billionaire brothers john and patrick collison made stripe one of the most hyped, best rated and most profitable in the world. — startups, with a value of about 95,000 million dollars. now they must avoid going from disruptor to disruptor.
iit’s just before five and stripe co-founder john collison is preparing to address his hundreds of ireland-based employees on the top floor of his headquarters in the district dublin silicone docks
These regular Friday town halls, which are also simulcast to new york, san francisco, singapore and anywhere else its 7,000 employees want to tune in from over zoom, are an almost sacred tradition at stripe, the payments company who co-founded with elder brother patrick collison in 2010. with patrick away getting married, it’s up to 31-year-old john, with a cape of gray hair now covering his boyish face, to answer the questions.
Reading: How much is stripe worth
could get controversial: There’s a social media buzz going on on twitter this week: zachary perret, the billionaire co-founder of fellow fintech unicorn plaid, accused stripe in a series of tweets (since deleted) of meeting with your company under false pretenses just to build a competing software tool.
patrick, stripe’s 33-year-old CEO, interrupted his honeymoon to write a company-wide memo (later shared publicly) warning that such scrutiny and uncharitable interpretations of stripe’s motives will only increase with time. John, the president of stripe, is prepared for the worst. but the staff thing, when it comes, it’s just a name. Is calling a new product financial connections a sign that Stripe is moving towards more boring monikers from now on? It’s a serious question. Clever names like Atlas (software to help with company formation) and Radar (fraud detection) sound better, admits John. but they are terrible for search engine rankings. in the end, no one asks about the twitter dispute. (plaid declined to comment).
“we will compete with a group of companies and partner with a group,” says john with a shrug. “everyone should be an adult and be on their best behavior about it.”
Still, such “front-page evidence” of stripe’s ethical reputation, as patrick calls incidents that have the potential to surface in the popular press, will only prove more common as stripe grows from a startup favorite to become a technological battleship. The company, dual-headquartered in San Francisco and Dublin, processed $640 billion in payments last year in 50 countries. its gross receipts, still mostly the 2% to 3% it raises on such volume, hit nearly $12 billion in 2021, according to sources with knowledge of its finances, an increase of about 60% year over year. Net revenue, which excludes cut-slot passes to partners like Visa and Chase, reached nearly $2.5 billion. And, unusually for a unicorn still growing rapidly, Stripe ended the year with hundreds of millions in profit on an EBITDA basis, two sources add. stripe declined to comment on his figures.
Its startling financial data explains why investors, including Fidelity and Ireland’s sovereign development fund, poured an additional $600 million into Stripe in March 2021, bringing its total year-to-date funding to $2.4 billion and valuing it at $95 billion. That puts the streak behind only TikTok owner Bytedance, Chinese e-commerce giant Shein, and Elon Musk’s SpaceX for the title of world’s most valuable startup. (Forbes estimates that Patrick and John Collison each own about 10% of Stripe, making them each worth $9.5 billion.)
young collison works with sales and marketing; more introverted patrick with engineering and finance. “We met in the middle where Patrick and I might end up discussing products,” says John.
Collisions have come a long way since the precocious boy wonder that wowed silicon valley a dozen years ago with just nine lines of code, which was all developers needed to copy and paste to enable payments with credit card on their sites. Stripe now offers a comprehensive set of financial tools to handle everything from home driver payments to taxes to Duolingo in-app payments and Atlantic subscriptions. At the heart of it all: Patrick and John Collison, who still check every product that walks out the door, an act akin to scientific “basic sampling” or restaurant owner-style kitchen tours, depending on which brother you like. ask. They also personally fill out “friction logs” of any unpleasant moments they encounter while using Stripe and, in Patrick’s case, occasionally diving into the code itself.
“We’re not a glamor company, just an infrastructure company that hopefully we’ll be able to consolidate for a long time,” says patrick, his short, sun-bleached red hair after his rare week off. “The scope of work doesn’t change that.”
The job is harder today than it was a year ago, when the biggest question about stripe was when it would finally go public. The ongoing pandemic, a brutal ground war in Europe, a global energy crisis (see page 102), and a broken supply chain have made such concerns largely moot. the s&p 500 is down almost 20% so far in 2022; big tech concerns like public stripe pairs have fared even worse. Businesses large and small are feeling the shock waves of such instability, and Stripe, which drives transactions for everything from backordered platoon bikes to hard-to-find baby formula, has a front-row seat. .
Like entrepreneurs around the world, colliders must navigate this new normal without slowing down. They’re pushing Stripe into new markets in Southeast Asia and the Middle East, while also shipping new products like an app store and a cryptocurrency offering for social media creators. they are building existing products to deepen the financial flow of a company and its customers. they have started negotiating small business loans and issuing corporate credit cards. Rumor has it that they are exploring entirely new areas like accounting. And they’re trying to do it all in the face of increasingly emboldened competition while appeasing demanding new business customers like Ford and Maersk.
