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The Secret To Growing Any Business, Building Unicorns & Crazy Ideas with Square Co-Founder Jim McKelvey

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In this episode, we share the universal secret to growing any business, how to build a unicorn startup, what the real definition of an entrepreneur is and much more with our guest Jim McKelvey

Jim McKelvey is an American serial entrepreneur, artist, and philanthropist, best known for his popular invention, Square. He has founded around seven businesses in the technology and craft field. In addition to Square, he founded the non-profit LaunchCode and Third Degree Glass Factory. Jim is also an author having written two computer programming textbooks while in school, the bestselling book, The Art Of Fire, on glass art and most recently The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time, on entrepreneurship and creating lasting world-changing businesses.

  • From glass blowing to co-founding Square - the winding path that leads to the co-founding of one of the most successful Silicon Valley unicorns. 

  • It’s possible to do something for which you have no official qualifications. 

  • “None of the stuff I’ve done have I had any formal qualifications or credentials for."

  • You will almost always be unqualified if you're doing something truly interesting. Something that has not actually been done before. 

  • Almost everything in business is a copy of something else - good results mostly come from replicating what has already been done and been learned from others. 

  • In business, most of the time the best thing to do is to find an expert and teach them how to do it, or steal their ideas, or hire them.

  • Copying and replication is the smartest business decision you can make, 99% of the time… BUT if you’re doing something that is NEW, that has never been done before.. you can’t copy... at that moment you feel supremely unqualified and alone. 

  • “Does anyone know how to land a 737?” That’s the feeling of being a true innovator and solving the toughest business problems. 

  • It’s possible to be successful even with ZERO qualifications, but you have to get over the fear of being unqualified to do something. If you’re doing ANYTHING interesting, you won’t be able to copy anyone else. 

  • The great universal secret to any existing business - the answer to almost every single business problem.

  • There is no checklist for something no one has done before.

  • COPY!!! Do what everyone else does. Figure out what everyone is doing to do the same damn thing. Hire their people away. Copy their stuff. That ALMOST ALWAYS works… the ONLY time that doesn’t work is if you’re trying to do something truly NEW.

  • Failure is the basis of all comedy. When you do something that’s never been done before, you have to fail. 

  • “Maps are for tourists, not explorers"

  • “What is an entrepreneur” vs a businessperson and why is entrepreneur such an overused word today?

  • “Intelligently copying what has been done before is a good formula for getting rich."

  • Thrill and terror are two sides of the same coin of entrepreneurship.

  • The word entrepreneur is not always a compliment. It’s someone out on the fringe, pushing the boundaries, solving the unsolvable problems. 

  • “I love problems because problems are easy to see."

  • Opportunities are hard to see, but problems are very visible.

  • How to discover the “perfect problems” that you can found a business to solve. 

  • You have to work on a problem that you CARE about.

  • If you’re doing something truly entrepreneurial - you will be lonely, you will get negative feedback, people will ignore you and ridicule you.

  • Should you be bold or should you focus on humble perseverance?

  • There’s a HUGE difference between being BOLD and being COMFORTABLE when you’re SCARED - being comfortable with discomfort.

  • Don’t believe entrepreneurial hero stories about boldness - it’s much better to get comfortable with being scared. 

  • Don’t worry about overcoming your fear - the trick is to begin the journey.

  • A lot of the business advice you hear is crap.

  • Our evolutionary relationship to fear short circuits our brain’s perception of threats - the reality is that in business you won’t die, so get comfortable being scared and take the risk. 

  • There is no specific advice on being an entrepreneur - by definition, there is no advice that you can be given if you’re solving a problem that hasn’t been solved before. 

  • Do something that makes you really uncomfortable. Hang out with your enemies, put yourself in situations that make you uncomfortable. 

  • If you’re going to be an entrepreneur, almost by definition you will be uncomfortable.

  • What is an innovation stack and how can you use it to solve new problems?

  • How did Square survive an attack from Amazon?

  • Amazon’s playbook for killing any company

  • Undercut the competitor by 30%, copy their product, and watch them die. 

  • You won’t find one new solution - you will find a stack of innovative solutions that all work together. You will have a chain of problems you have to solve that all eventually stack together into a competitive and differentiated business. 

  • Homework: Look at your personal energy score. Figure out what increases your energy, which decreases your energy, and does more of what increases it and less of what decreases it. 

  • When does an entrepreneur fail? 

  • “Dude, the product is never gonna work."

Thank you so much for listening!

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Science of Success listeners receive a complimentary Metabolic Profiling assessment and a 30-minute consultation with a MetPro expert. To claim this offer head to metpro.co/success

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Episode Transcript

Announcer: Welcome to the Science of Success. Introducing your host, Matt Bodnar.

[0:00:11.8] MB: Welcome to the Science of Success; the number one evidence-based growth podcast on the Internet with more than five million downloads and listeners in over a hundred countries.

In this episode, we share the universal secret to growing any business, how to build a unicorn startup with a real definition of entrepreneur is and much more with our guest, Jim McKelvey.

Are you a fan of the show and have you been enjoying the content that we put together for you? If you have, I would love it if you signed up for our e-mail list. We have some amazing content on there, along with a really great free course that we put a ton of time into called How To Create Time for What Matters Most In Your Life. If that sounds exciting and interesting and you want a bunch of other free goodies and giveaways along with that, just go to successpodcast.com. You can sign up right on the homepage. That’s successpodcast.com. Or if you’re on your phone right now, all you have to do is text the word smarter, that’s S-M-A-R-T-E-R to the number 44-222.

In our previous interview, we shared the power of the experimental mindset. How can you use experiments to make better decisions and improve your life? What makes for good experiments? We shared all of this and much more with our previous guest, Stefan Thomke.

