John & Patrick Collison on 'Bloomberg Studio 1.0'

[Music] they're brothers from rural Ireland who came to America to pursue the entrepreneur dream together they created a payments company called stripe in 2010 making it dead simple for small young companies to accept payments from all over the world it has since grown into a giant valued at nine point two billion dollars half of all Americans who bought something online in the last year did so without knowing via stripe the company now works with customers as big as lyft Facebook and Amazon processing billions of dollars worth of transactions for a small fee joining me today on Bloomberg studio 1.0 Patrick and John Collison cofounders of strength I've interviewed you both separately many times and I'm so excited to have you here together so we're gonna start at the beginning you were born in rural Ireland what was it like growing up the brothers Collison we were up in the countryside right and so it was like a 40-minute drive to get to school in the morning and I did none of the friends we went to school with lived anywhere close to us and so kind of making came home from school we couldn't go and run around and play with them and so you know we had to run outside and play with each other oh that's there was to do was to go in read books and we wouldn't if the internet or you know we didn't get the International until until I was a teenager and you kind of got used to when you're sort of browsing these websites or whatever you know reading about these products or services you know him to kind of scrutinize the fine print I'd be like oh you know offer not available in the Republic of Ireland and so it kind of this sense of sort of staring through the glass that this kind of amazing world and Internet out there but sort of not all of those opportunities being available or equally available or whatever sort of to against someone in the middle of the countryside in Ireland and so you know in the way that sort of stripe is so focused on kind of global access and expansion of global opportunity and kind of all those things and it is really was not conscious in any way but sort of now looking back and you know over the last kind of 20 years in my life I think in some ways kind of that mindset was instilled by again music variance of sort of growing up in 1990s Ireland's so how did you discover computers be fair to say we were sort of free range kids yes and I'm always struck in in the us by you know people need even finer grained calendar controls for their kids lives you know it's like half-hour increments are not precise enough and in our case our our parents were pretty busy they were both entrepreneurs running businesses they had they had started and pattern I had a lot of latitude to figure out what we were interested in and go explore that and so and you're the one who started with programming but that was those very self directors that was not the the plan as it were recommend we read a lot and took kind of this the standard routine was after school go to the library and get to both yourself to the library indeed yes I walked a library and kept two new books go home read the books you know Bryn's repeats of the next day and then at some point I just I happened to get a programming book and and write the book it read about programming you know I read I read it the internet for four years before we had the internet got a programming book and read us and plot that seemed awesome and and built my first little kind of janky website and it was very proud of myself so did you follow older brothers lead here yeah I I similarly got into aspirin I was a that was a teenager and didn't you hack each other's websites or something like that yeah did that happen Patrick I think it's an important duty of you know the 16 year old older brother to sort of you know help educate the you know slightly younger brother you know the the potential security downsides some of the work and so I took that obligation that Duty very seriously so you made it to MIT you made it to Harvard and in 2009 you both dropped out how'd you make that decision yeah Patrick is the safety in numbers I suppose exactly Patrick is the honor of having dropped out of college twice and but in 2009 we have we just started in college we had been building all sorts of side projects and internet businesses and things like this and I don't think anyone ever or certainly in our case you don't set out to start a huge thing you don't send our to set out to build a large company you set out to solve a problem right and there is this huge disconnect between the fact that all these new internet services and businesses were getting started smartphones had just arrived and felt like such a land of opportunity and then you actually went to do anything on the on the business side of things to actually accept money for what you'd built it's like going back to the 70s and so I think it was honestly helpful that one you know we're definitely young when we started out and to that we weren't coming from being industry professionals who had been in the industry for 30 years or anything like that because you can bring a fresh perspective to us and we started approaching it from the perspective of the people who actually proved to be the most important decision makers of all which is the software developer who's actually building this stuff the thing that I think ledge was dropping out was kind of the realization that what we initially conceived of as being too this a slightly niche product for developers or something solving a narrow problem or something like that was actually you know this kind of Lake was actually an ocean and that the character the problems we were addressing in terms of what is the you know global economic infrastructure for the internet and why is it not possible you know even then in 2010 to accept customers payments revenue from Internet users anywhere in the world and how did your mom and dad feel about this I mean I know they're entrepreneurs I often wonder again where I in their shoes how would I react but they are always sort of you know that they asked us to