Museum of Modern Art in NYC and The Smithsonian in Washington DC. His glass studio, Third Degree Glass Factory in St. Louis, is one of the main centers of glassblowing arts in the United States.



After Square, Jim founded LaunchCode, a non-profit that makes it possible for anyone to learn programming and land a full-time job in under six months, for free. Jim’s most recent venture, Invisibly, gives people control of their online identities. He also recently published a new book, "The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time."


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Ep. 20 Gerald Kane headshot on Decoding Digital

Decoding Digital Heroes: Dr. Jerry Kane on Digital Leadership

WHY PEOPLE ARE THE KEY TO DIGITAL TRANSFORMATION

33 min

According to Professor Gerald C. Kane, co-author of “The Technology Fallacy,” digital transformation is not a technology problem, it's a people problem. After surveying more than 16,000 business leaders from companies such as Walmart, Google, and Salesforce, the data is clear: Businesses must focus on people and processes—not just technology—to compete in a digital world.

Episode transcript

James McKelvey:  [0:06] Occasionally, you can't copy something that hasn't been invented yet. What I want the world to understand is that, all of us, if we're ready to do that little bit of innovation the two or three times in our life when it matters, the world's going to be a better place.

Dan Saks:  [0:22] That's Jim McKelvey, a pioneer in the payment space. 10 years ago, he sketched out a design for a credit card reader that attaches to a mobile phone. He then teamed up with Jack Dorsey to launch a new payments company called Square.

[0:38] His simple idea sparked a business revolution that put the power of credit card payments into the hands of small merchants. Today, Jim serves as a Director of Square, which sees almost $5 billion in annual revenue. In addition to his role at Square, Jim is also an author. Last year, he published a must read book called "The Innovation Stack    Building an Unbeatable Business One Crazy Idea at a Time."

[1:05] Filled with stories from the early days at Square, the book has been called a thrilling business narrative that's a first person look inside the world of entrepreneurship and a call to action for all of us to find the entrepreneur within ourselves.

[1:18] In this episode, Jim talks about building a company, what it takes to beat Amazon, and why a steady stream of new ideas is so critical for success. This is Daniel Saks, Co CEO of AppDirect, and it's time to decode the innovation stack.

[1:39] Welcome to "Decoding Digital," a podcast for innovators looking to thrive in the digital economy. I'm your host, Daniel Saks, and I'll sit down with other founders, CEOs, and changemakers to decode the trends that are transforming the way we work. Let's decode.

[2:02] I'm going to kick it off with the how we met story. If you recall, a few years ago, we were both invited to the UK Prime Minister's Office at 10 Downing Street. I recall walking up a big, famous staircase with portraits of the past prime ministers. There was a crowded room on the right.

[2:18] I turned left and went into a relatively empty room with two wing back chairs, sat down on one of the chairs, and in the other chair was you, Jim. We had, I think it was an hour, maybe two hour conversation, ranging from everything from urban geography to the state of San Francisco, to technology, to politics.

[2:37] I remember being so fascinated with your approach and passion for those conversations and excited to share some of those stories with the audience today.

James:  [2:46] It's good to see you again. That was a great conversation. I remember it well. I was expecting a boring, stuffy British cocktail party and got anything but.

James McKelvey:  [0:06] Occasionally, you can't copy something that hasn't been invented yet. What I want the world to understand is that, all of us, if we're ready to do that little bit of innovation the two or three times in our life when it matters, the world's going to be a better place.

Dan Saks:  [0:22] That's Jim McKelvey, a pioneer in the payment space. 10 years ago, he sketched out a design for a credit card reader that attaches to a mobile phone. He then teamed up with Jack Dorsey to launch a new payments company called Square.

[0:38] His simple idea sparked a business revolution that put the power of credit card payments into the hands of small merchants. Today, Jim serves as a Director of Square, which sees almost $5 billion in annual revenue. In addition to his role at Square, Jim is also an author. Last year, he published a must read book called "The Innovation Stack    Building an Unbeatable Business One Crazy Idea at a Time."

[1:05] Filled with stories from the early days at Square, the book has been called a thrilling business narrative that's a first person look inside the world of entrepreneurship and a call to action for all of us to find the entrepreneur within ourselves.

