Running Your Company by Patrick Collison

so Patrick welcome so Patrick is the co-founder and CEO of stripe he launched the startup we're now pretty big company in 2010 correct with his brother John why should we started working on it full-time in 2010 but it actually your comment just there about companies launching it took us quite a while to launch cuz we had all these kind of banking partnerships in place and so on and so we didn't launch until September 2011 and we've been working on it for almost two years at that point and and every time we saw PG or really anyone else from YC all they would ask us is why we did not launch some things don't change that's interesting to two years until you have to it was I think one year and 11 months from sort of first line of code to public launch which to be clear I don't recommend that is not a good idea it's just we had to because we had to kind of get all these other things in place and because it sort of took us to so long to build a publicly launched we're sort of we tried to be kind of Airy disciplined about sort of gradually expanding the number of users every month and so even though we weren't publicly available we got our first user like first production user just kind of three months in and then have every month we tried to add at least kind of a handful of users and so by the time we publicly launched we did have about a hundred users which I mean back then to us you but that seemed like a big deal that seemed very very large speaking of actually when I was preparing for this interview I I was trying to talk my memories and I remember specifically because your office was near here in Palo Alto and I remember back then people would always talk about the call us and brothers running around going to people's offices and like installing their API into the web apps and you know in true do things don't scale fashion and I assume you are not only trying to make sure they installed it but also get user feedback and it happened so much that actually I don't know if you know program PG now calls it the Cullison installation and this is actually something we give and we tell founders to go do this do the call us and installation because obviously you know it in hindsight it seems so obvious to do well it sort of served two purposes and one is to your point I mean it's art it's a really good way to kind of get sort of user research and to get kind of UX feedback and so on and I mean if you've done this I'm sure you had the experience for you design which are absolutely certain is the most streamlined user-friendly straightforward frictionless way to you know do whatever it is the product does and then you kind of you you you you present it and kind of put it in front of a user and you just kind of ask them to do whatever it is and you know they find it completely impenetrable and like they're clicking all the wrong links and they can't find the next button even though the next button is they're blinking and green and stuff and so it's invariably so incredibly painful at the sort of nothing so sobering as watching somebody use kind of that the first version of of you know some new product but the other reason for us was you know we would suggest to somebody they use stripe or they switch to stripe whatever and you know invariably the responses oh yeah sure that sounds awesome and but you know it can be postponed and locals phone it again and just like there's never a moment or it's like okay this is the evening or I'm going to switch to stripe and so us going and sort of accosting them in person sort of helped you know great you know if you'll talk code in sales it's almost like a you know of why you and I why this and why now and these kinds of questions and and going in person could have created a why now moment it's like what we're here at your house did you just show up or how did you I don't think we ever actually showed up and although perhaps we should have but um you know we we we try to to be kind of at least semi invited so so stripe now today I mean you've come a long way since back then I mean it's not even it's really been a decade not even but I mean today you're what you have 1,300 employees across nine offices across the world you're doing I have a list here you manage 200 million API requests a day you process billions a year for millions of companies across hundred 30 companies new latest round of funding stripe is now worth 20 million dollars billion anyway let's go going on I'm not gonna stop they're all there otherwise people think I'm your PR agent but anyway you've clearly done something right and so I want to spend a lot of I guess the time today talking about running your startup from the perspective of the start-up CEO you yourself and it's kind of like zoom like what do you think about from zooming in and the day-to-day operations to zooming out to the long-term strategic decisions so maybe to help us ease into the discussion one thing is you know when you start off you know one from the very beginning a lot of friends get together and they come for the idea and they're super excited and they start working on it and then at some point they need to decide we need to see you for this company and some people you know aren't meant to be CEOs but for you and John you know I've met both of you you're very smart ambitious people with great you know qualities that end attributes that correlate to becoming great leader how did you and John decide you would be the CEO well I think stripe is unusual for you know John my RFC brothers and we've known each other for a long time and and and you know because of the relationship we real sort of place a lot of trust in each other and and we really do run the company together and there's no major decision that sort of stripe has made that sort of that we've not both been a part of and and you know it's not always the case that you know despite being the CEO that kind of I'm the person who like in the case of disagreement it's not all it's not all the case that I prevail instead of our kind of dispute resolution framework it's kind of much more around which of us carries more than kind of which most holds this title earth and I mean John's title as president and so it was kind of some both are significant roles and so I'm yeah in that regard I think we're kind of an anomaly he said of the fact that I became CEO was honestly semi-random and and I would say yeah I think because we're brothers being able to kind of get to this unusual situation where we really do run it together is there a certain would you sorry may not be a helpful answer because perhaps you're trying to encourage all these companies it's like you know what do you got guys has got to be the the CEO but do you think there's like a rubric for this of you know here are five questions you should answer maybe then you decide that's good question um-hmm you know yeah I'm guessing it's quite okay well I wasn't one thing which is I think it is important just have an efficient mechanism for reaching a decision and it can't be sort of you know simply orange around consensus right if there's sort of three co-founders and sort of none of you sort of quite want to or you know nobody's a clear CEO and you don't have some kind of efficient