Billionaire brothers John and Patrick Collison built Stripe into one of the world’s most-hyped, highest valued — and profitable! — startups, worth some $95 billion. Now they must stave off going from disruptor to disrupted.
It’s just before five o’clock, and Stripe cofounder John Collison is preparing to address his hundreds of Ireland-based employees on the top floor of his headquarters in Dublin’s “Silicon Docks” District.
Such 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 that Collison cofounded with big brother Patrick in 2010. With Patrick away getting married, it’s up to John, 31 and with a dusting of gray hair now topping his boyish face, to field questions.
It could get contentious: There’s a social media “kerfuffle” playing out over Twitter this week: Stripe has been accused in a series of (since deleted) tweets by Zachary Perret, the billionaire cofounder of fellow fintech unicorn Plaid, of meeting with his company under false pretenses only to build a competing software tool.
Patrick, Stripe’s 33-year-old CEO, has interrupted his honeymoon to write a memo to the entire company (later shared publicly) warning that such scrutiny—and uncharitable interpretations of Stripe’s motives—will only increase over time. John, Stripe’s president, is prepared for the worst. But the staff question, when it comes, is just about a name. Is calling a new product Financial Connections a sign that Stripe is moving toward more boring monikers from now on? It’s a serious question. Artful names like Atlas (software to help with company formation) and Radar (fraud detection) sound better, John admits. But they’re terrible for search engine rankings. In the end, no one asks about the Twitter dustup. (Plaid declined to comment.)
“We will compete with a bunch of companies, and we’ll partner with a bunch,” John says with a shrug. “Everyone just needs to be a grownup and well-behaved about it.”
Even so, such “front page tests” of Stripe’s ethical reputation, as Patrick calls incidents that have the potential to bubble up in the popular press, will only prove more common as Stripe transitions from startup darling to tech dreadnought. The company, dual-headquartered in San Francisco and Dublin, processed $640 billion in payments last year across 50 countries. Its gross revenue, still mostly the 2% to 3% it collects on such volume, reached nearly $12 billion in 2021, according to sources with knowledge of its financials, up about 60% year over year. Net revenue, which excludes the cut Stripe passes along to partners like Visa and Chase, reached nearly $2.5 billion. And, unusually for a unicorn that’s still growing fast, Stripe finished the year with hundreds of millions in profit on an Ebitda basis, two sources add. Stripe declined to comment on its figures.
Its eye-popping financials explain why investors including Fidelity and Ireland’s sovereign development fund poured an additional $600 million into Stripe in March 2021, raising its total funding to date to $2.4 billion and valuing it at $95 billion. That puts Stripe behind only TikTok owner Bytedance, Chinese e-commerce juggernaut Shein and Elon Musk’s SpaceX for the title of the world’s most valuable startup. (Forbes estimates Patrick and John Collison each own about 10% of Stripe, making them worth $9.5 billion each.)
The Collisons have come a long way from the precocious boy wonders who, a dozen years ago, wowed Silicon Valley with just nine lines of code—which was all developers needed to copy and paste to enable credit card payments on their sites. Stripe now offers a broad suite of financial tools to handle everything from DoorDash driver payouts to taxes for Duolingo in-app payments and subscriptions to the Atlantic. At the heart of it all: Patrick and John Collison, who still review every product that goes out the door, an act akin to scientific “core sampling” or restaurant owner–style kitchen visits, depending on which brother you ask. They also still personally fill out “friction logs” of any user-unfriendly moments they encounter using Stripe and, in Patrick’s case, occasionally dive into the code itself.
“We’re not a glamorous business, just an infrastructure company that hopefully we’ll be able to compound for a long time,” says Patrick, his short cropped red hair sun-bleached after his rare week off. “The scope of the job doesn’t change that.”
The job is harder today than a year ago, when the biggest question about Stripe was when it would finally go public. The ongoing pandemic, a brutal land war in Europe, a global energy crisis (see page 102) and a busted supply chain have largely made such concerns moot. The S&P 500 is off nearly 20% so far in 2022; big tech concerns like Stripe’s public peers have fared even worse. The shockwaves from such instability are being felt by businesses big and small—and Stripe, which powers transactions for everything from delayed Peloton bike orders to hard-to-find baby formula, has a front-row seat.
