SaaS Interviews with CEOs, Startups, Founders
Billionaire Co-Founder of Square Joins Latka
05 Apr 2021
Chapter 1: What is the main topic discussed in this episode?
I don't want everybody in the world to stop when they hit that line. I want them to recognize that line and be able to make a decision. Okay, look, at this point, I can choose to cross it, in which case I'm going to need this other set of skills. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed.
To subscribe, go to getlatka.com. When you subscribe, you won't hear ads like this one. You'll get the full interviews. Right now, you're only hearing partial interviews. And you'll get interviews three weeks earlier from founders, thinkers, and people I find interesting. Like Eric Wan, 18 months before he took Zoom public. We got to grow faster. Minimum is 100% over the past several years.
Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Bean before Google acquired his company for $2.6 billion. We want to see a real pervasive data culture, and then the rest flows behind that. If you'd like to subscribe, go to getlatka.com.
There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hey guys, my guest today is Jim McKelvey.
He founded his first company, Mira, back when he was 25 years old, found Third Degree Glass Factory in 2002, ultimately probably best known for co-founding Square in 2008, before now jumping into new endeavors to do good like LaunchCode and ideally save journalism via Invisibly. He was appointed also as an independent director of the Federal Reserve Bank in St.
Louis in January of 2017, has a new book out, called the Innovation Stack. We're going to jump into it today. Jim McKelvey, you ready to take us to the top? Yeah, Nathan, let's go. All right. I just checked Square. Now, I'm a money guy, but I don't like only focusing on money. So check this out.
Square today is a $76 billion market cap company, but it maybe never would have happened if it wasn't for a double twist, glass faucet, dusty piece of artwork you put together where a little old lady couldn't pay because she only had an American Express card. Take us back to glass bowing. That is actually true.
So Jack Dorsey and I, who have been friends for years and worked together on another company that actually I still own, he and I were going to start a new company. We didn't have an idea. I'm a glassblower, so I work in a grubby studio and I sell stuff that nobody needs.
And one day when we were in the middle of starting this new company, I lost a sale because I couldn't take an American Express card. And it was for a double twist, a yellow orange glass faucet, which in my opinion was hideous, but this lady seemed to like it. And I really wanted to sell this thing and she wanted to buy it, but couldn't because I couldn't process her card.
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Chapter 2: What is the main topic of Jim McKelvey's journey with Square?
So I was working during the days for IBM. I was working on the side with another business and I was blowing glass. And then, you know, sort of tragically, my life was sort of derailed by my mother who, you know, my mom killed herself. And this really just, devastated me and when that happened, I looked at all the stuff that I was mediocre at.
I'm really mediocre at a lot of stuff and I was a mediocre IBM employee, I was a mediocre entrepreneur, I was a mediocre artist, And I thought, wow, my mother never saw me do anything well. So I thought, well, I will focus, right? That's the idea. If you want to do something well, focus. And I sort of naively thought that by stopping everything I was doing and focusing on something new.
So I quit glassblowing for a couple, about a year, sold my other company, quit IBM. And then I focused on this company, Mira. Mira is still around today, so it's endured for 30 years, but it was anything but successful for the first five years. We kept getting just battered. Then during that time, in order to fund my company, I went back into the studio at night and just started making work.
Glass was actually my venture capital as I was starting my tech company because that was the early 90s. at least in St. Louis, Missouri, there was no such thing as venture capital, at least not for me. So it was just necessity. And not to focus too much on this, but why did you have the belief that your mom never saw you really go deep onto something?
I mean, you tell a fascinating story in the book, how you don't have an engineering background, but professors and the head of the CS department are selling overcharged books where when you read them, they don't even work.
And you go in, not only do you petition to get a different book in its place, you write the book, the debugger's handbook, UCSD and Apple Pascal, which then became the selling book there. I mean, that requires a level of obsession and expertise that is way above mediocre. Well, I mean, I'm stubborn.
It turns out writing a textbook, at least a textbook on computer science, doesn't take that much knowledge. It just takes perseverance. I mean, you can look up every answer you need. And eventually I did. It took me a whole summer. I wrote this book. The book actually did pretty well. And then the publisher asked me for another book. And that book actually did really well. And so I ended up...
Look, I had some successes. I'm not saying I was a total blank slate by the time mom died, but I was really unfocused. And I thought that this was a problem because I was always trying to copy the people around me and the successful people that I saw were doing one thing. It turns out for me, doing one thing is not a good thing.
I seem to be better if I'm sort of dividing my attention around three or four different activities. And that's just always been true. But that's just a quirk of how I work, not something that I would recommend for others.
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Chapter 3: How did a glassblowing incident lead to the creation of Square?
And of course, the conversation like, what are you doing with all these things? And we told her that we were small tech company in St. Louis. And she's like, oh, my son loves computers. I was like, great. We need help if he wants to come by. And this kid who was 15 years old showed up in the middle of this crisis. We just made a major mistake and needed everybody we knew.
to come in and help us fix this problem. That was Jack Dorsey. Jack came in. I hired him on the spot when he was 15. He worked all night with us the first night, got in horrible trouble with his mother. But he became part of the team after that and joined us for that summer. And we just had a great working relationship.
He was one of these people who every time I gave him a task, he would do it well and in many cases, surprisingly well. And I just started noticing this trend and I thought, well, I wonder how he would do on these other tasks. So I kept giving him bigger and bigger jobs and he kept doing them up until the point where I gave him a job that was too big for one person to handle.
And he said, Jim, I don't think I can do this. And I said, oh, no, no.
don't need to do all the work i'll hire a team to do the work i want you to run the team so jack actually was a manager by the time i guess he was 16 years old that's fascinating so mira started as a digital document viewer jack comes in that's how that connection started i think you then pivot the business in 93 to basically a cd-rom interface for brochures was that the project that he was in charge of sort of turning around what was the first big project you gave jack where he was managing people
So that was a side project. What our business was back before the internet was we would take trade show literature, scan it, and put on CD-ROMs. So we would give these CDs away at the trade show. And if you can imagine not having the internet, like having a trade show disc with all the ā brochures from all the companies in the industry. That's a really valuable thing.
We were making gobs of money with that product and growing like crazy, but the Internet was going to kill it. I knew that our business was going to get just obliterated.
I tried to get the company to pivot to another line of business, which was essentially trade show publishing because trade shows always have conferences that go along with them, and the conferences need digital publishing tools too. We had all that tech, and I thought, well, we'll just use this and sell that.
And everybody at the company would verbally agree with me, but I couldn't get them to change their behavior because they were making so much money using the old models that none of them could. I mean, I couldn't get any of them to to move. And so this probably speaks to my quality as a leader.
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