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Stripe Capital

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Re: Stripe Capital

#261

Post by whatshisface »

PeterisP wrote: post #259
ceejayoz wrote: post #207

Earlier quoted context omitted.

I suppose I'm left wondering if this causation loophole - a properly engineered switch being deemed not to cause anything, despite an obvious cause/effect linkage to an observer - is usable in other, nastier scenarios. Can I (setting aside the obvious secular punishments for a moment) murder someone with a bomb activated via one of these switches?

IMHO those are not comparable scenarios. In the case of murder, the result and intent is prohibited, so no matter how you get there, that's a sin. In the case of having a fire on Shabbat, there's nothing wrong with wanting a fire or having a fire, the result is not prohibited or a moral wrong; but in that particular time and place you are prohibited to light a fire. A hundred years ago the standard solution was to si…

>the standard solution was to simply have someone else (non-jewish) do it, e.g. local gentile boys used to spend saturday mornings doing minor chores in jewish households for some tips

That sounds like a bad incentive. If a shabbos goy decided to convert he would have to stop being paid, which means that you would be paying the shabbos goy to not convert.

Re: Stripe Capital

#262

Post by i_cant_speel »

mNovak wrote: post #57
adamqureshi wrote: post #31

Stripe offered my 1 man shop a cash advance. $12,500 $1,250 Fixed fee then 10% of sales withheld. $18,500. $1,850 Fixed Fee. 14% of sales withheld. $25,000.00 $2,500 fixed fee. 20% of sales withheld. terms: No lengthy application: You’re pre-qualified for your advance—no time-consuming application process required. No hidden fees: We charge one fixed fee for the advance—there are no interest charges or late fees. Pay…

The important question here is what are your average monthly sales? (e.g. what is the expected term and thus APR of the loan?)

I'm confused on why everyone is focusing on this so much. It matters on interest-based loans because a higher APR means you are going to pay more in X amount of time. But here you are paying a flat fee, regardless of the amount of time it takes to repay.

Why does the APR matter?

Re: Stripe Capital

#263

Post by softawre »

davidpolberger wrote: post #160
BukhariH wrote: post #101

Earlier quoted context omitted.

I really love what Stripe are doing here - whilst yes the the APR can be quite considerably higher. That's fair since Stripe are taking on quite a fair bit of additional risk. As the borrower this loan is significantly de-risked since there aren't any dreaded monthly payments you must make. Here's my attempt at a quick interest calculator for Stripe Capitals loans: https://docs.google.com/spreadsheets/d/1RH9PpJ9kdB7X…

I created a version with sliders, making it easier to experiment: https://connect.calcapp.net/?app=atzggn Also, you don't have to duplicate the spreadsheet to make it editable, you can just use it straight away. (Disclaimer: I created it with Calcapp, which is a SaaS product I built.)

Cool experiment.

I don't agree with how you say that 10% is the Quoted Interest Rate, because Stripe isn't doing that. They are saying they have a fixed fee. "Interest rate" means it compounds.

Re: Stripe Capital

#264

Post by softawre »

jonathonadler wrote: post #163
onetimemanytime wrote: post #154

Earlier quoted context omitted.

>> "But I worry that it's vulnerable to bad people." You worry too much for them, that's why they charge a hefty interest fee. A certain % of non-payments or partial payments are built in.

They probably have some data science and a decent fraud model to keep risk within an acceptable band too.

> Stripe

> Decent fraud model

Yeah, I would think so.

Re: Stripe Capital

#265

Post by softawre »

i_cant_speel wrote: post #262
mNovak wrote: post #57

Earlier quoted context omitted.

The important question here is what are your average monthly sales? (e.g. what is the expected term and thus APR of the loan?)

I'm confused on why everyone is focusing on this so much. It matters on interest-based loans because a higher APR means you are going to pay more in X amount of time. But here you are paying a flat fee, regardless of the amount of time it takes to repay. Why does the APR matter?

Because if you have the option of getting the loan through Stripe or a bank that offers a loan with a regular APR, you may want to compare which is a "better deal".

