Open a new document in photoshop
Size should be 400 x 400 pixels
Color: white

Type some random text

Now add the following layer styles

This is the Result

Be sure you have the text layer selected. then go to Select > Load selection (When a new window appear press OK

Go to Select > modify > Expand and use the following settings

This is the Result

Now select the background layer, then press CTRL+SHIFT+ALT+N
Then with this new layer selected go to Edit > fill and use the following settings

Press on CTRL+D to deselect
then add the following layer styles on this button

This is the Result