Transcript
0:18 Three messages before we get started. First, do you need a single phone number that comes with multiple extensions so anyone who works at your company can be reached no matter where they are? Go to grasshopper.com. It's the virtual phone system that entrepreneurs love. Next, does anyone you know need a beautiful online store that actually increases sales but is easy to set up and manage? Send them to shopify.com, the platform that top online stores are running on right now. Finally, do you need a lawyer who actually understands the startup world that you and I live in? Go to walkerclaw.com.
1:02 I've known Scott Edward Walker for years, so tell him you're a friend of mine and he'll take good care of you. Here's a program. Hey there, freedom fighters. My name is Andrew Warner. from the founder of mixerg.com, home of the ambitious upstart. Over 700 interviews with proven entrepreneurs who've come here to tell you how they built their businesses so you can go out there, build your own company, and hopefully come back here once you do and do what today's guest is doing, which is tell your story and teach others. So, what I want to find out in this interview is how how can discovering a pain that most people most business people even don't notice that they have.
1:41 How can doing that lead to building a successful new business? Patrick Collison is the co-founder of Stripe, which makes it easy to accept payments on the web. Stripe is is you Stripe is used by thousands of online companies including Shopify, Foursquare, New York MoMA, and Tarn Snap. And Patrick, welcome to Mixer G. >> Thank you. It's great to be here. >> So Paul Graham, guy who backed your company twice now actually, right?
2:11 >> yeah, he he was also an investor in our previous company. So he said that one of the things that he admired about your business is that you noticed a problem that most people didn't even realize they had. How did you do it? How did you identify this big problem that the rest of us didn't notice at all? >> So it's interesting. I I guess most people never run into the problem of having to accept payments online and that most people don't actually or most internet users don't build a product or service that they need to charge for. As that happens, we were web developers. We built a lot of software.
2:45 and this is this is in fact something that we'd encountered and like a couple of times I just built little side projects or something and I thought it'd be kind of cool to to charge for it just to see you know maybe there's like maybe unexpectedly you some like rich seam or something where you know it doesn't necessarily seem all that lucrative there might actually be something there and and we'd actually experienced this. >> can you give me an example?
3:08 >> Yeah. So with the app store, we had run into this. a couple of years ago, I built an application for the iPhone that stored a copy of Wikipedia on the iPhone so you could read it without needing internet access. and we launch in the app store and we charge for it because you you had to download two gigabyte dump from our servers which cost us a fair bit of bandwidth. and so as a result of that, we decided to charge a couple dollars for the app, expecting it to, you know, become maybe a couple of people would like it, but it was more just a a fun side project. And then it ended up becoming really popular and got tons of downloads and and actually, you know, was a sort of a major income stream for a while. H, but there's just no way that I would have expected or predicted that. And it was like if it hadn't been so easy to integrate payments into the app or to to have charged for it, there's just no way I'd ever discovered that.
4:04 >> but you were able to integrate payments into the app through Apple's system, right? >> Through through Apple's infrastructure, they had made it incredibly easy to to charge for the software you built. >> Okay. But every time that I'd built like a little tool or project or something like that, I'd either most of the time I actually hadn't in payments just because it seemed like so much work. >> Can you give me a specific example? Tell me the story of a time when you were building a business and you were adding payments and you said this is infuriating there's got to be a better way.
4:33 >> Give you three examples. one is automatic. this was our last company which was also funded by Y Combinator. It made it really easy for people to sell things on eBay. and there we never integrated payments. though >> you never integrated any payments into it >> simply because it was just too much hassle. >> Do you remember when you tried integrating and what you experienced when you tried to add it on? >> So I don't believe that we ever even as in we never went very far down the road in payments just because we knew it would be so much hassle. and so it was always kind of on the road map for the future at some point. we never actually sort of went and had the conversations. the next project was a thing called change feed. which was this was just like a tiny little tool that I want to myself. It was a thing where you give it the URL and it monitors the URL for changes and then gives you an RSS feed with a diff every time the link changes. and so it's cool for something like terms of service and and things like that. It's a quick way to get an alert when a page online changes.
5:39 >> Yes, >> I see. >> And that that is literally just something I wanted for myself, but it was as easy to make it available for others as it was just myself. and there I went about setting up payments for it and discovered that it was just a huge amount of hassle. >> What did you What kind of things? Because here's the thing that I know about you. >> Paul Graham thinks apparently you're so brilliant that he brought you to the Octomatic team, right? He said, "This guy Patrick is brilliant. You guys should meet him and work with him."
6:10 >> Everywhere I look, you when I look you up, I kept seeing people compliment how bright you were, how great a developer you were, how impressive the projects you worked on were, including Encyclopedia, which is what you talked about a moment ago. So, you're a guy who could do any, you could even create a mobile payment system. Why was payment so tough for you? What were you seeing? So it it was two things I think and one is that like you know yes ultimately people can in fact you know accept payments online like this is a solvable problem and and people do it and just it's so much hassle that it just ends up getting like pushed back or like you know like there's always so many things competing for your attention and I mean this prioritization right and so like with change feed it wasn't like oh I'm not able to integrate payments, therefore I'm stuck, right?
7:04 >> Was more like, well, you know, I could integrate payments, but it looks like that would probably take me a day, so I don't know, maybe I'll just build a new feature, not bother charging because chances are I won't make much money anyways. Just like, who cares? It was >> but also it's that it's just that it's so complicated. Like there are merchant accounts and gateways and processors and ISOs and like recurring billing providers and PCI and vaults and like interchange and qualified and non-qualified and like all these terms and this like PDFs and tutorials that of course teach you about all this stuff. And so it's like you know from from my standpoint so before I knew anything this industry like for all I knew what you actually needed to do was pretty simple but just like there was so much stuff there that like I I didn't even know if it was simple or not. and so or or where on that continuum it was and so just it ended up getting deferred and so for >> just like it it was never the most pressing thing and I never kind of ran that experiment of just like charging a couple of dollars and you know for all I know maybe change would have become really popular or you know maybe my mom would have paid for it and nobody else ever and I just don't know and it was you know I never got to find out.
