Ron Klein: Secrets From The Guy Who Invented The Credit Card...

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Hey, everybody, this is Ryan Daniel Moran, and you're listening to Freedom Fast Lane. Today we're going to be joined by Ron Klein. And you might not know his name, but you've definitely been impacted by what he's done with his career. Ron is an inventor, although he would call himself a problem solver, but he solved a lot of your problems. In fact, if you've got a credit card in your wallet, you can thank Ron. He invented it. He also invented a lot of other really cool things, and they've directly impacted your life. I wanted to have Ron on not just because he's influenced and impacted over a billion people currently alive on the planet, but also because, you know, in this technology age, we get bombarded with kind of the new school of entrepreneurship. Ron's an old school guy, and I wanted to get his perspective and share it here on Freedom Fastlane. There's one key point that he makes throughout this interview that I want to drive home, and it's simply the fact that he sees challenges as opportunities. Or put another way, he sees a gift or an opportunity in every challenge. And I thought, what a great lesson. If we could all just see gifts and opportunities in our challenges. If we got ourselves trained to look for gifts and opportunities inside of our challenges, what a better world this would be. And I hope you get that in today's interview with Ron Klein.

Hey, everybody, this is Ryan Daniel Moran, and you're listening to Freedom Fastlane. And today we've got a very special guest with us. We're joined with somebody who has basically changed all of our lives. Everybody who is listening tonight has been impacted by Ron Klein, and we're going to get his story today. Ron, thanks so much for hanging out with us.

Thanks for having me today. I'm delighted, Ryan.

Ron, you've impacted every single one of the people that are listening. Why don't you tell people a little bit about your story?

Well, okay. And I've impacted them really by, in fact, if someone would ever ask, what is my avocation and what do I do? Give me a snap, snap answer. I can really describe it in two words. My entire life has been problem solving, so I don't really classify myself as an inventor. Although I'm going to be telling you about inventions. I'm really a problem solver. So I don't sit in the think tank all day long holding my head saying, what am I going to invent today? I recognize a need and I fill that need. So I am the inventor of the credit checking system from way Back in the early 60s. And from that as a benefit and a side product came along the magnetic strip on the credit card. I'm also the inventor of that. And then a few years after that I came up with the development for multiple listing service for the real estate industry. And then right behind that came up with the voice response system for.

The banking industry. And there's just many, many things after that. And then long into my career and spent many, many years at the New York Stock Exchange, automating the New York Stock Exchange and developing all kinds of new things and program trading and bond quotation systems for the exchange. But I think the most important message I have today is to simplify and let me see if I can explain that there is no such thing in my life as a problem. Although I told you I was a problem solver, I'm really a challenge solver. I convert any problem into a challenge because there's a gift behind every challenge. We tend to complicate issues in business and personal life tremendously. And if we just look at things in a very simple way, the way we used to when we were given word problems in grade school, where they gave a lot of the superfluous information to try and clutter your brain. But the most important thing was to sift out what is the given and what is the solution we're looking for. And I've lived my entire life like that and I've solved every challenge in that way. So again I say, what is the given and what is the solution I'm looking for? And everything else in between is just the journey. It's the journey along the way. And in this journey you're going to have lots of detours and flat tires and hurdles to jump, and we'll solve those as we go along. And when those journeys get difficult, I always go back and say, well, wait a minute, what did I start with? What's the given? What's the solution I'm looking for? I'm in New York City and I want to get to la. Well, I never lose sight of that. I'm going to have rain, I'm going to have flat tires, I'm going to have detours, there are going to be potholes. But I always look back and say, well, wait a minute, I was in New York and my goal is to get to la, so just keep going. And the thing that keeps you going is a word called stickability. And it's not to be confused with stubbornness. Stickability is the ability to stay with something and never quit. When you're three feet from gold, just like Greg Reed says, and I'm sure everybody has heard that story, brief story, but have stickability and then also have flexibility. Don't be afraid to change. Don't be afraid to go use the side road instead of the interstate, because it'll come back to the interstate and you'll keep going. So that's the approach that I've taken through all of my development and all of my ideas. I could go through and spend a lot of time now telling you how certain things came along and how I simplified them. But I'm going to turn it back to you, Ryan, to see if we're on the right track, and then I'll give you some interesting stories.

