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> In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment. We’d go further than that. In our view, we made

by pid-1 4y ago

> In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment. We’d go further than that. In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important: > - We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown. > - We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in. https://stripe.com/br/newsroom/news/ceo-patrick-collisons-email-to-stripe-employees https://stripe.com/br/newsroom/news/ceo-patrick-collisons-em...

iterati 4y ago
And, of course, the leadership aren't suffering their mistakes.
- deleted 4y ago
  [deleted]
BaseballPhysics 4y ago
That first point is key, and I think they're being... less than honest. The reality is there's very little evidence for an actual "broader slowdown". GDP growth in the US was decent in the last quarter despite a huge decline in home sales and headwinds from inflation, and unemployment remains at record lows. There's certainly some signs for concern, but the only real, persistent decline has been in the stock market (which, honestly, is why this whole period is kinda weird). The truth, when I look at these stories, is many of these tech companies expected the major changes during COVID, which lead to huge boosts in revenue for a lot of tech companies, to persist post-COVID, and that simply didn't pan out. The result is a lot of businesses with bloated workforces predicated on long-term financial projections that haven't panned out. But, Stripe can't admit they made a major strategic blunder--the exact same blunder made by companies like Peloton--so they have to blame it on "a broader slowdown" since then they have an exogenous factor they can point to rather than admitting they were just caught up in the techno-optimism of a transformed post-COVID society.
- 650REDHAIR 4y ago
  Anecdote here, but I sell vintage clothing, electronics, and furniture on the side and have noticed a substantial downturn in sales this year. Lower than pre-pandemic levels.
- jesuscript 4y ago
  The stock market didn’t really decline. There was a speculative play at the beginning of the pandemic that allowed the shitheads that run that game to do a reallocation of capital from “pandemic hit” industries to tech. That’s why tech ballooned to stupid levels. I say speculative because while it may have been right to reallocate away from, say, Airlines stocks, there was no good reason to run up tech to those absurd levels. Tech didn’t get hit by interest rates, it’s just a reallocation of that influx of money back to other sectors. People didn’t stop using tech. Now they reallocated out of tech (the way it was supposed to be around 2019), and all these shithead companies are saying “we’re fucked, our stock tanked”. No, your stock went back to healthy levels, your stock was just a bank for two years, that’s all.
  - deleted 4y ago
    [deleted]
  - BaseballPhysics 4y ago
    Yup, good points. The stock market has been pretty damn volatile, which is to be expected given the broader geopolitical context, the chaos of the post-COVID recovery, etc, but the stock of a ton of these tech companies just reverted to the mean, which is exactly what you'd expect if the changes during COVID failed to persist.
- austenallred 4y ago
  > But, Stripe can't admit they made a major strategic blunder They quite literally say that? “In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important: We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown. We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”
alexpetralia 4y ago
I would argue CEOs generally find it optimal to "overgrow" during boom periods and "cut" during bust periods. This is why we see the routinely observe the pattern. It is not because a bunch of confused CEOs are constantly making mistakes. This was expected, even planned for (if not explicitly). This is how startups work. Overgrow, then cut, then overgrow again. Layoffs, especially around moonshots or non-revenue-generating teams, are only problematic for PR purposes.
- zeroonetwothree 4y ago
  It's true but it would be nice if they were honest about it. It makes sense as a strategy because, if the bust doesn't come (or as soon as you think), then you'd much rather be in the position of having grown to take advantage of it than not.
  - bombcar 4y ago
    It seems to me they are moderately open about it. "We expected things to keep growing, acted on that, it didn't, now acting on that." I suppose they could say "we thought the economy might contract in 2022 as it would eventually, but that risk was more palatable than not growing and missing out vs our competitors if the contraction didn't happen."
dehrmann 4y ago
> We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 A lot of this was driven by covid-cautious WFH culture. Someone working from home in the Bay Area in January 2022 might not realize the extent other industries are back in the office and other regions are done with covid.
deleted 4y ago
[deleted]

by pid-1 4y ago

iterati 4y ago

And, of course, the leadership aren't suffering their mistakes.

deleted 4y ago
[deleted]

BaseballPhysics 4y ago

That first point is key, and I think they're being... less than honest. The reality is there's very little evidence for an actual "broader slowdown". GDP growth in the US was decent in the last quarter despite a huge decline in home sales and headwinds from inflation, and unemployment remains at record lows. There's certainly some signs for concern, but the only real, persistent decline has been in the stock market (which, honestly, is why this whole period is kinda weird). The truth, when I look at these stories, is many of these tech companies expected the major changes during COVID, which lead to huge boosts in revenue for a lot of tech companies, to persist post-COVID, and that simply didn't pan out. The result is a lot of businesses with bloated workforces predicated on long-term financial projections that haven't panned out. But, Stripe can't admit they made a major strategic blunder--the exact same blunder made by companies like Peloton--so they have to blame it on "a broader slowdown" since then they have an exogenous factor they can point to rather than admitting they were just caught up in the techno-optimism of a transformed post-COVID society.

650REDHAIR 4y ago
Anecdote here, but I sell vintage clothing, electronics, and furniture on the side and have noticed a substantial downturn in sales this year. Lower than pre-pandemic levels.
jesuscript 4y ago
The stock market didn’t really decline. There was a speculative play at the beginning of the pandemic that allowed the shitheads that run that game to do a reallocation of capital from “pandemic hit” industries to tech. That’s why tech ballooned to stupid levels. I say speculative because while it may have been right to reallocate away from, say, Airlines stocks, there was no good reason to run up tech to those absurd levels. Tech didn’t get hit by interest rates, it’s just a reallocation of that influx of money back to other sectors. People didn’t stop using tech. Now they reallocated out of tech (the way it was supposed to be around 2019), and all these shithead companies are saying “we’re fucked, our stock tanked”. No, your stock went back to healthy levels, your stock was just a bank for two years, that’s all.
- deleted 4y ago
  [deleted]
- BaseballPhysics 4y ago
  Yup, good points. The stock market has been pretty damn volatile, which is to be expected given the broader geopolitical context, the chaos of the post-COVID recovery, etc, but the stock of a ton of these tech companies just reverted to the mean, which is exactly what you'd expect if the changes during COVID failed to persist.
austenallred 4y ago
> But, Stripe can't admit they made a major strategic blunder They quite literally say that? “In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important: We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown. We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”

alexpetralia 4y ago

I would argue CEOs generally find it optimal to "overgrow" during boom periods and "cut" during bust periods. This is why we see the routinely observe the pattern. It is not because a bunch of confused CEOs are constantly making mistakes. This was expected, even planned for (if not explicitly). This is how startups work. Overgrow, then cut, then overgrow again. Layoffs, especially around moonshots or non-revenue-generating teams, are only problematic for PR purposes.

zeroonetwothree 4y ago
It's true but it would be nice if they were honest about it. It makes sense as a strategy because, if the bust doesn't come (or as soon as you think), then you'd much rather be in the position of having grown to take advantage of it than not.
- bombcar 4y ago
  It seems to me they are moderately open about it. "We expected things to keep growing, acted on that, it didn't, now acting on that." I suppose they could say "we thought the economy might contract in 2022 as it would eventually, but that risk was more palatable than not growing and missing out vs our competitors if the contraction didn't happen."

dehrmann 4y ago

> We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 A lot of this was driven by covid-cautious WFH culture. Someone working from home in the Bay Area in January 2022 might not realize the extent other industries are back in the office and other regions are done with covid.

deleted 4y ago

[deleted]