Patrick Collison & John Collison - A Business State of Mind - [Invest Like the Best, EP.348]

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0:25 Operate smarter and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgeline.ai. Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at joincolossis.com.

1:00 Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast. My two guests today are John and Patrick Collison, co-founders of Stripe.

1:37 My conversation with John in 2020 was, for a long time, our most downloaded episode. In this conversation, we went in a totally different direction, talking about Stripe, the global internet economy, and beyond. This year, along with John Malone, John and Patrick were recipients of the Singleton Prize, given annually by the Singleton Foundation to active CEOs. The foundation was recognizing John and Patrick as up and coming CEOs in the mold of Henry Singleton, who I spent years studying and who heavily influenced my own thinking on business and investing, both in my quantitative investing days and today. This was one of those conversations that I went into with tons of topic to cover, only to get through close to zero of them because I became so wrapped up in other interesting topics with two of the smarter people that I've ever encountered.

2:22 I hope you enjoyed this great and wide-ranging conversation with John and Patrick Collison. I was talking to Will Thorndyke about what was so interesting about Henry Singleton's life and career. And it was just wild adaptability. He just never held on to a strategy. He just adapted and updated his strategy for the prevailing conditions and it whiplashed around all the time. And then he did it for a very long period of time. The classic, don't interrupt.

2:45 Compounding unnecessarily. And I'm really curious about how you think about that vis a vis vis stripe. When Such a big part of its compounding potential. is born of your two curiosities about

2:58 the world and about business and about technology. And how you make sure that it's set up in the right way. So that stripe is the recipient of the reinvestment of your curiosity. So that Yes, payments is probably endlessly fascinating. And maybe if you just stayed in the payments lane forever. It would be interesting enough to you both that you stick around and the business and the team benefits from your curiosity. But how do you think about

3:20 that which seems to be a common theme in technology businesses that Technologists tend to be very omni curious. interested in a lot of things, pursue a lot of things. And there's leakage, there's enterprise value leakage or something. How do you think about that forty years hence and what stripe can become?

3:36 I think for founders is Two kinds of curiosity. that have a lot of business value are probably Important. There's also a lot of forms of curiosity that don't have particular business value, like Patrick coming to me with his later scheme on

3:48 Carbon dioxide. There was a time when you know stripe's conference rooms. You never know. How much would you pay for something increased that stripe by thirty percent? There's a time when all the conference rooms had carbon dioxide monitored in them. So you could monitor that. It does get very high during a big meeting when it could feel stuff. Exactly on CO2. Detector or endocrine disruptors or whatever they so there's lots of random ones, but I would say on the business curiosity front, one is absolutely like you say. Businesses are different at every scale. And so Stripe has been different as two people to fifty people to currently seven thousand people. I think you have to be curious about what is required. To run a good company at that stage and kind of what's required to run Stripe well really matters. And one thing we try to do is just spend a lot of time looking at all the other.

4:37 companies and what they've done. Not that you want to blindly emulate them, but you should at least understand it's funny, I remember Tyler Cowan. Commenting about Magnus Carlson. that he entered some chess trivia contest. There was just like literally like chess trivia and won it. He knew the most chess trivia out of anyone who's in this contest. And that's not a coincidence, I think, that the world's number one player has also studied the most about all the chess history is extremely knowledgeable in that. I don't know if we'd win the business trivia, but I think we'd have a respectable show, because you'd have to understand what makes Apple versus Amazon. You cannot imagine two companies that work. more differently than the two of those. One is totally functional, one is this GM model. And yet they're both really successful models. And so I think it's useful to have a framework for how those stuff works. So anyway, that's one. The second is I was actually just reading the galley for poor Charlie Talmanac. You probably know Stripe Presses.

5:26 comes out in November, I was flipping through the galley of that. Now that he has the famous speech about the multiple mental models and just cribbing the best mental models from different industries. I don't know if you think that every founder can ask to do this, but I do think it's probably effective to be able to Just know the top mental models from Fine. and from engineering and from product and from sales and stuff like that. I don't see how you could

5:48 be that effective without being pretty curious on how do I learn the most important mental models from This particular domain or function. I think it's a really perceptive question and I've never thought consciously about it before.

6:01 I think There's the line about uh whenever you see somebody make some observation about capitalism, you should replace that with people. Just like it's the nature of just voluntary arrangements of people. There's I guess in science, I don't know if this is true, but maybe it's true that We've had a lot of success. going down and unearthing the most fundamental laws and disaggregations and decompositions, whatever. And now it's not like we're fully done. There were still some unanswered questions, but the returns to going down more seem to have diminished. We've gone down pretty far. But then so much of science today is about what you find going

6:31 Up and combining things in different ways. And so computer science has been emergent science where we elucidated the Turing machine or whatever almost a century ago now, but we're still finding new ways of writing interesting software, or similarly with with I would say biology. And we know how the atoms in biology work with all these immersion effects that start to ensue as you have cells and systems and organs and everything. AI and deep learning. We know how the transformer works. We're still learning what the emergent effective transformers can be. Anyway. That's all to say that I think to some extent

6:59 Business is just The emergent effects of volitional voluntary arrangements of people. And that just Feels like a endlessly interesting thing to me. I don't think it's trying to payments company. I think payments and commerce and all these things are really important, but

7:14 Formi mental model of stripe is Stripe is an infrastructure company for facilitating transactions and exchanges and so forth between These different businesses and we deliberately articulate our mission as increasing the GDP of the internet. It's not something specifically about transactions. I think viewed that way, just how do you have there be more businesses in the world and how do you have those

7:35 Yeah. I think that's a sufficiently rich vein to mine that we're not gonna run out of Curiosity aperture. In the near term. You mentioned Apple. There's this line about Apple that I find so interesting, which is that Apple is Steve Jobs with Ten Thousand Lives was the line discussed about it.

7:53 And of all the major companies, maybe it was the one where the company was a vehicle for self-expression of the founder in the most extreme way. I'm curious to what degree you think that should be the case. The best companies end up being vehicles of self expression. For the founders and that should be preserved. It's an outlier to begin and don't let it go towards the peak of the distribution where everything's normal. It's like all other businesses.

8:15 I'm curious if you agree with that idea about maybe vis a vis specifically, but even more generally, should companies really just be Vehicles for founder self expression. I think yes and no. I think yes, in the sense that I think a company should be

8:32 the resonant frequency of some tuning fork um clearly wrong. Presumably the founders are chronologically the first people to Respond. that wavelength. But I think it has to be

8:45 It's only gonna work if if it then becomes an agglomeration of people who share that idea. and turn the Apple example around. I think it's hard to argue that Apple hasn't Pretty meaningfully sustained.

8:58 Vash which Steve stood for. And so I think a company has to stand for an idea. But I don't think it's gonna work if it's overly individuated. Another way to think about it is

9:11 Sometime is pause. people interpret as a very strong culture founder. It's just a company having a very strong culture. That the founder is a metonym for. Apple has this extremely strong

9:22 design focus and the designers are quite central in the or you know it's very functional design and there's probably I don't know about fifty, a hundred designers who are extremely important in All of the products that happen. And Steve was a big part of inculcating that culture. But that's a culture that

9:39 Can and indeed as Apple. does exist separate from that. Another example I like is Pat and I both visited Star Base for Launch. No, I haven't been to a lunch. I'd love to go to a lunch. On a non-launch day, this is before they got their launch. Until all the flying confidence exactly until they figure out that part. So what really struck me is At SpaceX, I presume as you know Tesla and other companies, it's obviously very much the focus on

10:02 What is possible from an engineering point of view, and SpaceX and Tesla and various companies are customers, we kinda get this exposure at uh at Stripe as well. But it's a really high agency culture. And so, for example, at Starbase or in the middle of nowhere. right on the border in Texas. And so they have all these issues with too many mosquitoes. So they're breeding dragonflies in paddling pools to eat the mosquitoes. And obviously there's no housing there. So they're just building their own housing and they need energy. So they're deploying a solar farm and everything like that. The guy giving us the tour at some point so who who's nominally the site manager is walking past in building. I say, Wait. I was just very very impressed by the high agency culture, which again people associate with Elon, I think correctly, but at this point is cultural. We're asking, how do you solve problems? Who do you go to when you can't solve something? And the person we asked it of was confused. They're like, Well, You just figure it out and you just solve it. And so again, this wasn't something that comes from talking to Elon. This was just something that now deeply exists in the culture. And so

10:55 Good cultures are often not regress to the mean they are differentiated. They have something that people strongly believe in a way, they strongly act that is different from every other company. And that Again, Apple shows the It can certainly persist beyond a founder. Maybe you need a founder to get it going. I don't know.

