Mapping Innovation Roles to Stripe’s Founders and Key Hires

When setting out to understand and recognize the range of roles required to bring about an innovation, I continued to pair my own personal criteria with the criteria of the assignment. With a solid understanding of my own capabilities, I have begun to think about the team and connections I will need to build in order to bring my entrepreneurial aspirations to life. To contrast this paper with my innovation opportunity search, I attempted a different approach. Instead of focusing on a company with strong and obvious similarities to the industry I am looking to enter, I focused my search on a company with indirect parallels. (I am a firm believer that you often find things where you least expect them). With that understanding, I set out to understand the roles that built Stripe.

Stripe: An Overview

Stripe is a payments company with its sights set on conquering the $1.5 trillion global ecommerce payments industry (Quittner, 2015). Landing at number 20 of FastCompany’s most innovative companies of 2015, Stripe was lauded for “becoming the go-to payments provider.” (Staff, 2015). One year prior, brothers and co-founders John and Patrick Collison were featured on the 2014 Forbes 30 under 30 list.

According to their Crunchbase page, Stripe’s most recent round of funding closed with a series of substantial investors, including Visa and American Express. After raising a total of $290M, Stripe is currently valued at $4.9B. While not publicly disclosed, analysts estimate Stripe processed about $20B in transactions in 2015, with revenues around $450M. (“2016 IPO prospects: Is Stripe lining up next?,” n.d.). After Paypal, Stripe is now the second largest digital payment solution.

Before the Collison brothers brought Stripe to the masses, accepting online payments was one of the few remaining hurtles for developers and entrepreneurs building and launching online businesses. If a developer wanted to enable a site to accept payment via credit card, only two options were available. They could either set up a merchant account (a process that could take weeks to complete, built on legacy systems that predated the internet) or integrate a third party payment provider, like Paypal or Google Checkout. Despite an initial sense of convenience, these third parties bring in a set of downsides many chose not to deal with. They include an unnecessarily cumbersome user experience (which required leaving and returning to the site during the check out process) which leaded to a loss of control over the user journey (and in turn higher bounce rates), and the inability to independently manage customer data across the transaction (DesMarais, 2012).

Stripe’s mission is ambitious:

Stripe is the best way to accept payments online. Stripe aims to expand internet commerce by making it easy to process transactions and manage an online business. We want to increase the GDP of the internet.
(Stripe, n.d.)

Since launching in 2010, Stripe has partnered with the likes of Apple with Apple Pay, Alibaba with Alipay, Google’s Android Pay, as well as Facebook, Twitter, Lyft, Pinterest, and Salesforce (Quittner, 2015). Beyond Stripe’s initial offering (the product is officially called Stripe Connect), Stripe has continued to develop products intend to shake up the e-commerce world. Stripe Relay is an API that allows product publish and purchasing integration into third party apps, allowing users to purchase directly through a Tweet or Instagram post. Stripe Atlas makes startup tools accessible to entrepreneurs outside of the US. Atlas allows global users to easily incorporate a U.S. Company, set up a bank account, and start accepting payments with Stripe. (Stripe, 2016)

Scanning, Opportunity Recognition, Planning and Conception

Roles: Explorer, Revolutionary, Connector

The continued success and recognition of Stripe should come at no surprise. In 2005 Patrick, at the age of 16, won the 41st Young Scientist of the Year, while John scored the highest ever recorded score on the Irish Leaving Certificate. Patrick went on to MIT (a year early) and in the winter of 2007, joined Y Combinator where he founded Auctomatic (a better Ebay). Ten months later, Auctomatic sold to Live Current Media for $5M. Patrick decided he wouldn’t return to MIT, instead opting to take the Director of Product Engineering position with LCM in Alberta CA. Meanwhile, John had been accepted to Harvard, and began in 2009. (StartupGrind & Startup, 2016)

After working on several side projects, the brothers teamed up to address a recurring problem for Patrick; the difficulty of accepting payments on the web. (Andersen, 2012) In this way, Patrick assumed the role of explorer and revolutionary, with his technical and practical experience driving him to seek out change in the way web payments were handled. He questioned the complexity and necessity of the legacy payment processing systems, and sought out a way to simplify the process. To that end, John slid right into the connector role, a mindset that served him well when the brothers started writing the code for Stripe’s initial API in 2010.

