Latest / Merryn Talks Money / Money Stuff Podcast: Stripe's John Collison

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Money Stuff Podcast: Stripe's John Collison · Merryn Talks Money

0:03
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
0:19
Speaker 2: Hey Marin talks to money listeners. Hope you're preparing for
0:22
Speaker 2: a lovely holiday break. We are going to be off
0:24
Speaker 2: for a few weeks, resting up for another great year
0:26
Speaker 2: of interviews. But do not worry. We're bringing you some
0:29
Speaker 2: great stuff It doesn't do in the meantime. Starting with
0:32
Speaker 2: another episode from our colleagues on the Money Stuff team,
0:34
Speaker 2: hosts Matt Levine and Katie Greifeld spoke with John Collison,
0:37
Speaker 2: the co founder and president of Stripe. It was a
0:39
Speaker 2: really interesting conversation about the financial services business, the case
0:42
Speaker 2: he's making for crypto, and why he doesn't think IBOs matter.
0:46
Speaker 2: I disagree, by the way, enjoy and be sure to
0:48
Speaker 2: catch more episodes by subscribing to The Money Stuff Feed.
0:53
Speaker 3: So my idea for you guys is you guys just
0:55
Speaker 3: have like regular normal boring ads on the podcast. I
0:58
Speaker 3: think you need to do the post read ads for yeah,
1:02
Speaker 3: say a lot that everything in securities, frauds is having
1:04
Speaker 3: a bad night's sleep securities for us.
1:08
Speaker 4: Well, like I could do like the men's shaving club
1:11
Speaker 4: ads or something that could be fun too.
1:13
Speaker 3: When buying short data out of the money called out.
1:16
Speaker 5: Right.
1:16
Speaker 4: Yeah, be good.
1:18
Speaker 5: Hello, and welcome to The Money Stuff Podcast. I'm Matt Levine,
1:22
Speaker 5: I write The Money Stuff Colm at Bloomberg.
1:23
Speaker 4: Opinion, and I'm Katie Greifeld, a reporter for Bloomberg News
1:27
Speaker 4: and an anchor for Bloomberg Television.
1:29
Speaker 3: Katy.
1:29
Speaker 5: Today we're doing something new. We are doing our first
1:31
Speaker 5: interview on The Money Stuff Podcast.
1:33
Speaker 4: Are you nervous, I'm pretty nervous. I'm a little bit
1:35
Speaker 4: nervous too.
1:36
Speaker 5: We're recording this after it happens, and we're not really nervous.
1:40
Speaker 4: I'm still stressed out. To speak for.
1:41
Speaker 5: Yourself, I'm pretty nervous. I haven't listened to it yet.
1:43
Speaker 5: Today our guest is John Collinson Stripe. Stripe is a
1:47
Speaker 5: payments and financial technology company, and John and his brother
1:51
Speaker 5: and co founder Patrick are kind of tech industry celebrities.
1:55
Speaker 4: Yeah, he's an Irish billionaire. He's from Limerick. That's cool.
2:00
Speaker 5: He's wearing her Limerick jacket, but we'll probably get into
2:02
Speaker 5: that during the podcast.
2:03
Speaker 4: That's true. It's a little embarrassing that I.
2:05
Speaker 5: Wore this medium amount of embarrassing.
2:07
Speaker 4: I truly didn't mean to, but as I said to
2:10
Speaker 4: you in our office, it was forty seven degrees. When
2:13
Speaker 4: I left my apartment this morning pre dawn, and I
2:15
Speaker 4: needed a top and this is my favorite medium weight jacket.
2:20
Speaker 5: This is the behind the scenes content that Money Stuff
2:23
Speaker 5: podcast listeners really crave. Yeah, let's jump right back.
2:27
Speaker 4: Into that internetailed.
2:28
Speaker 3: It should do.
2:29
Speaker 5: Like a crashing transition to talking about striper.
2:34
Speaker 3: Yeah, So how do you guys usually start these how
2:35
Speaker 3: do you want? I guess you haven't done that.
2:36
Speaker 5: You haven't done that, you could invent the product?
2:38
Speaker 3: Yeah, start by review of the advertisements I've heard.
2:41
Speaker 5: Yea, the podcast we start the podcast with much like this.
2:45
Speaker 5: We walk into the room and bullshit for a bit
2:49
Speaker 5: and then record that. Yeah, and then we eventually say
2:52
Speaker 5: hello and welcome to the Money Stuff podcast, and we
2:54
Speaker 5: talk about whatever the thing we're talking about today. So
2:56
Speaker 5: now we're talking about Stripe capital markets. Yeah, okay, So listeners,
3:02
Speaker 5: in podcasts with you, you talk a lot about your
3:04
Speaker 5: interest in business history and like you've learned from the
3:07
Speaker 5: tech companies of the past and the conglomerates of the
3:09
Speaker 5: conglomerate wave. I have not heard you talk about the
3:13
Speaker 5: lessons you've learned from financial services companies. And I write
3:16
Speaker 5: about finance and think of Stripe in many ways as
3:19
Speaker 5: like a financial services esque company here, like some evolution
3:23
Speaker 5: of a financial services company. So I'm curious, like, I
3:26
Speaker 5: don't know what you think about financial services.
3:28
Speaker 3: Yeah, in general, we try to learn a lot from
3:32
Speaker 3: other businesses, and Okay, one of the things I really
3:35
Speaker 3: like is we live in a golden age of learning
3:37
Speaker 3: about other businesses right now. And one of the reasons
3:39
Speaker 3: I like this is because I think learning about other
3:42
Speaker 3: businesses at some level learning about the world or certainly
3:47
Speaker 3: the economy, because you know, you're getting sense for how
3:50
Speaker 3: all the various entities work together. With financial services in particular,
3:54
Speaker 3: you came up with the framing that you know, Stripe
3:57
Speaker 3: is in a way kind of a new kind of
3:59
Speaker 3: scaled investment bank.
4:00
Speaker 5: Was it you're framing I think I said that. Yeah, yeah,
4:03
Speaker 5: but I would love for you to tell me that's right.
4:05
Speaker 5: That I'm assuming you'll tell me it's wrong.
4:07
Speaker 3: No. I actually kind of like it because if you
4:09
Speaker 3: think about what are the potential source of funding for
4:11
Speaker 3: a business, Like if you want to scale up a business,
4:13
Speaker 3: how can you fund it? There's three ways you can
4:14
Speaker 3: fund a business. You can do it through debt, equity,
4:17
Speaker 3: or retain earnings, and so if you just tick through
4:20
Speaker 3: each one of those on the earning side, maybe that's
4:23
Speaker 3: the place where a Stripe is kind of the most
4:25
Speaker 3: directly doing this, where we're making it easier for businesses
4:28
Speaker 3: to self fund their growth. And we see tons of
4:31
Speaker 3: bootstrapped or kind of certainly airly monetizing businesses on the Stripe,
4:35
Speaker 3: like with this customer and Stripe Photo Room, and they
4:37
Speaker 3: do online kind of GENI powered photo editing. They're based
4:41
Speaker 3: in France, and you know, maybe ten years ago they
4:43
Speaker 3: would have you know, raised a whole bunch of VC
4:45
Speaker 3: and scaled up that way. They're actually profitable within a
4:47
Speaker 3: year and they've just kind of scaled up profitably since then.
4:50
Speaker 3: Ninety eight percent of their business comes from outside France,
4:53
Speaker 3: and so they're kind of selling this product to a
4:54
Speaker 3: global audience and Stripes making it easy to do that.
4:56
Speaker 3: And we've seen that in general, I guess the AI
4:58
Speaker 3: companies in particular, where you know, during the social media boom,
5:02
Speaker 3: maybe companies scaled up first with raising lots of VC
5:06
Speaker 3: dollars and then later on figured out monetization. With a
5:09
Speaker 3: lot of the AI companies, you know, open eye perplexity clause,
5:12
Speaker 3: you know the photo room who I was mentioning, they
5:13
Speaker 3: actually monetize from pretty early on using stripe, and so
5:16
Speaker 3: that's one source of funding.
5:18
Speaker 5: Stripe allows early stage companies to monetize so efficiently that
5:23
Speaker 5: like there's less need for data and equity in the
5:25
Speaker 5: world because companies can sell fund like you're putting vcs
5:28
Speaker 5: out of business.
5:29
Speaker 3: Yeah, and obviously we think it's a more slightly more
5:33
Speaker 3: healthy dynamic for the businesses. A classic trap that early
5:37
Speaker 3: stage companies fall into is you know, and why combinators
5:41
Speaker 3: say tries to get their companies to avoid falling into
5:43
Speaker 3: this failure mode is kind of they raise money and
5:46
Speaker 3: then they think kind of valuation milestones or any kind
5:49
Speaker 3: of financial or investor milestones are the milestones that matter
5:52
Speaker 3: for the business wheas obviously that's not the case. It's
5:53
Speaker 3: are you building something of value in the world which
5:55
Speaker 3: will generally be measured by does anyone want to buy it?