“i think companies that don’t have to sing for dinner every day get a little flabby and lazy,” says john collison. “We still have a four times longer list of things we’d like to do.”
The shock waves of global instability are being felt by companies large and small. Like entrepreneurs everywhere, Colliders must navigate the new normal without slowing down.
restless stripe employees are eager for the liquidity of an initial public offering, but going private could be a boon during the ongoing economic storm. up and running, fidelity, obliged to publicly update the value of its shares, reduced by 20%. Most unicorns (startups valued at $1 billion or more) are listed on the secondary markets at discounts of 20% to 40% in their latest official venture capital rounds. But stripe shares remain hard to come by for new investors and are in high demand, with recent transactions involving a valuation of up to $165 billion, according to new york-based equityzen, a pre-stock market. initial public offering.
The closest publicly traded stripe peers such as adyen, paypal and square are down more than 40% year to date. colliders are in no hurry to join this crowd. But if any tech darlings could list in this market, the band would be the obvious candidate, says analyst Jordan McKee of 451 Research.
for patrick, stock prices and valuations are “academic” compared to what he considers a multi-decade mission. “I feel a little uncomfortable when people are too positive on the outside,” he says. “there are many things we haven’t discovered yet.”
Internally, Stripes, as the employees are called, loves to share a stat from a recent IMF study that found only 12% of global spending is online. that is the scale of opportunity. “It’s a huge world out there,” Patrick says. “our goal is to increase internet gdp”.
Alat least two Irish counties have claimed crash success stories since they were teenagers. their parents, trained engineers,
Operated a lakeside hotel in County Tipperary, where children attended an immersion school and learned to speak Irish and code at home; They attended high school in Limerick County. (The youngest collider, Tommy, studied journalism and now works in communications at the Bay Area software startup reorganization.)
at 17, patrick won a high-profile national competition for young scientists; his project, built on lisp, a programming language developed at mit, ranked second in the european union overall. The winner: his future wife, Silvana Konermann, who represented Switzerland. (“That’s not disinformation, sadly,” she says now.) During the contest, he corresponded with a technologist named Paul Graham, who had written a book on lisping. A year after Patrick enrolled at MIT in 2006, he and John applied to Graham’s local startup accelerator, and Combinator.
his idea: tracking software for ebay sellers. Rather than develop it themselves, the two Collisions joined forces with a pair of older brothers, Harj and Kulveer Taggar, who were already on the show with a similar idea. When the four of them sold their startup, Auctomatic, for $5 million the following year, John was still in high school. In 2009, he followed his older brother to Cambridge, enrolling at Harvard. At that time they had the idea to write a behind-the-scenes piece of code called an API, or application programming interface, that would make it easy to add credit card functionality to a website. yc invested, but colliders never featured their company, first called /dev/payments, on demo day. It was only after dropping out of college a year later and temporarily moving to Buenos Aires that they publicly launched their tool, which became stripe, from a coffee shop.
its api worked, and its unusual backstory, and patrick’s promise to “pick up where paypal left off”, attracted michael moritz from sequoia, himself an immigrant from wales. Weeks after launch in 2010, Moritz invested in Stripe’s seed round, along with PayPal billionaires Max Levchin, Peter Thiel, and Elon Musk, then led his series to $18 million in 2012.
“By virtue of the fact that we handle people’s money, the level of operation of the company is very high,” says Stripe CFO Dhivya Suryadevara.
To win over early adopters, the founders of stripe employed a powerful move now immortalized in yc as “the collision facility”. While some founders may share an email signup link after introducing their company to peers, colliders grabbed potential users’ laptops and set them up with stripe right then and there. Inside Stripe, the two established a hard-working, writing-intense culture influenced by their admiration for Apple, Amazon, and Berkshire Hathaway. meetings began in silence as attendees read a prepared memo and added written questions for discussion; internal emails automatically copied group accounts across the team so employees could catch up on any thread without wasting anyone else’s time.
Stripe’s first team, mostly young and entrepreneurial, took weekly tours of Bernal Heights in San Francisco with Patrick and John and prided themselves on developing products with just one or two engineers. This approach helped Stripe quickly launch its second major product in 2012 to support hyper-growth early customers, such as e-commerce platform Shopify and ride-sharing app Lyft. stripe connect made it easy for merchants and drivers to transfer payments. soon others (amazon, wayfair, instacart, postmates) joined. “Stripe was the way to index e-commerce,” says early investor Elad Gil. “instead of trying to invest in every startup, you could invest in stripe.”
On the other hand, the colliders’ insistence on technically competent managers meant that leadership positions remained vacant for months. employees placed simulated bets on how long certain newly hired leaders would last. “If you’re an executive here, you probably have a 50/50 chance of working out,” one early employee warned his new boss after the previous one lasted less than two years.