8:14 >> I see you know what you you're right you reminded me of all the steps that went into even us charging here at Mixer G. We had to get authorized.net >> which is a gateway. We had to get poweray. >> Yep. >> We had to do something with American Express and Discover >> to separately sign up for those. >> and then we had to set up a shopping cart. >> Yep. >> And the And by the way, I didn't know until months later that we had authorized.net net and power I didn't even know about power pay even though I must have signed something to get it on until I had an issue with someone who months later wanted a refund and I needed to figure out how to do it and then they told me about power I go what >> I didn't it's all these steps so you're right so it's not just the the development part you could probably knock that out fairly quickly you're saying it's all the different comp all the different agreements you need and all the people you need to interact with >> right and even just figuring out like which company I should be talking to like what even do I need like is a merchant account enough or like what's a gateway like why aren't they the same thing why are these different roles like I It's like you need to go and like assemble a server from scratch yourself, but you don't know what any of the components actually are. Like you don't even know what you need. and so and then coupled that sort of especially for I guess folks like us for like developers, people who just kind of making things like you know if someone tked you and said like you must get payments implemented you know this week and you a week to do it. Yeah, sure you'd figure it out. But if it's just like a speculative thing or kind of experimental whatever it it's often something you can defer and maybe you never get to it.
9:43 >> So when you're deferring it, how do you get to a place where you start to notice that this is something that you're deferring and that you're deferring it not because you're afraid of charging, which some people are, not because you just want to keep the product pure, but because hey, there's a hassle here that my mind just doesn't want to tackle and I wasn't aware of it. How do you become aware of it? >> Yeah. So I guess for us it was this happening repeatedly. there was another so I built an app store analytics product again just for my own use to track sales of this encyclopedia app. This was so I actually wrote the app before the app store existed. and then you know released it pretty early in kind of the history of the app store.
10:24 and so there weren't really many analytics tools out there. I mean even just like even the most basic questions like you know how much money did I make yesterday? there there were no like like Apple's tools didn't even tell you that. and so I built this like really simple web-based tool. again, I went to payments for it. And I actually remember the day where I was chatting with John about it and just like so frustrated with it. and so I guess having the experience of seeing sort of how transformative it can be to sort of discover that that some things you build can actually become an income stream. and then kind of having the experience of repeatedly sharpening this in other areas, the the penny sort of started to drop and start to realize that, oh, hey, you know, there's actually kind of something broken here.
11:02 And then I guess in parallel with that and there was something kind of really interesting happening in the hosting industry where like you know 15 years ago or something hosting meant like calling a sales rep at some hosting company and then getting like a physical server set up contract and you know now there were like Adams tagged with your name and you need to understand the details of the specs maybe they upgrade the server and just like all this stuff right and then and then EC2 and Lenode and Slice and all these new companies come along where they give you sort of all the advantages of kind of shared hosting infrastructure where it's like you can set it up instantaneously and you don't have to worry about sort of the physical computation details and there are no contracts and you know things are pretty standardized but they also gave you sort of the complete control of of like traditionally renting your own box and and I'm just really struck like hey why doesn't that exist in payments like why can't I sort of have all the benefits of like a merchant account and like the ability to sort of define my own user experience and I just have have credit card payments sort of really well implemented or integrate on my site. but sort of as easy to set up the server on slice host or EC2 or something. and and I think kind of just that shift in the industry where like hosting now just looks completely different, right? As a you know for for some people it occasionally makes sense to go and actually rent like physical server but for the vast majority of people you just you should just spin up a VPS and one of these services and it just seemed really clear that something like this should exist sort of for all the major pieces of infrastructure that go into building a business on the internet. and so yeah this this repeated personal experience and that kind of shift in the hosting industry that we started to realize. Okay. So, one thing I've noticed on a personal level is that when people scratch their own itch as you have, they solve a problem that they have for themselves.
12:54 Often they end up creating a solution that they're the only ones who understand because it they didn't talk to anyone else. They didn't try to address anyone else's needs. They thought everyone else was exactly like them and could understand their solution exactly the way they did. >> How did you avoid that problem? >> Good question. And so that's a mistake that I made before and just you know I built tons of >> when when did you make a mistake of solving your own problem and having it be a solution that works so well just for you and not for anyone else?
13:24 >> I worked when I was pretty young on new programming languages in particular I worked on a language called Chroma which was a new list variant. and that I realized was was very much tailored to the things I care about cared about and my own needs and not necessarily to those that everybody else cared about. I mean the building a programming language is actually kind of an exercise in product design and that never got much traction.
13:53 >> It didn't get much traction because you were building it just for your you building it based on your need. >> Well, I mean I thought I was building it for like anybody's needs, but in reality I was entirely building it for my own needs. What's one thing that you built that made sense for you, but if you took it out to the rest of the world, it just wouldn't make much sense to them? >> That's what I'm saying. Like, Chromad did not make sense for >> you saying the whole thing didn't make sense.
14:13 >> Yes. >> Why not? >> Was it just didn't solve problems that other people cared much about? Like I cared about the problems. >> Like what? What's a problem you cared about that the rest of us didn't care about? >> I wanted serializable delimited continuations in my programming language. And very few other people wanted this, it turns out. Okay, >> you know what? Before you even answer the next question, the qu the previous question, which is how you made sure that Stripe didn't suffer the same fate, I got to take a pause here and do something that I I maybe I should have done before, but I kind of assume everyone in my off in my audience knows Stripe. In fact, they're the ones who are emailing me and telling me to have you on because they integrate Stripe into their businesses. But maybe we should just take a moment and tell people what exactly is Stripe for someone who doesn't know it.
14:58 >> Sure. so, Stripe is the easiest way to start accepting payments on the internet. >> How quickly can I accept payments? >> You can you can start accepting payments instantaneously. or I guess the you can accept payments as quickly as you can integrate Stripe. there's no sort of synchronous blockers on our end. So, go to Stripe, create an account, fill out, you know, basic details like your name and your bank account number and stuff like that. integrate Stripe.js JS onto your web page or integrate into your mobile app or whatever and you can just start charging credit cards and there is no sort of phoning us up or like submitting fax paperwork or or any of that. It's it's instant setup.