Well, I'm curious about your story as an inventor, because there's something special about, like you said, seeing the gift in every challenge. And as an inventor, you're looking at ways that you can improve upon existing systems and how you can simplify that. Is that something that came natural to you, or is that just the result of practicing that idea of seeing gifts in every challenge?

It came natural to me because I'm a logical thinker. I learn something new every day. There's not a thing that I don't learn every day, and I'm learning from everyone. And even if it's these simple little things just walking down the street and seeing something interesting, I tuck that little new change in my life away in my brain, and I say, if I ever come, if I'm ever confronted with something that I believe, that little tidbit of information, then I research it further. But I'm a very logical thinking person. I'm a businessman, although I was trained as an engineer and a mathematician. However, soon after I did all of my development and inventions, the technical aspect of things, I saw that I was really thinking like an entrepreneur out of the box. I was thinking in a way of logic, creativity, and simple solutions, analyzing something and say, let me take it down to its basic roots, and how would I solve this challenge? Not problem, how would I solve this challenge? And then in simplifying it, I can understand it myself. You know, Einstein years ago, always said, if you can't explain what you do or what you're thinking in one or two sentences, then you really don't understand it yourself. And that's the approach I've taken. So years ago, and this was back in 1966.

A director of a very large department store came to me and said, and I was working for a very large company, said we have a problem every time someone comes in to make a charge purchase, and that's what they called them in those days, not credit card purchases, but a charge purchase, they give us this credit card with the embossed number and their name on it. And then we have to look up in this book that's given to us by the credit card companies every month, a great big thick book of all the negative account numbers. And the merchant would have to scan through this chronological order of all these account numbers, which would take a lot of time. And during holiday time it would really build up quite a bit of cue, but they'd go through all these numbers and if your number didn't appear in this book that they got every month, then you were good to go. Well, logically I just said that sounds pretty simple to me. And this was way back before PCs and the Internet. And I'm saying, well, geez, if I could take all those negative numbers and put them into some kind of memory device, I won't go into the different types of memory devices back in the 60s, but there were some big magnetic drums that they used for magnetic for storage. So I said, if I could put all of this information into that memory device and then hook up a little keypad down at the point of sale and have the department store cable the line up to the memory device where they kept it in their storage area, and the merchant would just key in that account number on the piece of plastic and if it didn't come up on this memory device which operated in milliseconds, the customer is good to go. And as simple as that sounds, anybody that was there at the time that I was there would have solved the problem the same way. So as simple as that sounded, that was the invention of how to check credit. So then I said, well, geez, you know what, let me take it to the next step. Let's see if we can put some smarts and some intelligence into that little piece of plastic. And right around that time, reel to reel tape recorders came out. And I said, geez, I got a great idea. If I can take a little piece of tape, record the account number on that little piece of tape, paste it on the back of the credit card, and then build the device that mimics a tape recorder that has a little head in it that can read the tape, and then you slide the the credit card through that little area rapidly that's mimicking the tape recorder, it would work because remember, if you would push the card in slow when you go to a Gas station. To fill up, you push your card in slow and then pull it out rapidly. The reason you do that is because you're mimicking a tape recorder. You know, years ago, if you could spin up the reel to reel tape recorder real fast, it would sound like Mickey Mouse. And if you would drag it, it was like Dracula. So with the synchronization that we recorded the account number on the, on the piece of tape, we actually built a little device, mimicked the tape recorder. And then you had this little piece of plastic on the credit card and you were the thing that was sliding it through the head. And that was the invention of the magnetic stripper credit card. Of course, at the time, I didn't know it was going to affect billions of people. I knew it was going to make a lot of department store people happy. So that was interesting. And the other interesting thing I thought about, and nobody can answer this question when I pose it to him, does anybody? And this was, I started developing it in 1964, finished it in 1966, and that's when we applied for the patent. And the patent was actually issued in 1969. And then the first credit card company to use it, the magnetic strip, is American Express in 1970. But does any of your listeners, and I want them to think about it for a few seconds before I give them the answer, why has it survived this long, from 1966 until 2013, in this world of obsolescence, why has the magnetic strip survived so long? So I'm going to give them a couple seconds to think about it and then I'm going to tell them. Why it survived is because it doesn't require energy. And if it doesn't require energy, it doesn't radiate. Because you need energy to make something radiate. And if it doesn't radiate, somebody can't come up behind your back pocket or somebody in a woman's purse and scan it and take the information off because it doesn't have any data. So there's the first invention.

