Patrick Collison

Supported by Greenhaven Road Capital, finding value off the beaten path.

Patrick Collison (Stripe, Atlas) talked to Jason Calacanis at the TWIST Launch 2017 event. Collison, says Tyler Cowen, is one of the smartest people he knows. Much like the Bill Gurley interview at Launch 2017, this could have been twice as long. We’ll take what we can get, here are the notes.

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Collison’s interview reminded me of the – (EPISODE OF THE YEAR) – podcast between Patrick O’Shaughnessy and Body Varty. Varty is a tracker and says, “there’s an impossibility to it, and yet, if we go and try there’s also a chance.” Tracking is about listening, searching, and being relentless. It’s a great metaphor for anything and pairs nicely with the story Collison tells.

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Pre-foothold. Before founding Stripe, Collison (along with his brother John) built apps for the App store. It was a good business and showed them sometimes.

“We (John and I) had been talking about this idea (payments) for awhile. We had sold apps in the app store and it had been incredibly easy…we were kind of reflecting on how easy it was to sell apps on the app store and it was so monstrously difficult to do other transactions on the broader internet.”

Like Ken Fisher, Collison noticed that in one area (the app store) something worked whereas in another (the broader internet) it did not. Collison started looking around and noticed that other people were having this same problem. His friends were creating a lot of workarounds to use the legacy payment companies. Obviously, he could do better.

Regular readers will know that nothing is obvious or fast. Even though the existing system was a quagmire it wasn’t that obvious that it could be fixed or that Collison was the one to do it. “It was almost two years of us writing code by ourselves,” he says, “We’ve been working on this for quite a while, laying the foundation.”

Collison recalls that around this same time the Facebook team had multiple irons in the fire. “It was not obvious that Facebook was the thing to be working on,” he says. The Stripe prototype too “wasn’t obviously a great idea…we didn’t know if we should raise money for Stripe or not.”

As Calacanis questions, there’s an origin story expectation but it never comes. Collison even mentions hindsight bias and explains the emotional roller coaster he was on. “Maybe a month after starting work on it (Stripe) we’re like, ‘This could take over the world.’ But of course the next morning it was like, ‘This is the worst idea in history.’”

As the idea grew Collison moved to the Bay area because that’s where his potential customers were. He avoided the #1 mistake of failed startups and found that the payments pond “was actually a much larger ocean.”

For the most part, the journey to this point is consistent for successful and for unsuccessful startups.  “Two years is a long time when you’re in it, working away, with so many of these roadblocks and headwinds and people telling us that it couldn’t work or shouldn’t work or it’s a bad idea…it could be that it’s a bad idea, or not.” Collison explains that the early days – maybe even the early years – are similar for companies that live and ones that die. This is among the reasons Bill Gurley recommended a book like The Startup.

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Post-foothold. Collison points out that Stripe isn’t established yet, but they do have a foothold. Stripe’s goal “is to increase the GDP of the internet,” says Collison.

While “the internet does not care about the national borders of the atoms they’re sitting on top of,” some founders can start internet businesses easier than others. Collison says they looked through the Stripe data and saw “so many people that were going through such lengths to surmount these stupid barriers.” The story was playing itself out again. Originally Collison saw companies struggling to accept payments. Now it was companies trying to incorporate in the state of Deleware, have a United States bank account, and get basic tax and legal structures implemented. Stripe created a product called Atlas to do these things.

As Collison told this story and explained the journey he used words like “hypothesis” and “experiment.” I think that wording matters. Brent Beshore said the secret to business is trying things and do more of the things that work and less of the things that don’t.

One of those experiments is staying private. Collison says that Stripe is going to “hold off as long as possible” from going public. Why? Ken Fisher guessed that because there is ample private capital and too much public pressure. Collison mentions the latter saying that Amazon is the best example of long-term thinking and they had an uphill battle to keep that mindset.

 

Thanks for reading,
Mike

PS This was another “shorter” post. If you liked the brevity and fewer links, let me know.