5:57
Speaker 3: And so I think maybe it gets people on the
5:59
Speaker 3: right lead board earlier on, where a revenue leader board
6:02
Speaker 3: is just a much healthier leaderboard to be thinking about
6:04
Speaker 3: than a fundraising valuation leaderboard. But we also play in
6:07
Speaker 3: the other parts of the capital stack, where on the
6:09
Speaker 3: debt side. I mean, you guys have probably watched this,
6:11
Speaker 3: but banks have kind of gotten out of the SMB
6:14
Speaker 3: lending space since the financial crisis, as just the compliance
6:17
Speaker 3: costs have gone up, Like people do not go to
6:19
Speaker 3: a bank for a five thousand dollars loan anymore. And
6:21
Speaker 3: so we now lend through our lending partners billions of
6:26
Speaker 3: dollars to startups. We do that entirely programmatically through amount models,
6:31
Speaker 3: you know, cash flow based lending. So we're not looking
6:33
Speaker 3: at the balance schee. We're not trying to do kind
6:34
Speaker 3: of credit checks on the individual or something like that.
6:37
Speaker 3: We're looking at the stream of cash flows. Is it
6:39
Speaker 3: a healthy, reliable stream of cash flows that can support
6:42
Speaker 3: some debt.
6:42
Speaker 5: So you're doing the cash flows, you can see exactly.
6:45
Speaker 3: We see the cash flows and people repay out of
6:47
Speaker 3: the stripe cash flows. And so that is a new
6:50
Speaker 3: kind of lending product that exists in the market. That
6:53
Speaker 3: now again is you know, in the billions of dollars
6:54
Speaker 3: in terms of the debt we're providing. It's kind of
6:56
Speaker 3: ironic in a way. If you want to raise one
6:58
Speaker 3: hundred million dollars of debt, that is a very competiti marks.
7:00
Speaker 3: Lots of people are playing in that. If you want
7:02
Speaker 3: to raise five thousand dollars of debt for your company,
7:06
Speaker 3: it's actually much harder to get that than it was,
7:08
Speaker 3: say twenty or thirty years ago. We've gone backwards there.
7:11
Speaker 3: And then on the equity side, I think stripe atless
7:15
Speaker 3: has actually helped make more companies investable because what a
7:20
Speaker 3: lot of people don't realize is stripe aatleists are incorporation product.
7:23
Speaker 3: But it lets companies where the founders might be in
7:27
Speaker 3: Israel or might be you know, in Singapore or something
7:30
Speaker 3: like that, create a US Delaware company and that makes
7:34
Speaker 3: it much more investable. And so we've seen a lot
7:35
Speaker 3: of foreign founders kind of virtually creating a US company,
7:39
Speaker 3: which it just turns out foreign companies investors fim too scary.
7:43
Speaker 5: So I guess I'm responsible for the framing that you're
7:45
Speaker 5: sort of in somebody's a substitute for an investment back.
7:47
Speaker 5: So like your framing is like increase the GDP of
7:49
Speaker 5: the Internet, but like you know, you have these businesses
7:51
Speaker 5: like incorporating companies, like what is the principle? And like
7:56
Speaker 5: that was like a real investment backer. I was doing
7:58
Speaker 5: like corporate derivatives, and like I assume you would never
8:02
Speaker 5: get into that business.
8:03
Speaker 3: But I am I wrong. We're certainly not planning on us.
8:05
Speaker 3: We build products that are scalable in some way through
8:08
Speaker 3: tech and so you know, Stripe itself. This past year
8:12
Speaker 3: we did trillion dollars in payment through the strip platform.
8:14
Speaker 3: That's still growing in a pretty healthy clip. The number
8:16
Speaker 3: of businesses served is millions of dollars. And so if
8:19
Speaker 3: there's something that is solved by just throwing an army
8:21
Speaker 3: of people at it, I mean, you know, all the
8:23
Speaker 3: investment banking firms are exceptional as recruiting armies of people,
8:26
Speaker 3: and that is a very competitive space, whereas the space
8:28
Speaker 3: of you know, like I was saying, with the lending
8:30
Speaker 3: side of things, that was just an underserved marketers where
8:32
Speaker 3: we came out it by talking to our customers and
8:34
Speaker 3: they said, we really need growth capital. It's actually very
8:36
Speaker 3: annoying for us to get us. And so I guess
8:39
Speaker 3: we try to find the underserved spaces, and investment banking
8:44
Speaker 3: for you know, certainly on the larger side does not
8:46
Speaker 3: seem underserved.
8:47
Speaker 4: Right now, I've listened to a lot of podcasts you've
8:49
Speaker 4: been on in the past several weeks. So sorry, no, no,
8:52
Speaker 4: it's been really interesting. You interviewed Charlie Munger, which was I.
8:56
Speaker 3: Much prefer interviewing to being interviewed. So we'll come back
8:59
Speaker 3: for the second round to this, right, you guys are
9:00
Speaker 3: put on the spot.
9:01
Speaker 4: That'll be a lot of fun. We'll put that on
9:02
Speaker 4: the calendar. But at one point Charlie Munger started talking
9:06
Speaker 4: about like banks and they're selling these sleazy products, and
9:09
Speaker 4: of course I couldn't see if you were nodding along
9:11
Speaker 4: and I were talking about, you know, whether you would chafe.
9:13
Speaker 4: It's sort of the comparison to you know, an investment bank,
9:16
Speaker 4: for example, but it sounds like you don't.
9:18
Speaker 3: No, I don't. Investment banking provides a useful set of
9:20
Speaker 3: services in the world. And okay, one things I really
9:23
Speaker 3: like about the Money Stuff newsletter is a studied detachment
9:29
Speaker 3: from what's going on where there are people and people
9:31
Speaker 3: respond to incentives and that creates behaviors in the world.
9:33
Speaker 3: I like, Matt does have views and you know, just
9:35
Speaker 3: like crypto and you know, all sorts of things, and
9:38
Speaker 3: you can kind of the views that occasionally come out,
9:40
Speaker 3: but it's mostly this very detached view of what's going
9:43
Speaker 3: on in the world. But the way we think about it,
9:46
Speaker 3: like for for example, we think, you know, stripes scale
9:48
Speaker 3: and revenue are actually pretty decent proxies for the value
9:51
Speaker 3: stripe is providing in the world. That's not always the
9:54
Speaker 3: case with the business. You could have an extract of
9:55
Speaker 3: business somewhere, or monopolies or rent extraction or something like that.
9:59
Speaker 3: But in our case we have very inforgmned buyers and
10:03
Speaker 3: a very competitive market. There are lots of other places
10:05
Speaker 3: people could go for payment acceptance or billing software or
10:08
Speaker 3: something like that. And so generally, if customers are choosing
10:11
Speaker 3: you and paying you money for a service, it's because
10:13
Speaker 3: you're providing something of value that you can't get elsewhere.
10:15
Speaker 3: And similar with investment banks. I think if people are
10:17
Speaker 3: going to investment banks for a thing, that's probably because
10:20
Speaker 3: they're providing some value to them. And so that's the
10:21
Speaker 3: frameworkuy I tend to take. I think Charlie rest in
10:24
Speaker 3: Peace generally took a lot of offense at where he
10:28
Speaker 3: saw people hyping things, principal agent problems. You know, there's
10:33
Speaker 3: a set of things that bothered him, Crypto Robinhood, mutual
10:37
Speaker 3: fund advisors, and you know you could understand, I could
10:39
Speaker 3: construct the Steelman for those cases.
10:41
Speaker 5: I think there's a lot of opacity and pricing and
10:45
Speaker 5: value in financial services that there's probably a less of
10:49
Speaker 5: in your business, right, Like you're kind of charging a
10:51
Speaker 5: transparent feed to people.
10:52
Speaker 3: Yeah, and certainly the more scaled something is, the more
10:54
Speaker 3: price comparison they'll be, the more efficient the pricing will be.
10:56
Speaker 3: Whereas yeah, there's more room for extracting price in the
11:00
Speaker 3: when you get into bespoke deals.
11:02
Speaker 5: So one thing I think of when I think give
11:04
Speaker 5: investment banking is just serving as an advisor to CEOs
11:07
Speaker 5: and sort of giving them general advice on their business.
11:09
Speaker 5: And we were talking before about you know, you are
11:12
Speaker 5: now interacting with a lot of big companies, and you
11:15
Speaker 5: had some views on like the ability of a big
11:18
Speaker 5: company to CEO to sort of understand her company, and
11:21
Speaker 5: I'm I'd love for you to talk about them.