15:40 >> Just right conceivably someone who's listening to us right now and is looking for something to do, maybe fidgeting at their keyboard, they could go to Stripe, sign up, get an account, and while they're listening >> this interview, they they can be live and have things running on their website >> accepting payments. >> Yes. Okay. And crucially, like I mean there there have been things before like Google Checkout and PayPal and Amazon payments and all this stuff. and some of those were kind of easy to set up on some level or something, but they really compromised the user experience in that your users were sort of twirled away into this like offsite vortex or something and they like twist around in that for a while and they get like jumped out back onto your site at some point kind of dazed and confused.
16:21 >> You know what? So that's exactly what I did when I first started. I'm sorry to interrupt, but you're Absolutely right. And I've got to jump in here because when I needed to quickly accept payment, I went and I used PayPal. Quickly, you can set up and start collecting payments. But what I didn't notice was until I logged in using somebody else's account. >> They were basically upselling my customers on their products at PayPal and causing confusion that would basically lead someone to go buy a PayPal product and maybe never buy mine.
16:47 >> Yes. And yeah, the the user experience of all these things really sucks. And so the thing we wanted to do with Stripe is sort of provide like a first class user experience. I.e. like one that you completely define. You integrate the payment into your site whatever way makes sense for you. but provide sort of the the same kind of instant setup like super easy benefits that that that they had. and and then kind of following off on that, like, I guess the other problem with sort of the the PayPal and the Amazon payments and the Google checkouts, whatever, is they sort of like the the perceptions are kind of for smaller operations or like by having kind of by using Google Checkout on your site, you're that's kind of a signal that you're you're not all that serious or big a business because you rarely see those on on large or serious businesses. And also they they don't tend to to scale very well.
17:37 And by scale very well I means like they don't they're really targeted at smaller users and just like the really basic tangible stuff like you know how you export your data or how you search for a transaction or how you do reconciliation or how you like match up transfer to your back or like all those things that you care about of any reasonable scale they don't do very well. And so what we wanted to do is have Stripe sort of work incredibly well sort of at that initial moment where you want to integrate parents into your Stripe. But then like on an ongoing basis that like say if your business takes off and you're doing I don't know like 100K a year or maybe even a million a year or like in the wildly successful case like 100 million a year. wanted to sort of strike to scale really well with kind of each of those points such I mean just just like AWS or something where like EC2 will work really well if you know it's just you and its own like side project experiments but it'll also work really well for Netflix and we sort of wanted Stripe to like span the gamut there. So so that's you want to integrate payments you're you're of any size we want to make it incredibly easy to get started and then really effective on an ongoing basis. All right. So, going back to the question that I had earlier, you have this problem. You are unique. How do you make sure that you don't solve the problem for people who are uniquely like you, which is nobody.
18:47 What did you do to make sure that it that it applied to other people? >> So, I don't know what or there's only one good answer that I know to that question, and that's get other people using it as quickly as you possibly can. and so John and I, John, my co-founder and also brother actually started we had we had this idea and then just after Christmas one year we had to go and take a month's holiday and we went to Bonire and and we just sort of started hacking on this and I think we got there on January 1st.
19:25 It was January 1st or 2nd and we had our first live production user on Stripe on I want to say January 11th, but I'm not completely sure about that date, but I think it was January 11th. So, basically like 10 days after we started hacking, we had our first real user using Stripe running him through it. >> How'd you get the first user? >> he was a friend of ours. it was actually Ross Buché from Twitty North, the guys who built the Cappuccino web framework.
19:49 so so yeah, and then we we had another user and then a couple more after that. And so just like like right from the start he had real people using it. And Paul Bukite from Gmail tells this this like great story about how he sort of prototyped Gmail where he he built it on top of Google groups because that was already kind of an email product. and so he just kind of hooked Google the Google groups UI up to his his own email and then you know he can you know browse and search his email or whatever. Then you start giving access to it to other people and the other people are like you know this seems really great but like how about instead of showing me your email you show you my email and and it was it was kind of like that with Stripe where like when we first released it to Ross it was an incredibly sort of minimal product like >> yeah let's let's talk about what how long did it take before you got the first user again? What was the number of days?
20:39 >> I don't remember the precise dates but let's say it was like 10 days >> roughly 10 days. What did you build in those 10 days? So, what we built was an API that allowed you to charge credit cards and and a really I believe we had a really minimal web interface that allowed you to view those charges, but we may not even have had that actually. It may literally have just been an API where you can submit a credit card number, an amount, and we will charge it.
21:08 >> So, I just send you a credit card number, an amount, name, etc., and you say charged. >> Yes, >> that's it. that that's pretty much it. like you definitely couldn't refund transactions. We had to build that you know as you needed it. we the the web interface for sort of viewing transactions and searching and all that kind of stuff that that all came later. even the infrastructure around transferring money to bank accounts I think came later. I'm pretty sure that wasn't there on day one.
21:36 >> So basically day one the money was staying in your bank account. >> Yeah. >> Ross couldn't get the cash out for himself. a couple of days. But yeah, it was just like what is the simplest possible thing that we could build that would enable Ross to start using this on a site. And I mean, of course, we were helped by the fact that he was a good friend, right? And that this wouldn't have been acceptable to release this to like quote unquote like a paying user. but >> so Ross did this because he's a good friend.
22:00 >> Yes. >> Why else would he do this? Why? You have tons of great friends and tons of people who would die to help you out because they know you're going places. They want to be helpful early on. Why Ross specifically? I guess it was kind of a combination of things where we knew him. We knew that he needed to accept payments for this product they were building. we really respected his his sort of design sense and technical sense and we thought that sort of the feedback he was likely to give us would be be really good and that I don't know how many of your viewers know of Cappuccino, the length framework, but Cappuccino is just like unbelievable. Like I think like people are still are now going to talk about this new breed of of modern web frameworks like built-in JavaScript and like copycript and Ember and Backbone and all this stuff. Cappuccino I think is still the most advanced web framework certainly client side web framework ever written and was basically done by these three guys in a in a pretty short span of time. And so they're just like incredible software engineers and so we're building a product. we're trying to sort of fix a deficiency on the web on some level and this was also kind of their mindset like what are the primitives we should use to build great products in the web and so yeah that confluence of things where they needed this product they were friends and they just like these really good design sense they they made for like a pretty or Ross made for a pretty good first user >> okay was he also looking at the world and saying hey I don't like whatever is out there and I don't want to spend time building it either >> yes very much so >> so he shared your the same pain that you had he had to very much Okay.
