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Speaker 1: This is Masters in Business with very Results on Bloomberg

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Speaker 1: Radio this week on the podcast what Can I Say?

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Speaker 1: A masterclass in entrepreneurship technology, learning from your mistakes, building

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Speaker 1: a wonderful brand and wonderful company. Jim McKelvey. He is

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Speaker 1: the co founder of Square along with Jack Dorsey. They

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Speaker 1: built an amazing company which is now publicly traded. He

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Speaker 1: has done a variety of really fascinating things, and I

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Speaker 1: think you will find our conversation quite intriguing. He is

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Speaker 1: also the author of The Innovation Stack, Building an Unbeatable Business,

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Speaker 1: One Crazy Idea of Time. I have a decent number

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Speaker 1: of authors, um pitch me on coming up on the podcast.

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Speaker 1: And for the most part, I find a lot of

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Speaker 1: the books a little tedious and and tough to plow through.

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Speaker 1: And so you don't hear those folks. The folks I

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Speaker 1: bring the books tend to be more interesting. I found

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Speaker 1: this to be a really amusing, well written, uh and

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Speaker 1: fascinating book. Uh not just about his experiences at Square.

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Speaker 1: But Jim went back and said, why did Square win

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Speaker 1: when there were so many forces aligned against us, including

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Speaker 1: behemoth Amazon? And so he put in the research and said,

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Speaker 1: let's figure out what we did right and see if

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Speaker 1: there are lessons to be shared with the world, and

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Speaker 1: that's what this book is about. You're gonna find this

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Speaker 1: conversation to be absolutely fascinating. So, with no further ado,

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Speaker 1: my conversation with Jim McKelvey. This is Mesters in Business

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Speaker 1: with Very Renaults on Bloomberg Radio. My extra special guest

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Speaker 1: this week is Jim McKelvey. He is the co founder

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Speaker 1: of Square along with his colleague Jack Dorsey Uh. He

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Speaker 1: is an independent director at the Federal Reserve Bank in St. Louis.

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Speaker 1: He is also the author of a book, The Innovation Stack,

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Speaker 1: Building an unbeatable business, one crazy idea at a time.

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Speaker 1: Jim McKelvey, welcome to Bloomberg. Thank you, Barry. Actually, I'm

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Speaker 1: now the chair of the St. Louis FETI you are

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Speaker 1: the chair the president. No, um, I don't get to

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Speaker 1: vote on that interest rate. I get to vote on

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Speaker 1: the little interest rate. That's fascinating. We'll talk about that

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Speaker 1: in a bit. But let's start out with your background.

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Speaker 1: And I have to begin by asking you a question.

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Speaker 1: What's the difference between an entrepreneur and a business person?

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Speaker 1: These days? Nothing because the word is the same. But

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Speaker 1: originally the word entrepreneur meant somebody in business who was

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Speaker 1: doing something different, very different, So we're talking about the

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Speaker 1: Right brothers trying to build the first airplane, or somebody

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Speaker 1: who you thought was crazy. These days, entrepreneur has sort

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Speaker 1: of lost that original meaning and it means just anybody

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Speaker 1: who starts a business. But the problem with that is

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Speaker 1: that you can't then talk about how different it is

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Speaker 1: to do something where you're not copying what everybody else

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Speaker 1: is doing and trying to invent something yourself. So so

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Speaker 1: let's stay with that theme, because if I were to

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Speaker 1: go to Jim Mcalvy dot com. On your site, there's

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Speaker 1: a big banner that says, do something that has never

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Speaker 1: been done. Explain what you mean by that? Yeah. So, um,

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Speaker 1: there's a lot of talk about how we like to

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Speaker 1: be innovative and how we like to be creative, and

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Speaker 1: people are supposed to like that, and I've never been

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Speaker 1: comfortable doing that, although I've done it occasionally, And I

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Speaker 1: wanted to address the fact that it's actually really scary

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Speaker 1: to do something where you don't have any peers, where

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Speaker 1: you don't have any validation, where you don't have anybody

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Speaker 1: else when you look around saying Oh well, uh, they're

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Speaker 1: doing it too, so it must be sort of okay,

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Speaker 1: if you're doing entrepreneurship in its classical definition, you're doing

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Speaker 1: something that is going to be very very scary to

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Speaker 1: you on on almost a biological level, because humans are

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Speaker 1: hurt animals. We like to be in a group, right,

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Speaker 1: it's a I was a big fan of Mutual of

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Speaker 1: Omaha's Wild Kingdom, and there was always that shot of

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Speaker 1: the herd of whoever zel zebra, that one zebra on

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Speaker 1: the outskirts of that you know what happens? That was

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Speaker 1: me I was as I was always away from the

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Speaker 1: herd and and lunch for the lions. Yeah, that describes

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Speaker 1: my schooling. So so that raises a lot of really

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Speaker 1: interesting questions, beginning with you know, why is Silicon's focus

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Speaker 1: on disruption so misguided? I think looking at disruption, which

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Speaker 1: is this term that we really used to death in

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Speaker 1: Silicon Valley, is it's a bad focus because if you're

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Speaker 1: looking to disrupt, it puts your eye on the thing

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Speaker 1: you're trying to disrupt. So we're gonna disrupt healthcare? Okay, Yeah,

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Speaker 1: there's a lot of stuff wrong with healthcare. What do

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Speaker 1: you want to disrupt? But if you spend your time

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Speaker 1: looking at what you want to destroy, it triggers that

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Speaker 1: copying function in your head that says and you that says, oh,

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Speaker 1: I should do this, I should do that, and you

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Speaker 1: start becoming indoctrinated into the thing that you're trying to destroy.

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Speaker 1: And so I believe you should kind of ignore the

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Speaker 1: thing that you are replacing and just focus on the

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Speaker 1: problem trying to solve. And then then you get this

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Speaker 1: sort of weird thing because you know, Square, which we

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Speaker 1: now call block is, has always been called a very

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Speaker 1: disruptive company, but actually ran the numbers on the number

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Speaker 1: of companies that we wiped out, right, American Express, Visa,

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Speaker 1: they're all bigger card, Right, you killed all of it.

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Speaker 1: We haven't disrupted anything like we We knocked a few

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Speaker 1: ISOs into you know, sort of more honestly pricing their products,

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Speaker 1: but even they're still around. I mean, we didn't destroy much.

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Speaker 1: What we did instead was we created a new market.

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Speaker 1: And we're gonna talk a lot about Square, uh coming up.

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Speaker 1: But here's another quote of yours. I really enjoyed. Chaos

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Speaker 1: is a good thing. Explain. Oh yeah, so chaos is

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Speaker 1: where you get new ideas. Chaos is that's it's this

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Speaker 1: moment that it puts your brain into a different form

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Speaker 1: of thinking. Uh So, if you've got if you're if

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Speaker 1: you're a pattern matcher, which we're all pattern matchers, and

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Speaker 1: you see these patterns and you don't think you do

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Speaker 1: the things automatically, you're you go through most of life

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Speaker 1: on autopilot, as you should. But occasionally, uh something goes

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Speaker 1: wrong and it's weird and and things are not working

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Speaker 1: like they should be, and and that puts your brain

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Speaker 1: into this different state. And so I say chaos because

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Speaker 1: it's a little scary to think of chaos, but it's

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Speaker 1: also a very good creative place that makes a lot

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Speaker 1: of sense. One more one more quote. Thank you for

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Speaker 1: reading the book. I mean, I have to say that you,

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Speaker 1: as an interviewer, have prepared really really well for this.

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Speaker 1: Can I tell you something And I shouldn't say this

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Speaker 1: out loud because I'm kind of revealing my secret sauce.

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Speaker 1: We do a lot of prep when people show up

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Speaker 1: for an interview, and my thought processes. How often am

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Speaker 1: I going to get a Jim mcelvy sitting in front

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Speaker 1: of me for ninety minutes. I'm not just gonna walk

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Speaker 1: in and coast. I have to do my homework, and

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Speaker 1: I am genuinely shocked that that is this exclusive market niche.

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Speaker 1: It's it's it makes you special. I hate to explain

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Speaker 1: to the listening audience, but a lot of people who

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Speaker 1: have interviewed me about the book haven't read the whole book,

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Speaker 1: and or they you know, they've got cliff notes or something.

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Speaker 1: I appreciate, you appreciate the work. Um, let me give

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Speaker 1: you one other quote of yours. Reward loyal customers now

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Speaker 1: or risk losing them. Tell us what that means, and

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Speaker 1: then I'll share a anecdote. So there's a different pricing

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Speaker 1: power you have if you have an innovation stack. So

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Speaker 1: myke my book sort of focuses on this world of

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Speaker 1: entrepreneurial companies that build these things called innovation stacks. We

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Speaker 1: can get into that, but the idea here is that

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Speaker 1: if you have one of these things, you have amazing

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Speaker 1: pricing power. You have extremely low cost You effectively have

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Speaker 1: customers that are willing to do things differently just to

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Speaker 1: experience your products. And this allows you a massive amount

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Speaker 1: of pricing flexibility. And I ran the math, and it's

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Speaker 1: actually better for you to keep your prices absurdly low

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Speaker 1: by normal sort of MBA calculations. And if you undercharge

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Speaker 1: the market, you will actually maximize revenue. That's really that's

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Speaker 1: really kind of interesting. So I used to have the

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Speaker 1: Starbucks app on my phone and every day on the

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Speaker 1: way into the office, this is pre pandemic, I would

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Speaker 1: swing by a Starbucks, even though we had a coffee

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Speaker 1: maker in the office, uh, and pick up their egg

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Speaker 1: white and turkey bacon sandwich and a and a Starbucks

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Speaker 1: um flat white, and I would go to my office.

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Speaker 1: And then they stopped. They like had less and less

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Speaker 1: of this in stock. Who was here or miss weather

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Speaker 1: they had it, And then the pandemic hits and they

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Speaker 1: converted their Starbucks points. And then I get an email

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Speaker 1: from Starbucks telling me that despite you know the pandemic

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Speaker 1: and everybody stuck at home, use it or lose it.

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Speaker 1: Your points which used to the last forever, if you

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Speaker 1: don't use them by May eleven, they're going away. And

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Speaker 1: I got really annoyed at that, And then you should.

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Speaker 1: And then outcomes the story that Starbucks has this three

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Speaker 1: billion dollar float because if you have the app on

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Speaker 1: your phone and it gets refilled with your credit card,

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Speaker 1: fifty Bucks or Bucks every time it runs down. Multiply

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Speaker 1: that by a million Starbucks customers. They're sitting on three

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Speaker 1: four billion dollars. That was pretty much the last draw

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Speaker 1: for me. That and the end. I don't care about

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Speaker 1: the float. No, no, no, but wait, you're sitting with

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Speaker 1: all this money and you have to take our already

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Speaker 1: reduced points. I'm done with you. And ps the same time,

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Speaker 1: I'm getting emails from Delta your silver medallions. Fine, don't

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Speaker 1: worry about it. We're gonna roll it over for a year.

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Speaker 1: You're good, And I'm like, that's the right way to

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Speaker 1: retain a customer. And and even more insidious than that

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Speaker 1: is the fact that when you are in a panic

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Speaker 1: state yourself, when you're in chaos, when you when something

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Speaker 1: is disrupted, like you just had the world shutdown because

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Speaker 1: of CODD, you are in a heightened state of of

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Speaker 1: of of imprint imprint ability. So, in other words, if

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Speaker 1: Starbucks does you a service at that moment, if they

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Speaker 1: help you out, if they say we're gonna stays with you,

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Speaker 1: then then they got a customer for life. Conversely, if

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Speaker 1: it's at the moment they choose to jab their thumb

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Speaker 1: in your eye, then you're gonna hate them, and you're

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Speaker 1: gonna go on air and hate them and and shock. Yeah.

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Speaker 1: It was a Starbucks in the lobby of our old

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Speaker 1: office building, and I was a regular there, and I

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Speaker 1: like strong coffee, so I used to defend them against

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Speaker 1: people who are, like I prefer Dunkin Donuts. That's because

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Speaker 1: you're a whim drink. Drink some coffee that puts a

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Speaker 1: little hair on your chest. But this, by the way,

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Speaker 1: a hundred Starbucks points, what is it? Coffee? It's the

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Speaker 1: cost of it is so meaningless. But the thought process

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Speaker 1: behind it was up yours, And I was like, now,

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Speaker 1: up yours. I was spending I don't know, five hundred

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Speaker 1: bucks a year on Starbucks. You can get coffee elsewhere

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Speaker 1: I cannot do, and I will occasionally get Starbucks, but

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Speaker 1: I am not no longer a regular. It probably doesn't

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Speaker 1: taste as good anymore either. Um no, it's it's still

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Speaker 1: still pretty good coffee. The the question that I'm curious about,

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Speaker 1: am I just an unreal custs And the only person

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Speaker 1: who got angry no, no, no, no, you're what percentage

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Speaker 1: of people who said, wait, you're taking my points away?

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Speaker 1: You are so so there's a calculation that you make

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Speaker 1: if you're uh, strictly looking at spreadsheets and you say, well,

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Speaker 1: they've got three billion dollars with a float, and our

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Speaker 1: stores are kind of closing and we need a little

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Speaker 1: bridge and we need you know, they make some sort

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Speaker 1: of cold calculating decision that sort of looks good on

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Speaker 1: a spreadsheet. What they forget is how impactful that is

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Speaker 1: during a crisis on the psychology of their customers, and

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Speaker 1: those people remember forever, and that that's just a terrible

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Speaker 1: moment to do anything against your customers. It's also a

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Speaker 1: wonderful moment to do something for your customers. So if

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Speaker 1: they if they had a way to do what Delta

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Speaker 1: did and be positive, by the way, same exact circumstances,

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Speaker 1: the same thing. No one's flying, nobody's going to Starbucks,

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Speaker 1: your points at both they're just sitting there, yea, And

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Speaker 1: Delta is probably worse, k right, So Delta said, hey,

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Speaker 1: we're good. We're gonna roll your flights status over to

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Speaker 1: and any canceled lights you get a lifetime credit. You

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Speaker 1: could use them in the future, don't worry about it,

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Speaker 1: and now good luck getting me on a different You

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Speaker 1: know something besides delta, Yeah, I expect to see you

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Speaker 1: on adulta flight holding a cannon or a cup of

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Speaker 1: pizza coffee. So so anyway, we digress, and your point

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Speaker 1: happens to be I digress is when you have an

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Speaker 1: opportunity to delight a customer, what what do you do?

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Speaker 1: So the the interesting thing here is I was studying

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Speaker 1: trying to figure out why the math was different for

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Speaker 1: companies with innovation stacks. And this is really uh, sort

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Speaker 1: of personal to me because I was very focused on

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Speaker 1: having some sort of theoretical basis for the stuff that

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Speaker 1: I was saying. And what I did was I found

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Speaker 1: this perfect case study, which was Southwest Airlines. Southwest Airlines

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Speaker 1: had tremendous pricing power and during the Herb Keller her years,

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Speaker 1: who was one of the founders in original CEO. Yeah,

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Speaker 1: he was one of the founders, a legend, and Herb

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Speaker 1: kept the prices low and then he left and Southwest

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Speaker 1: Airlines raised their prices. So it was this perfect case

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Speaker 1: study of this company that had an innovation stack and

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Speaker 1: then all of a sudden started messing with the math.

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Speaker 1: They made a lot more money right after her left

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Speaker 1: for a few years. Since that time, five new competitor airlines,

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Speaker 1: like complete new airlines that would have totally died if

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Speaker 1: herb was at the Helm are now competing with Southwest.

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Speaker 1: That makes a lot of sense. And and ps. Southwest

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Speaker 1: was always a pain in the butt, but they were

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Speaker 1: very cheap because you noah sign seats that you have

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Speaker 1: to get up, you have to wait online. I am

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Speaker 1: a former to your point, former Southwest Fortia because I

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Speaker 1: just don't have the tolerance for the headache and it's

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Speaker 1: not discounted enough. I'll pay a little more for Delta

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Speaker 1: and feel like I'm getting a better experience and not

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Speaker 1: feel like cattle boarding an airline. So all right, enough

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Speaker 1: endorsing Delta and trashing Southwest and Starbucks. So let's talk

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Speaker 1: a little bit about, um, your business backgrounds Uh. Turns

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Speaker 1: out that um, you were you were doing something with

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Speaker 1: Ceedie Rams and somebody who knew said, hey, I have

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Speaker 1: a kid who who's good with computers, and you hired

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Speaker 1: this kid as an intern. Tell us about had a

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Speaker 1: software company. This with the late eighties, I guess this

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Speaker 1: would have been about ninety two. But back then, uh,

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Speaker 1: my company, Mira was in a desperate situation. We had

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Speaker 1: just screwed up this disc that had to go out,

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Speaker 1: and we were hiring everybody. And the lady who sold

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Speaker 1: us chocolate covered espresso beans. Her name was Marcia Dorsey,

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Speaker 1: and her son, Jack Dorsey, came to work for us

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Speaker 1: when he was fifteen. He showed up in his bicycle.

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Speaker 1: He pulled an all nighter with us the first night

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Speaker 1: at at his first real job, and he became a

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Speaker 1: cherished part of the team from then. I called him

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Speaker 1: Jack the Genius. When he was sixteen, this used to

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Speaker 1: embarrass him, but now he's sort of grown used to it.

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Speaker 1: Fifteen year old pulls an all night or that's a

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Speaker 1: lot of chocolate covered espresso beans. Well, you know, Ridland

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Speaker 1: wasn't commonly available back man the way it is today.

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Speaker 1: You get out of you know, shake any kid a

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Speaker 1: couple of written form, right, So so you start working

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Speaker 1: with him, um for this company. Eventually you decide to

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Speaker 1: bolt because the company was not doing what you wanted

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Speaker 1: it to do anymore, and tell us about that. I'm

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Speaker 1: a terrible leader. I don't direct the troops well and

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Speaker 1: they sometimes don't follow me. And I saw the Internet coming.

