In your new book the innovation stack you talk about a glassblower to team up with the founder of twitter to build a multibilliondollar Payment Company you talk about perfect problems when did you realize how Business Payments were a perfect problem . I needed a way to delineate problems if you think about the worlds problems those that are solved so we could copy the solution. And then for one reason or another are not solvable. We dont have a way to do it but then that group in the middle of solvable problems that have not yet been solved is the perfect problem because that is the focus of what we accomplished to look for a way to solve a problem that is solvable that hasnt been done you have to do something new. So what happened with jack dorsey and i come i hired him when he was 15. A High School Student came into work at a company that i still have. I dont run any of my companies but i also dont sell them. We started working together and he went to college. We kept in touch. Then he got kicked out of twitter. The first time. They showed him the door he came back to st. Louis and we were hanging out and talking and decided we would start a company together. We were kicking around ideas. We started looking for problems we could solve and came up with a problem of how small merchants got paid. When did you come to that conclusion . You talk about your work as a glassblower so tell me the moment he realized payments were a problem for small merchants. He was just kicked out of twitter my first reaction is he was like a little brother to me and someone i felt i needed to stand up for what they did to him the first time was completely file. File. So i said lets get even with them like it was despite motivated to his credit he said lets do something more positive and start a new company. Then we were looking for a problem then we could only determine our company would be focused these things we will focus on these because the iphone had just come out we knew it would be important so we hired an engineer from apple he was starting in two weeks and that gave us two weeks to figure out what we were going to do. We were stressing for ideas im a glassblower. I make stuff that nobody needs. Art. In dc i used to teach glassblowing in Glen Echo Park 20 years ago i was a guy that taught you how to make a paperweight. I was in my studio trying to sell a piece of glass and i lost a sale because i couldnt take american express. I was angry i just lost this great windfall. And i was talking to the lady on one of these devices. I have this attitude toward devices like this. This is magic and turns into anything. Television, map, radio, that book, literally if you want but it didnt turn into a credit card machine. I was angry but also motivated to fix that so i called jack and said lets make the iphones into a credit card machine. The name of the book is the innovation stack. What is the innovation stack and how did you learn about that quick. Its not something we knew about when we started square but the most powerful phenomenon i have seen in business. We stumbled across it. The innovation stack is simply a way to interweave inventions together sometimes very simple but then they take on their own life to create a new industry. Look throughout history at the Great Industries that have started almost always there is the innovation stack at the beginning. We didnt know this. I had no idea this was happening as a matter of fact i wrote the book and have people review it. One of the greatest compliments i got was from a very successful entrepreneur in his living room he has a painting on the wall that is worth more than my house. So i am intimidated he is asking me about the book and finally says i wish i knew this when i was 20 years old. I said me to. But it turns out there is a thing that happens, this process when you start to solve the perfect problem because most of what we do is copying and the tools and training and comfort was solutions that exist thats truly different. It creates the innovation stack. Then your company will dominate the world. And then to focus on companies and then people thought draw that parallel that southwest and ikea so why did you focus on those outside of the industry quick. I am a scientist by training varies deep in the Scientific Method and then to eliminate variables one of the most powerful is the phenomenon of viable growth and technology if you look at the potential of the company that does nothing that interesting but sufficient technology to an old business so when i saw this pattern of the innovation stack i want to Study Companies but not google. Those that are successful or amazon but what creates success . In some cases just the pure disruptive nature overwhelms anything else this is why we study google practices they can find their own Space Program which is tremendous that management could be crummy but it is still a powerful force. If you exclude that businesses that have still dominated the industrys. So 100 years ago working for word that the pattern is systemic in innovation and not just the result of viable growt growth. People may be surprised to learn it started as a graphic novel. Tell me about that evolution. I didnt want to write a business book. Business books are boring. Ponderous selfserving tones. And didnt want to write a business but. And this could be a graphic novel. So what i originally sold to penguin was a schizophrenic manuscript that was graphic novel and tack and it flipped back and forth randomly. Penguin liked it or pretended they did because they signed the contract now they on the book. And it went like this that your cute little comics will not show up in a foreign screen. And they will listen to this as an audiobook it is useless. You cannot take a graphic novel and put it into the audiobook so then you lose 70 percent of your audience. Then you have to rewrite it. They were right. I rewrote the whole thing but i still had the great comics so i made my own comic. She has the book i have the comic. You cannot buy it i will give you a copy for free. This is a storybook thinker. There is a murder on that page. And the destruction of a major city. This is comic book stuff because