In the latest episode of Outcome By Design, Paul sits down with Jim McKelvey, the Co-Founder, and Director of Square, for a fascinating conversation about entrepreneurship and innovation. McKelvey shares his journey from the economic crash of 2008 to founding Square and achieving great success in Silicon Valley.
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As a self-described serial entrepreneur, Jim has spent his career solving complex problems and then moving on to the next great challenge. While Jim’s seen a lot of success with many of his ventures, he also knows what it’s like to fail, walk away and give up.
“I don't want to make light of it. Because I know what it's like to be there. And I know what it's like to quit. And I know what it's like to almost quit,” Jim says.
In the startup environment, Jim describes two major types of businesses: those solving a problem that’s been solved before and those working with true innovation. Both will have to innovate in some form when the pressure is on.
“The way you get $50 million is not by saying ‘we're going to do something that's never been done before.’” Jim says. “You get to $50 million by saying ‘We're following a formula that everybody buys into.’”
When a problem has been solved before, there is a formula somewhere that will lead a business to success — you just have to find it. The recipe may not include a checklist or precise step-to-step, but it will provide a roadmap to success, Jim says. And when a business is solving a problem that’s already been solved yet is struggling to succeed, they need to reevaluate their formula.
When Amazon faces off with a startup, they typically come out on top. But for Square, the outcome was different. Square won a direct attack from the giant marketplace and grew to become one of the biggest success stories in Silicon Valley.
The unexpected victory led Jim to search for answers — why did Square succeed?
“I started researching, and I found this pattern,” Jim says.
Jim identified several instances where startups were successful, unveiling a repeatable pattern by investigating related success stories. Then he shared his findings with the world in his book, “The Innovation Stack.”
“My goal was not to have some sort of ‘How To’ book on building 100-billion-dollar companies,” Jim says. “My goal was to prevent people who were already on the path to building a $100 billion company from stopping too early.”
The tendency to back out when the going gets tough revealed itself as a significant marker for startup failure. Because, according to Jim’s experience, things get really hard just before a breakthrough. Those who push past the biggest personal and professional challenges at the most difficult times will likely succeed.
While no checklist will lead a person to success, there are markers along the way that let entrepreneurs know they are on the right track. With no guarantee of success in innovation, Jim urges entrepreneurs to keep pushing through and following the formula, even when challenged by those who genuinely care.
“When a business succeeds, we're not going, ‘Wow, it's amazing!’ We're going, ‘Yeah, we expected that,’” Jim says. “When it fails, we go to our formula and find why it didn't work.”
Pushing through the challenges of entrepreneurship, particularly when funds are difficult to raise, isn’t easy — even when there is a formula to follow. Executing will ultimately be the only way to gain success.
Jim offers two major pieces of advice to those on the edge of reaching that success:
1) Don’t quit too early -- Those accustomed to success have a tendency to want to quit early, Jim says. They base their decisions on previous successes that peaked earlier than their current venture and tend to back out before the business can be pushed to the top of the hill.
2) Confirm your purpose -- For entrepreneurs who are more used to failure or things not quite panning out as planned, Jim suggests a return to their main motivation.
“Ask yourself: Do you still care? Is it still worth it? Because there's no guarantee that it’ll work,” he says.
When you’re working on a problem you genuinely care about, that’s enough to push you a step further. By keeping that driving motivation front-and-center and reminding yourself over and over again why you are building your business, you are more likely to push past the last major difficulties and reach success.
“Just honestly ask yourself if you still care. Generally, these are very personal questions,” Jim says. “And if you’re experiencing failure, but you're doing something for which others are succeeding, get some new advisors. Find new experts.”
Want to learn more details about working through adversity? Listen to the full episode of Outcome By Design to learn more.
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