Bloomberg Audio Studios, podcasts, radio news. So my idea for you guys is you guys just have like regular normal, boring ads on the podcast. I think you need to do the post red ads for yeah, say a lot that everything in securities, frauds is having a bad night sleep securities for us.
Well, like I could do like the men's shaving club ads or something that could be fun too.
When buying short data out of the money called out right, Yeah, I think we good.
Hello and welcome to The Money Stuff Podcast. I'm Matt Levine, I read The Money Stuff Colm at Bloomberg.
Opinion, and I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
Katy.
Today we're doing something new. We're doing our first interview on The Money Stuff Podcast.
Are you nervous, I'm pretty nervous. I'm a little bit nervous too.
We're recording this after it happens, and we're not really nervous.
I'm still stressed out.
To speak for yourself, I'm pretty nervous.
I haven't listened to it yet. Today our guest is John Collinson. Stripe is a payments and financial technology company, and John and his brother and co founder Patrick are kind of tech industry celebrities.
Yeah, he's an Irish billionaire. He's from Limerick. That's cool.
Katy's wearing her Limerick jacket, but we'll probably get into that during the podcast.
That's true. It's a little embarrassing.
That I wore this medium amount of embarrassing.
I truly didn't mean to, but as I said to you in our office, it was forty seven degrees when I left my apartment this morning, pre dawn, and I needed a top. And this is my favorite medium weight jacket.
This is the behind the scenes content that my stuff podcast listener is really grave. Yeah, let's jump right back into that Internet failed it should I do like a crashing transition to talking about striper?
Yeah, so how do you guys usually start these? How do you one? I guess you haven't done that, You haven't done that, you could invent the forduct. Yes, start by review of the advertisements I've heard the podcast.
We start the podcas us with much like this. We walk into the room and bullshit a bit and then record that. Yeah, and then we eventually say hello and welcome to the Money Stuff Podcast. Then we talk about whatever the thing we're talking about today. So now we're
talking about stribe, capital markets, Yeah, destiny tech. Okay, So listens in podcasts with you, you talk a lot about your interest in business history and like you've learned from the tech companies of the past and the conglomerates of the conglomerate wave. I have not heard you talk about the lessons you've learned from financial services companies. And I write about finance and think of Stripe in many ways as like a financial services esque company here, like some
evolution to a financial services company. So I'm curious, like, I don't know we you think about financial services.
Yeah, in general, we try to learn a lot from other businesses. And Okay, one things I really like is we live in a golden age of learning about other businesses right now. And one of the reasons I like this is because I think learning about other businesses at some level learning about the world or certainly the economy, because you know, you're getting sense for how all the
various entities work together. With financial services in particular, you came up with the framing that you know, Stripe is in a way kind of a new kind of scaled investment bank. Was it you're framing I think?
I said, yeah, yeah, but I would love for you to tell me that's right, but I'm assuming you'll tell me it's wrong.
No. I actually kind of like it because if you think about what are the potential source of funding for a business, Like, if you want to scale off a business, how can you fund it? There's three ways you can fund a business. You can do it through debt, equity, or retain earnings. And so if you just tick through each one of those on the earning side, maybe that's the place where a Stripe is kind of the most directly doing this, where we're making it easier for businesses
to self fund their growth. And we see tons of bootstrapped or kind of certainly airly monetizing businesses on the Stripe, like with this customer and Stripe Photo Room, and they do online kind of GENI powered photo editing. They're based in France, and you know, maybe ten years ago they would have you know, raised a whole bunch of VC and scaled up that way. They're actually profitable within a year and they've just kind of scaled up profitably since then.
Ninety eight percent of their business comes from outside France and so they're kind of selling this product to a global audience and stripes making it easy to do that. And we've seen that in general, I guess the AI companies in particular, where you know, during the social media boom, maybe companies scaled up first with raising lots of VC
dollars and then later on figured out monetization. With a lot of the AI companies, you know, open the eye perplexity clause, you know, the photo room who I was mentioning, they actually monetized from pretty early on using stripe, and so that's one source of funding.
Stripe allows early stage companies to monetize so efficiently that like there is less need for data and equity in the world because companies can sell fund like you're putting vcs out of business.
Yeah, and obviously we think it's a more slightly more healthy dynamic for the businesses. A classic trap that early stage companies fall into is you know, and why combinators say tries to get their companies to avoid falling into this failure mode is kind of they raise money and then they think kind of valuation milestones or any kind of financial or investor milestones are the milestones that matter
for the business, whereas obviously that's not the case. It's are you building something of value in the world which will generally be measured by does anyone want to buy it? And so I think maybe it gets people on the right leaderboard earlier on, where a revenue leader board is just a much healthier leaderboard to be thinking about than a fundraising valuation leaderboard. But we also play in the other parts of the capital stack, where on the debt side.
I mean, you guys have probably watched this, but banks have kind of gotten out of the SMB lending space since the financial crisis, as just the compliance costs have gone up, Like people do not go to a bank for a five thousand dollars loan anymore, and so we now lend through our lending partners billions of dollars to startups. We do that entirely programmatically through amount models, you know,
cash flow based lending. So we're not looking at the balance sheet, We're not trying to do credit checks on the individual or something like that. We're looking at the stream of cash flows. Is it a healthy, reliable stream of cash flows that can support some debt?
