Edit: Based on the published data I can find, Stripe and Coinbase alone have added more to their valuations in the last year than the total valuation of the top 50 YC-funded startups including Stripe and Coinbase was last year.
I think that correlation can be somewhat misleading, given that there has got be a strong correlation between timing of when those companies launched and their choice of initial programming languages.
I mean, nearly all of the top companies in that list were started in the very late '00s and early '10s time frame, when Ruby (and to a lesser extent Rails) was (a) very well established and (b) known for being a high-productivity language for small teams.
For example, NodeJS and Go barely existed when many of those companies were founded (or, in some cases like AirBnB, didn't exist), so I definitely think there is likely to be a different list of languages for top startups in 10 years time.
I do think, though, that it is definitely no accident that languages like Java and C++ appear way under-represented given their prevalence in the industry at large. My personal theory is that what is most important for developer productivity is the feedback loop between making a code change and being able to see that change in a running application. Scripting languages make it often as trivial as saving a file and refreshing, while compiled languages can, in addition to having a costly compile step, also have a very costly deployment step. I remember in the early 00s the painful experience of editing Java code and waiting nearly minutes for a local deploy step to get that code running again.
How doable is it to compile the data from all startups instead of just from YC?
I feel like this data should be one of the most important aspect of choosing a tech stack. Even though it’s hard to infer the data because there’s years of delay between inital tech stack choice and the success of the startup.
Super happy for the Stripe team. They deserve this.
I have worked in payments for over 10 years and I can tell you Stripe changed the game, made payments better and made it accessible to all.
Before Stripe payment processing was a nightmare. Payment processors had overly complicated APIs and poor documentation(if at all). The fee structures were intentionally not clear and plenty of them had minimum processing amounts and/or monthly fees which made payments processing (outside of PayPal) inaccessible to companies or individuals that lacked capital.
Stripe fixed the sh*t show that was payments by creating a really good payments API with clear documentation and a fee structure that was clear and affordable for even the smallest of companies.
Next Stripe created Atlas. Now let me tell you something, as someone that does not live in the US, but had a startup, this was huge. When I had a startup, and was looking for a local payment processor that could process in the US, they wanted to charge me thousands of dollars just to get started and that is when I personally knew a large chunk of their senior management.
Atlas (which I have never been a customer of) made the opening of a company in the US easy a which gives me and countless others access to Stripe, an affordable high quality payment processor.
And I can go on and on about the other things Stripe has done to make payments and finance on the internet better (connect, capital etc.).
Watching the Stripe rocket ship from a far has been amazing. They are changing payments and finance and I look forward to seeing them continue to innovate and push the limits of what can be done.
Stripe are an engineering first company. You even see the Collison brothers posting here on a regular basis. Creating great tech is built into the DNA of the company.
Great to see them investing further in their home country as well, and mentioning that some of their global leadership team will be based in Dublin.
This certainly makes Stripe the most valuable private startup in the world.
Where does Stripe rank among the world's most valuable private companies, though? It's easy to find lists of dubious quality like this: https://news.yahoo.com/10-most-valuable-private-companies-21..., but I'm sure there are more lurking. What are they?
Is Stripe unprofitable? What kind of scale are they going to reach that will push them over the edge into the black that they haven't been able to reach at the vast scale they already have?
If they are profitable, why go the expensive equity route rather than using retained earnings? Or bonds? American Airlines recently sold $10 billion of them at 5.5%. Surely Stripe could do just as well or better.
They are likely profitable and because raising cash is comically easy and cheap right now -- would you turn down $600MM in exchange for <1% of your company?
And when they inevitably do go public, they'll likely have a very pretty balance sheet, with a massive cash war-chest.
Keep in mind that they are a cash-heavy enterprise -- their risk exposure is any company that uses them goes bankrupt and they're on the hook for all the chargebacks.