11:12 I think this this metonym of fact that John references is is a huge deal and so I think there's Maybe this availability bias where you focus too much on the Companies with Very identifiable founders. Where there there aren't such convenient memorable labels for uh shorthand embodiments.

11:27 For some of the other places, the New Yorker and the Economist, we often think about exactly they have super strong cultures that have endured really powerfully the people. Yeah, and we kinda you can name the economist founder, but I'm not an expert in economist history, but it's not clear to me that there's been particularly some monotonic degradation of the culture since in fact, if anything, I think you can maybe make the contrary argument. Maybe not a self expression, but almost like some secret flame. That's the idea. That the founders are the protector of that flame, so to speak. And hopefully Tim Cook, you can pass it off. It's really hard to do.

11:59 Maybe re articulate what you think that idea or flame is for Stripe beyond the grow the GDP of the internet. You had to put another click on it. Do you think that if I'm working at Stripe and I hear that, what is the next causal thing that happens because I'm thinking about that idea? We're now getting into things that's I think we're just exploring live, but

12:23 Many of these cultures that we're describing Are not unique cultures in a whole bunch of different ways. They are Actually strong cultures. In quite similar ways. One what we're talking about is

12:35 quality and Producing higher quality sustainably. And being unreasonable, basically, clearly Apple, The Economist, the New Yorker, places like that. And the other one we're talking about is high agency. And again, making it so that you're not just okay with that. It's a Tesla good example of this where again high agency in the way where They weren't just satisfied with subcontracting all of the parts of the car. to some contractors.

12:58 It's the best wing mirror that you can buy from the wing mirror subcontractor. Instead they brought a lot of stuff in house. And I think in Stripe's case, I mean Patrick can speak to some of the examples, but Definitely, I think a lot of Where we've gotten to date on how Stripe has won market share to this point. There's a bunch of stuff we can talk about on the quality point, and simply on the high agency point, a big part of how the Stripe Product suite has gotten to where it is today. is not just self defining as okay, we're in this industry or this is what we do, but always be willing to

13:27 come back to the customer problem of okay, we want to make trading online easier. We want to make it easy to start and grow an internet business. And then What holds up businesses. Okay, everyone's complaining about sales tax and VAT and everything being hard. I guess we're getting into the software business now and we're solving sales tax for people and there's a bunch of stuff you have to learn about, but we'll just go figure it out. I think we definitely try to inculcate that at the try the high agency piece. But to your question about sort of well, what's the if we want to make that idea somewhat more concrete, what's the next

13:56 incremental version, the one that I usually go to next is this one that we just referenced of How do you cause there to be more companies started? And that's itself a pretty rich vein, and why we do Stripe Press, that's some of why we do Stripe Atlas. It's why we try to give away anything useful that we discover that we think can help lower you know barriers to entry. Does that make sense why we expand to more countries?

14:19 But the countries we expand to big pockets of revenue or pain volume or something there today, but we're pretty optimistic about the possibility of new ventures. being undertaken there that in future years will be of some significance. There's that kind of version of it. And then the second one is okay Conditioned on some pool of companies existing. Part of the binding constraints on their success and growth. And we really try to gear people towards.

14:45 What doesn't exist as opposed to what does that is Rather than thinking it well. Where are there profit pools today that we can sidle up to and plant some flag and try to

14:57 I think it's both Easier. And Honestly just more fulfilling to think about well What are the profits that nobody's making?

15:04 How can we build something that would enable that to happen? Global GDP is about Order of a hundred trillion dollars. Where's the next fifty trillion of GDP going to come from? And how can we causally responsible for helping that happen. And in framing the question that way, I don't want to sound grandiose, the world's a big place and many actors are responsible for enabling that, but on the margin, how can we help push in that direction? Now I was having dinner with Jensen Huang back a couple of months ago and he used the turn of phrase we're discussing this idea because I think Jensen's well Now probably he's not underrated. I think for a very long time. Especially not today. For a very long time, he was very underrated.

15:42 We talk at the founder run technology companies in Silicon Valley, Mark Zuckerberg and Mark Benioff and all these characters, but Jensen was usually not on that list, even though he's been sort of quietly running NVIDIA for several decades. Exactly. Incredible business. But anyway we're discussing this idea of trying to really encourage people to look for the new opportunities. And he was saying that NVIDIA much prefers Zero billion dollar markets to ten billion dollar markets. When they first introduced Cuda, for example, it was a zero billion dollar market. You're actually getting at something that I think is a belief that Stripe has that is actually not that widely shared and is a big part of.

16:18 how we've managed to Із часта Much more inside commerce. is possible than currently happens to say. And it's global commerce.

16:27 And you're like, okay, yeah, sure, but people get mad into time analyses and your business school types are just always talking about, as you say, where are the profit pools? Which is like when you think about it, a really unambitious way to look at the world. Cause it's like how can I say your margin is my opportunity. A lot of businesses inadvertently implicitly bet on stasis. Yeah. Whereas in the Stripe's case We measure a lot of the incrementality. We go talk to people who started their businesses on Stripe or you know, use Stripe Atlas or something like that. And we ask them

16:55 What kind of impact did Stripe have on this? A majority report a very significant impact, and a pretty significant number say, I think it's unlikely I would have started my business without this set of tools. And then of course you might say, Okay, Stripe is useful as the low end getting off the ground, it makes it easy, but a large company that is up and running. They have everything figured out when it comes to payments, and Stripe won't be able to help them. But actually, that's also not the case. And when we've run A B tests on people using stripes payments infrastructure. Rather than whatever unoptimized payments infrastructure they had themselves.

17:28 The latest numbers we have are at ten and a half percent conversion uplift. So again, ten and a half percent more commerce taking place on this particular site than would otherwise have had. You can see it in all the Anecdotal stats as we go talk to customers. I remember talking to a customer a little while back that had just turned off their store in Mexico because fraud was too high. And rather than deal with it, they just decided to not make the store available in Mexico. That's crazy when you think about that. In 2023, we have not figured this global commerce out. And so That is the underlying belief that Stripe has that I think is actually Get to a lot of where we are today. There's a huge legibility and more broadly just interestingness bias in the world for the uh management podcast. The cause of attributions that we give to things are necessarily those that are of sufficient mimetic interest that they can survive in the meme ecosystem.

18:16 Yeah, I should translate that two more times. I mean it's like given the choice between an interesting explanation for something or a comprehensible one or something, necessarily the ones that are comprehensible will survive and become the prevailing explanations rather than things that are super boring and arcane. But I don't think reality has the same interestingness bias. We're going with this is I think a huge driver. of where businesses choose to sell. Is The mechanics of

18:42 fulfillment, logistics, tax, remittance. All the stuff. I don't know that's that interesting to talk about. I don't know how much there is to even say in a totally generalizable way because the specifics in each case are different, but The fact that's not interesting doesn't mean it's not true and doesn't mean that it's not a huge deal. There's a guy in the UK who was I think I'm pronouncing it correctly, I don't know, the Jost report. Sixties, I think, where he basically concluded that friction, actual mechanical friction, was costing the UK several points of GDP.

19:13 Literal friction. Not too many buttons on a website. Yes. And so your question about how do you make this idea of increasing the GPU of the internet more concrete. There are so many pockets friction. There are just like prosaic reasons as to why gainful activities are not taking place. I haven't checked the latest here, but at some point when I'm going to to check this, Google Cloud was not available in India. You just you couldn't pay them using any Indian payment method.

19:44 And I don't think that's because Little Cloud made a strategic decision as well, we definitely don't want to be available and to sell in India. It's like, well, there's some combination of data policy stuff, financial stuff, and tax stuff, whatever, that I'm sure everyone agreed would be nice to solve these, but we haven't gotten around to it yet. And I think implicit structural belief in stripe is actually the sum total of those things, in fact, adds up to a lot. I don't want to get overly wonky about it, but I'm curious what is more interesting to you, the reduction of friction around known things to start a traditional business or whatever.