come to explain our decisions they didn't just kind of rubber stamp but but then they're always supportive and I think John and I you know are hugely lucky to have parents like that so you got into Y Combinator you moved to what SR is to build the company walk me through a little bit of the early days of building the early days of building just weren't that glamorous it was it was myself and John you know programming all day every day we wanted to get up and running with real customers as soon as possible and so we accepted the first repentance stripe in January of 2000 only kind of a couple weeks after starting to work on it and then the feedback loop was just okay what does this business want and how will we go implement that and let's make it happen as quickly as we can and you know when we're ready let's add a second business and so on you say that no one has to fail in order for stripe to succeed what does that mean I mean does it mean you don't think you have any real competitors well I think there's a desire to set these things up as a you know stripe versus banks or you know X versus Y whenever whenever there's a narrative about these things a very large fraction of the time when people are building businesses on stripe they're building businesses in white space as opposed to replacing another business directly you know that the status is very motivating for us is that 5% of global commerce takes place online today you know the other 95% is off line and so that's what we mean when we say no one has to fail you've done a lot of partnerships with companies that could be perceived as your competitors like Apple like Google like Visa walk me through the strategy we thank all of those consumer payment methods would all be really successful over time but what is always being lacking is a platform for the businesses to just manage and abstract the complexity of doing business online in 2018 when you talk to a business and just what is required even for table stakes to get up and running managing the payments and the Treasury and the regulation and the compliance and all the complexity that goes with that first off take doing is in the US and then take doing it all around the world that was a hugely heavy lift before handed I think had this really damaging effect where our only large companies could do it and they couldn't pivot very quickly and then you look at what internet businesses are doing today the business models are changing and they're much more global they're often getting much more complex like a multi-party interaction or something like that and so that's what we're focused on and that's why I mean Apple pay has been growing like a weed as a payment method and that's phenomenal for sure on a global basis the market sizes and the opportunities have never been greater [Music] stripes are working with smaller businesses for a long time but Bloomberg broke the news you are now working with Amazon you're working with Facebook Microsoft Allianz booking.com lyft how does a startup that is growing but still a startup like stripe serves such huge companies I think our success with sort of these larger companies and the companies you name it's not kind of despite the fact that we started working with startups it is because we started working with startups in that you know when you start out as a startup especially when you're serving startups you can't bamboozle them with like fancy sales materials and like this big marketing campaign or whatever like there is not going to be deceived by us they will assess you precisely on the product merits what helps them innovate fastest and you know fulfill their ambitions and goals and all the rest as rapidly as possible and so it's really punishing and we're forced to build a product that sort of you know helped them execute as quickly as possible so stripe makes money by charging a small fee on every transaction you're now processing billions of dollars a year for hundreds of thousands of companies taking payments worldwide you're reportedly valued at nine point two billion dollars you've raised 450 million dollars in funding some analysts say evaluation isn't justified and we've certainly seen companies going to the public markets that haven't been able to hit the market cap that they raised at privately do you have any concern that you won't be able to hit that mark I think we're certainly always paranoid that we need to execute strongly to actually meet the potential of stripe but if you're asking kind of does the potential market size support that kind of valuation absolutely many times over because again the entire company is so vast and so much smaller than it will be if we actually had the good infrastructure juicy stripe as a public company some day quite possibly but the way we've always thought about ourselves is that we're in such an expansion phase we're so far from reaching kind of the the plateau of that sigmoid when things kind of stabilize and you know the whole business becomes predictable I mean I was in Asia back last week and and there's just like such vast opportunity therefore for every internet business sort of stripe included that I guess we're just so fixated on making sure how do we ensure that sort of what stripe is doing in the u.s. in Europe and Asia and Latin America and so on that like we're really capitalizing on the opportunities there and we'll then you know backs off from that to you know whatever the right sort of long-term you know structure the company is yeah well fitted you know within that speaking of what's happening more broadly you know were in a world of great political and economic uncertainty with President Trump being elected with brexit with you know Facebook and Apple and Google you know on the other hand sort of squelching all of the smaller companies and in a way you could say squelching innovation could that hurt stripe given that you depend on businesses getting started when you zoom out and I guess you just take stock of sort of what's happening on a global basis the number of internet connected just users and people in the world continues to rise incredibly quickly