Their blog post[0] describes some business that aren't allowed, but provides some insight into their exposure:
> We recognized that the private jet market is different and analyzed financial statements, payment flows, customer profiles, and more to fully understand the underlying mechanics of the business. We modeled OpenJet’s business and determined that the credit exposure was within an acceptable range. We engaged our banking partners with concrete financial analysis, put in controls to monitor risk as the company grows, and OpenJet successfully launched on Stripe.
Let's say OpenJet as an example has ~$10MM of annual revenue. Let's liberally assume people don't book flights out further out than 6 months -- so ~$5MM of annual revenue is up in the air, so to speak. If OpenJet goes bust tomorrow, OpenJet's creditors -- including Stripe -- are on the hook for anywhere from $0 to $5MM of outstanding fares that could get charged back.
That's just one business. From TFA:
> Stripe has ridden the wave of ecommerce growth, with more than 200,000 new companies in Europe signing up to the platform since the start of the pandemic. John Collison said it handled almost 5,000 transaction requests a second in 2020.
How many of these companies will go bust? Even if we assume Stripe is profitable, their losses are surely huge and unpredictable, so having a huge pile of cash helps insulate them against market swings and lets them take bigger risks on bigger, possibly riskier customers, which in turn helps them make even more money.
Keeping away from the public markets has allowed Stripe to keep a tight lid on financial details; it has not disclosed revenues or profitability.
However, a person close to the San Francisco-based company said it handles a larger volume of payments than its European rival Adyen, which has a market capitalisation of €60bn and processed €303.6bn in 2020.
Payment is just the entry point; from there they are probably going to expand into other quasi-bank services; the first low-hanging fruit that comes to mind is Advance Loans secured by CC receivables; easy, popular and highly lucrative.
Think about how much complexity Stripe abstracts away from you as its user. In the US it might seem "simple" in that it's just cards, but each network/acquirer behaves differently enough that even that isn't easy. Now incorporate payment methods that aren't cards -- which are way more popular than cards in other parts of the world. Then think about decoupling the payment method from the geo. And then decouple the pay-in from the pay-out. We're not even talking about their other products at this point, and already it's a pretty complex business.
The fact that we can think "what's so hard about that?" is declaring Stripe's moat without even knowing you did it.
I just listened to a podcast with Patrick Collison in which he listed the ways in which Stripe's market seemed unattractive when they started out. Dauntingly complex, highly regulated etc.
Anyone looking to compete with Stripe will have the same thought process and probably won't bother.
And if they do then they will have to execute as successfully as Stripe over an extended period.
Edit: Just to add that the podcast was "The Knowledge Project" [1] - just a fascinating conversation.
I don't think any reply to this comment mentioned Stripe's actual moat: vertical integration between their products.
HN loves Stripe's Payments API, but in my experience from having worked on payments at a large ecommerce unicorn, APIs from companies like Adyen and Checkout.com are just as easy to work with.
Stripe's real moat is that they offer so many useful products around payments and finance that integrate really well. You can get fraud detection, billing, invoicing etc. from other merchants, or you can build your own, but it's probably cheaper (and much simpler) to use Stripe for all of that.
At the moment this is true from small to medium sized companies. Past a certain size you will most likely be using multiple Payment Service Providers anyway, so the vertical integration is not as useful.
Think of it this way: there is no opportunity for an new entrant into this market almost globally. Stripe's fee is low enough and its API is super easy to use and the brand is well loved by most ecommerce companies. A new entrant will have to go up against this enormous amount of goodwill that Stripe has accumulated. The only danger to Stripe is if a major bank decides to get into this space. I work for a major bank and let me assure you that the technical expertise , market savvy and wisdom to pull off a new venture like this just doesnt exist in banks.
they locked in the bottom up approach. Payments typically isn't something people have deep knowledge about, so management defer to devs to do the research, when that happens devs going to pick the easiest API to work with.
