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E723: Stripe Patrick Collison on online payment pwrhouse, Atlas, public/private mkts, & GDP of net
30 segments available
Filmed at LAUNCH Festival 2017, Jason sits down with Stripe CEO Patrick Collison to explore his journey to solving one of the toughest barriers to a global e-commerce economy: payments. About a decade ago, companies were mostly working with legacy players like banks, gateways and processors, and they were essentially looking to buy a technology service from them. These financial institutions were huge, but focused on particular markets, which provided an opportunity for Stripe. Today, Stripe works with companies in 124 countries and handles billions of dollars of aggregate revenue every year. Join us as Patrick shares an inspiring story of his early days at Y Combinator, mistakes and triumphs, opening the Atlas program to US-based startups, and his views on public/private markets. For full show notes, subscribe to http://thisweekinstartups.com/about/#allsubscribe
Segments Timeline
The Stripe Phenomenon
Patrick Collison introduces Stripe's impact on the payment industry, highlighting its growth to billions in revenue and its global reach across 124 countries. He emphasizes the company's evolution from a small startup to a major player in online payments, showcasing the significance of their technology in facilitating e-commerce.
"twist next up is Patrick from stripe please welcome Patrick come on out how many people here have used stripe raise your hand really high if you view stripe oh my God I all right hold on in your produ..."
The Journey Begins
Collison reflects on the early days of Stripe, discussing the challenges faced before its public launch in 2011. He shares insights into the long development process and the foundational work that laid the groundwork for Stripe's success, emphasizing the importance of perseverance in entrepreneurship.
"the history of the company what's the footprint of stripe today um so uh we're we don't disclose many metrics about the business um uh but we say we handle now billions of dollars uh of sort of aggreg..."
Identifying the Pain Points
In this segment, Collison discusses the frustrations with legacy payment systems like PayPal, which inspired the creation of Stripe. He highlights the difficulties faced by businesses in managing transactions and the opportunity Stripe seized to provide a more efficient solution for online payments.
"of broader phenomenon across the industry of sort of things that you know and I'm sure many of you have sort of had this experience yourselves where were sort of things that you've been working on for..."
The Global Opportunity
Collison explains how the fragmented nature of financial institutions across different countries created a significant opportunity for Stripe. He discusses the challenges businesses faced when dealing with various banks and how Stripe aimed to simplify the payment process on a global scale.
"paino that made you start the company what I mean I remember at that time uh PayPal was just horrific to deal with like every time I tried to get into my account it didn't work every time we tried to ..."
The Birth of an Idea
Collison recounts the moment he and his brother John decided to create Stripe after reflecting on their experiences with app sales. He shares the inspiration behind the idea and the initial discussions that led to the development of their payment platform, emphasizing the ease of selling apps compared to handling transactions.
"PayPal May and perhaps in part for for those reasons or others or I don't know but most of them weren't most of them were building on these Legacy players like they were working with banks they're wor..."
Funding and Early Support
In this segment, Collison discusses the early funding of Stripe and the support they received from influential figures in the startup community. He reflects on the uncertainty they faced in the beginning and how they navigated the early stages of building their company amidst multiple ideas.
"in the ass right yeah which then meant that people kind of weren't serving markets they should be and so a large part of I think what enabled strip back to your question uh is that we're building kind..."
Building the Prototype
Collison shares the story of how he and John built the first prototype of Stripe, driven by their desire to simplify online payments. He emphasizes the challenges they faced and the iterative process of developing their product, showcasing the entrepreneurial spirit that fueled their journey.
"went to start of school back in 2009 um and uh I talked about PayPal I mean it's fair yep um and uh and so John and I were very inspired uh and and we were having dinner afterwards and we've been kind..."
The App Store Experience
Collison reflects on their experiences selling apps in the App Store and how it contrasted with the complexities of online transactions. He discusses the lessons learned from their app development journey and how it influenced their approach to creating Stripe, highlighting the importance of user experience.
"which was like a group of us including Sam man who Sam and I were both Sequoia Founders but they started the scouts thing and R both was like hey can you guys put 25 or 50k into some companies and I t..."
Building a Wikipedia App
Collison discusses the development of an offline Wikipedia app that he created out of frustration during his travels. This experience highlights the innovative spirit that led to the creation of Stripe, as he and his co-founder sought to solve real problems in the tech landscape.
"know I always love the story that um uh that uh in sort of the famous house that Facebook started in in palalo uh that like Facebook was not the only company they were working on right there was also ..."