How's that sound so far Now, Ron, that's fantastic. And I'm really curious about how you went through that process of seeing the opportunity and bringing it to fruition. Because a lot of people have ideas that they don't necessarily intend to impact billions of people. They just want to have a small business or they want to see certain changes in their life and they see challenges. But the idea of turning that into a gift or an opportunity is a challenge in and of itself. So I know that you probably saw this opportunity and I don't think right away you were like, oh, well, if we just connect this to this and put this machine to. I mean, I don't know the technology, but I'm sure you didn't know all the details either. So what gave you the confidence to say, okay, I'm going to go make this happen, even though I don't know all of the answers?

Well, again, Ryan, it's just logical thinking and very simple thinking. Yes, you don't have to have all the answers. There's so much technology out there today and there's so many brilliant people that know how to solve problems, but there's loads and loads of very creative people that have good ideas and if they just stop and simplify it and think, how do I, you know, what is the given again? You know, it's called. It goes back to those early days, what we learned in grade school. You know, all that superfluous information they gave in a word problem to confuse us. They forced the confusion upon us and a lot of times we're forcing confusion upon ourselves. But if we just simplify it, sift through all that, that stuff where the word problem would say, a woman driving in a car 55 miles an hour down the road and she's wearing a black hat and, and she has a feather in the hat and the hubcaps are silver and all of this superfluous information, you have to stop and say, well, wait a minute, what is the given here? What am I working with? And also what is the solution I'm looking for? Don't get confused with all of the superfluous information or the journey in between. Just keep going. So the logical thinking, you know, my wife always jokes with me and saying, I'll say, hun, I'm going for a while, I won't be long. She'll say, you won't be long? How long? Oh, not long. And how far are you going? Oh, not far. Again, I simplify everything and after a while she says that my thinking is like I'm the straw that starts to drink. But I can go on and on with all of the creations and inventions that I came up with. And maybe I should talk about the last one I just created. Again, it wasn't sitting down in a think tank saying, what am I going to invent today? I have a friend who's visually impaired and he was blinded in high school, although he was quite an achiever and has quite a reputation and was a vice president of a major company and quite a guy. And one day I was having breakfast with him and I said, called by his name, I said, what's on the wish list? And he said, you know, and we were at a big meeting. He said, I'd love to be able to walk into a room like this and know who I'm speaking to without tapping him on the shoulder. I'd like to walk into my closet in the morning and know my yellow shirt for my blue shirt. Or when I go to the pharmacy and I get a prescription, I know what the prescription is, but when I take it home and put it in my medicine chest, I want to make sure I don't take that, take my aspirins instead of my blood pressure medication. I want to be able to identify things. And I said, well, you know, there's lots of technology out there, lots of science and we even put men on the moon. But we need a good simple solution that's very simple to come up with. And so I'm going to go home and think about it. Well, I thought about it for a long time, about two weeks. And I came up with a solution. And the solution happened to utilize current technology that's out there today called QR codes. Everybody probably has seen those little things looks like a postage stamp and it's a two dimensional code. It's a little bit more sophisticated than a barcode and it can contain all kinds of information. A URL address for a website or some text information and so on and so forth. Well, I took that.

Concept and enhanced it quite a bit engineering wise or I could have some of these to do that for me and put some intelligence into a smartphone and basically and then come up, come up with pre formatted printed labels that were QR codes with addresses as to where to store certain stuff. And to make a long story short, I'm able to, and I have a patent on it now first I filed a provisional patent and a year later I filed the utility patent on it. And basically what it is, is a very simple investment for a visually impaired person of which there's over 21 million visually impaired people in the United States. And I said if I can help just 1%, a couple hundred thousand, that would be wonderful. So I have these pre printed labels. It's almost like when you order a Checkbook with addresses 1 through 100 and then 100 through 200. So I pre print these labels which are very inexpensive for a, a blind person or visually impaired person to buy, I mean under $20 and an app that's free on your Smartphone and the whole scanning process so that they, whatever they want to identify, they just peel off one of these labels and it doesn't make any difference which one because they all have unique addresses and they can very easily just feel and peel off this label and just paste it on whatever they want, put their smartphone over it, where they put their finger, just begin to lift their smartphone up and when they're six inches away, it automatically says record your overlaid message. And they just record their message describing what it is, it goes into the phone. Now anytime that they point their phone in the area of what one of these little labels is, it'll tell them in their ear what it is. So that again, and I hope I wasn't too complicated explaining this latest little invention, but such a simple process. Now there are all kinds of very highly automated things that I'm sure are being worked on. I happen to know that they're going to be very expensive. They're very dependent on outside functions. This doesn't require any outside influence from the outside world. It's just self contained. And a visually impaired person can have an aid for less than a $20 investment. So there's a sample of modern day thinking from an old time inventor.