the details of entrepreneurship and those innovation stacks tend to be really good stories. Nobody wants to hear about success. How did you get that scar . Thats a good story. I wanted to tell it in this format only one chapter survives. If you buy the book i will give you the comic. They are good stories and they are fun. So often i find we ignore the fun part. So on the comic book so with you write about square then the building would be amazon so tell me what it was like when you realized amazon was trying to directly compete with even the payment space . I appreciate the irony dissing amazon in the middle of selling a book. [laughter] i will redeem myself at the last second. Amazon did what they do. They looked at the market and decided to take it. They copy the product. They undercut the price usually by 30 percent and then they add whatever else they have like customers and their brand and then watch you die. At four years old they ran the playbook so we were terrified and we went looking for solutions we could copy to respond. We looked around for all the companies that had be in amazon when they were attacked and there were none. Netflix is already a giant but startups . Zero. Nine have us on have survived this attack. I was terrified looking at what we could do that amazon was undercutting us on price. They were being amazon and we were terrified but there will wasnt much we chose to do differently so looking at all those options we realized for very good reasons that we just kept doing it amazons price was 30 percent lower we didnt match the price we just kept going and it lasted a year and a half and at the end halloween 2016 amazon gave up and mailed all the former customers a little white square reader. I couldnt believe it. This never happens but it is what happened and thats what led me to the book because as raised as a scientist i needed an explanation why this happened you just cant be lucky. We had the innovation stack. We did not know that at the time there is a bunch of reasons i havent seen it but once i did thats what allowed us to survive and all the other companies i studied to survive vicious attacks. Southwest airlines was worse we didnt have federal and state court Herb Kelleher had it worse than i did. Host you said you mentioned you can find other companies but you also say in the book he found people amazon beat but they would not talk to you on the record. I found many people and talk to them personally and got their stories and said thats great can i quote you . Know. Even people in a totally different industry that were now competing with amazon everybody was so afraid nobody would go on the record i have zero on the record firsthand quotes about what happened. Host why are they so afraid . Ask them. I dont know. Is not for me to share but it was so severe i couldnt get anybody to go on the record. There are no quotations. Just me. We are sitting in washington where there is a time and scrutiny on antitrust grounds at the moment. So do you think amazon is a monopoly . Not in the traditional sense but those behaviors of market dominance i have a legally valid opinion that any company that gets big enough to move markets not to be looked at. Im not a regulator. I guess i am now i sit on the fed im a big believer of regulation is probably good in a lot of situations. But the tech platforms and amazon in particular are very good so what youre looking for is a tech platform that is very powerful that still maintains a semblance of responsibility. Google has been facebook has not. They deserve regulation at different levels. Host i want to ask about apple because way or cannot exist without the iphone and then related one relied on the ipad. Apple the superpowerful they are important to get along with. They have Great Innovation we built our Company Based on our product that apple introduced to the world. This apple invention so i have a tremendous amount of respect for them and also not somebody you want to put this off. Like we did in the early days we bypass the connector on the bottom and put the square reader to the microphone jack. That was a nono when we were supposed to put them me that maybe its so cool they will be good with it because steve jobs is in control at the time had a way of protecting products that he liked. If he thought you were cool you are fine and the lawyers would leave you alone so we approached steve. Host tell me about the design of square and process to create such the iconic design thats in the smithsonian. The card reader which was this wide when i was even smaller had a basic design flaw. It is one that i noticed in a chose not to correct when you swipe the credit card through it was so narrow the card would wobble and as a result it would be a misread. But the reaction was very different, if i use the big device, people were like hohum, nanother credit card reader, ifi use a small device, in the smithsonian, they were amazed, they were blown away, what just happened, remember the first time you saw the a car go through the square reader, you were impressed, everybody was impressed, i got your attention, we took a giant gamble at square to build a product that mechanically did not work all that well as it could but just got your attention and pull you away and look so cool and was fun to have and people were talking about it and people were like we just have to go for the cool, we went to something that was supercool in this day, squares readers, they would worked better if they were wider, but they are cool, they are great and the funny thing is, it turns out that 80 really dropped after a little bit of practice, what you practice a little bit you will get a good read. So we discovered by making a product that was less than perfect, we trained customers to use our product and then once they were using it, they were showing off to their friends how good they were and swiping the square. Thats a major gamble and remind me of one part of the book you talk about the distinction between entrepreneur and business people, can you talk a little bit about that. I was trying to discover what allowed square to survive amaz amazon, in the process i saw this thing called an innovation