Block co-founder Jim McKelvey.
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BARCELONA – In 2014, Amazon launched a product that looked strikingly similar to something already on offer from payments company Jack Dorsey, co-founder of Twitter, Square, which today is known as Block.
It was called the Amazon Register, and it would allow small businesses to accept credit card payments using a smartphone or tablet, just like Block technology. There was one major difference, though: Amazon offered a processing fee of as low as 1.75%Compared to 2.75% of Block.
“We were still a startup, and Amazon copied our product and lowered our price,” said Jim McKelvey, who co-founded Block with Dorsey in 2009, during a discussion with CNBC at the Mobile World Congress tech show.
“When Amazon does this to a startup, the startup dies,” he added. “When Amazon did it in Square, we were horrified.”
Ban was not unique in the face of the possible.”death by amazon. “The e-commerce giant has entered many industries over the years, from cloud computing to television and film. A number of retailers have been forced to either adapt or shut down completely due to the so-called Amazon Effect.
The difference with Block, says McKelvey, is that he survived.
“We didn’t have the things they had, so we couldn’t do what they were doing,” he said. “So we just kept doing what we were doing and basically just ignored them. And it worked.”
A year after Amazon launched “Register”, the service to stopThis highlights the highly competitive nature of the digital payments sector. McKelvey says the company even mailed Square card readers to its customers: “They were actually pretty cool about it.”
It’s an anecdote as old as time: Big Tech launched a feature similar to that of a smaller competitor, and that company later struggles to keep up due to the level of pressure.
It happened last year with the club. The voice chat app has seen a spike in downloads amid the coronavirus pandemic before Drift into obscurity After launching a fake product from the likes of Facebook, Twitter and Spotify.
McKelvey said he has long been trying to figure out how Block avoided the same fate as companies that faltered under the pressure of internet giants like Amazon. According to a billionaire businessman, copying a product is not enough.
“If you’re a regular business,” he said, “you’re copying a model that’s already working.” “Things that work in a normal business don’t work for an entrepreneur.”
“Innovation is very inconvenient,” McKelvey added. “People were telling me and Jack when we started Square we were stupid. I had pay executives take me to dinner to tell me again the exact reasons why we’re stupid and why we’re going to fail.”
“If you’re doing something that doesn’t copy the latest 5G crap that they’re selling, that someone has built something that no one else has thought of before, they’re really scared because they don’t get herd validation. You don’t get validated until years later, until Amazon copies you.” “.
Since founding Block, McKelvey remains on the company’s board of directors but is less involved in the day-to-day business. According to Forbes, his fortune is $2.3 billion on paper. Once permeable to glass by commerce, McKelvey says he got inspired to create Square after losing a sale because he couldn’t accept American Express cards.
McKelvey now runs Invisible, a company that develops micropayment tools for news publishers, and has also embraced venture capital investing.