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The Collison Brothers Built Stripe into a $95B Unicorn
- lambda_lord 4y agoIs it unusual for a successful company like Stripe to take so long to go public? It seems like their house is in order, and they are profitable, but employees aren't liquid.
- pbreit 4y agoIt's too bad that most of the gains will accrue to private, wealthy investors instead of common public investors.
- tomatowurst 4y agoIPO right now is very difficult as the door is closing, and investors are wary about paying a premium like they have before. They delayed it too long and have missed the window, it is unlikely from a year from now they will be able to get any bids for the current market valuations.
- colinmhayes 4y agoI mean why didn't they IPO last year with everyone else?
- tomatowurst 4y agoYour guess is as good as mine but they likely thought that the status quo in market would continue.
- Emphere 4y agoPC has spoken admirably of Koch Industries and he thinks there's some merit to remaining private. That's probably why. I don't have the source at hand but probably one of his podcasts.
- colinmhayes 4y agoI feel like it makes sense for Koch to stay private since their work mostly focuses on fossil fuels and specifically fracking. Public markets can be a big distraction with protests and what not. Is stripe worried about being cancelled?
- etaioinshrdlu 4y agoIs there any reason they can't do a direct listing without selling any new shares? The only downside for the company seems to be that employees would be able to sell, and that seems rather greedy for the company to not work in its employee's best interest.
- jadbox 4y agoWhat happen if they never go public at this stage?
- brianwawok 4y agoThere are many private companies. Some are very big. See space-X as a popular example.
- taw89345 4y agoThere have been liquidity events before, which allowed old enough employees to sell shares. You will find that many a former employee has managed to leave while being able to exercise their options and have a partial cash out with a lot of money to spare. So it’s not been an exercise of keeping employees tied down. A visibility one is Will Larson: You bet that he didn’t leave without being able to sell shares to cover AMT, and getting some immediate payout. As for why stay private, what John C has said publicly is that they still see a lot of growth to go, and that not having to provide detailed financian statements to the general public, which would include competitors, is a competitive advantage. It seems believable to me.
- thecosas 4y agohttps://stripe.com/files/stripe-2021-update.pdf https://stripe.com/files/stripe-2021-update.pdf
- SilverBirch 4y agoI think this is almost a case of a company being too successful. The general pattern is that you grow, you raise money, you grow, you raise money, you grow, your IPO. At each stage of growth there's a different investor. Initially you have Angels and YC style places. Then you have various stages of VC, then you finally have the public market. What normally happens is that you become too big and that's when VCs step out of the way, you IPO and everyone takes their gains. But in the case of stripe you have $100Bn company that the VCs will still happily plough money into. So there's no reason to IPO. You can get all the liquidity you need privately. On top of that, Stripe doesn't really need capital, they aren't some uber buying market share with loss making. They are real SAAS, they can scale and see a drop in their earnings:cost ratio.
- digianarchist 4y agoConsidering they just emailed all former employees asking for up-to-date contact information, I think that an IPO is rather imminent.
- encoderer 4y agoPaddle buying ProfitWell is big. Paddle would also take over all my billing support. I don’t want to do a billing migration right now but if I did I probably would switch to Paddle. The first real contender to Stripe in a long time.
- mooktakim 4y agoI still don't understand what Paddle offers to SaaS. As a dev I thought maybe easier integration. But it doesn't seem all that different from Stripe Invoice.
- samwillis 4y agoMy understanding is that Paddle becomes a middle man in the transaction taking on all international tax responsibility. They pay you out after paying all tax/vat local to the customer. This massively simplifies international sales, particularly for EU business. I also believe that an awful lot of small online SASS and digital good sales by companies are committing (unintentional) tax fraud in the countries of their customers. I hate trying to understand vat/sales tax on digital goods, to the point that it has until now discouraged me from starting that sort of business on my own. With Paddle I wouldn't have to even think about it.
- jokethrowaway 4y agoA simple solution is to do a b2b company only and thanks the EU for complicating the situation so much. Another thing I used to do was to just sell to everyone except European customers (explicitly written on the website). The funniest thing is that the EU ostensibly did it to make "Amazon pay their fair share" while most small merchants that used to run e-commerce have moved to sell on Amazon or eBay just not to have to keep up with all the regulations and bs.
- samwillis 4y agoI believe that two some extent these sort of regulations are lobbied for in the background by large corporations in order to make it harder for small business to enter the market. If they are going to get regulated anyway best make it to their own advantage!
- mroll 4y ago
- mroll 4y ago
- tootie 4y agoIt's a really amazing case of a business going into a crowded space and building a solution to what anyone would have called a thoroughly-solved problem and still managed to disrupt it. They didn't really "invent" anything or make a new market, they just did something better than everyone else. And, I think, got incredibly lucky with entering the market at the exact right time.
- warent 4y agoIt is curious to wonder how they managed to lead the company this successfully. How often do young founders actually hang onto leadership this long without either imploding or being replaced? Why are the Collison brothers different?