stack and i wanted to tell the world, i have to draw this or write this but i have to tell the story and i immediately realized that the english language does not have a word for this process that i was describing and the processor was describing was building a business but not a business that has been done before, how do you describe somebody who goes out and start a business, thats an entrepreneur but i have a friend who started a Coffee Company and hes an entrepreneur, he opened up a Coffee Company, thats a coffee shop but coffee shops have been around for centuries, you know how to make a coffee shop and if you do not know how to make a coffee shop, you can go to tradeshow where they would teach you all the stuff you can need, to set up your expression machine calmly coffee is a soft problem, how do you differentiate Something Like that from somebody who hasnt been done before, im another friend who is trained to launch satellites for supercheap, hes mine old russian fighter planes, stripping all the crab out of them and they send him up to 90000 feet, they put them in a mock two power dive and pulls up at the last second and they have kinetic energy, their 70000 feet up any fires a missile and what you do when you fire it 70000 feet you dont have to have a very big missile under so much to begin with. And there is nothing, he does not get it, he living in a different set of rules, hes 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 who is doing something new and weird and it might not work. It was the original use of the work, it has since come to mean business, you can say youre not to printer and you started the business, thats the correct use today, but the ancient use, the hundredyearold use, of sean peter and an economist we are using 100 years ago that somebody who is doing something different. So in the book i go back 100 years and i say were going to use this word and were going to use it in the archaic definition, thats only word we have that i can used to describe it and i wanted to be able to differentiate what it is like to not copy because i think i did not want to read the book, the pain in the and im a slow writer and its very tough for me. It wasnt like oh god i gotta write another book. I had to write this thing, and look for the explanation phenomenon that id seen, nobody ever explained it and i understood why, there is not a vocabulary for the part that you want to talk about. So i needed to dust off the definition of entrepreneur and then go and find examples that supported my thesis. When did you realize, you yourself well into the category of entrepreneur versus business person. I am realizing it, by my definition entrepreneur people who solve problems that have not been sober for, they sometimes fail to solve problems that are not been solved before and im in the other category, i have a lot of problems that i worked on that i do not have solutions for. But ive also had the fortune of doing some stuff that have not been done and having it work and seeing the results, the results are tremendous so it is a great thing when it worked and when it finally works, typically the path that ive taken is failure, failure, failure in something fixates but that creates two other problems, not seen have to solve those, you do that enough, one of two things will happen, you will die because you run out of energy or resources or time or you will succeed when you succeed you will basically be in possession of a thing called innovation stack, you will done so many Different Things in those Different Things will interrelate and influence each other, what you have will look like nothing else on the market and it will behave like nothing else in the market, even when amazon decides to try to copy what you did, they will not be able to, even amazon with all the resources and talent, they could not do it. This pattern is what creates Great Solutions to new problems. You mentioned earlier that youve known jack dorsey since he was a High School Student and was working for your company, tell me when did you first realize that he had some of these qualities of an entrepreneur. The first quality was demonstrated the first night because we made them hold an allnighter in the day he was hired we were in a panic, we made a giant air and we needed everybody we can, thats how we got to him because we were literally who bring up everybody from around the location where the company was and his mother ran the coffee shop that sold us the chocolate covered espresso beans that we were using to keep everybody awake, this is before ritalin was widely available so we would stay awake by munching on caffeine and marsha sold us the beans and she let us hire her son and i think she regarded it because we sent him home at 5 00 a. M. That morning on his first day of work. Thats how im jack. Quality one, tenacity, got it. Survive on little sleep, got it. I later discovered that jack is just incredibly competent, he is quiet, hes not a bombastic person but hes really good and it just shows through. You mentioned earlier you have a brother like relationship with him and youre so defensive of him the first time he was pushed out of twitter, what are your thoughts now that there is a recent activist investor push once again to potentially push them out of the company and what are your thoughts about that. You guys have tried that before, if you kick him out twice, let him run his company, you kick them out once and brought about, he kicked him out a second brought about, you didnt kick about the third time, they come to some terms, come on, who else is going to run twitter well. I dont know anything about twitter, i dont have anything to do with the company but i would say this, jack is a fantastic leader, he is a guy who thinks very deeply in this whining about the fact that hes running two Public Companies were, what could go wrong, i think square has been phenomenally successful nic were hes working competently at his other company and i leave him alone. Got it. What do you think it is about him that gives him the ability to run the Large Company successfully. He is single. Single and no kids. I asked my friend, are you married . Im not. All t