11:24
Speaker 3: Yeah. I think people think that CEOs are able to
11:30
Speaker 3: drive change in their organizations. I'm talking about organizations general,
11:33
Speaker 3: I'm not talking about stripe. People think that a CEO
11:35
Speaker 3: lands in a new job, they take over a company,
11:38
Speaker 3: and they're able to just whip everything into shape and
11:40
Speaker 3: change everything and I think the general experience of CEOs
11:45
Speaker 3: and new jobs is that is not the case, and
11:47
Speaker 3: organizations are pretty hard to change. And in fact, one
11:50
Speaker 3: of the things that we believe strongly at Stripe is
11:54
Speaker 3: it's very important for people to guess close to the
11:57
Speaker 3: work or you will not be able to drive any meaningful,
12:02
Speaker 3: useful change. And so like a bunch of different ways
12:05
Speaker 3: in which we do that. It actually reminds me of
12:07
Speaker 3: the lean manufacturing principle, you know. And they have all
12:10
Speaker 3: these very nice aesthetic Japanese terms for things, and so
12:12
Speaker 3: you know, there's the English equivalent permius for the Japanese terms,
12:14
Speaker 3: but in them is gemba, which is this idea that
12:17
Speaker 3: managers should, you know, walk the factory floor and solicit
12:19
Speaker 3: ideas from the people who are on the production line
12:21
Speaker 3: and things like that. And all companies, like a tech
12:24
Speaker 3: company like Stripe, has its equivalents, and so we very
12:27
Speaker 3: much encourage engineering managers to actually write code Stripe to
12:34
Speaker 3: get the experience of what is it like working in
12:35
Speaker 3: their corner of the code base problems our engineers running into.
12:39
Speaker 3: I really enjoyed being CFO last year when we were
12:41
Speaker 3: between CFOs, and one of the reasons I really enjoyed that. Again,
12:44
Speaker 3: was getting closer to the actual numbers, the processes by
12:48
Speaker 3: which we drive the business, Like we're going to hold
12:51
Speaker 3: Stripe to a budget regardless, and aren't you interested in
12:54
Speaker 3: how that process is actually set and how those numbers
12:55
Speaker 3: are set and everything like that. So you know, I
12:57
Speaker 3: say that I think every founder should be CFO their
13:00
Speaker 3: business for at some point during its lifespan. It's it's
13:03
Speaker 3: a very educational experienced.
13:05
Speaker 5: Like product ideas. Did you do that and come away
13:08
Speaker 5: with like we need to do accounting software? No?
13:11
Speaker 3: No, or or? I mean, I mean maybe in an
13:13
Speaker 3: abstract way, but again, stripes finance needs are are maybe
13:16
Speaker 3: a little different from the broader ones. But again, I
13:19
Speaker 3: just think for getting close to how the business actually runs,
13:23
Speaker 3: that's maybe the thing that's hard for CEOs to do.
13:27
Speaker 3: And you know, we try to do it from a
13:29
Speaker 3: customer perspective a huge amount of Even some of the
13:31
Speaker 3: products we're talking about, like Stripe Capital, they basically come
13:34
Speaker 3: from us trying to spend more time with our customers
13:37
Speaker 3: than our competitors do. And so you know, we'll start
13:40
Speaker 3: every leadership team meeting at am Monday morning with hearing
13:44
Speaker 3: from a customer We just asked them to come and
13:45
Speaker 3: give us cand of feedback on the product. If you
13:47
Speaker 3: were to sit in on those meetings, it's not an
13:49
Speaker 3: A plus report card that we're getting. You know, there
13:52
Speaker 3: are things they want us to fix. But I find
13:55
Speaker 3: that it's easy for like product managers to overcomplicate things,
13:58
Speaker 3: and you know, you can get in your own head
14:00
Speaker 3: and construct some really convolutioned castle in the sky. And
14:03
Speaker 3: there's nothing quite as grounding as hearing directly from a
14:05
Speaker 3: customer talk about what is not working for them in
14:08
Speaker 3: the product. And you know, we did the same on
14:09
Speaker 3: Fridays with like an all company thing, bring customers to
14:12
Speaker 3: talk to that. But any I think the essence of
14:14
Speaker 3: this for CEOs is getting close to the actual production function,
14:17
Speaker 3: and that is sometimes hard of them.
14:19
Speaker 4: So I have two points. It's interesting to hear you
14:22
Speaker 4: say that. First of all, my brain immediately goes to
14:24
Speaker 4: Elon Musk, like on the factory floor at SpaceX and Tesla.
14:27
Speaker 4: But it was interesting. We had Home Depot this week
14:30
Speaker 4: announced that they were going to require corporate employees to
14:33
Speaker 4: work eight hour factory shifts, which is interesting, like retail shifts.
14:37
Speaker 3: So Starbucks did something similar.
14:38
Speaker 4: Right, yeah, which makes a lot of sense, I mean,
14:41
Speaker 4: especially in brutal jobs such as that one and then
14:44
Speaker 4: the other thing. I mean, given that you do know
14:47
Speaker 4: so much about his business history and you know, just
14:49
Speaker 4: love looking at companies. But those eight a m. Meetings
14:52
Speaker 4: where you're just talking to your different companies, like, you
14:54
Speaker 4: see so many different types of companies, which is interesting, Yeah.
14:59
Speaker 3: And it's definitely pretty interesting time. I think the behavior
15:01
Speaker 3: we observe is that tech has been very well covered,
15:05
Speaker 3: and so I think everyone knows broadly kind of what's
15:07
Speaker 3: going on in the tech world. What we find interesting
15:10
Speaker 3: is the businesses that are the Sherwan Williams of the world,
15:13
Speaker 3: you know, the businesses that are ten twenty fifty, one hundred,
15:15
Speaker 3: two hundred years old, and how they are adapting to
15:18
Speaker 3: the modern world. And generally, what we find is that
15:21
Speaker 3: COVID provided a useful long term change to those businesses
15:26
Speaker 3: because those kinds of businesses all employed a chief Digital
15:30
Speaker 3: Innovation Officer prior to COVID, and that person had a
15:33
Speaker 3: team of ten people, and they produced all these slides
15:35
Speaker 3: and ideas, and the ideas were pretty good, and the
15:37
Speaker 3: company just ignored all them and just didn't do any
15:38
Speaker 3: of them, and so they had the kind of idea
15:40
Speaker 3: generation part and nothing happened, and then COVID happened, and
15:44
Speaker 3: it was this oh moment where people they were forced
15:48
Speaker 3: to adapt because you know, obviously the stores were locked
15:51
Speaker 3: down or were not open, and so you maybe had
15:53
Speaker 3: gym companies moving to a virtual training or something like that.
15:56
Speaker 3: But that created a mandate for actually getting serious about
15:59
Speaker 3: the digital stuf and we see much higher quality digital
16:04
Speaker 3: execution coming out of that. And there's kind of a
16:06
Speaker 3: few common patterns in what everyone's trying to do. I
16:10
Speaker 3: think everyone is questioning their middlemen. I don't think middlemen
16:14
Speaker 3: are going away, but they're questioning the middlemen and do
16:16
Speaker 3: middlemen add value? And they are starting to do much
16:19
Speaker 3: more direct customer relationship stuff. Part of that is the
16:23
Speaker 3: product experience where you know, Hershey's using Stripe to sell
16:26
Speaker 3: candy directly online and the customization and things like that.
16:30
Speaker 3: And then everyone's just trying to build some kind of
16:34
Speaker 3: recurring revenue. And so, you know, we think there's two
16:36
Speaker 3: kinds of business in the world. There's those who have
16:38
Speaker 3: recurring revenue and those who want recurring revenue. And people
16:40
Speaker 3: talk about the engine, you know, the airplane engine, makers,
16:43
Speaker 3: but power by the hour. You know, you actually don't
16:45
Speaker 3: buy an engine, you buy you know specially exactly. You
16:48
Speaker 3: might trust you know, the by the minute. But that
16:51
Speaker 3: is actually what all companies are moving towards because it's
16:54
Speaker 3: kind of better on both sides of the equation. And
16:55
Speaker 3: obviously that's pretty complex from an implementation point of view,
16:58
Speaker 3: and something intercomany stripe.
17:13
Speaker 5: I did like the Strive fire side a while back,
17:16
Speaker 5: and you're like, what should we do? And I was like,
17:18
Speaker 5: you should fix paywalls. Have you done it?
17:21
Speaker 3: We're getting there because one of us hard. Why is
17:24
Speaker 3: it hard? Okay, it's hard for a few reasons. One,
17:28
Speaker 3: I think people confuse paywalls with micropayments, and I think
17:32
Speaker 3: more consumers want micropayments than publishers, where the publishers want macropayments.
17:37
Speaker 5: I think nobody wants micropayments and everyone wants to talk
17:39
Speaker 5: about it.
17:40
Speaker 3: But okay, yeah, yeah, So anyway, once we move past
17:42
Speaker 3: the micropayments thing, then it's hard because you ultimately need
17:49
Speaker 3: to smooth the onboarding friction and you probably need some
17:53
Speaker 3: cross publisher network. And you know, publishers are not they're competing,
17:56
Speaker 3: They're maybe not inclined to work together, and then it's
17:59
Speaker 3: just a bunch of tech upgrades which are actually kind
18:01
Speaker 3: of somewhat prosaic long running projects, but you know, you
18:04
Speaker 3: need to be able to have the patients to work
18:05
Speaker 3: with the media company to spend a year or year
18:08
Speaker 3: and a half upgrade in their stack. The way we've
18:10
Speaker 3: ended up doing this is with our product link, which
18:12
Speaker 3: is very simple. What is really starting to work. It
18:14
Speaker 3: just remember you guys, maybe run into it on the internet.