Now for our interview with Jim.

[0:01:38.4] MB: Jim McKelvey is an American serial entrepreneur, artist and philanthropist, best known for his popular invention, Square. He has founded seven businesses in the technology and craft field. In addition to Square, he founded the non-profit LaunchCode and Third Degree Glass Factory. Jim is also an author, having written to computer programming textbooks while in school, the best-selling book The Art of Fire on Glass Art and most recently, The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time.

Jim, welcome to the Science of Success.

[0:02:11.1] JM: Thank you, Matt. This is going to be fun.

[0:02:13.0] MB: I'm so excited to have you on the show today. You have an incredible career filled with so many interesting stories and a fascinating journey from the world of glassblowing, to the Federal Reserve, to co-founding Square, which is a massively successful company. Tell me a little bit about your story and your background and how you've woven together so many disparate and different things.

[0:02:35.4] JM: There was no plan. I went into college not knowing anything I was going to be doing. I had a conversation with my father, where he recommended that I not be an engineer, because he thought engineering was too solitary of practice. He thought I'd be more interested in liberal arts. He recommended I study economics. I said, “Okay, dad. I'll be an economist.”

I studied economics. Got halfway through my freshman year and realized that econ was boring and it was actually more solitary than the engineering classes, because the problems that the engineers were working on required teams to get them right, whereas, the econ stuff was easy enough that you could do it by yourself.

Ironically, I found that doing really hard science was a more social activity, so I gravitated towards that and ended up doing all sorts of crazy stuff during college that I had no qualifications to doing. My God. I wrote a couple of computer textbooks. I guess, you mentioned those, when I was a freshman in college.

I was not one of these kids that loved computers when I was a kid. I never played with computers. I never had a computer. I basically saw my first computer when I got to college and I was so overwhelmed by how difficult it was to work with these machines. Then on top of that, I was really frustrated, because the professor from my class had written the textbook and this thing was just garbage. It was terrible and it was out of date and the programming examples didn't work. I was so pissed off that I said to my roommate, “I could write a better textbook than this.” He turns around and he goes, “Well, why don't you?” I was like, “Okay, I will.”

Basically on a bet, I decided to replace my professor’s textbook with a textbook that I have written. Yeah, again, I had no qualifications for this. It turns out, it's not that hard to write a programming textbook. You just have to do a lot of work. You don't have to come up with a plot, there's no characters. If you're willing to just grind it out and figure out what works on the computer and what doesn't, anybody could do this.

I did it. The book got published and this was back in the days before self-publishing. You had to actually interest real publishing house. The publishing house took the book; asked for another book. By the time I was a sophomore, I had more publications than a lot of my professors. It was this really early lesson that it's possible to do something for which you have no official qualification.

That's in the base note of my career, because again if you – Matt, if you think about all the stuff you listed out, none of the stuff that I've done have I had an official credential to do. I mean, even these days. I'm on the Federal Reserve. I vote on interest rates and I've got an undergraduate degree in economics. I mean, let me vote on interest rates. I don't have a PhD, or a master's degree. I couldn't draw the Phillips Curve if I had to. It's amazing to me the things that a person can accomplish, even without an official credential.

That's the thing that ties my career together. Then glassblowing was something else I did. I've done it for years. I'm actually heading into the studio right after this interview and got to make some Christmas gifts. Wow, it's just this crazy, weird hodgepodge of stuff that I do.

[0:06:00.9] MB: So interesting. I love this concept of not having the qualifications, or doing things without being worried or concerned about whether or not you're qualified to do it. In some ways, it seems that stifles so many people from even trying, or beginning their journey.

[0:06:17.1] JM: Oh, absolutely. One of the reasons I wrote this book – as a matter of fact, the primary reason I wrote this book was to reach out and tell people, “You will almost always be unqualified if you're doing something interesting.” By interesting, I mean something that has not been done before. Because think about it, okay, most of the stuff that we do in our lives is a copy of something else. As a matter of fact, that's what school is, right? You most of the time in school are learning to do what other people have learned to do. Good behavior and good grades come from replicating stuff that has been learned by others.

If you think about what we do in business, most of the time the smart thing to do is find an expert, find somebody who solved that problem. Hire McKinsey. Get somebody who has done what you need to do and have them teach you how to do it, or steal their ideas, or I mean, replication, replication, copy, copy, copy. This is the base note of our lives. We are copying machines.

I've got a little daughter at home, she's 2. She is just a sponge. She copies anything we say, anything we do. You want to make a kid hop in a circle with one hand above your head, like at my house, you just do that and this little girl will come in, just hop for no reason in a circle with one hand raised, because that's what humans and animals and businesses do. We copy stuff. It's the thing that is the smartest decision. We copy because it works. Sometimes if you are doing something that is new, that has never been done before. If you're trying to solve a problem that nobody else has solved, you don't get to copy.

At that moment, you are going to feel supremely unqualified. You will be one of those – Remember those old movies where the pilots die and they run into the back of the plane and goes, “Does anyone know how to land a 737?” I mean, not a 737 MAX, but a normal 737. That's everybody's fear is that they're going to be called out of the captain and put in the cockpit. The stewardess is going to say, “Land this sucker,” right?

What I've learned is just through this weird – I wouldn't even call it a career. Whatever I've done, the different types of work I've done, I've learned that it's possible to be successful if you're not qualified. The reason I wrote the book is I want to encourage people to get over that fear of being unqualified, because if you are doing anything interesting, by definition you don't get to copy the solution. Therefore, you were going to feel unqualified. In other words, you're trying to figure out something that nobody's figured out before. The first thing that's going to hit, at least, I mean, just speaking from mind first, the first thing that hits with me is this little voice in my head that says, “Jim, you have no idea what you're doing. You have never done this before. You have no experience.”