mechanism first that of having decisions get made I think that is a recipe for failure and and even I don't know doing some kind of you know sort of quasi democratic voting is probably not a great idea either and so so for myself and John we kind of both have areas we kind of respected we specialize in and so that doesn't mean we kind of have absolute ultimate authority there but so do we be kind of biased in that direction so he spends more time for example of working externally with users I spend more of my time working to have internally unloved you know product and engineering things that nothing to say that he doesn't make decisions there or I don't here but again there's a bias in that direction and then second we have this kind of additional aspect where you know in case of a being a major decision and we should respectively disagree then then we really do sort of try to make it based on sort of which of us is kind of is just more passionate about it and because that that will correlate with the outcome one of us really wants to do something or think that you know X or Y is the right thing to do simply sort of wanting is to be so passionately is more I mean that can become a sort of self-fulfilling prophecy and so I think it's kind of not irrational to have that be a consideration yeah I also see like the best teams that work well together are the ones in which everyone they they all want the best idea to win not their idea to win and so there's a stepping back and an unselfish kind of way to to get to that conclusion definitely and I think that you know something that working on lucky about that I think is very well exactly to your point I think he's definitely present in sort of the most successful co-founding relationships that I've seen is some degree of sort of dispassion in disagreement and you know for us I think that was you know kind of easier to get to because you know we've been disagreeing with each other for 20 years and so it had lost some of the emotional charge but I think that sort of finding other mechanisms whereby you can get there such that it's not sort of this I don't know that this kind of but the notion of disagreeing strongly is not sort of a scary phenomena and that kind of both parties or multiple parties if they're more than two are kind of suppressing their feelings for fear of of there being this divergence you've how many more siblings do you have via one more brother one more sibling yes okay three three of us in total would you guys would he join the or is it just you and John are the special match there well the Tommy my youngest sibling he's sort of quite a bit younger than myself and John and so um you know John is almost approximately two years younger than I am and you know when we started stripe I guess I was about 21 and I think I guess therefore John was 19 and and Tommy was still kind of definitively midway through high school and so it wasn't quite practical at the time yes finished high school and now I think you know if you asked him he probably said he'd never throw his lot in with you know miscreants like us yeah cool so in terms of the role is to you often people say there there's a there's a threshold in time in which and it's related to product market fit where that you have a role as a pre product market fit to you and then which is completely different from your role as a post product market fit to you so I want to spend most of our time talking about pre product market fit but just to calibrate those questions what in terms for stripe what was product market fit for you like how did you define it or their metrics to it number of employees you are at when you reached it so forth yeah that's a really good question and I think you're exactly right to kind of divide things into sort of there's kind of the story of a start-up is two stories and it's a story of getting to product market fit and then the story of kind of what happens subsequently and obviously there isn't like a totally definitive binary line between them but I think it's kind of helpful to frame the narrative in that regard and I would see for stripe and actually around the time we launched publicly I think is is basically when we had it and that we when we launched publicly in September 2011 you know we can rebuild significant components of stripe kind of multiple times in response to user feedback like we're kind of on the third version of our dashboard and the second or third hand how you count major version of our API and so we'd kind of gone through a lot of iteration response to kind of the you know evident challenges that these are hat users had or the deficiencies the product seemed to possess and and when we launched we were basically immediately bottlenecked on sort of being able to serve user demand rather than generating user demand and I think sort of directionally that's kind of the the sort of the inversion that happens first it is you know in the early days you should have really trying to figure out well okay kind of you know conditioned on or given some user how do I make sure that it's if it does what they need and you know they end up a happy retained user in a you know a sufficient fraction of cases or whatever and then kind of at some point it flows for okay the sort of well you know I I think it's kind of very different do you sort of take you know a hundred users and you know some fraction of them on board and some smaller fraction you know remain engaged or whatever and so kind of 100 users the curve sort of a sort of asymptotes downwards and then you take 100 users and kind of again a meaningful fraction end up engage and they actually tell more people about it or they sort of invite people I don't even have strictly just in a viral sense but it's kind of generally speaking just that kind of lead to and generate more demand such a thing soon to be sort of a sort of in some super linear fashion kind of growing and I think when you sort of like being kind of less than one is just very different to being more than one and it sort of seems again when we launched I mean that didn't generate that many users I mean I don't think I could remember but let's just pretend that sort of 500 businesses signed up on the day we launched butts of immediately those 500 businesses told other businesses and people heard about it all the rest so kind of the next day we had a lot of businesses as well and and so forth such that from the day we launched the challenge became keeping up with demand rather than tweaking the product to somehow serve the market when you watched how many people were you at at that point employees we're about 10 so I guess before you launch then but your day to day sounds like it was just like we were talking about earlier just running around talking with users and fixing issues what was that literally every single day was like that or what were you doing everything okay so not literally every single day but I would say and we really tried very hard to understand into the very granular detail what exactly it was that people were doing you know where they were tripping up and so on it's just to give you some examples we had a chat room for sort of providing support when people were integrating stripe and it was it was actually a public chat