For the past couple of years, I’ve been narcassistically keeping an eye out for a tell-all book about Square. Of the cohort of startups founded in the late 2000s to early 2010s, we were certainly one of the least flashy ones—focused on something as mundane as payments processing—but since the surprising IPO back in 2015, I’d argue that Square has been one of the more impactful technology companies of that vintage. So while customer companies like AirBnb and Uber and Twitter get their own books, there’s not been much journalistic attention on the story of Square.
So one of the founders wrote it instead. The Innovation Stack is a book written by Jim McKelvey, who had been an old friend of Jack Dorsey and founded the company when Jack was on a hiatus from Twitter. It’s not quite an exposé on the company, though; as the title suggests, Jim actually wants to present this idea of the Innovation Stack: a series of interdependent and interwoven innovations, stacked on top of one another, that in aggregate can drive change from entrenched status quos. To those ends, the book draws a couple of examples from different industries and time periods, but also makes use of the author’s own founding experiences at Square to drive home his point.
I met Jim during my first week at Square, at the Town Square that we held every Friday. True to what he wrote in his book, he gave this rousing presentation to the 100 of us1: about the inverted credit card pyramid and its exclusion of small merchants; his glass-blowing studio and the inability to close a sale from not accepting credit cards; his talented artist friend who had to drive a junker because he also couldn’t easily sell his art. I appreciate that the tone and style of his writing very much fit how he comes off in real life—passionate, determined, earnest, but also a bit all over the place when drawing analogies.
One small point in the book that resonated with me was that “disruption” is not only overused in the tech world to lazily signal success, but it’s often not actually desirable. Innovate, sure, but do it judiciously and carefully, and don’t just deviate from the status quo just to be contrarian and reinvent for its own sake. The author talks repeatedly about how important it is for entrepreneurs, somewhat like artists, to copy.
As to the idea of the Innovation Stack itself, it’s a pretty abstract theory but has some analog to the notion of Skill Stacking. In both instances, the key insight is that even if an individual slice of the stack is common or commodized, with enough slices, you can build a set of skills or competitive advantages that is wholly unique and powerful. It’s math and combinatorials, after all.
But I’m not fully convinced, mostly because it’s not clear that just being unique itself confers success. That is, even if we take the premise that a couple of slices of uniqueness will eventually produce a stack that is itself one-of-a-kind, there’s no obvious reason why that deviation from industry standards means anything. The Innovation Stack necessarily picks examples where this has produced winning companies, but that’s a bit like divining startup success from recently-IPOed firms, laden with a heavy dose of survivorship bias2.
Instead, the less-inspiring message I got out of the book was simply that entrepreneurship is indeed hard. And sometimes takes a bit of luck.