You're doing the cash flows you can see exactly.
We see the cash flows and people repay out of the stripe cash flows, and so that is a new kind of lending product that exists in the market. That now again is you know, in the billions of dollars in terms of the debt we're providing. It's kind of ironic in a way. If you want to raise one hundred million dollars of debt, that is a very competitive market.
Lots of people are playing in that. If you want to raise five thousand dollars of debt for your company, it's actually much harder to get that than it was, say twenty or thirty years ago. We've gone backwards there. And then on the equity side, I think stripeatless has actually helped make more companies investable because what a lot of people don't realize is stripeatlists are in corporation product.
But it lets companies where the founders might be in Israel or might be you know, in Singapore or something like that, create a US Delaware company and that makes it much more investable. And so we've seen a lot of foreign founders kind of virtually creating a US company, which it just turns out foreign companies investors fanan too scary.
So I guess I'm responsible for the framing that you're sort of in somebody's a substitute for an investment back. So like your framing is like increase the GDP of the Internet. But like you know, you have these businesses like incorporating companies, like what is the principle? And like that was like a real investment banker I was doing, like corporate derivatives. I'm like, I assume you would never get into that business, But am I wrong?
We're certainly not planning on us. We build products that are scalable in some way through tech and so you know, Stripe itself. This past year we did trillion dollars in payment through the strip platform. That's still growing in a pretty healthy clip. The number of businesses served is millions
of dollars. And so if there's something that is solved by just throwing an army of people at it, I mean, you know, all the investment banking firms are exceptional ash recruiting armies of people, and that is a very competitive space, whereas the space of you know, like I was saying, with the lending side of things, that was just an underserved marketers where we came at it by talking to our customers and they said, we really need growth capital as actually very annoying for us to get us and
so I guess we try to find the underserved spaces, and investment banking, for you know, certainly on the larger side, does not seem underserved right now.
I've listened to a lot of podcasts you've been on in the past several weeks, so sorry, no, no, it's been really interesting. You interviewed Charlie Munger, which was I.
Much prefer interviewing to being interviewed. So we'll come back for the second round of this where you guys are put on the spot.
That'll be a lot of fun. We'll put that on the calendar. But at one point Charlie Munger started talking about like banks and they're selling these sleazy products, and of course I couldn't see if you were nodding along and I were talking about, you know, whether you would chafe. It's sort of the comparison to you know, an investment bank, for example, but it sounds like you don't, No, I don't.
Investment banking provides a useful set of services in the world and Okay, one things I really like about the Money Stuff newsletter is a studied detachment from what's going on where there are people and people respond to incentives and that creates behaviors in the world. I like Matt does have views and you know, just like crypto and you know, all sorts of things, and you can kind of the views that occasionally come out, but it's mostly this very detached view of what's going on in the world.
But the way we think about it, like, for example, we think, you know, stripes, scale and revenue are actually pretty decent proxies for the value stripe is providing in the world. That's not always the case with the business. You could have an extract of business somewhere, or monopolies or rent extraction or something like that. But in our case we have very INFORGMNED buyers and a very competitive market.
There are lots of other places people could go for payment acceptance or billing software or something like that, and so generally, if customers are choosing you and paying you money for a service, it's because you're providing something of value that you can't get elsewhere. And similar with investment banks, I think if people are going to investment banks for a thing, that's probably because they're providing some value to them. And so that's the frame of guy I tend to take.
I think Charlie rest in Peace generally took a lot of offense as where he saw people hyping things, principal agent problems. You know, there's a set of things that bothered him, Crypto Robinhood, mutual fund advisors, and you know, you could understand I could construct the Steelman for those cases.
I think there's a lot of opacity and pricing and value in financial services that there's probably a lot less of in your business, right, Like you're kind of charging a transparent feed to people.
Yeah, and certain the more scaled something is, the more price comparison they'll be, the more efficient the pricing will be. Whereas, yeah, there's more room for extracting price in the when you get into bespoke deals.
So one thing I think of when I give investment banking is just serving as an advisor to CEOs and sort of giving them general advice on their business. And we were talking before about you know, you are now interacting with a lot of big companies, and you had some views on like the ability of a big company to CEO to sort of understand her company, and I'm I'd love for you to talk about them.
Yeah, I think people think that CEOs are able to drive change in their organizations. I'm talking about organizations in general. I'm not talking about the Stripe. People think that a CEO lands in a new job, they take over a company, and they're able to just whip everything into shape and change everything. And I think the general experience of CEOs and in new jobs is that is not the case.
And organizations are pretty hard to change. And in fact, one of the things that we believe strongly at STRIPE is it's very important for people to get close to the work or you will not be able to drive any meaningful, useful change. And so like a bunch of different ways in which we do that. It actually reminds
me of the lean manufacturing principle, you know. And they have all these very nice esthetic Japanese terms for things, and so you know, there's the English equivalent per much for the Japanese terms, but in them is gemba, which is this idea that managers should you know, walk the factory floor and solicit ideas from the people who are on the production line and things like that, and all companies,
like a tech company like Stripe has its equivalents. And so we very much encourage engineering managers to actually write code at Stripe to get the experience of what is it like working in their corner of the code baselat
problems our engineers running into. I really enjoyed being a CFO last year when we were between CFOs, and the reasons I really enjoyed that again was getting closer to the actual numbers, the processes by which we drive the business, Like we're going to hold Stripe to a budget regardless, and aren't you interested in how that process is actually set and how those numbers are set and everything like that.
