Stripe: Patrick and John Collison (2018)

Brothers Patrick and John Collison founded and sold their first company before they turned 20. They created software to help eBay users manage inventory online, which set them on a path to help make e-commerce frictionless. Today, John and Patrick are the founders of Stripe, a software company that used just a few lines of code to power the payment system of companies like Lyft, Warby Parker, and Target. PLUS in our post-script "How You Built That," we check back with Kirby Erdely, who saw a problem with flying beach umbrellas and developed a new kind of tent stake—with a twist. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey. So before we start the show, I want to tell you about today's episode. And it's about software, a seemingly simple payment system that was actually so complicated that none of the big tech companies wanted to take it on. And the two guys who did were recent transplants from Ireland. Two brothers, both college dropouts, and, as you're about to hear, both super, super smart. This episode first ran about two years ago. It is one of my favorites. And I say that a lot, but it really is. I hope you enjoy it.

• 0:34Speaker 01

  We built the first prototype back in October of 2009. And it really was apparent to us that it wouldn't be easy. Like, it was not going to be possible for it to be some sort of, well, we code furiously for two months. We launch this thing, and then it's off to the races. Like, from when we started working on it full time to when we publicly launched was almost two years. And so, yeah, going to be hard, but it is actually possible.

• 1:03Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:17Guy Raz?

  I'm Guy Raz, and on today's show, how two brothers from Ireland wrote seven lines of computer code and built it into a $9 billion business.

• 1:35Guy Raz?

  So the holy grail for a venture capitalist is the elusive unicorn. This is what hundreds or thousands of business school graduates working at venture firms search for every day. They sit through pitch after pitch, PowerPoint after PowerPoint, hoping that today will be the day, that one of these pitches will be the next Uber or Airbnb. An opportunity so rare, so coveted, it's like a unicorn. Well, welcome to today's story, because Stripe is basically a unicorn with extra whipped cream and cherries on top. This was a company that went from $0 to $100 million in value in a matter of months.

• 2:20Guy Raz?

  And today, barely seven years after its founding, Stripe is valued at more than $9 billion. So now, your next question. What is Stripe? Well, Stripe isn't a thing you buy. It's not like Under Armour shirts or Warby Parker glasses, but it is what allows you to buy those things online. If you use Instacart, or Lyft, or Kickstarter, or even if you shop online at Target, you're using Stripe. It's basically the backend technology that allows you to safely enter your credit card details and pay for what you want. And there are two things that make Stripe very different from its competitors. The first is its simplicity.

• 3:03Guy Raz?

  It was originally just seven lines of code. And the second, the youth of the two brothers who founded it. When Stripe launched in 2009, Patrick and John Collison were just 23 and 21 years old. The Collison brothers grew up in rural Ireland, in County Tipperary, where their parents ran a small hotel.

• 3:25Speaker 02

  Very small. It had 12 bedrooms when he bought it. And we got a house maybe a mile or two away. And so we grew up surrounded by farmland. The options were to play in the garden, and did a lot of that, and to play with Lego, and we did a lot of that, and to read books. And I look back at it very fondly.

• 3:48Guy Raz?

  So your dad was running this hotel, and were you guys involved with it at all? Like, did you have to go there on the weekends and like change sheets and mop the floors?

• 3:56Speaker 02

  Well, remember, you know, Patrick, I think it was Patrick was probably four when they started. I was two. And so, you know, there's only, you know, a two-year-old can only be so useful in the operations of the hotel. I think my favorite memory is the ballroom floor, the highly polished surface. That was awesome as a kid for kind of getting a, you know, kind of a length game in terms of who can slide the furthest. But much and all, I'd like to imagine that we were extremely useful in running the hotel. I think we were primarily a hazard.

• 4:29Guy Raz?

  Yeah. How did you guys get into coding? How did that happen?

• 4:32Speaker 02

  I bought a book when I was 13, and...

• 4:37Speaker 02

  I read it one Saturday and started writing some webpages. And really, it was all downhill from there.

• 4:45Guy Raz?

  Yeah. And how about you, John? Did you, seeing Patrick get into coding, did you think, hey, I want to try that, too?

• 4:51Speaker 02

  Yeah, that was definitely an influence. And I think I had an experience that a lot of people I know who've learned to code had, which is it's often an end result that pulls you along. And you're making everything up as you go and you don't really understand. You're copying things from a book or from a website and typing them into a computer to get it to work. And it seems like the two big motivations that people often have are websites or video games. And so in my case, the initial website I made was not very good. After I'd built it, Patrick taught me a lesson in security. I was probably 14 at the time and I cobbled together this website. And there were vulnerabilities and issues and stuff that Patrick then hacked the site just to teach me a lesson on that.