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Speaker 1: The Internet was going to wipe out our product, which

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Speaker 1: was an internet based, you know, trade show disc. It

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Speaker 1: had all the stuff that the brochures and stuff at

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Speaker 1: a trade show. And in fact, the disc replaced all

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Speaker 1: those bags of paper that people can't get the bags

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Speaker 1: of paper have a disc. It made a ton of

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Speaker 1: sense in the early nineties, and it was gonna get

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Speaker 1: wiped out when websites were coming along. And I saw this,

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Speaker 1: and I said to the troops, hey, let's stop making

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Speaker 1: discs and start making websites. And they were like, oh, yeah, sure, Jim,

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Speaker 1: we'll do it. But they didn't. They didn't follow me that,

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Speaker 1: none of them. None of them would listen to me

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Speaker 1: except this fifteen year old. So Jack and I um

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Speaker 1: went off by ourselves and we basically created a new company.

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Speaker 1: And that company still runs today. It's amazing that, you know,

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Speaker 1: thirty years later, what Jack built is still running. And

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Speaker 1: you said he was a really good code or he

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Speaker 1: knew exactly what he was doing, A good coded, a

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Speaker 1: good guy. I mean, he was a lot of fun

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Speaker 1: and we got on famously. And uh, you know, after

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Speaker 1: he was shown the door Twitter the first time, he

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Speaker 1: asked me if I wanted to start a company with him,

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Speaker 1: So I I got, I got sort of paid back

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Speaker 1: twenty years later when he said, Hey, Jim, let's do

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Speaker 1: something together again. I was like, cool, what do you

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Speaker 1: want to do? And that's really an interesting story because

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Speaker 1: and you described this very nicely in the book, as

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Speaker 1: you're telling the story of we're trying to think about

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Speaker 1: what to do. Wasn't like we have an idea, let's

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Speaker 1: build a company. It's we want to build a company.

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Speaker 1: Let's find an idea that resonates with both of us.

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Speaker 1: At the time, you're doing glass blowing, and you have

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Speaker 1: some nice products, and you have some products that are

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Speaker 1: kind of ugly. I have a lot of that you

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Speaker 1: shuff to the side and and pray someone comes along

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Speaker 1: and takes the inventory off your hand. A client wanted

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Speaker 1: to buy an ugly piece of glass via an amex,

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Speaker 1: and you couldn't accommodate her. Tell us about what. Yeah,

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Speaker 1: So the dirty little secret about art is that a

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Speaker 1: lot of artists make stuff they're not proud of, and

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Speaker 1: we don't signal it in the price. So you look

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Speaker 1: at my stuff, and I've learned very very early to

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Speaker 1: charge the same if I hate it or like it

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Speaker 1: um And this was a piece I hated, and for

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Speaker 1: good reason, I think it was ugly, um, but this

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Speaker 1: lady wanted to take it off my hands. It was

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Speaker 1: like a two thou dollar piece of glass. And she

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Speaker 1: tried to pay me with an AMEX card and I

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Speaker 1: couldn't complete the sale because I couldn't she didn't have

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Speaker 1: a visa car, she didn't have a master card. Uh,

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Speaker 1: and so I lost this sale. I was really upset,

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Speaker 1: um and I called Jack on my iPhone and I said, hey, man,

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Speaker 1: I know what we ought to do. I said, we

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Speaker 1: ought to build a system so that I can take

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Speaker 1: a payment on my iPhone. And Jack got quiet for

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Speaker 1: a second. He said, that's interesting, and that's how Square started.

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Speaker 1: So so now you guys want to launch this company.

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Speaker 1: You design the hardware. Do you have any background in

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Speaker 1: in hardware design or hard reading or software? No? I

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Speaker 1: don't have any. Well, I have some background in software,

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Speaker 1: but it turns out of the you know, between the

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Speaker 1: two of us, Jack and me, he's a much much

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Speaker 1: better programmer than I am. Uh. So it was pretty

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Speaker 1: much Jack leading the software effort and me doing everything else.

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Speaker 1: Because there was so much software work to do that

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Speaker 1: I was trying to keep all the other stuff away

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Speaker 1: from him. So I was dealing with the business licenses.

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Speaker 1: I was, you know, buying office furniture. I also got

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Speaker 1: into an argument with jack about how we were going

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Speaker 1: to get the credit card read. So his attitude was, well,

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Speaker 1: we'll build some software that'll take a photo of the

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Speaker 1: card and we'll just use the photo and IR to

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Speaker 1: convert the gotcha. So it turns out, if you know

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Speaker 1: the subtleties of credit cards that actually cost more, that's

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Speaker 1: called a card not present transactionally cost you more. And

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Speaker 1: I thought, no, no, we want to get card present rates,

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Speaker 1: which means we need to make read the mag stripe.

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Speaker 1: And so I had this idea for a little mag

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Speaker 1: stripe reader. It was actually an idea that I got

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Speaker 1: out of out of Make magazine. Make magazine had this

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Speaker 1: like hackers, uh story about some guy who turned his

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Speaker 1: mobile phone into a credit card reader, and I was like, oh,

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Speaker 1: we can do the same thing. So we took this

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Speaker 1: idea and I went to my studio and I started

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Speaker 1: building a credit card reader. Uh so I basically built

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Speaker 1: the hardware before Jackie get the software working. It was

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Speaker 1: sort of a race. So so the hardware it into

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Speaker 1: original form is a square with the tape reader on

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Speaker 1: the inside and and the plug to go into the

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Speaker 1: headphone jack of the iPhone. Yeah yeah, so when it's

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Speaker 1: original form bigger than a square though, Yeah it was,

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Speaker 1: it was. It was sort of a rectangle um and

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Speaker 1: it was made the first one I made small. So

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Speaker 1: I had a couple of big prototypes of first one

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Speaker 1: I made small. UM was for a demo with Steve Jobs.

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Speaker 1: Oh really, and I got We were terrified because Steve

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Speaker 1: was a legendary little and tim dating. Yeah yeah, and

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Speaker 1: especially if you're the hardware guy, because Steve is a

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Speaker 1: design zealot and if you make something ugly, he won't

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Speaker 1: touch it. And even get a meeting with Steve Jobs

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Speaker 1: was a big deal because nobody, you know, like Steve

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Speaker 1: was pretty sick at this time, and he he didn't

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Speaker 1: take too many meetings. But we had a meeting scheduled

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Speaker 1: and I was the guy who had to make the hardware.

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Speaker 1: So I was terrified, and I went into, uh, you know,

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Speaker 1: do what a good person does, which is steal ideas

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Speaker 1: from you know, better people. So I went into Steve's

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Speaker 1: Apple store. I went to the ice you know, the

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Speaker 1: the Apple store, and I started looking at all the

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Speaker 1: stuff that he was building and I saw all the

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Speaker 1: computers were made of aluminum, and I think, oh, well,

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Speaker 1: Steve likes aluminum. So I made the first square reader

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Speaker 1: out of a solid block of aluminum forgetting of course, uh,

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Speaker 1: engineering one on one that aluminium is conductive and that

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Speaker 1: this basically when I hooked it up, turned our card

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Speaker 1: reader into a cardio reader. It was basically turned into

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Speaker 1: a heart monitor. And um, actually your boss. So Mike

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00:20:55,920 --> 00:20:57,920
Speaker 1: Bloomberg was the very first guy to see that because

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Speaker 1: Jack had a demo with Mike back when Mike was

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Speaker 1: a mayor New York. Mike was trying to get Squared

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Speaker 1: open a New York office. Uh, and he, Mike was

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Speaker 1: the first person to see that aluminum reader. Yeah, it

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Speaker 1: was a disaster. So so how did you go from

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Speaker 1: aluminum to the little plastics? Well, it didn't work. I mean,

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Speaker 1: the the aluminum reader, if you touched it with your

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Speaker 1: finger would short out, so um, you'd have to swipe

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Speaker 1: without touching it. So I switched to plastic immediately thereafter,

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Speaker 1: and then we then we built a square reader and

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Speaker 1: spin square ever, so I gotta imagine it's easier to

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Speaker 1: work the electronics and wiring in plastics, and it is

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Speaker 1: an aluminum anyway, it was a little bit, but I

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Speaker 1: mean basically a casing is a casing. The hard part

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Speaker 1: is getting all this stuff, miniaturizing, getting the read head

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Speaker 1: and getting a spring and resistors. I mean there a

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Speaker 1: lot of we jammed a lot of stuff in there.

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Speaker 1: So so the meaning with jobs was with a plastic

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Speaker 1: square is that right? Canceled? Oh it did? I canceled

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Speaker 1: because Steve got sick. Wow, So that's that's that's amazing.

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00:21:48,400 --> 00:21:51,159
Speaker 1: So um. One of the things I found fascinating was

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Speaker 1: the discussion about credit card companies and how they disadvantaged

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Speaker 1: small businesses. How is it possible that they're charging small

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Speaker 1: businesses forty times as much as they're charging large businesses

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Speaker 1: to process their credit cards. That that's just an absurd number.

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Speaker 1: So it's amazing when I discovered that. Actually I discovered

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Speaker 1: that information on the first day of research because I

429
00:22:13,200 --> 00:22:15,240
Speaker 1: was looking, I was following the money, trying to figure

430
00:22:15,240 --> 00:22:16,919
Speaker 1: out where the where the money was being made. And

431
00:22:16,960 --> 00:22:21,160
Speaker 1: it turns out a small business account makes forty five

432
00:22:21,280 --> 00:22:25,880
Speaker 1: times more profit than a billion dollar company like Starbucks

433
00:22:25,920 --> 00:22:28,240
Speaker 1: or Walmart. And this is in terms of the fees

434
00:22:28,240 --> 00:22:31,000
Speaker 1: that are paid by the merchant and I thought, well,

435
00:22:31,000 --> 00:22:32,879
Speaker 1: that can't be like that. You can't, it can't be.

436
00:22:32,960 --> 00:22:36,639
Speaker 1: It can't be forts it's profit relative to the total transaction.

437
00:22:36,960 --> 00:22:39,400
Speaker 1: So it turns out that it's really expensive to be poor.

438
00:22:39,760 --> 00:22:42,760
Speaker 1: You may have I learned that growing up after Yeah,

439
00:22:42,760 --> 00:22:44,480
Speaker 1: I mean, like if you don't have enough money, like

440
00:22:44,560 --> 00:22:47,080
Speaker 1: diapers cost ten times as much, if you're poor and

441
00:22:47,119 --> 00:22:49,040
Speaker 1: have to buy m onesI two zi at a dollar store,

442
00:22:49,119 --> 00:22:50,679
Speaker 1: then if you can buy a bulk at you know,

443
00:22:50,720 --> 00:22:53,199
Speaker 1: Sam's Club. There was a store A couple of stories

444
00:22:53,280 --> 00:22:56,800
Speaker 1: right after the financial crisis about these businesses and families

445
00:22:57,240 --> 00:22:59,520
Speaker 1: that could not afford to go bankrupt, which is an

446
00:22:59,520 --> 00:23:03,160
Speaker 1: expensive legal you don't have enough assets, you just walk

447
00:23:03,200 --> 00:23:05,399
Speaker 1: away and let the business sort of with her on

448
00:23:05,440 --> 00:23:08,440
Speaker 1: the vine. You can't afford to discharge your debts and banks. Yeah,

449
00:23:08,520 --> 00:23:11,159
Speaker 1: it's it's it's really it was eye opening. I mean

450
00:23:11,200 --> 00:23:12,720
Speaker 1: I sort of knew this because I sort of lived

451
00:23:12,720 --> 00:23:14,200
Speaker 1: this because I have a lot of friends who are artists,

452
00:23:14,200 --> 00:23:15,560
Speaker 1: and I was an artist, and you know, you live

453
00:23:15,680 --> 00:23:19,240
Speaker 1: with you know, marginal credit and weird you know, guys

454
00:23:19,240 --> 00:23:21,200
Speaker 1: sleep in the back of their cars and stuff like that.

455
00:23:21,480 --> 00:23:23,679
Speaker 1: So I was familiar with it, with it but what

456
00:23:23,760 --> 00:23:27,040
Speaker 1: I what I didn't understand was how pervasive this was

457
00:23:27,640 --> 00:23:32,159
Speaker 1: and how um powerless small merchants were. And what Square

458
00:23:32,160 --> 00:23:34,720
Speaker 1: did was we basically said, Okay, we're powerless individually, but

459
00:23:34,720 --> 00:23:37,000
Speaker 1: if we get a million of them together, I bet

460
00:23:37,000 --> 00:23:39,000
Speaker 1: we've got some power. And that's eventually what we did.

461
00:23:39,359 --> 00:23:41,760
Speaker 1: So what else did you find about the credit card

462
00:23:41,760 --> 00:23:44,399
Speaker 1: industry when you looked under the hood? What else struck

463
00:23:44,440 --> 00:23:47,920
Speaker 1: you as unfair or outrageous? One of the things that

464
00:23:47,960 --> 00:23:49,800
Speaker 1: was the way credit card systems were sold. So they

465
00:23:49,800 --> 00:23:53,360
Speaker 1: were sold on these three um three year contracts typically

466
00:23:53,800 --> 00:23:55,760
Speaker 1: where you would be lied to and I was I

467
00:23:55,800 --> 00:23:58,520
Speaker 1: was personally at you know, a recipient of this behavior.

468
00:23:58,560 --> 00:24:00,800
Speaker 1: Somebody would show up in my glass video and they

469
00:24:00,800 --> 00:24:02,480
Speaker 1: would say, hey, what are you paying for credit cards on?

470
00:24:02,560 --> 00:24:05,200
Speaker 1: Like I don't know, I can't tell what they're charging

471
00:24:05,200 --> 00:24:07,199
Speaker 1: because bill is too confusing, And you go, oh, well,

472
00:24:07,240 --> 00:24:08,920
Speaker 1: let me take a look. And he'd come back and say, hey,

473
00:24:08,920 --> 00:24:11,040
Speaker 1: guess what, kild we can save your money. And so

474
00:24:11,240 --> 00:24:13,040
Speaker 1: I'd always sign up with them, and you took me

475
00:24:13,160 --> 00:24:15,359
Speaker 1: a couple of cycles to realize what was going on.

476
00:24:15,400 --> 00:24:17,280
Speaker 1: They would always say they save me money, and it

477
00:24:17,320 --> 00:24:20,800
Speaker 1: would never be any better. And the reason was, first

478
00:24:20,840 --> 00:24:24,840
Speaker 1: of all, the system is unnecessarily complex and a feature

479
00:24:24,920 --> 00:24:28,360
Speaker 1: not above it's designed by designed, because if it's so complex,

480
00:24:28,400 --> 00:24:31,040
Speaker 1: you stop the argument, Oh what what? What? What? Page?

481
00:24:31,200 --> 00:24:34,480
Speaker 1: On these forty two pages do you are you arguing with?

482
00:24:34,760 --> 00:24:37,080
Speaker 1: You know? Um? So if you don't understand something, you

483
00:24:37,080 --> 00:24:40,479
Speaker 1: can't really argue against it. And secondly, the system is

484
00:24:40,600 --> 00:24:46,320
Speaker 1: so um uh. There's a line in the book that

485
00:24:46,359 --> 00:24:50,200
Speaker 1: you wrote that struck me while you're processing that thought,

486
00:24:50,600 --> 00:24:53,359
Speaker 1: which was how bad does an industry have to be

487
00:24:53,840 --> 00:24:56,680
Speaker 1: that it turns into a check mark? How much lying

488
00:24:56,760 --> 00:25:00,119
Speaker 1: must you have? Where's the checkmark where they're made be

489
00:25:00,400 --> 00:25:04,320
Speaker 1: material misrepresentation which you will not hold against us within

490
00:25:04,359 --> 00:25:06,960
Speaker 1: their boiler plate. Yes, so when we went to cancel

491
00:25:07,040 --> 00:25:09,520
Speaker 1: our first merchant account, I had to facts in a

492
00:25:09,600 --> 00:25:13,200
Speaker 1: form to cancel the account, and one of the check

493
00:25:13,240 --> 00:25:15,560
Speaker 1: boxes on the forum was to say why did you

494
00:25:15,560 --> 00:25:17,359
Speaker 1: cancel the account? And one of the one of the

495
00:25:17,359 --> 00:25:21,240
Speaker 1: answers was misrepresentation, which is a fancy word for lying

496
00:25:22,119 --> 00:25:24,719
Speaker 1: and the court word. Think about how bad an industry

497
00:25:24,760 --> 00:25:27,800
Speaker 1: has to be before lying becomes a box on that

498
00:25:27,800 --> 00:25:30,160
Speaker 1: that you check like, oh, we don't want to make

499
00:25:30,240 --> 00:25:32,880
Speaker 1: our customers, you know, right out the fact that we've

500
00:25:32,920 --> 00:25:35,200
Speaker 1: we've been lying to them. It's just part of the forum.

501
00:25:35,440 --> 00:25:36,840
Speaker 1: I mean, and I put the form in the book

502
00:25:36,840 --> 00:25:40,240
Speaker 1: like it's so appalling. Um, Look, the abusive small merchants

503
00:25:40,600 --> 00:25:44,719
Speaker 1: were receiving was similar to all small groups. Like, if

504
00:25:44,760 --> 00:25:47,240
Speaker 1: you are small and powerless, there's somebody who's gonna prey

505
00:25:47,240 --> 00:25:48,480
Speaker 1: on you, and they're gonna pray on you to the

506
00:25:48,520 --> 00:25:51,439
Speaker 1: extent that the economy allows them to. I mean, that's capitalism.

