Competing in a Crowded Market? Take a Page From Stripe.
You don't have to run a payments processing company, or even a tech company, to take a page from the playbook of Stripe, a four-year-old payments processor that just announced an $80 million round of funding valuing the company at $1.75 billion.
The money came from Founders’ Fund, Khosla Ventures, Sequoia Capital, and Allen & Co. Stripe has raised a total of about $120 million. Plus, three of PayPal’s five original founders have now invested in rival Stripe.
Stripe reportedly processes billions of dollars in payments a year, with total payment volume doubling since September. Its customers include Rackspace, Lyft, Evite, and Blue Bottle Coffee. The San Francisco-based company is also rumored to be in talks with Twitter, where it might power a new shopping feature.
Stripe's success raising money and rolling out its platform shows the value of thinking globally right from the start and of rethinking who, exactly, your customer actually is.
Brothers John and Patrick Collins, Stripe's co-founders, are originally from Tipperrary, Ireland. In the early stages of the company, when both were still students, John was on a visa and Patrick was on a green card. “It kills me every time we when we meet people who are very talented who we know would make a huge contribution to Stripe and we can’t hire them because of visas getting in the way,” said John Collins in an earlier interview with Inc.
But the company is growing more quickly globally than it is in the U.S. It expanded into Canada in 2012, when it was only about two years old. About 40 percent of Stripe's 85 employees are from outside the U.S., and it’s looking for country managers to run operations in new geographies as the company expands. So far, it's processing payments in 12 countries and running an open beta in eight more. The recent funding will be used for international expansion.
While other payments processors try to get merchants excited about their offerings, Stripe has made its name as the payments processor that's easy for developers to implement. The Collins brothers are coders, and they're targeting other coders--the ones who tell merchants which payments software they should be using--as customers.
Stripe also appeals to merchants, of course. It lets them accept online payments without having to set up a merchant account or deal with a bank. With Stripe, an online retailer’s payments form and pages can be designed to look like the rest of the retailer’s site. That allows the merchant to put its own brand on the checkout pages, increasing the odds that the sale will be completed.
Stripe charges 2.9 percent per transaction in addition to a 30 cent fee--exactly the same as PayPal.
At the end of last year, Stripe’s biggest competitor, PayPal, bought payments processor Braintree for $800 million. Activist investor Carl Icahn recently bought a stake in eBay, and is pushing for PayPal to be spun out of the company.