The Collison brothers have continued in these roles over the past five years. As CEO, Patrick has continued to identify opportunities while expanding Stripe’s vision by “Focusing on its larger ambition: becoming the edifice upon which new forms of commerce are created.” (Helft, 2016). John, as Stripe’s President, continues as the company’s boundary spanner, and focuses on functions inside of Stripe as well as the payments industry. These roles have allowed both brothers to address the status quo, and to provide products that continue to simplify the way people launch or participate in business online.

Idea Generation, Evaluation, Development, and Prototyping

Roles: Inventor, Idea Champion, Tester

Prior to building Stripe, Patrick and John had built various web applications, both together and independently. When reflecting back on their experience with these side projects, the Collisons realized they had not charged users for any of them. The brothers began to wonder about the root cause that had prevented them from setting up and accepting payments. Together they realized they had even started the process of applying for merchant accounts, but because of the cumbersome nature of the legacy systems, account setup never became a high priority. (Startup Grind, 2013)

Patrick, acting in the role of inventor, realized the difficulty of accepting payments was one of the few remaining hurtles developers and entrepreneurs faced when starting an online business. At the time, the Collisons were using Slicehost, a hosting provider that combined a user friendly UI with a streamlined process for hosting and setting up servers. Patrick and John set out to apply the same thinking to online payments. (Startup Grind, 2013)

Escaping winter in the northern hemisphere, the brothers spent January of 2010 in Buenos Aires. After two weeks of coding, they ran the prototype through its first transaction with their first customer. Ross Boucher, founder of 280 North, served as Stripe’s first tester, and later joined the team as one of Stripe’s first employees. (Andersen, 2012) Ross provided direct user feedback, shining light on details like transferring the money into a bank account after charging the credit cards. (Startup Grind, 2013)

Product and Market Testing, Market Launch

Roles: Champion, Gatekeeper, Seller, Process Manager

Returning to Silicon Valley, the Collisons continued their work on Stripe (at that time Stripe was still called Dev/payments). During this time, Stripe spread through word of mouth, with both friends and users acting as champions of the Collisons’ solution. By the end of the 2010 summer, the brothers had accumulated a waiting list of nearly a thousand people interested in using Stripe. The brothers decided to focus on Stripe full time in order to build the infrastructure to make Stripe truly work. In the fall of 2010, Patrick and John raised a seed round with the help of Y Combinator to fund the infrastructure work. (Startup Grind, 2013)

Through this seed round, the Collisons connected with Peter Thiel (who along with Elon Musk and Max Levchin co-founded PayPal). In addition to investing in Stripe, Thiel acted as Gatekeeper, and provided the brothers with insights from his time with PayPal. Thiel and Musk also provided key insight into the world of online payments as well what was needed to build it. Patrick summarizes their input:

Elon and Peter have been very insightful…They have sharp opinions on what PayPal did right and wrong. They have deep appreciation for how difficult it is to get there. They fought this battle for many years and it’s really helpful to have someone who can talk about the future in 15-years, but also someone who can empathize and sympathize with the day-to-day considerations. I don’t think there are that many people who can straddle both sides of that.
(StartupGrind & Startup, 2016)

Thiel encouraged the Collisons to pursue a business model with a long term pricing strategy based on a percentage plus 30 cents (priced higher than competitors), but in turn deliver a customer experience that was much better than anything else out there (Startup Grind, 2013).

The Collisons retired the Dev/payments name, and with a staff of ten employees, the newly named Stripe publicly launched in September of 2010. After a series of discouraging meetings, Patrick and John hired Billy Alvarado to be Chief Business Officer in April of 2011 (Rampton, 2015). Billy, took over the seller role, and launched into business development for Stripe. Patrick describes his contributions:

We met Billy and described our plight and he agreed to help out… Soon after, we got our first major deal done with Wells Fargo, which was pivotal in enabling Stripe. Billy is still at Stripe and has done all these deals around the world. If we’d been left to our own devices, I’m not sure we would have ever gotten there.
(Rampton, 2015)

Billy’s contributions allowed Stripe to grow to over 500 people.

