How Stripe Built A $35 Billion Company

How Stripe Built A $35 Billion Company


Think of the term “middleman”, and it
conjures up negative ideas and stereotypes. In fact, “cutting out the middleman” is
considered a good thing. But is it? Stripe, one of the fastest-growing fintech
companies in the world, has positioned its growth on being known as the Internet’s
Middleman. And based on its recent valuation of $35 Billion,
they’ve done pretty well in that space. In this video, we’ll cover exactly how Stripe
has established itself as the premier choice for accepting payments online. This video is brought to you by EquityZen,
the pre-IPO marketplace. Growing up in rural Ireland, brothers and
co-founders of Stripe, Patrick and John Collison, were exposed to the world of business at an
early age. Sons of entrepreneurial parents, it seemed
natural to start and run businesses for the boys, often a game they would play as children. It wasn’t until their early teen years that
they first got access to the internet, each of them building their own websites and experimenting
with web development in their spare time. Both Collison boys received high marks in
school and started to develop online businesses as a natural extension of their passions. While they were 19 and 17 respectively, they
started Auctomatic, a business that intended to solve some of the issues they saw with
eBay. In a span of just 10 months, they built, funded,
launched, tested, and sold that company for a cool $5 million dollars, making both boys
handsomely rich before even finishing high school. After moving to the US, the Collisons attended
Harvard and MIT for a few months and regularly discussed the future of online transactions. Funding their tuition by developing iPhone
Apps, they remarked how easy it is to make money with the convenient payment system on
the App Store. But if you were running an online business,
however, the ability to accept payments felt like the 1970s. It was complex, antiquated, and in desperate
need of a change. The financial barriers to starting a business
were immense, more favorable to large corporations, and hardly encouraging for the small startups
that Patrick and John were familiar with. Businesses couldn’t devote enough of their
time to working on their products because they had to deal with currencies, reporting,
payment routing, and dozens of other financial hoops simply to allow customers to give them
money. Joking that they should just start their own
payment service, Patrick and John stumbled on to their “Next Big Thing”. It was here where others saw just 16 digits
on a piece of plastic and a few lines of code, but for these two young men, they saw opportunity. It was late 2009 when the Collisons started
working on their payment acceptance service, dropping out of school and moving to Buenos
Aires to work full-time on their revolutionary idea. Stripe, even though it was called “slash
dev slash payments” back then, felt very natural to the Collisons. They wanted to solve their own problems as
well as those of their friends. If they could remove the need for startups
to worry about the financial side of business, then these startups could invest more time
and energy into their products and services. With a few internet businesses under their
own belt, the Collisons were intimately aware of the problems of accepting payments. By creating Stripe, they were first focussed
mainly on solving their own issues. But within a few months, it became apparent
that this lake of potential customers was actually an entire ocean. All of eCommerce could benefit from the service
that Stripe provided. And so, their vision became even grander. Enter Y Combinator, the start-up accelerator
with several successes under their belt. Founder Paul Graham had already made several
hundred thousand dollars with his investment in Auctomatic and once the Collisons applied
again, this time with their new Stripe concept, he readily funded it in 2010. Launching a beta test, they attracted more
interest from Angel investors, including Peter Thiel, the founder of PayPal. They were allowing businesses to receive payments
immediately and test their theory that these companies would grow because of Stripe’s
financial middleman platform. And by September of 2011, they were live and
available to the public. After that, growth was enormous. In 2012, they secured a round of funding from
the famed venture investment firm, Sequoia and AMEX Ventures. In 2014, they raised another round of funding,
bringing their valuation from $1.7 billion to $3.4 billion in just a matter of months. And by 2019, Stripe’s latest round of financing
raised an additional $250 million at a staggering valuation of $35 billion. At this stage, Stripe isn’t simply offering
a way for startups to accept money. They had launched Radar, a machine-learning
fraud-detection service that reduced credit card fraud by as much as 25%. They also launched Atlas, providing an end-to-end
business formation service, allowing anyone in the world to quickly and easily form a
new company, further removing the barriers for innovation. Recently, Stripe launched Issuing, a platform
that white-labeled credit cards for businesses, offering a percentage of the fees that Stripe
collects as a cash back for its business customers. And what’s next for Stripe? Maybe with the new credit card service, they
are positioning themselves for a buyout from one of the major credit card companies that
invested in them. Maybe they intend to go public with a more
complete version of their already extensive end-to-end service. The Collisons are tight-lipped, saying that
they remain in the expansion phase, not yet done developing and offering new solutions
for the growing transition to online commerce. In 2018 alone, it’s estimated that half
of Americans who spent a dollar online, used Stripe to make that payment. Stripe never intended to become a competitor
to major payment facilities like Paypal, Square, or Apple Pay. But as a fast follower, this unicorn company
has been able to watch what the “big guys” are doing and swiftly improve their own service
to capture a huge portion of the market, including offering payment infrastructure to Amazon,
Facebook, and Lyft. By making online business easy for everyone,
Stripe, and the middleman service they offer, has become an incredibly popular company. Of course, this was only possible because
of the investors who believed in them and funded their success. Which brings us to today’s sponsor, EquityZen. EquityZen has opened the door to pre-IPO investing. Since 2013, they’ve been one of the leaders
in connecting shareholders of private tech companies who wants to sell their stock to
accredited investors looking to access the private market. Their investment funds buy shares of companies
like Stripe while they’re still private, allowing you to unlock investment opportunities
that were once only available to well known venture capitalists. And if you’re new to EquityZen, you can
invest for as little as $10,000. Click on the link below to learn more about
how your capital can appreciate through pre-IPO investments offered EquityZen If you enjoyed this video, also be sure to
click the like button and subscribe for more content just like this. Until next time, stay smart.