The first thing I always do is I look for somebody who's done it before and I try to copy what they've done. Sometimes there is nobody. When we were starting Square, nobody had built a payment system for tiny, tiny merchants and individuals. It just didn't exist. Jack and I, we’re out on our own. We had nobody to copy. When we were starting a launch code, which is this non-profit that's actually now around the nation and various cities, but we were trying to solve a problem that nobody had ever been able to solve before.

At my current company, Invisibly, we're tackling this problem that nobody's been able to fix this. We don't even know if the solution is possible, but we know that we are supremely unqualified to do what we're doing.

[0:10:12.3] MB: So interesting. There's a number of really important points that come out of that. One, which I thought was such a fascinating insight from the book was I think you call it the answer to almost every business problem is copying and replication.

[0:10:25.2] JM: Yes, yes. The book. Okay, so this is great. I wrote the book completely. I didn't know if it was any good or not. I didn't even know if I was going to publish it. At some point, I was like, “Okay, I got to show some publishers.” I got a book agent; great guy, Jim Levine. He took me around to all these fancy publishing houses.

One publishing house wouldn't even read it, because they'd flip through the book and there were no checklists. They're like “We can't publish a book without checklists.” I was like, “Wait a second. Did you read it?” They go, “No, we didn't have to read it. There were no checklists.” I was like, “Wait a second. How do I give you a checklist for something that nobody has done?” The editor just looked at me and she's like, “If you want a business book, you have to have a checklist.” There is no checklist in my book.

I was feeling guilty as I was writing it. I was like, “Oh, my God. I got to give them one thing.” I gave the universal checklist, which is a one bullet point checklist to solve any problem in any existing business. Here it is. This is the great secret. The Science of Success Pod, you will live up to your title better than you have ever lived up to the title of this whole series at this moment. I am about to reveal the universal secret of success in any existing business. Copy. Just do what everybody else does. That works. Figure out what everybody else is doing, do the same damn thing. Hire their people away, copy their stuff. Just do the same thing. That almost always works.

The only time that doesn't work is if you are trying to do something truly new. What I spend the rest of the book is for those people who don't want that one bullet point checklist, because let me tell you, Matt. When you are doing something that is different from what has been done before, it feels so weird and a different set of rules apply. The rules that you're used to using, the ones that serve you every day as a human and as a person who's working, or as a friend, as a family member, all the stuff that we do has this base note of copying.

We are so comfortable copying. We are so good at it. We are literally genetically programmed to do it. That when you stop doing it, you are going to feel strange. I wanted to write a book for those people who have the ability to do something new. I mean, really new, and just feel weird, because they are going to feel weird. I always feel weird doing it, but I figured maybe if I find some examples and give some principles and tell some funny stories, because believe me, when you do stuff that has not been done before, failure is your friend and failure is funny. Failure is the basis of all comedy.

Look at any great comedic persona. You know what they're talking about? The time it didn't work. When it works, that's boring. Boy, sometimes I give speeches and I always give my audience this choice. I say, “Would you rather have me tell you the story about how Jack Dorsey and I finally after a year and a half of trying, convinced MasterCard to change their rules on card-present aggregation,” which was the single most important decision that allowed Square to exist. I mean, if MasterCard had not done that, I wouldn't have a company right now, there would be millions of merchants who couldn't process credit cards.

That was the single make or break decision. That was probably the single biggest business triumph in my life and a great success. It's an interesting story. I can tell you that story, or I can tell you the story about the time I failed to notice that one of my blind dates had an Adam's apple. Which story do you want to hear, right? Failure is this funny companion. In the book, I talk a lot about failure, talk about how people throughout history have dealt with it and I try to keep it funny.

[0:14:39.8] MB: Yeah, that's a great point about how failure is the foundation of comedy. The overarching point you're making around not having a map, not having a checklist. If you're going to truly innovate, if you're going to solve as you call it and I wanted to get to this more as well, a perfect problem. The quote that really jumped out at me from one of the early parts of the book was this quote that “Maps are for tourists, not explorers.”

[0:15:06.0] JM: Yeah. I mean, we tend to confuse words in the English language and I think we tend to inflate words. Like, “I'm going to explore Lake Tahoe this weekend. No, I'm not. You know what I'm going to do? I'm going to go to Lake Tahoe this week, okay.” Tahoe has been explored. Tahoe is in Google Maps. It's right there. People have been there.

There may be some rain forests in some country that I couldn't find on a map that needs exploring. There's certainly parts of the ocean floor that I need exploring, but most of what we do as travelers is be tourists. I live in the city where probably one of the greatest explorations of all times began. Lewis and Clark started in St. Louis, Missouri to map the western part of the United States. They did not have a map when they started, okay. They had a river and a compass. A bunch of guys, many of whom were going to die, okay. That's what it's like exploring. You don't get a map. If you're an explorer, it's a different type of traveling, okay. As you go further into the wilderness, you're drawing the map as you go.

[0:16:26.2] MB: I thought that was just such a powerful image and analogy. It really gets to your definition of entrepreneur and entrepreneurship, which is quite distinct and comes back to what you said a moment ago about how words today have had their meanings diluted.

[0:16:44.3] JM: Yes. I needed a word to describe something other than business, a business person, somebody who's a business person. What's a business person? What do you call somebody who doesn't copy in the world of business? Most of the time, you call them a failure, right? Most of the time if you don't copy what works, you end up dead. There is a small group of people who don't copy and survive. Those people, I didn't have a word for.