room which kind of had some downsides because you know if we'd broken something or if somebody had some kind of embarrassing issues sort of everyone would see it but we thought that was kind of good because it would actually can put more pressure on us to sort of have the product to be good and we had literally every time a sort of for the first I don't know called 10 years of stripe every time somebody sent an API requests to stripe like it sent an email to us so we were like looking at every single API request and you know if we saw users do something weird why did they do that right or kind of where were our Doc's confusing or whatever and say you know I get a dinner in the evening or something and I've but you know well again it seems like a lot that I might've you know maybe 10 email list because stripe was not handling a lot of API requests back then but but sort of you're literally looking at sort of each individual action and actually stripe and we just kind of celibate celebrated or at least pass I'm very good at celebrating but we passed our seventh anniversary just you know a few days ago on September 29th and so I was looking at our sort of we had an hourly stats email that we used to send and and so on the day we launched we handled sort of 22 payments in the previous hour which again sort of seemed huge to us back then but I was noticing in that email I actually forgotten this that we had things like m in the in the email we literally had a list of businesses that had submitted three or five or something API requests but it's sort of not gonna if they did not launch their businesses wheeler just had the emails of all these businesses the idea was that we would then kind of we literally individually reach out to them it's like hey you can have seemed you strive a little bit but you know you didn't I didn't go live like did we screw up or you know was the product somehow inadequate or whatever we did things like every time anyone ever hit an error of any sort that generated like a high priority email to us and so it sort of try to immediately go Salvage and that also kind of generated sort of I think this M this Pleasant kind of user experience for I mean you know it's frustrating when you hit an error in some service but we could then often sort of 15 minutes later reach out to them and say hey we saw the tubes have been counted the problem it's it's all fixed now and sometimes we did even in the case were sort of them the users made a silly mistake and that you know they'd be kind of mistyped an API parameter or something and we just reach out to them they're like hey noticed you had a typo in your code which you know perhaps and some of them is a little bit unsettling but but but at least gonna helped us you know increase the kind of the throughput of product feedback but so I mean these are all kind of examples I would say of the sort of general pattern of sort of really trying to be kind of hyper attentive to all the micro details of sort of what people were doing the product and kind of iterating rapidly in response to it and generally speaking I think that sort of pre product market fit metrics are actually relatively unhelpful and I think you should have you really want to buy us very strongly towards kind of as much sort of inspection and kind of high throughput qualitative feedback as possible because probably no not that many people are using your product right and so you know if it's 20 users you can kind of in some sense afford to just like look at everything they're doing and try to understand kind of you know what's working what isn't in some sense it's how much do they you can tell actively like how much they love your product how much are they gonna probably be really upset if it just disappears totally and actually on this point we had a thing at the bottom of every webpage we had a little sort of text box and kind of Anchorage to the bottom of the of the sort of thumb of the browser frame and and sort of a you know kind of one line high sort of text input and but we had placeholder text in it I had to sort of try to prying people to tell us things and so it had you know my my favorite part of stripe is ellipsis and you know people just fill it out I'm gonna hit enter now but we also of course had you know MOOC most of the problems were negative it was you know like the worst thing about stripe is or the worst thing that this page is or I really hate the way stripe does or whatever and and again we would sort of sort of at that stage you have to be kind of masochistic and so again we'd be sort of always waking up to you know all these emails you know telling us all the terrible things about stripe but that it was you know if I helpful to-do list for the day ahead how did you stay happy if look in the early days I mean for every story complaints what makes you think we did so it was it was what happy is such a squishy concept right and because like there are lots of things that we are I guess when I look back and look maybe this is the rationalization I taught myself but when I look back and sort of through life other things that I'm sort of most glad I did I wasn't exactly happy well doing them like often I was very stressed out or you know I had to work really hard or whatever but to the things that kind of post hoc brought the most fulfillment and and you know I think that well you know part of it there's a rich literature here and so I won't kind of died too deeply into it but I do think kind of happiness is a is a tricky concept to kind of pin down because you know is that kind of happiness in the moment is it sort of the sense that you have a year later looking back and so on and so I think and you know language is squishy and it's not you know completely specifically defined but I think kind of generally speaking kind of a better utility function and kind of gradient reddit line is that of fulfillment and and so I would take an experience of doing stripe was it was not especially happy because we were sort of you know constantly sort of incredibly aware of all the ways in which the product was severely deficient and you know all the challenges we faced and I mean it seemed like there was no FinTech category back then it was just like two teenagers or you know just just over teenagers trying to compete with PayPal which you know many people told us was not an especially kind of promising Avenue to pursue and so not especially happy per se and but it did feel kind of fulfilling and like I enjoyed working with John and the kind of people were separately hired and it was really fun working with the kinds of kind of customers we were serving and they're just sort of businesses doing all these kind of wonderful things and they were kind of really smart people and it felt that like if it worked it could be kind of consequential in the world and so I would say kind of it's it's sort of felt like I mean well you know I don't know what it feels like to be sort of a scientist or something but I'm guessing when you're sort of pursuing all you have this kind of big question and you're appreciating all these kind of haven't used to sort of try to better understand - and I'm guessing day to day it's sort of not especially happy because most your experiments don't work