- deleted 4y ago[deleted]
- ralston3 4y agoIMO...value. I personally feel like it's always easier for founders to stay on when their product provides actual, tangible, objective value. It clearly shows that they (the founders) sort've know their market, and know what they're doing (to some degree). When that's the case, I feel investors are happy to get out of the way and watch their equity rise. Whereas when a service isn't providing any real differential value, it's a lot easier to try to swap out the founders for the MBA/finance/corporate type that doesn't really know the market/audience.
- itsoktocry 4y ago>How often do young founders actually hang onto leadership this long without either imploding or being replaced? Why are the Collison brothers different? Stripe is great, so I assume these guys are good leaders. But Stripe was founded in 2011. Are there not plenty of young founders of that era "hanging on" to their leadership? I don't see anything particularly out of the ordinary here.
- samwillis 4y agoI think it's to some extent the good old Irish charm, and I say that as someone married to a much better Irish other half.
- newaccount2021 4y agoabsolutely ZERO chance they could get a $95B valuation in public markets today HN/VCs also said Uber was a $150B company...Lyft was a $50B company...Peloton was a $40B company... if Stripe went public today, I would say they would be lucky to crest at a $30B valuation, even that may be lofty...PayPal has 3x market share as Stripe and has a $92B valuation
- goodoldneon 4y agoUber peaked at ~$150 billion market cap. Peloton peaked ~$55 billion market cap. They were absolutely overvalued at those market caps, but it's wrong to say that "HN/VCs said those companies were worth X but they didn't reach X in public markets"
- itsoktocry 4y ago>They were absolutely overvalued at those market caps, but it's wrong to say that "HN/VCs said those companies were worth X but they didn't reach X in public markets" Why is it wrong? You think private markets are better indicators of value than public?
- lowkey_ 4y agoNo, he's saying literally they did reach X market cap in a public market. He was correcting facts of the previous poster.
- nwienert 4y agoIf Shaq lifts me up so I can dunk, you can say that I dunked, but in general it's more accurate to evaluate things under more normal circumstances.
- goodoldneon 4y agoRight, but that not OP's point. OP said that insane valuations reached in private markets can't be reached in public markets. Public markets can be just as irrational as private markets
- asd88 4y agoMore like $50B unicorn nowadays?
- clra 4y agoIt's hard to tell given the private stock and all, but the article mentions that there's reason to believe the company hasn't taken quite as much of a haircut as comparable ones that are already on the public markets: > 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.
- __derek__ 4y agoDoes buying private stock on EquityZen include any due diligence? I'm skeptical that it's helping with price discovery, but I don't really understand the platform. The topic reminded me of a good episode of Invest Like the Best with Carta CEO Henry Ward[1], which included a discussion of their CartaX platform for offering insiders a chance to sell private stock to institutions. [1]: https://podcasts.apple.com/ma/podcast/henry-ward-transforming-private-markets/id1154105909?i=1000558237878 https://podcasts.apple.com/ma/podcast/henry-ward-transformin...
- WXLCKNO 4y agoCan you take stock of a public competitor in the same industry and simply apply its price movements to a private valuation?
- Ferrotin 4y agoSimply, but not precisely. The same macroeconomic factors that affect the public companies’ value apply.
- paulpauper 4y ago
- m00dy 4y agoLet's see what will happen for them in this bear market.
- laluser 4y agoThis is exactly why they prefer to stay private. Stock volatility would be wild. They will have access to liquidity and funding for a while as long as they are growing a good rate, which they seem to be.
- tomatowurst 4y agoDoubtful as those sources of funding are also beholden to investors who most likely have positions in the market. There can be no isolation in modern finance, everything is interconnected. If the rates continue to rise and market gets bearish on paying multiples on revenues, its going to run into serious liquidity crunch.
- paulpauper 4y agoThe Nasdaq fell as much as it did during Covid, but without any obvious cause or catalyst for the selling. the bear market is probably over now. More likely this is the bottom.
- ambicapter 4y ago> Wordlessly offered a credit card reader, Collison says he’d rather pay cash. Wonder why. Competitors’ device? Privacy concerns?
- zht 4y agowonder if it's privacy concerns like Zuck taping over his webcam
- gnatman 4y agoYeah I wonder if, after seeing how the sausage is made on payment processing (and making $95B of sausage himself), he doesn't want exposure under some other (to him) shitty system. It could also be some petty competitive instinct to stiff his competitors even a few cents or dollars in revenue.
- daniel-cussen 4y agoIt's so basic. You gotta limit the cam. It's just too easy to do the spycam, I have a friend who did it to himself to see how hard it was. It was really easy. It's from like 2002, when they first came out. You know what I just did? I put a band-aid a guy sold me on the street, 2 cents, it's perfect, the cotton part over the camera and it doesn't leave residue. Restickable. Hardware kill switch right there...but for this problem, it's just a band-aid.