Realizing the Payment Landscape
As they worked on Stripe, Collison and his team began to understand the broader challenges in the payment industry. He emphasizes the low percentage of consumer spending online and the difficulties companies faced in integrating payment solutions, which revealed a significant opportunity for Stripe.
"over a weekend like this is cool I I actually built it when I was in Japan uh back when um you know the iPhone first came out and um uh you know there was uh I didn't have a data plan or anything and ..."
Deciding to Drop Out
Collison recounts the pivotal moment when he and his co-founder decided to leave school to focus on Stripe full-time. He discusses the importance of raising initial funding and the support they received from notable investors, marking a significant turning point in their entrepreneurial journey.
"we we kind of came to shift from sort of thinking about it you know merely as this nice little tool for for developers that kind of makes their lives easier you know initially which is kind of what wh..."
The Power of the Internet
Collison reflects on the transformative potential of the internet, emphasizing how it transcends geographical barriers. He shares insights on how the right tools can empower entrepreneurs globally, highlighting the importance of innovation in creating new opportunities.
"[Music] others hey if you're a small or mediumsized business even a large one you're trying to find solutions to solve your problems right wouldn't it be great if there was like a directory or a marke..."
Finding the Right Tools
In this segment, Collison discusses the significance of discovering the right tools for entrepreneurs. He draws parallels to the evolution of technology and how the right abstractions can lead to significant advancements, illustrating the journey of Stripe's development.
"software to grow your company find the right software to help you do what you do better capa.com twist capa.com twist welcome to the program Capa Everybody follow capara on Twitter and if you're a Sup..."
Moments of Doubt and Clarity
Collison shares his personal experiences of doubt and clarity during Stripe's early days. He describes the emotional rollercoaster of believing in their idea while facing skepticism, emphasizing the resilience required to navigate the entrepreneurial landscape.
"the right way you get push and I think that people have underestimated that for a long time and I mean people again when we had stripe prototypes early on and we sort of showed investors I mean some o..."
Facing Rejection from Banks
In this segment, Collison recounts a pivotal early meeting with a bank where they faced outright rejection. He reflects on the challenges of being young entrepreneurs trying to establish credibility in a conservative industry. This moment underscores the hurdles Stripe faced in its formative days and the determination needed to overcome them.
"counterbalancing like we're we're you know two kids and you know if we you know stand on top of each other and put a suit around both of us we can kind of pretend to be you know an adult and like you ..."
The Darkest Moment: API Outage
Collison describes a critical moment when Stripe's API went down, leading to a sleepless night filled with anxiety about customer reactions. He shares the pain of being unable to fix the issue immediately and the unexpected realization that customers seemed unfazed. This segment highlights the pressure of maintaining service reliability in the payment industry.
"to emphasize the long period um of sort of you know again two years it's a long time when you're in it um of of working away with with so many of these roadblocks and headwinds and people telling us t..."
The Unexpected Silence of Customers
After the API outage, Collison reflects on the lack of customer complaints, which initially felt like a relief but later became a source of existential concern. He compares this experience to other tech companies facing public scrutiny and discusses the implications of being unnoticed in a competitive market. This segment reveals the complexities of customer engagement and brand visibility.
"um uh there there was a moment uh very early on um so you know now sort of stripe is replicated across you know multiple data centers and invested kind of a huge amount in in redundancy and and and av..."
Lessons from the Silence
Collison elaborates on the lessons learned from the silence following the API outage, emphasizing the need for awareness and engagement with customers. He reflects on how this experience shaped Stripe's approach to customer relations and the importance of being proactive in communication. This segment provides insights into the dynamics of customer feedback and business growth.
"data center had failed um and uh and you nominally they had redundancy and multiple internet connections but had been misconfigured and so it was all down and so we had multiple servers but like the t..."
Empowering Entrepreneurs with Atlas
Patrick Collison introduces Atlas, Stripe's initiative aimed at providing entrepreneurs worldwide with access to essential business infrastructure. He reflects on the challenges faced by aspiring entrepreneurs outside the US and how Atlas aims to eliminate barriers by offering services like company incorporation and banking solutions, enabling them to thrive in the global economy.
"CO2 emissions from almost 3 million pounds of coal burned how amazing is that I'm so proud that they're a sponsor of this program they're supporting Independent Media and they're going to help you mak..."
The Journey to Stripe's Atlas
Collison shares the backstory of Atlas, detailing his and his brother's upbringing in rural Ireland and the limitations they faced in accessing technology. He emphasizes the importance of making Stripe's services available globally, addressing the frustrations of entrepreneurs who struggle with structural barriers to entry in the tech industry.