20:13 Versus exploration around what the next technology is of business, the next LLC or the next law or something that would unlock a lot more yeah step change, not just lots of one and two percent increases. What's the next corporation? Yeah, what's the next seems like a ridiculous question, but the corporation was so incredibly important. It was an invention. I think it's a really Good question. And maybe it seems too grandiose or something to spend too much time thinking about that, but I think it's a very good question. I think we start with

20:42 removing as much friction as humanly possible. And again, there's just way more of it than You could possibly know. Do you know about the Chicago lease tax? Tell me, please. Anyone who leases more than a hundred thousand dollars. to Chicago residents has to pay uh lease tax, revenue tax.

20:59 And that's all and it's lovely about the city of Chicago. That's all fine, well, and good, but they define lease quite broadly, including SaaS, basically. So any SaaS company. T. sells more than a hundred thousand dollars of SaaS, which is probably a few million dollars a year in total. has to pay the city has to go implement this city of Chicago lease tax. And again, this is Yet another thing that a business has to go do. And kind of like the cost of the friction, the ball bearings in the British economy, it's yet another thing that is minuscule by itself. But when you add together like the bacteria in your gut actually weigh a lot, all told, the weight of all this kind of adds up. So I think we start with let's remove all the friction. However, when you actually

21:36 meaningfully change a lot of that. I think new things become possible. And so we have a lot of multinationals on Stripe that are year old. five person companies. And again, when you think of multinational, you think of giant skyscraper campuses. That's the image that comes to your head when you hear the word multinational. Whereas we have all these businesses that are now selling globally from day one on Stripe. as a result of it being easier to do so. The other one that we think is exciting is

22:00 marketplace based business models thanks to the internet. I think there's Few components, but one of the things you need is the liquidity of the internet that you get these Airbnbs and Uber. You probably need smartphones, not just the internet. So you need the tech foundations, but then you also need to make it easy for people to actually transact with each other and do two-way stuff and you know, Stripe Connect that is the marketplace payment product that didn't really exist before that. And so I think you get these. new kinds of businesses that are much, much easier than before. I think you're saying at some point a change in degree is a change in kind, which I think is true. But I really like

22:32 This question as well. And actually, if any of your uh watchers or listeners have suggestions, we'd be very interested. I think Atlas was this in that I think we know because they tell us that there are thousands of businesses that have been started in countries where high tech entrepreneurship has not previously been as common or as popular that wouldn't have been started if not for Atlas. Steve Randy Wallman, who writes really interesting materials about economics and Finance and so on. Hear this blog post in twenty thirteen or something that really stuck with me about how credit financing is fixed cost. To the borrower.

23:02 asymptotically fixed costs within some range or something has the unbounded risk of destroying your business. Equity capital has unbounded costs, but does not come with the embedded risk of possibly blowing up your business. It's interesting to think about the possibility of a continuum there. To what degree it's necessarily dichotomous. If you think about a small business, effectively there are options run into that dichotomy and

23:24 If you just take take a restaurant, why is it the case that one, the restaurant probably can only get access to financing that might blow up their business. And certainly maybe they kind of convince some investors to write them their first check or something, but There isn't a whole lot in the middle. And I think one interesting story from the last fifteen years on the internet is the proliferation of crowdfunding, obviously, different variants of that and so forth. So I I think the question of are there interesting new funding models that could be invented. is a good one. Dominant assurance contracts I thought were all interesting. They never really seem to have taken off, but it feels like there might be kind of new points in the space. I think there's stuff in the domain of funding models.

24:00 Something like a Dow feels like it should work, maybe not Dows in particular. We do discuss different versions of this. I think standardization. is often underrated and One of the best things the EU has done is just

24:13 standardized things that were previously for no particularly Profound reason. In the sense of like an internet protocol as standardization. We all just agree this is the way we do things and so everything's interoperable as a result. Yeah. Basically. US has this obviously with a uniform commercial code. And I think the US minus stash would be just like a way worse place to do business.

24:33 But again, in a hard to articulate way. It sounds very arcane as well, you know, the product liability requirements at this stage versus that stage, blah, blah, blah. Pretty quickly the listener is clicking on the next podcast episode. We've thought about are there things that Stripe could help standardiz that are not standardized today? We can just be a coordination point. Obviously this Why she did an awesome version of this with safes? How much less investing would happen at the early stage absent the existence of saves? I don't know, but that seems possible to me that thirty percent or something.

25:01 It seems credible that it's significant effect. Or maybe if someone else had standardized it, maybe we'd have Standardized. in a worse point in the space or something. We wanted to make the whole podcast episode about this, but I think it's a really interesting question. If you think about the I like the idea of the hundred trillion, where's the next fifty coming from?

25:16 I'd love to hear what you've learned about business formation and small business versus reducing frictions for existing medium or large size businesses. And letting them get way bigger than they would, but for that outstanding friction. So even that like Chicago example. Sounds like a pain in the butt, even for like a real established business.

25:34 Maybe the faster way is to like make it Easier for big companies make more small companies. So what have you learned about big versus small and what matters and this goal to grow the GDP of the internet? In terms of where a stripe is going, a lot of where we started with was Make it easier for a startup to do X. the least tax example and just generally the billing system, a lot of what the Stripe billing team has been spending time on of late is companies like Atlassian and Cloudflare and all these very large public companies who are kind of moving their billing infrastructure over to Stripe Billing. So that as you say, they can

26:07 not just move the payment moving of money, but all the business logic can live in stripe. So they don't have to build and maintain it themselves because the maintenance that crushes people. We're continually surprised when we build things that we conceive of as being for the low end, how frequently they get enthusiastically adopted at the high end. So for example, payment links is We wanna lower the barrier to entry to strike making a couple of sales. Why do you need to build a payment for? Why can't you just sign up for Stripe and put in some detail about your product and then just send a URL to your friend or your first customers or whatever. And then maybe when you reach your hundredth sale or your thousandth sale, okay, I'll do the work, build a proper thing here or whatever. Payment links is pretty enthusiastically adopted.

26:47 by large companies. For basically the same reason in that It's like the soil and green principle. Everything is made of people, and there are humans inside these large organizations. And those humans, even in large organizations, have opportunity costs attached to their time. And if they can go and build some incremental new feature that aligns with the core purpose of their business, that's in general probably a more valuable thing to do than go and like build this payment form. Whenever we've built

27:12 No code functionality. Or just generally speaking, things that lower barriers to entry, where the original persona that we have or had in mind was somebody kind of starting out, we keep being struck by we had a user at our weekly. All hands meeting last week. They're a pretty significant company. I don't know the exact employee count is, but I believe in the hundreds. His ask to us, yeah, how can we improve Stripe? He asked for more no code functionality because they're strapped for engineering resources and they just want to be able to take things off the shelf and snap them to grid. So that's been eye opening for me.

27:44 It is also a dynamic where The very largest companies That we work with are often competing with startups and seeing new upstarts come along. And so the buying criteria are no longer as different as you might think.

28:00 because they know that their customers might just go to We work with a number of traditional grocery stores. And They're all competing with the Instacart and the ships before they were acquired. all of these small upstarts doing delivery and stuff like that. So it's like wow, the digital experience really matters. We gotta figure out our app strategy, we gotta figure out our delivery strategy, things like that, but that dynamic

28:20 I think ends up merging the considerations maybe more than they otherwise would. The big part of the ethos of this whole singleton idea, what got me interested in was the ability to study, like you said, I love the Magnus Carlson example. It's so perfect. Like he wins the trivia for Jazz. This is great. When you think about the deep lore of companies and companies that you've studied, I'm thinking Dutch East India Company, that kind of thing. What very old companies

28:45 have you been the most interested in, learn the most from been the most curious about. Why? I think they're almost all interesting. The question is almost is there something like your present circumstances that gives you reason to care?