So you know, I say that I think every founder should be CFO of their business for at some point during its lifespan. It's it's a very educational experience.
Did like product ideas? Did you do that and come away with like we need to do accounting software? No? No?
Or or?
I mean I mean maybe in an abstract way, but again, Stripes finance needs are are maybe a little different from the broader ones. But again, I just think for getting close to how the business actually runs that's maybe the thing that's hard for CEOs to do, and you know, we tried to do it from a customer perspective a huge amount of Even some of the products we're talking about, like Stripe Capital, they basically come from us trying to spend more time with our customers than our competitors do.
And so you know, we'll start every leadership team meeting at am Monday morning with hearing from a customer. We just asked them to come and give us kind of feedback on the product. If you were to sit in on those meetings, it's not an A plus report card that we're getting. You know, there are things they want
us to fix. But I find that it's easy for like product managers to overcomplicate things, and you know, you can get in your own heads and construct some really convolutioned castle in the sky, and there's nothing quite as grounding as hearing directly from a customer talk about what is not working for them in the product. And you know, we do the same on Fridays with like an all company thing, bring customers to talk to that. But anyway, I think the essence of this for CEOs is getting
close to the actual production function. And that is sometimes hard for them.
So I have two points. It's interesting to hear you say that. First of all, my brain immediately goes to Elon Musk, like on the factory floor at SpaceX and Tesla. But it was interesting. We had Home Depot this week announced that they were going to require corporate employees to work eight hour factory shifts, which is interesting, like retail shifts.
So Starbucks did something similar.
Right, Yeah, which makes a lot of sense, I mean, especially in brutal jobs. Is that one and then the other thing? I mean, given that you do know so much about his business history and you know, just love looking at companies, but those eight am meetings where you're just talking to your different companies, like, you see so many different types of companies, which is interesting.
Yeah, And it's definitely a pretty interesting time. I think the behavior we observe is that tech has been very well covered, and so I think everyone knows broadly kind of what's going on in the tech world. What we find interesting is the businesses that are the Sherwin Williams of the world, you know, the businesses that are ten, twenty fifty, one hundred and two hundred years old, and
how they are adapting to the modern world. And generally, what we find is that COVID provided a useful long term change to those businesses because those kinds of businesses all employed a chief Digital Innovation officer prior to Covid, and that person had a team to ten people, and they produced all these slides and ideas, and the ideas were pretty good, and the company just ignored all them and just didn't do any of them. And so they had the kind of idea generation part and nothing happened.
And then it happened, and it was this oh moment where people they were forced to adapt because you know, obviously the stories were locked down or we're not open, and so you maybe had gym companies moving to virtual training or something like that. But that created a mandate for actually getting serious about the digital stuff. And we see much higher quality digital execution coming out of that. And there's kind of a few common patterns in what
everyone's trying to do. I think everyone is questioning their middlemen. I don't think middlemen are going away, but they're questioning the middlemen and do middlemen add value? And they are starting to do much more direct customer relationship stuff. Part of that is the product experience where you know, Hershey's using Stripe to sell candy directly online, and the customization and things like that, and then everyone's just trying to
build some kind of recurring revenue. And so, you know, we think there's two kinds of business in the world. There's those who have recurring revenue and those who want recurring revenue. And people talk about the engine, you know, the airplane engineers with power by the hour. You know, you actually don't buy an engine, you buy you know, specially exactly. You might trust, you know, the by the minute.
But that is actually was all companies are moving towards because it's kind of better on both sides of the equation. And obviously that's pretty complex from an implementation point of view.
And so the intercomanent Stripe.
I did like the Stripe fire side a while back, and You're like, what should we do? And I was like, you should fix paywalls. Have you done it?
We're getting there because one of us hard. Why is it hard? Okay, it's hard for a few reasons. One, I think people confuse paywalls with micropayments, and I think more consumers want micropayments than publishers. For the publishers want macropayments.
I think nobody wants micropayments and ever wants to talk about it wrong.
Okay, yeah, yeah. So anyway, once we move past the micropayments thing, then it's hard because you ultimately need to smooth the onboarding friction and you probably need some cross publisher network and you know, publishers are not competing, they're maybe not inclined to work together, and then it's just a bunch of tech upgrades which are actually kind of somewhat prosaic long running projects, but you know, you need to be able to have the patients to work with
the media company to spend a year or year and a half upgrade in their stack. The way we've ended up doing this is with our product link, which is very simple but is really starting to work. It just remember you guys, maybe run into it on the internet.
It just remembers your credentials across websites, and so if you've bought on websites A with stripe and you have the box checked to remember your payment details, then you'll be able to buy on site B without entering your payment details again and you might think it will lead to a big increase in conversion if a lot of consumers have their payment credentials remembered so they don't have to type any extra data in they can just click buy.