[1:18] In this episode, Jim talks about building a company, what it takes to beat Amazon, and why a steady stream of new ideas is so critical for success. This is Daniel Saks, Co CEO of AppDirect, and it's time to decode the innovation stack.

[1:39] Welcome to "Decoding Digital," a podcast for innovators looking to thrive in the digital economy. I'm your host, Daniel Saks, and I'll sit down with other founders, CEOs, and changemakers to decode the trends that are transforming the way we work. Let's decode.

[2:02] I'm going to kick it off with the how we met story. If you recall, a few years ago, we were both invited to the UK Prime Minister's Office at 10 Downing Street. I recall walking up a big, famous staircase with portraits of the past prime ministers. There was a crowded room on the right.

[2:18] I turned left and went into a relatively empty room with two wing back chairs, sat down on one of the chairs, and in the other chair was you, Jim. We had, I think it was an hour, maybe two hour conversation, ranging from everything from urban geography to the state of San Francisco, to technology, to politics.

[2:37] I remember being so fascinated with your approach and passion for those conversations and excited to share some of those stories with the audience today.

James:  [2:46] It's good to see you again. That was a great conversation. I remember it well. I was expecting a boring, stuffy British cocktail party and got anything but.

Dan:  [2:56] Fascinating times, and let's try to bring back some of those stories. I recall, when we chatted, you talked a lot about how, at the early days of founding Square, there was a passion for solving the retail merchant story and figuring out ways of providing entrepreneurs with tools to succeed.

[3:14] Can you tell us a little bit from the impetus of how you came to that thesis and how you scaled Square in the early days?

James:  [3:21] It was less of a thesis, more of a personal problem when we started. I was a small merchant. I still am, actually. I'm a glassblower. It's been a hobby of mine for years. It used to be a former profession, but I still make stuff that nobody needs and try to sell it whenever I can.

[3:35] That was the situation I was in when Jack Dorsey and I decided to start a company together. I'm also a computer engineer, and Jack used to work with me at another firm. Jack and I rekindled our business relationship after he got kicked out of Twitter. He wanted to start a new company with me, and we were looking for ideas. That's what became Square.

Dan:  [3:56] Tell me about the pain of a glassblower and then how that evolved into Square.

James:  [4:01] The pain of glassblowing is profound, both in terms of burns and cuts sometimes, but mostly that you're a small merchant, and you have to take what they give you. I was sick of taking it. Specifically, I was sick of the abuse I was getting from the credit card companies. There was this very abusive system for small businesses at the time.

[4:20] Note that we're talking about 2008, 2009. At that time, it was commonplace for us to get rates that were triple, quadruple, or more than medium sized businesses. We were a small business. We couldn't fight this. I was pretty upset because I knew it was going on, but I was powerless as an individual to do anything about it.

[4:40] Once Jack and I decided to focus a company on that, we were able to gather the resources and make it fair for everybody.

Dan:  [4:46] Obviously, there's been a commerce revolution of the last decade, going from 2009, height of the Great Recession, and the future of entrepreneurship potentially looking bleak. Can you tell me, the movement that occurred over the last 10 years, is it what you anticipated when you were starting Square?

James:  [5:02] I wouldn't say we anticipated it, because it was already happening. What we saw was an acceleration. As tools became more available, and remember the iPhone landing en masse around '08, sparked a revolution that had begun with BlackBerry. It was definitely going to continue. The online revolution had already started.

[5:21] None of these were new trends, especially if you're a technologist, but we saw an increasing rate of change. We saw an acceleration of all this change.

[5:33] For the last year during COVID, we've seen probably a doubling again of that rate of change. This happens when there is new technologies, when there is new opportunities, but then also happens when there are crises. Right now, being in a pandemic, we're seeing a lot of change that probably we wouldn't see for another 10 years, happening immediately.

Dan:  [5:51] How does that impact merchants?

James:  [5:55] It kills some of them. [laughs] Change to those who don't adapt is death. To a lot of others, and fortunately, a lot of small businesses are showing great adaptation skills. What Square's been doing for the last year and a half is shoveling out these tools so that small businesses can very rapidly adapt.

[6:15] In the last half year, we've really upped the pace at which we're shipping tools because the small businesses are very nimble. That said, it's been really tough. My studio has been shut down for a year. We're mostly an event venue. We call ourselves the glassblowing studio, but we make most of our money off a bar.

