Patrick Collison: "What If You Succeed?"

In 2009, Patrick and John Collison went to Startup School in Berkeley, got sushi in Potrero Hill afterward, and decided on the walk home to start Stripe. The reasoning, as Patrick remembers it, was that “we might as well because it probably won't be that hard.” It took two years to launch. Seventeen years later, at Startup School 2026, he talks with YC's Harj Taggar about dropping out of MIT twice, why founders should ask what happens if they succeed, and what Stripe's own data says about the best time to start a company.

• 0:07Speaker 00

  Okay, Patrick, thanks so much for being here. Welcome to Startup School.

• 0:11Speaker 01

  Great to be here. Harge and I first met 20 years ago and we started a company together. Sorry, am I giving away the introduction?

• 0:22Speaker 00

  Yeah, I thought this was my interview, but keep going, you're doing a good job.

• 0:26Speaker 01

  We started a company together many, many years ago and I learned a huge amount from Harge. So it's really fun to do this.

• 0:33Speaker 00

  All right. Well, actually, I mean, speaking of that, so when I think when I first met you 20 something ish years ago, at the time, your most impressive achievement, I would argue, was Cromer, your dialect of Lisp.

• 0:46Speaker 01

  Any Lisp programmers here?

• 0:49Speaker 01

  Oh, wow. Okay, that was, I think I heard one whoop, which was more than I expected. But yeah, I really liked Lisp when I was in high school.

• 0:56Speaker 00

  Yeah, so what I was gonna ask is, a prolific 16-year-old today could presumably just like prompt call to write their Lisp dialect. Would you advise them to not do that and still do it? Is there any value in such things?

• 1:11Speaker 01

  I don't know. I wonder a lot.

• 1:15Speaker 01

  Yeah, like obviously on the one hand, it used to be really fun to write all this assembly and machine code and to optimize your instructions and layout and memory and everything. And now we don't have to do that anymore. Our compiler's doing it for us. We don't mourn it too much. And so maybe in the same way, we shouldn't mourn source code. We should just transcend the plane of instructions too claudius at all. But emotionally, I miss it.

• 1:41Speaker 00

  How about, I think just like as I've been hanging out here with these students, like maybe the question behind it is many of them are just wondering, what should they be learning at college? Like what is sort of in this sort of AI world? Like how much, how much they be trying to learn and derive from first principles? And how much should they just outsource to the AI?

• 2:01Speaker 01

  Right. I mean, my model of this is, is cash. You know, the C H, not an S H, where Jeff Dean has this famous set of numbers that every programmer should know, bandwidths and latencies and just kind of relevant constants. You show the reason about as you, as you build systems. And obviously, you know, thinking of building any system or distributed system or whatever, like all lookups and all, you know, relevant bandwidths between different components are very different, right? And you're retrieving something from L1 cache is very different to retrieving from RAM is very different from retrieving across the network or whatever. And I think it's like that with knowledge where fine, yes, you can ask the agent or something

• 2:44Speaker 01

  to compute something for you or to look something up for you, whatever. That's a hell of a lot slower than knowing it in cognitive L1 cache. And you can have way more round trips in your brain than you can, you know, muttering through, you know, Super Whisperer or typing it out or whatever. And so I think even granting the full capabilities of the, of the models, I still, I still think there's a pretty, like, I think for a long time to come, neuronal lookups will be, will be much faster. And, and then look, if you look in revealed preference at what companies themselves are doing, whether they're companies like Stripe or The Labs or what have you, there still seems to be an enormous premium on cognitive ability.

• 3:30Speaker 01

  And so I wouldn't, I think renouncing that before there is evidence that we've saturated those benefits would be premature.

• 3:41Speaker 00

  I mean, are there, are there specific things that maybe you personally, either personally or as CEO of Stripe, you still, you purposely choose to sort of do yourself and like retrieve from your own cache? Even though like the agents would probably do a reasonably good job?

• 3:59Speaker 01

  I still, I still write myself. Like I, I, I don't, I both philosophically but also specifically, substantively dislike the writing of the models. I mean, it's very interesting, right? Because these can prove the Jacobian conjecture, you know, whatever. And so clearly they're capable of these monumental feats. But somehow, I still haven't read the LLM essay that I found super compelling. Now, it is just very hard to like RL them in that domain because the, you know, the utility function or something is kind of hard to define.