That's pretty relevant though: if you're doing large order volume, the "cheaper" option maybe isn't anymore if you need a multiple of the dev effort to build and maintain it, especially if it's all proprietary stuff that you can't really do without specialized consulting firms charging a boatload. I don't think there are any close competitors at the price point and in-house or commodity contractor developer friendliness as Stripe. It's really a fine platform
So Ayden is valued at 100 times revenue. Per the article Stripe is bigger than Ayden and growing faster, so Stripe must be worth more than 100 times revenue and less than 95000/684 = 138 times revenue. So comparatively to Ayden their valuation seems cheap (or they are not bigger than Ayden)
am i the only one that thinks fintech is massively overvalued? especially square etc, or anything adjacent. sure they have great growth and revenue but i don’t see any path where profit can justify the value
Fintech (And indeed Stripe, Square and Plaid in particular) are grossly overvalued. They all play the hype game, with statement such as "Stripe powers the internet". Way too many people are buying into those valuations without looking at the fundamentals.
Paypal is a different type of payment option. If I pay via paypal my details are hidden from the store.
If I type in my credit card on the site they might use stripe or evopay or something else I wouldn't know either way. My details are save on the site.
On digitalocean you can pay via credit card or paypal. If you pay via credit card they take money out for service automatically. If you use paypal you manually buy the amount if credit you wish.
Stripe blocks some people who then have to use PayPal, also PP has been around for 20 years and expanded beyond payments, like what Stripe will be doing going forward.
Why aren’t companies going public sooner now? So much of the medium term upside is gone by the time they IPO and the stock then gets hammered in the markets.
There's always accepting checks and cash. Or ACH payments, but each of these will probably cause drop-off in people who'd prefer to use a CC.
I would tend to expect that the ease of donating via CC readily outweighs the fees you'd save by ditching it. I've seen a few charities have a checkbox on the form that says something like "processing this costs us 3%; will you add that much to cover it?"
How much wealth creation - to people with access only in the public markets - could this company have created if it were publicly traded? The previous generation had great wealth building ability in being able to invest in companies that were growing rapidly in the public markets at a very early stage (think MSFT, INTC, etc.); today too much of this is done in a way that the vast majority of people cannot be part of.
There is a complete disconnect between regulations in the public and private markets. Regulations that make great companies like Stripe pause on going public need to be reassessed.
[+] [-] qntty|5 years ago|reply
[+] [-] AlchemistCamp|5 years ago|reply
Edit: Based on the published data I can find, Stripe and Coinbase alone have added more to their valuations in the last year than the total valuation of the top 50 YC-funded startups including Stripe and Coinbase was last year.
[+] [-] hn_throwaway_99|5 years ago|reply
I mean, nearly all of the top companies in that list were started in the very late '00s and early '10s time frame, when Ruby (and to a lesser extent Rails) was (a) very well established and (b) known for being a high-productivity language for small teams.
For example, NodeJS and Go barely existed when many of those companies were founded (or, in some cases like AirBnB, didn't exist), so I definitely think there is likely to be a different list of languages for top startups in 10 years time.
I do think, though, that it is definitely no accident that languages like Java and C++ appear way under-represented given their prevalence in the industry at large. My personal theory is that what is most important for developer productivity is the feedback loop between making a code change and being able to see that change in a running application. Scripting languages make it often as trivial as saving a file and refreshing, while compiled languages can, in addition to having a costly compile step, also have a very costly deployment step. I remember in the early 00s the painful experience of editing Java code and waiting nearly minutes for a local deploy step to get that code running again.
[+] [-] karimf|5 years ago|reply
I feel like this data should be one of the most important aspect of choosing a tech stack. Even though it’s hard to infer the data because there’s years of delay between inital tech stack choice and the success of the startup.
[+] [-] myroon5|5 years ago|reply
[+] [-] benja123|5 years ago|reply
I have worked in payments for over 10 years and I can tell you Stripe changed the game, made payments better and made it accessible to all.
Before Stripe payment processing was a nightmare. Payment processors had overly complicated APIs and poor documentation(if at all). The fee structures were intentionally not clear and plenty of them had minimum processing amounts and/or monthly fees which made payments processing (outside of PayPal) inaccessible to companies or individuals that lacked capital.