or whatever but sort of in for perhaps there's some analogue there in terms of them it still feels like it was in some sense meaningful yeah they're in some sense I mean it did add a like you said you just you're running around with your head cut off but maybe on a weekly or at least monthly basis is just taking a step back and seeing like what progress have I actually made because week to week it's like one percent here one percent here it doesn't seem much but from a monthly basis or you know maybe longer than that it it seems like there's movement ya know I think that's true and I think III don't know like I think it's almost took me a bad idea to sort of work on a company or to work on anything if if you're like truly unhappy working right and so there's kind of charities and balancing act there and I think I mean a lot of well they're sort of so many differences of them difficult judgement calls to try to make in a start-up but you know of course part of it is like if something is making you unhappy or if it just doesn't seem like an especially promising Avenue or it's not really working whatever like your time has relatively high opportunity costs like you don't get to start that many startups in your life right and so kind of knowing when to sort of call it quits I think it is actually I mean sort of you know in start-up them we really extol and serve uphold the virtues of sort of you know determination at all costs you know never quit and so on and you know that's clearly not the right answer and that's like sometimes you should quit and so um so I think how much of getting it is true and right for I think that does need to be some sort of some happiness satisfaction fulfillment this good book of that of that name satisfaction which I recommend kind of week to week month to month if you're on the right trajectory oh man I wish I'd known that I could have you know what I remember when I was trying to when I was about to put stripe myself I had these bad memories of trying to implement PayPal and like stacks the documentation and taking like five days to figure it all out and so I sat down I was like it's because you guys are saying oh it took you ten minutes it's like no way and it probably took me actually five minutes at that point and I was I was super happy I mean that's like but maybe I should have sent you a review yeah especially if the review noted sort of criticism for us but no it's definitely helpful to have competitors with not very good products yes okay so you were in the early days you were doing a lot of stuff yourself at some point I guess too two-part question one is one of the things that you weren't good at and then too at what point did you hire someone to what what I assume is to do those things well I mean I'm I'm not that good at most things right and I say there's a non sort of false modesty or I don't mean artificially self-deprecating but said for almost anything that stripe has to do those are the people who were better at that than I am and so I think to some degree sort of the story of say you know product market fit and to you know say our current stage is kind of implementing the recognition of that in kind of more and more areas that said I think maybe sort of embedded in that question is you know okay well acknowledging that you're playing out the world's expert in in any single thing it's kind of in what order do you sort of replace yourself and for stripe the sort of the the important thing they were sort of most obviously not that great at was kind of partnerships and you know working with the various banks that we had to sort of get on board and and so on and so kind of we made them in fact Geoff Ralston who is here in the room today I think sort of was you know some combination of sort of very supportive and perhaps in the back of his minds of slightly pitying you know where he saw us kind of trying to get these partnerships with these kind of big banks in place and we really weren't sort of getting and they were very fast and so he told us that we had to hire this guy Billy Alvarado and I told us just don't ask me questions just hire this guy and at the time everyone everyone at stripe was an engineer and so we just we couldn't quite understand what a non engineer would do like you're not earning code what I was you know is there and and so we were kind of suspicious of this idea and and we sort of we went back to Jeff we met Billy he seems like a wonderful guy we really liked him but we couldn't quite get past this okay but like what does it actually how does this work out in practice and so Jeff told us that we should hire Billy and it didn't work it over the first few months or whatever that if it didn't work out Jeff would go back and pay his salary so it's kind of a zero risk move for us and and so and we didn't have a whole lot of money at the time so that was not insignificant so we we heard Billy and that was sort of an immediately trajectory changing event for you no previous leaving me gone and talked to a bank I mean I know they're literally doing this but it certainly felt they were kind of pushing the security button under their desk it's like what are these guys in my office and and then suddenly things start to go kind of much more smoothly and and Billy is still with stripe today and day has been an enormous ly kind of the pivotal presence and so that was um turned out to be very helpful advice that is interesting just as an inflection point for stripe never new cool so it sounds like you had hired actually people before Billy I guess first your very first hire the third person between with you and John it was an engineer I'm assuming like well he actually wasn't an engineer but he joined stripe and he started to become an engineer so like he'd written a little bit of code previously but he joined a lot of codes I had to written it was a guy I'd known from college he's actually also Irish and yeah we love code to be written and so he was the kind of person who you know would sort of survey that landscape and just do whatever it was was you know most important and required and at that time I was writing code and so he went so kind of the transition from pre pardon mark fit to post product market fit I want to see use when they think back this is like the one point in which they think I could have done that better so how do you how do you create your success of that transition because a lot of it is you know just taking stuff delegating stuff better and doing other functions of the business so what exactly was your transition like and you know how would you how could I if I was going in your shoes tell that I was doing it well yes I I don't think I did it especially well and I think it kind of you know fortunately sort of you know it worked out but I think if if I was doing it all over again I think we could have sort of accelerated ourselves by a year or two if we'd sort of gone about it in a somewhat more disciplined and kind of self-aware fashion I think the I think one of those kind of pernicious a sort of mental models you can have here is the kind of you are on some growth curve and it is sort of your job to sustain or you know marginally inflect upwards or kind of somehow and you know that much of them is curling the sport