I started looking at my history. It turns out that the original use of the word ‘entrepreneur’ was that meaning. The entrepreneur of 150 years ago when Joseph Schumpeter, whose an economist that basically gave us that word entrepreneur, he started using that word. The reason he started using that word was to describe this weird behavior. It was not business as usual, because business as usual is very rigid. It is slight refinement. It is replication. It's smart. By the way, I'm not knocking people who intelligently copy what's been done before. That is a good formula for getting rich. That is a good formula for success.

What if you don't do that and what do we call that person? It turns out that the original definition of entrepreneur was somebody who did crazy things. I looked at the word ‘entrepreneur’ in its current usage and I was like, “Oh, my God. Everybody at my world uses business person and entrepreneur interchangeably.” I've got a friend. He started a coffee shop, okay and he says, “I'm a coffee entrepreneur.” By today's definition, he's absolutely right. He started a coffee chain. You know how many other people have started coffee shops? More than 10, okay. More than 10 people, more than a 100, probably more than a thousand.

He's doing something and he is starting a business, but he's starting a business that is known and he can order his cups and the La Marzocco coffee steamer machine. I don't know that much. I'm not a coffee person. Believe me, there's almost a checklist for what he is doing. I needed to use the word ‘entrepreneur’, but I needed to use it in its archaic definition.

Throughout the book, I use the word entrepreneur, but I spend a paragraph and a half basically saying, look, when you read this word, I don't want you to think business. I want you to think crazy. Okay, I want you to think somebody that people are pointing to and laughing at and ridiculing and going, “What the hell were they thinking getting people to ride in strangers’ cars?” I remember when Uber was starting. Uber and Square started at the same time and they're our roommates and we were in the same building in California and we bumped into them, a bunch in New York.

I mean, they were one of our classmates, right? People don't remember what it was like in the early days of Uber, because these days everybody takes Uber and they take Lyft. You're totally comfortable getting in the car with a stranger. When I was a kid, they would tell us at home and in school, “Never get into a stranger's car.” That's what they teach you from the time you can walk, “Don't get in the car with a stranger.” If you did, you were a hitchhiker, right? You were a hitchhiker at your peril.

We first saw Uber and Lyft coming on the scene and a company called Sidecar, which nobody remembers Sidecar, but these guys were radical because their idea was well, you can get in the car with anybody. They were like, “No, you can't. That's hitchhiking.” We thought they were crazy. That's what I want the word ‘entrepreneur’, at least for the purposes of our conversation and the book that I wrote to be used in that, because I need a way to label that person. Because that person who's doing those crazy things has a totally different set of rules that apply, and learning those rules and sharing those rules is what I wanted to do.

[0:21:00.3] MB: I thought it was a great perspective. Using the word, subbing in the word ‘crazy’ instead of the word ‘entrepreneur’ helps to break apart the rigid and modern definition of it and really open up the perspective of realizing that the innovation you're talking about is really more somebody who's way on the fringe, who's pushing the limits, who's doing something that you don't – by definition, don't even know if it's possible to solve this problem.

[0:21:24.6] JM: Yeah, yeah. That's part of the thrill and it's part of the terror. Thrill and terror are really close. Thrill is just terror that's been constrained a little bit. It's been contained. Terror is when it breaks out of its container and just trashes your brain. Yes, I use the word ‘crazy’, partially because we haven’t denatured the word ‘crazy’, okay. The word ‘entrepreneur’ has been so recycled by industry and by well, frankly, the publishers of the world, of the podcasts of the world and the people of the world who are selling products to people who want to be entrepreneurs or want to be business people.

It's like saying, “I don't want to be a tourist. I want to go on an adventure. Well, really. Do I? Because I'm traveling with my family this week and I don't want to die, or have one of my kids eaten by some creature. I probably don't want an adventure. I want to do something cool and I'd like to think of myself as an adventurer, but you know what in the end of the day, I'm probably going to sleep someplace that's got a pillow.”

Even though we've worn out the word ‘entrepreneur’, the word ‘crazy’ still has this negative connotation. Now some people are like, “I like being crazy.” I mean, if you're talking about the word ‘crazy’, it's not always a compliment, right? I like this idea that we still have this word that has a little edge to it and a little bit of the being ostracized, that little idea of being kicked out. “You're not part of this club. You're not behaving like the rest of us, so you know what? You're not welcome here. You're crazy.”

We venerate these people in hindsight. When they succeed we say, “Oh, hey. Great idea. We were with you all along.” You know what? They weren’t. They show up when the exploration, when the adventure is over.

[0:23:25.0] AF: What's up, everybody? This is Austin Fable with the Science of Success. This episode of the Science of Success is brought to you by our partners at MetPro. What is MetPro, you ask? It's a world-renowned concierge, nutrition, fitness and lifestyle coaching company.

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[0:25:18.6] MB: That makes me come back to the other side of the coin, or the other piece of this equation which is to be an entrepreneur, you have to be solving a problem that hasn't been solved, something that's on the frontier and as you call it, a perfect problem. Tell me a little bit more about what that is and how to discover one.

[0:25:38.9] JM: Okay. I talk in the book about my concept of the perfect problem. The perfect problem, it was just a thought experiment that I did. I said, okay, imagine every problem in the world, okay. There are lots of problems. I love problems, because problems are easy to see. If you say, “Here's an opportunity. I can't tell you if it's an opportunity or not.” If you say, “Jim, this is a problem.” I will say, “Oh, yes. That's a problem. Oh, no. It is.”