Dan:  [6:31] [laughs]

James:  [6:32] Without being able to sell drinks to people who are having parties and weddings, we basically lost all our income in the last year. Now, fortunately, we've been able to scramble and sell some other stuff.

[6:43] When we put up an online gallery, we've been able to do some things virtually that we hadn't focused on previously, but it's been very tough, and it's been tough for millions of small businesses, and I know a lot of friends who've lost their business because of COVID.

Dan:  [6:56] This digital divide has become more pronounced, particularly since COVID. There are some who have been beneficiaries, but some who have been challenged. What do you think the role is of the technology industry in supporting merchants to make that transition to be able to adopt services that will help them?

James:  [7:11] It's super important that the technology industry continue the trend of making tools that were once only available to the elites available for the masses. Square is certainly in that business, but there are hundreds of companies that are doing this.

[7:23] I would argue the Amazon, for all the bullying they've done in the market and for the beating that we got from them, is still doing some good things as far as enabling small businesses in some ways, but they're also bulldozing others. Walmart basically killed Main Street in a lot of small towns, and I have a love hate relationship with what they've done.

[7:42] The technology businesses, in general, are more likely to bring opportunity to companies that are smaller than companies that are large, so that's a good thing.

Dan:  [7:52] One of the things that I've observed and it's a key theme of the podcast is that transformation takes a certain type of innovator and someone who has certain characteristics to have the vision, the tenacity, the ability to learn, the ability to change.

[8:05] What patterns have you seen over the last several years that allow essentially small merchants to succeed through embracing this innovative change versus, let's say, the mindset of not being able to embrace technology and not being able to transform?

James:  [8:19] It's a platitude, and I would imagine pretty boring for most of our listeners to hear me spout off about how everybody needs to embrace change and get with the tech program. Duh, OK. Let's assume that that's been said...

Dan:  [8:31] [laughs]

James:  [8:32] and has put half your listeners to sleep already. The question that I would ask is what's interesting? What's interesting to me is the stuff that's unexpected or that you wouldn't think would happen, but happens anyway. If you asked me that question, the way I'd answer it is I'd say you've got two different classes of innovation.

[8:52] One, I focused my book on which is this transformative massive change that leads to new markets. That to me is really interesting because it's very rare, and also because it has a totally different set of rules.

[9:05] Which is to say if you think of the other type of innovation, which is iterative stepwise incremental innovation, which is also super important by the way, and where most human progress is incremental, but you use a different set of rules in that world.

[9:18] The reason I wrote the book, and the reason I made so many mistakes in my early career was that I didn't understand that there was a different set of rules that applied in each world. What we're seeing right now in large part is the boring type of innovation. The stepwise innovation that is just being accelerated. Now that's not to say, it's not super important.

[9:40] If you don't have a website, you might want to get a website. If you haven't started using social media, you might want to do that. If you haven't learned how to do a Zoom meeting, guess what? You're going to be left out.

[9:52] Saying you need to embrace that innovation should elicit the thud of somebody falling asleep in the middle of your podcast. That's what I would not want to talk about because we should all be doing it, and if you don't think you should be doing it, why the heck are you even awake and listening to a podcast right now?

Dan:  [10:09] [laughs]

James:  [10:10] Let's forget that. What I'd like to do is talk about this stuff that was never explained to me, which is this different type of innovation that comes from basically not being able to copy what everybody else is doing. When you and I met at 10 Downing Street a couple of years ago, I was basically deeply focused on this area, which is the stuff that I never understood.

[10:29] That innovation, it turns out, is accelerated by crisis. If you look at breathtakingly new innovations, not just Square, but dozens of companies throughout history, hundreds of companies throughout history, that have changed entire markets and created an entire new markets.

[10:50] In almost every case, and certainly in every case study that I put in "The Innovation Stack." In every case, there was some giant cataclysm that accompanied it. The biggest bank in the world was built in San Francisco after the San Francisco earthquake. Was that a coincidence, or was that causative? Did that earthquake mean that the Bank of Italy became the biggest bank in the world?

[11:11] I don't know. IKEA, I studied them in great depth, and they had to deal with a bunch of crises, not the least of which being World War II and the aftermath there. What I think is really interesting is that massive societal crisis also goes hand in hand with these transformative businesses that 10 years later are the biggest in the world.