18:16
Speaker 3: It just remembers your credentials across websites and so if
18:19
Speaker 3: you've bought on websites A with Stripe and you have
18:22
Speaker 3: the box checked to remember your payment details, then you'll
18:24
Speaker 3: be able to buy on site B without entering your
18:27
Speaker 3: payment details again. And you might think it will lead
18:30
Speaker 3: to a big increase in conversion if a lot of
18:32
Speaker 3: consumers have their payment credentials remembered so they don't have
18:35
Speaker 3: to type any extra data in they can just click buy,
18:37
Speaker 3: And turns out it does. And there's obviously a virtuous
18:39
Speaker 3: cycle here where you know, the more people sign up
18:42
Speaker 3: for it, but denser the network gets. So that's really
18:44
Speaker 3: starting to work. And so we have some media properties
18:46
Speaker 3: starting to use that, and so what it means is
18:48
Speaker 3: they get lots of people coming with credentials all pre
18:50
Speaker 3: filled and they just need to hit by and so
18:52
Speaker 3: then the commercial proposition just needs to work.
18:54
Speaker 5: I just feel like the media payoll problem for me
18:56
Speaker 5: is not even the payment credentials. It's once you've paid
18:59
Speaker 5: for a payoll, keeping you logged in, you're on your
19:02
Speaker 5: phone and computers. Yeah, you're like, you get something emailed
19:06
Speaker 5: to you.
19:07
Speaker 4: And just remember me. It's really frustrating.
19:09
Speaker 3: We should and may get to that as well. I
19:11
Speaker 3: agree that's that that's part two of it, to.
19:13
Speaker 5: Mean, that's related to like online identity and the stuff
19:15
Speaker 5: that people are crypti people are talking about. So I
19:18
Speaker 5: also have listened to you on podcasts. One thing that
19:20
Speaker 5: you've said is that when you started raising money for
19:24
Speaker 5: a stripe, people are like, why isn't this a solve
19:26
Speaker 5: problem exists? Can you tell us why it's not right
19:30
Speaker 5: it wasn't or why is it isn't? Like why is
19:32
Speaker 5: payments hard? And like there were payments companies before you, Like,
19:36
Speaker 5: what's the thing that you're solving? They didn't.
19:38
Speaker 3: It wasn't solved for a few reasons. Payments requires you
19:42
Speaker 3: to be good at two very different things that are
19:45
Speaker 3: quite distinct skill sets. There's technology and there's financial services.
19:51
Speaker 3: And so prior to Stripe, you had some payment companies
19:55
Speaker 3: that just did the technology layer. You know, they said,
19:56
Speaker 3: we're an ic API and we plug into you know,
19:58
Speaker 3: whatever bank you use. But that wasn't a good payment
20:00
Speaker 3: experience because you would then try to sign up with
20:02
Speaker 3: the bank and you know, it's spent a week shuffling
20:05
Speaker 3: paperwork around or something like that. And so a huge
20:08
Speaker 3: amount of what we do is at the intersection of
20:11
Speaker 3: those things where you have AMLKYC considerations, where you know,
20:15
Speaker 3: a Stripe is essentially aiming to look at the activity
20:20
Speaker 3: going on on its platform and ensure that it is
20:22
Speaker 3: lisit and you know, acceptable activity that's happening on the platform.
20:26
Speaker 3: And so we do lots of cool mL work. You know,
20:28
Speaker 3: we don't talk about it really that much publicly because
20:31
Speaker 3: it is just what goes into operating a skilled platform
20:34
Speaker 3: like this, but it's a huge amount of the special
20:36
Speaker 3: sauce that makes Stripe tick. At the same time, the
20:40
Speaker 3: tech has to be really good and nice and usable,
20:42
Speaker 3: and customers really care about latency, they really care about
20:45
Speaker 3: how easy the API integration experiences, and so I would
20:48
Speaker 3: say companies prior to Stripe tended to pick a lane
20:52
Speaker 3: a bit where you had a few purely tech companies
20:54
Speaker 3: where you know, they'd say, we're a payment s gateway
20:56
Speaker 3: and we just don't think about anything. We just handle
20:58
Speaker 3: off the transaction of something someone else. Or there was
21:01
Speaker 3: banks and they actually just generally outsourced the tech. They
21:04
Speaker 3: didn't even really do it themselves, or if they did themselves,
21:07
Speaker 3: they did not do it particularly well, and so it
21:09
Speaker 3: was a very crummy experience for the developers actually using it.
21:13
Speaker 3: And of course the tech changes Mobile was just coming
21:15
Speaker 3: along as we were getting started. You know, the iPhone
21:17
Speaker 3: app store came oute in two thousand and eight. We
21:19
Speaker 3: started Stripe in two thousand and nine, so like we
21:21
Speaker 3: were just in time for that, and so mobile was
21:23
Speaker 3: a very relevant consideration. You know, even just the web
21:26
Speaker 3: apps and SaaS and everything grew a huge amount, and
21:29
Speaker 3: so I think the banks had not built for that
21:31
Speaker 3: and did not build for that, and so there was
21:34
Speaker 3: maybe a gap between the existing providers and there was
21:36
Speaker 3: that sort of things that you have to be really
21:38
Speaker 3: good at. There were huge number of things with Stripe
21:40
Speaker 3: that we did buy intuitive feel they were not part
21:42
Speaker 3: of a particularly deliberate tops down strategy that was written
21:46
Speaker 3: down in the business plan, but ended up working out well.
21:48
Speaker 3: And so one was our really early focus on developers,
21:51
Speaker 3: where our go to market was through developers. We started
21:54
Speaker 3: by selling to startups, and there was this really I
21:56
Speaker 3: would say, kind of bottoms up sort of adoption motion.
21:59
Speaker 3: But again, ltimately the product we're selling is a technical
22:02
Speaker 3: API product, and so of course you should be thinking
22:04
Speaker 3: about what the developers want. We just had the developer
22:07
Speaker 3: focus because we were software engineers ourselves. We just wanted
22:09
Speaker 3: to build a product that we thought was a good product.
22:12
Speaker 3: But I think it ended up being more strategic than
22:14
Speaker 3: we maybe realized in the beginning.
22:15
Speaker 5: There's a lot of like mess in the legal and
22:20
Speaker 5: like infrastructure of the payment system, and like your job
22:23
Speaker 5: is to provide people a very clean abstraction to that mess.
22:26
Speaker 5: And like that means handling all of the mess and
22:28
Speaker 5: you know, actually going on and figuring stuff out and
22:30
Speaker 5: then being able to put that in the back end
22:32
Speaker 5: of your API. So the API is like a very
22:34
Speaker 5: clean abstraction. Like is that?
22:37
Speaker 3: Burne Hobart had a line that I liked in one
22:39
Speaker 3: of his newsletters that stripe makes the financial system work
22:42
Speaker 3: the way people think it already does, and that I
22:45
Speaker 3: think is actually a pretty nice design principle for us.
22:48
Speaker 3: And you know, maybe a good example of this.
22:49
Speaker 5: Is see when I hear that I want you to
22:52
Speaker 5: do like equity derivatives, I want you to do more
22:55
Speaker 5: of this stuff in my world.
22:56
Speaker 3: But I don't think we've a view on how it improved.
22:59
Speaker 4: Maybe I just think more I do want to talk
23:01
Speaker 4: about crypto. Yeah, we debated this internally, but when it
23:04
Speaker 4: comes to the payments world, I mean, the conversation tends
23:08
Speaker 4: to devolve into a crypto conversation because I feel like
23:11
Speaker 4: crypto is trying to solve a lot of payments problems,
23:16
Speaker 4: especially when it comes to cross border payments. And I'm
23:19
Speaker 4: not asking you about like the price of bitcoin or
23:21
Speaker 4: whether you're bullish on you know, number go up, But
23:24
Speaker 4: when it comes to crypto and the problems that it's
23:27
Speaker 4: trying to solve, I mean, how do you think about it?
23:29
Speaker 3: We're quite excited about crypto at the moment. I interpret
23:32
Speaker 3: money stuff as the house position as moderately cryptoskeptical, and
23:37
Speaker 3: so I guess what I would say to a moderately
23:39
Speaker 3: cryptoskeptical audience. They'd be two things. One, there are just
23:43
Speaker 3: a bunch of scams and dodgy characters and everything like that.
23:47
Speaker 3: But it kind of reminds me of I at the
23:49
Speaker 3: first I grew up in Ireland. The first time I
23:50
Speaker 3: went to Vegas was for a work conference there. It
23:53
Speaker 3: was for a work conference, and you know, at the
23:55
Speaker 3: Venetian or something like that, probably Money twenty to twenty
23:57
Speaker 3: and you're going into the hotel past like all the
24:02
Speaker 3: people smoking indoors and like the people just addicted to
24:04
Speaker 3: the slot machines just pressing them again and again again,
24:06
Speaker 3: and it's all the blinking lights and you know the
24:08
Speaker 3: I guess the clatter of the coins paying out and
24:10
Speaker 3: you have to walk past this degenerate gambling areas. Yeah,
24:15
Speaker 3: it's a grim scene to get to your serious industry conference.
24:18
Speaker 3: And those very surprising to me. And I don't know this.
