It’s uncommon that a smaller brand name can go up against a large company like Amazon . com and win. But that’s what Sq . did when Amazon launched an almost similar card reader to get a fraction of Square’s price.
With out undercutting the price of its biggest competitor, Square still went on to fully disrupt the electronic payments and financing industry and make four. 68 billion in revenue in Q2 2021 .
Why? Its co-founder, Jim McKelvey features Square’s success in order to its “innovation collection. ”
In HubSpot’s first episode from the Shake Up, Alexis Gay and Brianne Kimmel sat lower with McKelvey to understand about how Square navigated its competition with Amazon and dive more into their book, The Innovation Collection: Building an Unbeatable B1 Crazy Idea at the same time.
How to Defeat Competition Like Square Beat Amazon
Beneath, you’ll find just a few illustrates from McKelvey as well as the podcast where you can listen to the full conversation.
Can be an innovation collection?
[20:13] Alexis Gay: Before we dive in a little bit, are you able to tell us what is the development stack?
[20:20] McKelvey: The particular innovation stack is thing that I discovered while I was endeavoring to answer a question which was plaguing me, that is how Square survived an attack by Amazon . com. … The Sq . was attacked by Amazon when we were a startup.
At the time, every company that had been attacked by Amazon, whether they were a startup or not died. There is a 100% mortality rate or it turned out absorbed into Amazon, which I would also consider. … death or worse.
… We were looking at this very dire situation and we did some sort of crazy stuff and it worked and, and then after it worked, I thought, “Why did it? ” And I couldn’t answer that question.
… I am a sort of nerdy engineer and I proceeded this research quest looking for other companies that had lived through similar situations. Therefore i studied historical companies…. Technology was not the major force, but there was this thing that kept showing up in my research plus it was a thing that I labeled an innovation stack. And it’s just this very simple indisputable fact that invention is not 1 or 2 things. It’s frequently this messy conglomeration of 10, 20, 30, 40 things.
Amazon takes on Square
[23:02] McKelvey: [In a board meeting], Jack [Dorsey] was dressed in all black and he announced that Amazon had copied our product and was going to undercut our price, that will be what they always do. And that he told the board what was happening — and we have very intelligent people on the board and we have a lot of experienced folks — and we were stopped.
… We started iterating through the questions of, “What could we do? ” Probably one of the most basic ones was Amazon was undercutting our price. We could lower our price and match Amazon. And then here’s the one thing. Those are priced to be as low as it could be and still serve our customers.
… We didn’t actually even do anything. That was different, which was the amazing thing. We desired to do something because if you’re being attacked, the hardest thing you can do is to not react or maybe not overreact.
[24:56] McKelvey: It absolutely was terrifying. And this managed to get even more interesting whenever we won for me to answer the question, “Why? ” What the heck happened because I was so happy we won, but then I was like, “Why did we win? ”
Square Beats Amazon
[27:02] Gay: So Jim, let us talk a little bit about Halloween in 2015. You got some pretty big news on that day. Is it possible to tell us a little bit, well, first actually, let me ask you this: Were you dressing in costume ?
[27:16] McKelvey: I was dressed as the Joker. My wife was dressed as Catwoman and my son was dressed as Batman. The best treat I acquired that night was Amazon announcing that they were going to discontinue their competitor to Square. And not only that, they were going to mail one of the little white square readers. The point that I designed.
Why Building an Innovation Stack is Uncomfortable
[34:43] McKelvey : The big insight of the book is that the process of innovation is fundamentally different and it feels different and here’s 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 that you experienced, you are going to run against the edge of human knowledge. ”
… When you are in the process of building an innovation stack, it is so darn uncomfortable. So I want visitors to have recognition. So first of all, recognize the boundaries. That’s hugely helpful. Secondly, comprehend when it’s appropriate to copy and when you need to.
[36:28] McKelvey: If you step across that line involving the known and the unknown, it’s going to get unpleasant. It will not kill you. It might be really wonderful on the other side ultimately, but … your focus is to figure out something that nobody else has figured out.
… How many pieces do you have to come up with before you’ve got an innovation stack that actually works? And by the way, there is no guarantee that you’re ever going to reach that limit, but you do. And if you do. The world changes. Like it’s just amazingly powerful in the event that you build [an innovation stack].
To know the full interview, listen to the podcast embedded above, or click the link for a full list of episodes.