• 5:35Guy Raz?

  OK, so Patrick, I'm going to mention this because you're not going to mention this. In 2005, you won an award, I think it was the Young Scientist Award of Ireland. You were 15 or 16 or something like that. And I'm assuming, and maybe you weren't cognizant of this, but people must have said, oh, they're the Collison boys. They're those two really smart boys. Were you aware that you guys were just really smart? I mean, were you aware that people were aware of the two of you when you were kids?

• 6:12Speaker 02

  I don't think they were when we were kids. I think actually this kind of science contest is, that was really the first time where anyone might have had even the slightest cause to have come across or heard of either of us.

• 6:29Guy Raz?

  What did you do? What was your invention or experiment or submission that won you, Young Scientists of Ireland?

• 6:36Speaker 02

  Well, as we sort of touched on, I'd gotten really into programming. And in particular, I'd become interested in this programming language called Lisp.

• 6:46Speaker 01

  I was kind of fascinated by Lisp because it had been invented in the late 50s, like really early into the history of technology. But it had been kind of forgotten and ignored. The thing I worked on was sort of a new version of Lisp, trying to kind of update it, making it really straightforward to build sort of complicated web applications and things like that. And, you know, it's funny, it's only kind of looking back on it that this sort of becomes clear. I mean, from a very early stage, I was interested in sort of working on tools or just kind of building things that created leverage for others. And that basically, the whole point of working on this programming language was to provide a tool that would make it easier for others to build things. And so, you know, I didn't consciously think about it this way at the time, even when I was starting Stripe or whatever.

• 7:28Speaker 01

  But basically, all the things that I've worked on kind of somewhat seriously have in some ways been kind of tools for creation.

• 7:37Guy Raz?

  So in 2006, after Patrick won the Young Scientist of the Year award, he decided to go to the US, to MIT for college. And two years later, John would follow his brother to Cambridge to attend Harvard. But all the while, the brothers were always working and conspiring on ways to solve problems they'd come across on the internet. For example, why it seemed so hard to buy and sell secondhand things in an efficient way. So one afternoon, while mulling over some ideas at their local pub, Patrick and John came up with a potential solution: backend technology for eBay users to manage inventory. And they found two other guys who were working on a similar problem.

• 8:18Guy Raz?

  So they joined up with them, moved to San Francisco, and called their company Octomatic.

• 8:24Speaker 01

  What Octomatic did was it made it really easy to kind of manage and to list items for sale on existing platforms, things like eBay or, you know, other marketplaces for...

• 8:39Speaker 01

  Selling some of these items. You could use Optomatic to sort of track your inventory and to upload your items and to manage the listing photos. And so basically, it was a tool for people who were kind of selling significant amounts of stuff online.

• 8:51Guy Raz?

  Right.

• 8:52Speaker 01

  And so it was software to help those people do that job better. And the idea was that kind of that could help us gain kind of one side of the marketplace, such that over time, we could come and then build a better user experience for customers.

• 9:03Guy Raz?

  So you guys build this thing. And who was the public face of Optomatic? Because, I mean, obviously, you guys are super smart and talented, but you were really young, right? Like 18 and 16 years old. So were you guys sort of staying in the background and were the other founders?

• 9:21Speaker 01

  The public face was really the website.

• 9:24Guy Raz?

  Right, right.

• 9:25Speaker 01

  The great line about how on the internet, nobody knows that you're a dog.

• 9:27Guy Raz?

  Yes, right, right.

• 9:28Speaker 01

  And we kind of took full advantage of that.

• 9:30Guy Raz?

  But the company must have done pretty well, right? Because I guess just over a year after you had your original idea, it sold reportedly for $5 million. So was it strange to, all of a sudden, at that age, land into that kind of money? I mean, I know you didn't get $5 million yourself. You had to divide it up and stuff, but still, you probably walked-

• 9:52Speaker 01

  Investors and-

• 9:53Guy Raz?

  Yeah, you still probably walked away with a couple hundred thousand bucks. That was probably more money than you'd ever seen in your life.

• 9:59Speaker 01

  It was certainly more money than we'd ever seen in our lives, yeah. It was enough money that it afforded a kind of freedom and really, I think, just kind of forced sort of a kind of reflection that had we been, or had I been, kind of on just the treadmill of, you know, you go to college and you get your degree and then it's your first job and so on, such that I can certainly imagine sort of a different version of my life and my career where I didn't do some of that thinking until I was much older.

• 10:26Guy Raz?

  Yeah. So I guess this was like right around the time you were at Harvard, John. And Patrick, you eventually went back to MIT for a while, right?

