When Stripe arrived on the scene, online payments were nothing new. But the app took payments a step further, simplifying the process of setting up payments for small businesses and app developers. Today, Stripe is integrated with high-profile services like Twitter and ApplePay, as well as being built into some of the hottest mobile marketplaces, including Lyft, Postmates, and OrderAhead. Five years after beginning serious work on the app, co-founder Patrick Collison reflects back on a company he began creating while in college.
As teenagers, Collison and his brother became frustrated by the process of setting up a business. Setting up a way for customers to pay was almost as difficult as getting a mortgage, the young developers found. Once they set up their first payment acceptance app, they noticed their friends were interested in using it and discovered they might be onto something.
In the early days, the Collison brothers had a series of discouraging meetings where they were repeatedly told there was no market for their concept. Being so young, they didn't know that they shouldn't believe what they were being told, but they persevered anyway. The brothers finally made progress when they added Billy Alvarado to the team.
"We met Billy and described our plight and he agreed to help out," Collison recalls. "Soon after, we got our first major deal done with Wells Fargo, which was pivotal in enabling Stripe. Billy is still at Stripe and has done all these deals around the world. If we'd been left to our own devices, I'm not sure we would have ever gotten there."
Battling the Status Quo
Collison has found that after something has been in existence for a while, people seem to accept it as the status quo. While online payments have been available for a long time, there are serious limitations. Customers have grown to accept that if they want to purchase something online, they'll have to manually enter the entire credit card number and related information. But this process is difficult and time-consuming and can be especially grueling on a mobile device.
"Now that the Internet is becoming a properly global phenomenon, it is now much more important than it was 10 years ago that you can address the complete market and not just be focused on the places where people have credit cards," Collison says. "For these reasons, there was actually a major technology shift possible."
Last fall, Stripe signed a deal with Alipay, the top payment platform in China. Despite being part of Alibaba, a business with an estimated market value of $231 billion, some people Collison spoke to told him that wouldn't be important to them because so little of their business comes from China. Before the Alibaba IPO, the company didn't have a large presence in America but it has now gotten major attention. With a population of more than a billion people, the fact that AliPay is used for the vast majority of online transactions is significant, especially since China citizens aren't really able to transact outside of the country.
"I think people are getting the message that the Internet is global," Collison says. "Only a small minority of users are in the U.S. If you're just addressing Western markets, that's going to be an impediment to your business, just because there are fewer people you can sell to, and a strategic liability, as you're creating the possibility for someone to go and replicate your business elsewhere."
From the beginning, Stripe worked as though it were a distributed workforce, using the technology commonly used by businesses with remote staff. Team members would often instant message each other even when they were in the same room. Collison has found that in the past few years, the tools have gotten so much more advanced.
"The cultures of the really large Internet companies were set back when the tools weren't as good," Collison says. "Now with Skype or Slack, or Google Hangouts, the infrastructure is much better in a way that enables the culture to coalesce."