24:21
Speaker 3: There's something similar in crypto, where you have the casino
24:24
Speaker 3: dogecoin value speculating part of us, and then there's people
24:27
Speaker 3: doing all the serious work over in say stable coins
24:29
Speaker 3: or something like that, and those two things just exist.
24:32
Speaker 3: But I think one cannot use the existence of the
24:35
Speaker 3: slots in the Vegas Casino to write off the work anomment,
24:38
Speaker 3: stretching the analogy.
24:39
Speaker 5: No, this is good, so because like, yeah, you're excited.
24:45
Speaker 5: There's like your friend Peto eleven would say, it's a
24:49
Speaker 5: kyic avoidance mechanism. Basically, it's like a yeah.
24:52
Speaker 3: Well, the thing about crypto is there's been a lot
24:55
Speaker 3: of hype on what crypto is useful for. And so
24:58
Speaker 3: for example, if you go back and read the original
24:59
Speaker 3: Bitcoin b or did a great read, it's a very
25:01
Speaker 3: readable original paper. It actually used the word interchange in
25:04
Speaker 3: there and talks about kind of the use of bitcoin
25:06
Speaker 3: as a payment method. But bitcoin turned out to be
25:09
Speaker 3: certainly stock bitcoin, you know, before lightning and everything like
25:12
Speaker 3: that should have to be a horrible payment method like
25:14
Speaker 3: slow expensive, let's all do you that. And now the
25:16
Speaker 3: technology has matured through what has been kind of fourteen
25:20
Speaker 3: years of development. I think the crypto haters used this
25:22
Speaker 3: argument that like, well, you know, is the web in
25:23
Speaker 3: ninety three for you know, many many years, whereas the
25:25
Speaker 3: actual web coming along. But there's been fourteen years of
25:28
Speaker 3: lots of technical development happening such that we've ended up
25:31
Speaker 3: with much more advanced technologies, and so what you specifically
25:34
Speaker 3: have now with stable coins is you have firstly, something
25:38
Speaker 3: that's value doesn't change and so there's none of the
25:40
Speaker 3: kind of speculation stuff that we're talking about. You have
25:42
Speaker 3: something that's actually very technically scalable. So with the current
25:45
Speaker 3: L two's there's no real scalability issues with them, and
25:49
Speaker 3: you have a pretty sensible construct where in a way,
25:52
Speaker 3: it's narrow banking. Right. We've been talking about narrow banking
25:54
Speaker 3: in this country for decades and we've ended up with
25:57
Speaker 3: narrow banking through stable coins, where say a good stable coin,
26:01
Speaker 3: you know that like a PAXOS or a USDC. In
26:04
Speaker 3: the case of USDC, it is fully backed by short
26:06
Speaker 3: term treasuries. And that actually just seems like a pretty
26:10
Speaker 3: good construct to me. And so you know, we now
26:12
Speaker 3: make it where you can, you know, accept money and
26:14
Speaker 3: strive via crypto. You can do some payouts things like that.
26:17
Speaker 3: And the obvious thing that people say is true where
26:21
Speaker 3: in the US you will be slightly too biased against
26:24
Speaker 3: crypto because the US is the world's best currency. You know,
26:26
Speaker 3: the US has the world's reserve currency where you get
26:29
Speaker 3: to spend and green back exactly. And so of course
26:33
Speaker 3: people in the US think the USD is awesome because
26:35
Speaker 3: it is an awesome currency, whereas many people in many
26:37
Speaker 3: other countries have a much more adversarial relationship with their
26:40
Speaker 3: own currency. And I'm not even talking about Zimbabwe, though
26:42
Speaker 3: it is true there. I'm talking about Turkey, which is
26:44
Speaker 3: a very large country and economy and population, but people
26:49
Speaker 3: there do not have, you know, full faith in the lira,
26:53
Speaker 3: and they think about what's a better place to keep
26:54
Speaker 3: money than lira.
26:56
Speaker 5: I guess the other like US bias is that the
27:00
Speaker 5: government really wants dollar payments to flow through the ky
27:03
Speaker 5: Seed banking system, and like there's some suspicion that.
27:07
Speaker 3: I think all the serious grown up crypto players today,
27:10
Speaker 3: I mean they're subject to the fincent travel real they
27:13
Speaker 3: are ky seeing the actors, and so if you go
27:16
Speaker 3: through a crypto flow today, you will see the normal
27:19
Speaker 3: frictions of dealing with a regulated financial product where you
27:22
Speaker 3: are asked to provide your you know, last for your
27:24
Speaker 3: social or upload a driver's license or things like that.
27:27
Speaker 3: And so I think just in most of the crypto
27:29
Speaker 3: use cases that are being top obviously that the sketchy
27:32
Speaker 3: dark web stuff exists as well, But in most of
27:34
Speaker 3: the use cases we are talking about where serious businesses
27:36
Speaker 3: like Stripe or serious merchants are using crypto. It is
27:39
Speaker 3: the custodial lyssis part of the crystals.
27:42
Speaker 5: It's just sort of like an un chain like non
27:44
Speaker 5: custodical transfer.
27:46
Speaker 4: Like correct, Yeah, I'm true. I mean, if you look
27:48
Speaker 4: into your crystal ball and you know, it's been fourteen
27:51
Speaker 4: years since bitcoin was created. As you said, we've seen
27:54
Speaker 4: a ton of technology advancements since then. I mean, you
27:57
Speaker 4: said you're quite excited about crypto, but I mean, how
28:00
Speaker 4: far can we run that out? Do you think it's
28:02
Speaker 4: the future? For example, would you go that far if
28:05
Speaker 4: you look fifty one hundred years into the future.
28:08
Speaker 3: I don't think it's a singular future. And again there's
28:11
Speaker 3: a bit of overpromising that's happened in the crypto world. Again,
28:13
Speaker 3: I think that's what gets people's backed up. Actually. Speak
28:15
Speaker 3: of Bern Hobart. We just Stripe Press published his new book.
28:18
Speaker 3: The title is Boom and the piesis of the book
28:21
Speaker 3: is that we generally view financial bubbles as societally net
28:26
Speaker 3: negative because you know, they cause the misallocation of resources
28:29
Speaker 3: and they cause you know, ultimately people lose out. And
28:31
Speaker 3: he makes the argument that bubbles provide a societally useful
28:36
Speaker 3: function by essentially coordinating effort. And you know, maybe the
28:41
Speaker 3: dot com boom is incorrectly understood as a you know,
28:43
Speaker 3: pets dot common webvan. It was really like by dollars
28:46
Speaker 3: put into it, as you guys probably know, it was
28:47
Speaker 3: a telecoms boom, and it was a fiber rollout boom.
28:50
Speaker 3: But it led to the US having just amazing fiber
28:53
Speaker 3: overcapacity that then led to the steady growth of the
28:55
Speaker 3: Internet for the decades that followed. And so that's maybe
28:57
Speaker 3: an example of it was a bubble, but it was
29:00
Speaker 3: a societally useful bubble because then it alleged to this overcapacity.
29:02
Speaker 3: This had lots of positive externalities. And I think you
29:05
Speaker 3: make that argument about crypto.
29:06
Speaker 5: This that argument made as crypto led to a build
29:10
Speaker 5: out of GPUs that led to the AI boom.
29:13
Speaker 3: Oh interesting, I wasn't even making that case. You could
29:15
Speaker 3: make that argument too though obviously there was a lot
29:17
Speaker 3: of GPU spent happening even even before crypto.
29:20
Speaker 4: No.
29:20
Speaker 3: I was just making the argument that I think the
29:22
Speaker 3: speculative side of crypto, you could make the argument pulled
29:25
Speaker 3: in attention and resources that was then used to build
29:29
Speaker 3: the very boring useful parts of crypto, like you know
29:32
Speaker 3: Ethereum two or against table coins or things like that.
29:35
Speaker 5: We could talk more about this. Do you want to
29:37
Speaker 5: make sure are we talking about the things you don't
29:39
Speaker 5: want to talk about?
29:40
Speaker 4: Yeah? Great, which we do want to talk about.
29:43
Speaker 5: So another money stuff theme that we'll probably do on
29:48
Speaker 5: our ad reads is that private markets are the new
29:51
Speaker 5: public markets. You guys are among the poster children for that.
29:55
Speaker 5: You're the CFO. Tell me about what it's like being private.
29:59
Speaker 5: I don't know. I mean, how should I think about,
30:01
Speaker 5: like the idea that, like, you're an enormous company and
30:04
Speaker 5: you've stayed private and have no enthusiasm as far as
30:08
Speaker 5: we know, for going public or even talking about this
30:10
Speaker 5: twenty years ago, would you have been able to do that?
30:14
Speaker 3: Yeah. We spend a lot of time internally at Stripe
30:17
Speaker 3: thinking about the value of the Stripe business. I think
30:21
Speaker 3: the external world spends a lot of time thinking about
30:23
Speaker 3: the value of the Stripe stock price, which are related
30:26
Speaker 3: but different things. We have definitely stayed private longer than
30:31
Speaker 3: some people expected. I think we'll continue to stay private
30:34
Speaker 3: longer than maybe some people expect. But there's no complex answer.