• 4:39Speaker 01

  But yeah, I think writing is a pretty, interpersonal communication and writing, I think, are so very fundamental and sort of being able to reason sensibly in the multi-dimensional space of reality. And in some kind of indescribable way, I feel like the model is still kind of deficient at that. And so I've never, I've yet to send, you know, every tool is now trying to prompt me with, you know, pre-written suggestions, whether it's Gmail or apparently WhatsApp just rolled this out. And I think I've still sent zero of those in my life.

• 5:13Speaker 00

  How about, so if you talk about the Stripe story, the early days in particular a little bit, you were at MIT, then you left to start Stripe. How did you think about that decision? And obviously, we're in a stadium full of college students. How should they think about it? How do you, how do they know if it's the right decision for them to leave college early and go start a company versus stay?

• 5:37Speaker 01

  Yeah, well, I think I have the slightly unusual distinction of having dropped out of college twice to start a company. So, so maybe one thing to know is that it's not totally trapdoor. You can, you can drop out and in fact return. So I dropped out after my freshman semester to start this company with Harge. That was super fun. And then after a couple of years of that, went back, did another year at MIT and then dropped out again to start Stripe. And, you know, I, when I went to college, probably like a lot of people here, I, I had this vision of my life involving becoming an academic.

• 6:20Speaker 01

  And I really liked physics and I thought, you know, I'll do all this physics stuff. It's so cool. I'd read all the Feynman books, all of this.

• 6:27Speaker 01

  And I guess I, well, growing up in Ireland, I hadn't realized, I hadn't thought much about the possibility of startups. Hello to the other Irish folks here. And, and I mean, way back then in the sort of, you know, pre-Cambrian era, startups were definitely much less well-known even on campus and so forth. You know, when I was dropping out, people thought it was super weird. I think, you know, overall, if you enjoy college, I, I would actually, you know, I think there's no harm in finishing. I felt this real sense of urgency, which I think in hindsight was a bit unnecessary.

• 7:12Speaker 01

  If you, but if you don't enjoy college, just, you know, whatever, it's not your thing. It's not what captivates you. You don't really want to learn all the physics things or whatever. There, I think a lot of parents think that dropping out is very risky and impugn your reputation for the rest of your life and so forth. And as far as I can tell, nobody has ever cared. So I, I both think you don't need to, but also the cost of doing so are de minimis.

• 7:40Speaker 00

  But what was the urgency you were feeling?

• 7:42Speaker 01

  The urgency?

• 7:43Speaker 00

  Yeah, to go out and do, do something.

• 7:46Speaker 01

  I don't know. Life is short, right? And I, I, I mean, it was a general kind of haste. I think, you know, a lot of us, I'm sure many people here, you kind of get into this mode of speedrunning high school. And then, you know, once you get to college, it's like, obviously I want to speedrun that as well and do all the things. So it's a bit of that, a bit of, Mark Andreessen also talks about a version of this. I thought that a bunch of the opportunities in startups in Silicon Valley and so forth were ephemeral and fleeting. And if we didn't build it then, that, you know, it wouldn't be possible to do it in three or four years. And maybe all the opportunities will be gone. You know, in hindsight, I think that that was a poor intuition. It's been pretty robustly and reliably the case over many decades that Silicon Valley has a surfeit of opportunities.

• 8:32Speaker 01

  Yeah, I think it was mainly those two things.

• 8:33Speaker 00

  Do you think it's, I mean, this is a very common thing that we hear when we talk to students now is that they are, part of the reason they want to drop out en masse, it seems at this point, is they're worried that actually now is the moment that there's sort of, I think the meme going around is that if you don't sort of drop out and start a company and make lots of money, you're going to be trapped in the permanent underclass. So is that, should everyone here be worried about being stuck in the permanent underclass? I guess is the question.

• 8:59Speaker 01

  I think humanity has always had a, an affinity for these millenarian sort of models of how everything is, you know, everything will soon come to an end and be this, this sort of permanent transformation of society and so forth. Actually, there's a great book, The Winged Gospel. People thought that after the, the invention of aviation, that it was just, like civilization was just entering and humanity as a species were entering a new era and nothing is going to be the same. And yeah, obviously aviation was, was a pretty big deal. But I don't think it was sort of quite the sociological rewriting that some of the, you know, excitable proponents at the time imagined.