Dan:  [11:33] Tell me a little more about the thesis of The Innovation Stack, and how it applies in that transformative element?

James:  [11:40] I like to use the word thesis. It makes it seem more academic than it really was. The Innovation Stack with a homework assignment that I got from Herbert Kelleher. The way it went down was not some academic exercise. I was curious as to how Square survived an attack by Amazon. Amazon copied our product, undercut our price, and we expected that would kill us.

[11:59] There was literally no other company that has ever survived an Amazon attack like that back in 2014 when Amazon did it to Square. When we looked at the world, we thought, "This is really bad." It turns out that Amazon was the one who retreated, and a year later, they gave up. That was great news for me, but it also made me really curious as to why that happened?

[12:20] I had this weird version of survivor's guilt, which is to say, "How the hell are we still standing? Nobody beats Amazon as a startup, and yet we did. What went on here?" I spent this better part of two years researching other companies that that had happened to because it's a very rare event. It's a very rare thing for startups to survive an attack like that.

[12:43] Then I found throughout history, there were these companies, who did it and not only had they survived this existential threat, but they then grew up later to become the biggest in their business.

[12:55] The biggest bank in the world, the biggest furniture company in the world, the biggest airline in the United States, the biggest frozen foods' company in the world, the biggest automaker. I was like, "Holy shit. There's a pattern here that's more powerful." The problem was, I did not do an academically rigorous study. I was just mining history, and everybody I was studying was dead.

[13:14] The only guy who was alive when I'd finished my work was Herb Kelleher. He was the founder of Southwest Airlines. I took everything to Herb, and I was like, "Hey, Herb. I don't want to think I'm delusional here, but thinking I've stumbled onto something that might just be selection bias."

[13:28] Herb sat down with me, and he got really excited about what I found. He said, "Yeah. This explains what happened to me at Southwest, and I never really thought about it this way." He's like, "How are you going to share this with the world?" [laughs] I was like, "I wasn't necessarily going to do that," but Herb was legendary. He inspired me to get out there and write eight versions of a book.

[13:52] The thesis is basically this. If you are in a situation where you are unable to copy what everybody else is doing, you are forced to survive using a different set of skills. Let's talk about this in something we understand and probably fondly remember which is travel    back when we used to travel.

[14:12] If I said, "OK, Daniel. I'm going to send you to a country. Why don't you prepare for travel?" You'd probably pack a suitcase. You'd probably pack a passport. You'd probably pack some forms of currency and some electronics. You'll be really upset if I dropped you in an uncharted jungle, and that was where you were going to travel to.

[14:31] You would have to have a totally different survival set. Like the little wheels on your suitcase are not going to do you any good at all in the jungle. You might have wished you'd brought a knife, or a gun, or maybe a hat. If you pack for the wrong trip, you're going to have a bad time.

[14:46] What happens is most of us pack for a trip in business, which is very similar to the one everybody else is taking. A little more tourists than explorers. Occasionally somebody gets dropped in the jungle, usually unexpectedly. These are not usually, interestingly, bold adventurers. These are not guys wearing khaki and have full beards when they depart.

[15:07] They're people who, for some reason or other, get put in a very hostile environment and then just don't die, and the process of not dying is what I study in the book.

[15:16] It turns out to have this repeatable pattern, and that's what I call an innovation stack. That was the thesis behind all this research and writing that I've done, which is, "Hey, man. I wish somebody had told me when I was 20 and starting on business. That there was a totally different skill set that I was going to need if I was going to do something truly innovative."

Dan:  [15:34] How much of this comes down to certain characteristics of the individual, and how they react to, for example, an attack on Amazon?

James:  [15:42] It's interesting. We tend to glorify the individual too much. It is a basic human trait, which is to survive. Even the most passive, polite, meek person doesn't want to succumb to death. If you try to drown somebody, not that I've tried. That's a bad analogy. [laughs]

[16:07] In the times I've seen people who've had their lives threatened, that I've been in maybe only three instances in my life where there was a life threatening situation going down around us. I was once in a restaurant that got shot up. Somebody burst into a restaurant...Surprisingly, this is not in St. Louis. I'm an St. Louisian, but this actually happened in France.