where you're kind of you know wiping the ice while the overt is the weight a precedes down along it sorry I'm not Canadian but um and but kind of somehow you're kind of making kind of these very small interventions and perturbations on some underlying growth curve and I think that's an easy mental model to have and I think it's kind of you know actively kind of fallacious and mistaken I think I have a much better mental model to have is you're serving some market and that market is I mean for its relatively finite in size I mean you can always you know change the project and increase the market size but sort of you know you can you can think of it as being finite and then there's sort of the percentage of the market that you're serving and then you know whatever percentage you are not serving is kind of well you just haven't built the sort of go to market functions and organization that's kind of capable or at least has yet sort of brought the product to those market segments and the kind of the growth curve or adoption curve is just kind of a function of of that go to market apparatus but basically it's it's it's not some kind of cosmic trajectory it's something kind of very much of your creation and under your control and so what I what we did not do but what I wish we did is kind of maybe whatever you know just after we launch me there's a whole bunch of kind of immediate scaling work we have to do but say six months after launch that we should have sort of mapped out the kind of concentric circles of our market like maybe there's kind of you know very early-stage startups there were kind of a you know our sort of initial initial constituency then there's kind of all technical startups but not necessarily very early stage and it's kind of I don't know you you you keep going these kind of successive increments until eventually got to say all companies handling online payments or something right and I'm gonna sort of figure it out okay kind of what's the size of this market sort of you know kind of what fraction of are we currently serving what would it take to serve more and so on and I think it's quite striking you see that kind of when and repeat founders going start companies they almost invariably are willing to kind of build the organization you know post prime market it so it's invariably willing to kind of build the organization ahead of where things are today and which I think is exactly the right thing to do because they're thinking okay I have the right product now that's gonna work backwards from okay what would the organization looked like that was serving the entire market and let's just start building that organization because again the growth curve is under my control and you know of course it's not like 100% under your control but I think it's much more under your control than then things that people don't think there's also of course a difference here a major difference when you can use or I think about sort of consumer versus kind of b2b use cases where consumer it's a bit more I mean people don't necessarily know exactly what they want you know what's the the market size for like a news reading app or a dating app or something I mean it's it's a kind of it depends a lot on the product like you know maybe when more people should be reading news or something but for fer sort of a for some service or a product that sort of serves a discrete logical concrete function that sort of set of businesses or entities to finish early have or don't have I think it's kind of much more sort of much more rational and much more mapable and I partly had this epiphany Vienna Aaron Levie who's the CEO of Box John I eventually we started an Palo Alto we moved up to San Francisco I don't well Aaron Levie um had Facebook message on and and we've never heard of him and heard of most people in Silicon Valley and but he'd Facebook messaged us like very early on asking to invest in stripe and I think John didn't know this is a random guy and so we never replied and but then you know we heard of Fox and we heard of Aaron and you know we've read his funny tweets and all the rest and so we moved to San Francisco and and we invited him to our housewarming I think was the first time we'd ever met him and sort of you know like we're not very good at partying and so you know by a sort of 11:00 p.m. or you know midnight or something kind of everyone was going home and but Aaron was still there and an Aaron state owns like 2:00 a.m. I still remember kind of sitting in our front room telling us how much better at woz be building b2b software than consumer software for this reason our sort of consumer for it's so hard to predict sort of what people want they don't even know themselves what they want you're kind of you're it's such an amorphous space whereas when you're selling software to businesses you know businesses are kind of are mostly rational are mostly the opposite of inscrutable is scrutiny I guess and and you can sort of work backwards in a way that sort of it's just much more comprehensible and so um I still have this kind of you know it's like the angel and demon on your shoulder I still have sort of you know - am Aaron Levie sitting on my shoulders of extolling the virtues of building software for entities that know what they want you've made the right choice yeah in some senses there's a lot less variables or in consumer there's a lot more variables to to consider and they're quite unknown I want to take a step back and you talked a little bit about you know thinking about thinking ahead about what your team is or what your company structure is going to look like how do you maybe this is too big of a question so I mean we can whittle it down a little bit but how do you think about that like like I'm sitting if I'm starting a start-up today I am close to maybe a product market fit but before that stage like am I thinking about this sort of thing i watch my team look like what should my culture be and stuff like that I think that then well okay so pre prime market fit um I mean the goal is really is just to gas to product market fish and so I actually wouldn't bother thinking too much but all these kind of distribution mechanics questions now you can get probably a good fit sort of relatively quickly and so kind of that pre-primary at this stage might only last six months you know you're not necessarily like stripe or you're gonna in it for various reasons for first of multiple years and so it may not last very long however until that point I really think you should just be think about okay how do I get there the main thing that I think companies screw up at that prepartum are could fit the sage and is sort of speed of iteration I think okay well what determines or you kind of speed of fruitful iteration and and that sort of I mean if you're kind of completely or if you're repeatedly rebuilding our product but sort of national response user feedback I mean that's that's kind of far less likely to be kind of bringing you in sort of a in a productive direction but if you have some kind of meaning albeit perhaps smalls of initial set of users and your rapidly iterating in response to sort of their feedback and sort of observed behavior and so on then I think that's like a really good spot to be in