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About the Author: Oren Garnes

100 Comments

  1. I hate how much power Stripe has in influencing payment processing sites to censor content they don't like.
    Their only job should be processing payment, regardless of whether its a conservative or sex worker. Yet they feel the need to try blocking those two people alot.

  2. I'm so grateful to stripe because they finally gave paypal some real competition. Paypal can no longer be the tyrant that they were before.

  3. Never heard of stripe before. As for valuation ? 35 billion ? They would be worth the imaginary 35 billion until the day they suddenly go bankrupt. Look at the stunt wework guys pulled off. Valuation means nothing.

  4. Bussiness Casual can you make a video on Saudi Aramco. The world's most valuable company which is going to do largest IPO.

  5. Good content but so many info missing. How tf they raise the money to start up their business. Not unless there parent help them out

  6. Business Casual could you please do a video on TTI, As it such a large company and is owned by berkshire hathaway. Thanks

  7. Damn….this channel makes quality content, can see the effort behind every video…Keep going Business Casual!

  8. Stripe won because their primarily users were developers. All you have to do is copy a view lines of code and your payment process is done. That is magical.

  9. Some has said it already, but I wanted to really stress this:
    Stripe is being used so widely in the e-commerce space right now, because they have achieved a perfect balance between being user-friendly and developer-friendly.
    As a developer Stripe's API was probably the most pleasurable to integrate with in my life. Not only it's very well thought, but their documentation is very clear and provide code snippets for all major webdev programming languages. They also provide tools for testing and are constantly evolving.
    In the same time, their graphic client is easy to use even for a person with no e-commerce and webdev experience and still does not interfere with the code. You can integrate with their API in your app and still allow your customer / sales department to use their web client simultaneously.

  10. DOUBT THIS COMPANY IS WORTH $35 BILLION..ALL TECH COMPANIES ARE PONZI SCHEME BUILT WITH PROPAGANDA NEWS LIKE THIS..

  11. This is the worst company out of all Startups. they have the worst business model and everyone working there has weird attitude. This is going to be one of the worst failed company soon.

  12. Why all these dislikes? Stripe is very famous for the people who work in eCommerce, web development and those who want to start a company in the US but not able to go to the US in person and open it!

  13. Stripe success is that it first focused on the developers that would be called on to integrate their products. Making the same developers recommend their solution to clients.

  14. Used to use 2checkout, switched to Stripe a few years ago and wow I have no complaints with them. They provide a fantastic payment solution for business owners. PayPal is still the king but Stripe are following close by.

  15. This is a good analysis. However, just a critique, I don't feel the question of "what made Stripe standout from their competitors including Paypal?" was fully answered. A simple answer to this is what u/TheBejbiborn said, Stripe stood out by focusing on being great for web developers to use. I feel like this point could have been added to the video.

  16. Stripe's marketing campaign is off the charts…literally 3 business YT channels promoting them. Not that I am complaining, I think Stripe is awesome.

  17. I've never even heard of Stripe. It's a PayPal clone?
    I was very confused that a company I've never heard of did 50% of online transactions. But that that's only in the States was only mentioned in the video, not in the description. That makes sense, 50% of the States is like 10% of the world?

  18. Can someone please explain is non-technical terms how Stripe achieved to make business easier? The video doesn’t say much about what exactly is the service they provide.
    Also I don’t get why Thiel would fund them instead of trying to capture that market with Paypal? He’s not big on charity..

  19. Indian cities are way more forward in terms of online payment. When I travel to US and Europe, I notice that strip cards instead of chip are used, no easy to use mobile wallet payment system, no easy real-time settlement options etc

  20. Interesting video. I never though that this video of Stripe will come on Business Casual,this is great keep on inspiring us with videos of such great companies

  21. Do you know how we can understand this world by listening and seeing … i will tell you something … good people can make money, bad people can see and listen to those good people to cure their sych problems.

  22. So, what im hearing is Stripe is garbage, they dont really solve anything, reason why nobody have really heard of them. And they paid you to make this video as a sort of advertisement

  23. the ad for equityzen isn't as well thought out. if say you purchased shares, you have to find a buyer to sell. there is a cancellation fee, you have to hold those shares for a certain amount of time before you can sell, when it goes public you can sell those shares to a buyer before or there's a hold on those shares based on the rules of the IPO going public. they claim you may have to hold those shares indefinitely. best way is to go directly on by a middleman for this one.

  24. In all honesty, stripe has a really good api and well written libraries that are documented really well. From a developer's point of view, stripe is really easy to work with.

    I wish more companies were like this.

  25. Whatever you said Stripe did, already existed long before Stripe. Only thing Stripe did was it made it easier for developers to integrate.

  26. I live in the Irish home town these boys grew up in, and the funny thing is our City Council Enterprise Board rejected their idea when they asked for funding as teenagers. Moral of the Story? Don't let old people make decisions about tech start-ups !!

  27. no one:
    youtube: want to know how other kids used the internet to get rich, not what you do clearing browser history and posting on social platforms how sad you are

  28. BS. Before stripe there was Paypal and many many other simple to use payment systems, even googlepay… What a bunch of nonsense.

  29. never heard of it. The valuation should be close to minimum of 100 Billions if 50% of all online transaction done in US is using Stripe.

  30. People who are valuing this at $35 billion are probably the same people who valued wework at $47 billion.

    The smart thing for the collisons to do is to get in touch with Masa Son and dump this on him and cash out.

  31. Thanks for watching! Enjoyed? Don't forget to like & share! By the way! Have you watched our latest video?
    How Andrew Carnegie Became The Richest Man In The World!
    Watch now! 👉http://bit.ly/carnegiebc

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