Why Most Startups Fail—and The Secret Stack That Can Make You Unbeatable

Unlocking the Hidden Architecture Behind the World’s Most Resilient Companies

Picture the startup world as a vast, bustling city. Most founders stick to the safe, well-lit streets—copying business models, tweaking features, and following the advice of experts. But what if the path to greatness lies not in imitation, but in venturing into the wild beyond the city walls? Jim McKelvey’s 'The Innovation Stack' argues that the most resilient and successful companies are built by entrepreneurs who dare to solve problems no one else can—or will—tackle.

McKelvey, co-founder of Square, learned this firsthand. When he and Jack Dorsey tried to process credit card payments for small businesses, they hit a wall: the existing financial system excluded millions of merchants. Instead of giving up or copying the competition, they invented a series of solutions—hardware, software, security, customer support—that no one had ever combined before. This wasn’t a single breakthrough, but a stack of interconnected innovations, each one necessary to solve the next problem that appeared.

What makes an Innovation Stack so powerful? It’s not just about creativity; it’s about necessity. When you face a 'perfect problem'—one that can’t be solved by copying—you’re forced to invent. And as you solve one issue, new challenges arise, demanding more invention. Over time, this stack becomes your company’s greatest defense. Competitors may copy one or two steps, but the full sequence is nearly impossible to replicate. This is how Square survived an all-out attack from Amazon—by holding firm to their stack, even as the giant tried to undercut them on price and features.

The Innovation Stack isn’t unique to tech. McKelvey shows how IKEA, Southwest Airlines, and even the humble Bank of Italy (which became Bank of America) all built their empires by stacking inventions, not by following the crowd. Each faced adversity—boycotts, regulatory barriers, or being ignored by the establishment—and each responded by creating something new, piece by piece.

So, why do most startups fail? Because they never leave the city. They copy, they tweak, but they never build a stack. The lesson: Seek out perfect problems. Embrace adversity. And when you’re forced to innovate, don’t stop at one solution—keep stacking. This is how you become unbeatable in a world that loves to copy but rarely dares to invent. 1 2 3