Monday, August 10, 2020

The Innovation Stack

The co-founder of $60 billion-valued Square Inc has written an intriguing book called The Innovation Stack. Like most books based on a single idea, I think this book should have been an article, as it's repetitive and drawn out. You can't blame the author: who's going to pay $15 for an article? But at the same time, I think the idea is so important that I'm still glad I read it cover to cover.

When you create a brand new industry, or at least seek to serve a segment of the market that is not being served by the current industry, you have to solve a problem that hasn't properly been solved before. Once you do that, you have a unique advantage, however small, that may allow you to solve an additional problem and so on. This stack of innovations can add up to a giant moat that is almost impossible for incumbents to copy.

McKelvey demonstrates this theory in action by going deep into the history of three businesses other than Square where he believes this process led to large moats. The descriptions were very interesting and I think his thought process makes a lot of sense.

There were a couple of additional aspects of the book that I also enjoyed. One was some colour on Jack Dorsey, Twitter's CEO, who founded Square with the author. Another was some info on Amazon's abuses from an anti-trust point of view, which has become topical with recent government hearings on the subject.

I highly recommend the book to anyone interested in this subject matter.

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