and I think again at that juncture a pre prod market fish it is kind of this you should be sort of doing everything you can to tighten that sort of feedback cycle and there's a fighter pilot in who kind of revolutionized airborne combat in the US and said of the second half the 20th century so Korean War onwards and called boid and he had this concept of the OODA loop which was sort of a sort of a similar notion I was the most improve you see people thought you want to just like the fastest aircraft or said that you know most sophisticated weaponry and so on where he was all about sort of no you actually want an aircraft that instead of pilots and training that are really oriented around sort of the fastest sort of responsiveness in iteration to the cut particulars of the situation in a way that kind of subsequently went on to really inform sort of modern aircraft design and so I think you want to be like and one of these sort of these modern fighters every year sort of really optimized to respond as quickly as possible to sort of rapidly evolving situations again and it's kind of pre-primed market at stage and so then from a hiring standpoint I think I think it should really be about okay well what's gonna sort of what's going to get you there faster and I mean I think it an early stage it's most likely well sort of just people who help you kind of build the product but of course not too many because I mean at some point like not be able to do more but you might actually be less responsive because you're bigger team to manage or something right and so as an empirical matter it seems that somewhere between kind of you know two and ten depending on exactly what you're building is kind of the optimally responsive size but but I think it really is about that sort of him time from observed sort of necessity or deficiency or just you know characteristic of your users behavior to executed fix or improvement and whatever it is that kind eyes is that is there I mean you say two to ten which is helpful but is there are there observations or evidence in which you have hit the peak like you should not add an X like this extra person is going to be negative value add to the whole operation yeah I mean every person every person well startups in general involve all these kind of impossibly difficult of judgment calls in this kind of you know high dimensional possibility space and so it would be great if you could sort of collapse it down to kind of a fairly simple set of trade-offs that is I don't think you can however I think in principle the calculations that are trying to run is ok and each successive person takes time to hire and so slows us down in that regard takes time to unmoor slows that in that regard kind it takes time to understand meld with the sort of culture and learn the stack on the stuff that that also takes constant time then involves subsequent ongoing cost of just like coordination and alignment and sort of you know you you should now have you know the organizations that distributed across more neurons and and so there's that kind of persistent tax and that's not just necessarily a linear cost but it you know it can be sort of you know quadratic or something kind of given you know the multi way communication problem so you of all these costs to an additional person so the question is okay but this person can also help us with like get more done right they can write more code or talk to Moe users or whatever and so it's kind of is that fixed benefit to sort of that additional person worth all these other costs and again with I think the ultimate arbiter being will we be more responsive to what we're learning about our users given the presence of this additional person and I think you know whether or not you will be dependent the complexity the product and the complexity of the market and you know all that stuff but but I think that's in principle the calculation you might be running I've heard you said and speaking of hiring people I've heard you said you know the key qualities that you look for in a future stripe employee is intellectually honest cares a great deal and just loves getting things done which are great attributes because some people just don't fit in those categories so it's good to have that separation there how do you when you meet someone how do you figure out this is the right person it's very hard and and I wish I had a more sort of a sort of definitive rubric and kind of particular set of questions although if I had a particular set of questions maybe you know they'd you know they'd stop working because kind of would learn how to how to game them or something and so I mean it well it's hard to fake just being smart right and so that one's kind of not as hard to discern and and I it's oddly hard to fake being intellectually honest and and so the characters who kind of being able to see multiple sides of a debate or an argument like there are so many kind of complicated questions for so the only thing that I'm really skeptical of is kind of certainty in either direction just because you know the questions are intrinsically sort of involve very contingent trade-offs it's also it's not impossible but it's hard ish to fake just being nice and like something something we care a lot about it's stripe is is just sort of people who are pleasant and warm and sort of just you know make it others happier as a result of their presence and you know if well you know perhaps if you can fake that perfectly forever you know that's fine right but but yeah they're all and sort of actually there's no clear rubric for them and I'm not sure that the peer rubric could even work yeah so you talk about like get people who help move the organization faster if at all possible and I think there are two issues usually that start slowing down the organization as you start scaling just cuz each person adds just more complexity than organization but also I think one is asymmetric information just people don't want that guard never on the same page and I think you've talked a lot about this I think and there so everyone can google around for lectures you've given on this on you've done email transparency you know obviously you know having metrics transparent to the home ization but the second problem to that is if you fix that there's also this asymmetric interpretation problem which is everyone's there's just like black box function that how people interpret eight even if all the inputs are the same the outputs are all different and it's official at your skill now it's nearly impossible to figure out everybody's function so when you're thinking about creating your organization and building it out like how do you reduce that reduce that noise and and try to get everyone on the same page yeah and well the first thing is I wish we had actually between say five and fifty people and I think we were much too consensus oriented we of course weren't completely consensus oriented I mean we couldn't have gotten anything done if we were but I think we kind of biased too much in that direction and again I've seen a it's just not that efficient right and it's sort of it's it's necessarily not the case and so kind of you like you can sort of perhaps maintain some kind of fiction for you know more or less time