Problems are these beautiful, discrete things. Problems have this beautiful characteristic of being visible. Then I said, “Okay, let's consider all the problems in the world, okay.” Many of those problems have already been solved, okay. For instance, I'm going on vacation this weekend. I'm going to go to Lake Tahoe. A problem I am expecting to have in Lake Tahoe is I'm going to need food, okay. I expect that somebody in the Greater Tahoe area has solved the problem of feeding me and my family. I just assumed that's a solved problem. Haven't been there, okay. Can't prove it. Well, I guess I could probably prove it if I could go online. I'm pretty darn sure that that is a solved problem.

Imagine every problem in the world that's already been solved doesn't count, because if you want to solve one of those problems, all you got to do is find somebody who solved it and copy what they did. Those are copyable solutions, so let's eliminate those. Now, say those problems are on the left side, because I’m a visual person. Those are on the left side of the screen. Okay, now over on the right side of the screen we're going to throw every problem that is currently unsolvable. “I'm sorry, we do not know how to fix that. We do not know how to cure that cancer. We do not know how to make that car levitate. We do not know how to clean up politics.” They’re the unsolved problems, okay.

Then if you eliminate the problems that are unsolvable, they just – we don't have the tools yet to solve them. What you're left with in the middle are what I call the perfect problems. These are problems that are solvable problems, but their solution cannot be copied. In other words, this is something that you, or your team, or some other group of dedicated, hard-working people could solve if they tried. They can't solve it by copying somebody else's solution, but by God, if they try hard enough, those are solvable problems. That's what I focus on.

I look for these things called perfect problems. The perfect problem to me is something first of all, that you care about. To me, a perfect problem has this other criterion which is that you care deeply about it. Because if you're doing something that is entrepreneurial and entrepreneurial in the traditional sense of the world, i.e. you're doing something crazy, you are going to be very lonely and you're going to receive a lot of negative feedback and a lot of teasing and ridicule and basically, just people will ignore you. It's lonely and terrible.

You're going to need to sustain your energy through that period. Where does that energy come from? The answer that I found motivates most entrepreneurs is they care deeply about a problem and then they don't want to die, okay. Caring deeply about a problem is when Lewis and Clark say, “Okay, we are going to head west into this unknown territory. We don't know how big it is, we don't know how long it's going to take us. We're heading west, okay.”

Once you start on the path, then motivation is really simple. Don't die. What the hell is that? Oh, my God. It looks like a bear, but it's five times bigger than any bear we've ever seen. It's a grizzly bear. You've never seen a grizzly bear before, congratulations, here's a grizzly bear. You've got a new problem. You don't have any motivational issues, right? Run, shoot. I don't know. Outrun the other guy. Scale a tree. I don't know how you get away from the grizzly bear, but believe me, when Lewis and Clark first saw the grizzly bear, they didn't sit there and say, “Oh, let's have a motivational moment here.” They were like, “Run.”

You get this wonderful energy from a perfect problem that allows you to begin a journey. Then from there on, baby it's survival instinct. You just don't want to die. You refuse to give up and let the bear win.

[0:30:10.0] MB: That's a great analogy and reminds me of something you said in a speech a couple of years ago around the difference between being bold and humbly persevering, or humbly preserving.

[0:30:21.2] JM: Yeah. Here's the thing about being bold. I have never been bold. I may have been crazy, but I am not a bold person. I'm not a guy who does stuff that's risky. For instance, I fly planes. I'm a pilot and I have occasionally flown into situations where I was terrified, okay. If you're in a tiny little plane, 1 inch in, I mean, like crummy old plane from the 1960s, okay. It's a Mooney M20C. Great little plane. Really solid. Built during the space race. I mean, it's old, it’s clunky. It's not a good plane to fly into a storm with, okay. You're an idiot if you fly into a storm. You're an idiot if you fly near a storm.

One day I was an idiot. I got almost caught in a storm and I was terrified. I mean, just terrified. It turns out that I've done enough stuff in my life where I have been terrified, that I'm actually able to function even though I'm terrified. I was able to fly the plane not because I'm a bold pilot, but because I'm actually good at being a terrified pilot. If you scare the crap out of me and then say, “Here, Jim. Land this. Watch your airspeed, watch your altitude. Talk to the controllers. Get the plane on the ground safely. Get out of the situation. Even though my hands are sweating and I am probably as scared as I've ever been, I can still function.

I hear a lot of people give advice, sometimes from stage. I sometimes hear entrepreneurs, or people who have been very successful give advice to audiences and they tend to spin it a little differently. They tend to tell these hero stories about how they were so bold and how they were so brave and how when everyone turned against them, they didn't care. Well, I mean, I care, okay. I don't like that stuff.

What I've been able to do and recommend as a solution for those of us who are not bold is don't worry about being fearless. Don't worry about boldness. Don't worry about overcoming your fear. I would say the trick is to just begin, okay. Begin the journey. Understand that you will take that first step and the second step and the 27th step. At some point, you will be on the path. Once you're on the path, then the only question is will you keep going? When do you quit? At what point do you run out of energy, or resources? When do you give up?

If you don't quit, even though you're scared, you don't need to be bold. Boldness, done in or into it. You can be terrified. As long as you can function in a state of terror, that's fine. I tell this story often when I'm asked to give a speech about a time I was terrified and had to keep going. I guess, you saw one of those speeches. That's to me the essence of what the rest of us need in order to solve problems, because look, let me tell you this. This is the reason I love your podcast, okay. The people who listened to this podcast are interested in bettering themselves, they're interested in building new things, they're interested in somehow moving the world forward.

Now they may be interested in just moving their careers forward of copying and you get no judgment from me on that. That's cool. That works. By the way, you're smarter than those of us who are probably going to do stuff that might not work, okay? Now let me address that second group, the people who are going to do stuff that might not work. Because if you're in that group, you're going to feel really scared alone. I wanted to reach out to that group and say, “Look, a lot of the advice you hear is crap, okay? Because what about the person who has the ability to solve a perfect problem? They know what they want to do. They want to do it. They're going to go up against incredible odds and they're afraid.”

