Problems that havent yet been solved. So thats what i call the perfect problem because that, in fact, is the focus of what i think entrepreneurship is. In other words, you are looking for a way to solve a problem that is solvable but hasnt been done. You had to do something you and you dont get to copy. And so we were then taken around for ideas and you do not have an idea and i didnt have an idea so we started looking for problems that we can solve and came up with the problem of how they got paid. When did you come to that conclusion, you talk in the book about your work, tummy about that moment that payments were a problem for small merchants. It was funny because as i said jack had been kicked out of twitter and my first reaction to that was jack was like a little brother to me, somebody felt like i needed to stand up for and what they did to him at twitter the first time was completely bile. So my first suggestion was lets go to San Francisco and get even with those guys. It was like spite motivated but jack to his credit said when we do something more positive and starting a company. We were looking for problem that our property was going to be focused on my phone i have to use it as a prop, these things, we were to focus on these things because the iphone had just come out and we knew is going to be important so we hired an engineer for apple, that give us two weeks to figure out what we were going to do. And we cannot think of anything. We were stressing for ideas and i went back to my glass studio. I make stuff nobody needs, the stuff that nobody needs, matteroffact in d. C. I used to teach a clinical park, for the cspan viewers, if you been to the park 20 years ago i was the guy that taught you how to make a paperweight. But the point is, i was in my studio and trying to sell a piece of glass and i lost the sale because i cannot take an American Express card. I was angry, i lost this great windfall and i was talking to the lady about one of these devices and i have this attitude towards devices like this which this device is a magic device, turns into anything i want, they wanted to turn into television becomes a television, turns into a map, radio, and will turn into the book, literally tomorrow. It will turn out to the book, it did not turn into a credit card. And so i was angry but i was also motivated to fix that, so i called up jack on that device and said lets make her iphone turn into a card machine so thats what became square. So the name of the book is innovation stack, what is the innovation stack and how did you learn about that from square. And innovation stack is not something we knew about when we started square but its probably the most powerful phenomenon that acm business and we stumbled across but the innovation stack is simply a way of interweaving inventions together, sometimes very simple but put enough of these together and they start to take on their own life and they create new industries, if you look throughout history at the Great Industries that i did not know any of this, i had no idea that any of this is happening in a matter of fact i wrote this book and i was having people reviewed like yourself and one of the greatest components i got was from a very successful, the skies living in, we were in his living room and he has a painting on the wall that is worth more than my house. I was like oh my god, im all intimidated and is asking me about the book and he finally said i wish i had known this when i was 20 years old. And i was like me too. It turns out theres this thing that happens, this process that can happen when you start to solve a perfect problem, something that has not been solved before because most of what we do is copying and most of our tools and training and comfort with solutions that exist, when you get out of the world of copying, you can build something that is truly different but the process is different, it creates a thing called innovation. If you build an innovation stack, at least in my studies company will dominate the world. It will run whatever business you are in. In the book when you talk about innovation stack, it was interesting that you focused on companies that we dont associate with tech, they draw the parallel between tech and innovation, you focus on southwest, ikea and others. Why did you decide to focus on those companies outside of the tech industry. Im a scientist by training and my father was a scientist, ive been very steeped in the scientific method, if youre going to do a reasonably controlled experiment, you need to eliminate variable. One of the most powerful variables is the phenomenon of viral growth in technology. So if you look at the potential for company that does nothing really that interesting but add sufficient technology to an old business, you can get outside success. I do not want to study that, what i did when i saw the pattern of innovation stack i want to Study Companies but i dont want to Study Companies like google. The only thing google their whopping they successful or amazon, all these companies are fantastically successful but what is it that creates success, in some cases just the pure disruptive nature of technology overwhelms anything else. So this is why i laugh when people studied Google Business practices, they can find their own space program. Which is tremendous but their management can be crummy and is still such a powerful force of technology. So i wanted to exclude that, if you exclude that what youre left with is businesses throughout history that built an innovation stack that has still dominated their industry. So i go back and start 100 years ago and work forward just to show that the pattern is something systemic in the innovation and not just a result of having Amazon Web Services and viral growth. Some people who see this book on the shelf might be surprised to learn that actually started as a graphic novel, can you tell us a little bit about that evolution. I did not want to write a business book. I dont particularly most Business Books are very boring, they are the ponderous selfserving tones, theyre not scientific, so i saw this and i thought i had to share this. This thing. And i did not want to write a business book so i started looking at the stories of these companies that had done this and the