3 ms·

What’s with all these acquisitions? Stripe realizing it’s going to slowly become PayPal 2.0 because infinite growth doesn’t exist?

by codemog 1mo ago

hibikir 1mo ago
Doing just payments is a really low margin industry, and the larger the contract you are after, the lower the margins. Therefore, it makes a lot of sense to try to sign up startups, as their growth is your growth. And to win in the startup market, you don't win by lowest costs, but by how much generic work you can save them. Cut their headaches, and they'll be happy giving you a wider cut. Thus, a million little acquisitions to make the possible Stripe bundle for small companies stronger, as they become the moat. The opposite of, say, the Adyen play, when you want to lower your own costs, and make money on tiny margins to do processing for really large companies.
- benatkin 1mo ago
  AI is making it a low-moat industry too. It's a lot quicker to build some API docs, a behavior tracking JavaScript library, and some fraud detection, with LLMs.
  - disgruntledphd2 1mo ago
    > some fraud detection Fraud detection is really, really, really, really hard so I would probably stick with someone like Stripe for this, as they have so much data that they can do a really good job. And fundamentally, the moat for Stripe isn't just the front-end APIs, it's all the work that they do (and there's a lot) in connecting together financial infrastructure. Even if you could wave a magic wand and generate all the code Stripe has (which you can't, currently) then you'd still need to build out all the partnerships, which is a lot of work. Disclaimer: former Stripe (though only a tourist), still hold some of their shares.
- whazor 1mo ago
  My analysis is that Stripe wants to own the costs of running a startup. They would get a complete picture of both sides of the business: what money comes in and where it goes. There are also a couple of advantages. They can take money directly from revenue before it leaves Stripes and without any processing costs. They can also invest into startups through credits and financing. And finally, their exposure to bankruptcy risk can drop as well.
  - nkotov 1mo ago
    If they buy Mercury - it's game over.
- anthonypasq 1mo ago
  Why would payments be low margin? You're making a small amount on each transaction, but to you thats essentially all profit no?
testbjjl 1mo ago
I think about their IPO and what seems and likely still is a promising offering seems a little less so with AI offerings. I also wonder if these businesses, suffering from the same AI uncertainties are a good value?
vxxzy 1mo ago
we will soon be in the last month of q3
fny 1mo ago
I think the aim is to become the agent for commerce.
- amelius 1mo ago
  Like a regulator. Great! If you don't like a government regulating a market then you haven't seen a company do it.
CodeCompost 1mo ago
I'm getting Gordon Gecko vibes.

What’s with all these acquisitions? Stripe realizing it’s going to slowly become PayPal 2.0 because infinite growth doesn’t exist?

by codemog 1mo ago

What’s with all these acquisitions? Stripe realizing it’s going to slowly become PayPal 2.0 because infinite growth doesn’t exist?

hibikir 1mo ago

Doing just payments is a really low margin industry, and the larger the contract you are after, the lower the margins. Therefore, it makes a lot of sense to try to sign up startups, as their growth is your growth. And to win in the startup market, you don't win by lowest costs, but by how much generic work you can save them. Cut their headaches, and they'll be happy giving you a wider cut. Thus, a million little acquisitions to make the possible Stripe bundle for small companies stronger, as they become the moat. The opposite of, say, the Adyen play, when you want to lower your own costs, and make money on tiny margins to do processing for really large companies.

benatkin 1mo ago
AI is making it a low-moat industry too. It's a lot quicker to build some API docs, a behavior tracking JavaScript library, and some fraud detection, with LLMs.
- disgruntledphd2 1mo ago
  > some fraud detection Fraud detection is really, really, really, really hard so I would probably stick with someone like Stripe for this, as they have so much data that they can do a really good job. And fundamentally, the moat for Stripe isn't just the front-end APIs, it's all the work that they do (and there's a lot) in connecting together financial infrastructure. Even if you could wave a magic wand and generate all the code Stripe has (which you can't, currently) then you'd still need to build out all the partnerships, which is a lot of work. Disclaimer: former Stripe (though only a tourist), still hold some of their shares.
whazor 1mo ago
My analysis is that Stripe wants to own the costs of running a startup. They would get a complete picture of both sides of the business: what money comes in and where it goes. There are also a couple of advantages. They can take money directly from revenue before it leaves Stripes and without any processing costs. They can also invest into startups through credits and financing. And finally, their exposure to bankruptcy risk can drop as well.
- nkotov 1mo ago
  If they buy Mercury - it's game over.
anthonypasq 1mo ago
Why would payments be low margin? You're making a small amount on each transaction, but to you thats essentially all profit no?

testbjjl 1mo ago

I think about their IPO and what seems and likely still is a promising offering seems a little less so with AI offerings. I also wonder if these businesses, suffering from the same AI uncertainties are a good value?

vxxzy 1mo ago

we will soon be in the last month of q3

fny 1mo ago

I think the aim is to become the agent for commerce.

amelius 1mo ago
Like a regulator. Great! If you don't like a government regulating a market then you haven't seen a company do it.

CodeCompost 1mo ago

I'm getting Gordon Gecko vibes.