28:58 And to find it memorable. I read a fairly lengthy history of Dubant, the chemical company, not that long ago, and it's super interesting. And as you pull on that thread and the history of the chemical industry and how it kind of came from the dye industry and eastern France and Western Germany. And then the various changes it went through and how it gave rise to the pharma sector and the whole thing is just super interesting. The chemical industry was one of the early technology industries in the sense that

29:25 There weren't that many businesses with Such uncertain R D where you didn't know what the properties of the chemicals you would discover would be. And so maybe it had some of the characteristics of some of the questions and problems faced by modern technology. And so perhaps it's interesting to see some of those parallels. It's interesting to see that well, We We published this book by Mike Malone few years ago.

29:46 The big score in early history of the semiconductor industry. I think it's maybe surprising and striking that book is Maybe your naive model would be that somebody discovers something. one of these companies and they're like wow it's a really important thing. I'm gonna go start a company about rounded myself. So they can internalize the gain or whatever.

30:02 Course, what actually happens with every case as far as I can tell is person discovers a thing, they're like, wow, this is awesome. We should totally go do this. We the company they're at. And they'll try to convince their management that Yeah, we should take it seriously, whatever. And management refuses and is oblivious to it or doesn't think it'll work or is important or whatever. And then after two years of trying to convince everyone around them that this is important, eventually in frustration and out of a desire to just have the thing exist in the world, they go and do it themselves. But awesome, I get to start a company. It's Christ. Okay, fine. If I have to go do this myself, I will, but it's almost out of this sense of obligation to the thing, to the discovery.

30:37 It was interesting to see In the early chemical industry, you've the same dynamic. And so this just seems to be not a thing about sort of Silicon Valley, exactly, but this deeper thing about human nature. You extract things like that, but I wouldn't say that DuPont is one of Striped top invoices. Tell you a funny story.

30:53 Mom when we were growing up. ran a Company, her own business. called S U T still exists and still does. quality training, a kind of quality assurance training, ISO 9000, things like that. And in particular, there are a lot of still are a lot of American multinational firms with

31:10 operations in Ireland that they would have had a significant demand for doing quality training for their employees. But There's definitely a lot to learn from The And it's like a business cliche, but Six Sigma lean manufacturing.

31:24 Process optimization sphere. It's a lot to learn. But There are very important limitations. And I think it's not an original insight by us.

31:34 But a lot of people comment on the fact that So much of modern management. Culture and theory. Stems from Basically 1950s command and control manufacturing organizations, and we have aped their ways of working. And in particular,

31:50 You're used to working with stuff. That can be measured, which sounds kind of obvious, but you know, but I have inventory that's at various stages of the production process. And for example, I can think about a balance sheet. The same works or doesn't in a fairly binary way at the end of the process. Exactly. We can determine was this part manufacture correctly or not. We're working with all this extremely legible space. And what we find so interesting about

32:13 Software engineering. as a domain. Is No one can do it that well. There's buildings going up around us. We were to ask the Guys building that office tower.

32:23 Is there a much better way to build building like, no, what are you talking about? You pour the foundation, then you do this, that we figured out how to build buildings. Then if you go interview someone at Google or Microsoft, or I'm not singling out any large company, you ask them what percentage Productivity do they think they're running at compared to the total theoretical productivity? I think they generally tell you what, 20% or something like that. And part of it comes from the lack of legibility in what you're working with. I sometimes joke here that whenever we talk about resourcing. And how we should resource very initiatives at Stripe. People often want to talk in terms of heads. This is a thing that needs five heads or 10 heads for a year or something like that. And I always want to get them to denominated in kilograms. We need five hundred kilograms or a thousand kilograms of engineers. You're like, but that's absurd. That's the point. So is five heads or ten heads. This thing needs a technical solution that could require one month or could require one year if you screw it up and do it badly. But again, we lack the legibility, we lack the meta understanding of software engineering as a domain. To be able to have good

33:24 Ways of reasoning about that. And so I think the fact that everyone in the industry Fine software engineering. so challenging to measure to do well is part of the fun of it. I mean the places where we do do it well and part of the opportunity for Stripe. Exactly. I was gonna say if the convertibility or elasticity between dollars and good software was straightforward, then the opportunity for startups in general and Stripe in particular would presume to be way more limited than it is, and that Lots of companies can afford to spend way more on building good financial infrastructure than we can. This is the famous buffers with a billion dollars. It is with a billion dollars test she talked about the tests of a good industry. is one where imagine

34:01 Some Rich guy gave his son. A billion dollars to go blow on building a company in this industry. There are lots of places like real estate or whatever where you can actually have a pretty good swing at it. And they will make life harder for you. Whereas I think there's lots of people who have tried to put a billion dollars competing in this or other software industries. And it's really hard to just turn a billion dollars into high quality software. Just ask the US government. Right.

34:25 To that point, I think we've probably learned as much from Because software, I don't want to say uniquely because I don't know enough about other sectors, but because let's say At least software to this intersection of creative work and mechanical industrial work. Half building a bridge, half half running a bestseller or something. Yeah. There's a different version that you could use.

34:45 We've learned a lot from science and learned a lot from creative domains generally. I think studying Hollywood From this line is is very interesting. I don't think that there are like directly transferable Ideas, I think. What's an example like about Hollywood that would be interesting?

35:00 In Hollywood, and I don't pretend to be an expert in Hollywood. You also can't just spend five hundred million dollars to make a good movie. Oh gosh. You really need the auture. The whole thing is pointless unless someone has a vision. So often at Stripe we're discussing something And Maybe yes, in theory we should

35:18 Do something in this space. But the real question is, is there a specific person who has a vision here? And There's a hundred things that we would love to go fund tomorrow if there was a a specific person with a vision. Of course, as Hollywood shows and this is just intuitively obvious. Division's not enough. have some degree of executionability and the whatever skills are required in the domain and so on. There's an illegible trace of Do they have the vision? I guess is the vision a good one.

35:42 Where If absent, the whole thing is just somehow going to be a failure. There's something about the unquantifiability of taste and judgment and how that makes Generally, I think that's tough for organizations to deal with because you can't build robust processes around that. But at least in Hollywood

35:59 But that corporate desire to build robust processes about things is an implicit belief system. And then like in science, a fact that really stuck with me is Gertie and Carl Corey. ran a lab at the University of Washington. in the couple of decades after World War Two. Six of their students went on to win Nobel Prizes. Wow.

36:18 University of Washington's a good university, but You can't tell a story as to It wasn't the single best university so they didn't just skim the cream of the very best students. It's not just about I think the characteristics of the students coming in. There aren't that many Nobel prices one Nobel here. I think we're all one in either medicine or chemistry.

36:35 That's two prizes a year. And so I think it's this incredibly vivid demonstration of how there's something that they knew or that was somehow embodied at their lab that was transmitted to these people that was incredibly important that made them collectively the students in their careers vastly more successful on average than the rest of that population. And again, I think this is something that is hard to quantify. It's hard to even put your finger on what it is, but it's this really rich demonstration of the potency of tacit knowledge.

37:04 I think for Complicated intellectual work in general, that tacit knowledge that has to be transmitted through mentorship is the rule, not the exception. And a lot of our intuitions, like, for example, our desire to enable tenure at Stripe is substantially informed by this, where if we're in a superficial domain where I don't know, you can come in basically knowing it already, and then after two years, you're not that much better than the person who started last week. That would be one thing I think might prescribe one set of personnel and

37:32 HR practices, but We're in a domain where I think the returns to experience and the returns to knowledge. Are really extensive. having six years of context in our domain gives you a tremendous advantage over somebody who just arrived.

37:45 I think we're informed by some of these other places and may just On the Hollywood point, if I don't know if you've ever looked at this book, not knowing much about Hollywood. I found it very interesting. There's an oral history of CAA, the agency. that I found to somehow be a really good idea. I also love the idea of packaging. Just that as a technology. packaging doesn't happen in business all that often and I always wondered why not. There's a lot in Hollywood that I think is

38:08 Super interesting. One other random one to talk about is it's not published as a book, but you can get a San Isdot PDF if you read around your Prospectives on McKinsey, which is McKinsey. I've heard of this one, but this one I haven't read. I'm sure it's in the dark web somewhere. If you've enough Bitcoin at your disposal. The professional Services just I was reminded as you discussed uh tenure.

38:27 Professional services firms really take Training, seriously? law firms, accountancy firms, consulting firms, and they take it much more seriously than I think most Silicon Valley companies. I think that's something we definitely looked at is how do you have People who are experienced with Stripe. Do a good job of spinning up.

