How I Built This with Guy Raz

Episode: Square: Jim McKelvey. He Lost a $2,000 Sale, Then Built a $10 Billion Company

Date: February 23, 2026
Guest: Jim McKelvey, Co-founder of Square
Host: Guy Raz
Additional Interviewer: Alex Blumberg

Episode Overview

This episode dives deep into Jim McKelvey’s unconventional path—from glassblowing and early tech entrepreneurship to co-founding Square (now Block), the fintech company that revolutionized credit card payments for small businesses. Guy Raz and Alex Blumberg explore how personal tragedy, creative restlessness, and a critical missed sale shaped Jim’s approach to business and led to the creation of a $10 billion company. McKelvey details the regulatory battles, design innovations, and David vs. Goliath moments that defined Square’s early years, alongside touching on the enduring partnership with Jack Dorsey and his ongoing drive to solve hard problems.

Key Discussion Points & Insights

Early Life, Education, & First Businesses (09:37–25:04)

• Restless Entrepreneurship:
  Jim describes his start as a student at Washington University, publishing a book ("The Debugger's Handbook") out of frustration with a bad required textbook.

  “I rewrote the textbook for my Intro to Computer Science class from the perspective of a student. And that book turned out to be pretty popular…” — Jim McKelvey (09:39)

• Mixing Science, Art, and Business:
  After graduation, early jobs were scarce, so he relied on glassblowing skills for income, later supplementing by remote work for IBM.

  “My role was $1,000 a day. Every day I work in the studio, I make $1,000.” — Jim McKelvey (16:55)

• Personal Tragedy as a Catalyst:
  Jim recounts his mother’s suicide and how the shock spurred a deeper sense of purpose and urgency in his work and life.

  “When I find myself in a situation where I think something needs to be done, I no longer sit there and say, well, someone else will probably do it. My attitude is like, you gotta be the one to do something.” (19:57)

Finding His Footing in Tech, Meeting Jack Dorsey (22:31–33:18)

• Early Ventures:
  He tells of launching a CD storage cabinet business and a document imaging company (Mira), which later pivoted after Adobe Acrobat emerged as a competitor.

• Serendipitous Meeting with Jack Dorsey:
  The casual hiring of teenager Jack Dorsey (later, Twitter’s co-founder and CEO) for grunt work, and recognizing his rare talent.

  “Whenever I gave Jack a project, he would always do it better than I was expecting…what can this kid do?” — Jim McKelvey (30:18)

• Pivoting and Surviving:
  As the Internet threatened his CD-ROM business, Jim and Jack successfully pivot to conference publishing, keeping the company afloat (32:03–33:32).

The Origin of Square: Missed Sale and Big Idea (35:06–39:19)

• The Missed Sale That Sparked Square:
  In 2008, Jim loses a $2,000 sale of his glass art because he couldn’t accept Amex. “I am sitting there talking to this lady on my iPhone, and… it didn’t turn into a credit card reader. And I thought, well, that’s what we should do.” — Jim McKelvey (38:42)

• Partnering with Jack Dorsey Again:
  Following Jack’s ouster from Twitter, the two team up, seeking a post-social-media project leveraging the iPhone’s potential.

Disrupting a Captured Market: Challenges of Payments & Regulations (41:30–47:31)

• Overcoming “Regulatory Capture”:
  Guy Raz explains how complex layers of fees and regulations kept new entrants out, protecting incumbent payment processors.

• Building for Small Merchants:
  Their insight: millions of small merchants were excluded from the credit card network due to high barriers.

  “Basically, if you didn’t have $100,000 of business, you would not take credit cards.” — Jim McKelvey (45:11)

• Regulatory, Technical, and Hardware Hurdles:
  They face a gauntlet of rules—17 known violations on day one (44:24)—plus hardware challenges with the iPhone.

Ingenious Product Design: Hardware, Apple, and the Audio Jack (49:46–54:22)

• Apple Integration Without Permission:
  Apple’s restrictions push Jim to research alternative connections, discovering the opportunity in the iPhone’s headphone jack after seeing a Make magazine hack.

  “So I'm thinking, oh, well, we can build a reader and go through the headphone Jack.” — Jim McKelvey (50:38)

• Winning Apple’s Blessing (sort of):
  Although a meeting with Steve Jobs never happens, the mere possibility keeps Square in Apple’s good graces.

• Iterating on Form Factor:
  Early hardware designs (aluminum casings, acorn shape) result in technical mishaps (e.g., a prototype accidentally reads Jack’s heartbeat).

  “Because he was holding it and… aluminum is conductive… it was picking up his heartbeat, and the heartbeat was screwing up the reed.” — Jim McKelvey (54:02)

Fundraising & Radical Transparency (57:26–61:04)

• The Famous "140 Reasons We Will Fail" Pitch:
  Instead of the usual bravado, Square’s investor decks list every way the business could fail, subverting expectations and enticing courageous investors.

