When Jim McKelvey co-founded Square in 2009, most American shoppers still purchased goods the way they had for decades--by swiping a credit card. A mere 11 years later, the number of available payment options has exploded: Consumers pay with chip cards, and wireless options like Apple Pay and Venmo have become a mainstay. And
McKelvey has gotten involved in the American financial system in new ways, too: In 2017, he was named an independent director of the Federal Reserve in St. Louis, his hometown, and he recently founded a new startup, Invisibly, which looks to give consumers control of how their personal data is monetized by advertisers. He's also the author of a book, The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time, where he shares the story of building Square and his philosophy for building disruptive companies. He spoke with Inc. about the future of finance, and what it means for entrepreneurs and consumers alike.
Inc.: At Invisibly, you're trying to help consumers under-stand how their data is monetized for ads. Why?
McKelvey: I believe that individuals should own their data. We have several very powerful companies whose business is to give you "free" stuff, but you essentially pay them with your identity.
Inc.: Can you tell me about micropayments?
McKelvey: Efficient micropayments would be hugely valuable in media, for example, where the current model is a lump subscription fee that doesn't make sense for most consumers.
Inc.: Other than micropayments, what has you excited?
McKelvey: I'm super interested right now in how information can be used to make credit more fair. If you look at a system like Square, where we have a lot of information about what merchants are selling, that information allows us to trust customers more than if we didn't have that information. And because we can trust them, we can offer them better loan products, for example.
Inc.: How are you feeling about the economy now?
McKelvey: Fairly good. When you look at the rate at which the economy has recovered, it's not that bad. We saw predictions that recovery was going to continue to accelerate in the fourth quarter--and so far the smartest economists I've met agree with that.
Inc.: So the economy will return to normal fairly soon?
McKelvey: No. There's going to be a shift. Chaos opens people's minds. The innovators of the world are living in a golden age right now: People are more open to new ways of doing things now than they will be for the next 50 years.
Inc.: Certainly we'll see lots of new kinds of products and services come out of this. But what about the financial system itself--will investing strategies change?
McKelvey: I don't think it's going to change that much. Most investing is very formulaic--even venture capital. Fundamentally, I'm looking for a business that isn't replicating what everybody else has done, and has a new process or approach that protects it from competition.
Inc.: One thing that's intriguing to me, as we're talking, is this give and take, this counterbalance between risk-taking and being more conservative as the scale and the stakes rise. Solo entrepreneurs don't risk the entire U.S. economy, of course, but they could be wagering their family's well-being. How do you find the balance between being an innovator and not destroying your life, or wreaking havoc on your own world?
McKelvey: Most of your life, you should copy. When you confront a problem, you should find somebody who solved that same problem, and copy what they did. Humans are already very good at that, because that's literally baked into our DNA--and it's also how we are schooled and how we are socialized--to be with a herd. The herd is a good place.
However, there are moments in everybody's life when you will probably run up against the edge of what mankind has figured out. In that moment, every fiber of your being is going to tell you to go back into the herd. And that's when you have to decide whether you should turn back, or whether you should keep going and innovating.
Inc.: What was that moment for you, at Square?
McKelvey: When we started Square, literally the first day, I found out that what we were doing was illegal, and broke a bunch of laws and rules. But over the previous 20 years of my life, I'd learned that certain rules were stupid and should be changed. Jack [Dorsey, Square's co-founder,] was of the same temperament. If either Jack or I had been more conformist, Square wouldn't exist. That's how human progress is made. Community advances when people do things that they are not qualified to do. So, my book, and my whole focus these days, is to get people to recognize that they have within them the potential to do something they're not qualified to do.