Re: Stripe Capital

#266

Post by clint »

halflings wrote: post #165
TazeTSchnitzel wrote: post #121

Earlier quoted context omitted.

Klarna has an identical product here in Europe too.

And iZettle (also a Swedish startup, recently acquired by Paypal) has the same service: https://www.izettle.com/gb/advance So nothing new here.

And Paypal has been doing this (Paypal Working Capital) for about 6 years at this point:

https://www.pymnts.com/news/b2b-payments/2018/paypal-uk-work...

Re: Stripe Capital

#267

Post by sudhirj »

pc wrote: post #59
jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

This can do with even simpler phrasing - Stripe carries the risk of the business underperforming in exchange for the business carrying the “risk” of over performing.

In a regular loan, the bank makes you bend over backwards to prove you’re risk free, and then charges you interest to give you the loan anyway, and you’re on the hook to pay back a constant amount whether you’re under or over performing, at risk of going bankrupt.

Re: Stripe Capital

#268

Post by meowface »

workaway wrote: post #228
meowface wrote: post #176

Earlier quoted context omitted.

Regardless of the particular response or the company, it's good to see transparency and lack of bullshit exec speak from C-levels. It might be more common among tech startups, but plenty of non-tech startup founders do it too. I wonder if the correlation might be age, since it seems to me that younger people try to avoid bullshit and seek out authenticity (giving or receiving) moreso than older generations, which wer…

I think most executives could post a coherent and informed response online (with some notable exceptions), but older and more established companies tend to have layers of lawyers and PR specialists in between the CEO and the public.

True. Some could do it but almost always self-censor or are censored by their minders, and some truly are full of nothing but hot air. A lot would probably be capable of it if they actually had total freedom, though I'm not sure if it's most.

Re: Stripe Capital

#269

Post by PeterisP »

whatshisface wrote: post #261
PeterisP wrote: post #259

Earlier quoted context omitted.

IMHO those are not comparable scenarios. In the case of murder, the result and intent is prohibited, so no matter how you get there, that's a sin. In the case of having a fire on Shabbat, there's nothing wrong with wanting a fire or having a fire, the result is not prohibited or a moral wrong; but in that particular time and place you are prohibited to light a fire. A hundred years ago the standard solution was to si…

> the standard solution was to simply have someone else (non-jewish) do it, e.g. local gentile boys used to spend saturday mornings doing minor chores in jewish households for some tips That sounds like a bad incentive. If a shabbos goy decided to convert he would have to stop being paid, which means that you would be paying the shabbos goy to not convert.

That's perfectly fine, he should not convert if minor tips are an obstacle. Conversion is possible if someone really wants to, but is not really encouraged (and perhaps even intentionally discouraged, different branches of Judaism have different attitudes towards this) - in stark contrast to Christianity and Islam, proselityzing and bringing every soul worldwide to God is not considered an important goal.

Judaism is for the Jewish people, and while some individuals may join (e.g. in marriage) the Jewish people, from the perspective of Judaism it's perfectly okay if all the non-Jewish peoples (i.e. most people in the world) stay non-Jewish forever and their relationship with God is different.

Re: Stripe Capital

#270

Post by londons_explore »

dylz wrote: post #242
CPLX wrote: post #218

Earlier quoted context omitted.

I wonder if you’ve considered the perverse incentive you’ve created. It may prove fatal to this model. In short, you’re charging the highest interest rate to those whose businesses do better than you expected and the lowest rate to business who underperform your projections. As such, you’ve created a financial incentive to underperform, and are entering this business of lending money by literally penalizing the least…

Yeah, but at the same time Stripe Capital only lends to people that have history selling on Stripe, and if they're anything like other processors they'll be holding some percent for chargebacks and other stuff anyway, lowering the default risk even if a company decides to take a "loan" and then swap processors overnight as soon as they get the money.

Most midsize businesses will be thinking of having at least two CC processors.

Having a stripe loan would make me, as a successful business owner, make that move much sooner.

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