• 10:36Speaker 01

  That's exactly right, in the fall of 2009.

• 10:38Guy Raz?

  And I should just preface this by saying, both of you would drop out and never return. But in that brief moment of time, where John, you were at Harvard and Patrick, you were at MIT, is that really, this is around 2009, is that where the early sort of idea-

• 10:56Guy Raz?

  That would become Stripe began?

• 10:58Speaker 02

  That's an interesting question because on the one hand Stripe was the most interesting idea we had come across during the course of Octomatic in that it was the single hardest thing about developing an internet business was just the business side of it and the accepting money side.

• 11:15Guy Raz?

  The payment side.

• 11:16Speaker 02

  Yeah, and it seemed like a really important problem and we thought there should be something really easy focused on developers instant setup to let people start accepting money. But on the other hand, what did we know, right? We were these two college students.

• 11:29Guy Raz?

  Yeah.

• 11:30Speaker 02

  And so maybe the financial system had it all figured out and we were these impetuous youngsters with the wrong ideas. And so you're trying to figure out in those early days of starting a company or starting a product, are we wrong or is the world wrong?

• 11:45Guy Raz?

  So let me try to understand what, take us back to 2009. I mean, I remember using Amazon and buying stuff from Amazon and for me as a customer it was, seemed fairly frictionless, you know? I'd just hit click to buy it and it would be delivered like a couple of days later.

• 12:02Speaker 02

  That's exactly it. And I think that's part of why it didn't get solved is that as a customer, everything seemed fine.

• 12:10Guy Raz?

  Yeah.

• 12:11Speaker 02

  And then you talk to anyone who had to run a business and in particular an internet business and they would talk your ear off happily about it. I mean, the kind of the stories they would tell you. Again, oftentimes they would tell you it was the single hardest thing about getting their business off the ground because the providers that existed at the time, it was often through banks, they were the gatekeepers. They were the people that said, yes, you can have an online business or no you can't. And so it was a much more important step in that regard. And it's funny, when we go to investors early on for Stripe, they would say, you know, it seems pretty solved, you know, it's 2009, like, you know, I think we have this internet payments thing down. And they would do some asking around and that's when they got it.

• 12:52Guy Raz?

  Right. So if you were starting an internet business in 2009, when this idea came to you, what, I mean, and you want to accept payments, let's say you had a business selling, oh, I don't know, you know? Homemade peanut butter that you would ship to people.

• 13:09Speaker 01

  That sounds great.

• 13:09Guy Raz?

  It was hard. It would have been really hard to set up a way to accept payments through your site.

• 13:15Speaker 01

  I mean, it's hard to imagine that it could have been the case.

• 13:18Guy Raz?

  Yeah.

• 13:19Speaker 01

  And, you know, clearly, there must be some kind of reasonable answer to this, some, you know, easy to use piece of software or something, and we just weren't finding it. But what we came to realize is that because it was financial, that sort of technology companies were very hesitant to go and address it.

• 13:33Guy Raz?

  Why? Why would they be hesitant?

• 13:35Speaker 01

  Because you have to deal with partnerships with financial institutions and regulation and risk controls and making sure that things are sort of done compliantly, and it becomes then very complicated to figure out how to offer that service internationally. And so the fact that you had to kind of span these multiple sectors and deal with all these kind of different constraints with figuring out a better way to do payments, technology companies, startups tended and still tend, I mean, for understandable reasons, to kind of shy away from things, from problems that sort of, where you have to solve a lot of hard problems in multiple domains.

• 14:06Guy Raz?

  Yeah.

• 14:06Speaker 01

  And then, you know, coupled to that was the fact that, I mean, PayPal existed.

• 14:10Guy Raz?

  Yeah.

• 14:10Speaker 01

  And I think for a while, back in the early days of PayPal, people thought that PayPal was going to solve this.

• 14:15Guy Raz?

  Explain for a moment the PayPal thing, because I, you know, I've used PayPal, not very often, but I've had, you know, occasions where somebody asks me to PayPal them, and I've PayPal'd them, and it seemed pretty easy.

• 14:27Speaker 01

  Right.

• 14:28Guy Raz?

  So what was the problem?

• 14:29Speaker 01

  So the basic issue with PayPal was that it's designed for consumers, not for businesses. And so if you're building an app, if you're building, you know, a website, if you're building a new marketplace, something like this, PayPal works OK for sending $20 from Joe to Jane.

• 14:43Guy Raz?

  Yeah.

• 14:44Speaker 01

  Where it works much less well is when you want to do this at scale. You want to sort of build an automated integration to your website where you're running a business with it. PayPal just isn't designed for the business use case. It was built for eBay, where you're kind of one-off, sending $100 manually from this person to that person.