And turns out it does. And there's obviously a virtuous cycle here where you know, the more people sign up for it, but denser the network gets. So that's where it's starting to work. And so we have some media properties starting to use that. And so what it means is they get lots of people coming with credentials all pre filled and they just need to hit by and then the commercial proposition just needs to work.
I just feel like the media payoll problem for me is not even the payment credentials. It's once you've paid for a payoll, keeping you logged in, you're on your phone to computers, you're like, you get something emailed to you.
And just remember me. It's really frustrating.
We should and may get to that as well. I agree, that's that's part two of it. To me.
That's related to like online identity and the stuff that people are crypto people away talking about. So I also have listened to you on podcasts. One thing that you've said, is that when you started raising money for a shripe, people are like, why isn't this assault problem pay exists? Can you tell us why it's not right it wasn't or why is it isn't? Like why is payments hard? And like there were payments companies before you, like, what's the thing that you're solving?
They didn't.
It wasn't solved for a few reasons. Payments requires you to be good at two very different things that are quite distinct skill sets. There's technology and there's financial services. And so prior to Stripe, you had some payment companies that just did the technology layer. You know, they said, we're a nice API and we plug into you know,
whatever bank you use. But that wasn't a good payment experience because you then try to sign up with the bank and you know, it's spent week shuffling paperwork around or something like that. And so a huge amount of what we do is at the intersection of those things, where you have AMLKYC considerations, where you know, a stripe is essentially aiming to look at the activity going on on its platform and ensure that it is lisit and you know, acceptable activity that's happening on the platform, and
so we do lots of cool mL work. You know, we don't talk about it really that much publicly because it is just what goes into operating a skilled platform like this, but it's a huge amount of the special
sauce that makes Stripe tick. At the same time, the tech has to be really good and nice and usable, and customers really care about latency, they really care about how easy the API integration experiences, and so I would say companies prior to Stripe tended to pick a lane a bit where you had a few purely tech companies where you know, they'd say, we're a payment s gateway and we just don't think about anything. We just handle off the transaction of something someone else or those banks,
and they actually just generally outsourced the tech. They didn't even really do it themselves, or if they did themselves, they did not do it particularly well, and so it was a very crummy experience for the developers actually using it. And of course, the tech changes Mobile was just coming along as we were getting started. You know, the iPhone App Store came out in two thousand and eight. We started Stripe in two thousand and nine, so like we were just in time for that, and so mobile was
a very relevant consideration. You know, even just the web apps and SaaS and everything grew a huge amount, and so I think the banks had not built for that and did not build for that, and so there was maybe a gap between the existing providers and there was that sort of things that you had to be really
good at. There were huge number of things with Stripe that we did buy intuitive feel they were not part of a particularly deliberate tops down strategy that was written down in the business plan, but ended up working out well. And so one was our really early focus on developers, where our go to market was through developers. We started by selling to startups and there was this really i would say, kind of bottoms up sort of adoption motion.
But again, ultimately the product we're selling is a technical API product, and so of course you should be thinking about what the developers want. We just had the developer focus because we were software engineers ourselves. We just wanted to build a product that we thought was a good product. But I think it ended up being more strategic than we maybe realized in the beginning.
There's a lot of like mess in the legal and like infrastructure of the payment system, and like your job is to provide people a very clean abstraction to that mess, and like that means handling all of the mess and you know, actually going on figuring stuff out and then being able to put that in the back end of your API. So the API is like a very clean abstraction.
Like is that burn Hobart had a line that I liked in one of his newsletters that stripe makes the financial system work the way people think it already does. And that's I think is actually a pretty nice design principle for us. And you know, maybe a good example of this is.
See when I hear that I want you to do like equity derivatives, I want you to do more of this stuff in my world.
But I don't think we have a view on how improved. No one has, sad maybe we just think about it more.
I do want to talk about crypto. Yeah, we debated this internally, but when it comes to the payments world, I mean, the conversation tends to devolve into a crypto conversation because I feel like crypto is trying to solve a lot of payments problems, especially when it comes to cross border payments and I'm not asking you about like the price of bitcoin or whether you're bullish on you know,
number go up. But when it comes to crypto and the problems that it's trying to solve, I mean, how do you think about it?
We're quite excited about crypto at the moment. I interpret money stuff as the house position as moderately cryptoskeptical, and so I guess what I would say to a moderately cryptoskeptical audience, They'd be two things. One, there are just a bunch of scams and dodgy characters and everything like that. But it kind of reminds me of I at the first I grew up in Ireland. The first time I
went to Vegas was for work conference there. It was for a work conference, and you know, at the Venetian or something like that, probably Money twenty twenty, and you're going into the hotel past like all the people smoking indoors and like the people just addicted to the slot machines, just pressing them again and again again, and it's all the blinking lights and you know the I guess, the clatter of the coins paying out, and you have to
walk past this degenerate gambling area crazy scene. Yeah, it's a grim scene to get to your serious industry conference, and those very surprising to me. And I don't know, there's something similar in crypto where you have the casino dogecoin value speculating part of it, and then there's people doing all the serious work over in say stable coins or something like that, and those two things just exist.
But I think one cannot use the existence of the slots in the Vegas casino to write off the work atnomment stretching the analogy.
No, this is good, so because like, yeah, yeah, you're excited with there's like, well, your friend Patio eleven would say it's a kyic avoidance mechanism. Basically, it's like a yeah.