30:39
Speaker 3: It's just a simple answer, which is, we don't think
30:41
Speaker 3: companies should sleep walk into going public. We think they
30:44
Speaker 3: should be deliberate about it. And why would stripe right
30:49
Speaker 3: now and go public. It could be if we wanted
30:52
Speaker 3: to sell stock broadly to a retail audience. That's not
30:56
Speaker 3: something that we've had that you know, we just the
30:57
Speaker 3: business is profitable, you know, we haven't needed to raise
31:00
Speaker 3: very large amounts of capital. A traditional reason might be
31:03
Speaker 3: return of capital, not just kind of a capital raise
31:05
Speaker 3: for running the business, but return of capital to existing shareholders.
31:08
Speaker 3: But again that's where you're maybe referencing. The private markets
31:10
Speaker 3: have gotten deeper, and you know, in our case, we've
31:13
Speaker 3: run two unlimited employee tenders, you know last year and
31:17
Speaker 3: this year. You know, Sequoia just an LP tender where
31:20
Speaker 3: they gave liquidity to some of their LPs. But liquidity
31:23
Speaker 3: is available to people in the private markets, and so
31:26
Speaker 3: it's more I think the default spring, where companies, you know,
31:30
Speaker 3: as SaaS company would be started and you know, go
31:33
Speaker 3: from zero to one hundred million ARRR and then just
31:35
Speaker 3: run out and go public. Default is being questioned a
31:38
Speaker 3: little bit in Silicon Valley. Obviously, lots of companies are
31:40
Speaker 3: still going public, but the default is being questioned, and
31:42
Speaker 3: the default is more of a Silicon Valley tech default
31:49
Speaker 3: than maybe a broader global default. So like in financial
31:52
Speaker 3: stud we know exactly so as Bloomberg employees, you may
31:56
Speaker 3: be familiar with it, but Bloomberg is the example that
31:57
Speaker 3: everyone cites. But if you just quickly run through financial services,
32:01
Speaker 3: you know, take the world's leading market maker, Citadel Securities
32:04
Speaker 3: private company, take the world's leading prop trade I'm probably
32:07
Speaker 3: offending one of the world's leading in all these cases,
32:09
Speaker 3: So don't defend anyone. But if you look at Jane Street,
32:11
Speaker 3: you know which it's been reported on a lot these days,
32:14
Speaker 3: just how good a business it is. You know, whether
32:16
Speaker 3: they're at a ten billion profits run rate or something
32:18
Speaker 3: like that, private company Fidelity, when the world's leading brokerages
32:21
Speaker 3: private company Goldin Sachs, your former employer.
32:24
Speaker 5: I assume that that A big difference is that a
32:26
Speaker 5: lot like Chance Street writes very large checks. And the
32:29
Speaker 5: Silicon Valley difference is not just that like you have
32:32
Speaker 5: vcs you might be hunger to get at whereas like
32:33
Speaker 5: said at all thosand but like it's also you have employees
32:35
Speaker 5: who are getting paid in equity and they're getting tender
32:38
Speaker 5: as every Oh yeah, like is it tender every year
32:40
Speaker 5: just as good as publicly traded stock.
32:43
Speaker 3: We think the tender every year is in nice solution.
32:45
Speaker 3: And there are some things that would be different if
32:46
Speaker 3: we're a public company for the better. There's some things
32:48
Speaker 3: that'd be different as a public company for the worst.
32:50
Speaker 3: And you get into you know, trading windows and who's
32:52
Speaker 3: an insider and things like that. But it's thus far
32:55
Speaker 3: work quite nicely for a solution.
32:57
Speaker 4: So is that the model then? Like tender every year?
32:58
Speaker 4: You've only done two, but.
33:00
Speaker 3: We don't have forward looking plans to announce, and so
33:04
Speaker 3: I come back to it at some stage with you know,
33:06
Speaker 3: we could go do something that you don't expect, and
33:08
Speaker 3: we're not announcing the plans because genuinely, it's not like
33:10
Speaker 3: there's a written down plan at stride that we're going
33:12
Speaker 3: to do this, this and then this. We are always
33:16
Speaker 3: reevaluating it. But again, up to this point, it has
33:20
Speaker 3: made more sense for us to grow as a capital
33:22
Speaker 3: efficient private company, then it's made sense for us to
33:26
Speaker 3: be a publican sure.
33:27
Speaker 5: Like chancer, it just makes money every year and they
33:29
Speaker 5: don't need to raise capital and so they just.
33:31
Speaker 3: Seems like great business haze and money to people. Right.
33:33
Speaker 5: I don't know what the economics that is, literally, but
33:35
Speaker 5: they seem extremely good. But like, it does seem possible
33:39
Speaker 5: that you could just make cash every year and fund
33:41
Speaker 5: the business out of that and pay people out of
33:43
Speaker 5: that and never.
33:44
Speaker 3: Need to For twenty four, we're trying to make a
33:45
Speaker 3: decision for twenty four, and for twenty five, we'll try
33:47
Speaker 3: to make a decision for twenty five. So luckily it's
33:49
Speaker 3: not the case that you're faced with a you know,
33:50
Speaker 3: a fork in the road and you have to make
33:52
Speaker 3: some kind of permanent decision. We do constantly re evaluate
33:55
Speaker 3: it when.
33:55
Speaker 5: I write about this topic. One concern that people have
33:58
Speaker 5: is that there are a lot of cool companies, like
34:01
Speaker 5: an increasing number of them, like fast growing, profitable companies
34:05
Speaker 5: that or sorry, I should say fast growing, not profitable,
34:08
Speaker 5: early stage companies, stage companies, high growth companies that don't
34:12
Speaker 5: go public, and that deprives like ordinary investors of access
34:15
Speaker 5: to those companies, and therefore it should be like made
34:19
Speaker 5: easier to go public or whatever. Right, So for you
34:23
Speaker 5: do you worry at all about that? From like a
34:24
Speaker 5: systemic perspective that you're depriving like American retirement savers of
34:28
Speaker 5: access to the stripe. And then two, you're not entirely
34:30
Speaker 5: because there are people who are going around selling stripe
34:34
Speaker 5: shares in a way that I believe you do not like.
34:37
Speaker 5: And I don't know, like there's like a way around
34:39
Speaker 5: of the barrier that you've set up. I guess.
34:42
Speaker 4: Yeah.
34:42
Speaker 3: Look, I do think the debate over who should be
34:45
Speaker 3: allowed by private assets is a good debate. And the
34:52
Speaker 3: accredited investor rule is it's kind of an odd rule,
34:54
Speaker 3: like we're able to take it for granted that it's
34:56
Speaker 3: been around for a long time, but basically we define
35:00
Speaker 3: investors as rich people, which is, you know, maybe some
35:03
Speaker 3: a historic and.
35:04
Speaker 5: In like a declining standard of rich where it's now
35:06
Speaker 5: like sort of upper middle class people.
35:08
Speaker 3: Correct. Yeah, So I think debate on that is a
35:10
Speaker 3: good thing. In stripes case, you know, most of the
35:13
Speaker 3: non employee ownership is through essentially kind of VC funds,
35:18
Speaker 3: and the underlying VC fund ownership the LPs there tend
35:22
Speaker 3: to be pension funds, college endowments. People. I think we
35:26
Speaker 3: feel quite good about making money for it, and so
35:28
Speaker 3: I don't think it's the case that's kind of broader society.
35:30
Speaker 3: It doesn't get to benefit from the appreciation. I think
35:33
Speaker 3: we feel quite good about the LP base of the
35:36
Speaker 3: investors that are behind striving Again, I think that's another
35:38
Speaker 3: thing that has allowed us to stay private for as
35:40
Speaker 3: long as we have, which is actually the very long
35:42
Speaker 3: term vcs. And I think if we had a different
35:44
Speaker 3: set of vcs, we would have been less fortunate in
35:46
Speaker 3: being able to grow Stripe as a private company because
35:48
Speaker 3: maybe they would have felt the need for a win
35:50
Speaker 3: or something like that. But I think luckily, you know,
35:51
Speaker 3: Siquic Capital is one of the best VC firms that
35:54
Speaker 3: there is that don't quite need to prove themselves.
35:56
Speaker 5: And they probably count you as a win anyway, say again,
35:58
Speaker 5: they probably count you as a win exactly yea, yeah.
36:01
Speaker 3: And then on the I don't know what you call them,
36:03
Speaker 3: but the firms out there the market.
36:05
Speaker 5: I've taught on the podcast about Destiny Tech one hundred,
36:08
Speaker 5: which has a private market. I was that fond situation
36:13
Speaker 5: with like some Stripe forward contracts, and like there's like
36:16
Speaker 5: a general there's like a market for forward contracts, which
36:18
Speaker 5: all seem to be not really appreciate this.