507
00:25:51,440 --> 00:25:53,639
Speaker 1: That's up until the point where someone else spots an

508
00:25:53,640 --> 00:25:57,240
Speaker 1: opportunity and says, hey, we could do this faster, cheaper, better,

509
00:25:57,560 --> 00:26:00,920
Speaker 1: and make it much less. Zone was for the small

510
00:26:00,920 --> 00:26:03,880
Speaker 1: business person. And that's that's eventually what happens, hopefully, I mean,

511
00:26:04,000 --> 00:26:06,480
Speaker 1: that's that's hopefully what happens. But what happened to credit

512
00:26:06,480 --> 00:26:08,360
Speaker 1: card readers is the same thing that happened to travelers,

513
00:26:08,400 --> 00:26:10,239
Speaker 1: the same thing that happen in banking customers. I mean,

514
00:26:10,280 --> 00:26:13,240
Speaker 1: their example after example after example of people who are

515
00:26:13,560 --> 00:26:18,680
Speaker 1: sort of collectively um, powerful but individually powerless. So let's

516
00:26:18,680 --> 00:26:23,240
Speaker 1: talk about collectively powerful. Uh. It turns out that your

517
00:26:23,359 --> 00:26:27,760
Speaker 1: little niche had become successful enough that it attracted uh,

518
00:26:27,840 --> 00:26:32,639
Speaker 1: some unwanted imperial attention from Bezos and company. What was

519
00:26:32,680 --> 00:26:38,280
Speaker 1: it like when you realized that suddenly the juggernaut that

520
00:26:38,440 --> 00:26:43,000
Speaker 1: is Amazon was coming after your business? So Amazon decided

521
00:26:43,040 --> 00:26:45,480
Speaker 1: they wanted to take our market away. To be fair,

522
00:26:46,160 --> 00:26:49,400
Speaker 1: your squares white and their square was blacks. Yes, there's

523
00:26:49,560 --> 00:26:52,680
Speaker 1: very different black rectangle. They did do that a bit

524
00:26:52,680 --> 00:26:56,119
Speaker 1: of originality. Um. It was chilling, It was very it

525
00:26:56,160 --> 00:26:58,120
Speaker 1: was It was absolutely terrifying. It was one of those

526
00:26:58,160 --> 00:27:00,960
Speaker 1: moments where your hands tingle, at least my hands tingled,

527
00:27:01,240 --> 00:27:04,200
Speaker 1: because how do you fight Amazon? Like when Amazon attacks

528
00:27:04,200 --> 00:27:07,600
Speaker 1: a startup, the startup dies. You just you describe it

529
00:27:08,000 --> 00:27:12,600
Speaker 1: in terms from the Godfather as discovering the horsehead, only

530
00:27:12,640 --> 00:27:14,560
Speaker 1: they mailed it to you in a box with a smile,

531
00:27:14,600 --> 00:27:18,040
Speaker 1: and they mailed us a horsehead with free two day shipping. Yeah,

532
00:27:18,080 --> 00:27:21,680
Speaker 1: you know, it was terrifying. And um, and then of course,

533
00:27:21,840 --> 00:27:24,320
Speaker 1: you know what, once the terror wave passes, then the

534
00:27:24,320 --> 00:27:25,639
Speaker 1: then the questions, well, what do you do? What are

535
00:27:25,640 --> 00:27:27,200
Speaker 1: we gonna do? What are we gonna do? And so

536
00:27:27,320 --> 00:27:28,840
Speaker 1: we asked these questions. We asked him at the board,

537
00:27:28,840 --> 00:27:30,560
Speaker 1: we asked him at the office, and we were asking

538
00:27:30,560 --> 00:27:33,800
Speaker 1: these questions, how do you fight Amazon, And the first question,

539
00:27:34,600 --> 00:27:36,440
Speaker 1: the first answer we looked at, was oh, well, let's

540
00:27:36,440 --> 00:27:38,800
Speaker 1: find somebody else who's beaten them. Let's find a startup

541
00:27:38,840 --> 00:27:41,880
Speaker 1: who survived. Good luck with that. There are none. Yeah,

542
00:27:41,880 --> 00:27:44,560
Speaker 1: they don't that, they don't exist, you know, you know.

543
00:27:44,680 --> 00:27:47,239
Speaker 1: And and at the time you guys were engaged in

544
00:27:47,440 --> 00:27:50,520
Speaker 1: rapid growth, you didn't even have time to think about them.

545
00:27:50,520 --> 00:27:53,160
Speaker 1: You were so busy just dealing with all the new

546
00:27:53,200 --> 00:27:57,080
Speaker 1: clients and new revenue. How much how much headspace you know,

547
00:27:57,119 --> 00:28:01,399
Speaker 1: how much rent free space was Jeff Bezos taking in

548
00:28:01,480 --> 00:28:05,119
Speaker 1: your head or were you just too busy that the

549
00:28:05,160 --> 00:28:07,159
Speaker 1: thing we looked at what we could do. There was

550
00:28:07,240 --> 00:28:08,760
Speaker 1: very little we could do. I mean, we couldn't build

551
00:28:08,760 --> 00:28:11,400
Speaker 1: a brand like Amazon's. We couldn't actually even match their

552
00:28:11,440 --> 00:28:14,600
Speaker 1: price because they undercut They undercut us thirty percent, which

553
00:28:14,680 --> 00:28:16,760
Speaker 1: what they always seem to do. But we ran the

554
00:28:16,840 --> 00:28:18,840
Speaker 1: numbers and we would be losing, Like, our margins were

555
00:28:18,880 --> 00:28:21,240
Speaker 1: so slim that if we cut our margins by we'd

556
00:28:21,240 --> 00:28:24,440
Speaker 1: be underwater on everything. And so it was like, well,

557
00:28:24,480 --> 00:28:27,480
Speaker 1: that's just death in another form, So why go down

558
00:28:27,560 --> 00:28:31,720
Speaker 1: that way? So we didn't do anything. We basically ignored

559
00:28:31,760 --> 00:28:36,240
Speaker 1: Amazon and what happened. Amazingly after a year they gave

560
00:28:36,359 --> 00:28:39,920
Speaker 1: up and they actually, I gotta say something nice about Amazon. Um,

561
00:28:40,000 --> 00:28:42,720
Speaker 1: when they gave up, they decided to mail a Square

562
00:28:42,720 --> 00:28:46,600
Speaker 1: reader all their all their customers. Now, why would they

563
00:28:46,600 --> 00:28:48,840
Speaker 1: want to do that? That that's kind of a fascinating

564
00:28:49,000 --> 00:28:52,280
Speaker 1: coda to to the one of the four horsemen of

565
00:28:52,280 --> 00:28:56,680
Speaker 1: the apocalypse stampeding into your living room. Why send a

566
00:28:56,720 --> 00:29:00,520
Speaker 1: square reader to everybody? Uh? Well, it's beak because they

567
00:29:00,520 --> 00:29:03,640
Speaker 1: wanted to take care of their customers. Amazon always has that.

568
00:29:04,080 --> 00:29:06,720
Speaker 1: I've heard empty seat at the table that represents the

569
00:29:06,760 --> 00:29:10,120
Speaker 1: customer at the meeting. And I believe, I hope this

570
00:29:10,200 --> 00:29:12,480
Speaker 1: is the reason that they thought we were the best

571
00:29:12,480 --> 00:29:15,120
Speaker 1: solution for their customers and they said, here, we're not

572
00:29:15,160 --> 00:29:18,320
Speaker 1: there for you anymore. But Square is that that's amazing.

573
00:29:18,400 --> 00:29:21,160
Speaker 1: So you're one of the few startups to have beaten Amazon.

574
00:29:21,560 --> 00:29:24,840
Speaker 1: Have you ever spoken with Bezos about this? No? No,

575
00:29:25,040 --> 00:29:28,720
Speaker 1: I have not. I've I did meet. Uh. We hired

576
00:29:28,760 --> 00:29:30,080
Speaker 1: a few people that used to work for him, and

577
00:29:30,120 --> 00:29:34,000
Speaker 1: I got the backstory on it. And smaller market not

578
00:29:34,120 --> 00:29:39,160
Speaker 1: big enough margin for them? Is they're getting get their kicked? Yeah? Huh,

579
00:29:39,280 --> 00:29:42,880
Speaker 1: you would think that small businesses and a startup that

580
00:29:43,040 --> 00:29:45,880
Speaker 1: solving a problem might have a little bit of loyalty

581
00:29:45,920 --> 00:29:49,600
Speaker 1: to you, well they would. Look, Amazon was expected to

582
00:29:49,640 --> 00:29:51,880
Speaker 1: win that battle. And and this is the thing that

583
00:29:51,880 --> 00:29:53,600
Speaker 1: made me write the book because I couldn't answer the

584
00:29:53,640 --> 00:29:55,840
Speaker 1: question what so, so we won and I was happy,

585
00:29:56,120 --> 00:29:58,840
Speaker 1: and then after the happiness sort of subsided, then I

586
00:29:58,920 --> 00:30:01,960
Speaker 1: was just confused, like, well, we won, but why, like

587
00:30:02,040 --> 00:30:04,320
Speaker 1: why are we here? What? What? What? What? What in

588
00:30:04,320 --> 00:30:08,000
Speaker 1: the world happened? And so it took me two years

589
00:30:08,040 --> 00:30:11,680
Speaker 1: of research to figure out that there was actually this pattern,

590
00:30:11,720 --> 00:30:13,800
Speaker 1: this thing that we did that you know, it wasn't

591
00:30:13,800 --> 00:30:15,840
Speaker 1: that commonplace, but boy, if you do it this way,

592
00:30:16,040 --> 00:30:18,520
Speaker 1: you can even survive and attack by Amazon. And that's

593
00:30:18,520 --> 00:30:20,840
Speaker 1: what led to the innovation stack, led to all the research,

594
00:30:20,880 --> 00:30:23,760
Speaker 1: like that's that's the thing that led me actually to

595
00:30:23,800 --> 00:30:26,080
Speaker 1: the research. And then I mean the reason right I

596
00:30:26,480 --> 00:30:29,520
Speaker 1: wrote the book honestly is because herb callerher whom I

597
00:30:29,560 --> 00:30:33,160
Speaker 1: was interviewing to sort of complete my research, Basically, he said, well,

598
00:30:33,200 --> 00:30:34,640
Speaker 1: how are you going to share this with the world?

599
00:30:35,200 --> 00:30:36,400
Speaker 1: And I was like, oh my god, I just got

600
00:30:36,440 --> 00:30:38,520
Speaker 1: a homework assignment from one of my from one of

601
00:30:38,520 --> 00:30:41,960
Speaker 1: my idols. It was weird. Herb was like, what are

602
00:30:42,000 --> 00:30:43,720
Speaker 1: you gonna do about this? And I'm like, oh god,

603
00:30:44,080 --> 00:30:48,680
Speaker 1: that's that's really quite quite amazing. So you're now no

604
00:30:48,720 --> 00:30:51,920
Speaker 1: longer CEO, but you're still on the board. How did

605
00:30:51,960 --> 00:30:55,000
Speaker 1: you come to realize I was never CEO? I was chairman?

606
00:30:55,040 --> 00:30:57,240
Speaker 1: You chairman. That's from from day one. Jack wanted to

607
00:30:57,280 --> 00:30:59,040
Speaker 1: be CEO and I didn't. So that was a quick

608
00:30:59,080 --> 00:31:01,720
Speaker 1: But you had a lot of operational Yeah, I was

609
00:31:02,520 --> 00:31:04,320
Speaker 1: doing all the stuff that Jack wasn't, which was like

610
00:31:04,400 --> 00:31:06,800
Speaker 1: most of the stuff beside software. When did you realize

611
00:31:06,800 --> 00:31:10,080
Speaker 1: it was time to relinquish certain responsibilities and step back

612
00:31:10,120 --> 00:31:13,200
Speaker 1: and say, let me let a new group come in

613
00:31:13,240 --> 00:31:15,440
Speaker 1: and take over and running the day to day. Oh.

614
00:31:15,480 --> 00:31:17,320
Speaker 1: In my case, I was doing about a dozen things,

615
00:31:17,360 --> 00:31:19,760
Speaker 1: and I eventually got somebody who was better than me

616
00:31:19,800 --> 00:31:22,200
Speaker 1: at all those dozen things. You just delegated your way

617
00:31:22,240 --> 00:31:24,880
Speaker 1: out of response. At work, I always assume that I'm

618
00:31:25,120 --> 00:31:27,959
Speaker 1: mediocre at what I'm doing, and I will always try

619
00:31:28,000 --> 00:31:30,960
Speaker 1: to find something who's better than me. And well, it's uh,

620
00:31:30,960 --> 00:31:33,720
Speaker 1: it's been true. I mean, I'm in pretty mediocre, but

621
00:31:33,760 --> 00:31:36,720
Speaker 1: I'm fast. So I'm like in a startup situation, I

622
00:31:36,760 --> 00:31:40,120
Speaker 1: will get things done very very quickly, and okay, but

623
00:31:40,240 --> 00:31:43,640
Speaker 1: I will I will very quickly give that control to

624
00:31:43,680 --> 00:31:45,920
Speaker 1: whomever is better and can prove it. And in my

625
00:31:45,960 --> 00:31:47,680
Speaker 1: case that we're about twenty things to hand over. And

626
00:31:47,720 --> 00:31:50,200
Speaker 1: when those things were handed over, um, that also happened

627
00:31:50,200 --> 00:31:54,080
Speaker 1: to coincide with the birth of my son. And you know,

628
00:31:54,120 --> 00:31:56,440
Speaker 1: people at the office are working twelve fourteen hour days,

629
00:31:57,200 --> 00:31:59,920
Speaker 1: and if I continued that, I would probably be divorced

630
00:32:00,640 --> 00:32:02,720
Speaker 1: right now. And I just didn't. I didn't want to

631
00:32:02,760 --> 00:32:04,760
Speaker 1: be the guy who was showing up eight hours a

632
00:32:04,840 --> 00:32:07,680
Speaker 1: day when everyone else was putting in twelve. Um. So

633
00:32:07,720 --> 00:32:09,440
Speaker 1: it was better at that point for me to step back.

634
00:32:09,480 --> 00:32:12,320
Speaker 1: But really I was not necessary at that point. I mean,

635
00:32:12,360 --> 00:32:14,720
Speaker 1: I I've done what I needed to do. That's really

636
00:32:14,760 --> 00:32:18,440
Speaker 1: that's really interesting. And and to put a little coda

637
00:32:18,560 --> 00:32:23,640
Speaker 1: on what you did, your card reader design was inducted

638
00:32:23,760 --> 00:32:28,880
Speaker 1: to the Museum of Modern Arts Pantheon of Great Great

639
00:32:28,880 --> 00:32:31,280
Speaker 1: Designs back in two thousand eleven. That had to be

640
00:32:31,280 --> 00:32:35,440
Speaker 1: pretty satisfying, considering you're not exactly a hardware designer. You're

641
00:32:35,480 --> 00:32:37,320
Speaker 1: a glass blow Yeah, it's like guy who did art

642
00:32:37,320 --> 00:32:39,560
Speaker 1: for twenty years. It was sort of flattering and insulting

643
00:32:39,600 --> 00:32:42,239
Speaker 1: at the same time, right, Like, they didn't take any

644
00:32:42,280 --> 00:32:45,000
Speaker 1: of my glass, but they took this little piece of

645
00:32:45,000 --> 00:32:46,920
Speaker 1: plastic that reade a credit card. I mean, look, I'm

646
00:32:47,160 --> 00:32:49,320
Speaker 1: I'm an engineer by training, so I got it. I mean,

647
00:32:49,400 --> 00:32:51,520
Speaker 1: you know, I I I'm a technologist and a guy

648
00:32:51,520 --> 00:32:54,200
Speaker 1: who builds things. But I also sort of like art,

649
00:32:54,360 --> 00:32:57,360
Speaker 1: and I was I was flattered but also sort of insulted.

650
00:32:58,120 --> 00:33:01,400
Speaker 1: Quite quite interesting, So Jim, I really enjoyed the book.

651
00:33:01,440 --> 00:33:03,000
Speaker 1: A lot of a lot of business books can be

652
00:33:03,040 --> 00:33:07,000
Speaker 1: a little staid and dry. This is funny and a cerbic,

653
00:33:07,120 --> 00:33:09,920
Speaker 1: and you seem to be having fun writing it. What

654
00:33:09,960 --> 00:33:13,160
Speaker 1: was the process like putting all these ideas down on paper?

655
00:33:13,280 --> 00:33:15,320
Speaker 1: I had fun rewriting it. It went through its eight

656
00:33:15,440 --> 00:33:17,720
Speaker 1: It went through eight drafts. The first five drafts were

657
00:33:17,760 --> 00:33:21,880
Speaker 1: graphic novels. So I thought the I hate business books.

