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> Founded in 2010, Stripe is middle-aged by Silicon Valley standards, but Mr. Gaybrick and Stripe president John Collison said it had no plans to go public. Wh

> Founded in 2010, Stripe is middle-aged by Silicon Valley standards, but Mr. Gaybrick and Stripe president John Collison said it had no plans to go public. Why doesn't Stripe want to become a public company?

hkarthik 7y ago
Stripe is trying to capitalize for a capital intensive endeavor: Stripe Capital. An IPO would have been one way to fund it, but likely would have involved a lot of financial scrutiny along the way, which would probably distract them from the main point of raising the funds. A bold move which will hopefully work out for them and not overvalue the company before they attempt to go public later on.
seansmccullough 7y ago
Generally consensus is a recession is going to happen in the next year or two, and the next good time to IPO won’t be for several years after it that.
- bduerst 7y ago
  Yep. That's why we've seen a glut of public offerings in the past 18 months, as CFOs push to get them out before the drought.
- joering2 7y ago
  ... which has absolutely nothing to do with going IPO, since they would cash out/in and get access to stockholders money at the exact day of their IPO, not "next year or two". If you do not need to raise money there are limited reasons to go public, however you have much stricter reporting requirements, and general things you cannot do anymore since you are publicly traded, not to mention hostile takeovers, etc. Dell's story is a great example why you want to go public / go back private. https://www.forbes.com/sites/connieguglielmo/2013/10/30/you-wont-have-michael-dell-to-kick-around-anymore/ https://www.forbes.com/sites/connieguglielmo/2013/10/30/you-...
  - ceejayoz 7y ago
    > which has absolutely nothing to do with going IPO Sure it does. You can't do an IPO in a day. A company starting the process now risks having the recession start before the IPO goes live.
- acchow 7y ago
  Visa IPO’d during the Great Recession in 2008.
  - sureshv 7y ago
    Visa's underlying fundamentals didn't change due to a recession.
    - acchow 7y ago
      Stripe is also in the payments space. I wouldn't expect Stripe's financials to change any more than Visa's during a recession.
      - ryanmercer 7y ago
        Visa makes a ton of money just off of necessary debit card transactions. As far as I know Stripe doesn't have a whole lot of groceries/gas stations/drug stores/doctors offices/etc as customers. From what I've seen Stripe mostly has customers that are selling non-essential services and luxury goods. They'd be far more likely to suffer during a recession than Visa. I mean, Visa does around 1,700 transactions per second on average [1] and handled over 2 trillion dollars in a single quarter last year [2] [1] https://hackernoon.com/the-blockchain-scalability-problem-the-race-for-visa-like-transaction-speed-5cce48f9d44 https://hackernoon.com/the-blockchain-scalability-problem-th... [2] https://www.digitaltransactions.net/visa-surpasses-2-trillion-in-payment-volume-in-its-third-quarter/ https://www.digitaltransactions.net/visa-surpasses-2-trillio...
tempsy 7y ago
Incentivizes short-term thinking? My main question then is how do you create liquidity for employees? Unclear if these rounds include secondary offerings for employees.
servercobra 7y ago
Why would you want to become a public company? Being public means more complex accounting, transparency, extra legal fees, focus on quarter-to-quarter profits, etc. Other than liquidity (especially for founders/VCs), I don't see much of a reason to and a lot of reasons not to.
erikpukinskis 7y ago
The point of an IPO is to A) create liquidity, and B) divest some of the risk to a bigger pool of investors. If you are cash flow positive, and have only long term investors, there’s no real monetary benefit. You’re giving away your dividends to other people. It’s a question of whether you want to discount your own risk or hold it. IPOing allows you to price your risk and sell some of it off. But if you’re a long term investor there’s a good chance you value your risk higher than the market, which means you’ll lose money in the long term by selling it. It also depends on your other investment opportunities. If you have other places to invest, then your money has a high time value and you’re paying more “interest”, so-to-speak, on the risk. If you don’t have anywhere better to park your money then the time value is very low and holding that risk is cheap. There are other factors as well, like government limits on buying other assets, that could make a private investor want to hold.
- hn_throwaway_99 7y ago
  While those are the "theoretical" reason for IPOs, let's not ignore a primary reason for an IPO, which is to let early investors and employees cash out (though these days many companies, e.g. Slack, are just doing a direct listing instead).
  - deleted 7y ago
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  - deleted 7y ago
    [deleted]
  - erikpukinskis 7y ago
    Those people are divesting of risk.
    - robbiemitchell 7y ago
      Or seeking liquidity. They can be related but I wouldn't say they're synonymous.
  - 7y ago
soamv 7y ago
It's a carefully worded answer. No plans != doesn't want to. And also, I'd read "no plans" as "no plans that we're gonna tell you about right this minute".