23:37 >> So, he's looking at, by the way, before I even ask you about his feedback, what about you? You don't feel awkward saying to this guy who you admire, whose feedback you want, hey, you know what? You're never going to get refunds or you're not going to get refunds in version one. You're not going to get all this other stuff. >> I I mean, we're pretty upfront about that, but I mean, from this time, I think you can look at the other way, which is like, you know, online payment sucks. There's all these dinosaurs that provide terrible service. like we will build the product that you want and like you can start using it right now and as you give us feedback we'll like immediately go and build the stuff that you'd like to see. And so I think actually from from like the other person's perspective that's actually a kind of compelling proposition and like if somebody else who like I actually thought execution was good came to me and said they would solve like acute problem that I have and like as soon as I give them feedback they'll go and iterate on it like basically my own sort of you know boutique >> consulting company. Exactly.
24:30 >> Like they get a free consultant. >> Exact. Yes. Yes. I think that's actually that would be awesome. And I love like I think there's few things kind of more motivating for a user piece of software than to just like see it improve really quickly in kind of a direction you approve of even though it's kind of not quite there yet. so >> I know what you mean. >> I don't think he was >> that is inspiring.
24:51 >> What about before you launched? Did you talk to Paul Buhight the the founder of Gmail? Did you talk to friends and say hey do you guys have this problem too? What do what are you doing? yes. I mean we've talked to Paul a bunch of in the past. He's actually also an investor again in our previous company. and I guess we just we we talked to a lot of people just about this problem space generally and kind of heard about what their pain points were and what they used and what they kind of wished existed. And >> what's one thing that you discovered in these conversations that you didn't know when you were just thinking about it on your own?
25:29 in the beginning we were much more focused on kind of the ease of setup because that was kind of the real the real issue that we kept hitting. but as we had more of these conversations, we realized that even for the people who kind of got set up and were actually expecting light, like the experience still sucked for them. they got like statements in the mail and like they couldn't possibly figure out like the most basic stuff like most of the people we talked to didn't know how much they were paying right as in they were were getting some amount of money into their bank account every month it was like roughly of the order of what they were charging like were they paying 1% 2% 3% 5% 10% they just didn't know and often they'd tell us numbers and like oh interesting you know and then at some point later we'd like ask we could see their statements because we really really wanted to analyze kind of what they're being charged for and why and how and we found that in most cases what they thought they were paying actually wasn't what they were paying intentional offiscation and so yeah like the ongoing and the again really prosaic issues like there's one guy who who now uses Stripe who is a pretty heavy user and previously used PayPal and like his issues with PayPal were stuff like it's really hard to find a transaction and just like refund it right as like was a basic thing I log into PayPal and I have to like page through all these transactions and every page load is really slow. Like the whole process of like refunding a transaction takes you like 10 minutes whereas instead you know I just like type in like a type ahead search bar you know press enter and then my check refund is just the really basic things like all kind of suck. Anyway, from all these conversations, we started to think much more about sort of how we could make Stripe awesome for people who were already up and running and like had real businesses and not just kind of trying to figure out how we could turn all those people who had been put off by even a notion of processing payments and and how to turn those into people.
27:26 >> So, from what I'm understanding, there wasn't a formal qu list of questions or a formal process of asking people, right? >> Yes, that that's correct. So what I'm what a lot of people a lot of entrepreneurs who I interview who who talk to customers and figure out what to build based on those conversations what they often warn me against is you don't want to ask a question with the expectation that people are going to come back to you with a specific kind of answer. You don't want them you don't want to say hey I'm thinking of building this is this the best and not give them room to say no it's not you want to so how did you do it if you were c if you were just casual how do you make sure that you weren't influencing the answers that they were giving you? That's a good question.
28:07 I'm not sure that we did a fantastic job of not influencing influencing their head surface. we may actually have influenced them. And I think that on solo with stripe, we're just kind of lucky. where like we we just stumbled upon this this like this geyser as like there there just this giant problem here like the the payments infrastructure of the internet sucks. and I I guess I don't think that we necessarily did an especially good job of sort of being systematic about how to kind of how to discover the optimal product.
28:48 Here was more just kind of our instincts where this should be built for like developers and makers and the the end users as opposed to sort of the business people and that should be sort of instant setup and and basically treated as a technology problem as a finance problem. like I can claim that we had a great like a very disciplined process for really proving that that was the case. It was more just our own suspicion and that's what I mean I guess I say that I think until we're just lucky and but yeah the one thing that I think was helpful was that we just had real production usage almost literally from day one >> real production usage. So, and by the way, then this shows that even if you're not perfect, as long as you talk to customers, the influence that they have on your product is going to be is going to be positive. The the way they open your eyes to issues that you didn't know because you didn't feel them because you weren't depending on those >> payments to come through Power Pay or whoever else.
29:45 >> Right. Helpful. >> For sure. For sure. And I think I mean there's there's lots of kind of schools of thought here in that there's a classic Henry Ford about customers and you know you get a faster horse or whatever and obviously I guess a balance but I think that >> you know what actually >> once you've decided where the future sort of should be we decided like kind of if you the structure of the industry and like just you just thinking rationally about how the internet should work like this kind of service should exist. I think once you kind of meet that need that customers might not necessarily tell you about then for for like implementing that concept should talk to users like as much as you possibly can. Similarly for Henry Ford you know he might decide that okay the motor car that that's where it's going to be right but like once he's decided that it would probably be great to his benefit to then go and like talk to customers with the car like constantly and figure out the issues and and bugs and pain points out whatever.
30:45 So I think it's probably some kind of balancing act. But yeah, I think that kind of once you have the the lead and you've kind of popped that chasm in your mind, then talking as much as possible is I I think it can almost only be a good thing. >> All right. And so you showed it to a first customer within about 10 days. What did the first customer say? What was the feedback that you got?