• 15:01Guy Raz?

  Yeah.

• 15:02Speaker 01

  Whereas when you're building a business online, where you're, again, integrating this into a website or into an app or something like that, you have a quite different set of considerations around how you do this at scale. And PayPal had not been designed for that.

• 15:13Guy Raz?

  So, OK, so here's what I don't get. You guys were obviously super smart and very good at coding, but what made you think that you could solve these big, enormous problems like regulation and dealing with banks and developing relationships and credit card companies that, you know, Google and Apple clearly felt that they could not resolve?

• 15:35Speaker 01

  In large part, a healthy dose of the naivete of youth. But, you know, we didn't just leap into it. We built the first prototype back in October of 2009. And then we basically spent kind of eight or 10 months trying to sort of map out what would actually be required to have this work at sort of, you know, any material scale, what sorts of people we'd have to hire, which sorts of entities we'd have to partner with, and, you know, what that would look like. And so we realized, well, we need to hire, you know, very senior and experienced partnerships people to make sure that we can get sort of first tier relationships in place with banks. And it really was apparent to us that kind of it wouldn't be easy.

• 16:16Speaker 01

  Like, it was not going to be possible for it to be some sort of, well, you know, we code furiously for two months, we launch this thing, and then it's off to the races.

• 16:24Guy Raz?

  Yeah.

• 16:25Speaker 01

  Like, from when we started working on it full time to when we publicly launched was almost two years. That's how long it took us to kind of orchestrate all those details that sort of you're describing.

• 16:35Guy Raz?

  Yeah.

• 16:35Speaker 01

  And but I guess, yeah, what we got a sense for sort of after, again, that this kind of investigation was, yeah, going to be hard, but it is actually possible.

• 16:47Guy Raz?

  So you guys had a couple of hundred thousand bucks from the sale of Octomatic, and obviously you had the coding chops and the technology chops, but you did not have any money. How were you able to to get money to, you know, fuel the ambitions of this company?

• 17:05Speaker 01

  One of the things that Silicon Valley does well is it probably has the, you know, Patrick and I now travel to a decent number of other places, and Stripe has offices around the world, in Dublin, and London, and Singapore, and places like this. But but I think Silicon Valley is probably the best place in terms of the risk tolerance of the investment capital that's available. If we could get people convinced of the opportunity, and if we could show people that initial early customer traction and how much it resonated with the target market, they were actually willing to take a bet, despite the fact, I mean, when you look back on it, there was a vast amount of uncertainty in every other aspect of the execution. Between would Patrick and I be able to get visas for the United States to work here to would

• 17:50Speaker 01

  we be able to hire to what would the long term financial partnership structure or things like that look like but people are willing to look past all of those things to the opportunity.

• 18:00Guy Raz?

  What I wonder is when you I mean you had an advantage when you when you started meeting with investors I'm assuming because you had already started and sold a business and a lot of investors love that they love to see that experience but did they ask you were you asked tough questions by potential investors like for example you know you guys are really young how are you gonna manage people or you don't have any connections or involvement in the financial industry or back did you get questions like that?

• 18:29Speaker 01

  Surprisingly, no. I think people are used to that in Silicon Valley. I mean by the time people become famous because the thing they worked on succeeded they tend to be older but that means the mental image we have of people who do successful things is like 10 to 20 years maybe even more older than the ages at which they tend to have actually done them right and VCs and investors and just people in general in Silicon Valley I think are sort of unusually sort of attuned to this fact and recognize and realize that sort of hey really significant work not only can be done by people in their twenties but is very commonly done by people in their twenties and so you know I think that's kind of to their great credit and you

• 19:10Speaker 01

  know we really benefited from it the thing that has I mean this is not to suggest that investors you know rushed with enthusiasm to invest in Stripe most investors said no but the reason was much more reasons were much more because they just thought it was a bad idea rather than the kind of

• 19:27Guy Raz?

  Why did they think it was a bad idea?

• 19:30Speaker 01

  Well, a whole host of reasons. It was going to be a developer oriented service rather than going and sort of trying to run this big kind of expensive sales and marketing campaign.

• 19:40Speaker 02

  So already many companies in payments?

• 19:41Speaker 01

  Exactly. There's already thousands of companies doing something like this. As you suggested, there were a lot of partnerships that we'd have to navigate and get in place and you know those don't tend to be kind of the forte of a startup and it wasn't clear to them back then. I think viscerally, just how eerily the market kind of still was. You know, we were sort of starting Stripe in the wake of the financial crisis. And it's kind of hard to remember this or kind of internalize it now. But people were actually fairly pessimistic about technology in some ways back then. And that was in part because US investors had really kind of tilted quite skeptical on where technology was going. And so I think, you know, the kind of the bear case on Stripe was in part this bear

• 20:26Speaker 01

  case on technology more broadly, where, well, maybe we've already done all the stuff that we're going to do.