• 9:43Speaker 01

  So I, you know, it's, it's hard to predict anything, especially the future. But I would, I would take the under on this being the last couple of years to create a company.

• 9:54Speaker 00

  Fair enough. So going back to the Stripe story, Stripe ostensibly seems like a good idea. Like even on day one, it's, the internet's a big deal, money's a big deal. Like combine those two things, presumably, is that how it went? When you went to tell people you wanted to start Stripe, but everyone just say, hey, this is a great, this is obviously a good idea?

• 10:12Speaker 01

  It was kind of funny. It was. It was something we learned from YC was the importance of focusing on very concrete, easy to explain customer problems. Like, it's very easy to hallucinate or to imagine some customer problem that's not actually something viscerally felt by a person who would pay money. And so, over the course of, in part, working on Automattic together, we have encountered this issue of it being really annoying to deal with the movement of money or payments, whatever, in the internet. And on the one hand, it seemed like an obviously good idea in the sense that nobody liked the existing ways of doing so.

• 10:53Speaker 01

  And they were broadly extremely unpopular and kind of antiquated and legacy. And you had to fill out this paperwork and go to the bank in person. And the paperwork was in Latin and it was all bad. But then the flip side is, it just seemed kind of ridiculous. The two kids would start a financial services business. And fintech didn't exist as a sector at the time. Like, the word literally didn't exist. And so, it's just kind of, you know, we felt like proverbial squirrels in a trench coat, trying to masquerade as a sort of a real business or as, you know, serious adults, but obviously knowing nothing coming in about the space. And certainly, a lot of people we met and pitched, or banks, or partners,

• 11:38Speaker 01

  or whatever that we talked to, I mean, they didn't literally laugh us out of the room, but you kind of see them looking for the button to call security under the desk and have them haul us out, because it just seemed so improbable. So, anyway, I'd say it both seemed like an obviously good idea in that people really wanted this, but also a bad idea that nobody took us seriously. But I think the fact that it was, ultimately, the fact that it was grounded in such a concrete, actual, real user problem saved us.

• 12:05Speaker 00

  You, actually, speaking of that, how did you, in order to actually build the product, you had to get a banking partner and do things that a typical software company did not have to do. As two young founders, like, how did you manage to convince a bank to trust you at the end?

• 12:20Speaker 01

  Yeah, well, actually, this is not an answer to your question. But just a thing that strikes me as I sit here is, the reason we decided to start Stripe is because, so John and I, we were in college together. He was in his freshman year. And we went to startup school in 2009, which was held in Berkeley. And we thought it was pretty cool. And so, we went and we got sushi afterwards in Potrero. And we were walking back from sushi and we're like, you know, we'd kind of been kicking around this idea for a payments thing or like, we'd been thinking of the space. And it was walking back that evening after startup school that we decided to start Stripe.

• 13:05Speaker 01

  I remember literally where we were in the road. And I remember what we said to each other, which was, yeah, you know, we might as well, because it probably won't be that hard.

• 13:12Speaker 00

  Okay, so, moral of the story is go get sushi in Potrero tonight, you might start the next Stripe.

• 13:19Speaker 01

  And yes, beware of sort of these ultimate yak shaves. We thought we could do it on the side while in college. It would take a couple of months. And that was almost 17 years ago.

• 13:32Speaker 00

  At the time, I remember, you were also unusual in that you took sort of longer to do a big public launch. And especially within the YC world, the motto is very much sort of, launch early, launch quickly, be out there and iterate. Could you maybe talk us through a little bit about that? Why did you do it that way?

• 13:47Speaker 01

  Yeah, so, we started working on Stripe kind of seriously. And the, well, we started working the week after that startup school, but we were kind of in college, wasn't full time. We started working full time the summer of 2010. We launched publicly September 2011, so almost two years after like the first lines of code, after the repo was started. And yeah, waiting two years to launch seems, I mean, if we're going to YC meetings every week, I think we'd have bludgeoned on the head. I think, and look, in many domains, that probably is the wrong thing to do. In our domain, to kind of your last question, because we had to do so much stuff around security and partners and money movement and infrastructure

• 14:29Speaker 01

  and reliability and all the things, it just, we didn't feel like we could scale a really good self-serve experience without getting a lot of the kind of the preconditions and the infrastructure in place. The, I think the thing that saved us and meant that it wasn't a total walk in the wilderness is we had production users almost from the very beginning. So, first lines of code in the fall of '09. We got our first live production user in January of 2010, so like, two months into working or whatever. And it did very little, like, it was very larval and incomplete.