They say to themselves, “Oh, I'm probably not qualified to do this, because I'm afraid. I know when I'm afraid, I'm afraid for a good reason. I'm not going to get into a car with a stranger, or I'm not going to do this thing.” I'm telling you, that's a load of crap. You've been told your whole lives to be afraid for a very good reason. That fear saved your life hundreds of times growing up and it saves your life probably several times a year just as a sentient adult. Sometimes that fear stops you. The time to be afraid is when there is a known problem.

If it's an unknown problem, your fear is still there, but it is now irrational because how do you know? Nobody's been there. By the way in business, nobody kills you. Well, like in most businesses. Any business I get into – I almost got in a business that would kill me. I was in a roofing business for a while. That almost killed one of my guys. We fell through a roof, 20 feet through a roof. Bam!

I got out of that business, because like, “Oh, I don't want to do business that actually could literally kill me.” Square could have failed, but Jack and I would have still – we'd still be alive now. A lot of the stuff that I do, failure means well, the company loses a bunch of money and you've wasted a bunch of time. Usually doesn't mean accurate death, but again, your brain is not good at differentiating death fear from just lose your money fear, so I've tried to address that.

[0:35:59.9] MB: That's such a great point. The fact that the way that our brains evolved means that we can't really distinguish between existential mortal threats and business threats. It's such a great piece of advice to really start to get comfortable with discomfort and get comfortable being afraid when you're facing a tough business challenge, because not only are the stakes not as low as your brain often makes them feel like they are, but the reality is and this to me is one of the most important things that you've said in this whole conversation is this idea that there's a huge difference between boldness, or even what boldness looks like from the outside and with being comfortable with being uncomfortable.

[0:36:41.1] JM: Yeah. Yeah. Look, remember, a lot of people who preach how bold they are, I know some of these people, okay. I knew them before they were bold, okay, or at least I don't remember them being that way. There was a little bit of inflation. Once you're successful and they hand you the microphone, it's easy to be bold. Yeah, being comfortable with discomfort, that sounds like such a contradiction.

I think of Harry Houdini, one of the greatest escape artists in the history of the world; one of the greatest magicians. Fantastic guy. Used to lock himself up, have other people lock him up and then he would – he had this all these ways of picking locks and he was really good at getting out of locks. He would sometimes have them chained him up and chain him in a box and then throw the box in a river. Rivers are like 60-degree water sometimes, so he would have to deal with not only picking a lock underwater in the dark holding his breath, but he would have to do so in the cold, right?

Houdini as just a regular practice, every day took a cold shower. Have you ever taken cold shower, the first 10 times you do it, it sucks. If you do it every day, at some point you get used to it. You just go, “Oh. Well, now I'm going to take a shower.” The fact that the water is 50 degrees, doesn't freak you out anymore. Most of us never get to that point, because most of us live in civilized dwellings.

Houdini used his cold shower to become comfortable with a discomfort that he knew he was going to fix. Being thrown on the river, all of a sudden he doesn't have to deal with the fact that his body's cold, because he's like, “Oh, yeah. Just like in my morning. It's every day.” It's actually familiar to him. One of the things that I recommend and Matt, at the beginning I guess you asked me for some suggestions for your audience. I think okay, I really can't give you any specific advice on entrepreneurship, because by my definition, entrepreneurship is something that hasn't been done before, so I have nothing to offer you, like zero. I'm sorry. Nothing.

What I can tell you and this has been really effective for me personally is occasionally, do something that makes you really uncomfortable. Go talk to a stranger, or give a public speech, or dress in a way that nobody else is dressing, or go someplace that you don't like, or eat some weird food, travel, or hang out with your enemy, okay. I wish Washington would do this a little bit more. Why don't they have Republican and Democrat mixers anymore? I mean, just open up a bottle of gin and see if we could solve some problems.

I really believe that a person can get used to the feeling of discomfort and then the feeling of being able to still function when in that state. Believe me, if you're going to be an entrepreneur, you will be uncomfortable. Your physiology, your brain, the way you are evolved is going to tell you something is wrong. You need to have enough familiarity with that feeling to go, “Oh, well. That's just me being terrified. Oh, that's just me feeling really uncomfortable. Or oh, that's just my need for positive reinforcement.” You can get over that stuff.

Now I'm not saying being a total jerk, okay. I'm not saying going around and just making a public nuisance of yourself, but up to a point, yeah, sure. Do something that you're not going to just get heaps of praise for, because believe me, if you're one of these people and I'm one, okay. If you’re one of these people that craves praise, that lives for the, “Oh, that's a great job. We love it.” You're going to feel so weird when you actually start doing something that is new, because you're not going to get any praise. It just doesn't come. Nobody knows how to praise something that hasn't been done before. We lack the vocabulary.

[0:40:42.1] MB: I want to come back to the broader question, or problem around innovation. The name of the book is The Innovation Stack. Tell me a little bit about what is an innovation stack and how do you think about as somebody who's innovated and built incredible companies and organizations across a huge array of verticals and areas, how do you think about what innovation is and what is an innovation stack?

[0:41:08.4] JM: To me, the idea of the innovation stack is a series of independent and interdependent solutions to new problems. What I realized when I started doing my research was that this cascade of solutions was in itself, this massively powerful business tool. I discovered it by accident. What happened in our case was Square got attacked by Amazon. Amazon is the scariest company on the planet, as far as I'm concerned.