and of course you know around the world middle classes are rising I mean a hundred thousand people are leaving poverty every day right and so I think on a global basis the kind of the market sizes and the opportunities that are presented for you know people who want to do something new or want to kind of build something significant I think those opportunities have never been greater and you know there's always been concerned that with the kind of the particular Giants of the day or sort of overly dominant and kind of might exercise some of this force and generally speaking you know those giants have have only prevailed first of a particular window right you know we had this concern about of Microsoft in the 90s we had this concern at IBM before that and so on right and so I think they're always being sort of preeminent technology companies and I don't see anything kind of distinctly different about the the current generation coming from Ireland you know what do you think of rex is it concerning I am concerned by the general trend we're seeing in a number of countries around the world towards more inward looking and more retrenchment in part because i don't think it's the global long-term trend price it has been a mistake historically to bet against more global integration or to assume that people you know there will not be more migration of people throw nothing more migration of cultures who will not be more migration of goods and services and things like that and I don't think things like brags that are going to change that fact you both spent time with President Obama as the Trump administration takes things in a different direction slide towards protectionism you know what are your biggest concerns we benefit from such an amazing set of tailwind right in that that there's never been more people employed in the US at any time in the past the global inequality is falling like just there's so much kind of good that's happening that I think there are some things that are alarming and bad that is happening arguably but I guess what's gonna go is that so I think when you really zoom out and look at the kind of the full time series here I think almost all of the major trends are going in the right direction and so then what concerns me is what are the tale events that could really jolt these off course it's not clear just how much influence a single person in a single country can have against all these broader trends but but but note that that is what gives me concern our determination with Bitcoin was not a good payment method [Music] you cryptocurrency is all the rage right now and stripe initially accepted Bitcoin but recently stopped are you at all concerned that stripe will be on the wrong side of history with that decision we're absolutely open to revisiting this at the time we made that decision it was trending towards being a digital stole of that store value I think that's a valuable thing to have exist in the world you know I genuinely wish them the very best with that right it just it works less well for our use case and this wasn't just kind of so much like a decision where we wanted to be the arbiter we're just looking at the data and like it was declining rapidly it induces a payment method if it starts increasing again as a parent method then sure great what we'll go back mol at it so Bitcoin cryptocurrency is it hype is it reality is it a bubble our determination with Bitcoin was not a good payment method which is a very different you know discussion than cryptocurrencies generally because the value was shifting so dramatically well and because the the speed and cost of even just posting transactions on the Bitcoin network was the main thing so we remain fascinated by cryptocurrencies from a from a technology point of view and just the general speed of execution in this space I see tons of companies and tons of people getting distracted by almost vanity projects of you know we'll put this database on the blockchain are things like this because people are not really wedded in the in the technical details and what's necessary there's a concern that Bitcoin and blockchain pioneers are still mostly young and mostly male this as the tech industry is grappling with a big diversity problem if the tech industry doesn't start doing a better job including people of all backgrounds what are the consequences the tech industry has to be a place where people of any background or any demographic or you know whatever origin can really thrive and there have been some you know big missteps on that front that you have attracted prominent headlines and rightly so people are paying a lot of attention just to Silicon Valley and to how it is that we do things here and there's gonna really real ripple effects around the world and so I think for myself and John we really try to start at home as it were and you know if we can't build a company and a culture and an organization that we can really be proud of and that we can really feel good about and that again we're people of any background can really thrive that I think we just we have not achieved anything of value stripe you know you you guys have some really interesting things you have an open floor plan so people change desks every so often and can meet new people gender-neutral bathrooms you have an interesting email transparency policy where everyone can read everybody else's emails as I understand it issue I would say you know people can choose to make certain emails available but it's very much on an opt-in per email base it's been a susan fowler the former uber engineer who wrote that viral blog post about uber about sexual harassment and discrimination and ultimately you know resulted in the CEO leaving the company she now works at strike what do you see yourselves continuing to do to attract and retain you know whether it's women or underrepresented minorities there's a whole bunch of sort of specific initiatives we work on right there's things around you know making sure that people who become you know moms and parents you know stay with the company and you know we track those numbers carefully invert you know delight