38:45 people who are but there's a case team leader at a consulting firm and they are really responsible for both the work Which is done by the more junior people and for those people's development. And they have to do so much of it because a lot of people graduate out that they get really in the practice of it. But I think there's something really interesting to study there of companies that by virtue of their business model and by virtue of just how they work have to take training up new people incredibly seriously and just spend way more time on it than your traditional tech company, where they people have a four week boot camp and then off you go. As I was thinking about Stripe on the Way up here, what is it about the business that's different or unique? I won't pick on any one other developer facing tooling company or something, but there's plenty of other companies that built products originally designed for developers that didn't achieve this status of

39:29 Almost striped as a state of being. It has this ambient. quality about it. that and you can just see it in the way people Talk about stripe. as a company, which of course has a lot to do with both of you, but also it's achieved this thing as an entity separate from the both of you.

39:44 And I'm curious why you think that is, and how much of that Is a lucky random side effect. How much of that was Really deliberate. based on decisions you made or the kind of company that you wanted to build. Because

39:57 Whether you want it to or not, it has come to embody a certain era of technology business. In a way that if you looked at other companies that also build similar ish products, let's say four developers in the early days, did not achieve that same thing. I'm curious to what you would attribute. That difference.

40:13 I think part of it is We're a self serve product. for a fairly ubiquitous need. In a domain where it's actually hard to be self served. if the audiences creators and founders and business owners, they tend to be kind of exacting in their judgments kind of have to be because they are with respect to their own thing. And so I think a lot of the other developer oriented companies take Databricks unequivocally an awesome company.

40:35 But Tommy, our youngest brother, mentioned that he's seeing a physiotherapist. But physiotherapist mentioned they were using stripe. I presume that physiotherapist is not using data breaks. And so I think some of it is probably just a bit of awesome if they were though. Yeah, really want to meet this person. The fact that we work with Amazon and Ford and Hertz and these giant companies

40:56 data bricks, of course, also serve the enterprise, but that we also kind of because at the low end is part of it. People that stribe Really? Care. Catchphrase the stripe of really, really, really caring.

41:09 I think the returns to care to sweating details and so on are also unquantifiable. And part of the problem with them is It's brand thing and so you can in any narrow individual case you can coast on not caring. If Apple sent you a poorly designed invitation to something, you would still go because the overall halo of credibility that they've accrued over multiple decades will carry them through even a single poorly executed thing. But that means the local incentives. To care. Are actually

41:38 not that strong as collective action or this public goods problem within the company. We can benefit from everybody else's work. And so I think the aggregate long term returns of caring a lot are super high, but the individual local returns are low. And that creates this collective action problem. Most companies think fail to solve it. And I don't particularly credit us. I think this is deeply embodied by a very large fraction of the first hundred people that's tried, but it became this thing with a tremendous amount of of Momentum and endurance and

42:08 People at Stripe today are still maniacal about padding issues and spacing issues and consistency issues were used. This word over here, but that word over there. It adds up. Is there a detail you're most proud of of this type? In Stripes History.

42:24 Well the one that people have in sight is We Show you your API keys. In sample code. And a lot of errors in Stripe will tell you.

42:34 what we thought you were trying to do, not just what the actual mistake is. And it's funny, even though some of those were implemented 10 years ago, we'll still see tweet occasionally where we saved somebody a few hours because Not only do we tell them that their thing didn't work. We told them what we think they were most likely trying to do instead. To be controversial here. I think It's very harmful to bring consumer

42:57 Product. Thinking. to a space like Stripe or I think B2B space generally. Because I think there's implicit or explicit You just have users by the wheelbarrow.

43:09 You treat them in in aggregates. Everything is statistically testing. On the active users for those who don't see technology, you know, again, people in the value say mouse as their way of referring to the people who are using the product. But you are just I'm not a number, I'm a free man. No, like you're a number. Everything is statistical and everything is linked in with dark patterns. It's like, oh, complete your profile, everything is nudging you towards some business outcome. And what we really try to constantly clapper people over the head with a stripe is these are people starting a business who are generally Really talented, and they have some great idea and they have a vision for it, and they're making it happen. And they have a pretty sophisticated understanding of their space and

43:50 business and finance and everything like that. And you can just see it if you go talk to any of them. We have another value of stripe that we try to really inculcate is talking up to the user. When you're writing product marketing copy and your patron of a sort spend a lot of time you know reviewing that, you're not trying to bamboozle them with some highfalutin statements. You're trying to explain to a busy business owner who, again, go back to Charlie Munger's multiple mental models, is constantly switching between product and business and finance all these things, why this thing will solve some specific need that they have, but it's not Hucsterism, it's not sloganeering. It's having a technical discussion with someone who really knows their shit. I have to mention this weekly all hands. We every week have user Uh

44:32 This fireside, we call it, where well just for you know 10 or 15 minutes, again, they're busy, we'll interview them about Their business, how they started it, how they got there, how they're using Stripe, what they'd like to see do better, you know, us do better, everything like that. I think that's important to stay connected to this because again, I think the classic technology product management domain. Is it best I would say

44:55 It's not respectful enough of who the users actually are and how capable they are. I think that's gonna be too normative. Maybe it works fine for those businesses but not our business. Exactly. The thing that we have to take seriously is Any sign up could in principle be in not that many years in the future. Five percent of our revenue. And so

45:12 Allowing Because they got really big, not because we got really small. Allowing any of them to fall off the wagon and just shrugging our shoulders. If the distribution of possible sizes of our users was normal, I think you could shrug your shoulders. And if one percent of them something goes wrong, then okay, that's unfortunate. We'd like to be less, but like it's fine. But Our tails are really heavy. It's koshy or something, but it's not normal.

45:36 It's something with a lot of ketosis. And Worse. sort of the concern you have to have is if something is going wrong for these customers, maybe it's actually biased and correlated so that it's the ones who are more successful who are more likely to encounter the issues. And so therefore I think your intuition has to be

45:52 John's point, kind of exactly the opposite of the conduit domain, where when you hear about a single case of something going wrong, your ears really prick up and you get interested because, huh, maybe it's the companies that are selling a ton in this new market. We had in the early days of Stripe was businesses implementing these multi-sided ecosystems are consistently running into compliance problems and payout problems and mechanical problems, whatever, and an attitude of well, not that many of our customers are doing that. Shrug would have meant that wouldn't have discovered this incredible opportunity that has been a huge deal for us. We're big into anecdotes here.

46:24 This is probably the correct amount of data in the world. People have realized that data is important, but sometimes they underestimate. Anecdotes. Because it surfaces the questions that you should be asking. Data is good if you have a specific question and you want the answer to us, but I mentioned our growing up, our Dad for a while ran a hotel, small hotel on the shores of Loch Durg in Ireland. And what I find funny is You do not need to run a complex user research study.

46:49 To know if you're doing a good or bad job in a hotel. You can do that. You can just walk around and go, Oh my God, this Waiter is terrible because like these people have been waiting half an hour for their food. You just walk around and the questions you should be asking slap you in the face. Sometimes literally. People talk about management by walking around, but they talk about it in an internal management. You gotta do the management. By walking around with the customers and in the actual market.

47:21 How much more likely do you think it was that you became entrepreneurs given that both your parents were? Is that something we can simulate? What makes more businesses? My dad was an entrepreneur. I'm an entrepreneur. Your parents both were. You both are maybe there's stats on this, we can just answer the question, but For you personally, how much of an influence was it?

47:37 That They were both doing that. And you watch them. Gotta do the twin studies, find some twins separate here. Exactly. Yeah. I remember when we were playing in the garden when we were like six and eight or something, we used to often play uh we know internet at that age, so you know, we have to play in the garden and we'd play as I don't know if you're starting a company, but I guess running a company. I guess just because that's our parents.

47:56 We'd have been firemen. It's hard for me to say no, it had no effect. When I think back to those anecdotes, whenever I think we're first engineer your old childhood and even if it is somehow tributable to our parents, I don't know, maybe it's genetic, maybe we lack the risk averse gene or something, but we've underdeveloped. Pre-frontal. courtes or something, but yeah, it's probably not really coincidental.

