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

- Show: [How I Built This](https://hardwarepodcasts.com/podcast/how-i-built-this)
- Published: 2026-02-23
- Length: 1h 11m
- Page: https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company

## Summary

Jim McKelvey, co-founder of Square (now Block), explains how a lost $2,000 glass art sale to a customer with only an American Express card inspired the creation of the Square card reader. He details the engineering hack of using the iPhone's headphone jack to read magnetic stripes, bypassing Apple's restrictive dock connector, and the strategic decision to pitch investors with 140 reasons for failure to build trust. McKelvey describes how this 'innovation stack' of 14 necessary inventions protected Square from being crushed by Amazon's cheaper, copied product in 2014, allowing the company to thrive despite regulatory hurdles and legal disputes.

## Chapters

- [0:00](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=0) Introduction: Jim McKelvey and the Square Origin Story
- [6:05](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=365) McKelvey's Early Life: Glassblowing, IBM, and the Debugger's Handbook
- [13:59](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=839) The Trauma of His Mother's Suicide and Its Impact on His Mindset
- [25:21](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=1521) Meeting Jack Dorsey and the Pivot from Mira to Square
- [35:06](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=2106) The Lost $2,000 Sale and the Birth of the Square Idea
- [42:23](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=2543) Breaking Credit Card Rules and the Headphone Jack Hack
- [57:37](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=3457) The '140 Reasons We Might Fail' Pitch to Investors
- [1:06:03](https://hardwarepodcasts.com/podcast/how-i-built-this/2026-02-23-square-jim-mckelvey-he-lost-a-2-000-sale-then-built-a-10-billion-company#t=3963) Surviving Amazon's Attack Through Innovation Stack

## Topics

- [Industrial & consumer product design](https://hardwarepodcasts.com/topic/industrial-design)
- [PCB design & layout](https://hardwarepodcasts.com/topic/pcb-design)
- [Wireless & RF](https://hardwarepodcasts.com/topic/wireless-and-rf)
- [Starting a product company](https://hardwarepodcasts.com/topic/starting-a-company)
- [Validation & product-market fit](https://hardwarepodcasts.com/topic/validation-and-product-market-fit)
- [Pricing, margins & unit economics](https://hardwarepodcasts.com/topic/pricing-and-unit-economics)

## Most relevant to

early-stage companies

## Mentioned

- Square (product)
- Block (company)
- Jack Dorsey (other)
- Twitter (company)
- Amazon (company)
- Apple (company)
- iPhone (product)
- Visa (other)
- MasterCard (other)
- American Express (other)
- Mira (company)
- Make magazine (other)

## Related episodes from other shows

- [Lisa Lloyd | Engineering with Inventors, Starting Inexpensively, and Diverse Teams](https://hardwarepodcasts.com/podcast/being-an-engineer/2022-06-17-lisa-lloyd-engineering-with-inventors-starting-inexpensively-and-diverse-teams) (Being an Engineer)
- [220: How Storytelling Drives Consumer Product Sales](https://hardwarepodcasts.com/podcast/product-startup/2024-04-05-220-how-storytelling-drives-consumer-product-sales) (Product Startup)
- [#024 - How to increase your own productivity and that of your garden’s, with Mattias Lepp of Click & Grow, Estonia](https://hardwarepodcasts.com/podcast/the-hardware-entrepreneur/2017-05-03-024-how-to-increase-your-own-productivity-and-that-of-your-gardens-with-mattias) (The Hardware Entrepreneur)
- [S4E48 Paul McEnroe | Inventing the Barcode (UPC) & Scanner](https://hardwarepodcasts.com/podcast/being-an-engineer/2023-12-15-s4e48-paul-mcenroe-inventing-the-barcode-upc-scanner) (Being an Engineer)
- [Dyslexia, Deals & Devastation: Jez Williman on the Highs and Lows of Building Physical Products](https://hardwarepodcasts.com/podcast/its-only-a-prototype/2025-06-12-dyslexia-deals-devastation-jez-williman-on-the-highs-and-lows-of-building-physic) (It's Only a Prototype)

## Citing this page

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