• 20:34Guy Raz?

  When we come back, how John and Patrick stayed bullish on Stripe and how they finally got it off the ground. Stay with us. You're listening to How I Built This from NPR.

• 20:58Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 2010. Patrick has dropped out of MIT. John has dropped out of Harvard. And their parents are not freaking out about this, by the way. The brothers are working full time on Stripe. And they start to look around for investors. And a lot of investors are saying no. But finally, John and Patrick catch a lucky break when they manage to get a meeting with a pretty big player in Silicon Valley.

• 21:31Speaker 01

  We had a meeting with Peter Thiel. And sort of, you know, just as in this conversation, we sort of told him structurally what we saw as being all the kind of major flaws in PayPal.

• 21:42Speaker 01

  Looking back on it, I sort of cringe a little bit at how impolite a guest I must have been. Again, this is my first time.

• 21:50Guy Raz?

  He's the co-founder of PayPal, yes.

• 21:51Speaker 01

  Exactly. Co-founder of CEO.

• 21:52Speaker 02

  You really screwed it up, yeah.

• 21:53Speaker 01

  Right, exactly. And so, you know, at great length, sort of belabored the point about sort of how they'd gone about things wrongly. But Peter, being such a sort of, you know, an inveterate contrarian, was quite sympathetic to this case and decided on the spot to make, you know, a fairly material investment of $200,000.

• 22:15Guy Raz?

  So what did Peter Thiel see in Stripe? Like, was it just easy to use? I mean, was it the kind of thing where a software developer would be like, oh, my god, somebody has finally figured this thing out?

• 22:27Speaker 02

  I think many of the developers were just really glad that someone was finally paying attention to them at all. Now, as it happened, we paid obsessive attention to them and we were really building for that audience. But the baseline that people were working with was very low. It was not competitive. I think what changed and what we were fortunate to be a part of was the fact that now for internet businesses, payments is actually part of the strategy that matters. It's part of the product experience. And so basically, I think this used to be a fairly tactical vendor decision for the

• 23:07Speaker 02

  business, where it was just something that needs to be taken care of and there was only downside, really. You could make a bad choice, but you couldn't make a great choice. Whereas now, as we've seen with companies like Amazon, like Lyft, like Instacart, they can actually win based on their product experience, and that's new.

• 23:26Guy Raz?

  So, OK, so for people who are non-technical, non-coders, and I will count myself among them, explain how this works. Basically, you're Lyft, and I take a Lyft and I pay the driver. I just click pay and I've Lyft, or you guys, I guess, have my credit card. And so you have to communicate with my credit card company to make sure that they are charging me, so then my bank account will be able to pay the credit card company later. Presumably, you also have to pay the credit card company, right? Like, they're taking a cut of your money, too.

• 24:03Speaker 02

  That's exactly right. So what's happening underneath the hood when you use any business powered by Stripe is, you know, you probably type in your credit card, you probably only type it in once and then it's saved with your profile for any time you use it in future. That is securely sent directly to Stripe, so it's not, you know, hitting or it's not being stored on other servers. And then, when a business wants to actually, you know, accept money and charge your credit card, and, you know, over time, it's now more than just credit cards, it's bank transfers and different international payment methods and things like this. But the business that wants to charge your credit cards, they say, hey, I'd like to charge this card $20, and we-

• 24:37Speaker 01

  They put money in their bank account and we handle everything that goes on between that instruction and the money arriving in their bank account. It's actually pretty complex what goes on under the hood. But again, our aim is that people did not start businesses so they could deal with the minutia of the financial system.

• 24:54Guy Raz?

  Right.

• 24:54Speaker 01

  They'd start businesses because they have a vision and they have a product that they want to get out there into the world. And we want to get them back to doing that. Anything that does not get them jumping out of bed in the morning, you know, we should be able to take off their place.

• 25:06Guy Raz?

  Right.

• 25:07Speaker 01

  And that at a technical level is kind of how it works.

• 25:09Guy Raz?

  So my understanding is that it was basically seven lines of code, which I guess from a coding standpoint is very simple, elegant, and a developer could just plug that in to the application or site they were developing and then that was it?

• 25:27Speaker 01

  That's pretty much it. We had lots of stories of people integrating payments in an afternoon or an evening and then launching their business the next day. And that just worked consistently. That was a big break from what had prevailed before.

• 25:39Guy Raz?

  And once you started to gain momentum and you launched, I guess you launched publicly in 2011, right?