Stripe’s chronic staffing shortages contributed to the costly and embarrassing outages that, after a three-hour shutdown in 2015, saw Amazon and Shopify threaten to quit. (Reliability is now a point of pride: During the 2021 holiday season, stripe tools were idle for a combined 1.2 seconds.)
Payments were stripe’s way of buttering their bread, they still are, but from the beginning, collisions pushed employees to understand other financial issues of their customers, whether it be fraud, cash flow or management of inventory. “The vision has always been, ‘Why can’t we move money in the cloud the same way we can move data?'” says William Gaybrick, who joined as CFO in 2015 and is now Chief Product Officer. “Why is money not just data?”
“stripe was the way to index e-commerce. instead of trying to invest in every startup, you could invest in stripe.”
Large clients like shopify now process billions through stripe, but much of their business remains small and medium-sized businesses like the non-profit Gaelic Athletic Association, which has saved over $1 million by having its affiliated clubs, spread across the globe, manage their combined 500,000 members through stripe. in the first year of the pandemic, food delivery service postmates generated an additional $70 million in sales and saved millions more in fees by using several of stripe’s products that helped retry failed transactions and collections, among other uses.
“If you want to create things that everyone has heard about at Thanksgiving dinner, striping is never going to be that for you,” says Patrick. “But if you’re the kind of person who finds it rewarding to build infrastructure for those people, then I think fringe on a corporate scale is really fun and meaningful.”
inon the roof of a nondescript parking garage an hour north of dublin, john collison marvels as shopping-cart-sized drones land with a quiet buzz, charge quickly with small grocery orders, in one case a single onion, and take off again on short delivery flights. Manna CEO Bobby Healy, who met Collison on Twitter and convinced him to personally invest in his 75-person company, answers a series of questions from him about how it all works: the efficiency of its replaceable battery, its features safety and retractable fall. shutdown mechanism. satisfied, john shifts gears: as manna expands across europe, what will it need from stripe?
That’s an important question. product development at stripe is complicated these days, a matrix that takes into account regulatory complexity, strategic value, and the urgency of customer needs. “There’s a kind of art to it,” says John. “You want to change your opinions when the facts change.” Patrick adds, “Ultimately, all that matters is whether our customers find us useful.”
manna CEO bobby healy gave john collison a (safe) crash course on drones and then asked stripe to keep working on improving their fraud prevention tools and payment acceptance rate.
Primarily that means focusing stripe’s R&D teams (more than 40% of the company are still engineers, unusual for its scale) on a combination of best practices, like adding payments in more countries around the world development or improve its recently announced app store. but it also means monitoring emerging products and quickly matching them. Take Link, Stripe’s one-click payment tool, competes directly with Bolt, a Miami startup that recently raised money with an $11 billion valuation, making its founder Ryan Breslow a billionaire. Although Link has been available for more than a year, Stripe has downplayed its interest in such consumer products. But as Bolt has grown in recent months, Stripe has quietly beefed up its liaison team, experts say. The company’s jobs site lists open positions to help it grow and launch similar efforts.
breslow has publicly accused stripe, along with y combinator (which rejected him) of ruling silicon valley as “mob bosses”. (Stripe declined to comment.) Breslow, whose own financial probity was called into question in a recent New York Times exposé, might not be the ideal courier, but he’s not the only one who’s wary of Stripe’s motives. “patrick talks about things not being zero-sum all the time, and we’re like, ‘this is the exact opposite of how you work in the world,'” says one fintech founder, who asked to remain anonymous for fear of retaliation. .
“Since when did competition become a bad thing?” asks hemant taneja of general catalyst, who ran stripe’s b-series in 2012. patrick, for his part, doesn’t focus too much on the rivals, noting that stripe’s size and influence remain, in the overall scheme of things , relatively small. “Our focus shouldn’t be, doesn’t have to be, eating other people’s lunch,” he says.
a perfect storm of macro conditions may mean the strip won’t grow as fast this year, john reckons, but people will still buy, he says, and people running businesses will still need the strip. And the good news, in a worsening economic climate, is that developing software requires far less capital than, say, building cars, as CFO Dhivya Suryadevara, who joined Stripe from General Motors in 2020, puts it.
After the drone visit, John settles into a harborside pub in the town of Skerries to sip a Guinness and pontificate on another cause close to the brothers: the weather. Stripe recently joined companies like Alphabet and Meta in committing to purchases of more than $900 million of carbon capture projects. (He doesn’t mention that collisions often fly in private.)
The local revelers ignore the still young tech billionaire sipping a pint in their midst. that is, until he goes to settle the account. He wordlessly offers her a credit card reader, Collison says that he prefers to pay in cash. the bartender raises an eyebrow: “pretty ironic!”