eMerge Americas

How failure sparked a big idea for Square co-founder

Not all mistakes are bad. In fact, for Jim McKelvey, the co-founder of mobile payments company Square, one failure led to a new venture.

In 2010, McKelvey and fellow Square co-founder, Jack Dorsey, decided to expand the company's operations to their hometown of St. Louis, hoping to create more jobs for programmers in the area. "My city needed ... great jobs," McKelvey said. Yet what transpired surprised them. Instead of having the luxury of choosing from a selection of endless new talent, Square was poaching employees from existing positions at other start-ups. This resulted, essentially, in a zero-sum hiring equation rather than the creation of new jobs.

Jim McKelvey, co-founder of Square
David A. Grogan | CNBC
Jim McKelvey, co-founder of Square

Realizing its aim to up employment in the St. Louis area was futile, Square closed the office and moved their new employees to California, McKelvey told CNBC at the Emerge Americas conference.

"It was a failure because we couldn't hire programmers without raiding other companies, and so we ended up closing that office, which I think you would define as a failure," he said.

Yet rather than focus on the issue of their failed expanison, McKelvey decided to focus on the greater issues: the millions of unemployed Americans and those stuck in low-wage jobs, and the giant tech talent gap.

According to the U.S. Department of Labor, 1 million programming jobs are expected to go unfilled by 2020, a major reason being that while there are a lot of talented people out there hoping to land these jobs, they lack the traditional credentials that major employers typically require: a college degree and at least three years of work experience in the field.

That's where LaunchCode comes in, said McKelvey, who claimed "their failure was the inspiration" that led him to found this nonprofit organization.

Based in St. Louis, LaunchCode creates pathways to opportunity through apprenticeships and job placement in technology. Through partnerships with hundreds of top-level companies, LaunchCode pairs people who want to work in tech fields, even though they lack the traditional education and experience.

Employers can try out these workers on a part-time, hourly basis before deciding whether to offer them a full-time position, said McKelvey.

Since its launch in 2013, LaunchCode has placed more than 350 people, ranging in age from 16 to 58, in jobs across the United States and has raised about $2 million in funding. According to the company's website, 90 percent of LaunchCoders have no previous programming experience and are offered a full-time job at their company.

In 2015 Square reopened an office in St. Louis. It now has "close to" 200 employees in that location.