If you want to name a company that's going to attack you, it better not be Amazon. Amazon is the deadliest. I know Google's terrifying and Facebook can scare you if you’re a tech, but nobody has worked with Amazon, at least for us. Amazon did to us what they did to many other companies, and that is they copied our product, undercut our price by 30%, they are offered a bunch of features that we didn't have and then they said, “Okay, we're now going to take over your market.”

By the way, this works for Amazon in so many areas, okay. They are the kings of taking over other people's markets, to that formula that I just gave you. Oh, there. There's a second checklist, okay. If you happen to be Amazon, you now have – well, they already do that, but maybe somebody from Baidu's list, they can do the same; undercut the competitor by 30%, copy their product and watch them die, okay. Beautiful. There is another checklist for you.

They did this to us and we didn't die. As a matter of fact, we survived and eventually, Amazon retreated. When I saw this happen I was like “Why? How did we win? What happened?” That's actually the research that started this book, because I couldn't figure out why we won. I knew what we've done, but I didn't know why it worked. I started looking for other examples and looking and looking, looking. It took me three years to find a pattern. Then once I saw the pattern, I was like, “Oh, my God. The pattern is everywhere. It's so pervasive that it in fact exists at the beginning of almost any significant industry.”

What that is is a stack of innovations, a series of interrelated discoveries and new applications for old discoveries. For instance, the easy one is the Wright brothers and the airplane, right? When you think about the Wright brothers and you think about their airfoil designs, okay. The fact that they had a wind tunnel and could test their designs. A lot of history of the Wright brothers talks about how important that was. If you think about the airplane itself, there were so many things that they had to figure out and they do.

They had to figure out how to make lightweight structures. Well, they could copy some of that for gliders, but gliders behave differently because gliders didn't have to have engines, so they had to have an engine, but the engine had to be light enough to turn a propeller. What's a propeller? Because nobody have built a propeller before? They had to develop a propeller. Then once they got in the air, well they had to figure out how to steer and nobody knew how to steer, because nobody had been in the air before, so they had to figure out how to maneuver. Then well, they had to figure out how to land, because eventually, the plane had to come landing. Well, nobody figured how to land because nobody figured how to fly. You don't learn how to land until you first figured out how to fly. They had all this stuff at the same time.

What they ended up doing was not one or two things differently, but they did 15 or 20. That to me is what an innovation stack is. It's this inner-locking, interdependent solutions to problems. The way these evolved is so interesting. I look in the book at innovation stacks throughout history and starting a 100 years ago and then working up to present day, how these things tend to evolve in different parts of the world, at different points in history, in different industries, but they all follow these patterns. That's what we discussed. We talk about the patterns.

The hope is that somebody who is building a solution to a new problem, or to an unsolved problem, to a perfect problem is most likely not going to find one solution.

What they will do is they will start with one thing and they'll fix that. Then the solution to that problem will probably cause other problems, okay. Take the Wright brothers. Well, they need to make the plane move, so how are you going to do that? Well, how about our propeller? Okay, but, well now you got to turn the propeller so you got two sources of power, you either got the human, you can make him pump a bicycle pedal, I mean, and the Wrights were – they owned a bicycle shop, so they thought, “Well, human power works. Works for bicycles.”

If human power isn't enough, well, you have an engine. Well, now we got to make an engine. Okay, so they got an engine, problem with the engine is it weighs 50 pounds, so now your whole aircraft has to support 50 pounds of engine, so now your light little glider just turned into a much heavier structure and now your wing spars have to be heavier and all your control surfaces have to be stronger. Solving one problem causes other problems.

What happens in the course of solving these new problems issue end up in one of two places, you either end up dead, because you fail to solve some problem at some point. If the Wrights have not been able to strengthen the frame of the airplane to the point where it would support the engine, well the plane would not have flown. It would have broken in half, but they solved that. Then the other option is you end up solving all your problems and eventually, come up with this stack of interlocking innovation. That is what I call an innovation stack.

[0:46:53.3] MB: All right. Correct me if this is a mischaracterization, but the idea is that when you start to solve a really unique difficult, as you would call it a perfect problem, you initially come across one innovation that then unlocks another problem or challenge and then you create another innovation to solve that. Eventually, these stack together in a way that you've built a backbone, or some competitive differentiated structure, as you called an innovation stack, that then helps that business even stave off or defeat some brutal competition; in the case of Square, Amazon coming in and trying to destroy the company.

[0:47:30.1] JM: Oh, yeah. In every case where I studied one of these companies that had evolved in innovation stack, these companies were viciously attacked. I mean, what happened to Square, we were just attacked by Amazon, okay. That was not nearly as bad as what happened to some of the other companies that I studied. We weren't banished from our home country, okay. We weren't kicked out of the United States. That happened to one guy. We weren't attacked by the federal government, that happened to another guy. There are worse things than being attacked by Amazon and I Chronicle a lot of that.

The durability of the innovation stack is amazing. It's not just one thing leads to another, but it's this gnarly mess of interrelated defects, so that for instance if you make one change to one thing and that changes let's say, the way your customer has to use your product, well now you've changed how the customer interacts with your product and you may have changed the way the product is delivered, which may change something else. All of these things eventually interrelate.

[0:48:38.0] MB: There's some great examples. I know we're running out of time, but there's some really good examples in the book of how these innovations all stack together and build on one another from the cheap hardware component of Square and how that enabled you to have lower acquisition costs and lower barriers to onboarding, to Southwest and the standardization of their fleet and all of the synergies that came out of that. So many interesting insights from this business model, this perspective. It's a great way to approach solving any difficult problem.