  “We changed the entire tenor of the room by saying, look, here's all the stuff that we don't know, here's all the stuff that might blow up in our face, here are legitimate reasons to not invest in this business.” — Jim McKelvey (59:51)

• Investor Appetite:
  The approach pays off; “I don’t think we had more than three pitches that didn’t result in offers.” (60:46)

Navigating Legal Landmines & Letting Go (63:02–66:54)

• Patent Disputes:
  A years-long legal battle ensues with a professor/friend over credit card reader patents.

• Stepping Back:
  Jim withdraws from day-to-day operations after his son’s birth, remaining on the board as the voice of the merchant.

• The ‘Taxi Test’ Moment:
  Square’s impact feels real when a New Orleans taxi driver pitches its virtues to Jim, not realizing he’s the co-founder.

  “And he’s pitching me my own product. And he gets everything wrong. Okay, he gets all this stuff wrong, but he is so excited. You could see how it was just this magic unlock for him…” (65:44)

Facing Down Amazon (2014): When Goliath Comes for David (68:49–72:38)

• Amazon’s Entry and Square’s Non-Reaction:
  Asked what to do about Amazon’s sudden copycat/payments pivot, the board chooses to do nothing—no price war, no big countermeasures.

  “So, we decided to not do anything.” — Jim McKelvey (70:08)
  Amazon’s product fizzles out, and Square receives its competitor’s customer list as an apology.

• McKelvey’s Theory of the “Innovation Stack”:
  The company’s real protection lies in a complex web of solutions only a true pioneer understands—a secret sauce impossible to copy by boardroom imitation.

  “If you invent something truly new, you’re not inventing one thing, you’re inventing a stack of things. And that invention becomes its own protection…” — Jim McKelvey (71:20)

Life After Square: Philanthropy & New Problems to Solve (72:38–74:51)

• Projects After Square:
  Jim dedicates his resources to philanthropic experiments in drug testing, journalism micropayments, and education.

• Modest Living, Big Risk:

  “I sort of see it as a responsibility…to tackle certain problems that are unsolvable if you don’t have the ability to walk away from a giant buyout or to do something crazy.” — Jim McKelvey (73:25)

• No Plans to Slow Down:

  “I used to work for money, but it’s weird. When money’s not a motivation, there’s no reason to stop…there’s no natural thing to stop me from doing the next thing.” (74:51)

• Luck as a Theme:

  “If I had a time machine, I wouldn’t use it. I wouldn’t go touch a second of the past. Even though I’ve made so many mistakes… I wouldn’t even use it to save my mom. It’s just too dangerous.” — Jim McKelvey (75:26)

Notable Quotes & Memorable Moments

• On Pitching Investors:
  “Here's all the stuff that we don't know. Here's all the stuff that might blow up in our face. Here are legitimate reasons to not invest in this business.”
  – Jim McKelvey (59:51)

• On Jack Dorsey:
  “Jack’s a little hard to find…he is really smart. And he’s hard to get a laugh out of, but it’s a really good laugh if you can get it.” — Jim McKelvey (68:10)

• On the Impact of Square:
  “When I saw the impact, that was the thing for me. So, yeah, I guess it was surprising. I will say this. The billion dollar threshold is sort of a magic threshold. And it was kind of cool to cross it. And then none of the daily things changed.” — Jim McKelvey (66:44)

Timestamps for Important Segments

• Jim’s first business and student years: 09:37–14:05
• Glassblowing and IBM work: 14:05–17:00
• Mother’s death and the drive for action: 17:13–20:56
• Launch and pivot of Mira: 22:31–26:10
• Meeting Jack Dorsey: 28:24–31:52
• Birth of Square idea (the missed sale): 35:06–38:42
• Tackling regulations and payment industry insight: 41:47–47:31
• Hardware innovation and battles with Apple: 49:46–54:22
• Radical transparency in fundraising: 57:26–61:04
• Patent lawsuit and letting go: 63:02–66:54
• Taxi test and Square’s billion-dollar milestone: 65:44–66:43
• Fending off Amazon and the “innovation stack”: 68:49–72:38
• Life after Square, new problems, and the role of luck: 72:38–75:26

Episode Highlights & Takeaways

• Square’s story is as much about resilience, humble pivots, and candid risk-taking as it is about technological disruption.
• McKelvey’s drive stems from personal tragedy but manifests in a relentless willingness to confront problems—both big and small.
• Square succeeded by solving a “stack” of invisible, interconnected problems—many learned through trial, error, and necessity—that competitors underestimated or missed.
• Partner selection (the relationship with Jack Dorsey), radical honesty, and clever design hacks (audio jack card reader!) were critical unlocks.
• Even in the face of existential threats (legal, competitive, regulatory), staying focused on the company’s core mission and unique methods provided lasting resilience.
• Philanthropy, curiosity, and the humility to credit luck define McKelvey in the post-exit phase.

Further Listening/Next Steps

• Guy Raz’s advice line episodes for actionable business tips
• Previous How I Built This interviews with Jack Dorsey, Ev Williams (Twitter), and other fintech pioneers

Summary compiled in the candid, insightful conversational spirit of the episode.