36:21
Speaker 3: It's not going to end well because generally hyping financial
36:28
Speaker 3: assets has a bad history. It worked out badly with SPACs,
36:34
Speaker 3: it worked out badly with icos, and it just tends
36:38
Speaker 3: to work out badly, which is why it tends to
36:40
Speaker 3: be regulated this. You know, financial regulators tried to rein
36:43
Speaker 3: in the hyping of private assets, and so again, Stripe
36:47
Speaker 3: is not a public company. We do not enable broad
36:50
Speaker 3: retail ownership of Stripe stock, and so if people try
36:55
Speaker 3: to back into that by having either company stock in
37:02
Speaker 3: a vehicle that that is then available to public mark investors,
37:05
Speaker 3: we just think it's not a good construct, Like it's
37:07
Speaker 3: underdisclosed where people are buying an interest in things based
37:11
Speaker 3: on name brand recognition but not based on going over
37:14
Speaker 3: the financials or understanding what it actually is. They tend
37:17
Speaker 3: to all be very high fees. I mean, it depends
37:19
Speaker 3: on the vehicle, but they tend to be fairly distractive
37:21
Speaker 3: in that way. And so we don't like it. We
37:23
Speaker 3: don't we don't permit it, and I'm personally not a fan.
37:28
Speaker 4: Is there much that you can do about it? Like
37:30
Speaker 4: in the case of a Destiny Tech for example, that
37:33
Speaker 4: says that you know they have Stripe forwards zuchrre Yeah,
37:37
Speaker 4: I mean, what can you do?
37:38
Speaker 3: We prohibit forward. So we had a bit of a
37:41
Speaker 3: about that.
37:42
Speaker 5: People do them anyway, can you then avoid them?
37:45
Speaker 3: And I don't know where this goes.
37:48
Speaker 5: Yeah, because right, I mean, it seems like they're prohibited
37:51
Speaker 5: and people do them.
37:52
Speaker 3: And yeah, we put it up on the website just
37:54
Speaker 3: to make it abundantly clear, so everyone has the same information.
37:57
Speaker 3: Instruments they're not allowed. So I don't know this areas
38:00
Speaker 3: where people have to read the tea leaves or the
38:02
Speaker 3: body language. We tried to make us abundantly clear get
38:05
Speaker 3: out there with the semaphore flags. So this people are
38:07
Speaker 3: not in any doubt.
38:08
Speaker 4: On the topic of going public. It doesn't sound like
38:11
Speaker 4: you're in any rush, obviously, you said in June, And
38:13
Speaker 4: I thought this was interesting that many companies make the
38:16
Speaker 4: decision to go public too early. That you personally see
38:20
Speaker 4: tons of opportunities to change and grow the business quite
38:23
Speaker 4: a lot, and I think it's interesting that you want
38:26
Speaker 4: to stay private to do that, and I think a
38:28
Speaker 4: lot of founders would agree with you. But just the
38:31
Speaker 4: fact that you know, sort of like going public. You
38:34
Speaker 4: see this as this sign of maturity and maybe that
38:38
Speaker 4: you're not innovating as much as you would in the privates.
38:40
Speaker 3: I don't know.
38:41
Speaker 4: It kind of made me think of tech companies like
38:43
Speaker 4: offering dividends, Like I remember when Meta started giving out
38:47
Speaker 4: dividends earlier this year. Everyone was like, oh, well they're
38:50
Speaker 4: old news now they're too mature.
38:52
Speaker 3: Well, I think Meta is the wrong example to use
38:54
Speaker 3: for that argument. I guess they currently seem to be
38:57
Speaker 3: doing extraordinarily well in the AI race. And I'm not
39:00
Speaker 3: making the claim that you know, one can as innovate
39:02
Speaker 3: as a public company, because that is clearly an absurd
39:05
Speaker 3: claim and you would just be kind of constantly slapped
39:07
Speaker 3: in the face by counterexamples. And Meta would be the
39:09
Speaker 3: perfect one where they just am of the ring glasses
39:11
Speaker 3: and those look amazing, and again they're just nailing it
39:13
Speaker 3: in the AI race, and so they're basically argument. I
39:16
Speaker 3: do think that on the margin, if you are developing
39:22
Speaker 3: large number of new products, if you have a fast
39:24
Speaker 3: growing business, if you're constantly reinventing how the business works.
39:27
Speaker 3: And again in our case, we are transforming Stripe from
39:30
Speaker 3: not just being a payment's business to there are all
39:32
Speaker 3: these new software lines of business that are much earlier
39:34
Speaker 3: that are harder to predict how they grow. Everything like this.
39:36
Speaker 3: You know, we're changing out the underlying payment methods. You know,
39:38
Speaker 3: we talked about crypto, we didn't talk about around the world.
39:42
Speaker 3: There are all these interesting trends happening in new payment
39:44
Speaker 3: methods where basically bank transfers and things like UPI and
39:47
Speaker 3: picks in Brazil and things like that are becoming much
39:49
Speaker 3: more relevant to anyway, the huge amount of change. I
39:52
Speaker 3: think on the margin, the public company valuation apparatus is
39:59
Speaker 3: you see it how people you know, the quarterly earnings
40:00
Speaker 3: and the miss and the beach and everything like that.
40:02
Speaker 3: It is optimized for mature, predictable businesses, and indeed people
40:07
Speaker 3: talk about kind of business predictability, whereas you know, for
40:11
Speaker 3: a business that is still in the you know, in
40:13
Speaker 3: the early stages like stripe, and we think about a
40:15
Speaker 3: lot of new products on a five or ten year
40:16
Speaker 3: time horizon. Again, I think on the margin, there are
40:19
Speaker 3: some benefits to doing that as a private company because
40:22
Speaker 3: you get to kind of completely retool the business as
40:24
Speaker 3: you go without necessarily wondering about, you know, what will
40:27
Speaker 3: the reception be for this in you know, the next
40:29
Speaker 3: quarter's earnings release.
40:30
Speaker 5: I know you're not in any phase of learning an
40:34
Speaker 5: IPO but I was a capital markets banker, and I
40:36
Speaker 5: know you've had thoughts about like the IPO process. I'm like,
40:40
Speaker 5: I don't know if you're doing an IPO, like, what
40:43
Speaker 5: would you change about the process.
40:45
Speaker 3: I find all the debates about IPO mechanics really uninteresting
40:48
Speaker 3: because it just doesn't matter. Like, if you have a
40:50
Speaker 3: great business that's valuable for customers that millions of people
40:53
Speaker 3: use and makes money as a result, you can do
40:56
Speaker 3: whatever you want. Like, you know, I think Facebook would
40:57
Speaker 3: say they bought the IPO, but they have likeable business,
41:00
Speaker 3: so it doesn't matter and no one remembers it. And
41:03
Speaker 3: then you can have like the world's best IPEO plan
41:05
Speaker 3: and if the business isn't good, it doesn't matter. And
41:06
Speaker 3: so people get into all these debates about direct listing
41:09
Speaker 3: versus regular IPO, and then Bill Gurly complains that the
41:11
Speaker 3: bankers are taking too many fees, and then it just
41:14
Speaker 3: doesn't matter. Like build a great business and you could
41:18
Speaker 3: write your prospectus on a cocktail napkin and it'll be fine.
41:21
Speaker 5: This is like why Charlie Muker doesn't like financial services business,
41:24
Speaker 5: because you're like, like, oh, this is real business.
41:28
Speaker 3: It's true, but it's true right. Yeah. And the thing
41:31
Speaker 3: is investors are smart. I think people try to do
41:35
Speaker 3: too much of a song and a dance with investor
41:36
Speaker 3: relations and try to you know, gin things up. And ultimately,
41:40
Speaker 3: when you meet professional investors, you know they're really smart
41:43
Speaker 3: and they can look through and understand the fundamental dynamics
41:45
Speaker 3: of a business. And so the secret to good investor
41:48
Speaker 3: relations is have a good business that's growing and is profitable.
41:51
Speaker 4: Where people should do that exactly. Yeah, well, oh, you
42:11
Speaker 4: have an airport. Do you want to talk about that?
42:13
Speaker 4: Is that something? Okay? Why where did that come from?
42:19
Speaker 3: Well? I should not be listened to for any rational
42:23
Speaker 3: financial investment advisor.
42:25
Speaker 4: I don't know. I don't have the pockets.
42:27
Speaker 3: Well. No, I'm a pilot and an aviation and I
42:31
Speaker 3: grew up interested in US and I've been flying since
42:33
Speaker 3: I was a teenager and you know, still really love
42:35
Speaker 3: to do it and I'm flying my spare time. And
42:37
Speaker 3: so I would say it's not necessarily the most rational
42:40
Speaker 3: business interest of mine. But the case the airport, so
42:43
Speaker 3: Dublin basically is three airports, Doublin International, which you've been
42:46
Speaker 3: to Dublin, that's the one you've been to. I guess
42:48
Speaker 3: three if you can't the military airport a bet Donald
42:50
Speaker 3: and then Western, which is the general aviation airports. And
42:52
Speaker 3: so general aviation is all the stuff that is not airlines.
42:54
Speaker 3: So it could be public service flights like search and
42:56
Speaker 3: rescuer air ambulance. It could be flight training and you know,
42:59
Speaker 3: people getting their licenses. It could be corporate jets, it
43:01
Speaker 3: could be all this kind of stuff. And generally speaking,
43:04
Speaker 3: the appropriate home for the general aviation stuff is not
43:08
Speaker 3: where all the airlines are because they just don't mix
43:11
Speaker 3: that well. And so most places will have you know,
43:14
Speaker 3: if someone's doing flight training in New York, they'll not
43:17
Speaker 3: do it at GfK. They'll do it you know, Westchester
43:19
Speaker 3: or something like that. Yeah. Yeah, they really don't make welf.