• 25:46Speaker 01

  That's right.

• 25:47Guy Raz?

  How did you convince companies to trust this, to work with you? Who was your first big customer client?

• 25:56Speaker 01

  Well, because we were serving high potential companies and startups and fast growing companies, we grew with our customers.

• 26:04Guy Raz?

  Right.

• 26:05Speaker 01

  And so back in the early, in the very earliest days, yeah, those companies were pretty small, but some of them started to, you know, become pretty big, like Lyft and Shopify and so on became customers of Stripe. And of course Lyft and Shopify have now become, you know, have very successful companies in their own right.

• 26:21Guy Raz?

  And how did you get them to work with you? Did you just meet the people who were working at those companies and you just developed a relationship?

• 26:27Speaker 01

  Well, yes, we sort of got to know those people, but I think more fundamentally and importantly than that, we enabled product experiences that they wanted to have. So in Lyft's case, for example, they wanted to not just charge their customers, but they wanted to pay their drivers. And there was no product that enabled a really good driver payment experience. And so we've kind of co-evolved with them to enable the best end user experience.

• 26:50Guy Raz?

  And your revenue stream was a percentage of every transaction that was going to, and that is the way that you get paid?

• 27:00Speaker 01

  Yeah, we really wanted clarity in the alignment of interests where we would only make more money when the businesses we served made more money.

• 27:07Guy Raz?

  And I think it's like 2.9% or something transaction fee, right? On a transaction, is that right?

• 27:12Speaker 01

  That's right.

• 27:14Guy Raz?

  Did anybody try to stop you or make life difficult for you, banks or regulators? Because you're dealing with intricate financial regulations and I mean, and big banks presumably have a big interest in this, this could be a revenue stream for them. Like, were there people who tried to, or was it just, once you started, you just, the momentum was, the wind was behind you?

• 27:37Speaker 01

  Well, in this department, we really tried to approach things differently to, I think, how technology companies often tend to. Technology companies, I think, often have a sort of go it alone mentality. We'll build it all in-house, we'll do it all ourselves, we can do things better than ever in the outside world. Whereas we thought that Stripe would only be possible, and it would only be possible to do it well, if we partnered closely with people who had deep expertise and experience in industries that we ourselves were less familiar with. And so from the very beginning, even before we launched, we partnered closely with banks, and now we work with banks in many different countries. And not just banks, but sort of other financial institutions besides. But we really wanted to build Stripe as sort of a multi-decade thing.

• 28:18Guy Raz?

  Yeah.

• 28:19Speaker 01

  And if we're going to go and do it that way, we really had to do it right.

• 28:21Guy Raz?

  So as you started to really, you know, launch and develop and get more and more attention, why didn't the competitors come out from the woodwork? Why didn't like PayPal or these other transaction companies, Square and stuff, say, we're just going to do what they do? Did they try?

• 28:38Speaker 01

  Well, what we were doing didn't look that important back then. It wasn't the case that sort of we immediately, or what we were doing immediately looked like it was obviously working and obviously of major significance. We were, back then, in the eyes of others, sort of working with all these inconsequential little companies and making their lives a bit easier. But, well, was this mobile payment thing actually going to amount to much? In aggregate, were there actually that many developers that would be starting these successful companies? I mean, again, I kind of get Back to this pessimism around technology that kind of existed and prevailed around 2009, 2010 and so on. And this is one of the great facts about our industry is that you cannot

• 29:19Speaker 01

  turn money into great products as a kind of mechanical operation. If it were possible, there would be many more great iPhone competitors.

• 29:29Guy Raz?

  Yeah.

• 29:30Speaker 01

  Facebook would have been long since eclipsed by MySpace or Yahoo or Google.

• 29:33Speaker 02

  Global banking apps would be really good to use.

• 29:35Speaker 01

  Right. And the intricacies of good product, of good design, of good architecture, those can't be trivially replicated.

• 29:46Guy Raz?

  I mean, essentially, your competitive advantage was you guys.

• 29:52Speaker 01

  I think it's an amorphous combination for any of these products, and I don't mean to single stripe out. For any great product, some amorphous combination of sort of the ethos and the culture and the people and sort of the work style and kind of a fingertip sense for the priorities. And all these things that are just like very hard to copy. I mean, it's the sort of a continuum where at one end, you're manufacturing steel and at the other end, you're manufacturing novels. And in steel manufacturing, sure, you can turn capital into more, better, cheaper steel. And at the other end, it's very hard to know

• 30:33Speaker 01

  how you turn the money into kind of better writing. And software is somewhere in between. And I think this is kind of constantly the challenge for people looking to analyze and make predictions in the industry where, again, Google should have beaten Facebook.