hkarthik 7y ago

Stripe is trying to capitalize for a capital intensive endeavor: Stripe Capital. An IPO would have been one way to fund it, but likely would have involved a lot of financial scrutiny along the way, which would probably distract them from the main point of raising the funds. A bold move which will hopefully work out for them and not overvalue the company before they attempt to go public later on.

seansmccullough 7y ago

Generally consensus is a recession is going to happen in the next year or two, and the next good time to IPO won’t be for several years after it that.

bduerst 7y ago
Yep. That's why we've seen a glut of public offerings in the past 18 months, as CFOs push to get them out before the drought.
joering2 7y ago
... which has absolutely nothing to do with going IPO, since they would cash out/in and get access to stockholders money at the exact day of their IPO, not "next year or two". If you do not need to raise money there are limited reasons to go public, however you have much stricter reporting requirements, and general things you cannot do anymore since you are publicly traded, not to mention hostile takeovers, etc. Dell's story is a great example why you want to go public / go back private. https://www.forbes.com/sites/connieguglielmo/2013/10/30/you-wont-have-michael-dell-to-kick-around-anymore/ https://www.forbes.com/sites/connieguglielmo/2013/10/30/you-...
- ceejayoz 7y ago
  > which has absolutely nothing to do with going IPO Sure it does. You can't do an IPO in a day. A company starting the process now risks having the recession start before the IPO goes live.
acchow 7y ago
Visa IPO’d during the Great Recession in 2008.
- sureshv 7y ago
  Visa's underlying fundamentals didn't change due to a recession.
  - acchow 7y ago
    Stripe is also in the payments space. I wouldn't expect Stripe's financials to change any more than Visa's during a recession.
    - ryanmercer 7y ago
      Visa makes a ton of money just off of necessary debit card transactions. As far as I know Stripe doesn't have a whole lot of groceries/gas stations/drug stores/doctors offices/etc as customers. From what I've seen Stripe mostly has customers that are selling non-essential services and luxury goods. They'd be far more likely to suffer during a recession than Visa. I mean, Visa does around 1,700 transactions per second on average [1] and handled over 2 trillion dollars in a single quarter last year [2] [1] https://hackernoon.com/the-blockchain-scalability-problem-the-race-for-visa-like-transaction-speed-5cce48f9d44 https://hackernoon.com/the-blockchain-scalability-problem-th... [2] https://www.digitaltransactions.net/visa-surpasses-2-trillion-in-payment-volume-in-its-third-quarter/ https://www.digitaltransactions.net/visa-surpasses-2-trillio...

tempsy 7y ago

Incentivizes short-term thinking? My main question then is how do you create liquidity for employees? Unclear if these rounds include secondary offerings for employees.

servercobra 7y ago

Why would you want to become a public company? Being public means more complex accounting, transparency, extra legal fees, focus on quarter-to-quarter profits, etc. Other than liquidity (especially for founders/VCs), I don't see much of a reason to and a lot of reasons not to.

erikpukinskis 7y ago

The point of an IPO is to A) create liquidity, and B) divest some of the risk to a bigger pool of investors. If you are cash flow positive, and have only long term investors, there’s no real monetary benefit. You’re giving away your dividends to other people. It’s a question of whether you want to discount your own risk or hold it. IPOing allows you to price your risk and sell some of it off. But if you’re a long term investor there’s a good chance you value your risk higher than the market, which means you’ll lose money in the long term by selling it. It also depends on your other investment opportunities. If you have other places to invest, then your money has a high time value and you’re paying more “interest”, so-to-speak, on the risk. If you don’t have anywhere better to park your money then the time value is very low and holding that risk is cheap. There are other factors as well, like government limits on buying other assets, that could make a private investor want to hold.

hn_throwaway_99 7y ago
While those are the "theoretical" reason for IPOs, let's not ignore a primary reason for an IPO, which is to let early investors and employees cash out (though these days many companies, e.g. Slack, are just doing a direct listing instead).
- deleted 7y ago
  [deleted]
- deleted 7y ago
  [deleted]
- erikpukinskis 7y ago
  Those people are divesting of risk.
  - robbiemitchell 7y ago
    Or seeking liquidity. They can be related but I wouldn't say they're synonymous.
- 7y ago

soamv 7y ago

It's a carefully worded answer. No plans != doesn't want to. And also, I'd read "no plans" as "no plans that we're gonna tell you about right this minute".