31:08 >> I have to dig up the the emails here and the IM transcripts. >> does anything stand out? it. >> So my recollection is that it was he's just very kind of satisfied. It's like it's like oh yes, you know, this is how it should be. Great. and I mean it's not like on some level it's strike is just kind of amazing. Not so much because it it's sort of this wholly implausible like technological leap. It's more like like this is amazing. It's amazing be like relative to everything else. It's amazing that like you know everything else was so bad and like this you know finally exists.
31:52 and I think with a lot of users including Ross was like yes good job like this is what this is indeed in fact what I've always wanted. >> what so you're showing it to customers not necessarily just the first one but you're showing it to a handful of customers early on because you want their feedback and you want their influence on your product. Yes. >> So, let's step away then from the first customer and talk about those early experiences. What did showing your product to to real people teach you that you wouldn't have known if you were just building it on your own with your brother?
32:27 >> so I guess you kind of talked about the the kind of the the ongoing account a little bit. I mean there there were a lot of just kind of use cases that we hadn't thought a lot about. >> Can you give me an example? What's one thing that >> >> that hadn't occurred to you? >> So for example, recurring billing. Obviously a ton of people do recurring billing. we're now on our sort of third kind of major version of our recurring billing infrastructure. like we we sort of first talked to a bunch of people and sort of figured out a set of abstractions we thought would cover, you know, most use cases pretty cleanly. We then realized that we were actually missing a bunch.
33:14 We ran another version and now we're run third and I think there's a good chance that there will be a fourth. so and that I think can only really come from >> but the whole idea of recurring billing wouldn't have occurred to you as being so important. We we knew well actually yes in the beginning I'm pretty sure that I thought that we shouldn't even have recurring building features that that that was pretty easy for developers to build themselves and they should just do that and then like enough people asked for it like probably half of our users asked for it and we realized that we should probably just build it ourselves and actually there we've been kind of moving up the sort of through the the levels of abstraction that our first recurring tool was just like a clock and you sort of had to do most of kind of the billing logic yourself. Whereas now in Stripe we have sort of this first class concept of plans and coupons and invoices and invoice items and kind of we really have brought together all of the sort of atoms that people typically tend to want to sort of build subscription infrastructure around. and that that was entirely driven by by our user.
34:20 And actually the person who built that that recurring billing infrastructure previous to working with Stripe, she built a company that did subscription payments on top of Stripe. she she was very well positioned to build that. >> So why why couldn't people do recurring billing on their own? does kind of seem to make sense that if you can program your side of the interaction as a as >> as a merchant and send Stripe credit card number and username and so on for a customer, couldn't you just do that again a month later and then a month after that? What were you finding that made them say, "Hey, you guys should do this for us."
34:59 >> So, so, so this is I think why so this is kind of what we thought, right? It's just just charging amounts every month, >> right? Right. >> How hard can it be? That's not the hard part. The hard part is actually just getting up and running quickly. The hard part is doing refunds and finding customers in an easy way. >> This is all we thought. And then you realize that actually well maybe they don't want to charge every month. Maybe they want to charge, you know, every quarter or every year or every twice a month or something like that. And then maybe like do they want to charge sort of like after the service has been provided or before it's been provided?
35:34 And then what happens if like one charge fails? you probably want to like kind of you know allow them to update their credit card and then charge them for for like whatever stuff is is pending like a couple of payments kind of stacked up. >> Y >> and then maybe you sort of you charge them some amount every month but maybe there's sort of you know additional things they can buy. So like it's the $20 base plan and you know five or 10 or whatever dollars of add-ons. Then maybe there's also some kind of usage based portion and then maybe you do coupons where like you know it's a 10% discount for your first year if you have like such and such a code from such and such a podcast and you sign up or something and and just like it keeps going like like what happens when you say you have that add-on and then you you only have it for half the month and like I only want to charge you like a prorated amount and just like this kind of fractal complexity where yes ostensively sending an amount every month most developers can do that but once once you really kind of dig into the real world scenarios and what people want to do. It turns out there there's usually quite a bit of subtlety there and and it's kind of sufficiently universal and sort of common that that we can actually do a pretty good job of of >> I see at that point when it's that complex it does become a whole job for them a whole other business and they don't want to be in that business. There are entire companies built around this like there's there's chargify there's recurly these are companies that basically do sort of subscription billing infrastructure >> I see because it is such a big pain that stood out like that >> >> you're talking about >> Well, >> as you >> Yeah, I I guess this might not be too surprising, but one thing we just didn't think much about initially that we sort of discovered that people really cared about was having visibility into into the transfers coming into their bank account from Stripe. And so this is actually a kind of interesting one because so like before Stripe you had like merchant accounts, gateways and and sort of all these other companies and they were all kind of loosely integrated together like you said you' authorize and part of the company the the >> Yeah. Power Pay Authoriz.net.
37:58 >> Okay. Yeah. Yeah. Right. >> American Express. >> Yeah. And so you get statements from American Express and maybe like bank transfers from American Express where I get bank transfers from like this. merchant camp or whatever. And and then and the gateway doesn't really know sort of what's going on on like the bank side. It only knows what's going on on like the the API side, the charging side, and just like the all these kind of separate silos. and Stripe because we integrate everything, it's actually really easy for us to sort of know what's going on on on every side. That means we can do things which for example authorized cannot do like for example tell you have I got the money yet for this charge, when will I get the money for this charge? this transfer came into our bank account. Like what was that for? Like why did you know why did this happen? And and it turns out that our users actually cared a lot about that.
38:45 And actually particular accountants just loved it and that like all these companies if they sort of start to become successful, they usually hire somebody at the end of the year to you know do their taxes or something and you know this this accountant or whoever is charged with doing the books is like going through the bank account statements whatever and trying to reconcile things. And for for most systems, it's just like random amounts of money like appear and they have to like do a best guess as to like why this happens and like what that corresponds to and and just kind of reconciling kind of the one side of the business with the other. and with Stripe that was just really easy. Actually, we built this kind of transfers display just so it seemed easy. Like we didn't we just figured that maybe someone would be kind of curious about it. And then it turned out that that accountants like loved it. And so we ended up building this infrastructure to like export the data and like an API so you could like introspect it and you could sort of check you could view sort of which like exactly which charges went into a particular transfer. It's like this really kind of granular detail and that's >> and that goes into the bank statement.