[16:28] I was in France. I was at a restaurant. Some lady comes in with a gun starts shooting at them. I don't know, it was all in French. I don't know what the hell they were fighting about, but the fact is, I watched the reaction of all the restaurant patrons, and we all behave in the same way when our life is threatened. It seems to be this thing that we share as humans.

Dan:  [16:45] Was it like you'd see in the movies?

James:  [16:47] No. It's not like in the movie. People were diving under the tables. I was the closest to the shooter, and I had a chance to take her out. If I'd been some bold person, I probably could have tackled her. My first instinct was to dive under a table when somebody whipped out a gun and started blasting away. I wish I had been a hero. It turns out I'm not a hero.

[17:07] I'm just a guy who wants to save his tail. Maybe somebody else would have done that? I'm sure there's somebody else on the planet who would have done that, but most of us share this dive under the table survival instinct because basically, that's [laughs] what everyone in the restaurant did. It's one of my three instances. That's how we all reacted, at least in that sample set.

[17:27] In that sample set, I can tell you that the fear that kicks, the survival instinct you have when somebody is firing bullets at you, is very similar to the survival instinct we felt when Square was attacked by Amazon.

[17:45] According to Herb Kelleher and the other people that I researched for the book, when the US airlines all banded together to drive Southwest out of business, and were blocking fuel pumps and suing them, torpedoing their ITL, and doing all sorts of crazy stuff, it created this warrior instinct that permeated his organization.

[18:06] Herb was one of the reasons Southwest became so successful. Back to your big question, which is do you have to be some sort of a special, not dive under the table person to be a successful entrepreneur? My answer is, "No," because I'm the guy who dives under the table [laughs] and my tail look like it went out of shape but is pretty good, right now.

[18:25] It's this thing that we all possess. The trick is learning how to trigger it in a business setting, when you don't want to put yourself in an existential threat situation. One of the ways to bring this characteristic to the surface is to put yourself in a situation where your literal life or your business life depends on a certain set of actions.

[18:44] That's probably a bad way to do it. People don't voluntarily sign up for that mission. What I found is that a lot of these hyper successful companies, and I put Square in this category, signed up for what they thought was going to be an easier mission, and then through a circumstance found out that they'd ended up in the jungle, like welcome to the jungle. [laughs]

[19:07] That was certainly the experience of all the companies that I studied. In other words, you don't have to be a hero.

Dan:  [19:14] When you look at IKEA and Southwest and your experience with Square, was it one defining moment that built this resilience and the culture that then enabled it to be easy later, or would you say they were repeated moments through Square's history even maybe recently that were that life threatening opportunity where people have to die behind?

James:  [19:33] It's something that happens more frequently when you're a startup. Square was pretty freaked out when the pandemic hit because all of our merchants, most of whom have stores and face to face human commerce...The device that I created was a thing that plugs into your iPhone and swipes your credit card while you're standing within two feet of me when that happens.

[19:55] The basis of a lot of our products was this in person commerce, which was going to get wiped out. Yeah, there was that fear. The good thing is that Square's a very resilient company with lots of resilient merchants. It was easy for us to keep going and building tools that our merchants requested. That turned out to be not too hard to rekindle.

[20:17] It's tougher in organizations that have less of an entrepreneurial DNA set. Square still thinks of itself as a startup. We still act the same way. God knows, we still dress the same way. We certainly have a culture that's more akin to a 30 person company than a 3,000 person company, even today.

Dan:  [20:37] In 2013, you founded LaunchCode, a nonprofit that makes it possible for anyone to learn programming. Why is it so important to teach people to code?

James:  [20:46] It's important to get them jobs. It's important that we have people that can fill these jobs. The companies of the US and the world are not growing because we can't get programmers to fill necessary slots. You say, "Why does a bank need a programmer?"

[21:00] Let me tell you. If you're a bank and you don't have some IT strength on your staff, you're not going to be a very successful bank. It turns out that all companies, to some extent, these days are, like it or not, technology companies. These companies need programmers. They need folks who can wrangle the computer.

[21:15] We have this huge, growing deficit in the United States. I looked at this, and I said, "This is silly, because it doesn't occur anywhere else in the economy." If you look at the shortage of welders, we, from time to time, have shortage of welders or nurses or stuff like that.