Like entrepreneurs everywhere, the Collisons must navigate this new normal without slowing down. They’re pushing Stripe into new markets in Southeast Asia and the Middle East while simultaneously shipping new products like an app store and a crypto offering for social media creators. They’re building out existing products to take Stripe deeper into the financial flow of a company and its customers. They’ve begun brokering small-business loans and issuing corporate credit cards. They’re rumored to be 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 enterprise clients such as Ford and Maersk.
“Businesses that don’t have to sing for their supper every day, I think they get a bit flabby and lazy,” John Collison says. “We still have a list four times longer of the things we would like to do.”
The shockwaves from global instability are being felt by businesses big and small. Like entrepreneurs everywhere, the Collisons must navigate the new normal without slowing down.
Stripe’s restless employees are eager for the liquidity of an IPO, but being private might be a blessing during the ongoing economic storm. In March, Fidelity, required to publicly update the value of its holdings, marked down Stripe by 20%. Most unicorns—startups valued at $1 billion or more—are trading on the secondary markets at 20% to 40% discounts to their last official venture capital rounds. But Stripe’s shares remain hard for new investors to obtain and in high demand, with recent transactions implying a valuation of as much as $165 billion, per New York–based EquityZen, a marketplace for pre-IPO shares.
Stripe’s closest publicly traded peers, such as Adyen, PayPal and Square, are all down more than 40% year to date. The Collisons are in no rush to join this crowd. But if any tech darling could stage a listing in this market, Stripe would be the obvious candidate, says analyst Jordan McKee, of 451 Research.
To Patrick, share prices and valuations are “academic” compared to what he thinks of as a multidecade mission. “I get a little uncomfortable when people are externally too positive on Stripe,” he says. “There’s a lot we haven’t figured out yet.”
Internally, Stripes, as employees are called, love to share a statistic from a recent IMF study that concluded only 12% of the world’s spending happens online. That’s the scale of the opportunity. “It’s an enormous world out there,” Patrick says. “Our goal is to grow the GDP of the internet.”
At least two Irish counties have claimed the Collisons as success stories since they were teens. Their parents, trained engineers,
operated a lakeside hotel in County Tipperary, where the boys went to immersive school and learned to speak Irish and code at home; they attended secondary school in County Limerick. (The youngest Collison, Tommy, studied journalism and now works in communications at Bay Area software startup Retool.)
At 17, Patrick won a high-profile national competition for young scientists; his project, building atop Lisp, a programming language developed at MIT, placed second in the European Union overall. The winner: his future wife, Silvana Konermann, who represented Switzerland. (“That is not, sadly, misinformation,” he says now.) During the contest, he had corresponded with a technologist named Paul Graham, who had written a book on Lisp. A year after Patrick enrolled at MIT in 2006, he and John applied for Graham’s local startup accelerator, Y Combinator.
Their idea: tracking software for eBay sellers. Instead of developing it themselves, the two Collisons joined forces with an older pair of brothers, Harj and Kulveer Taggar, already in the program with a similar idea. When the four sold their startup, Auctomatic, for $5 million the next year, John was still in secondary school. In 2009, he followed his big brother to Cambridge, enrolling at Harvard. Around that time they had the idea to write a behind-the-scenes snippet 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 the Collisons never presented their company, first called /dev/payments, at Demo Day. It was only after dropping out of college a year later and relocating temporarily to Buenos Aires that they publicly launched their tool, which became Stripe, from a coffee shop.
Their API worked, and their unusual backstory—and Patrick’s promise to “pick up where PayPal left off ”—appealed to Sequoia’s Michael Moritz, himself an immigrant from Wales. Weeks after launch in 2010, Moritz invested in Stripe’s seed round, joined by PayPal billionaires Max Levchin, Peter Thiel and Elon Musk, then led its $18 million Series A in 2012.
To gain early users, Stripe’s founders employed a power move now immortalized at YC as “the Collison installation.” While some founders might share an email sign-up link after pitching their company to their peers, the Collisons grabbed potential users’ laptops and set them up with Stripe right then and there. Inside Stripe, the two set a hardworking and writing-heavy culture influenced by their admiration for Apple, Amazon and Berkshire Hathaway. Meetings started in silence as attendees read a prepared note and added written questions for debate; internal emails auto-copied team-wide group accounts so staffers could catch up on any thread without wasting anyone else’s time.