• 15:12Speaker 01

  And our first production customer was Ross Boucher at a company called 280 North. And all it could do was charge a card. And so, you know, Ross would charge the card. And then he would ask sort of a reasonable question, like, you know, how do I, how can I look at all my charges? And like, reasonable request. And so, you know, let's put up a little dashboard here. And then he'd be like, well, I want to refund a payment. And you're like, all right, we'll build refund support. And then, you know, after a couple of weeks, he was like, you know, at some point, do I get my money? And we're like, hmm, also a reasonable request. So, let's build that functionality. So, it was very kind of just-in-time development. Anyway, so, we'd a production customer from very early. And then, we did increase, it was in private beta. We increased the number of customers every single month, you know, all the way to that public launch.

• 15:57Speaker 01

  And so, every, you know, every week, we had actual customer feedback requests, new users coming in, we're learning things from reality as opposed to our own kind of hypothesized or extrapolated conception of it. And I think if you have, you know, a significant stream like that of grounding, I think it's probably okay to not be like, launch, launch. I mean, you're an expert YC partner, do you agree?

• 16:25Speaker 00

  That's a good question. Yeah, I mean, it is, this is the issue with advice in general is it's sort of so generalized and like, especially in startups, the exception proves the rule, right? So, I think those are, yeah, certainly, certainly if, you know, the cost of failure is high, then it almost certainly you have to sort of take longer to like build. There may be a slight tangent, but something I'm curious about is, related to this, though, is, you know, we were talking like, with these coding agents, the ability to just like build and produce software cheaply and quickly. I wonder, should people be taking more of this path? Like, should people be more ambitious in general with what the version one of the thing that they launch is?

• 17:09Speaker 00

  Or, you know, or is it still fundamentally good product design to start like narrow and focused and then expand out once you know what people want?

• 17:16Speaker 01

  Yeah. It's a good question. I think probably in the era of AI, I mean, I don't know. And, you know, to some extent, YC will be, I think, the expert here. But, you know, the whole kind of traditional lean startup doctrine of exactly what you say, like, start out by buying the Google Ads or something and identify this crevice or whatever and iteratively expand out from that. I think you can certainly imagine that that becomes much more competitive and much more aggressively tilled.

• 17:59Speaker 01

  And it's kind of hard to find those little niches. The internet's a much bigger place than it was 20 years ago when some of those ideas emerged. Whereas, taking these really divergent starting points where nobody else is trying to occupy that territory is maybe a more, like, basically, maybe you have to more aggressively decorrelate in the era of AI. And I think it is interesting to think about, you know, many of the companies that are most successful over the last 10 years, so many of them are very anti-lean startup, right? Whether it's, you know, the labs themselves, or Anduril, or, you can go down the list. A lot of them have this characteristic.

• 18:41Speaker 01

  So, I, yeah, I think, maybe a better way of saying it is, 20 years ago, the whole lean startup thing was almost the only thing to do because of capital available and you didn't have AI that made, I don't know, spinning up an organization with many different potentialities and capabilities so much easier. Whereas now, I think you can start these much more aggressive and ambitious things upfront.

• 19:03Speaker 00

  Within sort of YC and probably startup row at this point, you're famous for the, at least the Paul Graham term, schlep blindness. Stripe, at least on the surface, was not, like, you know, involved a lot of schleps, like, things I presume you weren't like the intellectually most interesting things to work on. And I always found that especially interesting for you because you just mentioned you, you have academic interest in physics. And I just think you're like, you know, a deep intellectual and have very, very many things that you're interested in. As Stripe has sort of grown into this, in this big company, in what ways, sort of, you know, in what ways are there sort of like intellectual rewards that you've given up? And which ones have you gained?