[21:31] It turns out, we can train welders. We can train nurses. We can train these other skill sets. We were never able to train programmers. That's proven out by the numbers. I was like, "What the hell's going on here?" It turns out, the problem is not training programmers. It's the way we place programmers who have been trained and don't have credentials that the market respects.

[21:51] There's a bunch of reasons for this, but the basic thing is, you can be totally competent as a programmer and still not get a job. The reason is because, unless your resume looks a certain way, employers are never going to give you a chance. If you never get that chance, then who cares if you're a good programmer?

[22:07] What we did in LaunchCode was, we said, "OK. Forget education. Let's figure out how to solve the job placement problem." We, I would say, uniquely in the United States, have solved the job placement problem, which is to say, if you come in to LaunchCode and you can pass our test, I guarantee you'll get a job.

[22:25] I have maintained that guarantee now for seven years. You come in, and you pass our skill set, which is not that high, but if you pass our threshold, we'll get you a job. That's because we've negotiated with all these companies who now respect the LaunchCode credential. I keep that credential tweaked to the point where we never disappoint the employers.

[22:45] Yes, LaunchCode is an education center. One of the things, you come in. You take our test. You say, "Sorry, Danny, you don't cut it." We'll also, at the same time, offer you free education to the point where you can pass the test. We never turn anybody away. The basic idea of LaunchCode is job placement, which seems to be the thing that's broken in computer education.

[23:04] Let me put that another way. If you know somebody who's about to give $15,000 to some bootcamp or about to sign away a couple years of their life to some accredited or unaccredited program with the hopes of they'll get a programming job, watch out, because a lot of those educational institutions don't deliver on the promise. That's the thing to be careful of.

Dan:  [23:27] You've led and inspired many different ecosystems. You have the ecosystem of merchants across Square. You have engineers and programmers that have been through LaunchCode, and then you've interviewed and profiled many entrepreneurs of innovative companies. What common themes do you see in these different groups?

James:  [23:46] I see the pattern that I talked about in the book a lot which is that most people, including myself, I'm not saying I'm any different, are very good at copying, and we're very good at ambulating success systems. We are less good and less comfortable when we have to think differently, when we're forced to innovate.

[24:07] The thing that I always tried to do is prepare my organizations and my fellow co workers to be ready in case innovation becomes necessary. I'm not the one in these innovation T shirt guys that says, "Hey, we innovate every day here." No, screw it. That's a last resort. Innovation is the thing that you do.

[24:28] There's a hammer and a big pane of glass over the innovation lever because generally, it's better to copy something that you know works as opposed to invent something that, "Hey, it might not work." In all the organizations that I've run or being part of, what I see is this ability from time to time as it becomes necessary to be able to pull that lever.

[24:52] The reason I wrote the book, I wrote the book, I dedicated the book to somebody who I thought was incredibly competent. She's brilliant. She's got a Master's Degree from probably the most prestigious educational institution on the planet. You got a list of superlatives down the line. You have hardworking, charming, blah, blah, blah.

[25:10] I've watched her work over the years, and whenever she encounters a problem where she can't see that somebody else has solved it or she doesn't know that there's a known solution, she stops, and she says, "Well, I have to get qualified. I'm not qualified to do this."

[25:25] My answer to her which is now 300 pages, is, "Look, the first person on the planet to do something is always unqualified. I don't care what you're doing. You're the first person to land a double backflip. You're not qualified to do that because you haven't been trained."

"[25:42] A double backflip will kill you. If you're the first person in humanity to land that sucker, guess what? You've done it as an unqualified person."

[25:49] My message to my friend and to everybody who reads the book is you can spend most of your life, or all your life, and have a very happy life, copying what everybody else has done. That's probably what you should do. Occasionally, life is going to give you some opportunity to do something where you don't get to copy the solution.

[26:12] At that moment, you have a choice. You can either say, "Well, I'm going to do it," and use this totally different skill set that I've never been trained to use and is really unfamiliar and weird. It's the explorer, not the tourist skill set, or, "I'm going to choose to not do it."

[26:26] My message to my friend is, "Look, you've got this fantastic set of skills, and you might be the person who gets it done, even though nobody has done it before you. That still doesn't mean you can't do it, it just means that if you succeed, you will have succeeded as an unqualified person."

