Few small brands can compete and win against a large company like Amazon. But that’s what Square did when Amazon launched an almost identical card reader for a fraction of the price of Square.
Without weakening the price of its biggest competitor, Square continues to completely disrupt the digital payment and financial industries and earn Revenue of US$4.68 billion in the second quarter of 2021.
Why? Its co-founders, Jim McKay Attribute Square’s success to its “innovation stack.”
In the first episode of HubSpot shake, Alexis Gay and Brianne Kimmel sat down with McKelvey to learn how Square is responding to the competition with Amazon, and to learn more about his book, Innovation stack: Build an unparalleled business one crazy idea at a time.
How to beat the competition like Square Beat Amazon
Below, you will find some highlights of McKelvey and a podcast where you can listen to the complete conversation.
What is the innovation stack?
[20:13] Alexis Gay: Before we dive into it, can you tell us what an innovation stack is?
[20:20] McKay: The innovation stack is something I discovered while trying to answer a question that bothered me, and this is how Square survived the Amazon attack. … When we were a startup, Square was attacked by Amazon.
At that time, every company that was attacked by Amazon, whether it was a startup or not, was dead. There is a 100% mortality rate, or it has been absorbed by Amazon, I will also consider it. …Death or worse.
… We looked at this very scary situation, we did some crazy things, and it worked, and after it worked, I thought, “Why is this?” And I couldn’t answer this question.
…I am a nerd engineer, and I continue this research, looking for other companies that have experienced similar situations. So I studied historical business. …Technology is not the main force, but this kind of thing keeps appearing in my research, and I label it as an innovation stack. This is just a very simple idea, that invention is not one or two things. It is usually a chaotic combination of 10, 20, 30, 40 things.
Amazon takes over Square
[23:02] McKay: [In a board meeting], Jack [Dorsey] He was wearing black clothes and he announced that Amazon had copied our products and would lower our prices. This is their usual practice. He told the board what was happening-we had very smart people on the board, we had a lot of experienced people-we were blocked.
…We began to answer the question “What can we do?” repeatedly. One of the most basic problems is that Amazon has lowered our prices. We can lower the price and match Amazon. Then it’s the matter. The prices of these products are as low as possible, but still serve our customers.
… We actually didn’t even do anything. That’s different, it’s amazing. We want to do something, because if you are attacked, the most difficult thing you can do is not to react or to overreact.
[24:56] McKay: too terrifying. When we won and I answered the “why?” question, it made me more interesting. What happened, because I was so happy that we won, but then I thought, “Why did we win?”
Square beats Amazon
[27:02] Homosexuality: Jim, let’s talk about Halloween in 2015. You got some very important news that day. Can you tell us a little bit, um, first of all, let me ask you this: Are you dressed? In costume?
[27:16] McKelvey: I am dressed as a clown. My wife is dressed as Catwoman, and my son is dressed as Batman. The best treat I got that night was when Amazon announced that they would stop competing with Square. Not only that, they also mailed a small white square reader. I designed things.
Why building an innovation stack is uncomfortable
[34:43] McKelvey: The important insight of this book is that the process of innovation is fundamentally different, and it feels different, and this is how it feels. What I tell my readers or potential readers is, “Look, the reason you read the innovation stack is that at some point in your life, you will encounter the edge of human knowledge.”
…When you are in the process of building an innovation stack, this is really uncomfortable. So I want people to be recognized. So we must first recognize the boundaries. This is very helpful. Second, understand when it is appropriate to copy and when it is needed.
[36:28] McKay: If you cross the line between the known and the unknown, it becomes unpleasant. It will not kill you. In the end it might be really great on the other side, but… your point is to find out what other people have not thought of.
… How many parts must you think of before you have a truly effective innovation stack? By the way, there is no guarantee that you will reach the limit, but you did. If you do. The world is changing.Like if you build it will be very powerful [an innovation stack].
To listen to the full interview, listen to the podcast embedded above, or Click here for the full list The plot of the.