Stripe’s mostly young, entrepreneurial early staff took weekly runs in San Francisco’s Bernal Heights 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 the hypergrowth of early customers like e-commerce platform Shopify and ride-hailing app Lyft. Stripe Connect made it easy for them to pass along payments to merchants and drivers. Soon others—Amazon, Wayfair, Instacart, Postmates—had joined. “Stripe was the way to index e-commerce,” says early investor Elad Gil. “Instead of trying to invest in every startup, you could just invest in Stripe.”
On the flip side, the Collisons’ insistence on technically proficient managers meant that leadership roles remained vacant for months. Employees placed mock bets on how long certain newly hired leaders would last. “If you’re an executive here, you probably have a 50/50 shot of working out,” one early employee warned their new boss after their previous one lasted less than two years.
Stripe’s chronic understaffing helped contribute to expensive and embarrassing outages that, after one three-hour shutdown in 2015, had Amazon and Shopify threatening to walk. (Reliability is now a point of pride: During the 2021 holiday season, Stripe’s tools were down for a combined 1.2 seconds.)
Payments were how Stripe buttered its bread—they still are—but from early on, the Collisons pushed employees to understand their customers’ other financial problems, whether fraud, cash flow or inventory management. “The vision has always been, ‘Why can’t we move money around in the cloud the same way that we can move data?’ ” says William Gaybrick, who came aboard as CFO in 2015 and is now chief product officer. “Because isn’t money just data?”
“Stripe was the way to index e-commerce. Instead of trying to go invest in every startup, you could just invest in Stripe.”
Big customers like Shopify now process billions through Stripe, but much of its business remains small- and medium-sized companies like the not-for-profit Gaelic Athletic Association, which has saved more than $1 million by having its affiliate clubs, scattered around 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 charges, among other uses.
“If you want to build stuff that everyone’s heard about at Thanksgiving dinner, Stripe will never be that for you,” Patrick says. “But if you’re the kind of person who just finds building infrastructure for those people rewarding, then I think corporate-scale Stripe is actually fun and meaningful.”
On the roof of a nondescript parking garage an hour north of Dublin, John Collison marvels as shopping cart–sized drones land with a quiet whir, are quickly loaded with small orders of groceries—in one case, a single onion—and take off again on short delivery flights. Manna CEO Bobby Healy, who met Collison on Twitter and persuaded him to personally invest in his 75-person firm, fields a stream of questions from him about how it all works: the efficiency of its replaceable battery, its safety features and retractable drop-off 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 factors in regulatory complexity, strategic value and urgency of customer needs. “There’s kind of an art to it,” John says. “You want to change your opinions when the facts change.” Adds Patrick, “Ultimately all that matters is whether our customers find us useful.”
Mostly that means focusing Stripe’s R&D teams—more than 40% of the company is still engineers, unusual for its scale—on a mix of practical improvements, such as adding payments in more countries in the developing world or improving its newly announced app store. But it also means monitoring emerging products and quickly matching them. Take Link, Stripe’s one-click checkout tool that competes directly with Bolt, a Miami startup that recently raised money at an $11 billion valuation, making its founder, Ryan Breslow, a billionaire. Though Link has been available for more than a year, Stripe has downplayed its interest in such consumer products. But as Bolt grew in recent months, Stripe has quietly beefed up its Link team, insiders say; the company’s jobs site lists open roles 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 questioned in a recent New York Times exposé, might not be the ideal messenger, but he’s not alone in distrusting 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 retribution.
“Since when did competition become a bad thing?” asks General Catalyst’s Hemant Taneja, who led Stripe’s 2012 Series B. Patrick, for his part, isn’t too focused on rivals and points out that Stripe’s size and influence are still, in the global scheme of things, relatively small. “Our focus should not be, does not need to be, on eating anybody else’s lunch,” he says.
A perfect storm of macro conditions may mean Stripe doesn’t grow as fast this year, John concedes, but people will still shop, he says, and people running businesses will still need Stripe. And the good news, in a worsening economic climate, is that software development requires a lot 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 in at a harborside pub in the town of Skerries for a Guinness and to pontificate about another cause close to the brothers: climate. Recently, Stripe joined the likes of Alphabet and Meta in committing to make purchases of more than $900 million from carbon-capture projects. (He doesn’t mention that the Collisons often fly private.)
The local revelers ignore the still youngish tech billionaire sipping a pint in their midst. That is, until he goes to settle the tab. Wordlessly offered a credit card reader, Collison says he’d rather pay cash. The bartender raises an eyebrow: “Ironic enough!”
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