658
00:33:21,880 --> 00:33:24,800
Speaker 1: They're boring. They put me to sleep. I think most

659
00:33:24,840 --> 00:33:27,080
Speaker 1: of them are terrible. Um, and I didn't want to

660
00:33:27,080 --> 00:33:29,000
Speaker 1: write one. Even though Herb Keller, her who was one

661
00:33:29,040 --> 00:33:32,960
Speaker 1: of my idols, basically assigned me a homework assignment. I thought, well,

662
00:33:32,960 --> 00:33:34,600
Speaker 1: I'm just gonna do it as graphic novel. I'm gonna

663
00:33:34,640 --> 00:33:37,600
Speaker 1: make this fun because it turns out that the stories

664
00:33:37,640 --> 00:33:39,520
Speaker 1: that I tell in the book are actually they lend

665
00:33:39,560 --> 00:33:41,680
Speaker 1: themselves to pen and ink. There's the destruction of a

666
00:33:41,720 --> 00:33:44,520
Speaker 1: major city and murder and Nazis and like, there's a

667
00:33:44,560 --> 00:33:46,840
Speaker 1: lot of stuff blowing off fun stuff. Yeah, I mean it, like,

668
00:33:47,200 --> 00:33:48,440
Speaker 1: and it seemed to me like it would be a

669
00:33:48,480 --> 00:33:51,800
Speaker 1: better comic book. And um, I wrote the drafts as

670
00:33:51,840 --> 00:33:55,440
Speaker 1: a comic book. And then I showed it to Herb

671
00:33:56,240 --> 00:33:58,840
Speaker 1: and he hated it. Really, he hated it. I'm on

672
00:33:58,920 --> 00:34:00,680
Speaker 1: an old school though, isn't he. But he's got a

673
00:34:00,680 --> 00:34:04,560
Speaker 1: great sense of humor. He has a legendary, legendarily funny,

674
00:34:04,760 --> 00:34:06,560
Speaker 1: great sense of humor. I was expecting he was gonna

675
00:34:06,600 --> 00:34:10,959
Speaker 1: love it, and I was so crestfallen when he said, Jim,

676
00:34:11,000 --> 00:34:13,840
Speaker 1: if you're going to do it that way, leave me out. Really,

677
00:34:15,360 --> 00:34:18,520
Speaker 1: And I have to credit him for this, there's one Herb,

678
00:34:18,719 --> 00:34:20,319
Speaker 1: first of all, didn't want to be portrayed as a

679
00:34:20,320 --> 00:34:24,600
Speaker 1: cartoon superhero. Okay, And and here's the thing. Here's why

680
00:34:24,680 --> 00:34:27,280
Speaker 1: Herb is so much smarter than I am is because

681
00:34:27,440 --> 00:34:30,640
Speaker 1: if you tell a story as a graphic novel in

682
00:34:30,719 --> 00:34:33,359
Speaker 1: pen and ink. You're telling a hero story and and

683
00:34:33,480 --> 00:34:36,520
Speaker 1: superheroes are different from you and me. The whole purpose

684
00:34:36,560 --> 00:34:39,600
Speaker 1: of my book is to say, look, what makes these

685
00:34:39,640 --> 00:34:44,799
Speaker 1: super successful companies and super successful founders is not some

686
00:34:44,920 --> 00:34:48,440
Speaker 1: superpower that the founders have. It's this superpower that anyone

687
00:34:48,480 --> 00:34:51,160
Speaker 1: can access. And it's really a story for the everyman.

688
00:34:51,600 --> 00:34:56,640
Speaker 1: And Herb stopped me from making a giant, giant mistake. Um,

689
00:34:56,680 --> 00:34:59,640
Speaker 1: although I did. If you go to Jimmy Kelby dot com,

690
00:34:59,680 --> 00:35:02,360
Speaker 1: I did put some of the graphic novel that I

691
00:35:02,480 --> 00:35:04,279
Speaker 1: did on so you can just download it for free.

692
00:35:04,400 --> 00:35:07,520
Speaker 1: It's like it's a comic book, but it's not about herb. Um.

693
00:35:07,560 --> 00:35:10,640
Speaker 1: But yeah, I don't think you should have to. So

694
00:35:10,719 --> 00:35:12,719
Speaker 1: here Look, here's here's the thing, Barry. The reason I

695
00:35:12,760 --> 00:35:17,080
Speaker 1: wrote the book is because if you're in business or

696
00:35:17,120 --> 00:35:21,280
Speaker 1: in life, you're gonna occasionally run up against this line

697
00:35:21,880 --> 00:35:24,960
Speaker 1: where humanity has not figured out how to solve this

698
00:35:25,040 --> 00:35:27,640
Speaker 1: problem that you're looking at. And on the other side

699
00:35:27,640 --> 00:35:29,799
Speaker 1: of that line, there's no crowd, there's no herd, there's

700
00:35:29,840 --> 00:35:32,440
Speaker 1: no safety in numbers, and you're gonna feel if you

701
00:35:32,480 --> 00:35:36,000
Speaker 1: step across that line, terrified. You're gonna feel fear you're

702
00:35:36,000 --> 00:35:38,160
Speaker 1: gonna feel all this thing. You're not a superhero for

703
00:35:38,160 --> 00:35:41,200
Speaker 1: stepping across that line. You're just a that's scared gazelle.

704
00:35:41,320 --> 00:35:44,720
Speaker 1: You've left the safety of the and you're terrified. Okay,

705
00:35:44,760 --> 00:35:46,400
Speaker 1: imagine what's like to be that gazelle. I mean, I

706
00:35:46,480 --> 00:35:48,920
Speaker 1: I see those documentaries, I almost cry because like that

707
00:35:49,000 --> 00:35:50,840
Speaker 1: was me in grade school and most of high school.

708
00:35:51,040 --> 00:35:54,960
Speaker 1: You know, it's it's just terrifying. But unless we get

709
00:35:54,960 --> 00:35:57,279
Speaker 1: people to step across that line occasionally. I'm not saying

710
00:35:57,280 --> 00:35:59,160
Speaker 1: live across the line. I'm like being bold or any

711
00:35:59,200 --> 00:36:02,200
Speaker 1: crap like that, saying, look, a couple of times in

712
00:36:02,200 --> 00:36:04,239
Speaker 1: your life when you run up to the edge what

713
00:36:04,360 --> 00:36:08,280
Speaker 1: people have figured out, you can choose to step across

714
00:36:08,320 --> 00:36:12,120
Speaker 1: that line and maybe solve the problem. Maybe you're not

715
00:36:12,160 --> 00:36:14,040
Speaker 1: necessarily going to solve it, but maybe you got a

716
00:36:14,120 --> 00:36:16,040
Speaker 1: chance at it. I want more people to do that.

717
00:36:16,239 --> 00:36:19,000
Speaker 1: And so that's not a superhero story. So herb caller her,

718
00:36:19,400 --> 00:36:20,920
Speaker 1: I wish he was still alive because I wish he

719
00:36:20,960 --> 00:36:22,680
Speaker 1: got to see the final copy of the book, because

720
00:36:22,880 --> 00:36:25,520
Speaker 1: there's not a cartoon in it, and it talks about

721
00:36:25,560 --> 00:36:27,839
Speaker 1: the everyman. It talks about this power that we can

722
00:36:27,880 --> 00:36:30,360
Speaker 1: all have a scared humans. So let's let's talk a

723
00:36:30,400 --> 00:36:33,000
Speaker 1: little bit about that before we get to what the

724
00:36:33,040 --> 00:36:39,279
Speaker 1: innovation stack is. I want to ask you, copying perseverance audacity,

725
00:36:39,600 --> 00:36:43,960
Speaker 1: tell us about that combination. Yeah, so perseverance and audacity.

726
00:36:44,000 --> 00:36:46,480
Speaker 1: So we all talk about grit and perseverance and how

727
00:36:46,520 --> 00:36:49,160
Speaker 1: perseverance is really crazy. You know this this, this this

728
00:36:49,520 --> 00:36:52,040
Speaker 1: laudable thing. You should stick with it, don't give up,

729
00:36:52,080 --> 00:36:55,480
Speaker 1: don't quit, you know. And um, I'm kind of a

730
00:36:55,600 --> 00:37:00,360
Speaker 1: quitter except in certain circumstances. And I'm not a twitter

731
00:37:00,400 --> 00:37:04,400
Speaker 1: when I feel threatened, when I'm terrified, when I'm that

732
00:37:04,719 --> 00:37:07,680
Speaker 1: gazelle that's out of the hurt. Um. So I tend

733
00:37:07,719 --> 00:37:12,480
Speaker 1: to create situations that put me in those moments. I

734
00:37:12,480 --> 00:37:14,480
Speaker 1: mean even the state interview. I mean, I'm scared right now.

735
00:37:14,480 --> 00:37:16,400
Speaker 1: I'm not used to me. You shouldn't be. Yeah, I

736
00:37:16,400 --> 00:37:18,799
Speaker 1: know I shouldn't be. But my hands are sweating over here, right. So,

737
00:37:18,880 --> 00:37:22,279
Speaker 1: But the point is, if you are audacious enough to

738
00:37:22,400 --> 00:37:25,680
Speaker 1: step across that line, if you are somebody who is

739
00:37:25,760 --> 00:37:28,280
Speaker 1: willing to do something that seems a little bit crazy,

740
00:37:28,600 --> 00:37:30,440
Speaker 1: then you don't have to have a lot of self discipline,

741
00:37:30,560 --> 00:37:33,919
Speaker 1: your self discipline comes from your survival instinct. And this

742
00:37:33,920 --> 00:37:35,839
Speaker 1: this has always been my hat because I'm a lazy guy.

743
00:37:36,000 --> 00:37:39,279
Speaker 1: I sleep too late, you know, just just you can. Yeah,

744
00:37:39,560 --> 00:37:42,280
Speaker 1: there's a ton of lazy uh in in my DNA.

745
00:37:42,640 --> 00:37:45,520
Speaker 1: But there's also a ton of fear. And so what

746
00:37:45,600 --> 00:37:47,839
Speaker 1: I will do is I will put myself in circumstances

747
00:37:47,880 --> 00:37:51,520
Speaker 1: where the fear sort of counteracts the lazy. So I

748
00:37:51,600 --> 00:37:54,520
Speaker 1: end up being kind of a workaholic in certain situations

749
00:37:54,520 --> 00:37:56,440
Speaker 1: where oh, I've just committed this thing and now I

750
00:37:56,480 --> 00:37:58,759
Speaker 1: gotta get it done. Oh really, you you want to

751
00:37:58,920 --> 00:38:00,480
Speaker 1: do this? Okay, well let's go take a lot of

752
00:38:00,480 --> 00:38:04,319
Speaker 1: work so you don't have to be disciplined if you

753
00:38:04,360 --> 00:38:07,560
Speaker 1: are audacious. So now let's talk a little bit about

754
00:38:07,960 --> 00:38:11,520
Speaker 1: the innovation stack. What is that and how can we

755
00:38:11,920 --> 00:38:15,960
Speaker 1: put that to work in our startups or existing businesses.

756
00:38:16,360 --> 00:38:18,799
Speaker 1: So the innovation stack is this weird thing that I

757
00:38:18,960 --> 00:38:21,600
Speaker 1: found at every company that I studied that fit the

758
00:38:21,640 --> 00:38:24,120
Speaker 1: following model. Okay, So when I was trying to explain

759
00:38:24,200 --> 00:38:27,400
Speaker 1: what happened to do between Square and Amazon, I said, okay,

760
00:38:27,400 --> 00:38:30,040
Speaker 1: so let's look for other companies when they're small and

761
00:38:30,080 --> 00:38:33,720
Speaker 1: not very powerful, that were attacked by these major forces,

762
00:38:33,800 --> 00:38:38,080
Speaker 1: either governments or industries or uh, competitors that were a

763
00:38:38,120 --> 00:38:40,200
Speaker 1: hundred times their site, Like, let's look for the real

764
00:38:40,320 --> 00:38:44,600
Speaker 1: underdog and then find the underdogs that won that battle

765
00:38:44,680 --> 00:38:47,120
Speaker 1: and see if they have anything in common. And what

766
00:38:47,200 --> 00:38:49,759
Speaker 1: they had in common, among other things, was this thing

767
00:38:49,760 --> 00:38:51,600
Speaker 1: called an innovation stack. It wasn't called that. I just

768
00:38:51,640 --> 00:38:53,440
Speaker 1: had to coin the term. But it was this mess.

769
00:38:53,760 --> 00:38:55,120
Speaker 1: It was this thing, and I was like, what are

770
00:38:55,120 --> 00:38:57,799
Speaker 1: they doing? What are they doing? And the answer is

771
00:38:58,120 --> 00:39:01,759
Speaker 1: a company that's inventing something that's totally new is not

772
00:39:01,800 --> 00:39:05,280
Speaker 1: inventing one or two or three things. They're probably doing

773
00:39:05,440 --> 00:39:08,279
Speaker 1: ten or twenty or thirty different things that have never

774
00:39:08,320 --> 00:39:11,160
Speaker 1: been done before, certainly never been done before in combination,

775
00:39:11,440 --> 00:39:13,680
Speaker 1: and in combination, all those things affect the other things.

776
00:39:13,680 --> 00:39:18,520
Speaker 1: So you get this real mess. And so innovation mess

777
00:39:18,560 --> 00:39:22,279
Speaker 1: didn't make a good title. Uh, so we came up

778
00:39:22,280 --> 00:39:25,080
Speaker 1: with innovation stack. But stack makes it sound sort of linear,

779
00:39:25,160 --> 00:39:29,120
Speaker 1: and it's really this sort of snarl of interlocking things

780
00:39:29,160 --> 00:39:32,160
Speaker 1: that you're doing differently. It's a jumbalaya. It's just a

781
00:39:32,320 --> 00:39:35,839
Speaker 1: pot of brood things. And and use the example, Hey,

782
00:39:35,880 --> 00:39:38,759
Speaker 1: if there's an eighty percent chance that Amazon is going

783
00:39:38,800 --> 00:39:41,040
Speaker 1: to beat us at the first thing in our stack,

784
00:39:41,520 --> 00:39:43,719
Speaker 1: and an eighty percent chance on the second and the third,

785
00:39:43,800 --> 00:39:46,440
Speaker 1: down to the fourteenth. What you're left with is a

786
00:39:46,480 --> 00:39:50,080
Speaker 1: tiny percentage that they're gonna be you on everything across

787
00:39:50,120 --> 00:39:52,120
Speaker 1: the board. Yeah, yeah, the house always wins. If you

788
00:39:52,120 --> 00:39:54,359
Speaker 1: have to talk toss the dice twelve times, you're gonna

789
00:39:54,400 --> 00:39:56,600
Speaker 1: you're gonna crap out. So so let's talk about two

790
00:39:56,600 --> 00:39:59,880
Speaker 1: other companies. We already talked about Southwest. Let's talk about

791
00:39:59,880 --> 00:40:04,040
Speaker 1: the Bank of Italy. What was the Bank of Italy's innovation?

792
00:40:04,280 --> 00:40:06,719
Speaker 1: So the Bank of Italy is amazing because when I

793
00:40:06,800 --> 00:40:10,120
Speaker 1: say the word bank to listeners of your show, they

794
00:40:10,160 --> 00:40:13,239
Speaker 1: all think of what was invented by a kid who

795
00:40:13,400 --> 00:40:16,360
Speaker 1: dropped out of school at age fifteen and was a

796
00:40:16,360 --> 00:40:18,400
Speaker 1: produce vender. I mean, this guy sold lettuce for a

797
00:40:18,440 --> 00:40:22,120
Speaker 1: living and his name, ap Giannini is not one you've

798
00:40:22,120 --> 00:40:24,120
Speaker 1: probably heard of, but he at one point could have

799
00:40:24,160 --> 00:40:27,080
Speaker 1: been the richest person in the world, and he built

800
00:40:27,120 --> 00:40:28,920
Speaker 1: what you think of today as a bank. So what

801
00:40:28,960 --> 00:40:30,160
Speaker 1: do you think of the bank. You think of a

802
00:40:30,200 --> 00:40:32,239
Speaker 1: branch you can go into, You think of tellers that

803
00:40:32,280 --> 00:40:34,040
Speaker 1: you can talk to, You can think of a loan

804
00:40:34,120 --> 00:40:36,120
Speaker 1: you can get for a car or a house. You

805
00:40:36,160 --> 00:40:37,160
Speaker 1: think of the fact that you can go into a

806
00:40:37,200 --> 00:40:39,600
Speaker 1: bank if you're a woman, right, like he opened the

807
00:40:39,600 --> 00:40:41,880
Speaker 1: first bank for women. Like what you think of his

808
00:40:41,960 --> 00:40:45,719
Speaker 1: banking a hundred years ago was totally different and A p.

809
00:40:45,880 --> 00:40:49,600
Speaker 1: Giannini created something called the Bank of Italy originally, and

810
00:40:49,640 --> 00:40:53,000
Speaker 1: then that became successful enough that they bought the Bank

811
00:40:53,040 --> 00:40:55,200
Speaker 1: of America renamed a Bank of America. And I know

812
00:40:55,239 --> 00:40:56,960
Speaker 1: you're saying, oh wait, I hate Bank of America, But

813
00:40:57,080 --> 00:41:00,839
Speaker 1: like Bank of America fifty years ago was still very

814
00:41:00,880 --> 00:41:04,279
Speaker 1: innovative and very cool, and the Bank of Italy was

815
00:41:04,320 --> 00:41:06,600
Speaker 1: what started at all amazingly, it was from a kid

816
00:41:06,600 --> 00:41:10,000
Speaker 1: who knew nothing about banking and just wanted something to

817
00:41:10,040 --> 00:41:12,799
Speaker 1: include the little guys. So that was the problem that

818
00:41:12,840 --> 00:41:16,000
Speaker 1: he identified and wanted the solves. And we're just square.

819
00:41:16,200 --> 00:41:20,120
Speaker 1: Let's talk about Ikea. What is their innovation stack? So

820
00:41:20,160 --> 00:41:24,080
Speaker 1: Ikea was very interesting because Comprade, who's the founder of Ikea,

821
00:41:24,239 --> 00:41:27,160
Speaker 1: tells a very personal story about how he was terrified

822
00:41:27,320 --> 00:41:30,480
Speaker 1: and scared and crying. In fact, um, this was you know,

823
00:41:30,560 --> 00:41:32,800
Speaker 1: right after World War Two and you know his country

824
00:41:32,880 --> 00:41:35,520
Speaker 1: was in devastation the economy was a mess. Uh. He

825
00:41:35,560 --> 00:41:38,279
Speaker 1: was trying to make this furniture. Um actually he was

826
00:41:38,320 --> 00:41:40,040
Speaker 1: trying to make a catalog first, and then he was

827
00:41:40,040 --> 00:41:43,960
Speaker 1: trying to make furniture, and the furniture manufacturers of Sweden

828
00:41:44,000 --> 00:41:46,040
Speaker 1: basically ganged up on him and prevented him from going

829
00:41:46,080 --> 00:41:47,920
Speaker 1: to the trade show. So he had to do his

830
00:41:47,920 --> 00:41:50,840
Speaker 1: own trade show, which is what created the IKEA showroom.