39:46 >> So that doesn't that's not that's not on the bank statement basically for like a particular transaction your bank statement you can tell just like exactly why that happened. >> I see by going back to stripe.com. >> Yeah. >> Yes. Because you're right. Otherwise, you look at your bank statement or your accountant does and he sees this big lots of little payments, lots of little expenses and revenues and then boom, this big number that you don't know what it is. Yes.
40:08 >> And they have to go and figure out can I go to the shopping cart for it or what? >> Pretty material, right? Like $457.13 just appeared in your bank account. >> In which year did those sales occur? And and like even those basic questions like that are typically ones that you cannot answer with with most kind of merchant gap infrastructure. >> So, here's the thing. I started out this interview thinking, how does a guy who scratches his own itch, first of all, how did Well, yeah. How does a guy who scratch his own itch figure out how to build a product that satisfies other people? Well, your itch stopped at I needed to get a merchant account and I just didn't want to deal with all the headaches involved in that. This would not have been a problem that you had yourself. So, where did you even get the idea that >> to create a page that accountants might get excited about? So, so this is interesting. This this is kind of I think where the idea started to kind of lead us. And this is kind of what I mean about like us discovering a geyser or like an updraft or thermal or something.
41:06 We're just kind of like pulled on by it. so so yeah, we had this initial idea that just it should be way easier to start accept online and that all that infrastructure should should look very different. And as we started to sort of dig into it, we we sort of uncovered all these other problems. And actually like Stripe itself underwent a fairly big kind of shift in our own heads in that in the beginning we really thought about it as as this kind of this side project like we were building slice host but for payments or or something like that. You know, this is for folks just like us. and then and this this was maybe eight months later or so like over kind of the subsequent summer we realized that this is actually just like an enormous problem on the internet.
41:51 Like it's not that we're building slicers for payments, but just like the the fundamental like economic primitives of the internet are horribly broken. Like it it is incredibly difficult in like every single case to transfer money from A to B. and I mean if I'm if I'm building a product or service say in the US like even if I accept credit cards like even if I get that piece up and running the the major a majority of internet users cannot transact with me because most most people don't even have credit cards like if you're in Indonesia or Germany or Guatemala or whatever chances are you you probably can't purchase from my website like I'm not actually selling online or if I am I'm selling to like small subset of internet users and then you know if I'm in fact in one of those countries like Indonesia or Guatemala or Jerry whatever like it's even harder for me to start accepting parents online there than it is in the US and you sort of all these like disenfranchised users and just like this whole kind of raft of problems that I I think because it's been sort of so bad on the internet up to now we've almost kind of we've almost lost sight of like just how bad it is like it's kind of remarkable I think that we're in 2012 and and just you cannot accept payments from from majority of internet users, right? As in that service not available to you. and so as kind of these realizations started to sort of percolate in our minds. we we then started to sort of take Stripe more seriously and that we started to sort of really kind of systematically talk to people, kind of hear what their pain points were.
43:22 >> How do you systematically do it? What's your process? >> systematically still just talk to lots of users, get more of them, like interact with them constantly. >> How do you do And by the way, I'm not looking for the most professional setup that everyone else can follow and it and gets taught in Harvard business classes, but yes, >> but even if it's just a casual way, how do you do it in a consistent way? >> Okay, so we like I think it's all just about maximizing the contact between the people who are building and building the product and choosing what it should be and the people actually using it.
43:58 >> Okay. And so for for the first certainly for the first year like we were the only people doing support like you had a problem with Stripe just like emailed us and we fixed the problem and like that's all there was and so that was like a great incentive for us to like fix the actual issues that that people run into and like to this day both John and I do support like we we deal with the questions and like but that's not just John and I most people at the company do support and like the people building the product just like hear directly from the users constantly. and I think that that's I mean that that's almost the long and short of it. and we'd often like have users like come over to our office or we'd go visit them or like we'd reach out to them or >> you visit people's offices.
44:50 >> Oh, sure. We we visited like tons of our users. >> What do you how what do you see when you look at someone's office? Oh. I mean with regard to Stripe or in general? >> Yeah, with with regard to Stripe, do you remember walking into someone's office and looking at their computer and seeing something that you wouldn't have thought of or learning something as a result of that that you couldn't have done remotely? >> I'm trying to think. So, so my answer I feel like is yes. I'm trying to think of a specific example.
45:14 >> I am kind of putting you on the spot constantly saying, do you have a specific here? Do you have a specific there? >> Well, I know it's it's a good way to do it. Yes. So, >> perfect. >> There was a company selling robots on top of Strike. and there were, yeah, they were one of our favorite users because I mean, they're selling robots. It was pretty awesome. and I remember visiting their office and they didn't sell a ton of robots. the robots were pretty expensive and so they they actually hadn't automated the procedure for charging for a robot.
45:56 and so what happened is when they got a sale of a robot, someone like their credit card or whatever, they would like review the order and I don't know I guess like I don't know order some robots, build more robots or something. and then the guy would like literally start typing a curl command like against like charge the credit card. At some level it was kind of cool that the API was simple enough that he could just like do that every time. But on another level it kind of suggested that you know we should possibly have a a method within Stripe for just performing like an ad hoc charge. And so now if you log into your Stripe account and you're looking into your payments, you see a button for like new payment and you can like type in a credit card number and an amount and whatever and and charge the card and I remember was visiting his office. That was the first time that I realized that okay that might be a use case.
46:45 >> What a great story. So when you walk in you're just looking and saying hey how do you interact with Stripe? Can I watch what you do? Can I >> Oh yeah. Yeah. I find that stuff super interesting. >> That's it. you just say, "Hey, can I just see how you use our system? Log in. Do you have them do specific tasks or you just say do whatever you do and I'll watch?" >> So, so yes, by and large, yes. And we've we've done a less of this than I would but but yes. and actually one thing we held an event at our office I guess around two months ago or so.
