Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Stripe Is Now a $20B Company

bloomberg.com

Post reply on HN
Print view View original

21–30 of 180 posts

Re: Stripe Is Now a $20B Company

#21

Post by ahstilde »

dawhizkid wrote: post #11

I have heard for years people criticizing the payments industry as a low margin commodity biz. What has changed? Or they just got it wrong?

The first principles changed. From Elad Gil in First Round Review:

“In the tech world, particularly after PayPal was sold to eBay, the dogma for many years was ‘Don't ever do payments, it's too hard and fraud will blow up and destroy you.’ And during the first internet wave, that was true. It was a challenge to get the type of data and information you needed to really deal with fraud at scale,” he says. “But fast forward to today and take a look at companies such as Stripe and Affirm. It seems that the fraud problems weren’t as bad as we thought and we’ve since developed systems, processes and data science tools that just didn’t exist back then. So if you’d applied first principles thinking five or 10 years ago, asking if those assumptions were still true and digging into whether it was still too hard, then maybe you would have come to a very different conclusion about starting a payments company and gotten ahead of the curve.”

http://firstround.com/review/future-founders-heres-how-to-sp...

Re: Stripe Is Now a $20B Company

#22

Post by haaen »

Some valuation context, although I'm fully aware that Stripe is a private company and that many of its investors could have investing or striking privileges.

Stripe: 20 billion. Adyen (stock symbol: ADYEN) 19 billion. Shopify (stock symbol: SHOP) 17 billion. Square (stock symbol: SQ) 39 billion. Paypal (stock symbol: PYPL) 107 billion.

Paypal cofounders Elon Musk and Thiel are early Stripe investors.

Former Paypal EVP Keith Rabois is a Stripe investor and was COO of Square.

Re: Stripe Is Now a $20B Company

#23

Post by abalone »

ahstilde wrote: post #21
dawhizkid wrote: post #11

I have heard for years people criticizing the payments industry as a low margin commodity biz. What has changed? Or they just got it wrong?

The first principles changed. From Elad Gil in First Round Review: “In the tech world, particularly after PayPal was sold to eBay, the dogma for many years was ‘Don't ever do payments, it's too hard and fraud will blow up and destroy you.’ And during the first internet wave, that was true. It was a challenge to get the type of data and information you needed to really deal with fraud at scale,” he says. “But fast for…

That still doesn't explain margins though. Competing processors keep pace with fraud-fighting tech as well. For large customers, processing is still a commodity service and they have a lot of negotiating power to call up Stripe and demand they lower their rates.

Until we see Stripe's financials I would not assume anything about healthy margins. Square also had a lot of hype in the early days but turns out their processing margins were really low and most of their current valuation is from expanding into other products like business loans.

Stripe's valuation is similarly based on a hypey "grand vision" to offer other services that actually make money, not by magically making businesses pay more for commodity services.

Re: Stripe Is Now a $20B Company

#24

Post by pythonaut_16 »

40acres wrote: post #20

In 2017 e-commerce accounted for 9% of all retail sales. If I recall correctly, Amazon is the biggest e-commerce vendor and they are using Stripe. There are no sure bets in business, but If I had to bet on a private software company's survival 20-25 years down the road I'd be hard pressed to bet against Stripe. I also think their leadership is very impressive w/ the Collision bros at the helm.

I hadn't heard about Amazon using Stripe before.

Here's an article from 2017 talking about it: https://www.geekwire.com/2017/amazon-quietly-starts-using-st...

Re: Stripe Is Now a $20B Company

#25

Post by [deleted] »

haaen wrote: post #22

Some valuation context, although I'm fully aware that Stripe is a private company and that many of its investors could have investing or striking privileges. Stripe: 20 billion. Adyen (stock symbol: ADYEN) 19 billion. Shopify (stock symbol: SHOP) 17 billion. Square (stock symbol: SQ) 39 billion. Paypal (stock symbol: PYPL) 107 billion. Paypal cofounders Elon Musk and Thiel are early Stripe investors. Former Paypal EV…

[deleted]

Re: Stripe Is Now a $20B Company

#26

Post by toptal »

haaen wrote: post #22

Some valuation context, although I'm fully aware that Stripe is a private company and that many of its investors could have investing or striking privileges. Stripe: 20 billion. Adyen (stock symbol: ADYEN) 19 billion. Shopify (stock symbol: SHOP) 17 billion. Square (stock symbol: SQ) 39 billion. Paypal (stock symbol: PYPL) 107 billion. Paypal cofounders Elon Musk and Thiel are early Stripe investors. Former Paypal EV…

Adyen is actually 23b as the 19b you mentioned is in Euros. It’s also noteworthy that Stripe has about 1/2 the revenue and the same growth as Adyen, so it will be interesting to see how this plays out in the public markets given that they have nearly identical business models.

Re: Stripe Is Now a $20B Company

#27

Post by tlb »

ahstilde wrote: post #21
dawhizkid wrote: post #11

I have heard for years people criticizing the payments industry as a low margin commodity biz. What has changed? Or they just got it wrong?

The first principles changed. From Elad Gil in First Round Review: “In the tech world, particularly after PayPal was sold to eBay, the dogma for many years was ‘Don't ever do payments, it's too hard and fraud will blow up and destroy you.’ And during the first internet wave, that was true. It was a challenge to get the type of data and information you needed to really deal with fraud at scale,” he says. “But fast for…

Also, the fraudsters found the online payments business fairly early on, before there were a lot of real customers. In the late 90s, many merchants had as many fraud attempts as actual transactions, and a few fraudsters working through a box of stolen credit cards could take a small merchant to the cleaners. Now that online payments are so large, and there is a finite number of sophisticated fraudsters, fraud as a percentage is lower.

Re: Stripe Is Now a $20B Company

#28

Post by lifeisstillgood »

haaen wrote: post #17

Stripe is the second most valuable YC company. Total valuation of all companies that YC funded (more than 1,900) now exceeds 100 billon dollars. Airbnb has a private valuation of 31 billion. Stripe has a private valuation of 20 billion. Dropbox has a public valuation (DBX) of 11 billion. So the two most valuable companies account for about half the total value of all the YC companies. This is what a power law looks l…

To the founders and employees of all the other less "powerful" companies - well done too ... making the world better, however you are doing it, is powerful work. keep it up :-)

Re: Stripe Is Now a $20B Company

#29

Post by nostrademons »

tlb wrote: post #27
ahstilde wrote: post #21

Earlier quoted context omitted.

The first principles changed. From Elad Gil in First Round Review: “In the tech world, particularly after PayPal was sold to eBay, the dogma for many years was ‘Don't ever do payments, it's too hard and fraud will blow up and destroy you.’ And during the first internet wave, that was true. It was a challenge to get the type of data and information you needed to really deal with fraud at scale,” he says. “But fast for…

Also, the fraudsters found the online payments business fairly early on, before there were a lot of real customers. In the late 90s, many merchants had as many fraud attempts as actual transactions, and a few fraudsters working through a box of stolen credit cards could take a small merchant to the cleaners. Now that online payments are so large, and there is a finite number of sophisticated fraudsters, fraud as a pe…

It makes me wonder if the same dynamic is at work with cryptocurrencies now. Fraudsters found and adopted them early, because if your goal is to commit fraud, having a currency not under the control of the banking system is a pretty critical attribute. But now that the mainstream world is aware of them and people are actively researching what they might be good for, that may not hold true forever.
Post reply on HN