• 19:43Speaker 01

  Yeah, I mean, look, in any company, there's a bunch of stuff that's not that rewarding or in and of itself all that interesting. Like, setting up payroll, no one sort of starts a company so that you can set up payroll. And certainly, building business and financial services, there's all sorts of, you know, more arcane and extensive versions of that. I think that, I actually feel extremely lucky with Stripe in this respect. And I think this is something, I don't know if you need to think about it that much upfront, but I think once you think about it, maybe before you raise a significant amount of money, you know, you always worry naturally about possibility of failure. And, you know, what'll happen if you fail?

• 20:27Speaker 01

  And how to mitigate and avoid failure and all those things. I think you need to ask the sort of converse of that, what if you succeed? And, you know, you raise money and you have customers and you have employees and a whole thing, like, are you going to be, are you going to enjoy that? Are you going to want to work on that for 10 years, for 17 years, for 30 years? I mean, Larry Ellison at Oracle is going for, I mean, I guess it'll be a half century soon, right? So, you know, what if you succeed? And in the case of Stripe, I really love it because, you know, we're working with the world's most interesting and innovative companies.

• 21:07Speaker 01

  Like, we're, 25% of all Delaware corporations are started with Stripe via Atlas. And then, we get to partner with them and work with them and hear from them and get their feedback and get their requests and everything, you know, through the entirety of the journey, up to being the Shopify's and the OpenAI's and the, you know, all the standout successes. Oh, and actually, speaking of Atlas, we're giving free Atlas incorporation to everybody at startup school, so.

• 21:42Speaker 01

  If you are struck by the urge to found something over dinner this evening, as we were, just email [email protected] and we will get you your link for free Atlas. But yeah, I think PG latched on to something where, yeah, there are all these kind of menial tasks, but in the totality of Stripe, I find it so interesting. Like, every business is a kind of applied theory on how some aspect of the world works, or how some market works, or how if the new company with a new model, it's kind of a contrarian thesis on some counterfactual, it's like, I've never met a Stripe customer and thought, "That's boring."

• 22:26Speaker 01

  So it's actually, the business as a whole has been the opposite of the Schlepp blindness instinct.

• 22:32Speaker 00

  And you have a particularly unique perspective on this, because you work with the big model providers, the big lab companies, and you work with all of the fast-growing AI startups on the ground. Something that came up a lot here yesterday, honestly, it comes up within the batches too, is people are just worried about, "Is my idea going to get trampled by the big lab providers?" And I'm, given your perspective, I'm just curious, how should people think about that?

• 22:58Speaker 01

  Yeah. Again, predictions are hard, and certainly the labs are very competent, capable organizations. And maybe to separate a little bit, will rapidly improving AI capabilities do this? Or will the labs specifically themselves do this? I think in general, the track record of, like, no organization, if we go back 20 years, there was some of the sense with Google, like, when we were doing Octomatic, the question was always for our company and every other company, "What if Google does this?" And Google seemed omnipotent and had this immense number of incredibly talented people

• 23:41Speaker 01

  and essentially infinite access to capital and server, and just all the things. And just, human organizations are complicated, and it's very hard to have, to manage to aggressively prosecute 100 different priorities and to deal with all the issues and interference that arises among them and so forth. And so, you know, Google has done incredibly well in a bunch of specific places, but it's not like Google has done all the things, even if in some kind of basic material sense, Google maybe had that ability. So I'd say that the track record of that is checkered, and in general, I think that fear has been overstated. No, I think there is a more specific thing of just like, models themselves, forget the

• 24:24Speaker 01

  labs, even if the labs aren't particularly ambitious about expanding their scope, which is like, literally, LLMs will obviate a bunch of, or agentic capabilities will obviate a bunch of specific verticals or tasks or something. Hard to say, obviously contingent on one's forecast, it's the model capabilities themselves, but in certain cases, I'm sure that will happen, and in certain domains, it has already happened. Looking at the Stripe data, one thing I will say that I think has germane to people here, there are many more businesses getting started now than there were a year ago, like, as little as a year ago, way, way more than were getting started five years ago.

• 25:06Speaker 01

  And actually, the relative change between last year and this year is pretty much the largest relative change we've seen in any given year. So, for example, from 2019 to 2020, we saw a big jump, understandable during COVID, so February to April of 2020 or whatever. I think the growth rate inflected to maybe 50% or thereabouts year over year in terms of new businesses getting started. As I speak, the number of new businesses starting on Stripe is up around, it's a bit under, but around 2X year over year, which again, is the largest relative jump we've seen.