831
00:41:50,840 --> 00:41:53,080
Speaker 1: The first warehouse show room was created because he was

832
00:41:53,160 --> 00:41:55,600
Speaker 1: kicked out of the trade show, and then he was

833
00:41:55,640 --> 00:41:57,319
Speaker 1: actually kicked out of the country because they would let

834
00:41:57,360 --> 00:42:00,319
Speaker 1: him manufacture his wares in Sweden. They had this this

835
00:42:00,440 --> 00:42:03,319
Speaker 1: industry group that had such a lock on manufacturing. They said,

836
00:42:03,320 --> 00:42:04,759
Speaker 1: we won't make it for you. So he's like, well,

837
00:42:04,760 --> 00:42:07,200
Speaker 1: I guess I'll go to uh Poland. Well, Poland just

838
00:42:07,200 --> 00:42:09,400
Speaker 1: been wrecked by the war, but they were very eager

839
00:42:09,440 --> 00:42:12,080
Speaker 1: to rebuild, and so he he was sort of forced

840
00:42:12,120 --> 00:42:14,640
Speaker 1: to build an innovation stack because they wouldn't let him

841
00:42:15,000 --> 00:42:17,919
Speaker 1: copy what everyone else is doing. And this is sort

842
00:42:17,920 --> 00:42:19,600
Speaker 1: of one of the things I get into the book,

843
00:42:19,600 --> 00:42:23,840
Speaker 1: and that is, look, usually copying is the right solution.

844
00:42:24,280 --> 00:42:26,360
Speaker 1: Do what everybody else is doing. That's probably what the

845
00:42:26,840 --> 00:42:30,160
Speaker 1: that's probably what's going to work. But if you can't copy,

846
00:42:30,200 --> 00:42:33,759
Speaker 1: you're gonna be forced to innovate, and innovation could lead

847
00:42:33,800 --> 00:42:36,000
Speaker 1: you to be, in this case, the biggest furniture company

848
00:42:36,000 --> 00:42:39,920
Speaker 1: on the planet. And Ikea is wildly, wildly successful and

849
00:42:40,400 --> 00:42:43,280
Speaker 1: very profitable, although we don't know because it's very private, private,

850
00:42:43,440 --> 00:42:45,360
Speaker 1: it's one of the biggest private companies in the world.

851
00:42:46,200 --> 00:42:48,640
Speaker 1: So quote another quote of yours that I thought was

852
00:42:48,719 --> 00:42:52,839
Speaker 1: quite fascinating. Every man made object that you have ever

853
00:42:53,040 --> 00:42:58,719
Speaker 1: encountered began as an idea in someone's minds ideas compete

854
00:42:58,760 --> 00:43:04,040
Speaker 1: for atoms, splay. Oh, this is the idea. So everything

855
00:43:04,080 --> 00:43:08,319
Speaker 1: you see in the world is I like to think

856
00:43:08,320 --> 00:43:09,680
Speaker 1: of it as us as a sea of success. So

857
00:43:09,719 --> 00:43:11,080
Speaker 1: I'm sitting in the studio right now, I'm looking at

858
00:43:11,080 --> 00:43:14,160
Speaker 1: a microphone. Well, somebody had this idea for this microphone,

859
00:43:14,640 --> 00:43:18,400
Speaker 1: and somebody had to then build it. And there were

860
00:43:18,440 --> 00:43:21,440
Speaker 1: other competing designs for microphones that didn't make it into

861
00:43:21,480 --> 00:43:24,760
Speaker 1: your studio. Okay, And every molecule in this room, including

862
00:43:24,760 --> 00:43:27,640
Speaker 1: you and me, like we competed for molecules, you know,

863
00:43:28,000 --> 00:43:31,759
Speaker 1: biologically our parents somehow survived and you know yours didn't mind,

864
00:43:31,800 --> 00:43:36,040
Speaker 1: didn't how it happened. Beats me, but it did. If

865
00:43:36,080 --> 00:43:40,200
Speaker 1: you look at that, everything in the world is a

866
00:43:40,239 --> 00:43:44,000
Speaker 1: winner to get its atoms into existence. And you may

867
00:43:44,000 --> 00:43:46,080
Speaker 1: sit there and say, well, this is a crumby you know,

868
00:43:46,160 --> 00:43:48,839
Speaker 1: coffee cup that I'm holding, and it could be better

869
00:43:48,840 --> 00:43:50,320
Speaker 1: than the handle, could be more comfortable than all this

870
00:43:50,400 --> 00:43:53,279
Speaker 1: other crap. But the fact is that that coffee cup one.

871
00:43:53,640 --> 00:43:55,840
Speaker 1: You don't know the explanation, but you know it's the winner.

872
00:43:56,120 --> 00:44:00,680
Speaker 1: So you are surrounded your entire life by nothing but winners.

873
00:44:00,880 --> 00:44:02,600
Speaker 1: It's so funny you say that because I have a

874
00:44:02,600 --> 00:44:07,080
Speaker 1: pet theory that says everything you see is survivorship bias.

875
00:44:07,520 --> 00:44:10,600
Speaker 1: And because you're surrounded by winners, you don't see the

876
00:44:10,719 --> 00:44:15,040
Speaker 1: millions of losers and iterations and failed attempts that went

877
00:44:15,239 --> 00:44:18,960
Speaker 1: into trying to build that, which is my theory as

878
00:44:19,040 --> 00:44:23,560
Speaker 1: to why people continue to put money into plays and

879
00:44:23,680 --> 00:44:28,200
Speaker 1: restaurants that have such a horrific success rate. Um, because

880
00:44:28,280 --> 00:44:31,000
Speaker 1: all they see is Hamilton's. All they see is the

881
00:44:31,080 --> 00:44:33,960
Speaker 1: hot Michelin star rate. They don't see the fifty ones

882
00:44:34,080 --> 00:44:36,680
Speaker 1: or the millions that failed before that. Oh yeah, and

883
00:44:36,680 --> 00:44:39,839
Speaker 1: and you can have selection bias, uh in in an

884
00:44:39,880 --> 00:44:43,280
Speaker 1: individual form. It's just called denial, right, you know, selection

885
00:44:43,320 --> 00:44:47,759
Speaker 1: bias on one person is just denial. It'll work this time. Well,

886
00:44:47,880 --> 00:44:50,399
Speaker 1: I have to repeat. I found the book to be

887
00:44:50,640 --> 00:44:53,719
Speaker 1: like a really fun read, which is what not what

888
00:44:53,800 --> 00:44:56,839
Speaker 1: you expect from a business book. And you clearly have

889
00:44:57,520 --> 00:44:59,960
Speaker 1: a sense of humor and some snark which comes up

890
00:45:00,040 --> 00:45:02,440
Speaker 1: cross in the book. Thank you. Did you catch the

891
00:45:02,520 --> 00:45:05,520
Speaker 1: dirty joke? Which one? Well, I I there are a

892
00:45:05,520 --> 00:45:07,759
Speaker 1: couple in there. You probably did. Um, there was one

893
00:45:07,760 --> 00:45:09,480
Speaker 1: in there. I will not tell because I promised not

894
00:45:09,560 --> 00:45:12,080
Speaker 1: to tell. But my editor was sort of checked out

895
00:45:12,080 --> 00:45:13,640
Speaker 1: on the last part of the book. He'd taken another

896
00:45:13,719 --> 00:45:15,480
Speaker 1: job and he didn't tell me, so he didn't really

897
00:45:15,480 --> 00:45:17,719
Speaker 1: scrutinize what I was writing. So you snuck some I

898
00:45:17,719 --> 00:45:19,880
Speaker 1: snuck this in and I told him and he's like,

899
00:45:19,920 --> 00:45:21,799
Speaker 1: we have to tell me. It's like, now I don't.

900
00:45:21,840 --> 00:45:23,319
Speaker 1: You're the editor. You have to catch it. And so

901
00:45:23,360 --> 00:45:26,160
Speaker 1: we had this like game of chicken and uh, and

902
00:45:26,239 --> 00:45:29,840
Speaker 1: he gave up and went into publication. And I'm not

903
00:45:29,880 --> 00:45:31,719
Speaker 1: going to say what it is, but like, yeah, there's

904
00:45:31,719 --> 00:45:33,480
Speaker 1: some stuff in there that I love the idea of

905
00:45:33,600 --> 00:45:36,160
Speaker 1: Easter eggs within a book just just kind of have

906
00:45:36,320 --> 00:45:39,040
Speaker 1: some fun. Yeah, we'll talk about the name change, and

907
00:45:39,080 --> 00:45:41,440
Speaker 1: we'll talk about some of the other things you co

908
00:45:41,640 --> 00:45:47,359
Speaker 1: founded or founded. UH. Let's start with UH. Invisibly, can

909
00:45:47,400 --> 00:45:51,720
Speaker 1: consumers really profit off of all of their private data

910
00:45:51,920 --> 00:45:56,799
Speaker 1: that these online companies and social networks are grabbing? Tell us,

911
00:45:56,800 --> 00:45:59,480
Speaker 1: tell us a little bit about invisibly. I wish I

912
00:45:59,480 --> 00:46:01,759
Speaker 1: could give you a strong yes. I will give you

913
00:46:01,960 --> 00:46:05,440
Speaker 1: sort of a kind of right now. But the idea

914
00:46:05,520 --> 00:46:09,280
Speaker 1: behind invisibly is very sound, which is that you should

915
00:46:09,360 --> 00:46:12,800
Speaker 1: stop being the product and start being the person in control.

916
00:46:13,200 --> 00:46:14,680
Speaker 1: And what I mean by that is when you're using

917
00:46:14,680 --> 00:46:18,000
Speaker 1: a platform for free like Facebook or Twitter or any

918
00:46:18,040 --> 00:46:21,319
Speaker 1: of those platforms Google for this for that matter, they're

919
00:46:21,400 --> 00:46:23,759
Speaker 1: going to monetize you. And what that means is that

920
00:46:23,800 --> 00:46:28,919
Speaker 1: they serve you things that serve them and only them.

921
00:46:29,120 --> 00:46:31,600
Speaker 1: So I'll give you an example. Facebook has figured out

922
00:46:31,880 --> 00:46:34,319
Speaker 1: that the more time you spend on their platform, the

923
00:46:34,360 --> 00:46:36,600
Speaker 1: more money they make. And they have also figured out

924
00:46:36,600 --> 00:46:38,360
Speaker 1: that if they piss you off towards the end of

925
00:46:38,400 --> 00:46:41,120
Speaker 1: your browsing experience, you're going to spend more time on it,

926
00:46:41,320 --> 00:46:44,399
Speaker 1: So it serves them to get you. Know you, they'll

927
00:46:44,400 --> 00:46:46,480
Speaker 1: show you the pictures of your cousins and your kids

928
00:46:46,480 --> 00:46:48,279
Speaker 1: and all the cool stuff. And then if you if

929
00:46:48,280 --> 00:46:50,279
Speaker 1: it looks like to their algorithms that you're gonna leave,

930
00:46:50,320 --> 00:46:52,799
Speaker 1: they will piss you off on purpose. And that's how

931
00:46:52,840 --> 00:46:55,600
Speaker 1: they're one of their tricks to keep you engaged. Well, yeah,

932
00:46:55,640 --> 00:46:59,160
Speaker 1: it's well known now that is not good for you,

933
00:46:59,680 --> 00:47:02,040
Speaker 1: but it's good for Facebook. How do you monetize How

934
00:47:02,080 --> 00:47:05,960
Speaker 1: do you, as the individual user flip the script and

935
00:47:06,040 --> 00:47:09,759
Speaker 1: monetize that. So about five years ago I started working

936
00:47:09,840 --> 00:47:12,440
Speaker 1: on this idea that everybody's had it. It's an idea

937
00:47:12,440 --> 00:47:16,400
Speaker 1: called micropayments. And micropayments are simply making you the center

938
00:47:16,400 --> 00:47:18,880
Speaker 1: of the transaction. So if you see an ad, you

939
00:47:18,960 --> 00:47:21,719
Speaker 1: get paid for seeing that add a tiny amount. And

940
00:47:21,840 --> 00:47:24,360
Speaker 1: if you view a piece of content or read something

941
00:47:24,480 --> 00:47:26,320
Speaker 1: or listen to something like you listen to this podcast,

942
00:47:26,360 --> 00:47:29,480
Speaker 1: and we should we should you know, we gotta pay Barry, Yeah,

943
00:47:29,520 --> 00:47:31,120
Speaker 1: we should pay Berry. We gotta pay for you all

944
00:47:31,120 --> 00:47:32,719
Speaker 1: the work you did I forgot sake. You read the

945
00:47:32,760 --> 00:47:36,480
Speaker 1: book like, you know, that should be compensated. So at

946
00:47:36,520 --> 00:47:38,680
Speaker 1: the center of this, though, is the person in charge.

947
00:47:39,120 --> 00:47:41,080
Speaker 1: And what we're trying to do with invisibly is create

948
00:47:41,120 --> 00:47:43,960
Speaker 1: an invisible agent. And this agent is going to buy

949
00:47:44,000 --> 00:47:45,759
Speaker 1: for you and sell for you. They're gonna buy at

950
00:47:45,960 --> 00:47:48,120
Speaker 1: the lowest prices they can. They're gonna sell your eyeballs

951
00:47:48,120 --> 00:47:51,160
Speaker 1: at highest prices they can. They're gonna negotiating your negotiate

952
00:47:51,200 --> 00:47:53,040
Speaker 1: on your behalf. So the first thing we're going to

953
00:47:53,160 --> 00:47:55,759
Speaker 1: stand up is a newsreader which will take you know,

954
00:47:56,239 --> 00:47:59,920
Speaker 1: most of English language news and give you control of it.

955
00:48:00,400 --> 00:48:02,479
Speaker 1: And look, I can't tell you that people are gonna

956
00:48:02,480 --> 00:48:05,520
Speaker 1: want to use this because news is so polluted right now.

957
00:48:05,600 --> 00:48:09,440
Speaker 1: Everybody the currentcept of this, it's really it's really interesting.

958
00:48:09,520 --> 00:48:11,759
Speaker 1: It's a great concept, Barry. I can't swear that it works,

959
00:48:11,800 --> 00:48:13,359
Speaker 1: but if you go to invisibly dot com you can

960
00:48:13,360 --> 00:48:16,800
Speaker 1: try it. And look, we're giving it a shot, um.

961
00:48:17,000 --> 00:48:20,000
Speaker 1: And the hope is that if we can give people control,

962
00:48:20,280 --> 00:48:23,880
Speaker 1: then they will feel better about what they're consuming and

963
00:48:23,920 --> 00:48:26,279
Speaker 1: also what they're selling, because believe me, if you think

964
00:48:26,280 --> 00:48:28,960
Speaker 1: something free, you're paying for it with your attention, and

965
00:48:29,000 --> 00:48:30,839
Speaker 1: you should be in control of the The old joke

966
00:48:31,000 --> 00:48:33,720
Speaker 1: is if if the product is free, then you're the problem.

967
00:48:33,960 --> 00:48:36,520
Speaker 1: That's so that's it. How'd you like working with Founders Fund?

968
00:48:36,520 --> 00:48:39,840
Speaker 1: They have a really interesting. Uh history, I really like

969
00:48:39,840 --> 00:48:42,040
Speaker 1: founders Fund. Founders Fund was the only money I wanted

970
00:48:42,160 --> 00:48:44,640
Speaker 1: in the company. Uh, And it's it's because of Peter

971
00:48:44,719 --> 00:48:48,720
Speaker 1: teel So micropayments. If you know anything about the history

972
00:48:48,840 --> 00:48:52,200
Speaker 1: of the Internet, everyone's had the idea, nobody's made it work.

973
00:48:52,239 --> 00:48:54,680
Speaker 1: So we're talking about twenty five years of constant failure.

974
00:48:55,280 --> 00:48:57,839
Speaker 1: So when I was pitching Peter, well, so first of all,

975
00:48:57,840 --> 00:49:00,759
Speaker 1: forget Peter when I when I did the problem, when

976
00:49:00,800 --> 00:49:02,200
Speaker 1: I did the company, I said, well, I could fund

977
00:49:02,200 --> 00:49:04,680
Speaker 1: the company myself, but that would be stupid because then

978
00:49:04,719 --> 00:49:08,239
Speaker 1: I'm just an idiot who has no validation. So I thought,

979
00:49:08,880 --> 00:49:12,120
Speaker 1: who would be the most validating capital in the world.

980
00:49:12,600 --> 00:49:15,320
Speaker 1: And I thought, I need somebody who's made contrarian calls,

981
00:49:16,120 --> 00:49:18,520
Speaker 1: who's been right, who's been in your face, who's not

982
00:49:18,640 --> 00:49:22,080
Speaker 1: afraid to be a little controversial. And only two names

983
00:49:22,120 --> 00:49:25,520
Speaker 1: came to mind. It was Elon Musk Competer too and Elan.

984
00:49:25,600 --> 00:49:26,759
Speaker 1: I can't get in touch with him, but I can

985
00:49:26,800 --> 00:49:28,160
Speaker 1: get in touch with Peter, and I went, I pitched

986
00:49:28,200 --> 00:49:32,120
Speaker 1: Peter and they both were part of the original PayPal

987
00:49:32,160 --> 00:49:36,360
Speaker 1: man memory serves. But I mean Peter has made contrarian

988
00:49:36,440 --> 00:49:39,040
Speaker 1: calls and been right. This is the thing when Peter

989
00:49:39,120 --> 00:49:41,520
Speaker 1: invested invisibly, it said to the rest of the world,

990
00:49:41,680 --> 00:49:44,399
Speaker 1: you better pay some attention here because somebody who's been

991
00:49:44,480 --> 00:49:47,239
Speaker 1: right more often than you are is putting his money.