Dan:  [26:41] I tend to think of an innovator who would thrive in that situation as a hero, but I'm really intrigued by that jump under the table analogy and your thesis around, it's not that people are heroes, it's maybe the opportunity that presents them to actually innovate and think uniquely.

James:  [26:58] That's a great point, Daniel. I'll tell you who one of my heroes was. It was Herb Kelleher. I grew up thinking Herb Kelleher was the biggest badass on the planet because, during my formative years, Southwest was not only the best airplane stock in the country, it was the best stock in the country for a decade running.

[27:15] They were the best small business, and they had all these superlatives. When I finally got to meet the legend, and he gave me this homework assignment of basically, "Hey, take your research and make it in some digestible format." I thought I would impress Herb by doing something abnormal, which is to say, I wasn't going to write a business book, I was going to write a comic book.

[27:35] I did the comic book. As a matter of fact, the first draft of "The Innovation Stack," it is a graphic novel. It's all cartoons and some stories mixed in, but it turns out that these stories of entrepreneurship make good graphic novel stuff because there are shootings. There are shootings, and bleedings, and frontal nudity, and [laughs] there's all sorts of great stuff that makes a comic book go.

[27:56] I wrote this thing up as a comic, and I told Herb, I was like, "You're going to love this. I did it all as a graphic novel." He was pissed. He was not happy. I was surprised, but Herb's point was that by telling the story of entrepreneurship in a format that lends itself to comic book portrayal.

[28:19] There's a Chapter 9 in the book, which I couldn't resist. Chapter 9 was such a badass comic that I just made it a comic book. Have you seen this yet?

Dan:  [28:26] No. I haven't seen that version.

James:  [28:29] Go to jimmckelvey.com and you can get it for free. I printed up 10,000 of these things. It's a great comic. There're Nazis. There is destruction of a major city. There's that guy yelling at you. It's totally badass.

[28:42] I wanted to have the whole book this way, but here's why Herb was such a genius. They're not hero stories. The comic is the way you tell a hero story. The hero in the comic is some larger than life, bolder than I am, tougher than I am, smarter than I am, younger than I am, older than I am, wiser than I am.

[29:02] It appears she has some superlative or some superpower that I don't possess as a normal flow, and because of that I read a comic book and I watch all these heroic antics, and I say, "Oh, that's good for that person with superpowers, but bullets don't bounce off Jim Mckelvey, so I'm just not going to try that."

[29:21] It was the wrong format. I basically took all the comics out of "The Innovation Stack," and rewrote the whole thing as a... [laughs] It still reads like a comic book in some spots.

Dan:  [29:30] I feel that. I get that.

James:  [29:33] The graphics are gone. The point is, it's not a hero story, it's an everyman story. The people that I studied are not heroes. They are people who, in many ways, are very shy, they're meek. I'm no bold adventurer.

[29:45] They're folks who just, for one reason or other, ended up in these weird situations where they had to become adventurers. They had to learn how to survive in the jungle, and learning that survival skill set is something that we're all capable of.

Dan:  [29:58] I feel I'm fortunate to meet so many interesting people like you and others that have these incredible stories, and there's so many interesting themes that you can bring to others.

[30:07] When I look at my community, whether it's a small merchant, whether it's an enterprise merchant, whether it's someone in our ecosystem, they're all these people are passionate and you want to inspire them to be heroes.

[30:16] I like that contrarian view which is, "Hey, we're all on one level playing field, and we all have the secret sauce to be a hero, but who cares about being a hero. We're all just here to react and innovate," and it's humbling. It's interesting.

James:  [30:30] I think it's empowering. I want people off the sidelines. I don't want people to feel they have to spend their entire lives only replicated with what other people have proven works. That's the real tragedy. Unfortunately, we've put this hero label on the behavior that doesn't have a guaranteed outcome.

[30:52] We say, you are so bold, or you have vision, or whatever superlative you want to hang on it, and that tends to discourage people who really have what it takes, but have been trained their entire lives to do nothing, but copy. Don't buy the damn book, but just listen to the following two minutes. You've been schooled your entire life.

[31:14] Actually, for the million years before you were born, your genome evolved to replicate what works. That's how we educate. That's how we procreate. That's how we do everything that's successful. With one little exception, and that is occasionally, you can't copy something that hasn't been invented yet.