• 25:46Speaker 01

  And you might think, "Okay, fine, there's way more vibe-coded, lightweight, slop, whatever, like, fine, there's more things, but are they actually succeeding?" But actually, the median business is doing better this year than a year ago. And so, and then if we stratify it and look at the probability that any given business will reach some revenue threshold, a million dollars, $5 million, $10 million, whatever, those all seem to be getting better. Businesses are, the time to revenue for new companies incorporated with Atlas is declining.

• 26:25Speaker 01

  And so, by all the kind of objective metrics we can look at, it seems to be a better time than ever to start a business. Now again, things can change, I don't know what the world's going to look like in five years, but speaking today on July 26th, or whatever it is, of 26, I think the Stripe data would suggest there's never been a better time.

• 26:47Speaker 00

  I mean, we see the exact same thing in the YC batches, companies are just able to grow faster than ever, certainly within the batch.

• 26:54Speaker 01

  Back in, again, the old days, when Arj and I were first starting out, like, getting to a million dollars of revenue, like, run rate revenue was a big deal. Like, people would know about that company, they'd be like, "I heard that X company got to a million dollars of revenue, and now, I mean..."

• 27:11Speaker 00

  Yeah, you should be, by your first month, it feels like. That's an exaggeration for everyone here. But I mean, certainly within the YC part of the lifecycle, like, day zero to 90, it's really been driven by, I would say, enterprises willing to buy from startups, which is the new thing, so you can sign these new contracts within the batch. You have the data as the companies keep growing. I'm curious, are there other factors that are driving these sort of inflected growth curves from like, 1 to 10 and 10 to 100?

• 27:42Speaker 01

  I think it's really the dynamic you just mentioned, which is, businesses, businesses everywhere are more spring-loaded to adapt and to try new things, and they have a real terror of being left behind with archaic and antiquated ways of operating. And so, in normal times, you're a new startup, you've some mechanism for doing whatever, and you pitch the CIO or the CTO or the whoever at some company, and they kind of don't want to talk to you because your thing is not validated, maybe you won't be around in two years, all the kind of obvious objections.

• 28:26Speaker 01

  But now, people know that, well, the risk of the status quo is actually extremely high. And so, even if there's risk in doing all the new things, well, this path also looks pretty dangerous. And so, I really think there's never been a better time for startups to sell and to have their products get adopted at a pretty meaningful scale right out of the gate. A lot of YC companies in recent times have demonstrated this, but I think it's a really pervasive dynamic. And there's a bit of it, I think, also, I mean, Stripe is not a consumer company, obviously, but I think there's some version of this on the consumer side, where I think consumers, I mean, are also pretty, I mean, consumers have complicated views on AI, and maybe they don't want the data centers, but people are very intrigued by the product, and I think

• 29:09Speaker 01

  there is a kind of, they're kind of beguiled by them, and there's a predisposition and an openness to experimenting with the new.

• 29:18Speaker 00

  Maybe just more broadly, something I'm curious about is, again, with the data you have at Stripe, has anything you've seen in that data changed a belief you have about AI broadly, say, over the last 12 months?

• 29:31Speaker 01

  I mean, there's a fear that AI is going to be this hegemonic, centralizing, totalizing force, where a small number of companies gobble up a very large share of the economy. And many companies at the forefront of AI have done incredibly well, and I think will continue to do incredibly well, for sure. But basically, we can see at Stripe the hunger and the intensity with which other companies are either getting started, taking advantage of these new capabilities, or existing companies are retooling. I don't worry about the centralization in the same way.

• 30:16Speaker 01

  I think there are going to be many thousands of winners. And again, we try not to offer any definitive prognostications, because the future is not predetermined, but based on the trend lines we can see, I think we are heading towards a more decentralized world and one with more broad-based preferivity.

• 30:41Speaker 00

  Cool. All right, well, I think that is all we have time for today, so thanks so much, Patrick.

• 30:47Speaker 01

  Thank you for having me, and it would be remiss of me not to say that Stripe would not exist without YC.

• 30:55Speaker 00

  Oh, cool. All right, thank you so much.