48:15 You probably remember seeing this with your diet. Australian business goes in and out of fashion and famously after the social network Everyone decided they want to go start a business, but at least I think a lot of what we saw growing up was Honestly, maybe even just the work ethic. There's other things and the customer centricity and things like that. But if you just take a single thing away, it's absolute just. hours on the problem that you have to put on it is maybe useful to see firsthand. And I think that probably subconsciously seeps in. And again, I think you probably saw it with your dad. And I think

48:46 Maybe if you haven't seen that front. Maybe you're operating with a disadvantage if you haven't just seen that firsthand to really ingrain it with you. We work quite hard on Stripe, but I think we work less hard on Stripe than our dad To the hotel or or Mom that at this training company and just

49:01 We are not at the office. For most of the weekend. He was at his office. Necessarily. And so Even just that. We get to take weekends.

49:09 I've seen you talk a lot about your relationship with your parents and their businesses and everything growing up. What's it like as adults? How has it shifted? in interesting or surprising ways. as you become adults and getting married and the whole deal. What has shifted most and what's it like now? Well it's interesting to watch now with a bit more adult perspective to see of where maybe

49:29 our childhood perceptions weren't correct and We used to make fun of our mom growing up for working a lot and in a admiring way. Now she retired nominally a few years ago. Exactly. She uh she's had multiple failed attempts to retire. She tried to retire a few years ago and now somehow has found herself. I think she helps a hospital uh our youngest brother has a Today, Roger, mild physical disability, so she

49:53 became very interested in its treatment and how to do that well and very long story short, ended up writing a book about successful treatment for cerebral palsy. And through that learn that well, there are these other conditions that don't have good treatment manuals for them. And so she's working with uh employed, in fact, by a hospital at Minnesota, where they're collaborating to produce a whole series of books on the treatment of different physical conditions. And so I think five of those books will come out for the next 12 months. And This is her retirement.

50:21 Definitely not show for us to watch as adults. You asked um about old organizations coming through to learn to lawfront. Was it the Royal Society who had the mission of reducing the gap between best practice and standard practice. Good question. I don't remember. Part of us mom is doing is also working, we're doing some stuff philanthropic group in Ireland, improving cereballsy care. And again, it's amazing the degree to which.

50:44 different treatments are happen on a geographical basis for No real good reason. condition doesn't know where you are. And so they have some of the leading treatments in the world for cerebral policy are in Australia, where they've developed these interventions that work really well. And so they're now working on rolling them out. I mean it's not just these, they're also doing some research and stuff like that in Ireland, but I get very excited about the idea of how can we Advance.

51:08 The state of the art. But even just bringing things up to the stage of the art in a lot of domains really has, I guess, the entirety of the lean manufacturing rollout in the United States in the seventies and eighties was just bringing things up to the state of the art. Did you think about the future of Stripe, you guys are so lucky, you have so much time to Do whatever the answer to my next question is. What do you want it to be?

51:27 That it's not yet. And or What do you want it to be more of? Like most specifically. In the decades to come.

51:35 An important thing that's drive today. is that we're always trying to remind people who join because Stripe is say twelve years post launch, and so they might appreciate this necessarily, that Just measure it against the goals we set out to solve when we started, there's still Not only a lot to do, but

51:52 In certain ways We're even further from solving them than we were at the outset, where in the very beginning of Stripe and say twenty eleven. accepting online payments or moving money online basically meant facilitating pretty basic, pretty straightforward credit card transactions. But now over the last couple of years there's been this incredible proliferation of pay and methods. usually run by central banks, but you know, also different wallets and

52:14 national payment schemes and so forth to the Vattage. The good news is they've brought immense numbers, like billions of new people online and enfranchise them to participate in the internet economy. But the flip side is they've made the landscape so much more complicated. And we're now in this funny position where even very sophisticated companies are Often. inadvertently restricting their customer bases to be only a relatively small percentage of what they could be.

52:40 if they're sort of comporting themselves properly. So just assessed against kind of the most basic criteria of Is Stripe making it easy for a business to accept revenue from, let's say at least 90% of internet users, the standard for that has gotten an awful lot higher. And while Stripe is now way more powerful than it ever was in the past, it's interesting that just the complexities of the world are also advancing considerably. And that's before you get into all the other stuff that's happening around. different tax things and regulatory things and data privacy things. And now you need to have an Android app and an iPhone app, and the complexity of the whole landscape is considerable. So We want stripe to be a

53:16 global programmable money movement engine for All of these different use cases. And possibilities. available to businesses everywhere in the world and capable of executing transactions on behalf of people anywhere in the world. And as we just think of the N dimensional matrix of functionality entailed in that.

53:36 We still have a long way to go. And then the second party question was how do we want strike to B? What I'm getting at is say you're retired. Hopefully better than your mom and you're in your rocking chair. And you want Stripe to be described as X, Y, and Z.

53:49 You'll be able to feel like you can rest easy, you've done a good job because Stripe is blank or has done blank, like that kind of looking backward. Have you read Tim Wu's book, The Master Switch? I really like that book and there's lots of random I learned lots about the history of radio that I didn't know. And so it's always fun in that way. But when you think about it.

54:09 As you reflect on it, you should be scared because Basically the takeaway from the book is Every other information network that has been started has started out with lots of innovation and the healthy ecosystem. Low barriers entry. Exactly, low barriers to entity, and has ended up as a monoculture regulation captured

54:31 oligopoly with two or three big players that get to extract rents. And that has happened with every other information network to date. Well we'll see if it happens in unsettling those that Temu leaves you on. The internet is different and the internet is I think one could argue a bigger deal than all those other technologies.

54:50 For lots of reasons. But The warning signs are there and you see this a lot where a lot of Internet commerce stops us. national borders, which should not be like the packets don't travel any slower as they cross them. The gravity equation in trade says that trade falls off with the square of distance. And that maybe makes sense if you're shipping beef, it goes off. It's complex to ship across countries, you have to refrigerate it, everything like that. It makes less sense

55:18 When you're shipping software, and yet the gravity equation still exists in Digital trade. And so Again, I think part of our hope would be there is a real plausible world. Where we end up with four or five big internet companies that are the internet companies that have a really outsized share of the

55:38 online activity happening there. And it's not that it's illegal to start a company, it's not that impossible to start a company, but The barriers are so high to break through that no one is preventing you from starting at telco, but nobody does because the barriers and the costs are so high. That would clearly be a really bad outcome and should Make us sad. And so

55:58 I think if we could feel like we contributed to The next seventy years. of vibrancy in the internet economy, which of course is just becoming the global economy generally, where you're continuing to make it accessible for new entrants to come in and compete on a level playing field with all the existing folks. I'd be pretty happy with that. I love that.

56:16 I think it's Peter Thiel's notion that diagram of an investing perspective, the best things being seems like a bad idea and is a good idea. The intersection is where you want to live. And I'm curious. I think last time we talked in this format, you said Something about

56:30 The most impressive thing about the big internet companies Is that they've ridden multiple waves. They weren't one trick ponies. They successfully Evolved. I wonder how you square those two things. The waves maybe seemed obvious. Maybe one of us might have been crypto, now it might be AI.

56:45 might be something else, material science or biotechnology or something. I don't know. How do you think about that zero billion Jensen Huang idea with the Peter Tiel idea? Up against AI is obviously the thing we should focus on. As you think about Stripe's future.

57:00 I think the nature of the problem for a Facebook or for a Snapchat or a Pinterest or something is actually quite different because They're serving a consumer sensibility. It's ultimately a kind of entertainment product, utility and messaging and so forth, but some significant portion of the use is entertainment.

57:18 And there's a lot of in principle fungibility across different Pursuits there and on some level watching Instagram stories is competing with Netflix. Maybe it's even competing with Chat GPT. I don't know.

57:31 Because Consumer taste. by its nature evolves, I think that necessarily puts one into this mode of wave writing. Whereas Stripe operates at a lower level of the pace layering diagram.

57:45 You've fashion and infrastructure and culture and these different sedimentary layers evolving and changing on different timescales. And At the infrastructure layer that's stripe.

