Using the Innovation Stack
How we Squared Up Contact Info
In The Innovation Stack, Jim McKelvey tells how he co-founded Square — the mobile payments company now valued at $70+ billion. Making the iconic Square card reader (that plugs into an iPhone) was the easy part. Giving small business a square deal on payment processing took an entire Innovation Stack — a whole set of interlocking inventions behind the scenes.
The book teaches startups how to pick the right problems, and create unbeatable, market-changing solutions. This article explains how my team used The Innovation Stack, and how you can too.
Finding the Pyramids
The first step is picking your perfect problem. A problem you’re passionate about, that the market hasn’t found a simple solution to. An unfair system that needs to be squared up.
Square’s fundraising pitch used a set of pyramids to show how small businesses were being overcharged by the credit card processing industry. We found our own set of pyramids in Contact Info:
Individuals are adding value when they pick up the phone or send an email.
The communications we send most are also the most valuable — calls and messages to close friends & family. We also send lots of messages to our larger network — a few hundred people we know and new people we meet.
Research shows the strength of these weak ties, as the source of new opportunities, new information, friendships and relationships. Weak ties have an impact on our health, happiness and even our weight and BMI.
We initiate a few calls and messages with businesses, mostly to order their products and solve urgent problems in our lives. Companies are happy to get these communications — they are making the cash register ring, or providing feedback on how to serve the customer better.
Everything we send as individuals is adding value to the network, and to each other.
The Problem is Obvious
Now look at the other pyramid, showing communications that are sent to us.
The biggest group of communications we receive are sucking value out of individuals by harvesting our time and attention.
Most communications sent today are just robots trying to get the attention of humans. If you have a phone number, bots are calling it just because it exists. If you have an email address shown anywhere on the internet, bots are scraping it and send you SPAM just because they can. There’s zero reciprocity.
The next large group is low-value marketing messages sent by every company you do business with. Here’s what happens: they require a phone number so you can rent a car, see an eye doctor, or have a plumber come to the house. They require an email address for anything you do online.
But it’s bait-and-switch. They are not using the phone number and email to provide you with the goods and services you want. They’re using it to harvest your attention and sell you more stuff.
Only a few of the communications sent to us are adding value — the messages from our friends, family and network. The network value of email, phone and text are collapsing as they become largely a robot-to-human interface.
The Invisible Crime
McKelvey tells the story of his friend Bob, a highly skilled glassblower who still drives a broken 1992 Chevy Corsica (and sometimes lives in it).
People like Bob had no way to accept credit card payments, which is the only way to get paid $500 or $2000 for a piece of glass art. An invisible barrier kept Bob from earning a living, even though people wanted to buy his art.
There’s an invisible crime in contact info as well. The robots and marketing spam are cutting us off from our wider network and cutting us off from making new connections.
Four decades of research shows that the wider network of people we talk to a few times a year are incredibly valuable for both our careers and our happiness. But if you don’t recognize the phone number, you’re not going to answer the phone. And it could be days before you check voicemail.
We have email SPAM filters turned up to 11, catching good emails and making email unreliable. Ask yourself this — if you send someone new an email, what’s your confidence that it arrived and was seen?
We hide our contact info so it can’t be scraped by the bots. If you want to contact someone, you have to wrangle an introduction from someone who already has their contact info.
When I think about Jim’s friend Bob, I don’t just see a payment processing issue. To make a living, Bob needs to access the network of fellow glassblowers, art shops, collaborators, and customers.
In a world where nobody picks up the phone, how can Bob find out where other glassblowers are selling successfully? Which galleries to approach? Which festivals to display at?
This isn’t just a problem for social connections. You can’t even reach small businesses anymore.
Pyramid Problems need Innovation Stacks
Now that you’ve picked your perfect pyramid problem — it’s time to start building your innovation stack. What’s an Innovation Stack? It’s a set of interdependent, interlocking innovations.
The Wright brothers’ airplane is a perfect example. Orville and Wilbur had to develop a lightweight and powerful motor, an efficient propeller, a lift-generating wing, and (crucially) a set of flight controls. They developed and tested each of these innovations separately, but the inventions only had value when deployed as an integrated whole — an airplane.
McKelvey tells us it takes an innovation stack to square up an unfair system. If it only took one invention, someone would have done it already.
Square Readers and Contact Links
We started with a pretty simple idea. Instead of one address for each person (like a phone # or email address), what about one address for each conversation? My conversation with you has one address, but my conversation with Laura has a different address.
We decided to make the address a web link, something anyone can click from any device. Now it’s universal. Any device with a screen can send an email and text, any device with a microphone and speakers can place a phone call. Any device with a video camera can start a video call.
Give each person the options to add or subtract contact methods (phone, text, email), or cancel the whole conversation. Now you’ve got reciprocity, and contact information can be a square deal.