Great. Well, Ron, I think that the world would be a better place if more people looked at it that way. That in every challenge there was a gift or there was an opportunity. As an inventor, you've made that your livelihood where you think of a challenge and you go home and you wait for the solution to come to you and you look for different opportunities in order to fill that narrow need. Most people aren't trained to think like that. But again, I think the world would be better if we all were to look for the gift and the opportunity in our challenges. What advice or what habits would you recommend to people in order to train their brain to start to see opportunities in challenges rather than feeling the weight of the opportunity?

Well, I'm glad you asked it that way, Ryan. First of all, my whole life now has been dedicated to speaking and consulting to try and get people at all ages. I speak with a lot of college students, I even speak with high school students, and I speak with a lot of young business people who tend to complicate issues tremendously. I want them to be aware. You know, a lot of people hear, but they aren't necessarily listening. You have to be a good listener. Just because you hear doesn't mean you listen. A lot of people have sight, but they don't have vision. So if you have sight Wonderful. But turn that into vision. When you see something, when you're paying attention, when you walk down the street, when you listen to the news, listen. Don't just hear, but listen. And people will start thinking more logically, more simplistically. Our world is too complicated. People tend to complicate every issue that they're involved with. And what's so important is to. And I hate to keep sounding like a simpleton, but what is the given that I need to answer today, and what is the destination or solution I'm looking for? And I, and I preach this constantly in my speaking and consulting, and I'm helping a lot of people now do that. You know, it's interesting. People think, well, geez, I've got this wonderful idea, but it's not a widget. Years ago, there were widgets to be designed. Today, there's so much technology, there's no widgets left to be designed. We're not looking for designs in widget. Intellectual property can be applications, methodology. That's intellectual property too, not necessarily coming up with a widget. So again, I want to leave your audience with the thought of think in a very simplistic way so you can identify what it is that you're looking to solve and think clearly and have that stick ability you must have stickability. Never quit when you're three feet from gold. And if I have time, I'll. I'll tell you that story, if Greg Reed hasn't already told you, but I'm sorry, go ahead.

Yeah, well, there's. There's one friend of mine who has a great recommendation of just getting into the habit of, on a daily basis, writing down ideas, of just coming up with ideas, and you can give yourself a topic and then write down ideas. Because it seems like today we almost restrict that part of our creativity because our world is so complicated. We restrict the flow of ideas because we get so bogged down in the Facebook notifications we're getting and our phone going off and somebody calling us and all this buzz going around in our world on a regular basis. I would even go as far as to say is one of the reasons you've been so successful, Ron, is because you live by this philosophy that you keep saying of simplify, simplify, simplify. You talked about why the credit card was so successful and you gave three criteria. You know, you did the same thing with this recent invention is you kept it really simple and there were no. It didn't depend on anything outside. I think we today, especially entrepreneurs in the technology world, get so Hung up on the details of everything and making things so complicated that they lose sight of this philosophy that you're talking about is what is the given, what is the result that we want? And let's keep it simple. Could you elaborate on a little bit? Do you think that's why you've been so successful?

Absolutely, it is tremendously the answer.