57:56 Things change more slowly. That's Bad news in the sense that It's not possible to have these

58:03 Insane meteoric. appreciations and The overwhelm majority of cases. But the flip side is if you get things right, you can compound for a very long time. And I've always found it striking that the internet Really never grew in any given year at an insane rate. It's just been this incredibly durable 30% a year compounding for several decades.

58:23 one point three to the forty just ends up being a large number. So I think Stripe has more of those dynamics. And you can see this if you look at businesses like Visa or MasterCard or something, where They obviously conceived In a pre internet world and yet The wave of the internet.

58:40 Mm. obviously changed their business in various ways, but it didn't fundamentally restructure it. And With everything on the horizon, it's still the case they're going to be businesses and transactions and exchanges and Associated

58:54 Challenges and complexities that money could be exchanged for the spaces. So I think Stripe, because of its position in the ecosystem, needs to strike the right balance between spotting the opportunity in these waves, and we're excited about the fact that basically all of the AI companies Are implementing revenue models at the outset of necessity because it's expensive to run inference and training everything. And basically all of those companies are doing it on Stripe. It's hard to find an exception. And not only are they using Stripe for the most basic payment, but they're using all the higher level functionality on top of that because they have sophisticated needs and they are sophisticated companies. Jump back for a second to just your previous question of sort of how on Stripe to B. We've talked a lot, I guess, over the course of this conversation about prosperity and growth and why we care about that and how we think strike can be implicated and all that's obviously important and true, but the thing we may haven't said or touched on as much that just in your Invocation of the rocking chair and

59:45 seepia tones and so on looking back, something about beauty and craft. If Stripe is a monstrously successful business, But what we make isn't beautiful and stripe doesn't embody a culture of Incredibly exacting. Craftsmanship.

1:00:01 I'll be much less happy. I think the returns to Both of those things in the world are really high. I think even beyond the peculiary or financial returns, I think that just the world's uglier than it needs to be. It's a free lunch where

1:00:14 One can just do things well or poorly and Beauty is not a rivalrous good. We can do some architecture, but My intuition. Is it more of Stripe success than

1:00:23 One would think. is downstream of the fact that People like beautiful things and for rational reasons. Because what does a beautiful thing tell you? Well, it tells you the person who made it really cared, and you can observe some superficial details. But probably they didn't only care about those and then everything else in a very slapdash way. And so

1:00:44 If you care about the infrastructure being holistically good, indexing on the superficial characteristics that you can actually observe is not an irrational thing to do. There's a reason there's a very intricate filigree on the one dollar bill. Yeah, right. And then I think the kinds of Like there's something about the talent selection, the people who like good APIs and good architecture. Like good software architecture t tend surprise.

1:01:08 things being done nicely and well in other domains and so on. So I think there's this a nice warm and fuzzy thing. It's very rational. I think there's this bundle of self reinforcing loops. Such that. it is a sensible thing to do. I think people behave quite differently in spaces that are beautiful. Banks had it figured out a hundred years ago where bank buildings should be nice. We're just continuing to make financial services. If someone really convinced me that the financial returns to craftsmanship and beauty, which I believe are greater, are not greater. It's still do it. I still do it. Life's too short.

1:01:39 If you think back on Stripe's history And had to identify the most important, impactful, memorable conversation between the two of you. What would it be? Individual conversation, I mean.

1:01:50 I remember a conversation we had, I remember even the restaurant. We had it at In the summer of two thousand and Ten. When we've been working on Stripe for seven months.

1:02:03 And the question was right there. Yeah. No, no, no. This was whether you were gonna drop out or not. Oh, yeah, yeah. Or I guess we were gonna drop out, but John was the one more on the fence. And it was this probably Somewhat dispassionate conversation. as just how big a deal could Stripe be? And we just gotten excited about it in the beginning of

1:02:20 It's fun and cool to solve this problem. But then we're talking almost for the first time about like, well, where could it really go? If this is not just a little random side project, what could it become? And that was I think the first time we'd ever sort of really taken a step back and talked about In much more in coagent larva form some of these same ideas that we're discussing here. I remember that one. The flip answer is

1:02:42 conversation back in two thousand nine when we were walking home from dinner and just decided to start uh working on Stripe and As I said, you know, how hard can it be? Famous last words. Yeah, I think a more serious answer might be that conversation at um on Valencia Street, the wine bar where you were gross and you were just down maybe two or three years into stripe. Is this even working? Is this even worthwhile, not growing fast enough? Things like that. I think that actually maybe gets to One thing we're very lucky to have is a good team dynamic where I think it's really

1:03:13 It's just like a lot for anyone. I don't know how you do it. It's a lot for any one person to have on their shoulders. I think two people will naturally have various cycles that they go and I, of course, just like what are you talking about? It's great. It's gonna be fabulous. But I think just because he was maybe in a more pessimistic humor at that point, and I was in an optimistic humor, and If you're just naturally will have highs and lows, you'll tend to cancel each other out and act as dampeners for each other, or even just act as someone to talk through the issues with and stuff like that. I feel very fortunate that I think not that many people have real partnerships that they can work on something worthwhile on on the multi decade horizon. And again, maybe if more those partnerships were formed we get more interesting multi decades.

1:03:55 opportunities'cause again, I think we think with Stripe. We spent the first ten years getting the table stake stuff out of the way. And now the next 20 years, you could do a bunch of the really interesting stuff where you have the platform and the ability and the fighting fit army to actually go execute on it. But a lot of people just don't Get to that point.

1:04:15 The same vein. Setting aside maybe the very earliest years. Is there a defining moment in the business's history that comes to mind? Very continuous business. Um

1:04:26 Everything we do. Starts very small and then just compounds for a long time. And Atlas is now a double digit percentage of all Delaware and corporations in the US. And that's like shooting. multinationals incorporating subsidiaries also are incorporations of the true startups. I mean I don't know the exact number is, but it's a lot.

1:04:45 We launch Atlas in I think twenty Fourteen or fifteen. And so but it's just eight years of compounding to now be really big. But everything we do has that shape. There's a product that I'm really excited about this year that I'll I'll leave nameless for now. It's doing super well. I think it's gonna be a huge deal for our users in a bunch of different ways over the next couple of years.

1:05:06 We've been working on version of this product since literally twenty fourteen. I think after a decade. It's going to be say next year, if that's its tenth anniversary, it's going to be phenomenal but It just took iterating for that long. We're not a business of discontinuities. You think about the way you spend your time today, and you could go show your day to the twenty five year old version of View.

1:05:27 In what ways would That twenty five year old virgin be most surprised about how you spend your time now. For you, presumably meeting with customers. Yeah, there's a lot of customer time.

1:05:37 Which I find very energising and I did a lot of it back then as well, but I think Maybe I would have been surprised by how continuous that. It's also like who they are.

1:05:47 Yeah, that's one real big surprise. And again, it converts over into how we spend time and who we spend time with. We've been really surprised The degree to which Basically large companies Have ended up needing Stripe.

1:06:00 And so In our series A pitch deck. We were explaining why you should care about a business that sells to developers and startups. And so we had a slide in there where we're like, and obviously, you know, some Amazon will never use Stripe, but there's a lot of developers out there, there's a lot of startups, and so this can still be a big deal. And of course, we've now been working with Amazon for five years and it's a super productive partnership. I would do all sorts of things with them and I spend a bunch of time with our counterparties over there and lots of other similar large companies in a similar way. And that's maybe part of again the how the product thing works where

1:06:32 I think Patrick probably spends more time internally with the technology team as well. In the abstract, how should things work? What do we want, you know, a well designed global money movement system to be? And I'll probably spend more time With customers. There saying I really need you to solve X for me, and those two can be in the middle when it comes to processing.

1:06:58 Versus Instacard. Yeah, exactly. Or for You name it, it's the complexion of the customer base. A lot faster than surprise me where as John says. These companies want to be and have realized the importance. Mark Andreessen wrote The Software He's eating the World piece in 2009 and the Wall Street Journal published this. I think it's very interesting. Yeah. I think it's very interesting that the Wall Street Journal published it in the sense that In what way is that a contrarian point of view? And it's hard to put ourselves back in the mindset of oh nine.