they're as high as they are and this initiatives we work on for female entrepreneurs and there's kind of specific hiring practices both in how we interview people and you know hiring goals especially in engineering that we set for managers and stuff like that but like I think sometimes people leave a bit too quickly to kind of what's their checklist of initiatives and then they think they're kind of done I think that like if you're actually going to take this seriously if you're actually gonna do it well I think it has to be something that that is really deeply kind of just like suffuse in the culture and that everybody lives every day because you know again you can have a good list of initiatives but it's not really in the culture then it's just not gonna work now before we go I understand there's a third call uh some brother who as I hear is even more tech-savvy than you are tell me about Tommy yeah so Tommy is a four years my junior and Tommy was very interested in this topic that we talked about about the implications of technology and the fact that more of our lives are moving online he was really interested in that before it was the talk of the town and before was the cool thing to be into and so he worked at the the Electronic Frontier Foundation was a very storied nonprofit around digital rights and digital privacy and things like that and he now works for a company called or a nonprofit called tor who produce traceless or privacy-preserving software especially used by journalists and people like that so yeah I think he is the one to watch really he's taking a very different tack on this stuff he was born with cerebral palsy I'm curious how that impacted your relationship as a trio so it can affected the whole family environment and and as a kid sort of growing up whatever circumstances you grew up in you was kind of considered normal right and for him and for our parents and for us you know it was sort of it was very no-nonsense in that you know well okay is this a disadvantage or sort of you know unfortunate piece of luck that's fine you just like figure out what the game plan is to overcome ish and then work to make that happen and you know he walks and he runs and he swings and he cycles and everything else and and again that took a lot of work but but there was no and you know while holding in self-pity or anything like that and as John mentioned earlier both of our parents were entrepreneurs and again kind of similarly they're you know people sometimes ask us you know what inspired us to become entrepreneurs or something like that and you know for us it was it was just like the normal thing I just see it as kind of a theme running through our upbringing in general and you know the sort of no-nonsense way in which both he and again our parents approached it I mean I found it kind of inspiring honestly and it helps sort of keep in perspective you know the challenges you know building a fast growing company or something like that it's like you know seeing the the work that he's invested in you know again now over the course of decades I mean it it keeps all in perspective so what is your advice for aspiring entrepreneurs or people who may not look like you who want to do what you do the first thing is between increasing sense you don't have to be here like and that's very different even versus 10 or 15 years absolutely yes yeah and it means the kind of company you're building like for stripe you know even we're serving other technology companies they're kind of some pretty significant benefits of being here but you can almost certainly do it wherever you are today I would take advantage of the community's tools and knowledge the internet makes available and start where you are right now how do you see yourselves navigating your partnership your relationship as brothers as the company grows and the stakes if all goes well right only get higher we figured that you know we've survived this long I'm not too worried about on a on a go-forward basis but in particular it's very after 20 years you know we can extrapolate at least survive another couple it's the last word by the way when you disagree gosh I can't remember the last time we even had a discussion about figuring that out because when you're so focused on the wording a stripe just past a thousand people we're still hiring very quickly there's always the next problem in the next interaction to go with and so I think one of the things that I find very enjoyable it's when you have a high trust environment which we do and you've been working together for a long time you're sort of not focused on the the meta structure and how do we arrange the Lego bricks and things like that you're always focused on the on the next problem we're all stripe being let's say five years I hope that we have substantially completed this work of building this globally unified economic infrastructure that serves companies of every size and that makes it possible for way more companies to get started and sort of companies to get started no matter what country in the world they are in I still think it's absolutely freakin crazy that if you start a business in Indonesia you know good luck selling to customers in America and if you start a business in Germany good looks on to consumers in China and so on it's like we should be up in arms or the fact that the Internet does not make this infrastructure available today that it that it's not complete and I'm very proud of sort of you know the progress we've made of the first you know six seven years but you know we've quite a ways left to go when we're sitting here I hope in in five years you know I hope that sort of that foundational infrastructure you know has been put in place and now we're at that point then we can be kind of turning our sights so you know what comes after it I'm scheduling our catch-up for five years Senator John Patrick calls him thank you so much for joining us on the show it's really been great to have [Music]

Channel: Bloomberg Markets and Finance

Views: 87,754

Keywords: Bloomberg

Id: VUUko-q5RUo

Length: 24min 0sec (1440 seconds)

Published: Wed May 30 2018