stories were epic, they were fantastic and so i was like i dont have to tell as a business, this can be a graphic novel. So what i originally sold to penguin was a schizophrenic manuscript that was a graphic novel in text and flip back and forth randomly and penguin liked it or i should say pretended that they liked it because they signed the contract, once they sign the contract, they own the book. So then they took me to this windowless Conference Room in manhattan and had a little talk, the talk went like this, you realize that your cute little comics are not going to show up on a 4inch screen. And people besides that are going to listen to this as an audiobook so as an audiobook its useless, you cannot take a graphic novel and reduce it to an audiobook. Right there you will lose 70 of your audience. If you want to lose 70 stick with what you got otherwise you have to rewrite it. So they were right, so i rewrote the whole thing but i still had all these great comics. So i actually made my own comic, she has her book and i have my. This is for you cannot buy the thing if you go to my website all give you the copy because like this is a storybook banker. This is a banker. There is a murder, there is a murder on that page and a funeral and heres the destruction of a major city, this is comic book stuff and the reason he wanted to do a comic was the tail of entrepreneurship and the details of the companies that build intubation stack ten to be really good stories because theres a lot of failure and failure actually makes really good stories, nobody wants to hear about success, boring. But failure, how did you get that scar, thats a good story. So i wanted to tell in this format and although theres only one chapter that sorta survived in the comic, if you buy the book will give you the comic, i will not sell this but you can have it. In their good stories, they are fun and so often i find that we ignore the fun part of what its like to do something that has not been done because theres a lot of failure and you have to have a sense of humor but mistakes, everyone is talking about that. On the point about the comic book, i know only one chapter has turned into a comic book now but it seems to me reading this if you were to write the comic book about square the billing would be amazon. Yes. Can you tell me what it was like when you realized that amazon was trying to directly compete with you and the payment space. Yes. Believe me i appreciate the irony of dissing amazon when youre in the middle of selling a book. [laughter] i will redeem myself at the very last Second Period so yeah, amazon did what they do which is they look through our market, decided that they wanted it and they take it. They do to things, they copier product, three things, they copy your product, they undercut your price biome is 30 and then they add whatever else they have like the amazon brand and a couple hundred million customers in all the stuff and then they want you to die. This was four years old, they would brand the playbook and so we were terrified and we went looking for solutions that we could copy to respond and we looked around for all the companies that had beaten amazon when they have been attacked this way, there were none. Netflix had already giant but startups, forget it. 0. 0 started setting on or that we could find had to live the attack by amazon. So you are truly alone. And it was terrifying. We looked at what we can do, there is not even that much we can do but amazon was undercutting us on prices, they were being amazon. And we were terrified. But there was not really much that we chose to do differently so we looked all our options and looking all the options we realized that they were all being done for very good reason so we just kept doing it. And we did not even maximum price of amazons price was 30 lower than our price and we did not match their price paid we kept going. And it lasted for about a year end half and a thing and on halloween of 2015 amazon gave up and they mailed all of their former customers and little white square reader. I cannot believe it. I cannot believe it. This never happens. This does not happen. But its what happened and thats actually what led me to the book because of somebody whos raised a scientist, i needed an explanation. I needed why did this happen, you cannot just be lucky, there must be some phenomenon and it turns out square had innovation paid we did not know at the time and there was no label of the innovation stack and there was a bunch of reasons that i had not seen it but once i saw it i was like that is it. Thats what a lot of us to survive amazon and would allow all these other companies that i study to survive vicious attack, you dont think amazon was bad but what happened to Southwest Airlines was worse, we did not end up in federal and state court, herb keller had it worse than i did. I wanted to ask you, you looked around and you cannot find other companies that had been able to be amazon and in the book you also say that you found some people who amazon beat but they werent willing to talk to on the record about it. So i found many amazon victims and talk to them personally. And they got their stories and then said thats great, can i quote you, no. Nobody, even people who were in totally different industries, even people who are industries now competing with amazon, everybody was so afraid of amazon that nobody would go on the record. I have 0 on the record first in the book about what happened with amazon. Why are people so afraid of amazon . You have to ask them, i dont know. Thats not for me too share. I will tell you that it was so severe that i could get nobody to go on the record. So theres no quotes. Just me. Right now were sitting in washington where theres a ton of scrutiny of the Larger Tech Companies on antitrust grounds at the moment when you look at congress, stc, do you think the amazon is monopoly . Not a monopoly in the traditional sense but i think they definitely exhibit some of the behaviors of market dominance. And im not a lawyer, i dont have a legally valid opinion on this but any company that gets big enough that it can move markets to be looked at and again, im not a regulator. I guess i kind of am now, i sit on the step, im a big believer in regulation, i