You can even show the link as a QR code. Every smartphone can read a QR code automatically. People who meet in person can exchange contact info with no typing and no typo’s. It’s not just a square deal, it’s a square link.
This was our version of the Square card reader. It’s a cool conversation piece. It was the first thing we built. But it was nowhere close to the Innovation Stack needed to solve Contact Info.
The Solution Creates More Problems
You know you’re dealing with an Innovation Stack when your new solution creates a new problem that you have to solve next. And solving that problem creates yet another. A few steps down the line, the solutions interlock and your Wright Flyer takes off. We had the same experience.
The first time you click on a Contact Link, it’s like magic. Click the link and you can send a text, an email, or place a call. We deliver the call, text or email to the other person inside an App.
But then you realize the other person can’t reply to you. That’s a problem. So we built a way for guests to enter their phone number and email, where we can forward their calls and messages. It’s safe — we don’t share it with anyone.
So now the other person’s replies or return calls go to the phone & email you already use. Unlike Messenger, WhatsApp, Signal and other apps — you don’t need to download or install anything. You don’t have to deal with advertising and wondering how your data is being monetized. It’s frictionless.
But when we got our first test users, we found another problem.
What if It’s Not Cool?
In The Lean Startup, Eric Ries tells us what happened when he asked new IMVU users to share their avatars with their instant message friends list. They loved their new avatars, but they wouldn’t hit the share button. They seemed to be asking, “what if it’s not cool?”
We showed the new Contact Links to a lot of people, and got the same response. One of the top hunters on Product Hunt asked, “Why wouldn’t I just give you my phone number? Is this for people when you don’t trust them?”
To solve the problem, we had to make Contact Links a better kind of contact info. It had to be a step up from phone and email, not a step down.
So we added features. Now you can fire up a video call or screen-sharing meeting from your ContactLink with no need to download or install anything. You don’t need the same kind of phone as the other person. It just starts and works, like magic. There’s a calendar scheduler, too.
And we started emphasizing reliability. If someone gives you their phone number, your phone call goes in with all the robocalls and telemarketers. If someone gives you an email, your message gets lumped together with all the SPAM. If someone gives you a ContactLink, your call or message gets through.
So people wanted to start using it. But we quickly found another show-stopper.
The Website Problem
It worked great for me to give someone a ContactLink in person. Or send out an email to everyone in my address book. Everyone I talked to gets their own unique ContactLink.
But people kept asking how they could put a ContactLink on their website. Or in their LinkedIn profile. Or their Twitter and Instagram bio.
After saying “that’s not how it works” a few times, I realized we had a problem. We needed to give each person one link they could post on their website and all their profiles.
One link that was fully exposed to bot-attacks and simple human social hacking. That’s a problem.
In The Innovation Stack, McKelvey tells the story of how Square solved the credit card fraud problem. For Square, it turned out that having granular data on how people are trying to hack the system lets them effectively monitor and respond to the attacks. There’s only so many ways to hack the system, and the patterns became clear.
We could use a similar approach to fight the bots. It turns out that the bots that scrape websites look very different from a normal human browsing the internet — at least if you’re an AI system inspecting cookies and browser fingerprinting.
With a bit of instant, automated detective work we could tell the difference between a human and a bot clicking the link. Humans can use the link with no friction, while putting a difficult CAPTCHA test in front of anyone who looked like a bot. We got the idea from a familiar source.
Fighting Social Hacking
We knew that kicking out the bots would solve most of the problem. But it was still possible for an ordinary, real human to look up 1000 LinkedIn profiles by job title, pick out the 100 that have a ContactLink, and start cold-calling everyone on the list. It’s slow, it’s manual, but it can be done.
How can we let people find each other, network and get in touch while keeping the cold-callers out?
Let’s look at what happens when someone clicks the public link on your website or social media profile. ContactLink can ask them to identify themselves with a name and phone number. We can validate that phone number by asking them to click a link sent in a text message. Now we have at least a minimum identity established for that person.
When they get in touch with you, now you’ve got a chance to rate the person. Were they adding value, or did they just cut-and-paste a sales email? Do you want to block them? We can crowd-source our defense against cold-callers.
Now it’s a communication network with an immune system. When someone collects a list of 100 ContactLinks and plans to send them all a cold call or email, by person 3 or 4 they’re likely to get blocked.
They can’t access the other 97 people, or anyone else on ContactLink. A shared gatekeeper can do things a million individual gatekeepers cannot.
There’s Always One More
We found several more interlocking innovations we needed to build ContactLink and bring it to market — but this is enough to show how the Innovation Stack approach can help find your Perfect Problem, and start stacking together your solution.
To learn more about innovation stacks, buy Jim McKelvey’s book. If you’re solving a complex problem, it’s the best guidebook you’ll read this year.
