Stripe- 7 lines of code that disrupted the Digital Payment Industry
Kevin's Newsletter #20
Well, meet Patrick Collinson. Founder of Stripe. You might have already guessed by now, he has a great sense of humour. The Tweet was accompanied by an engagement ring — which explained the kind of metrics Patrick was talking about.
History- John and Patrick Collinson first started working on Stripe in early 2010. The inspiration came when Patrick, who was working on a few side projects, kept complaining about how difficult it was to accept payments on the web. The two quickly developed a simple solution and within 2-weeks they had processed their first transaction. Over the next 6-months, they showed it to friends, watched people interact with it, and iterated as fast as they could.
But, more importantly, he has changed the whole payment industry with 7 disrupting lines of code. Stripe, (on 24 March 2021) raised a new $600 million round of funding that values the company at $95 billion — nearly triple its last reported valuation of $36 billion from April 2020, according to PitchBook data. But what makes Stripe so different and important in this space?
In a nutshell-
Instead of chasing 1000-hour programming contracts to build clunky, archaic payments solutions for each individual client, the Collinson brothers built 7 lines of code that developers could simply add to their websites.
The result is — a company that has more cash than it knows what to do with.
How does it work?
Source: Stripe Document
Their USP’s
1. Developers first-
When Stripe was launched in 2010, it was essentially a community of developers. Stripe didn’t sell to companies,” said Dmytro Okunyev, who is the founder of Chanty. “It sold to developers. That is, Stripe offered an alternative to PayPal and Authorize that was so much easier to implement that developers around the world were naturally inclined to use it.”
Back in 2010, setting up a payments system for your business was an extremely tedious process. Most integrations at the time took weeks and months to set up. It was an exhaustive process, involving several departments — from finance, legal to accounting.
The companies used to set unachievable goals and deadlines, and pass the responsibility onto developers who had to outdo themselves in order to meet expectations. Stripe changed all that by giving developers a quick and reliable way to set up payments, effectively bypassing the “decision-makers,” most of whom would have never believed that 7 lines of code can replace custom integrations that took up to 4-6 months to build.
A partial screenshot of Stripe.com, circa 2011. Courtesy of the Internet Archive Wayback Machine.
2. Payments made Simpler-
Stripe’s software made it simple for any website or app to accept payments, without having to obtain their own licences or strike deals with these big banks and card operators that the company has already integrated.
The Collinson brothers spent years creating relationships with these big banks, card operators etc. As a result, users only have to upload a couple of documents to set up their fully operational Stripe account.
3. Fewer hassles-
Paypal created a cost-effective way to safely accept payments 10 years ago, but the web has changed dramatically and accepting payments has not.
One of the biggest advantages of Stripe is that you don’t really have to know anything about finances to run it—which could save you from having to hire someone to do that for you in addition to your payment processor. All of the applications associated with the software, including revenue management, fraud protection, and a billing API that integrates with already developed websites, are found in the same place, making the system easy to use. In addition to this ease of use, Stripe doesn’t require much setup (if any) on your end, and you’ll be able to start making transactions right away.
I am personally a big fan of Patrick and the way he has taken stripe to this level.
He’s an inspiration to all the young founders out there. The Collison brother’s humble, problem-solving, product-first approach is what turned them into a massive success.
Key Takeaways-
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Good job, excellent.