but but sort of ultimately speaking the third there is no way of sort of sustaining that and I think that's a relatively common mistake right and because you know you almost invariably come from so some kind of you know n Musketeers for so small and sort of kind of orientation whereas it is there's no particular need for sort of formal decision-making mechanisms or sort of you know subsequent communication of said decisions or whatever right but then you can hit fifteen people and now there is and come I think companies don't adjust quickly enough to sort of that new necessity again very much as included and so I actually think we did relatively well on the kind of ambient availability of sort of context and information so on but actually kind of in some sense poorly at sort of deliberate explicit communication of of decisions decisions being I mean actual kind of tactical decisions or even you know bigger decisions like you know what are our priorities the next six months or things of that nature and so the higher order piece of advice and perhaps I'm over extrapolating from our personal experience but Hydra advice just kind of reflecting back would be to kind of it's kind of like the pre and post pop probably market fit thing it's sort it's actually about the size of the organization we're kind of when you hit a certain size again maybe I'm just gonna say ten people for the sake of simplicity a bit before it's a bit after I think you to kind of adjust more more deliberately to this kind of explicitly eunuch ation model of sort of of being sort of quite quite firmly non consensus based and and sort of I mean nobody nobody likes the idea of sort of being hierarchical that sounds pejorative but like in some sense hierarchical sort of the top-down like it does move things faster maybe some people don't like that yes it does that's right that's right and there is this can delicate balancing act you you want to sort of orchestrate we're kind of on the one hand you want to sort of really prioritize speed and agility which involves being kind of somewhat a hierarchical because those are sort of efficient sort of symmetry breaking mechanisms and ways to sort of have shots get called but on the other side you really do want people to have this kind of strong ownership mentality and and real sense that sort of they they can cause think things to change or identify problems or sort of inject new ideas even in unrelated areas and so it's this a delicate act where I mean you definitely can be excessively hierarchical but sort of how do you sort of facilitate enough autonomy and agency them but also not have things devolve into this kind of I don't know sort of a uniform morass of sort of all these kind of of a Brownian motion and and and I think that's hard and requires all these kind of you know ongoing sort of tweaks and nudges and I mean is dependent on the personalities involved and all the rest and again I you know I really wish there was kind of the sort of wrote simple I'll just do XY and Z and you'll be good but sort of if such XY z-- and Z's exist you know no one's told me yet if only there was a formula for everything so riding on the same theme you know as stripe grows you strike me as a company that does the opposite of most companies which was they get bigger they just slow down and they get less innovative but for you guys and it's hard to even keep up like you're just pumping out new products and which seem to be successful to me like stripe Atlas try press stripe terminal so and so forth so in the early days you know when there's just 9 or 10 of you if someone had a new idea it's probably really easy to get to you and you know then you guys would decide how has that changed over time to make sure that someone who's like six level six degrees away from you that a good idea actually gets to you and then how does that decision made to actually execute on upon it um well I'm it's very nice to you say that I feel that we're getting faster as we get bigger because you know we're constantly sort of self-flagellating over how like freaking slow we are and like paranoid about sort of I don't know degenerating into some kind of you know sort of immobile stupor and so to whatever extent we do get things done or or appear fast I think it's largely because we we're very paranoid in this dimension and and I think that kind of the the default outcome of companies of course as they scale is to become sort of more ossified and rigid and sort of closed to new ideas and directions and things that contradict their prevailing orthodoxies and all of that as how we kind of avoid that and I mean well there's lots of kind of obvious things like partly it's it's sort of I mean having leaders who care about the rate of progress and and just love seeing things happen quickly and lots of things of that nature and I think maybe sort of deeper rooted as we try to be a kind of yes and culture in that I mean I personally love just ideas and potential things we could do and I mean most of them are or I mean no matter how good the idea is sort of we should not pursue most ideas right even if independently it could be a super successful comfort or something but like there is a fairly finite number of things we can do and so sort of you kind of on the one hand need to recognize that intellectually and just like not pursue most things while on the other hand enjoying the exercise of contemplating well what it looked like if we did it right and so you know one thing we do every year for example is we have this kind crazy ideas process.we college where we literally sent a document to the whole company a hackpad document that that's open to everyone and people can sort of add ideas to it that they think are probably a bad idea but if they worked might be a great idea and it's very important that they have to be probably a bad idea because if they're like probably a good idea then I mean it's not that risky and I mean kind of by definition we should ply do it and so we know whatever it may be just do it and so people like really self-censor a lot in most organizations because they don't look stupid and they don't be sort of associated with just having all these like wacky bad ideas and so on and so we try to be fairly firm that if you add ideas it has to be probably a bad idea and and actually a lot of cool things we've subsequently got on and done the first came from the process it's try Pappas you know being one of them and and also we we sort of helped stellar it could off the ground this sort of cryptocurrency back a few years ago instead of that also sort of came from this process and so that's one of the mechanisms by which we try to have a kind of yes and culture and I really think there aren't that many as just as an empirical matter and there aren't that many large organizations that I think sort of really do this successfully but I think that sort of the the most successful of larger organizations somehow do succeed and sort of this iterative repeated repeated process of kind of augmentation you know Amazon and Google being have the most prominent examples for you know obviously even Google launched there was no Gmail or YouTube or Android or Google Maps or whatever and you know Amazon sort of is kind of an even more