"program so uh I want to uh play the video of this new product you have and then afterward you said youd make the big IPO announcement so let's uh your PR people right now just like totally spit their ..."
Overcoming Barriers for Global Entrepreneurs
In this segment, Collison discusses the lengths entrepreneurs go to in order to access Stripe's services, including traveling to the US and navigating complex legal requirements. He highlights the need for a solution that allows entrepreneurs from anywhere in the world to access the same resources as those in the US, leading to the creation of Atlas.
"whatever reason like they weren't available in Ireland or not in our part of Ireland or whatever um and um and so then kind of when we started stripe you know it was first available to businesses in t..."
Atlas: A Game Changer for Startups
Collison explains how Atlas provides a comprehensive package for entrepreneurs, including company incorporation in Delaware and access to a US bank account. He discusses the significance of this initiative in increasing the GDP of the internet by enabling more companies to exist and thrive globally.
"you think about it um uh what what an entrepreneur uh I mean really anywhere in the world wants is to have access to First Class infrastructure right and and you know they're not kind of you know you ..."
The Economics of Atlas
In this segment, Collison addresses the pricing model of Atlas, emphasizing that the $500 fee is a one-time cost aimed at helping entrepreneurs get started. He clarifies that Stripe's revenue model is based on the success of its customers, not on the initial fees, reinforcing the company's commitment to supporting global entrepreneurship.
"Atlas was our effort to do that and so kind of coming back to we discussed earlier on the way we work with entrepreneurs in 124 countries is through Atlas we've put together this package of we'll inco..."
The Vision Behind Atlas
Collison shares Stripe's vision for Atlas, which is to empower entrepreneurs worldwide by providing them with the same tools and resources available to successful companies in the US. He discusses the encouraging early traction of Atlas and its potential to transform the landscape for global startups.
"capable and you know the the early traction over the course of the year has been really encouraging uh and so you know we we launched a new version of Atlas yesterday um Patrick McKenzie patio 11 is i..."
Opportunities in Global Markets
Collison shares insights on the challenges faced by entrepreneurs in emerging markets, particularly in Egypt and Turkey. He highlights how Atlas enables startups to access global markets and banking systems, allowing them to thrive without relocating, thus fostering a new wave of global entrepreneurship.
"monetize them okay let's play the video After the Revolution here in Egypt no one was buying anything and it really retail I saw a great opportunity in terms of all of the products that were just sitt..."
Overcoming Payment Barriers
In this segment, Collison discusses the significant barriers to payment processing faced by startups in regions like Egypt. He illustrates how Atlas helps these businesses accept payments in various currencies, which is crucial for their survival and growth in the global market.
"shops Hotel Runner our typical customers are family run properties so we really help them get online and Market their property and actually start selling online banking here in Egypt is almost non-exi..."
Empowering Startups with Atlas
Collison emphasizes the transformative impact of the Atlas program on startups, allowing them to operate globally without the need to leave their home countries. He discusses the potential for startups to achieve significant growth and success through the resources provided by Stripe.
"global company there are obvious problems one of the biggest ones that we face right now is payment when we first launch at platti we needed to charge people from all over the world who speak Spanish ..."
Navigating Public Markets
Patrick Collison shares his perspective on the public markets, discussing the challenges and opportunities they present for companies like Stripe. He reflects on the importance of maintaining a long-term vision while being publicly traded, using Amazon as a case study for navigating early turbulence.
"stage it will allow us to access uh worldclass Banking and Financial system which really wasn't possible in Turkey we're going to see a revolution of startups coming to the global market and Atlas cou..."
Long-Term Vision vs. Market Pressures
In this segment, Collison addresses the tension between short-term market pressures and the need for long-term innovation. He discusses the impact of public company status on strategic decision-making and the importance of focusing on sustainable growth rather than immediate stock performance.
"partaking in them um uh in that so genuinely um uh the uh you know from our standpoint instead of Atlas I think as a good example of this you know there as we think about the idea of growing the GDP o..."
Future of Liquidity and Investment
Collison explores the evolving landscape of liquidity for private companies and the potential for new models that provide better access to investors. He emphasizes the need for innovative solutions that balance the interests of early investors and the long-term goals of companies.
"Amazon's employees specifically to stop looking at the stock price and focus on work and I'm sure that worked you know just as well as you might think but um uh but um you know from our standpoint you..."