T.his most valuable private company in Silicon Valley is a garment that most people have never heard of – unless they are a) Irish investors or b) tech. It’s called Stripe, and this week saw the final round of investments in it valued at $ 95bn (£ 68.5bn). It was founded in 2010 by two young boys from Northern Ireland – brothers John and Patrick Collison – who were then aged 19 and 21 respectively. Their company’s most recent valuation – based on a recent $ 600m investment from investors including the National Financial Management Agency of Ireland, Fidelity and Sequoia Capital – means it has a net worth. each now on paper at around $ 11.5bn.
The Collisons come from Dromineer, a village on the shores of Loch Derg in County Tipperary. When they were growing up it was too remote to have an internet connection, and at first the only way to get broadband was through an expensive satellite connection. In some ways they look like young shoots from throwing in the middle. As a teenager, Peter Lisp discovered the programming language that was once the lingua franca of early AI programmers, and used it to create a conversation system that won the young scientist of the year award in 2005, at the age of 16. His brother, two years younger, scored the highest scores ever recorded in an Irish school leaving certificate.
When John 15 and Patrick 17 were, they launched their first startup stages: Auctomatic – a software platform as a service for big sellers on eBay to track inventory and traffic – and an app iPhone provides an offline copy of Wikipedia (described as “Hitchhiker’s Guide to the Galaxy”) on the phone. They sold Auctomatic for $ 5m to a Canadian company, where Patrick worked for a year (he had dropped out of MIT in the fashion geek with honors), while John was at Harvard.
Listening to Peter tell the story – as he does in a terrific 2012 interview on YouTube – a man is tricked into reaching for a keyboard and starting to write the screen for Local hero sequence. Yet it has a hard edge. Both entrepreneurs were inveterate traders who fell for a problem that wiped out almost everyone on the net at the time but no one solved it: the truth was that while stuff was easy to sell online, setting up a system that could secure customer money was difficult and expensive. It included having a merchant account with various credit card companies, difficult delays (the usual “five working days”) and very high trading fees. Across the internet there were startups that were (as one founder put it) “a growing waiting list of people who wanted to give us money but couldn’t”. The Collison brothers realized, Peter said, “that the online payment business was a rare example of an entire business that is about to eat its lunch”.
After finding such a shameful food, they went to a party on it. Stripe was designed to make it so easy to set up an online payment system to tick a box on a website. The software made it simple for any website or app to accept payments, without getting its own licenses or dealing with a strike by the many banks and card companies. As a reward, Stripe raises a fixed fee of 2.9%. With that in mind, online businesses large and small were expected to go for it as wolf predators – including unsuspecting people.
Writers, for example. As traditional news outlets have declined, and as even those who are still standing have become able or willing to pay writers, new blogging platforms such as Medium and Substack have emerged with different ways to let writers bark to earn. The daily version of my blog, for example, is on Substack, and is free to subscribers. But if I decide, for some reason, to charge a monthly fee, all I have to do is click a button and Stripe would do the rest. And many famous writers and journalists seem to have clicked that button in the last year or so.
It is easy to see why. Some have thousands of registrars (like Andrew Sullivan, or Glenn Greenwald or Scott Alexander, to name just three). Just as a thought test, do the numbers: an author of 2,000 writers is willing to pay £ 5 a month. That’s £ 10,000 per month total income. Stripe takes his 2.9% (£ 293) and imports his 10% (£ 1,000) – leaving £ 8,700 to keep the wolf out of the door. All from the click of a button.
Stripe’s current valuation may or may not be optimistic. The business he’s been concerned with may have been a dozy once, but he’ll get the action together and the Collisons will find themselves operating in a more competitive market. On the other hand, one of the few testimonials in real life right now is that online commerce is going to grow. And no matter how big he gets, the two boys will have a slice of it. Three percent of a large number is also a large number.
What I have been reading
Where do you start?
“How to put out the dumpster fire of democracy” is a good article by Anne Applebaum and Peter Pomerantsev in the Atlantic on U.S. politics and online media in Biden’s time.
NYU researchers have written a nice empirical study on how far better news sources have made Facebook users work up.
What comes after Zoom fat? More Zoom, Adam Clark Estes thinks in his piece on Recode. Sigh.