Well. The thing about crypto is there's been a lot of hype on what crypto is useful for. And so for example, if you go back and read the original Bitcoin paper, which is a great read. It's a very readable original paper, it actually used the word interchange in there and talks about kind of the use of bitcoin as
a payment method. But bitcoin turned out to be certainly stock bitcoin, you know, before lightning and everything like that should have to be a horrible payment method, like slow expensive, let's not do that. And now the technology has matured through what has been kind of fourteen years of development. I think the crypto haters used this argument that like, well, you know, it is the Web in ninety three for you know, many many years, whereas the actual web coming along.
But there's been fourteen years of lots of technical development happening such that we've ended up with much more advanced technologies. And so what you specifically have now with stable coins is you have, firstly, something that's value doesn't change and so there's none of the kind of speculation stuff that
we're talking about. You have something that's actually very technically scalable, so with the current L two's there's no real scalability issues with them, and you have a pretty sensible construct where in a way, it's narrow banking. Right. We've been talking about narrow banking in this country for decades, and we have ended up with narrow banking through stable coins, where let's say a good stable coin, you know that like a PAXOS or a USDC. In the case of USDC,
it is fully backed by short term treasuries. And that actually just seems like a pretty good construct to me. And so you know, we now make it where you can, you know, accept money and strive via crypto. You can do some payouts things like that. And the obvious thing that people say is true where in the US you will be slightly too biased against crypto because the US is the world's best currency. You know, the US has the world's reserve currency where you get to spend and
might back exactly. And so of course people in the US think the USD is awesome because it is an awesome currency, whereas many people in many other countries have a much more adversarial relationship with their own currency. And I'm not even talking about Zimbabwe, though it is true. I'm talking about Turkey, which is a very large country and economy and population, but people there do not have full faith in the lira, and they think about what's a better place to keep money than lira.
I thin guess the other like US bias is that the US government really wants dollar payments to flow through the KYCED banking system. And like there's some suspicion that.
I think all the serious grown up crypto players today, I mean they're subject to the fincent travel rule. They are ky seeing the actors, and so if you go through a crypto flow today, you will see the normal frictions of dealing with a regulator financial product where you are asked to provide your you know, last for your social or upload a driver's license or things like that. And so I think just in most of the crypto
use cases that are being tough. Obviously there's the sketchy dark web stuff exists as well, but in most of the use cases we are talking about where serious businesses like stripe or serious merchants are using crypto, it is the custodial lissis part of the crystals.
On chain, like non costardical transfer.
Like correct, I'm true. I mean, if you look into your crystal ball and you know, it's been fourteen years since bitcoin was created, as you said, we've seen a ton of technology advancement since then. I mean, you said you're quite excited about crypto, but I mean, how far can we run that out? Do you think it's the future? For example, would you go that far if you look fifty one hundred years into the future.
I don't think it's a singular future. And again there's a bit of overpromising that's happened in the crypto world. Again, I think that's what gets people's backed up. Actually, speaking of bern Hobart, we just Stripe Press published this new book. The title is Boom, and the pieces of the book is that we generally view financial bubbles as societally net negative because you know, they cause misallocation of resources and
they cause you know, ultimately people lose out. And he makes the argument that bubbles provide a societally useful function by essentially coordinating efforts. And you know, maybe the dot com boom is incorrectly understood as a pets dot common webvan. It was really like bit dollars put into it, as you guys probably know, it was a telecoms boom, and
it was a fiber rollout boom. But it led to the US having just amazing fiber overcapacity that then led to the steady growth of the Internet for the decades that followed. And so that's maybe an example of it was a bubble, but it was a societally useful bubble because then it led to this overcapacity that had lots of positive externalities. And I think you make that argument about crypto, that.
Argument made as crypto led to a build out of GPUs that led to the AI boomah.
Oh interesting. I wasn't even making that case. You could make that argument too, though obviously there was a lot of GPU spent happening even even before crypto. No. I was just making the argument that I think the speculative side of crypto, you could make the argument pulled in attention and resources that was then used to build the very boring useful parts of crypto, like you know, ethereum to or against stable coins or things like that.
We could talk more about this. Do you want to make sure are we talking about the things you don't want to talk you about?
Yeah? Great, which we do want to talk about.
So another money stuff theme that we'll probably do on our ad reads is that private markets are the new public markets. You guys are among the poster children for that. You're at the CFO. Tell me about what it's like being private. I don't know, Like, I mean, how should I think about like the idea that, like, you're an enormous company and you've stayed private and have no enthusiasm as far as we know, for going public or even
talking about this twenty years ago? Would you have been able to do that?
