Recently I read Jim McElvey's excellent The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time. In the world of business books, Jim is especially unusual with his quirky, fun writing style complete with eclectic analogies on every page. The big idea is that startup success isn't one breakthrough idea -- e.g. using a credit card reader plugged into the headphone jack of an iPhone at Square -- but rather the aggregation of a number of ideas that coalesce over time.

Wildly successful startups stack one innovation on another, without consciously thinking of it as innovation, all in an effort to make the customer happy. Only once success is achieved, it's possible to look back and see the different innovations that emerged. Here's what he cites as the innovation stack for the company Square (market cap $100+ billion) that he co-founded:

  • Simplicity
  • Free Sign-Up
  • Cheap Hardware
  • No Contracts
  • No Live Support
  • Beautiful Software
  • Beautiful Hardware
  • Fast Settlement
  • Net Settlement
  • Low Price
  • No Advertising
  • Online Sign-Up
  • New Fraud Modeling
  • Balance Sheet Accountability

These are easy to see now, but back in 2009 this was anathema to the credit card processing industry. The provide the best customer experience possible, innovation was required across multiple dimensions.

Now, let's apply this thought exercise to the early days of Pardot (company founding through the first five years):

  • All-in-One Marketing Platform -
    By incorporating the most important marketing modules like email, landing pages, forms, automations, and integrations into a unified platform, marketers were able to run higher performing campaigns
  • Customer Care Culture -
    With our culture of people who were positive, self-starting, and supportive and a focus on being the best place to work and the best place to be a customer, our bootstrapped company was able to out-compete heavily funded competitors from the coasts
  • Tech Stack -
    Building an app from scratch in 2007 using PHP on Symfony with a MySQL backend enabled our engineering team to deliver customer requests faster and iterate quicker than the incumbents
  • Product Pricing and Packaging -
    Everything was built around a price point that was the maximum amount we could charge a marketing manager without having to sign off from finance (~$1,000/month) while delivering the most bang for the buck
  • No Contracts -
    Without contracts, we had to earn the business of our customers everyday. This forced us to work harder and ensure we were delivering value. Every competitor had annual contracts.

Innovation stack is a way to reflect on the elements of the business that enabled success. At Pardot, it was part people, technology, business model, and more that allowed us to win. Thanks to Jim for writing an excellent book that captures this idea that innovation is necessary across all disciplines in a business.