1:07:26 The the idea that software might be important was in fact this. combative sentiment to express in the Wall Street Journal opinion pages. When Stripe started out, the idea that we were focusing on the needs of startups. Was certainly a detractor in the eyes of established enterprises. Whereas now it's inverted so completely where

1:07:46 Every company of any size and significance and Of the businesses that have retained any degree of agility, which is most of them. They all have plans for how to take advantage of the possibilities of the internet and the possibilities of ML and the possibilities of these global customer bases and so on. And they know that while if they don't

1:08:06 Execute us. Some crop of startups is going to come along and sort of do it in their sector for them. And so now when we go and talk to the CIO of some giant retailer or some large manufacturing company or something. The fact that we're Working with

1:08:22 actually the world's most innovative, at least new companies, is a very strong kind of positive in their eyes. This funny inversion where the same trait went from being detractor to really being a selling point. And they want to hear what are the upstarts doing. So that they can go and roll it out themselves. And honestly, I've been impressed where take Hertz as an example, you know, we're discussing them yesterday. They're doing a really big deployment with Stripe.

1:08:45 They're really excellent to work with. Doing doing a bunch of stuff with United Healthcare and Optimum and Big companies. Yeah, yeah. And I think a lot of these companies to a greater extent than people appreciate have have actually hired some really good talent. Maybe twenty years ago they didn't have people who really get software. Now in a lot of cases they do. And a lot of our engagements with those businesses are just really productive. One of the coolest things in my life recently is that I have kids of a certain age now. Where the kids are starting to do things that make me very proud for the first time. They're developing agency.

1:09:14 And they're doing things where it blows your hair back, like, Oh my God, I can't believe they did this. It's made me really love asking people this question about Pride. Not in themselves, but in other people. I would love to hear from each of you what about the other Makes them most proud.

1:09:30 Exactly. Introspection and vulnerability. Well look, I mean this is very relevant for this discussion. John has been serving as our interim CFO. For most of this year and

1:09:47 I think it has always been true that John has a scholar of business and When we were living together in an apartment in San Francisco, I'd be shuffling to bed and he'd be yelling out to me from the bedroom. You'll never guess what they said on this earnings transcript or whatever. John, I'm brushing my teeth. There's a way for both of us, we're normally engaging in the business as co-founders with one layer of indirection. And so we're very lucky to have Stefan Tomlinson joining as TFO in a couple of weeks as of the time of this recording. Hands out people, in fact, have started, but it's been very fun for me to watch John actually temporarily inhabit the role of CFO. And I think it's been significantly to Stripe's benefit. And so we're both extremely excited about Stefan.

1:10:28 In the same way that I'm always trying to find a productive Equilibrium with our product leaders where me to empower them and a lot of those people are really fantastic and it would be a mistake of me to be getting in their way. But want to find some way to have some end of productive meddling.

1:10:44 I think similarly for John, I've been encouraging him to make sure that we retain sufficient productive meddling on the finance side because Very good at it. When we had all that discussion about policy and craft and everything, that's all Patrick. And In particular He has a remarkable

1:11:01 I for it. And Cares about us. It kind of has to be good because something will be

1:11:09 wrong in the universe. He'll be itching. He'll be sitting in awkwardly in his chair if the stuff isn't good. And we'll be putting the hours we'll be there very late the night before our conference, ensuring that the talks are in good form or whatever. But I think how that bleeds over is People really One two. Do great work.

1:11:30 Because of The expectations that They know Patrick has of them and that now they have of themselves. And I think again, as we talk about culture, there's a really nice cultural thing as Stripe where there's tons of really talented people and again people who are meticulous.

1:11:46 In their craft at Stripe. But again, I think How to set an expectation and a culture there where people and maybe start out wanting to Do excellent craft.

1:11:57 Because it is expected by him of them and they end up wanting to do it. themselves. I was describing a capability of John's and probably the the lots of those, but maybe like another view of stripe would be that every organization You're also trying to balance these dichotomies. I think lots of things are dichotomies and

1:12:15 Trying to find a reasonable intermediate point, but maybe an important one and somehow one that we straddle is I'm grim and austere. And joyless. Complaining about the misplaced pixels. And all the rest. And John at the end. Everyone who knows him is cheerful and extroverted and sociable and is bringing a hundred of his closest stripe friends to the bar next door on Tuesday because it just opened and we need to, you know, inaugurate it. I think for an organization of humans,

1:12:44 That do great work. You actually do need both, where you're not gonna achieve super high expectations absent. the standards, but it also needs to be a group of people Where you want to spend time in it. Look, I don't think either of us actually are sort of on either end of the continuum here, and we're probably even less different.

1:13:00 On this continuum as individuals. Similarity highlights the contrast or something. It's a duo, but I think there's an interesting way organizations. Need both of those. The more Irish appropriate question might have been. What does the other do that makes your eyes roll the most easily? Oh well, that's the way to the same answer is actually to add another hour to the podcast for that. I think it's been incredibly. I know we're coming up on time. I had the pleasure of doing this with John before, and I have a traditional closing question, so I get to direct it at you this time since he's already answered it. What is the kindest thing that anyone's ever done for you?

1:13:34 I should have known this was coming, but I didn't prepare an answer. Everyone else is prepped for this, so you get to think about it. Apart from my parents. My

1:13:44 Principle. at our secondary school, which is the high school plus plus that I attended in Ireland, which was A public school and a very good public school, but a public school that It actually wasn't the closest public school, but our Relentlessly resourceful mom.

1:14:01 Far was. better than the most proximate one and Managed to find a way to basically we we had lived in its catchment area when the school was founded or something like she she found some way to persuade them to take us. Anyway. The principle. consistently let me

1:14:20 violate all sorts of policies and rules and turned a blind eye to Many things over the years. In such a way that I had a fabulous time in my five years there. And like at first it was I just want to read my books during class and I thought I was being very deviously and effectively furtive, having nobody notice No. Exactly. In the small little classroom. There's no way this teacher could spot this, but I learned subsequently that he had just quietly instructed all the teachers to not complain about my

1:14:50 ignoring I guess the class work and just reading my book. I did the homework and whatever took the test. I wasn't paying much attention to class. And then the stage I wanted to take some time out of school, mostly to spend it on working on this programming language and He found a way to categorize this so there's work to work in theory school. Yeah, so actually I did a lot of it physically in the school and part so he could argue while he's at school. You didn't ask me if you'd go into the classes and at the end I wanted to go to college in the US and

1:15:18 not do the standard examination that everyone in Ireland does and so on. And again he kept finding ways to make it work in theory. Very tragically, he died. A few years after I left school. Suddenly it premature and early age. And so I did thank him, but I I was

1:15:33 felt regretful that I never felt that I had sufficient opportunity to thank him. It's amazing how much this category of answer comes up. The two major ones are this one. Noticed something about me and

1:15:46 did something customized and shaped me in a certain way, or bet on me when they didn't need to. Some ways the same thing. It just comes up over and over again. I hope more and more people do that for others. I think you're doing a huge service. By highlighting those cases to a bunch of people who are in the position to do it.

1:16:02 I don't know if this was your intent in asking this question, or if this is now a side benefit. So I do this as a hobby, still as my favorite hobby, effectively. I'm focused on investing. But this is something I love to do it. And I didn't know how to do it. I'm not a journalist or anything, and so I was really into the mythology, Joseph Campbell's

1:16:22 hero's journey or whatever. And it's all the same story for all these great historical myths. And so I thought I would ask a question in the podcast that covered each of the nine stages of the hero's journey. And one of them, like stage three or four, is random helpers come and assist the hero on their quest before they get to the belly of the beast. And so the question was just what's the kindest thing? But I had these nine questions and the rest of them sucked. Don't ever cared. But that one always got an awesome answer. And so that's the only one that lasted. So that's where it came from. I wish I had higher intention. Oh that's really funny. Well I think you're now yeah creating more kind moments. Yeah, yeah, yeah. Well it's a testament to how interesting

1:16:58 Just the core thing that you have worked on and will continue to work on is the we didn't even get to in two hours AI and all these other amazing things happening in the world of technology. But I'm really glad that we focused on the core thing because that's what got you here and that's what you're focused on for the future. I'm deeply appreciative of the time and all the insight and all the detail that's gone into it. So thanks so much for your time. Thank you. Thank you. This is really fun. If you enjoyed this episode, check out joincolossis.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning.

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