Stripe fixed the sh*t show that was payments by creating a really good payments API with clear documentation and a fee structure that was clear and affordable for even the smallest of companies.
Next Stripe created Atlas. Now let me tell you something, as someone that does not live in the US, but had a startup, this was huge. When I had a startup, and was looking for a local payment processor that could process in the US, they wanted to charge me thousands of dollars just to get started and that is when I personally knew a large chunk of their senior management.
Atlas (which I have never been a customer of) made the opening of a company in the US easy a which gives me and countless others access to Stripe, an affordable high quality payment processor.
And I can go on and on about the other things Stripe has done to make payments and finance on the internet better (connect, capital etc.).
Watching the Stripe rocket ship from a far has been amazing. They are changing payments and finance and I look forward to seeing them continue to innovate and push the limits of what can be done.
Congrats Patrick, John and the Stripe team.
[+] [-] cecida|5 years ago|reply
Great to see them investing further in their home country as well, and mentioning that some of their global leadership team will be based in Dublin.
[+] [-] p1necone|5 years ago|reply
[+] [-] sharkweek|5 years ago|reply
95B honestly seems relatively cheap.
Trying to figure out why this was announced on a Sunday (in the US) though.
[+] [-] Liron|5 years ago|reply
[+] [-] sebmellen|5 years ago|reply
Where does Stripe rank among the world's most valuable private companies, though? It's easy to find lists of dubious quality like this: https://news.yahoo.com/10-most-valuable-private-companies-21..., but I'm sure there are more lurking. What are they?
[+] [-] missedthecue|5 years ago|reply
If they are profitable, why go the expensive equity route rather than using retained earnings? Or bonds? American Airlines recently sold $10 billion of them at 5.5%. Surely Stripe could do just as well or better.
[+] [-] xyzzy_plugh|5 years ago|reply
And when they inevitably do go public, they'll likely have a very pretty balance sheet, with a massive cash war-chest.
Keep in mind that they are a cash-heavy enterprise -- their risk exposure is any company that uses them goes bankrupt and they're on the hook for all the chargebacks.
Their blog post[0] describes some business that aren't allowed, but provides some insight into their exposure:
> We recognized that the private jet market is different and analyzed financial statements, payment flows, customer profiles, and more to fully understand the underlying mechanics of the business. We modeled OpenJet’s business and determined that the credit exposure was within an acceptable range. We engaged our banking partners with concrete financial analysis, put in controls to monitor risk as the company grows, and OpenJet successfully launched on Stripe.
Let's say OpenJet as an example has ~$10MM of annual revenue. Let's liberally assume people don't book flights out further out than 6 months -- so ~$5MM of annual revenue is up in the air, so to speak. If OpenJet goes bust tomorrow, OpenJet's creditors -- including Stripe -- are on the hook for anywhere from $0 to $5MM of outstanding fares that could get charged back.
That's just one business. From TFA:
> Stripe has ridden the wave of ecommerce growth, with more than 200,000 new companies in Europe signing up to the platform since the start of the pandemic. John Collison said it handled almost 5,000 transaction requests a second in 2020.
How many of these companies will go bust? Even if we assume Stripe is profitable, their losses are surely huge and unpredictable, so having a huge pile of cash helps insulate them against market swings and lets them take bigger risks on bigger, possibly riskier customers, which in turn helps them make even more money.
0: https://stripe.com/blog/why-some-businesses-arent-allowed
[+] [-] nl|5 years ago|reply
Keeping away from the public markets has allowed Stripe to keep a tight lid on financial details; it has not disclosed revenues or profitability.
However, a person close to the San Francisco-based company said it handles a larger volume of payments than its European rival Adyen, which has a market capitalisation of €60bn and processed €303.6bn in 2020.