Yeah? We spend a lot of time internally at Stripe thinking about the value of the Stripe business. I think the external world spends a lot of time thinking about the value of the Stripe stock price, which are related plus different things. We have definitely stayed private longer than some people expected. I think we'll continue to stay private longer than maybe some people expect. But there's no complex answer. It's just a simple answer, which is we don't think
companies should sleep walk into going public. We think they should be deliberate about it. And why would Stripe run out and go public. It could be if we wanted to sell stock broadly to a retail audience. That's not something that we've had that, you know, we just the business is profitable, you know, we haven't needed to raise
very large amounts of capital. A traditional reason might be return of capital, not just kind of a capital raise for running the business, but return of capital to existing shareholders. But again that's where you're maybe referencing the private markets have gotten deeper, and you know, in our case, we've run two unlimited employee tenders, you know, last year and
this year. You know, Sequoia just did an LP tender where they gave liquidity to some of their LPs, but liquidity is available to people in the private markets, and so it's more I think the default spring where companies, you know, a SaaS company would be started and you know, go from zero to one hundred million ar R and then just run out and go public. Default is being
questioned a little bit in Silicon Valley. Obviously lots of companies are still going public, but the default is being questioned, and the default is more of a Silicon Valley tech default than maybe a broader global default. So like in financial suit, we know exactly so as Bloomberg employees, you may be familiar with it, but Bloomberg is the example
that everyone cites. But if you just quickly run through financial services, you know, take the world's leading market maker, Citadel Securities private company, take the world's leading prop trade. I'm probably offending one of the world's leading in all these cases. So don't defend anyone. But if you look at Jane Street, you know, which it's been reported on a lot these days, just how good a business it is. You know, whether they're at a ten billion profits run
rate or something like that. Private company Fidelity, when the world's leading brokerages, private company Goldban Sachs, your former employer.
I assume that that a big difference is that a lot like Chance Street writes very large checks. And the Silicon Valley difference is not just that like you have vcs, you might be hunger to get at whereas like said, at all dozen, but like it's also you have employees who are getting paid in equity and they're getting tender as every Oh yeah, like is it tender every year just as good as publicly traded stock?
We think the tender every year is in nice solution. And there are some things that will be different if we're a public company for the better. There's some things that'd be different as a public company for the worse. And you get it, you know, trading windows and who's an insider and things like that. But it's thus far work quite nicely for a solution.
So is that the model then? Like tender every year, you've only done.
Two, but we don't have forward looking plans to announce, and so I'd come back to it at some stage with you know, we could go do something that you don't expect, and we're not announcing the plans because genuinely it's not like there's a written down plan at stride that we're going to do this, this and then this. We are
always reevaluating it. But again, up to this point, it has made more sense for us to grow as a capital efficient private company, then it's made sense for us to be a public company.
Sure, Like Chancer just makes money every year and they don't need to raise capital, and so that.
Just seems like great business has money to people. Right.
I don't know what the economics that is, literally, but they seem extremely good. But like, it does seem possible that you could just make cash every year and fund the business out of that, and out of that I.
Never need to for twenty four, we're trying to make a decision for twenty four, and for twenty five, we'll try to make a decision for twenty five. So luckily, it's not the case that you're faced with a you know, a fork in the roads and you have to make some kind of permanent decision. We do constantly re evaluated when.
I write about this topic. One concern that people have is that there are a lot of cool companies, like an increasing number of them, like fast growing, profitable companies that or sorry, I should say fast growing, not profitable early stage companies, stage company companies, high growth companies that don't go public, and that deprives like ordinary investors of access to those companies, and therefore it should be like
made easier to go public or whatever. Right, So for you, do you worry at all about that from like a systemic perspective that you're depriving like American retirement savers of access to the stripe And then two, you're not entirely because there are people who are going around selling stripe shares in a way that I believe you do not like. And I don't know, like there's like a way around of the barrier that you've set up. I guess.
Yeah, Look, do you think the debate over who should be allowed by private assets is a good debate? And the accredited investor rule is it's kind of an odd rule, like we're able to take it for granted that it's been around for a long time, but basically we define sophisticated investors as rich people, which is, you know, maybe some a historic and in.
Like a declining standard of rich where it's now like sort of upper middle class people.
Correct. Yeah, So I think debate on that is a good thing in Stripes case. You know, most of the non employee ownership is through essentially kind of VC funds, and the underlying VC fund ownership the LPs there tend to be pension funds, college endowments, people. I think we feel quite good about making money for it, and so I don't think it's the case that's kind of broader society, it doesn't get to benefit from the appreciation. I think we feel quite good about the LP base of the
investors that are behind Striping. Again, I think that's another thing that has allowed us to stay private for as long as we have, which is actually the very long term vcs. I think if we had a different set of vcs, we would have been less fortunate in being able to grow Stripe as a private company because maybe they would have felt the need for a win or
something like that. But I think luckily, you know, Sequahic Capital is one of the best VC firms that there is that don't quite need to prove themselves.
They probably count you as a win anyway. Again, they probably count you as a win exactly.
Yeah.
Yeah. And then on the I don't know what you call them, but the firms out there at this market.
We've taught on the podcast about Destiny Tech one hundred, which has a private market. I was the fund situation with like some Stripe forward contracts, and like there's like a general there's like a market for forward contracts, which all seemed to be not really approveiate this.
It's not going to end well because generally hyping financial assets has a bad history. It worked out badly with SPACs, it worked out badly with icos, and it just tends to work out badly, which is why it tends to be regulated this. You know, financial regulators tried to in the hyping of private assets. And so again Stripe is
not a public company. We do not enable broad retail ownership of Stripe stock, and so if people try to back into that by having private company stock in a vehicle that that is then available to public mark investors, we just think it's not a good construct. Like it's underdisclosed, where people are buying an interest in things based on name brand recognition but not based on going over the financials or understanding what it actually is. They tend to
all be very high fees. I mean, it depends on the vehicle, but they tend to be fairly distractive in that way, and so we don't like it. We don't we don't permit it, and I'm personally not a fan.