• 30:47Guy Raz?

  Yeah.

• 30:47Speaker 01

  Google had every advantage against Facebook. They had more people, more money, more distribution, more brand recognition, more of kind of any of the obvious inputs. And yet somehow, there was something missing.

• 31:00Guy Raz?

  When you think of this number, last year, $9.2 billion valuation, does that mean anything to you? I mean, is it abstract? Do you think, man, I'm rich? Or does it even cross your mind? I mean, must at some level, right?

• 31:15Speaker 01

  It's been my experience that people pay a huge amount of attention to the headline numbers of Silicon Valley companies. And so Stripe is a company that's been valued in fundraising at $9.2 billion or what have you. There is an assumption baked in that Stripe continues to execute very strongly. And so it would be a very dangerous mode to slip into.

• 31:39Speaker 01

  Becoming rearward looking and looking at everything that has happened to date, because the much more relevant fact is what we release in 2018, what we release in 2019, what Stripe's global expansion looks like and things like that. You don't have a valuable company unless the company continues to execute. It's very dynamic.

• 31:58Guy Raz?

  It's a very careful way of saying, hey, I could lose this all at any moment.

• 32:01Speaker 01

  Yeah.

• 32:06Guy Raz?

  What, how much of the success of this company do you attribute to your skill and your, you know, your intelligence and how much to luck?

• 32:19Speaker 01

  I think the question is less about, you know, how much can be attributed to my skill and intelligence and instead to the skill and intelligence of the hundreds of people who've gotten Stripe to where it is. And I guess I would say that skill and intelligence and especially, most importantly, intense application and hard work, I think all those things are necessary. I think had they not been there, had there not been so many people who just came up with so many smart ways of doing things and, you know, in many cases toiled at such length, there's not a chance, not a sliver of a chance that we would be here. But I also think that the luck was required too.

• 32:59Speaker 01

  There are, again, groups of people who are smarter and harder working than us who just didn't have the same good fortune.

• 33:07Guy Raz?

  You are still, both of you guys are still so young. I mean, you know, you're at a point in your life where-

• 33:14Speaker 01

  Less so every day, but yes.

• 33:15Guy Raz?

  Less so every day, but at a point in your life where lots of people are just starting out, you know, at the same age. So when did you guys know that this was huge? I mean, you know, it was going from this idea that you have in Cambridge, Massachusetts, to raising 2 million, to being valued at 20, and then 100, and then billion, and then today-

• 33:39Guy Raz?

  More, almost $10 billion. When did you, did you ever have a moment where the two of you sat back and said, "Wow, look what we built"?

• 33:48Speaker 01

  There's never really been time for that. And there's nothing like a young company to every morning remind you that there's so much left to be done, so much that's not yet working the way it should be. I mean, it's really quite visceral. You wake up in the morning and there are 20 emails in your inbox that are sort of somehow all related to things that you're doing badly or wrongly. There's never a moment when it feels successful. And there's a quote that I kind of often think about from Greg Lamond, saying, of course, the cyclist. "It never gets easier, you just go faster." And I used to kind of cycle quite a bit.

• 34:29Speaker 01

  And there's a lot of sort of painful truth to that, where as you cycle more, as you practice more, as you get fitter, as you get faster, as your form gets better, sure, you start cycling faster, your times get better. But the experience of being on the bike never gets easier. The pain that you feel on the first bike ride, that's the same pain that you're going to feel on your 500th bike ride. You'll just be going much faster on the 500th bike ride. And it kind of feels like that in the startup, where every day now, the problems and challenges and visceral pain is just as acute as when we were starting out. The problem is just of a different form.

• 35:10Speaker 01

  It's this kind of relentless process of trying to shift what it is that exists and what we've collectively managed to create so far into what we all set out to create in the first place. And we still have quite a ways to go there.

• 35:35Guy Raz?

  That's Patrick and John Collison, founders of Stripe. In 2017, John Collison was described as the youngest self-made billionaire on earth. And I know you heard us talking about their valuation as being like $9 or $10 billion. Well, remember, we did that interview back in 2018. Today, just two years later, Stripe is valued at $35 billion.

• 36:06Guy Raz?

  And please do stick around because in just a moment, we're going to hear from you about the things you're building.

• 36:14Speaker 03

  Hi, I'm Manoush Zamirodi, and I am the new host of NPR's TED Radio Hour. I am so excited because we are working on a bunch of new, amazing episodes. We're exploring big ideas about reinvention, making amends, and the psychological effects of climate change. Our first show drops March 13. Please join me.

• 36:35Guy Raz?