[31:34] What I want the world to understand is that all of us, if we're ready to do that little bit of innovation the two or three times in our life when it matters, the world's going to be a better place because right now, we got a bunch of problems with a disease. We got a bunch of problems with the environment. We got a bunch of problems in society.

[31:51] I don't want only the heroes or people who think they're heroes, on that problem set because there may be 100 people in that category on the planet. I want eight billion people to think that they have the skills. I go through a very boring mathematical analysis of what those skills are, how to apply them, and how you already possess them.

[32:15] Then, I think pretty candidly about how uncomfortable, at least I felt, and the people that I studied felt when applying. If you do this stuff, and you still feel bold and empowered, you're probably psychotic, or at least in some way, delusional. Most of the folks that I studied, the so called heroes, were afraid.

[32:36] I read Kamprad's diaries. The guy was crying himself to sleep at night. This is the most powerful furniture builder on the planet, probably in the history of humanity. There's never been a person who had put more furniture in the hands of more people than Ingvar Kamprad, and he admits to crying himself to sleep at night during the early days of IKEA.

[32:56] There's your hero crying himself to sleep on a bed that was put together with a six millimeter Allen key. Whatever it takes to get someone off the bench, fine. You want to think yourself the hero, that's what would get you off the bench, fine.

[33:11] I prefer to think of it as, "Wait a second." As just a normal human who doesn't give in to death. I possess these qualities that lie deep in reserve, but sometimes have to surface, and he wrote the circumstances where they surface, and here are the feelings that surface along with those circumstances.

[33:30] I don't want people quitting because they feel uncomfortable when they're doing something new because, believe me, if you're doing something new, something truly new, you will feel uncomfortable. I've never found anyone who doesn't.

Dan:  [33:43] That is inspiring to everyone. I really appreciate your speaking from the heart there because anyone has the potential to step up to an opportunity, and that vulnerability is something that I feel. In fact, sharing my personal experience, the first time I did a podcast interview, I was terrified.

[33:57] Even now, I'm speaking to the founder of Square and there's a nervousness, but I think that exposing more of that vulnerability is important today.

James:  [34:06] Talk to anyone who is a performer, talk to the lead singer of a band, or a stage actor, or even the TV actor, you'll find that most of them, even if they've been in front of this crowd a thousand times, still get nervous before they get on stage, and I'm not surprised by that. It's unnatural to play the hero, and it triggers a different set of physiological responses.

[34:30] I wrote a chapter on fear. What it feels like, and how to deal with it? I was a little weird. You don't usually put a fear chapter in a business book. If we're not honest about it, then what happens is that people feel weird. They get in the situation. They go, "Oh, I shouldn't feel this way. I'm probably not qualified." Then they quit.

[34:48] No, you're going to feel unqualified because you are unqualified. The other thing that I discovered is that none of the so called heroes that I studied, including Jack and me, were qualified to do what we did. Jack and I didn't know anything about payments. Kelleher was an attorney. He didn't know anything about airlines.

[35:07] Kamprad, hell, he even started IKEA when he was 19 or 17, he wasn't qualified to do anything. [laughs] That's for sure. What are the qualifications here? You're not going to be qualified to do something for the first time anyway, so who cares.

Dan:  [35:20] Jim, I want to thank you for coming and sharing your passion and being vulnerable. To me, this was super inspiring to hear from yourself and so many impressive people who I would consider heroes, but hear about how they're just like many of us. That's truly inspiring to give anyone, whether it's the listeners here, or readers to your book, the tools to be able to innovate and succeed. Thank you.

James:  [35:43] Awesome. Daniel, thanks so much. Good seeing you again...

[35:45] [background music]

James:  [35:45] and thank you for helping us get the word out.

Dan:  [35:47] Well, thanks. On the next episode of Decoding Digital...

Gerald Kane:  [35:55] Digital heroes need to be both inspired, empowered, and supported. If you can do both of those, almost at least 70 percent can be a digital hero. We can build them.

Dan:  [36:07] Professor at Boston College and author of "The Technology Fallacy," Gerald Kane.

[36:12] [background music]

Dan:  [36:16] Thanks for listening to Decoding Digital. Make sure you never miss an episode by subscribing to the show in your favorite podcast player. To learn more, visit decodingdigital.com. Until next time.

Transcription by CastingWords

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