992
00:49:47,239 --> 00:49:50,200
Speaker 1: But in this so let's talk a little bit about

993
00:49:50,239 --> 00:49:53,399
Speaker 1: what you learned building a billion dollar business. Square when

994
00:49:53,520 --> 00:50:00,480
Speaker 1: public it's become wildly successful. What are the lessons from that? Uh? Wow, um,

995
00:50:00,520 --> 00:50:04,640
Speaker 1: I think it's the lesson of serve the unserved. I

996
00:50:04,640 --> 00:50:07,320
Speaker 1: mean what Square has been focused on from day one

997
00:50:07,840 --> 00:50:10,239
Speaker 1: are people who weren't invited to the party. And we

998
00:50:10,400 --> 00:50:13,960
Speaker 1: began with payments. That's where we were. We're now doing

999
00:50:14,000 --> 00:50:16,360
Speaker 1: that with cash app, which is a runaway success. But

1000
00:50:16,560 --> 00:50:19,160
Speaker 1: cash app is esessionally a bank in your pocket. It's

1001
00:50:19,160 --> 00:50:21,680
Speaker 1: a way of trading stock, it's a way of buying crypto,

1002
00:50:21,719 --> 00:50:24,040
Speaker 1: it's a way of it's a way of participating in

1003
00:50:24,080 --> 00:50:26,040
Speaker 1: the financial system that you know, people like you and

1004
00:50:26,040 --> 00:50:28,160
Speaker 1: I take this for granted. We think, oh, well, why

1005
00:50:28,200 --> 00:50:30,640
Speaker 1: are there unbanked people? There people for the same reason

1006
00:50:30,800 --> 00:50:33,960
Speaker 1: their business are too small to declare bankruptcy. Like you,

1007
00:50:33,960 --> 00:50:36,560
Speaker 1: you don't realize how many people were excluded. So cash

1008
00:50:36,600 --> 00:50:39,320
Speaker 1: app is inclusive. There Um, you know we just bought Title.

1009
00:50:39,880 --> 00:50:42,480
Speaker 1: Our excitement would that was a big surprise. It seems

1010
00:50:42,520 --> 00:50:46,359
Speaker 1: like a little outside of of what square folks. Yeah,

1011
00:50:46,800 --> 00:50:48,880
Speaker 1: it is if you think of it in terms of music,

1012
00:50:49,040 --> 00:50:51,399
Speaker 1: if you think of it in terms of artists and

1013
00:50:51,440 --> 00:50:54,400
Speaker 1: how artists are at the you know, sort of receiving

1014
00:50:54,480 --> 00:50:56,600
Speaker 1: end of a lot of abuse. Like, we really think

1015
00:50:56,600 --> 00:51:00,000
Speaker 1: that empowering artists through the Title platform could be transformed

1016
00:51:00,320 --> 00:51:03,560
Speaker 1: for the music industry and for the artists. So look,

1017
00:51:03,560 --> 00:51:05,600
Speaker 1: in other words, get them a fair payment on their

1018
00:51:05,640 --> 00:51:07,600
Speaker 1: streams and down laws. Yeah, and look, I mean you

1019
00:51:07,600 --> 00:51:09,480
Speaker 1: can get the same song on Title that you can

1020
00:51:09,560 --> 00:51:11,839
Speaker 1: on Spotify. I mean, like we've got to hire data rate.

1021
00:51:12,280 --> 00:51:15,640
Speaker 1: But look, they'll catch up at some point. Um, And

1022
00:51:16,120 --> 00:51:18,319
Speaker 1: I think it's more about what the artists are gonna

1023
00:51:18,520 --> 00:51:21,920
Speaker 1: experience with Title. But again the focus is just like

1024
00:51:21,960 --> 00:51:24,080
Speaker 1: what can we do to empower the people who have

1025
00:51:24,360 --> 00:51:27,000
Speaker 1: traditionally been left out of the party. So let's talk

1026
00:51:27,000 --> 00:51:30,680
Speaker 1: about defy. Do you see squares business as part of

1027
00:51:30,719 --> 00:51:36,000
Speaker 1: the decentralized uh finance movement or are they outgrowing the

1028
00:51:36,080 --> 00:51:39,080
Speaker 1: traditional payment system? So it's a little both. I mean,

1029
00:51:39,239 --> 00:51:42,160
Speaker 1: as a so I'm a I'm a Fed regulator. Now

1030
00:51:42,200 --> 00:51:46,000
Speaker 1: I actually get to see regulation from inside the Federal Reserve,

1031
00:51:46,160 --> 00:51:50,120
Speaker 1: and regulation is really really good for a lot of things.

1032
00:51:50,760 --> 00:51:53,160
Speaker 1: But if it becomes too ossified, if it becomes too

1033
00:51:53,760 --> 00:51:56,080
Speaker 1: too restrictive, then it becomes bad. And I like the

1034
00:51:56,120 --> 00:51:58,839
Speaker 1: idea that we've got decentralized options. What do you make

1035
00:51:58,880 --> 00:52:01,719
Speaker 1: of the name change of air to block Inc. What

1036
00:52:01,719 --> 00:52:04,440
Speaker 1: what does this say about the role crypto is gonna

1037
00:52:04,440 --> 00:52:07,560
Speaker 1: play in the square ecosystem? So the block was a

1038
00:52:07,560 --> 00:52:10,479
Speaker 1: pretty you know, sort of clever round a couple levels.

1039
00:52:10,520 --> 00:52:12,440
Speaker 1: It was you know, the three deventual version of Square

1040
00:52:12,480 --> 00:52:14,719
Speaker 1: of block blockchain. It was also block you you know,

1041
00:52:14,760 --> 00:52:17,839
Speaker 1: it had some negative connotation to on Twitter. Yeah, I mean,

1042
00:52:17,880 --> 00:52:19,920
Speaker 1: look there's there's a lot of you get blocked on Twitter.

1043
00:52:19,960 --> 00:52:21,480
Speaker 1: I mean like like, you know, you take the go

1044
00:52:21,560 --> 00:52:24,960
Speaker 1: of the bad um. The Square brand really means payments,

1045
00:52:25,560 --> 00:52:28,879
Speaker 1: and people think of Square, they think of getting paid. Uh.

1046
00:52:28,920 --> 00:52:31,640
Speaker 1: They don't necessarily think of person to person payments, or

1047
00:52:31,719 --> 00:52:33,600
Speaker 1: bank in your pocket like cash app. They certainly don't

1048
00:52:33,600 --> 00:52:35,560
Speaker 1: think of music like title. They don't think of other

1049
00:52:35,600 --> 00:52:38,400
Speaker 1: things that we might be doing. And so so this

1050
00:52:38,480 --> 00:52:41,160
Speaker 1: is sort of the alphabet to Google search. Yeah, yeah,

1051
00:52:41,200 --> 00:52:43,240
Speaker 1: so we're still calling you. You still call Search, Google,

1052
00:52:43,400 --> 00:52:45,319
Speaker 1: you still call payment Square. But we got this thing

1053
00:52:45,440 --> 00:52:48,480
Speaker 1: over it that you know have I mean Google's case,

1054
00:52:48,520 --> 00:52:50,200
Speaker 1: I got a space program. In our case, you know,

1055
00:52:50,680 --> 00:52:53,839
Speaker 1: we got something called Spiral. So so let's talk about

1056
00:52:53,920 --> 00:52:57,280
Speaker 1: something else you're doing besides chairman of the St. Louis

1057
00:52:57,280 --> 00:53:01,160
Speaker 1: fed And and by the way, I have my Fred

1058
00:53:01,600 --> 00:53:05,600
Speaker 1: swag Love Fred. Yes, I haven't worn that T shirt.

1059
00:53:05,800 --> 00:53:09,319
Speaker 1: Uh it's Bloomberg yet. Um, but I'm a giant Fred fan.

1060
00:53:09,440 --> 00:53:12,520
Speaker 1: For those of you who like manipulating economic data and

1061
00:53:12,560 --> 00:53:16,799
Speaker 1: generating charts and things. Fred is the best tell us

1062
00:53:16,840 --> 00:53:20,239
Speaker 1: about the innovation district for downtown St. Louis. And how

1063
00:53:20,239 --> 00:53:23,560
Speaker 1: did you get involved in that? So? Uh, St. Louis

1064
00:53:23,600 --> 00:53:26,160
Speaker 1: has had some hard times and I wanted to build

1065
00:53:26,200 --> 00:53:28,720
Speaker 1: something in my hometown that was going to not only

1066
00:53:28,960 --> 00:53:31,680
Speaker 1: show off how cool St. Louis is but also attract

1067
00:53:31,719 --> 00:53:34,279
Speaker 1: people to it. And so we bought the old Post

1068
00:53:34,360 --> 00:53:37,440
Speaker 1: Dispatch building where the newspapers used to be printed. This

1069
00:53:37,520 --> 00:53:40,440
Speaker 1: is basically a factory, and we put a hundred million

1070
00:53:40,480 --> 00:53:42,759
Speaker 1: dollar new office in there for Square and a bunch

1071
00:53:42,840 --> 00:53:44,799
Speaker 1: of employees, and then we save some space for some

1072
00:53:44,840 --> 00:53:46,920
Speaker 1: new folks who who want to come in, and we're

1073
00:53:46,920 --> 00:53:49,879
Speaker 1: hoping to catalyze this whole district because what I'm trying

1074
00:53:49,880 --> 00:53:52,480
Speaker 1: to do in downtown St. Louis is create this sort

1075
00:53:52,480 --> 00:53:56,040
Speaker 1: of swagger that you have in the fancy office. So

1076
00:53:56,040 --> 00:53:58,120
Speaker 1: I mean, I don't know if you've uh Barry. When

1077
00:53:58,120 --> 00:54:01,239
Speaker 1: he was taking me through Bloomberg to Barry was walking

1078
00:54:01,239 --> 00:54:03,320
Speaker 1: me into the studio, he was talking about boot Bloomberg

1079
00:54:03,400 --> 00:54:06,000
Speaker 1: has a curved escalator. It's the coolest thing in the world,

1080
00:54:06,239 --> 00:54:09,279
Speaker 1: the only curved escalator in North America. Right, It's just

1081
00:54:09,400 --> 00:54:12,600
Speaker 1: so cool. And Barry feels cool walking down this curved

1082
00:54:12,680 --> 00:54:14,440
Speaker 1: escalator because that's how you should feel if you work

1083
00:54:14,520 --> 00:54:17,440
Speaker 1: for Bloomberg, because Bloomberg is a kick out the organization, Right.

1084
00:54:17,719 --> 00:54:19,560
Speaker 1: I want people to feel that way when they work

1085
00:54:19,600 --> 00:54:21,600
Speaker 1: for Square. And when you work in Square in Melbourne

1086
00:54:21,680 --> 00:54:24,719
Speaker 1: or Sydney or or or our offices in San Francisco,

1087
00:54:24,719 --> 00:54:26,760
Speaker 1: and you do you feel that swagger because our offices

1088
00:54:26,760 --> 00:54:29,000
Speaker 1: are great. We didn't have a great office in St. Louis.

1089
00:54:29,120 --> 00:54:33,040
Speaker 1: Now we do our office and St. Louis is spec tackular,

1090
00:54:33,280 --> 00:54:34,960
Speaker 1: and I want the people to come into St. Louis. Oh,

1091
00:54:34,960 --> 00:54:37,040
Speaker 1: it's the best looking office we've got. I want people

1092
00:54:37,080 --> 00:54:38,520
Speaker 1: to have that swagger and then I want to take

1093
00:54:38,560 --> 00:54:40,960
Speaker 1: them to carry a little bit that outside and bring

1094
00:54:41,040 --> 00:54:43,920
Speaker 1: more people to St. Louis. So, so is this an

1095
00:54:44,080 --> 00:54:47,799
Speaker 1: enterprise Is this an enterprise zone? It's hard to spit

1096
00:54:47,840 --> 00:54:50,480
Speaker 1: that out. What what? What is this actually set up

1097
00:54:50,520 --> 00:54:53,839
Speaker 1: as it possibly is? I don't know the tax there's

1098
00:54:53,840 --> 00:54:55,400
Speaker 1: a bunch of tax things that I didn't pay much

1099
00:54:55,440 --> 00:54:57,360
Speaker 1: attention to that. Look, it's just a cool building and

1100
00:54:57,400 --> 00:54:59,400
Speaker 1: I think it's an opportunity zone or something like that.

1101
00:54:59,440 --> 00:55:02,960
Speaker 1: Opportunity but you know what, I honestly didn't pay much attention. Look,

1102
00:55:02,960 --> 00:55:06,680
Speaker 1: the numbers are terrible. Whenever when sometimes if everyone's like,

1103
00:55:06,680 --> 00:55:08,239
Speaker 1: oh can I invest with you, it was like yeah, yeah,

1104
00:55:08,239 --> 00:55:10,880
Speaker 1: you like you can have the whole thing. It was

1105
00:55:10,920 --> 00:55:12,520
Speaker 1: not a good amount of money maker. It's not a

1106
00:55:12,520 --> 00:55:15,200
Speaker 1: many maker for me. But that's okay. That raises an

1107
00:55:15,239 --> 00:55:21,800
Speaker 1: interesting issue. You've been a serial entrepreneur and a fintech investor.

1108
00:55:22,440 --> 00:55:26,080
Speaker 1: The traditional route from your success is, hey, become a

1109
00:55:26,160 --> 00:55:29,000
Speaker 1: venture capitalists, seed a bunch of companies, lead a bunch

1110
00:55:29,040 --> 00:55:31,400
Speaker 1: of A and B rounds. Why not go that route?

1111
00:55:31,400 --> 00:55:33,399
Speaker 1: Oh I did? I'm a VC, but I mean, I don't.

1112
00:55:33,440 --> 00:55:35,440
Speaker 1: I don't lead with it because it's honestly kind of boring.

1113
00:55:35,520 --> 00:55:37,760
Speaker 1: Like what my venture capital firm does is we invest

1114
00:55:37,800 --> 00:55:40,160
Speaker 1: as software the service companies that are gonna te xt

1115
00:55:40,239 --> 00:55:44,520
Speaker 1: their returns and our returns have been fantastic. It's just

1116
00:55:44,600 --> 00:55:47,960
Speaker 1: a family officers just open. No, every it's fin top.

1117
00:55:48,160 --> 00:55:50,120
Speaker 1: You can, you can go to fin top. It's it's

1118
00:55:50,120 --> 00:55:52,319
Speaker 1: an open fund. I don't know if I'm allowed to

1119
00:55:52,320 --> 00:55:55,080
Speaker 1: say when we're open, but yeah, with a fin top

1120
00:55:55,440 --> 00:55:57,640
Speaker 1: is a VC fund and I'm a general partner. We

1121
00:55:57,640 --> 00:55:58,800
Speaker 1: we make a lot of money, and we make a

1122
00:55:58,840 --> 00:56:01,120
Speaker 1: lot of money by using a form law that makes

1123
00:56:01,160 --> 00:56:03,480
Speaker 1: a lot of money. Um, and the formula, I'll tell

1124
00:56:03,520 --> 00:56:06,840
Speaker 1: you what the formula is. Uh, Big platforms have to

1125
00:56:06,880 --> 00:56:10,600
Speaker 1: buy small companies because big financial platforms are terrible at innovation.

1126
00:56:10,800 --> 00:56:12,600
Speaker 1: And if you identify the companies that they have to

1127
00:56:12,600 --> 00:56:14,880
Speaker 1: buy and fund them for three years, they tend to

1128
00:56:15,080 --> 00:56:19,160
Speaker 1: ten x year or money interesting, really interesting. So no,

1129
00:56:19,280 --> 00:56:22,040
Speaker 1: it's not, that's really boring. Come on, you don't think

1130
00:56:22,120 --> 00:56:24,239
Speaker 1: you think ten x is boring? No, I think it's

1131
00:56:24,280 --> 00:56:28,200
Speaker 1: I think, but it's it's it's a wonderful result. The

1132
00:56:28,280 --> 00:56:32,680
Speaker 1: process that I go through there is so mechanical. It's

1133
00:56:32,719 --> 00:56:36,880
Speaker 1: not interesting because it's work. It's successful. Yeah, and the

1134
00:56:36,920 --> 00:56:39,640
Speaker 1: other partners work really hard and I you just count

1135
00:56:39,719 --> 00:56:42,160
Speaker 1: the money that I show up and do your scro

1136
00:56:43,640 --> 00:56:47,279
Speaker 1: and I'm I'm making swimming in the gold coins. And

1137
00:56:47,520 --> 00:56:49,279
Speaker 1: they used me to fire people like if I have

1138
00:56:49,320 --> 00:56:51,160
Speaker 1: to talk to an entrepreneur about how they should leave

1139
00:56:51,200 --> 00:56:53,759
Speaker 1: their own company. But what I've done it myself like

1140
00:56:54,239 --> 00:56:56,879
Speaker 1: and occasionally have to pull pull somebody aside and say, hey, look,

1141
00:56:56,920 --> 00:57:00,399
Speaker 1: it's really good to be the other guy that makes

1142
00:57:00,480 --> 00:57:02,600
Speaker 1: that makes a lot of sense. So so let's stick

1143
00:57:02,640 --> 00:57:07,799
Speaker 1: with traditional banks and being unable to innovate. Since you

1144
00:57:07,840 --> 00:57:11,759
Speaker 1: mentioned you're looking at small companies that can facilitate ten

1145
00:57:12,040 --> 00:57:17,720
Speaker 1: x on larger platforms, why can't traditional banks innovate and

1146
00:57:17,720 --> 00:57:21,680
Speaker 1: and what are the missed opportunities that these folks um

1147
00:57:21,840 --> 00:57:25,960
Speaker 1: are creating for for startups. So banks and financial institutions

1148
00:57:26,000 --> 00:57:29,320
Speaker 1: become structurally conservative for a very good reason, which is

1149
00:57:29,400 --> 00:57:32,360
Speaker 1: you don't become a big bank if you ever lose money.