think regulation is probably good in a lot of situations but on the other side these tech platforms and amazon a particular are very good at keeping the customer in mind. I think what youre looking for is a tech platform that gives very, very powerful that still maintains a semblance of responsibility, i think amazon has kind of done that and google has kind of done that in phase because kind of not done that so they deserve regulation at different levels. I want to ask about apple because square could not exist without the iphone and later much of the business relied on ipad, how do you think about them in that context. Apple is superpowerful, there really important to get along with, they also have great intubation and i got tremendous respect for apple, we built our Company Based on the apple had introduced to the world which was this thing, thats an apple invention. So i have a tremendous around a respect for them but also not 70 want to piss off, you dont want to do stuff that we did in the early days which couldve upset apple a lot, we bypassed the connecting thing on the bottom and we put the square reader into the microphone jack and that was a no, no, we were not supposed to do that and we thought we would get in trouble with apple but then we thought our products are so cool the be good with it. Because steve jobs at the time who is in control of apple had a way of protecting privacy in a steve. You are cool, you are fine. Lawyers would leave you alone. So we approach steve to save our butts. Tell me a little bit about the design of square in that process of creating such an iconic design that people recognize that in the smithsonian. The square card reader which is about this wide, the one that i built was smaller. It had a basic design flaw. It was one that i noticed and i chose not to correct. Which was when you were swiping a credit card through it was so narrow that the card would wobble as it would go through and as a result of that it would result in a mystery. About 80 of the time in about a it would work. In the 20 would not. This is a result of my testing. Dissolve the problem i built another reader that was not wide and tested it and everybody was 100 without. So the question is why did we build a tiny little device that did not work as well as the big device and it was not for cost reasons or anything like that. Interpret the reaction was very different. If i use the big device, people were like another credit card reader, if i use the small device, one is in the smithsonian they were amazed. They were blown away. What just happened. Remember the first time you saw a car go through a square read reader, you were impressed, everybody was impressed, and got your attention so we took a gamble was great to build a product that mechanically did not work all that well as it could. But it just got your attention and will you away and looked so cool and was fun to having people were talking about it and we were like we have to go for the cool. So we built something that was super cool and to this day squares routers, they would work better if they were wider but they are cool, they are great. And the funny thing is it turns out that the 80 number really drops after a little bit of practice, went to practice youll always get a good reader. So we discover by making a product it was lessthanperfect, we trained customers to use our product and then once they were using it they were showing up to difference how good they were and swiping the square. Thats a major gamble and reminds me of one part of the book of distinction between entrepreneurs and business people. Can you talk a little bit about that. So i was trying to discover what allowed square to survive amazon. In the process i sell the thing called innovation stack, i wanted to tell the world, i have to draw this or right is but i have to tell the story. I immediately realized that the english language does not have a word for this process that i was describing in the process i was describing was building a business but not a business that has been done before. So how do you describe someone who goes out and starts a business, thats an entrepreneur but i have a friend of mine who started a Coffee Company and hes an entrepreneur, he opened up a Coffee Company, he has coffee shops. But coffee shops have been around for centuries. You know how to make a coffee shop and if you dont how to make a coffee shop you can go to a tradeshow where they will teach you all the stuff you need, hire the spender to set up your expression machine, coffee is a soft problem. How do you differentiate Something Like that to somebody who is doing something that has been done before. I have another friend trying to launch satellites, hes my old russian fighter planes stripping the crab out of them, loading them with a missile and send them 90000 feet, put in a mock two power dive and pulls up at the last second so he has all this Kinetic Energy any 70000 feet up and fires a missile, when you fire a missile that high dont need to have a very big missile because theres so much energy to begin with. He think they can launch satellites cheaper. Where is his tradeshow, where as in buying russian fighter jets and sending them to the stratosphere. There is nothing, hes living in a different set of rules. He is living in a world where i needed to be able to describe that, it turns out the word entrepreneur was originally used and popularized to describe the person whos doing something new and weird and it might not work. It was the original use of the work, it has since come to be mean business, you can say youre an entrepreneur because you started the business, thats correct used today. But the agent use, the 100yearold use, economists are using 100 years ago. It meant somebody was doing something different. So in the book i go back 100 years and i say were going to use this word but were going to use it in a definition because thats only word that we have that i can used to describe it and i wanted to be able to differentiate what it is like to not copy. I think i did not want to write the book, it was a pain in the ass. A muscle writer and it was tough for me. I would not like to do it again. But i had to write this because i looked for the explanation phenomenon that i had seen, nobo