[+] [-] SMAAART|5 years ago|reply
[+] [-] Graffur|5 years ago|reply
[+] [-] SmellTheGlove|5 years ago|reply
The fact that we can think "what's so hard about that?" is declaring Stripe's moat without even knowing you did it.
[+] [-] klelatti|5 years ago|reply
Anyone looking to compete with Stripe will have the same thought process and probably won't bother.
And if they do then they will have to execute as successfully as Stripe over an extended period.
Edit: Just to add that the podcast was "The Knowledge Project" [1] - just a fascinating conversation.
[1] https://fs.blog/knowledge-project/patrick-collison/
[+] [-] jjevanoorschot|5 years ago|reply
HN loves Stripe's Payments API, but in my experience from having worked on payments at a large ecommerce unicorn, APIs from companies like Adyen and Checkout.com are just as easy to work with.
Stripe's real moat is that they offer so many useful products around payments and finance that integrate really well. You can get fraud detection, billing, invoicing etc. from other merchants, or you can build your own, but it's probably cheaper (and much simpler) to use Stripe for all of that.
At the moment this is true from small to medium sized companies. Past a certain size you will most likely be using multiple Payment Service Providers anyway, so the vertical integration is not as useful.
[+] [-] manishsharan|5 years ago|reply
[+] [-] pxue|5 years ago|reply
[+] [-] chiefalchemist|5 years ago|reply
It's like the soft drink market. You don't have to be #1 or #2 and you can still do quite well.
Stripe might never be on top but it'll print money fairly easily for a long time.
[+] [-] lr4444lr|5 years ago|reply
[+] [-] rglover|5 years ago|reply
The developer-friendly bit is just a marketing/sales tactic (make the developers swoon to force the hand of co's to implement it).
[+] [-] polote|5 years ago|reply
[+] [-] bitcoinGod88|5 years ago|reply
[+] [-] davej|5 years ago|reply
[+] [-] polote|5 years ago|reply
[+] [-] ffggvv|5 years ago|reply
[+] [-] rainyMammoth|5 years ago|reply
[+] [-] forrestthewoods|5 years ago|reply
[+] [-] AlchemistCamp|5 years ago|reply
The huge exception this past decade has been crypto.
[+] [-] bitcoinGod88|5 years ago|reply
[+] [-] ipaddr|5 years ago|reply
If I type in my credit card on the site they might use stripe or evopay or something else I wouldn't know either way. My details are save on the site.
On digitalocean you can pay via credit card or paypal. If you pay via credit card they take money out for service automatically. If you use paypal you manually buy the amount if credit you wish.
Different markets...
[+] [-] edoceo|5 years ago|reply
[+] [-] blizkreeg|5 years ago|reply
[+] [-] heavyset_go|5 years ago|reply
[+] [-] ceejayoz|5 years ago|reply
There's always accepting checks and cash. Or ACH payments, but each of these will probably cause drop-off in people who'd prefer to use a CC.
I would tend to expect that the ease of donating via CC readily outweighs the fees you'd save by ditching it. I've seen a few charities have a checkbox on the form that says something like "processing this costs us 3%; will you add that much to cover it?"
[+] [-] edwinwee|5 years ago|reply
[+] [-] bombcar|5 years ago|reply
[+] [-] 1123581321|5 years ago|reply
[+] [-] ianhawes|5 years ago|reply
[+] [-] atlasunshrugged|5 years ago|reply
[+] [-] missedthecue|5 years ago|reply
[+] [-] vmception|5 years ago|reply
[+] [-] redgrange|5 years ago|reply
[+] [-] BryanBeshore|5 years ago|reply
There is a complete disconnect between regulations in the public and private markets. Regulations that make great companies like Stripe pause on going public need to be reassessed.
[+] [-] AlwaysRock|5 years ago|reply
[+] [-] kjrose|5 years ago|reply
Sorta like Uber being a taxi service without having to follow any of the rules of a taxi service.
My guess is it's very expensive to beat someone who has already broken the rules to get to where they are before the rules caught up to them.
[+] [-] e_commerce|5 years ago|reply
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