[0:49:06.7] JM: Yeah. I think it's a good framework to have. I've got two young kids and the first thing about being a parent is your kids never listen to you. I thought, “Well, my kids are never going to listen to my advice. Maybe if I get hit by a bus or something happens to me and I wanted to pass one or two messages into the future to my children, this would be what I'd want to pass.” I'd like to have my children feel that they are powerful enough to do things that have not been done before. I wanted to pass that onto everybody, not just my kids. When I was writing it, I had this idea that somehow something had happened to me and these were the only words that I could leave behind.

That's a tough lesson to pass on. What I wanted to do was make it as funny as possible to read and then to confess that yeah. I mean, I've had a lot of stuff go right and hopefully, some more stuff in the future will go right. Boy, the real skill that I want to get people comfortable with is when things go wrong and how do you handle that and what do you do and what have people before in history done and how do they feel about it.

[0:50:23.1] MB: To bring this all the way back and you shared some great strategies throughout this conversation, but for listeners who want to concretely implement one thing that we've talked about today, what would be one piece of homework, or one action item that you would give them to start taking action in some way?

[0:50:41.3] JM: I don't think I've discussed this in the book. I honestly don't know. I don't know if this is in the book or not. It was there for a while and then I think I cut it out. I have this idea of personal energy score. I always think of things that I do, either increasing or decreasing my energy. For instance, get a good night's, sleep increase your energy, eat well, increase your energy, get some rest, hang out with people that make me laugh, increase energy. Go to long meetings, decrease energy, get a subpoena, decrease energy, be in a room that's too cold, decrease energy. I'm constantly looking at my day and my week and I guess, more than that as things that either add to my energy supply or decrease my energy supply.

By the way, if this is not in the book, I promise on JimMcKelvey.com, I will put this essay, because I know I've written about it. It's a great trick. Matt, you want to trick. Here's a trick; personal energy score. Manage your energy. The idea here is that you want to do things that increase your score and consciously catalog them. For instance, I have terrible taste in music. As a matter of fact, my taste in music is so apparently bad that I don't even tell people what I listen to. As a matter of fact, I'm embarrassed by it. I jealously hide my Spotify playlist sometimes. The songs I listen to psych me up. I will often listen to that if I'm going into anything. The idea is I just get a little more energy from. I get a little boost.

The real question of when does an entrepreneur fail, to me is when does the entrepreneur quit? It's the same question. Because I don't think of failure as this thing of oh, the product doesn't work. Dude, the product is never going to work, okay. If you're an engineer and I was trained as an engineer, you never get to work on a product that functions, right? If it functions, you hand it over to the marketing department. You're done as an engineer, okay. Me, my life, my career, I never get to work on stuff the functions, because if it functioned, I wouldn't be working on it.

What do you do in the case of a day when you have to constantly confront failure? The answer is you have to have enough energy to keep going. That energy comes from somewhere. The interesting trick is that sometimes, the cereal that I eat for breakfast, or the TV show that I watch the night before, or a conversation that I had with my wife a week ago is the thing that makes or breaks my performance on the job.

If I have this family problem and I'm worried about one of the kids, or I'm stressed out about the fact that my car doesn't start or something, there's a cost to that. I don't think of it as affecting my work performance, but it really does, because I come to the office with a little bit less energy and a little less resilience. Then some giant problem shows up and I'm depleted. I can't solve it. That problem just knocks me on my ass. I like this idea of a personal energy score, because it forces me to actively think about the things that I do that allow me to do the things that I do.

[0:54:07.2] MB: Jim, where can listeners find the book, find you and your work online?

[0:54:11.9] JM: I put up a website, JimMcKelvey.com. I apologize to everybody, I'm not on social media. Actually, one of the ways I manage my personal energy, getting back to personal energy, is I don't use social media. I don't use Facebook. I don't use Twitter. I don't use Instagram. I have a LinkedIn account. I don't use it ever. I mean, it's there and maybe once or twice a year I'll check it. I may have to start doing it now that I've written the book, so that may change by the time we broadcast this.

Generally, you're not going to find me on social media. Why? Because I find it drains my energy. I find it stresses me out. I find it's one of those things that at the end of the day has taken energy from me, as opposed to giving energy to me. If you want to find me, JimMcKelvey.com. Then the book is published by Penguin and I'm sure will be for sale on Amazon. This is the great irony of starting a book, where your lead story is being attacked by Amazon. Because writing it, I was like, “Oh, man. These guys are going to have to sell my book.” 

I didn't hold back. I figured they're big enough. They're not going to care what one guy says. Actually, Amazon was really cool about the way they handled one Square one, because after Square beat them, they mailed everybody a little Square reader. Great end to that story.

[0:55:28.9] MB: Yeah. That's just one of many really fascinating and great stories throughout the book. By the way, big respect for not being on social media. I think that's such a great decision and one that people are continuing to migrate towards in many ways as we see how dangerous it can be for us.

Either way, Jim, I just wanted to say thank you so much for coming on the show and for sharing all this wisdom.

[0:55:51.0] JM: Oh, Matt. Man, I love what you do. Your listeners may not know that you and I actually met under totally different circumstances in a different organization that I'm also part of, FINTOP Capital. Our paths have crossed and I've got tremendous respect from you and what you do and also for your listeners, because the people who listen to these things are trying to better themselves, are trying to do new things and they're trying to come up with ideas and that's admirable. Go. That's fantastic.

[0:56:17.9] MB: Thank you so much for listening to the Science of Success. We created this show to help you our listeners, master evidence-based growth. I love hearing from listeners. If you want to reach out, share your story, or just say hi, shoot me an e-mail. My e-mail is matt@successpodcast.com. That’s M-A-T-T@successpodcast.com. I’d love to hear from you and I read and respond to every single listener e-mail.

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