Stripe continued to grow, both in size and internationality. Last year, 2015, was a big year for Stripe. The Collisons hired Claire Hughes Johnson to take on the position of Chief Operating Officer. Her former Google executive experience perfectly positioned her as an ongoing process manager, taking some of the responsibility off of Patrick and John. As described by Ross Fubini, partner at Canaan Partners, “The hires provide a combination of experience from older tech company Google, and innovations within the fast-growth startup community.” (Quittner, 2015)

The Shift of Roles from Startup to Scaleup

As Stripe matured, the roles taken on by the founders’ transitioned from all-encompassing to more specialized and focused as positions were added to the team and the organization grew. The argument can be made that Patrick and John had to embrace all the facets of innovation along the road to building, launching, and scaling Stripe. And while Stripe is now a mature company, there will still be times when Patrick as CEO and John as President will jump between roles.

I’ve found the fluidity of roles to be something any founder will need to be comfortable with and embrace, as their successful approach to innovation is directly tied to these roles. Founders should have the capability to perform any of the roles at the beginning, and objectively identify their own strengths and weaknesses in order to identify who their team needs.


Sources

Quittner, J. (2015, April 22). The Twentysomething brothers behind a $3.6 Billion payments company. Retrieved October 4, 2016, from 30 Under 30 2015, http://www.inc.com/jeremy-quittner/2015-30-under-30-stripe.html

Staff, F. C. (2015, November 2). The most innovative companies of 2015. Most Innovative Companies 2015. Retrieved from https://www.fastcompany.com/3042022/most-innovative-companies-2015/the-most-innovative-companies-of-2015-complete-list

Stripe. Stripe: Press resources. Retrieved October 5, 2016, from https://stripe.com/press

2016 IPO prospects: Is stripe lining up next? Retrieved October 5, 2016, from http://www.sramanamitra.com/2016/04/15/2016-ipo-prospects-is-stripe-lining-up-next

DesMarais, C. (2012, May 3). Set up an online business in hours. Retrieved October 5, 2016, from Technology, http://www.inc.com/christina-desmarais/stripe-online-payments-paypal-google-checkout.html

Quittner, J. (2015, November 16). Why 2015 was a blockbuster year for stripe. Retrieved October 5, 2016, from Company of the Year, http://www.inc.com/jeremy-quittner/stripe-2015-company-of-the-year-nominee.html

StartupGrind, & Startup, T. (2016, June 14). The Collison brothers: The story behind the founding of stripe — startup grind. Retrieved October 5, 2016, from https://medium.com/startup-grind/the-collison-brothers-the-story-behind-the-founding-of-stripe-ae013434c080#.xyd5kjz3r

Andersen, D. (2012, May 20). The story behind payment Disruptor stripe.Com and its founder Patrick Collison. Retrieved October 5, 2016, from https://techcrunch.com/2012/05/20/the-story-behind-payment-disruptor-stripe-com-and-its-founder-patrick-collison/

Helft, M. (2016, January 4). How john and Patrick Collison built stripe into the PayPal of the mobile era. Forbes. Retrieved from http://www.forbes.com/sites/miguelhelft/2016/01/04/cashiers-of-the-internet/#7243b6ea6afc

Startup Grind (2013, May 22). Patrick Collison (stripe) at startup grind silicon valley Retrieved from https://www.youtube.com/watch?v=IZ7yagPzlHE

Rampton, J. (2015, March 20). How stripe excelled in an established industry. Retrieved October 5, 2016, from Icons of Entrepreneurship, http://www.inc.com/john-rampton/stripe-s-patrick-collison-discusses-excelling-in-an-established-industry.html

Quittner, J. (2015, November 16). Why 2015 was a blockbuster year for stripe. Retrieved October 5, 2016, from Company of the Year, http://www.inc.com/jeremy-quittner/stripe-2015-company-of-the-year-nominee.html