Is there much that you can do about it? Like in the case of a Destiny Tech, for example, that says that you know they have stripe forwards zuchorrect. Yeah, I mean, what can you do?
We prohibit forward, So we had a bit of a about that people do them anyway?
Can you then avoid them?
And I don't know where this goes, Yeah, because right, I.
Mean, it seems like they're prohibited and people do them.
And yeah, we put it up on the website just to make it abundantly clear, so everyone has the same information. It's allowed, they're not allowed. So I don't know. There's some areas where people have to read the tea leaves or the body language. We tried to make it abundantly clear, get out there with the semaphore flags. So this people are not in any doubt.
On the topic of going public. It doesn't sound like you're in any rush, obviously, you said in June, and I thought this was interesting that many companies make the decision to go public too early. That you personally see tons of opportunities to change and grow the business quite a lot, and I think it's interesting that you want to stay private to do that, and I think a lot of founders would agree with you. But just the
fact that, you know, sort of like going public. You see this as this sign of maturity and maybe that you're not innovating as much as you would in the privates.
I don't know.
It kind of made me think of tech company is like offering dividends. Like I remember when Metas started giving out dividends earlier this year. Everyone was like, oh, well, they're old news now and they're too mature.
Well, I think Meta is the wrong example to use for that argument, because they currently seem to be doing extraordinarily well in the AI race. And I'm not making the claim that you know, one cannot innovate as a public company, because that is clearly an absurd claim and you would just be kind of constantly slapped in the
face by counterexamples. And Meta would be the perfect one where they just dem at the ring glasses and those look amazing, and again they're just nailing it in the AI race, and so they'll basically argument I do think that on the margin, if you are developing large number of new products, if you have a fast growing business,
if you're constantly reinventing how the business works. And again in our case, we are transforming Stripe from not just being a payments business to there are all these new software lines of business that are much earlier, that are harder to predict how they grow. Everything like this. You know,
we're changing out the underlying payment methods. You know, we talked about crypto, we didn't talk about around the world, there are all these interesting trends happening in new payment methods where are basically bank transfers, and things like UPI and picks in Brazil and things like that are becoming much more relevant to anyway, the huge amount of change, I think on the margin, the public company valuation apparatus
is set. You see it how people you know, the quarter of the earnings and the miss and the beat and everything like that. It is optimized for mature, predictable businesses. And indeed people talk about kind of business predictability, whereas you know, for a business that is still in the you know, in the early stages like Stripe, and we think about a lot of new products on a five
or ten year time horizon. Again, I think on the margin, there are some benefits to doing that as a private company because you get to kind of completely retool the business as you go without necessarily wondering about, you know, what will the reception be for this in you know, the next quarter's earnings release.
I know you're not in any phase of learning an IPO, but I was a capital markets banker, and I know you've had thoughts about like the IPO process, and like, I don't know if you're doing an IPO, like would you change about the process.
I find all the debates about IPO mechanics really uninteresting because it just doesn't matter. Like, if you have a great business that's valuable for customers that millions of people use and makes money as a result, you can do whatever you want. Like, you know, I think Facebook would say they botch the IPO, but they have like an incredible business, so it doesn't matter and no one remembers it.
And then you can have like the world's best IPO plan and if the business isn't good, it doesn't matter. And so people get into all these debates about direct listing versus regular IPO and then Bill Gurly complains that the bankers are taking too many fees, and then it just doesn't matter. Like, build a great business and you could write your prospectus on a cocktail mapp and it'll be fine.
Really, this is like why Charliemker doesn't like financial services business because you're like like, oh, this is around business. It's true, but it's.
True, right, Yeah. And the thing is investors are smart. I think people try to do too much of a song and a dance with investor relations and try to you know, gin things up. And ultimately, when you meet professional investors, you know they're really smart and they look through and understand the fundamental dynamics of a business. And so the secret to good investor relations is have a good business that's growing and it is profitable.
Where people should do that exactly. Ye, Well, oh you have an airport. Do you want to talk about that? Is that something?
Okay?
Why where did that come from?
Well? I should not be listened to for any rational financial investment advisor.
I don't know. I don't have the pockets.
Well, I'm a pilot and an aviation and I grew up interested in US and I've been flying since I was a teenager and you know, still really love to do it, and I'm flying my spare time, and so I would say it's not necessarily the most rational business interest of mine. But the case the airport, so Dublin basically is three airports. Doublin International, which you've been to Dublin, that's the one you've been to. I guess three if you count the military airport, Belt Donal, and then Western,
which is the general aviation airport. And so general aviation is all the stuff that is not airlines. So it could be public service flights like search and rescuer, air ambulance. It could be flight training, you know, people getting their pilot's licenses. It could be corporate jets, it could be all this kind of stuff. And generally speaking, the appropriate home for the general aviation stuff is not where all the airlines are because they just don't mix that well.
