The Twentysomething Brothers Behind a $9 billion Silicon Valley Player
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John Collision, Patrick Collison

Image: John Collision, Patrick Collison.

STRIPE President John Collison doesn't have an executive office or even a work area, so he often works at a shared table on the ground floor, when it's available. His older sibling Patrick, who is CEO, goes by the more conventional route: a little work area packed between a wall and the desk used by the admin he shares with his sibling.

The lack of an executive office stopped the Collisons, Irish migrants, and twentysomething college dropouts, from building one of the most successful startups in the financial services industry. Seven years after its founding, Stripe is revolutionizing digital payments. Over the past few years, the startup has doubled its size to 400 employees and earned investments that value it at $5 billion. One a U.S.-only service, Stripe has now expanded to over 23 countries and is routinely striking partnerships with the likes of Apple Pay, Visa and Alibaba. In recent years, Facebook, Pinterest, and Twitter have chosen Stripe to power their e-commerce efforts, and traditional retailers like Saks Fifth Avenue and Best Buy picked Stripe for their foray into mobile.

Stripe is private and won't disclose income. While the majority of its countless paying clients are moderately small, a modest number of its best-known customers - Lyft, Shopify, Kickstarter, Postmates and Wish, process tens of billions in installments combined, a lot of it through Stripe. According to industry sources, Stripe’s payment volume exceed $20 billion a year. For each transaction it processes, Stripe receives a 2.9% in swipe fee, plus 30 cents, roughly the same as other payment platforms such as Square.

A STRIPE STORY

According to Stripe, 27% of Americans will have bought something through Stripe in 2016. The financial services startups has remained largely successful at making digital payments easy to process. Stripe’s technology powers subscription services like Slack, crowdfunding sites like Kickstarter, and marketplaces like Lyft. In 2016, it made a big push in what could be the next big trend in mobile commerce with the launch of the “buy” button that allows retailers to sell directly to consumers on platforms such as Facebook, Pinterest and Twitter.

One of its rivals, Braintree, which is owned by PayPal, has processed $50 billion in 2015 - more than twofold Stripe's volume- - and boasts of marquee clients, for example, Uber and Airbnb. Adyen, another fast-growing European startup, is additionally bigger and pushing forcefully into new markets. However with just around 2% of worldwide business happening on the web, by Stripe's estimates, the Collisons- - and their investors, which include Sequoia Capital and Andreessen Horowitz, believe there is immense opportunity enough for all.

Stripe board member Mike Moritz of Sequoia Capital has called the Collisons some of the sharpest people he has ever back, high acclaim from the man who has bankrolled PayPal, Yahoo and Google.

EARLY DAYS

The Collisons split responsibility over products, although John, 25, handles partnerships and sales while Patrick, 27, focuses on designing and being the public face of the organization. The siblings learned programming at an early age and sold their first company, Auctomatic, for $5 million while still in their teens. Patrick, dropped out of MIT, is an insatiable reader who keeps a list of 600 or so books on his shelves, on topics ranging from programming, physics, literary criticism and economics. John, briefly attended Harvard, and is now the world’s youngest self-made millionaire.

Strip Checkout (1)

Stripe wasn’t born with the ambition of becoming one of the hottest startups of the decade. The Collisons simply wanted to solve a problem that had encountered as app developer. While the ubiquity of Internet and smartphones has made it fairly easy to build services with a global reach, getting money for them remains an issue. So, the siblings built a system that enables developers to accept payments in less than a minute.

In the early days of Stripe, the Collisons did everything. They wrote the code and also handled customer service. Soon, they realized that in order for Stripe to grow, they had to steer their focus towards creating an organization. In the following months, they hired their first ten hires, all of whom have Stripe’s 10% equity reserved – an unusually large amount. Today, the founders will do whatever it takes to lure a top pick. To hire Clair Hughes Johnson, a veteran of several executive roles at Google, where she also ran the self-driving car project, they spent close to 50 hours courting her, before she agreed to join Stripe, where she is now the chief operating office.

During the early years, Stripe has had its share of blow-ups and misfires. Talent is flocking in from all parts of the country to work with the Collisons. After all, the Collisons are seen are the next Page-Brin duo.

STRIPE NOW

Stripe has grown alongside some of its best clients by remaining dexterous. When Lyft chose in mid-2015 that it needed an option to pay its drivers more quickly, it swung to Stripe. In December Lyft launched Express Pay, an option that allows it to pay drivers instantly for their rides instead of making them hold up a few days. The feature required Stripe to bypass the typical electronic payment network, called ACH, and rather built a service that connected drivers’ bank accounts through their debit cards.

Similarly, Twitter turned to Stripe for its first raid foray into e-commerce. Twitter wanted to make it simple for a large number of retailers, of all shapes and sizes, to offer merchandise through a buy button on its app. The challenge was massively complex, to a limited extent since vendors use many diverse platforms to power their stories. Stripe simplified the platform for developers and publishers, so Twitter won’t need to worry about it.

The work with Twitter formed the basis for Relay, a Stripe product that has allowed thousands of other merchants to sell through third-party apps easily. Stripe’s ability to simple complexity has brought corporate powerhouses like Slack on board with it. Two years ago, Slack ditched Braintree in favor of Stripe because of its ability to deal with various currencies and payment types and to integrate with the company’s accounting software.

Patrick and John Collison are now worth $1.1 billion each after Stripe raised $150 million from CapitalG, an investment division of Alphabet and General Catalyst Partners. The brothers together own about 29 percent of Stripe, although no official statement regarding the same is public. According to The Wall Street Journal, the company is expected to exceed 40 percent in volume growth.

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