  Hey, thanks so much for sticking around because it's time now for how you built that. And today, we're updating a story that we ran about a year ago with Kirby Erdely from White Salmon, Washington. And Kirby and his family spend a lot of time at the beach, which means they have all observed one of the great wonders of marine life, the free-flying sun umbrella.

• 36:57Speaker 04

  When the wind comes up, those things blow down the beach like crazy. And you hear about it all the time. You hear about the beach umbrellas that fly through the air and land on somebody's car.

• 37:08Guy Raz?

  And those things blow around because they're not always well anchored, right? In a big gust of wind, a metal stake can just fly off the ground. And Kirby just wasn't satisfied with the stuff that was on the market.

• 37:21Speaker 04

  Lots of inexpensive tent stakes that you pound in with a hammer or a rock. But there was no really good, tool-less solution that would hold in all-weather conditions and that would work in sand. It would work in clay.

• 37:34Guy Raz?

  And because Kirby is a professional woodworker, he started to tinker around with ideas for a better ground anchor. And he was inspired by one thing in particular.

• 37:44Speaker 04

  You've probably seen it, and it looks like a gigantic wine cork opener.

• 37:49Guy Raz?

  And in case you haven't seen this giant wine cork opener, think pets. Because people use this corkscrew thing as kind of an anchor to help keep their dogs tethered outside. And Kirby thought a big screw like that could be great for anchoring all kinds of things.

• 38:05Speaker 04

  Because the screw threads have quite a bit more surface area, it increases the surface area between the soil and the ground anchor.

• 38:12Guy Raz?

  And more surface area means a firmer hold in the ground. Anyway, Kirby started experimenting with prototypes and looking for a company to make the screw. And while he's doing all this, he has this huge, earth-shattering epiphany.

• 38:26Speaker 04

  The internet. Is amazing.

• 38:28Guy Raz?

  Kirby was able to locate the perfect recycled plastic to make the screws and the perfect injection molding company that could make them.

• 38:37Speaker 04

  You could screw this into the ground, anchor your stuff, and the hold is pretty darn incredible.

• 38:43Guy Raz?

  And then Kirby did a Kickstarter campaign about four years ago. He raised $45,000 and boom, his product was launched.

• 38:50Speaker 04

  The crazy thing that kept happening over and over again is we would get a phone call or an email that says, "I'm going camping on Friday. I have to have these for the weekend." And so I don't know how we went from this product that never existed to something that people have to have for the weekend and they're upset if they're not going to be able to get it.

• 39:10Guy Raz?

  OK, great story so far, right? But then, one morning, about two years ago, Kirby gets this email.

• 39:17Speaker 04

  You know, an angry email. And it said, "I ordered your screws from this promotion you did on Facebook, and I haven't gotten anything yet." And I thought, I don't even know what this is. We're not running a promotion on Facebook.

• 39:30Guy Raz?

  And you probably know where this is headed. Scammers were starting to get into Kirby's business. They were copying his photos and design and advertising cheap knockoffs and way undercutting his prices.

• 39:42Speaker 04

  So as soon as we would report one of these for trademark violations is how we would take them down. One would disappear and then two more would pop up.

• 39:51Guy Raz?

  So Kirby actually did something kind of unusual. He sent his own product for free to anyone who had made the mistake of buying a cheap knockoff. Meanwhile, some of his loyal customers kept reporting the knockoff sites and leaving comments warning new customers about the scam.

• 40:08Speaker 04

  We created this kind of international police force, probably of 50 or 60 people, that would email us every day and say, "Here's another one."

• 40:17Guy Raz?

  And that helped for a while, but when we last checked in with Kirby, he told us that the counterfeit screws kept showing up online. So in August of last year, he hired a law firm, which is now going after 85 knockoff companies with more lawsuits on the way. As for sales, Kirby's doing pretty well. He hopes to do about $1 million in revenue. This year. His product is called Orange Screw. To hear more about it or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. And while you're there,

• 40:57Guy Raz?

  please do give us a review. You can also write to us at [email protected]. And if you want to follow us on Twitter, it's at How I Built This or at Guy Raz. Our show was produced this week by Thomas Lu with music composed by Rameen Arablouei. Thanks also to Julia Carney, Candace Lim, Neva Grant, and Jeff Rogers. Our intern is Raini Toll. I'm Guy Raz, and you've been listening to How I Built This.

• 41:33Guy Raz?

  This is NPR.

• 41:40Speaker 05

  Not everybody wants to run around the White House or Congress all day. That's where the NPR Politics Podcast comes in. At 5 PM, NPR's best political reporters get together and break down the biggest political stories. No noise, just friends making sense of Washington. Listen to the NPR Politics Podcast every weekday.