47:20 We just invited like it was Stripe office hours where you could come by the office and if you had a problem with Stripe or questions or you just wanted to integrate Stripe or like thought you may want to integrate Stripe or something you could come by and you know we just hang out and and help out and watch and just like interact directly. That that was excuse me that was really useful. So Patrick, that brings up another question. Then when you invite people into your office or you go to their office and you get a suggestion as a result of that, it's really hard not to do it. On the other hand, if you do everything that people suggest, Stripe is not going to be such a simple way for people to collect payments because it'll be overloaded with features. You're smiling. So how do you do it? How do you decide what to do and what not to?
48:01 >> It's hard. again I I don't have a great profound answer like I guess so it's a combination of things. we remove features like strike features in the past just no longer exist because an insufficiently large number of users cared about it. >> Okay. >> we sort of iterate on features a lot. so a feature that Stripe has is you've probably seen it stripe.js where you can sort of drop a single kind of JavaScript include into your page and that basically what that does is helps you sort of submit a credit card number directly to Strike. we tokenize it and sort of remove the sensitive parts and give you back just the token that's then kind of not sensitive and not subject to PCI and you can kind of pass that around to your web server or whatever and like you no longer need to worry about like oh will there be credit card numbers in my log.
49:01 >> Okay. And that feature the structs which is really cool and helps at companies like outside of the scope of PCI that that is on probably its fourth or fifth major iteration. and it's gone through like a bunch of just different implementations and like what exactly it did and how exactly it worked. and in a in ways that have been sort of challenging for us where like we've to support all the old users and we have to like make sure we don't break anything for for their charges.
49:36 but just yeah like constantly trying to figure out like sort of where the where the natural boundaries are in terms of in the functionality. EMTT from Emit Shirer from from Twitch TV said that what he does is he has people rank the frustrations that they have. So he might say is give it to me in in one to 10 and that way he knows all right the the items they've identified as number one are really important to them. That's what we should work on first. Do you do anything like that?
50:05 >> Maybe even internally. So we do some of that internally like we'll often go through a bunch of our user communication and our support email and chat. one thing that Sharp does I think this something I always want when I deal with companies is you can like just jump into a chat room immediately and start chatting with the developers. because that's usually by far the >> someone sends you an email and you respond but you also say hey let's get into this chat room here and start talking.
50:32 >> Well, you don't even need to email us. you just go to like stripe.com and just like start chatting and that ends up being a pretty productive dynamic because especially like one question often needs clarification and leads to another thing. We often distill that both the chat transcripts and the emails and and rank sort of people's pain points and issues and problems whatever which is kind of similar to emin I guess we do that sort of more latently as we don't ask users to rank them we just kind of rank them based on what the the kind of set of overall users has brought up but it's also I guess a lot of taste as in it's where do we think Stripe should go or like I guess a more kind of can we for it based Bing on all the feedback we've gotten, maybe we should like maybe nobody has asked us for this specifically, but if we actually did this, this would really solve like a whole host of of use cases.
51:25 >> I see. >> And and I guess actually we tend to be pretty a balancing act like you always want to be kind of sanding off like the rough corners of the product. but but I think you also you obviously can't let the immediate feedback drive it too much. And so I think we we air pretty far on the side of trying to figure out like what do these people actually want because I mean for the for the people of using Stripe and the people selling things like they're not experts in payments and like they shouldn't have to be. That's that's the whole point. they don't need to learn everything that this infrastruct this this ecosystem and so like when they come to us with a problem you know they might they might know what's possible like for example maybe they complain that PCI forms are confusing and in fact a feature request we often got is like you guys should have some automated tool for like you know filling out PCI forms like an actual fact what would be way better is if we just made PCI go away so that's not even a thing that you have to think about and so there's a fair amount of that I think >> what is a PCI form >> I'm glad that you don't know or it's nice that you don't have to. So PCI is of the industry standards around the protection of credit card information. and there are various self assessment questionnaires that businesses are required to fill out depending on what they're doing. and Stripe.js enables a ton of these businesses to get outside the scope of BCI altogether and don't even need to >> I see.
53:02 So they would have asked you to make it simpler or to help them autofill it out and you say, "No, maybe what we should do is just get rid of it if it's that frustrating." >> Yes. >> Were you able to get rid of it for them pretty early on? >> You know, no is a short answer. Like PCI, it's really complicated and it's sort of >> Oh, because they're also storing numbers themselves, right? If >> no.
53:25 they what they what they do is they they store the card on Stripe and then we give them sort of a reference to that card. So they're not actually ever storing a number themselves like the number but it never touches their servers. yeah, the PCIs is pretty complicated and subtle and it's really kind of an an ongoing dialogue where you know PCI or you know we we talk a lot to the folks making the standards the card companies to the banks to the the auditors who like actually do the PCI audits. We are sort of PCI certified ourselves and so it was just like this ongoing conversation but that was something that that came much later in the history of the company.
54:07 >> All right. let me say this and then I've got to come back and ask you two follow-up questions based on well actually two important questions. First I'll say this if you're Mixer G Premium member well actually do you know this that what Kissmetrics does and I guess a lot of people who follow Eric Reese's lean starter philosophy they actually go through a specific process of talking to customers. They have specific questions that they go through specific way of handling it. Well, we got someone who works for Kissmet Metrics, Jason Avanage, to come to Mixer G and teach the process that they use at Kissmetrics, complete with the questions, how they get people to answer them and so on. We're editing it.
54:43 Apparently, the editor is working on it today. And if you're a MixerG Premium member, by the time you see this, it should be on mixergium.com where you'll see a formal process to do this. And if you're not, >> Stripe, >> sign up. So, I'd love to use Stripe because look at this, by the way. This is I shouldn't be cursing my own interviews, but >> No, but >> this is that I get this. It's that I get all these different things that you're talking about that I don't even I don't want the paper. I don't want to deal with it.
55:10 >> Yes. >> I just don't know how to integrate it with my my membership plugin. If I could I would pay someone to integrate it with my membership plugin properly >> to integrate Stripe. I would much rather have Stripe than >> that I deal with now. I I never talk badly and I'm not going to mention the Power Pay is a I don't think it's a problem to talk badly about the process that involves Power Pay, but I wouldn't talk badly about the system that I use.