And so most places will have you know, if someone's doing flight training in New York, they'll not do it at GfK. They'll do it you know, Westchester or something
like that. Yeah, Yeah, they really don't mix well. And in the case of Dublin's Western Airport, I end up buying it back in twenty twenty one, and it needed a bunch of investment, and so A bought it and we've been investing in giving it the facility that needs around, you know, instrument landing capabilities and you know, redoing the terminal and the capital stock and things like that, and so it's partly I think it's a good I mean, they are in the US, they're not for profit businesses.
They tend to be government owned and federally funded. Internationally they are like he throws, a for profit business and they just make money off landing fees. And so I actually think it will, in the fullness of time, be a good business once it's kind of come out on the right side of the growth curve. But it's also a passion.
Product in that's awesome. I mean this not as an insult, but I feel like to enjoy being a pilot, like casually you have to be like a little bit crazy, like that seems like an insane proposition, but maybe I'm just really risking.
So no, it just it requires a lot of discipline, you know, checklist discipline, and you know, recurrent training. I just went through some recurrent training and it just I actually find it more interesting because obviously aviation safety is generally talked about correctly as one of the best examples of process optimization over the last you know, five decades, where we have taken a system and just improved the
crap out of it until it's like so good. If they talk guys, how can go buy on Twitter recently where the FA doesn't and date car seats on airplanes because flying is so safe compared to driving that they're worries that if they mandated car seats on airplanes, even though like you have a tiny benefit, it would lead to people choosing not to fly and choose to drive instead and get into car accidents and therefore be net
less safe. But I find it funny that, you know, again, flying an airplane feels like in principle it should be like kind of hard to do, and driving car on the ground should be easy to but permile. Obviously flying wins out, And so again you have this decades and decades and decades of history where we've taken the lessons of you know, they say the rules and regulations they are written in blood. You know, we take the lessons of the previous accidents that have happened and then we
wrap them into future training. And you know, generally, when you do pilot training, you're studying a lot of specific accidents that happened and you know what the learnings were for them. And so I think if you're interested in systems design, engineering, process optimization, things like that, lessons.
From piloting like inform your software engineering.
I mean they're pretty separate, but I think the software engineering brain tends to be a t to flying. And you know, you got Palo Alto Airport was a little general Afacian airport in the Barians when the busy general aviation airports in the entire country. Because I think engineering minds, of which there are lots in Palo Alta, tend to
enjoy it. And again you're mixing you know, a kinesthetic skill and meteorology and you know, mechanical understanding of you know, a combustion engine and all the attendance systems and you know airspace and everything like that.
So it wasn't like fueled by you being in an adrenaline junkie like I want to go fast and I want to fly in the sky.
Adrenaline Like if you're feeling adrenaline while flying you're doing something wrong.
I feel it all the time when flying, like God, I hope we stay in the air.
There was that, you know, you read entron descentic Zuperie and you know, flying in Africa during the b nineteen twenties in his case, and you know, getting shot down and all these kind of things. There clearly was a that would make you feel something. Yeah, that exactly. I think that kind of stuff would make you feel something. But again in these days it has become much more safety oriented and the cowboys stuff has been pulled out.
And again they actually describe one of the cultural challenges that happened in the aviation industry underwent was that we produced all these military pilots in you know, the World War Two, in the Vietnam War, and those people then went into you know, PanAm cockpits and they actually kind of made bad captains in a certain way because it was like very much shut up, this is my cockpit.
And so the CRM Crew Resource Management, I guess thing basically was a multi decade efforts to get rid of the the captain mindset and get towards a collaborative problem solving.
A lot of like I'm going on a like seven seven the pilot landed fourteen line carriers, Like that's got to be the safest possible way to fly.
But apparently not, No, he's gone rogue.
Not listening to his second officer or whatever.
Do European airlines have a different model than the US airlines where they take pilots who have two hundred and fifty hours only, which the US would consider very low, and they put them in the right seat of airliners and they have like a really strong safety record, and so as you fly around an airliner in Europe, you could have someone who only learned to fly a few years ago. And the way they do that is a huge amount of standardization, a huge amount of process orientation.
You know, people make fun of Ryanair for the hard landings, you know, the Ryanair landing in europehere they really plunk it on the runway. That is one of their safety SOPs where they say a positive landing, as it's known in the industry, is safer because it reduces the risk of hydroplaning if it's wet, and so it reduces the like very small risk that you run off the end of the runway if the runway is wet, but we're just going to every landing. We're going to plunk it
on and that's safer. But again, it's generally process orientation, standards and a lot of that kind of stuff that's driven to safety and not excessive piloting skill. And again, if you're relying on incredible piloting skill, something has gone wrong in your system. Because we should be able to have a seven seven seven full of passengers be safe even if the pilots are fatigued or something like that.
That's wild. I did not know that about Ryanair. I feel like they should put that fact out there. You know that it's intentional that we're plunking down.
That's true. Yeah, yeah, because you know it's quite Yeah, that's question exactly. Yeah.
Draw attention to.
It being uncomfortable, Well, everyone knows.
That's sure. That's true.
That's true.
John Colls and thanks for coming on the Money Stuff Podcast.
Thank you guys, it's fun our first guests.
Yeah, I'm honored, and that was the Money Stuff Podcast.
I'm Matt Levian and I'm Katie Greifeld.
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