1150
00:57:32,880 --> 00:57:35,040
Speaker 1: So one of the you know, the classic images of

1151
00:57:35,080 --> 00:57:37,480
Speaker 1: the bank is is the bank vault that this giant

1152
00:57:37,480 --> 00:57:39,240
Speaker 1: piece of stainless table all these bolts in it. I mean,

1153
00:57:39,280 --> 00:57:40,960
Speaker 1: we don't see them that much anymore. But like that

1154
00:57:41,040 --> 00:57:43,360
Speaker 1: used to be why you should trust this bank, as

1155
00:57:43,360 --> 00:57:47,080
Speaker 1: we have this you know, big vault. Look, if you

1156
00:57:47,200 --> 00:57:49,840
Speaker 1: lose money, you're dead. I don't care how innovative you

1157
00:57:49,840 --> 00:57:53,520
Speaker 1: are as a financial institution. You first have to be conservative.

1158
00:57:53,560 --> 00:57:56,960
Speaker 1: You have to be good at auditing, accounting, record keeping,

1159
00:57:56,960 --> 00:57:58,880
Speaker 1: you have to be good at legal and compliance and

1160
00:57:58,880 --> 00:58:01,560
Speaker 1: all these things that are not innovative. The problem is

1161
00:58:01,600 --> 00:58:06,160
Speaker 1: that these organizations that get too big become structurally conservative.

1162
00:58:06,200 --> 00:58:10,040
Speaker 1: They proved they promote only accounts and lawyers and auditors,

1163
00:58:10,080 --> 00:58:13,080
Speaker 1: and after a while they kill innovation. So what you

1164
00:58:13,160 --> 00:58:14,920
Speaker 1: have is this company that needs to grow. They need

1165
00:58:14,960 --> 00:58:17,320
Speaker 1: to get new products in but they can't, so then

1166
00:58:17,360 --> 00:58:20,120
Speaker 1: they have to buy their way into that. And it's

1167
00:58:20,120 --> 00:58:23,360
Speaker 1: actually a pretty good marriage because the big platforms are

1168
00:58:23,560 --> 00:58:28,200
Speaker 1: given regulatory um permission to access the rails of commerce,

1169
00:58:28,320 --> 00:58:30,760
Speaker 1: whereas the small companies aren't. So I mean we even

1170
00:58:30,760 --> 00:58:33,080
Speaker 1: went through the at square when we started our our

1171
00:58:33,160 --> 00:58:35,960
Speaker 1: our our product, we had to get permission from Visa

1172
00:58:36,000 --> 00:58:39,280
Speaker 1: and MasterCard in the banks to even transact legally on

1173
00:58:39,320 --> 00:58:41,760
Speaker 1: the rails. So when you first went to Visa and

1174
00:58:41,840 --> 00:58:45,600
Speaker 1: MasterCard and said, hey, we want to do credit card processing.

1175
00:58:46,480 --> 00:58:49,440
Speaker 1: What was the response, what was the pushback? Lay the responses,

1176
00:58:49,520 --> 00:58:52,040
Speaker 1: we have an app. We have a rule against exactly

1177
00:58:52,040 --> 00:58:55,560
Speaker 1: what you're doing. In our operating regulations it says you

1178
00:58:55,640 --> 00:58:57,720
Speaker 1: can't do what Square wanted to do? So how did

1179
00:58:57,720 --> 00:58:59,680
Speaker 1: you get around that? We had to get them to

1180
00:58:59,760 --> 00:59:02,400
Speaker 1: change our minds. And I got the sense from the

1181
00:59:02,440 --> 00:59:05,680
Speaker 1: book that you guys were kinda on not like Uber

1182
00:59:06,040 --> 00:59:10,640
Speaker 1: violating rules and laws, but you were kind of right

1183
00:59:10,680 --> 00:59:13,280
Speaker 1: at the edge when you were startup. We built a

1184
00:59:13,320 --> 00:59:17,200
Speaker 1: product that violated, by my count, at least seventeen rules

1185
00:59:17,360 --> 00:59:21,640
Speaker 1: and regulations that were promulgated by Visa, master Card, Visa

1186
00:59:21,680 --> 00:59:23,520
Speaker 1: master Card, the federal government. We I mean that the

1187
00:59:23,840 --> 00:59:27,800
Speaker 1: total body count was like seventeen and and And it

1188
00:59:27,840 --> 00:59:29,800
Speaker 1: wasn't like we were intentionally trying to flaunt the laws.

1189
00:59:29,840 --> 00:59:32,240
Speaker 1: It's just that we couldn't build our product in compliance

1190
00:59:32,280 --> 00:59:34,760
Speaker 1: with everything initially, and we had to have a working

1191
00:59:34,760 --> 00:59:37,440
Speaker 1: product because when you're building something new that somebody has

1192
00:59:37,480 --> 00:59:41,240
Speaker 1: never seen before, if you don't have a working prototype,

1193
00:59:41,240 --> 00:59:44,640
Speaker 1: people can't visualize it. They will always map you into

1194
00:59:44,720 --> 00:59:48,000
Speaker 1: something they've seen, their history, their frame of reference. Yeah,

1195
00:59:48,040 --> 00:59:49,840
Speaker 1: and so if you're gonna break that frame of reference,

1196
00:59:49,840 --> 00:59:51,800
Speaker 1: you better do it with a product that actually physically

1197
00:59:51,840 --> 00:59:54,920
Speaker 1: exists and works. And so to make it physically exist

1198
00:59:55,000 --> 00:59:57,320
Speaker 1: and work, we had to break a bunch of rules. Now,

1199
00:59:57,320 --> 01:00:01,200
Speaker 1: what we then did was get compliant with all those rules,

1200
01:00:01,280 --> 01:00:03,440
Speaker 1: or in some cases, get those rules changed. In one cases,

1201
01:00:03,480 --> 01:00:06,640
Speaker 1: we had a MasterCard, Visa American Expressed actually changed their

1202
01:00:06,680 --> 01:00:09,880
Speaker 1: operating regulations for Square to exist. How on earth do

1203
01:00:09,920 --> 01:00:14,040
Speaker 1: you get behemoths like that to change there? Because I

1204
01:00:14,280 --> 01:00:17,320
Speaker 1: my assumption is all those rules, not only have they

1205
01:00:17,360 --> 01:00:21,280
Speaker 1: been vetted by lawyers and and everybody else, they will

1206
01:00:21,440 --> 01:00:25,720
Speaker 1: work to the advantage of m X and MasterCard. Well, yes, uh,

1207
01:00:25,920 --> 01:00:29,120
Speaker 1: rules exist, but remember there's a there's a time when

1208
01:00:29,160 --> 01:00:33,000
Speaker 1: that rule is written. And if the world moves thirty years,

1209
01:00:33,200 --> 01:00:35,560
Speaker 1: and remember we're talking about tech years, so we're talking

1210
01:00:35,560 --> 01:00:39,480
Speaker 1: about probably a hundred years in banking time, um, then

1211
01:00:39,480 --> 01:00:42,840
Speaker 1: that rule may no longer be applicable. And so those

1212
01:00:42,960 --> 01:00:45,360
Speaker 1: rules can be rewritten. They've been written by humans, that

1213
01:00:45,360 --> 01:00:46,760
Speaker 1: can be changed by humans. And the way we got

1214
01:00:46,760 --> 01:00:50,040
Speaker 1: them changed was we did a demo that dropped jaws

1215
01:00:50,320 --> 01:00:56,080
Speaker 1: at MasterCard really and MasterCard said, well, actually, wasn't MasterCard.

1216
01:00:56,120 --> 01:00:59,720
Speaker 1: I say master Card. It wasn't MasterCard. It was Ed McLoughlin. Yeah.

1217
01:01:00,080 --> 01:01:03,120
Speaker 1: And his title was what what he was? Chief of something? Right,

1218
01:01:03,160 --> 01:01:06,320
Speaker 1: because you talked about in the book sending money with

1219
01:01:06,400 --> 01:01:08,680
Speaker 1: a credit card and the reader in the in the

1220
01:01:08,680 --> 01:01:12,640
Speaker 1: early days of Square, and people like, that's not possible. Yeah. Yeah,

1221
01:01:12,680 --> 01:01:15,200
Speaker 1: they were like, what the hell happened? Yeah? I mean,

1222
01:01:16,240 --> 01:01:19,480
Speaker 1: and we did a demo for Ed, and and we

1223
01:01:19,640 --> 01:01:22,240
Speaker 1: knew that his decision was going to determine the fate

1224
01:01:22,240 --> 01:01:24,200
Speaker 1: of our company because if he said no, we were dead.

1225
01:01:24,800 --> 01:01:28,520
Speaker 1: Really that's amazing. So so how did tell us about

1226
01:01:28,520 --> 01:01:32,080
Speaker 1: the demo? We did the demo? Um and uh, it

1227
01:01:32,120 --> 01:01:34,080
Speaker 1: went perfectly. I mean, Jack and I demo the product

1228
01:01:34,080 --> 01:01:35,720
Speaker 1: about fifty times. So we had our we had our

1229
01:01:35,720 --> 01:01:38,400
Speaker 1: game down perfectly. And the great thing about Jack Dorsey,

1230
01:01:38,920 --> 01:01:43,440
Speaker 1: of the many things, he's very quiet, He's very calm.

1231
01:01:43,480 --> 01:01:46,480
Speaker 1: I'm a nervous guy, like I get your high energy. Yeah,

1232
01:01:46,600 --> 01:01:48,760
Speaker 1: but I've also learned to never interrupt. I will never

1233
01:01:48,800 --> 01:01:52,400
Speaker 1: interrupt anybody. So we did the demo and then Ed said,

1234
01:01:52,560 --> 01:01:57,240
Speaker 1: you realized that violates our operating regulations? And I said, yes, sir,

1235
01:01:57,360 --> 01:01:59,680
Speaker 1: We do, and then neither Jack nor I said it

1236
01:02:00,040 --> 01:02:03,760
Speaker 1: thing for like twenty seconds and I don't want to count.

1237
01:02:03,960 --> 01:02:06,360
Speaker 1: That silence is I don't want to count twenty seconds

1238
01:02:06,360 --> 01:02:09,960
Speaker 1: and dead air on Bloomberg just right now. Just imagine

1239
01:02:10,000 --> 01:02:17,160
Speaker 1: how horrible you feel, how tight your clenching on that countdown.

1240
01:02:17,520 --> 01:02:19,920
Speaker 1: And then he said, so, I guess we have to

1241
01:02:19,960 --> 01:02:22,880
Speaker 1: change our rules, and he left the meeting. He looked

1242
01:02:22,920 --> 01:02:25,080
Speaker 1: at his team, glances team. He's like, I guess we

1243
01:02:25,160 --> 01:02:28,640
Speaker 1: got to change our operating rigs, and he goes what

1244
01:02:28,680 --> 01:02:30,600
Speaker 1: was the eye contact like with you and Jack at

1245
01:02:30,680 --> 01:02:35,680
Speaker 1: that moment, I was I was probably suppressing a laugh,

1246
01:02:36,320 --> 01:02:38,680
Speaker 1: like you know, like a kid in the back of

1247
01:02:38,680 --> 01:02:41,280
Speaker 1: a you know, classroom in high school. I was so

1248
01:02:41,360 --> 01:02:45,280
Speaker 1: giddy at that moment because it's like, oh my god, well, no,

1249
01:02:45,440 --> 01:02:47,680
Speaker 1: we can live like we hadn't one yet because we

1250
01:02:47,680 --> 01:02:49,520
Speaker 1: hadn't released as we didn't even know if anyone wanted

1251
01:02:49,560 --> 01:02:52,600
Speaker 1: the product. You have to think someone at that level says, oh,

1252
01:02:52,640 --> 01:02:56,680
Speaker 1: we're gonna change MasterCards rules so your product can do

1253
01:02:56,720 --> 01:02:59,880
Speaker 1: what it does. That feels like now all that's left

1254
01:03:00,120 --> 01:03:01,880
Speaker 1: going out and doing it. Now, all is left is

1255
01:03:01,880 --> 01:03:04,120
Speaker 1: going out and see if anybody but me wants this

1256
01:03:04,160 --> 01:03:07,840
Speaker 1: product because we had not been had to know. No,

1257
01:03:08,040 --> 01:03:10,760
Speaker 1: we didn't. We didn't because look, and this is this

1258
01:03:10,840 --> 01:03:14,160
Speaker 1: is another thing about innovation. You don't get to test

1259
01:03:14,240 --> 01:03:17,480
Speaker 1: your product, if it's truly new, until it's built and working,

1260
01:03:17,960 --> 01:03:22,040
Speaker 1: because if you say we'll imagine this, they can't do it. Right.

1261
01:03:22,240 --> 01:03:24,760
Speaker 1: Elon Musk when he was building the early Tesla's, you know,

1262
01:03:24,880 --> 01:03:26,400
Speaker 1: it was like, well, it's electric car, and people think

1263
01:03:26,440 --> 01:03:27,640
Speaker 1: electric car. What do you think of when you think

1264
01:03:27,640 --> 01:03:31,000
Speaker 1: of electric car? Golf card? Right, you think of this

1265
01:03:31,200 --> 01:03:34,640
Speaker 1: crappy little thing, you know. Uh, And and it's got

1266
01:03:34,720 --> 01:03:41,640
Speaker 1: terrible acceleration. Electric cars accelerate great and needed instantaneous. So

1267
01:03:41,720 --> 01:03:43,560
Speaker 1: Musk used to sit you in the car and he'd

1268
01:03:43,560 --> 01:03:45,680
Speaker 1: ask you to pick your favorite radio station, and you

1269
01:03:45,960 --> 01:03:48,640
Speaker 1: reach for the radio dial, He'd punched the accelerator and

1270
01:03:49,320 --> 01:03:52,720
Speaker 1: glue your with five g's of acceleration to the back

1271
01:03:52,720 --> 01:03:54,520
Speaker 1: of the seat. And that's how we did it. You

1272
01:03:54,560 --> 01:03:57,720
Speaker 1: have to build that demo. If we hadn't had permission

1273
01:03:57,760 --> 01:04:01,960
Speaker 1: for master Card to build it, we couldn't have released it.

1274
01:04:02,120 --> 01:04:04,560
Speaker 1: But the day we released it, we didn't know if

1275
01:04:04,600 --> 01:04:07,240
Speaker 1: anyone wanted it. This is the thing about innovation. You

1276
01:04:07,280 --> 01:04:09,600
Speaker 1: don't get that guarantee. I I gotta say this to

1277
01:04:09,680 --> 01:04:13,160
Speaker 1: your to your listeners, because it's so important. You've been

1278
01:04:13,200 --> 01:04:15,760
Speaker 1: told your whole life not to jump unless you've got

1279
01:04:15,760 --> 01:04:18,040
Speaker 1: to guarantee, unless you got to study, like show me

1280
01:04:18,080 --> 01:04:20,760
Speaker 1: the report from McKenzie or something that's just gonna prove

1281
01:04:20,960 --> 01:04:22,760
Speaker 1: that what I'm about to do is gonna work. So

1282
01:04:22,800 --> 01:04:26,320
Speaker 1: I'm not like responsible or at risk. I think it

1283
01:04:26,360 --> 01:04:29,440
Speaker 1: doesn't exist. If it's being done for the first time,

1284
01:04:29,960 --> 01:04:33,000
Speaker 1: you can't prove that it's gonna work. That that's that's

1285
01:04:33,080 --> 01:04:36,560
Speaker 1: just astonishing. Maybe this is a little hindsight bias because

1286
01:04:36,600 --> 01:04:39,560
Speaker 1: we now see how how much demand there is for

1287
01:04:39,560 --> 01:04:45,040
Speaker 1: for Square. But if you would have asked me years ago, Hey, anybody,

1288
01:04:45,400 --> 01:04:48,800
Speaker 1: So my wife used to teach fashion, illustration and design

1289
01:04:48,840 --> 01:04:51,080
Speaker 1: and art. So I've been dragged around to all these

1290
01:04:51,160 --> 01:04:55,040
Speaker 1: museums and all these art fairs and shows, and you

1291
01:04:55,080 --> 01:04:57,080
Speaker 1: show up at them. In the old days, they would

1292
01:04:57,120 --> 01:05:01,120
Speaker 1: have the physical clunk clunk machines, the knuckle and it

1293
01:05:01,200 --> 01:05:04,400
Speaker 1: was very very clear early on that square was made

1294
01:05:04,440 --> 01:05:06,320
Speaker 1: for those soda people. Oh, I lived in an easy,

1295
01:05:06,400 --> 01:05:10,760
Speaker 1: uptent baby and and you know, you see the the

1296
01:05:10,800 --> 01:05:14,120
Speaker 1: Washingm call you. It was not long after you guys

1297
01:05:14,160 --> 01:05:17,480
Speaker 1: formed that you started seeing this thing show up everywhere

1298
01:05:17,880 --> 01:05:20,960
Speaker 1: at the littlest merchants. People who you wouldn't think would

1299
01:05:21,640 --> 01:05:23,760
Speaker 1: be ready to sell something to ready to sell something, right,

1300
01:05:23,800 --> 01:05:27,120
Speaker 1: and you know you those impulse buys, especially a piece

1301
01:05:27,120 --> 01:05:30,160
Speaker 1: of jewelry, is sculpture, some sort of wind chime, that's

1302
01:05:30,160 --> 01:05:32,120
Speaker 1: a couple hundred bucks who walks around with five hundred

1303
01:05:32,160 --> 01:05:35,120
Speaker 1: dollars on them? Putting a credit card in an iPhone

1304
01:05:35,480 --> 01:05:39,360
Speaker 1: turns out to be just that's the solutions of that problem. Yeah,

1305
01:05:39,400 --> 01:05:41,200
Speaker 1: it turned out it worked. But again we couldn't know

1306
01:05:41,280 --> 01:05:44,360
Speaker 1: that at the beginning. I guess so, so I know,

1307
01:05:44,400 --> 01:05:46,960
Speaker 1: I only have you and the studio for a limited

1308
01:05:46,960 --> 01:05:50,080
Speaker 1: amount of time with some of our with with some

1309
01:05:50,160 --> 01:05:52,080
Speaker 1: of the last time we have. Let me ask you

1310
01:05:52,160 --> 01:05:55,640
Speaker 1: our favorite questions that we ask all of our guests,

1311
01:05:55,720 --> 01:05:58,640
Speaker 1: and I'm gonna start with, tell us what you're streaming

1312
01:05:58,680 --> 01:06:02,080
Speaker 1: these days? What was keeping you entertained during lockdown? Could

1313
01:06:02,080 --> 01:06:05,960
Speaker 1: be Netflix or Amazon Prime or even podcasts. Tell us

1314
01:06:06,000 --> 01:06:09,160
Speaker 1: what what you've been watching or listening. I'm rewatching old

1315
01:06:09,200 --> 01:06:12,280
Speaker 1: episodes of Community so hilarious. I went through the whole

1316
01:06:12,360 --> 01:06:16,080
Speaker 1: run of those community thirty Rock Silicon Valley, the show

1317
01:06:16,120 --> 01:06:18,520
Speaker 1: which I kind of lived through, and so yeah, I've

1318
01:06:18,560 --> 01:06:20,560
Speaker 1: got friends who are in the cast, and I was like,

1319
01:06:20,600 --> 01:06:24,160
Speaker 1: I love this stuff. It's so I mean, I'm escapist

1320
01:06:24,160 --> 01:06:26,840
Speaker 1: when it comes to streaming UM and sometimes doubly so

1321
01:06:26,920 --> 01:06:29,760
Speaker 1: when I have to watch a Swedish television. So my

1322
01:06:29,800 --> 01:06:32,680
Speaker 1: wife is sweeping the Rock No, no, no, no, no.