conspicuous example in some sense this kind of repeated attach of successful ancillary businesses and so I think kind of yeah there's a very natural temptation as you grow to I think become increasingly close to this I think is very important to avoid cool so I have a couple more questions and then maybe we'll have time to take questions from the audience one is are looking back is there something did you have a strong opinion of you know how startups should be run as a CEO that have just completely reversed because you're now to see you it's a good question and another way to potentially put it is like what are what are things that you did were you're like I know for sure this should have been done and they just turned out to be a mistake well I already mentioned the set of the consensus orientation when they were going through right now which is a quite sort of significant divergence is a you know we were sort of fairly centralized and up until sort of relative recently I mean we had some remote employees from pretty early stage but so by and large stripe was kind of concentrated in San Francisco a.m. last week we announced our fourth global hub and basically we've decided to do is we're going to have kind of major sort of product and engineering sort of efforts and teams and functions and all the rest in San Francisco also in Seattle also in Dublin and also in Singapore and and sort of these nonsensical locations they're not gonna be sort of I know operations offices or satellite offices or you know places where we do have some localization and local market adaptation we want to have kind of completely de novo new products that sort of become super successful started out of these offices and that's not the sort of standard obviously kind of Silicon Valley pattern and we're sort of Apple and Amazon and Facebook and Google and all these companies tend to be sort of highly concentrated in these sort of very I don't know so monolithic corporate headquarters and our thesis is that it's kind of several folds you know partly that kind of the availability of talent is becoming sort of far more geographically dispersed partly that sort of you know the Bay Area is going an increasingly untenable expensive location to locate and partly that sort of we really want stripe to be global infrastructure that work kind of just as well in instead of you know Asian markets or in Latin American markets or whatever as it does for businesses in the US and have the era of the internet being asleep predominantly North American or North America and Western European or whatever the the days of being kind of such a phenomenon are over and so I think that's sort of a fairly substantial break with kind of you know descriptive best practice of the past I mean you know we obviously think it'll work and we wouldn't do it if we didn't but it is also kind of them on some level risky like we don't have good you know prior examples to point to and you know I mean there are some great companies in Singapore like like grab and carousel but aren't really any examples yet a sort of American companies establishing kind of major private engineering hubs they're you know we're pretty optimistic it can be done but but you know kind of if it works you know we'll be the first or one of the first cool last question so in a hundred years from now what is stripe gonna be what do you imagine it to be well we're only seven years old so that's a difficult question to answer we're trying to build this kind of this economic infrastructure for the International is sort of platform for globalization and kind of technological progress in the sense that like it ought to be just as easy easy to start a company in in in in sort of you know Nigeria as it is in New York and it should be just as easy for somebody in Brazil to buy something so from any of these companies as it is for for again somebody in in the Western world and and it just seems so crazy to me that sort of that hasn't happened yet like I it sort of feels that stripe should have happened ten or twenty years before it did and and just kind of I don't so much think the were sort of pursuing this kind of unprecedented kind of path breaking I am sort of a inconceivable idea so much as kind of correcting a deficiency and instead of as a rip in the fabric of Internet infrastructure and and so anyway I think we still have you know at least five years to go instead of sort of correcting this inadequacy yeah so what happens after that I'm not sure in some sense in the future all transactions should be digital and they could very well it's just the all going through strife I mean right now like in the u.s. someone's telling me like 80% of all Americans have done some transaction Thursday right yeah that's right so in the last 12 months more than 80 percent of American adults have bought something from a from a stripe business at least one thing from a stripe business which is cool and you know it's not just the case in the u.s. like in Singapore I was last week you know that that figure is about 70 percent right but I guess we don't think about it well I think about it more in terms of the things that are possible or get started as an its kind of we think a lot about the rate of sort of new firm creation what companies are getting started how successful of those companies which markets can they serve and so on and you know every now and again we look back and we look at sort of the those kinds of market coverage that's but I guess that's not really about sort of them what motivates us is it's more than sort of are these businesses that should exist and or should be able to kind of offer the present services you know in these places where they currently can't and that's I think I mean that's the kind of thinking that we use to kind of inform the product and that's it is kind of the the core on a locomotion day-to-day and then maybe the outcome of that is is that all these people get to benefit from it all right thank you so much Patrick this is great thank you [Applause] you

Channel: Y Combinator

Views: 116,555

Rating: 4.9413252 out of 5

Keywords: YC, Y Combinator, Patrick Collison, Startup School, Adora Cheung, Stripe

Id: NprBQi0cSHU

Length: 57min 14sec (3434 seconds)

Published: Wed Oct 03 2018

Reddit Comments

[u/midael]

00:00 by Patrick Collison of Striple
07:26: There needs to be a mechanism to reach a decision. Someone / somehow need to make decision(s
11:00: Story of the start-up is two stories - getting to product market fit, and what happens afterwards
23:30: It’s helpful to have competitors with NOT very good products (just don’t be the one with the bad product :P )
36:00: OODA loop: https://en.wikipedia.org/wiki/John_Boyd_(military_strategist))
39:00: Key qualities of stripe hire: 1) intellectually honest, 2) cares a great deal, 3) gets things done!
43:00: We used to be too consensus focused.
43:10: How do you make sure that someone with 6-levels down from you gets their great idea to you? We try to be, "yes let’s do it" - culture.
48:50: Yearly we circulate a ‘probably a bad idea’ document among all the people where we collect such ideas throughout a year. Many of them became great ideas after some adjustment/groupthink.

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