- deleted 4y ago[deleted]
- napolux 4y agoPaddle as a lot of restrictions on what to sell and what not.
- kpennell 4y agoFWIW - Accepted and ghosted: interviewing for a leadership position at Stripe - https://news.ycombinator.com/item?id=29387264 https://news.ycombinator.com/item?id=29387264 I know Stripe is a darling YC company but if you look for it, you can find some usually anonymous detractors. "+1. Also a founder of an $XB fintech. Exact same story. Patrick + John dangled an acquisition to get a look inside, and ended up re-trading on the terms. Then proceeded to target 2 of our team members to recruit. Fast forward a few years, and now they have deployed a team to directly copy one of our products. Amongst their L2 team, Patrick and Will are described as the "killers". I guess maybe a bit of duplicity is required to build a company of that size..."
- deleted 4y ago[deleted]
- vlovich123 4y ago> but if you look for it, you can find some usually anonymous detractors. Seems like a vacuous statement. Isn’t that true of anything/anyone in life?
- kpennell 4y ago[removed]
- pvg 4y agothis needed to be shared You're welcome to write your own critique of Stripe or anything else but recycling other people's HN drama is not really in the spirit of the site. Repasting an old provocative comment while withholding context (i.e. not linking it and its rebuttals) is extra lame.
- tempnow987 4y agoAnd for everyone of these stories is a story of a startup that screwed its employees during a buyout by another big firm while founders walked in the gravy. I've found a lot of the "secrets" really aren't that. The ideas are usually pretty public, and the questions come down to ability to execute and integrate etc. Stripe has a good position from which to expand linked lines.
- kareemsabri 4y agoI know the Collisons are brilliant founders and I have long admired Stripe (I've used their Golang API client as inspiration many times in my own code) but it's kind of unfortunate how founder lore really minimizes employees. Stripe has 4,000 people working there, this article mentions only two other employees in passing (the CPO and CFO). Surely many others were brilliant contributors to Stripe's becoming a $95B unicorn, and staying one, beyond just the Collison Brothers. A culture in our industry that made employees feel more ownership would likely help with retention and recruiting.
- paulpauper 4y agoI am sure a good chunk of those employees are millionaires will will become millionaires after the IPO.
- javajosh 4y ago>it's kind of unfortunate how founder lore really minimizes employees It's far easier to tell the story of a handful of people than of thousands. The only successful approach to the latter is selecting some at random and telling their stories - but that still leaves most people out. I think it's an interesting and hard problem to tell a comprehensive story about a large group, but I'm not really sure if it can be done. Even Howard Zinn focused on (usually unsuccessful) opposition leaders more than the everyman in his narrative! In any event, I'd love to see someone succeed at making such a narrative, not necessarily about Stripe, but about anything really.
- kareemsabri 4y agoFor sure. I understand why stories are told the way they are. I stand by my point though. And I do think there's a happy medium between Ayn Rand'ian style hero entrepreneur and telling the story of thousands that can be achieved with modest effort, since I've read a few of them. Admittedly the absurdity of the headline is what triggered the initial thought for me, but the article lived up to the headline in this case.
- AlchemistCamp 4y ago> I've used their Golang API client as inspiration many times in my own code For the last five years, I’ve requested an Elixir client. I wish they would either build one or greatly improve the docs for people who aren’t using one of their first party API client libraries. It’s not like Stripe lacks the resources. In fact an argument could be made that ignoring all but the most popular handful of languages runs counter to their goal of increasing the GDP of the internet. Increased friction for adopting new and productive languages means fewer do and devs remain in a slightly more ossified ecosystem.
- throwaway5752 4y agoWhat the hell is a unicorn at this point? Just say "successful private company". Because of the craziness in valuations, $1B pre-public isn't that rare any more, so "unicorn" is not apt. But Crunchbase says they've had 20+ funding rounds, and there should be some limit at the D or E round. Nothing against Stripe, Stripe is great.
- NDizzle 4y ago95B and they still charge me the wrong tax rate on purchases. Note that some zip codes have rural areas that use the county rate. 9.5% vs 7.5% is quite a difference.
- DantesKite 4y ago> 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. What? Are you telling me Patrick Collison lost to his future wife at 17 in a science competition? That's so cool.
- chrisgd 4y agoI find it hard to believe they should be worth more than Twilio. They get a cut of revenue but they are still developer focused, which limits ultimate upside. It is about making developers lives easier not about building a network that scales
- kopochameleon 4y agoI don't find it hard to believe that "Twilio, but for money", could make more money than Twilio
- chrisgd 4y agoTwilio but for accepting payments. Mostly for a bunch of DTC and subscription businesses that are not getting another round of VC funding
- deleted 4y ago[deleted]
- funstuff007 4y agoAre there any public financials for Stripe?
- hgarg 4y agoLooks like an IPO is coming soon.
- paulcole 4y agoIsn’t this just a marketing puff piece with no substance?
- danielmarkbruce 4y agoAsk yourself why.