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Stripe Capital

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Re: Stripe Capital

#211

Post by ztratar »

edwinwee wrote: post #189
rajacombinator wrote: post #180

Stripe’s payments platform is missing some pretty basic functionality that they should probably focus on before pursuing these side project ventures.

What do you think is missing? Would love to chat more to see if we can fix that. :) edwin@stripe.com

I work at Stripe, too. Please do chat with Edwin!

We are building new functionality daily. To achieve global reach for our features, there is still a lot of work to be done. This isn't a place like some of the big tech companies where some folks are working on low-value-add projects.

If you want to help build Stripe, too, come apply! https://stripe.com/jobs

Re: Stripe Capital

#212

Post by edwinwee »

antoinevg wrote: post #139

It does not please me that this announcement comes at a time when Stripe took an unprecedented FIVE DAYS to transfer incoming payments to my bank account. Is this the new ultra-capitalism? Delay my payments so that I am forced to take on loans on unfavourable terms?

Ah, sorry. We tried giving you a call earlier. It was a holiday weekend in the US (Labor Day was Monday), and most banks don't process transfers then. It takes 2 business days to send a payout, but these three holiday days pushed it out. If you've any more issues you can email me at edwin@stripe.com.

Re: Stripe Capital

#213

Post by mrnobody_67 »

cm2012 wrote: post #146

I worked in SMB finance for four years. Here's the big players: 1) OnDeck (Now a public company) 2) Kabbage 3) Square (For their own customers only) 4) Paypal (For their own customers only) Stripe is obviously following the Square/Paypal model which already own the customer - life is tough for OnDeck and Kabbage since the default rate for standard SMBs is so high and competition is so fierce for them across marketing…

Afterpay and Klara are interesting as well... point of sale.

Smile Club rolls their own (65% of customers finance their purchase according to S-1).

Re: Stripe Capital

#215

Post by abalone »

haven wrote: post #202
abalone wrote: post #34

Stripe is really coming after Square. Square Capital is an extremely similar product (prequalifies you & autopays based on your payment volume). Square has a platform / payments SDK but if you look at the Github repo it's a disorganized mess versus Stripe's with virtually no "stars".[1] There's also Stripe Terminal which is a platform-y approach to Square's register/terminal. I wonder how much longer until they go af…

Not to nitpick, but a quick check shows Square has way more stars overall. (233,343 stars for Square repos and 30,982 stars for Stripe repos.) If you’re talking about Square’s brand new SDKs, they of course start with zero stars and some are just weeks old.

Wow, looks like Square is updating its github repository in response to this thread! Just saw they pinned their SDKs. Good job Square, that helps.

Square if you're listening, also work on the docs and dev experience. For example I noticed that Stripe's docs immediately show you how to work with charges. Whereas with Square the first step is... setting a location. It's just another little dev experience hurdle. What if I don't have a location? What if I'm an online store that spans all my locations? Stripe has put a lot of attention to detail here. Pinning repos is just the tip of the iceberg.

This is important because developer mindshare matters. For instance it seems like lots of devs here think this stripe capital product is novel/brilliant, a testament to wunderkind founders, etc. etc. That's all Stripe doing an A+ job grabbing and holding developer mindshare. GET ON IT SQUARE.

P.S. I think my characterization about the SDK stars is correct. They have some other open source projects that are very popular, but their SDK is trailing way behind Stripe by this measure (even years old repos), by like a couple orders of magnitude.

Re: Stripe Capital

#216

Post by tschwimmer »

I am shocked that nobody has mentioned adverse selection here. Stripe presumably has some sophistication that allows them to predict the probability of future cashflows. They're not going to lend to companies that are going to 'default' with crappy future revenue. They'll just choose to lend to the 'winners.'

It's an interesting twist, because this makes the terms relative to a standard loan worse: PC mentioned that customers are asking for downside protection, but under the assumption of adverse selection, it's being extended to those that need it least.

Re: Stripe Capital

#217

Post by cj »

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…

Why the fixed fee in the first place?

You could charge a flat interest rate but require the customer to pay you back a minimum of x% of their stripe volume per month.

Allow the customer to pay a higher percent of volume if they choose, and reward them for paying you back by lowering the effective rate.

I somewhat agree with the point the GP made, the fee structure is very much an early repayment penalty in disguise.

Re: Stripe Capital

#218

Post by CPLX »

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…

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 risky borrowers and rewarding the riskiest borrowers.

When you incentivize something you get more of it.

Your borrowers know their business better than you, and you’ve provided them with a mechanism to exploit that asymmetry in information.

You sort of have to assume that your incentives will be effective: the customers who have the most reason to believe they are growing faster than baseline will avoid your product and those who are pessimistic will embrace it, greatly increasing your default rate.

Re: Stripe Capital

#219

Post by al2o3cr »

aznpwnzor wrote: post #28
brianpgordon wrote: post #17

Earlier quoted context omitted.

The rates don't seem extraordinarily high to me. What would you consider reasonable? It's not trivial to get an apples-to-apples comparison since loan rates are usually given as an APR, not a flat fee. Also, don't confuse their "% of sales to loan repayment" number with a rate - that just determines how much of your revenue they hold back until the loan is repaid.

yea that's technically a subpoint really that they've made this really hard to compare. i'm mainly saying it's possibly unreasonable based on the example case they've illustrated. morally, usury can be one or both of the two: 1. socially deemed over profiting 2. socially deemed high drag on your borrower i'm using a gut check on #2 here

IMO using the effective APR doesn't make a lot of sense in #2, since a business which isn't doing as well will be repaying more slowly and therefore see a lower effective APR...

Re: Stripe Capital

#220

Post by edoceo »

tempsy wrote: post #53
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…

How does this offering compare to Square? Square Capital has been around for years now.

And PayPal and CapitalOne and loads of others, Stripe has nothing new here - just an old product to a new(ish) segment they have a direct line to
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