Because of the logical way that I think and the logical way that I attempt to mentor and teach everyone that I'm involved with and all of the small businesses, I keep approaching them to think about what you have, speak with others, because to be alone and not try out your ideas, discuss your ideas and you know, if it's not a close friend or if it's not a relative that you want to try out these ideas with and you feel it's a business colleague. Any business colleague will sign a non disclosure agreement and there's tons of those around. You can even pick one up on the web. It's a non disclosure agreement saying I want to talk to you about something, I want to kick around some ideas. And this is a degree of protection. And in fact the one that I like to use mostly in today's society is the mutual non disclosure, which says that I'm going to give you some ideas. You may be coming back with some help with my ideas. And mutually. I can't use what you're giving me, you can't use what I'm giving you. And it works. But that's kind of a pseudo legal way to protect yourself if you feel uncomfortable about kicking around ideas. But again, it's taking a step back in today's world in which it's extremely complicated and looking at the way we solved our word problems in grade school. And that's really the best advice that I can give to anyone. And every idea is a good idea because even if it's something that exists today and you have a better thought as to how to improve it, that's intellectual property. That's something worthwhile going after and that's something worthwhile pursuing even if it doesn't end up where you're monetizing it. But if it makes your life better and other people's lives better, why not approach it and why not go that way? But that's what we have to do in today's world. And like I say, if I had time, I can go on with each one of my projects and each one of my solutions in life where I've approached this method of thinking and it has worked. Again, be a good listener Pay attention and most important, not try but learn something new every day. There's so much out there to learn. And even if it sounds simple, there's a lot to learn. Even when I pedal my bicycle, there might be different ways to put my foot on the pedal that's a little bit safer. But there's always something new to learn and listen. So I hope I got that message off to your audience.

Yeah. And Ron, you're an inventor, obviously, and you've done all these great projects, but you're also a business consultant and you've worked with a lot of people who are experienced and some those who are just starting out. I'd like to know with your inventor background, what have you seen be the biggest challenges as you've worked with business owners and how have you taken this philosophy and impacted people's businesses.

Again through their thinking process? I have found that Even speaking with CEOs of very, very large, multiple.

Mega dollar businesses, sometimes they're just so caught up in the perfect example. A lot of these large corporation CEOs, they tend to micromanage. They're not listening to their line people who are really dealing with their customers on a basis every day. True, some of the CEOs are dealing at a high level, from high level to high level, but they should be listening very carefully. Not just hearing, but listening very carefully to their line people. Because their line people are seeing more than they're seeing from the standpoint of their customers. And that I think is a very, very important factor. A good CEO can really run the company with two words. When his subordinates or her subordinates come to them, they have to be able to answer a question or an opinion either by a yes or a no. Of course, they give a lot more knowledge and information than that. But they're the decision makers. They're the ones that really have to think about what it is that's coming up before them at their desk and answer, should we proceed or should we not? And that's really the success that I think I've seen with working with some of these both small and large business owners and entrepreneurs. I might mention that if anybody wants to follow anything that I've done or a little bit more history about me, they can go on my website. It's pretty simple to remember it's the number four Ron Klein.com that's R O N K L E I N dot com. And I think, you know, you can even learn something by going on my website. In fact, if you go on my website and go to the Contact Me page or the About Me page. If you send me your email address, I'll send you my business notes and my lessons for life. I'll gladly email that to anyone who goes on the website and takes a look. So Again, it's the number four Ron Klein.com and I've been so happy to be able to speak with you today, Ryan, and I hope I've given your audience a little bit of foresight as to how to go about and live successfully in this complicated world that we have to simplify.

Well, Ron, thanks so much for sharing your story. Thanks so much for impacting all all of our lives directly with the inventions that you've had. And I really appreciate you sharing the experiences that you've learned along the way and inspiring this new generation, this complicated generation to simplify and to never lose sight of the goal that we have. Thanks so much, Ron.

Thank you, Ryan. Thank you for having me as a guest. I really enjoyed this.

You know, we live in a world where solving problems is easier than it's ever been because we can look for a need and fill it. I mean, that's what entrepreneurship is, right? Seeing a need and filling it. There's not a better example than that than Ron Klein. And you don't have to invent the credit card in order to make a big impact. It's easier than ever in order to solve problems. And we teach that a lot at the blog. At freedomfastlane.com we can teach you how to take an idea or to take a problem and build really an income stream or a business out of that. So that's something that you've always wanted to do. Go over to freedomfastlane.com, download one of our free reports and we'll get you started on that path. Hey, you know, it always helps us when you leave a five star review on itunes. It really helps us spread our message of freedom across the world. And that really is the mission of Freedom Fast Lane, to inspire, educate and empower people to live extraordinary lives. Thanks for your help in spreading the message and thanks for listening to Freedom Fast Lane.