43:22
Speaker 3: And in the case of Dublin's Western Airport, I end
43:25
Speaker 3: up buying it back in twenty twenty one, and it
43:27
Speaker 3: needed a bunch of investment, and so I bought it
43:29
Speaker 3: and we've been investing in giving it the facilities that
43:32
Speaker 3: needs around you know, instrument landing capabilities and you know,
43:35
Speaker 3: redoing the terminal and the capital stock and things like that,
43:38
Speaker 3: and so it's partly I think it's good. I mean
43:40
Speaker 3: they are in the US, they're not for profit businesses.
43:43
Speaker 3: They don't be government owned and federally funded. Internationally, they
43:46
Speaker 3: are like he throws, a for profit business and they
43:48
Speaker 3: just make money off landing fees. And so I actually
43:50
Speaker 3: think it will, in the fullness of time, be a
43:53
Speaker 3: good business once it's kind of come out on the
43:55
Speaker 3: right side of the growth curve. But it's also a
43:57
Speaker 3: passion product.
43:58
Speaker 4: Of min that's awesome. I mean not as an insult,
44:01
Speaker 4: but I feel like to enjoy being a pilot, like
44:04
Speaker 4: casually you have to be like a little bit crazy,
44:07
Speaker 4: Like that seems like an insane proposition, but maybe I'm
44:09
Speaker 4: just really risking.
44:10
Speaker 5: So no, it just.
44:12
Speaker 3: Requires a lot of discipline, you know, checklist discipline, and
44:16
Speaker 3: you know recurrent training. I just went through some recurrent training,
44:19
Speaker 3: and just I actually find it more interesting because obviously
44:23
Speaker 3: aviation safety is generally talked about correctly as one of
44:27
Speaker 3: the best examples of process optimization over the last you know,
44:33
Speaker 3: five decades, where we have taken a system and just
44:36
Speaker 3: improved the crap out of it until it's like so good.
44:39
Speaker 3: If they talk out thing go by on Twitter recently,
44:42
Speaker 3: where the FA doesn't mandate car seats on airplanes because
44:45
Speaker 3: flying is so safe compared to driving that they are
44:48
Speaker 3: worries that if they mandated car seats on airplanes, even
44:50
Speaker 3: though like you have a tiny benefit, it would lead
44:53
Speaker 3: to people choosing not to fly and choose to drive
44:56
Speaker 3: instead and get into car accidents and therefore be net
44:59
Speaker 3: less safe. Kind of funny that. You know, again, flying
45:01
Speaker 3: an airplane feels like in principle it should be like
45:04
Speaker 3: kind of hard to do, and driving car on the
45:06
Speaker 3: ground should be easy to but permile. Obviously flying wins out.
45:09
Speaker 3: And so again you have this decades and decades and
45:12
Speaker 3: decades of history where we've taken the lessons of you know,
45:15
Speaker 3: they say the rules and regulations, they are written in blood.
45:17
Speaker 3: You know, we take the lessons of the previous accidents
45:19
Speaker 3: that have happened and then we wrap them into future training.
45:22
Speaker 3: And you know, generally, when you do pilot training, you're
45:24
Speaker 3: studying a lot of specific accidents that happened and you
45:27
Speaker 3: know what the learnings were for them. And so I
45:29
Speaker 3: think if you're interested in systems design, engineering, process optimization,
45:33
Speaker 3: things like that, lessons.
45:35
Speaker 5: From piloting like inform your software engineering.
45:38
Speaker 3: I mean, they're pretty separate, but I think the software
45:40
Speaker 3: engineering brain tends to be attracted to flying, and you know,
45:44
Speaker 3: you got Palo Alto Airport was a little general aviation
45:46
Speaker 3: airport in the variance when the busy general aviation airports
45:49
Speaker 3: in the entire country. Because I think engineering minds, of
45:53
Speaker 3: which there are lots in Palo Alta, tend to enjoy it.
45:55
Speaker 3: And again you're mixing you know, a kinesthetic skill and
45:58
Speaker 3: meteorology and mechanical understanding of you know, a combustion engine
46:03
Speaker 3: and all the attendance systems and you know airspace and
46:06
Speaker 3: everything like that.
46:07
Speaker 4: So it wasn't like fueled by you being in an
46:10
Speaker 4: adrenaline junkie, like I want to go fast and I
46:12
Speaker 4: want to fly in the.
46:13
Speaker 3: Sky adrenaline Like if you're feeling adrenaline while flying, you're
46:16
Speaker 3: doing something wrong.
46:17
Speaker 4: You feel it all the time when flying, like, God,
46:19
Speaker 4: I hope we stay in the air.
46:20
Speaker 3: There was that, you know, you read entroon descentic Superie
46:23
Speaker 3: and you know flying in Africa during the base nineteen
46:25
Speaker 3: twenties in his case and you know, getting shot down
46:28
Speaker 3: and all these kind of things, there clearly.
46:30
Speaker 4: Was a that would make you feel something.
46:32
Speaker 3: Yeah, that exactly. I think that kind of stuff would
46:34
Speaker 3: make you feel something. But again in these days it
46:36
Speaker 3: has become much more safety oriented and the cowboy stuff
46:40
Speaker 3: has been pulled out. And again they actually describe one
46:42
Speaker 3: of the cultural challenges that happened in the aviation industry
46:46
Speaker 3: underwent was that we produced all these military pilots in
46:49
Speaker 3: you know, the World War Two, in the Vietnam War,
46:52
Speaker 3: and those people then went into you know, PanAm cockpits
46:56
Speaker 3: and they actually kind of made bad captains in a
46:57
Speaker 3: certain way because it was like very much shut up,
46:59
Speaker 3: this is my cockpit. And so the CRM Crew Resource Management,
47:04
Speaker 3: I guess thing basically was a multi decade efforts to
47:08
Speaker 3: get rid of the the captain mindset and get towards
47:11
Speaker 3: a collaborative problem solving a.
47:14
Speaker 5: Lot of like I'm going on a like seven seven
47:17
Speaker 5: the pilot landed fourteens line carriers, Like that's got to
47:21
Speaker 5: be the safest possible way to fly, but apparently not, No,
47:24
Speaker 5: he's gone rogue, not listening to his second officer or whatever.
47:27
Speaker 3: Do European airlines have a different model than the US
47:31
Speaker 3: airlines where they take pilots who have two hundred and
47:34
Speaker 3: fifty hours only, which the US would consider very low,
47:37
Speaker 3: and they put them in the right seat of airliners
47:39
Speaker 3: and they have like a really strong safety record. And
47:41
Speaker 3: so as you fly around an airliner in Europe, you
47:43
Speaker 3: could have someone who only learned to fly a few
47:45
Speaker 3: years ago. And the way they do that is a
47:47
Speaker 3: huge amount of standardization, a huge amount of process orientation.
47:51
Speaker 3: You know, people make fun of Ryanair for the hard landings,
47:54
Speaker 3: you know, the Ryanair landing in Europe where they really
47:56
Speaker 3: plunk it on the runway. That is one of their
47:58
Speaker 3: safety SOPs where they say a positive landing, as it's
48:01
Speaker 3: known in the industry, is safer because it reduces the
48:04
Speaker 3: risk of hydroplaning if it's wet, and so it reduces
48:06
Speaker 3: the like very small risk that you run off the
48:08
Speaker 3: end of the runway if the runway is wet. But
48:09
Speaker 3: we're just going to every landing, we're gonna plunk it
48:11
Speaker 3: on and that's safer. But again it's generally process orientation,
48:16
Speaker 3: standards and a lot of that kind of stuff that's
48:18
Speaker 3: driven to safety and not excessive piloting skill. And again,
48:21
Speaker 3: if you're relying on incredible piloting skill, something has gone
48:24
Speaker 3: wrong in your system. Because we should be able to
48:26
Speaker 3: have a seven seven seven full of passengers be safe
48:30
Speaker 3: even if the pilots are fatigued or something like that.
48:33
Speaker 4: That's wild. I did not know that about Ryan Air.
48:35
Speaker 4: I feel like they should put that fact out there.
48:37
Speaker 4: You know that it's intentional that we're plunking down.
48:40
Speaker 3: That's true. Yeah, yeah, because you know it's quite yea
48:42
Speaker 3: quite exactly. Yeah, attention to it.
48:46
Speaker 4: Being uncomfortable, Well, everyone knows that's true.
48:50
Speaker 5: That's true. That time calls and thanks for coming on
48:52
Speaker 5: the Money Stuff Podcast. Thank you guys, it's fun.
48:55
Speaker 4: Our first guest.
48:56
Speaker 5: Yeah, I'm honored, and that was the Money Stuff Podcast.
49:06
Speaker 4: I'm Matt Levia and I'm Katie Greifeld.
49:08
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49:10
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49:12
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49:18
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49:31
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49:34
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49:36
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49:39
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49:44
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