1323
01:06:32,760 --> 01:06:35,280
Speaker 1: This we watched that. It was actually pretty good rack

1324
01:06:35,320 --> 01:06:39,600
Speaker 1: and Mack was good. But I'm talking about Swedish public television.

1325
01:06:40,600 --> 01:06:42,800
Speaker 1: My wife speaks Swedish with our kids. She's trying to

1326
01:06:42,800 --> 01:06:44,760
Speaker 1: get them to speak Swedish, and I'm trying to not

1327
01:06:44,880 --> 01:06:47,040
Speaker 1: learn Swedish so that my kids can talk behind my

1328
01:06:47,080 --> 01:06:49,320
Speaker 1: back with my wife. So I'm not allowed in the

1329
01:06:49,400 --> 01:06:52,320
Speaker 1: room during this, so they're Swedet. We're streaming Swedish TV.

1330
01:06:52,920 --> 01:06:55,800
Speaker 1: By the way, if you like Silicon Valley, I'm going

1331
01:06:55,840 --> 01:06:59,120
Speaker 1: to recommend something to you which is the same thing,

1332
01:06:59,200 --> 01:07:04,760
Speaker 1: only apply to gaming. Mythic Quest on Apple TV with

1333
01:07:04,840 --> 01:07:08,040
Speaker 1: I'm Forgetting his Name from It's Always Sunny in Philadelphia

1334
01:07:08,200 --> 01:07:13,680
Speaker 1: plays the lead. It's the same sort of absurdest comedy,

1335
01:07:13,840 --> 01:07:16,479
Speaker 1: only instead of being set in a software company set

1336
01:07:16,480 --> 01:07:19,600
Speaker 1: in a gaming company. Marry, thank you, you will, you

1337
01:07:19,600 --> 01:07:22,920
Speaker 1: will do that. You've just made my Christmas vacation that

1338
01:07:23,080 --> 01:07:27,880
Speaker 1: much better. And I'll tell you my favorite Silicon Valley story. So,

1339
01:07:28,320 --> 01:07:30,160
Speaker 1: when I was on the West Coast a couple of

1340
01:07:30,240 --> 01:07:33,480
Speaker 1: years ago, UM I did an interview with Marc Andreeson

1341
01:07:33,760 --> 01:07:37,439
Speaker 1: at Andreas and harraways I fly. So that was during

1342
01:07:37,440 --> 01:07:39,240
Speaker 1: the week, and we were at there for the whole week.

1343
01:07:39,280 --> 01:07:42,160
Speaker 1: We fly home on Friday or Saturday, and I believe

1344
01:07:42,200 --> 01:07:47,200
Speaker 1: Silicon Values to broadcast on Sunday and Sunday night. I'm watching.

1345
01:07:47,280 --> 01:07:49,480
Speaker 1: I picked up the phone. I call Chris, who was

1346
01:07:49,480 --> 01:07:52,240
Speaker 1: out there with me from my office. Are you watching this?

1347
01:07:52,360 --> 01:07:56,120
Speaker 1: He's like, yeah, there was a scene set in the

1348
01:07:56,200 --> 01:07:59,400
Speaker 1: A sixteen Z building. Because it I recognize it immediately

1349
01:07:59,440 --> 01:08:03,160
Speaker 1: because it has waterfall that runs around the perimeter. It's

1350
01:08:03,160 --> 01:08:08,720
Speaker 1: almost like a goes goes continually around the building. And

1351
01:08:08,760 --> 01:08:10,520
Speaker 1: I'm like, we were just there. It was such a

1352
01:08:10,560 --> 01:08:14,040
Speaker 1: weird experience to see the outside of building that you

1353
01:08:14,200 --> 01:08:17,920
Speaker 1: just were on television. It was really music. Yeah, Sahill

1354
01:08:18,000 --> 01:08:21,320
Speaker 1: Road south Side. So so Silhan Valley was such a

1355
01:08:21,360 --> 01:08:23,639
Speaker 1: great show. I really enjoyed it. If you like that.

1356
01:08:23,960 --> 01:08:26,519
Speaker 1: I think you'll I think you'll like epic Quest. It's

1357
01:08:26,560 --> 01:08:30,120
Speaker 1: Apple epic Quest Quest, Mythic Quest, It's Apple TV. That's

1358
01:08:30,160 --> 01:08:32,439
Speaker 1: the reason to subscribe. Okay, yeah, there you go. Or

1359
01:08:32,479 --> 01:08:35,040
Speaker 1: if you have an Apple product, usually you get Apple

1360
01:08:35,040 --> 01:08:38,080
Speaker 1: TV free for a year or something. They're they're good

1361
01:08:38,120 --> 01:08:41,560
Speaker 1: about giving that sort of coop away. Um, you mentioned

1362
01:08:41,560 --> 01:08:44,000
Speaker 1: herb Kella her tell us about some of your early

1363
01:08:44,040 --> 01:08:48,280
Speaker 1: mentors who helped to shape your career. Oh my god,

1364
01:08:48,479 --> 01:08:51,639
Speaker 1: I didn't have many mentors. Um. I wished I had

1365
01:08:51,960 --> 01:08:54,720
Speaker 1: because I was always doing stuff where I wished I

1366
01:08:54,760 --> 01:08:57,720
Speaker 1: had some peers. And what I realized, or actually what

1367
01:08:57,760 --> 01:09:00,559
Speaker 1: I realized very late, was that I was doing things

1368
01:09:00,600 --> 01:09:04,120
Speaker 1: differently enough that my peers were not good good help.

1369
01:09:04,479 --> 01:09:06,160
Speaker 1: So this is actually one of the things that that

1370
01:09:06,600 --> 01:09:08,639
Speaker 1: hit me in the book, which was that a lot

1371
01:09:08,720 --> 01:09:10,360
Speaker 1: of the advice that I was following from people who

1372
01:09:10,400 --> 01:09:13,200
Speaker 1: are super successful, I would implement it and would blow up,

1373
01:09:13,760 --> 01:09:15,960
Speaker 1: and I thought, oh, I'm just a terrible person, like

1374
01:09:16,000 --> 01:09:19,160
Speaker 1: I can't do anything right. It turns up, it turns

1375
01:09:19,160 --> 01:09:20,400
Speaker 1: out that I was on that other side of the

1376
01:09:20,400 --> 01:09:23,280
Speaker 1: line where the physics are different. So if and this

1377
01:09:23,360 --> 01:09:26,439
Speaker 1: is the thing that that just drove me nuts. Is

1378
01:09:27,240 --> 01:09:31,880
Speaker 1: I would find competent, successful people and ask them for

1379
01:09:31,920 --> 01:09:35,880
Speaker 1: advice and do what they told me to do, and

1380
01:09:35,880 --> 01:09:39,120
Speaker 1: it would just be a disaster. Keller Her was the

1381
01:09:39,120 --> 01:09:41,479
Speaker 1: first guy, the very first guy that I sat within

1382
01:09:41,560 --> 01:09:44,320
Speaker 1: a room who I said, I did this and I

1383
01:09:44,360 --> 01:09:46,759
Speaker 1: felt this way, and her was like, I felt exactly

1384
01:09:46,800 --> 01:09:49,599
Speaker 1: the same way. But that was late in my career.

1385
01:09:49,640 --> 01:09:52,240
Speaker 1: I never had a mentor growing You're you were doing

1386
01:09:52,320 --> 01:09:55,800
Speaker 1: quantum physics and you were asking people about Newtonian Yeah,

1387
01:09:56,160 --> 01:09:58,080
Speaker 1: it was. It just didn't apply. It was it was

1388
01:09:58,160 --> 01:10:01,720
Speaker 1: just different math. Different math really are interesting. Let's let's

1389
01:10:01,760 --> 01:10:04,080
Speaker 1: talk Since you wrote this book, let's talk about some

1390
01:10:04,120 --> 01:10:06,120
Speaker 1: of your favorite books or what you might be reading

1391
01:10:06,200 --> 01:10:09,439
Speaker 1: right now. Um. One of my favorite books right now

1392
01:10:09,560 --> 01:10:14,320
Speaker 1: is a pre Suasion Robert Child, Robert Robert Aldini. Yeah,

1393
01:10:14,600 --> 01:10:20,360
Speaker 1: fantastic book. Um. I'm reading uh some uh some Churchill.

1394
01:10:20,439 --> 01:10:24,400
Speaker 1: I'm going through Churchill's autobiographies and his story of the

1395
01:10:24,479 --> 01:10:27,639
Speaker 1: World War two. Um, and that's that's part of my

1396
01:10:27,640 --> 01:10:29,800
Speaker 1: main reading. I look at Churchill like he was a

1397
01:10:29,800 --> 01:10:33,760
Speaker 1: bad polo player. He was an aristocrat. Uh, he was

1398
01:10:33,800 --> 01:10:37,479
Speaker 1: a war hero. He was uh, you know, a leader

1399
01:10:37,479 --> 01:10:40,280
Speaker 1: of a nation. He was, you know, he basically the

1400
01:10:40,280 --> 01:10:42,719
Speaker 1: reason we're all sitting here, Like he pretty much credit

1401
01:10:42,760 --> 01:10:45,320
Speaker 1: Western civil civilization to like one guy. That would be

1402
01:10:45,320 --> 01:10:48,679
Speaker 1: the guy. Um. And he was a prolific artist and writer,

1403
01:10:49,240 --> 01:10:52,200
Speaker 1: and he's a great writer. And so I'm just chewing

1404
01:10:52,200 --> 01:10:55,880
Speaker 1: through Churchill. That's really interesting. He if you watched The Crown,

1405
01:10:56,479 --> 01:10:59,280
Speaker 1: he really is a key player in in the latter

1406
01:10:59,360 --> 01:11:02,240
Speaker 1: episodes of that. Yeah, I wish, wish, wish I've been

1407
01:11:02,240 --> 01:11:05,160
Speaker 1: able to meet him. Um, But uh, there's enough of

1408
01:11:05,240 --> 01:11:07,920
Speaker 1: his writings and enough of his recordings that I feel

1409
01:11:07,920 --> 01:11:12,000
Speaker 1: like I'm learning something really intriguing. What sort of advice

1410
01:11:12,160 --> 01:11:14,840
Speaker 1: would you give to a recent college grad who is

1411
01:11:15,000 --> 01:11:19,080
Speaker 1: interested in a career in technology. Um, I'd say, get

1412
01:11:19,120 --> 01:11:22,519
Speaker 1: engineering training, learn learn to be a tech learn to

1413
01:11:22,560 --> 01:11:24,720
Speaker 1: be gig, go to the go to the school that

1414
01:11:24,760 --> 01:11:27,680
Speaker 1: teaches you how to how to make this stuff. For

1415
01:11:27,720 --> 01:11:31,120
Speaker 1: two reasons. Number one, there is a massive bias in

1416
01:11:31,200 --> 01:11:34,840
Speaker 1: Silicon Valley against people who are non technical. And the

1417
01:11:34,880 --> 01:11:37,960
Speaker 1: way you determine this, if they will ask, they'll ask

1418
01:11:37,960 --> 01:11:42,519
Speaker 1: you very innocuously, are you technical, very technical? And if

1419
01:11:42,520 --> 01:11:46,120
Speaker 1: you say, uh, no, I've got a degree in accounting

1420
01:11:46,200 --> 01:11:50,160
Speaker 1: or finance or something, but not really hardcore engineering. Uh,

1421
01:11:50,200 --> 01:11:53,599
Speaker 1: they won't invite you to the meeting. Really, you'll get bullied,

1422
01:11:53,600 --> 01:11:57,120
Speaker 1: you'll get excluded. And just having those technical chops will

1423
01:11:57,160 --> 01:11:59,240
Speaker 1: get you into those rooms. Now, what you do in

1424
01:11:59,240 --> 01:12:01,559
Speaker 1: those rooms depends on your other skill set, but if

1425
01:12:01,600 --> 01:12:03,240
Speaker 1: you want to get in the room, you better be technical,

1426
01:12:03,680 --> 01:12:07,280
Speaker 1: really really interesting. And our final question, what do you

1427
01:12:07,400 --> 01:12:13,160
Speaker 1: know about the world of filling the blank, technology, payments, innovation,

1428
01:12:13,320 --> 01:12:16,439
Speaker 1: entrepreneurship today that you wish you knew twenty or so

1429
01:12:16,600 --> 01:12:18,439
Speaker 1: years ago when you were first getting Oh my god,

1430
01:12:19,120 --> 01:12:21,800
Speaker 1: I wish I knew there was a line between innovation

1431
01:12:22,000 --> 01:12:25,040
Speaker 1: and copying. I never recognized it. I never recognized that

1432
01:12:25,080 --> 01:12:27,080
Speaker 1: there was a different set of physics. That was the

1433
01:12:27,120 --> 01:12:29,760
Speaker 1: greatest revelation because I'd seen all these mistakes that I

1434
01:12:29,760 --> 01:12:32,640
Speaker 1: had been making again and again and again, and all

1435
01:12:32,680 --> 01:12:33,880
Speaker 1: of a sudden, I was like, oh my god, I

1436
01:12:33,920 --> 01:12:35,760
Speaker 1: can I can explain what was going wrong. You know,

1437
01:12:35,800 --> 01:12:38,280
Speaker 1: It's almost like if you if you're in a social

1438
01:12:38,280 --> 01:12:41,320
Speaker 1: situation and you just have this weird social tick and

1439
01:12:41,360 --> 01:12:43,000
Speaker 1: people don't like you because of your social tick. You

1440
01:12:43,080 --> 01:12:44,439
Speaker 1: learn to get out of control and then people are

1441
01:12:44,520 --> 01:12:46,400
Speaker 1: nice to you. Like, that's what I felt like I was.

1442
01:12:46,560 --> 01:12:48,840
Speaker 1: I was a failure for so many years in situations

1443
01:12:48,840 --> 01:12:51,599
Speaker 1: where I thought I was prepared and ready to succeed,

1444
01:12:51,720 --> 01:12:53,920
Speaker 1: and the fact was I was just playing a different game.

1445
01:12:54,200 --> 01:12:56,719
Speaker 1: And if the game you're playing is using a different

1446
01:12:56,720 --> 01:12:58,320
Speaker 1: set of rules and you don't know those rules, then

1447
01:12:58,439 --> 01:13:01,040
Speaker 1: you're going to fail a lot. And that's that's why

1448
01:13:01,080 --> 01:13:03,640
Speaker 1: I had That's why it took me so long to

1449
01:13:03,720 --> 01:13:06,479
Speaker 1: sort of get my career out of you know, the dumpster,

1450
01:13:07,280 --> 01:13:11,240
Speaker 1: really really fascinating stuff. Jim mcklvey, co founder of Square,

1451
01:13:11,320 --> 01:13:14,519
Speaker 1: author of The Innovation Stack, Thank you for being so

1452
01:13:14,600 --> 01:13:18,320
Speaker 1: generous with your time. If you enjoy this conversation, we'll

1453
01:13:18,439 --> 01:13:21,120
Speaker 1: be sure and check out any of our previous four

1454
01:13:21,160 --> 01:13:25,480
Speaker 1: hundred or so such discussions. You can find those at iTunes, Spotify,

1455
01:13:25,560 --> 01:13:29,120
Speaker 1: wherever you get your favorite podcasts. We love your comments,

1456
01:13:29,120 --> 01:13:33,280
Speaker 1: feedback and suggestions right to us at m IB podcast

1457
01:13:33,320 --> 01:13:36,639
Speaker 1: at Bloomberg dot net. Sign up from my daily reads

1458
01:13:36,680 --> 01:13:39,639
Speaker 1: at Rid Halts dot com. Follow me on Twitter at

1459
01:13:39,720 --> 01:13:42,200
Speaker 1: Rid Halts. I would be remiss if I did not

1460
01:13:42,360 --> 01:13:44,880
Speaker 1: thank the crack team that helps with this conversation together

1461
01:13:45,000 --> 01:13:49,400
Speaker 1: each week. Mohammed Ramaui is my audio engineer. Atico val

1462
01:13:49,479 --> 01:13:52,599
Speaker 1: Bron is our project manager. Michael Batnick is my head

1463
01:13:52,600 --> 01:13:57,479
Speaker 1: of research. Harris Wald is my producer. I'm Barry Ridalts.

1464
01:13:57,560 --> 01:14:01,120
Speaker 1: You've been listening to Masters in Business Bloomberg Radio