55:34 >> It's not even fault and PowerPay is just like along with all these other >> That's what I'm saying. No, there people who are at fault in my system. >> They're just like instances of a legacy archaic infrastructure and that's like it's hard to do much better when you're stuck in that world. >> and I did need something really quick and dirty to get up and running and the process works. It's just not the ideal system. And I see people who use Stripe and I would pay someone to integrate Stripe properly in with my my plugin is Wish List. That's what we use to manage members. If I can get somebody to plug in a better system with them, I love it.
56:06 >> I mean, Stripe and a better system that does it. >> And I would pay them. This doesn't have to be, hey, I want to do a favor for Mixer G so that I could raise my profile. I got to pay you. >> All right. so now that I've said that, I got to ask you two things based on my research on you that have nothing to do with what we talked about so far. The fir, well, maybe one doesn't.
56:24 >> The first is you sold your previous company for it's public, right? $5 million to live current media. >> That's right. >> I heard that some people thought you sold too soon. What do you say about that? >> They might be right. it's hard to know. for us you know optimatic we like we're we're very interested in this whole area of providing liquidity for for used items like I think a lot of the most exciting startups on the internet are about sort of introducing or facilitating sort of a new kind of coordination that wasn't previously possible and so if you look at Kickstarter Uber and Etsy are are sort of perfect recent examples of that where you know they're they're fundamentally about coordination just like there all these people in the world doing all these kind of disperate things and these these services kind of bring them together I think in the case of used goods like it's it's really just inefficient that there's so much stuff in the world like there there's totally somebody who could make use of this and for whom it would be a great value which is like you know for my old iPhone like there there like tens hundreds billions of people who would love to have my old iPhone and who would even give me something for it, but like how do I possibly find out who that is? and so we're really into that problem that's >> because it's such a hassle to list it on eBay and to go back and forth with people are going to be unhappy or have a question and so on. Right.
57:54 >> Right. and so we're really interested in that kind of whole problem space generally. and automatic was sort of our our first step in sort of working with it were just we were taking so all these people who were already selling at eBay and just like making the process of selling more effective >> and and so then we plan to think about ways in which we could sort of make buying easier or build a better marketplace or whatever else. And as it happens, it was just kind of a a pretty it was a pretty kind of interesting time for that whole ecosystem as a whole where eBay was kind of starting to decline a little bit. Google was really starting to think about it. Facebook had just launched Facebook marketplace and and just marketplaces and eBay marketplace were kind of a pretty hot area. And I guess from our standpoint, it was it was a combination of we're pretty excited by what Livecurren was doing and sort of the like in the conversations we had, it was pretty clear that they wanted to do something very similar to what we had in mind. And I mean, frankly, we were pretty young. We didn't have a ton of experience. Automatic was pretty new.
59:12 And there's a there's a real kind of nonlinearity to the value of money. and so like the notion of just having sort of that small bit of liquidity under our belt was actually was pretty compelling and I think for all of us subsequently has enabled us to sort of be freer to things of what we could explore and and do and what we could think about doing. And like honestly even for like for these side projects like for encyclopedia and for even strike like you know the fact that you're able to just go and take that month and hack in bonazares like that was in part facilitated by by that sale you know where we were just kind of we were we were freer >> have to worry about money so you can think about what you wanted.
60:00 >> Yeah. It's not that, you know, we were set for life or anything, but just like we're we were somewhat freer and I mean I was deemed an automatic was acquired and just like having that sort of little bit of incremental freedom was really valuable. and so I think that like I have tremendous respect obviously for sort of the entrepreneurs that that don't sell and I mean with stripe we obviously haven't so far and emphatically our intent is not to but but I think that it's >> it gave you the freedom >> is the answer. and I think that like I guess I guess really what I'm saying is it's a pretty sort of personal choice and kind of situation and circumstance and company dependent and all of those things.
60:40 >> What about Buenosarius? I spent a year in Buenosarius and I felt that working on Mixer Gy there made my interviews better, made my com my comfort in front of the camera better. It was just like what Bob >> Sorry. >> I had no idea that you'd spend time there. >> Yeah. 2010 pretty much. It's such a fantastic city. >> Yeah. Oh, it was fantastic. For me, it was complete focus on my work. It was like my Shaolin, Bob called it, where I just got to focus and train every day.
61:11 And then, of course, because people have dinner at 10:00 at night. I could still go out at night and have dinner and have friends and conversations and be back the next day. >> It's so funny to hear you describe this because I've been seeing like exactly the same stuff. It's like it's like a city on the hacker schedule. Like, it starts late. You can have dinner at like midnight, no problem, and like you roll into bed at, you know, 3:00 am or something like that. there's Wi-Fi everywhere. It's really like, you know, because people are speaking a different language and I guess I personally don't speak Spanish and so like I don't overhear all these conversations around me. you >> get sucked into meaningless conversations about things.
61:46 >> Yeah. Yeah. Yeah. Right. it's really cheap, which I guess is sort of nice. You just want to spend a ton of time there focusing on one thing. You had the food is great, the weather is great. There's Wi-Fi at all the cafettes. I guess I'm preaching to the converted here. >> But I think it's important to say that it was huge for me. It was huge for you. It's >> I I have incredibly fond memories of my city. Haven't been back since, but I've been like trying to find an excuse ever since. And I definitely will before too long.
62:13 >> All right. Final question is, what advice do you have? I'm looking, by the way, at Paul Graham's blog post about you. How fantastic was it that he singled you out and your company out as as like a model of the kind of companies he admires? And he goes, "For over a decade, every hacker who'd ever had to process payments online knew how painful the experience was." He says, "Thousands of people must have known about this problem. And yet, when they started startups, they decided to build recipe sites or aggregators for local events.
62:44 Why? Why why why work on problems so few people care much about or and no one will pay for etc. So for someone who says I want to notice this problem that others are are ignoring do you have a piece of advice that will help them do that? >> Yes. I'm not sure how you how you notice them, but the I guess the advice I have about how you think about them, but I think that like in some like almost definitionally the harder problems are kind of like mechanically harder in that like there's more that you have to do and like think about and solve and maybe the solutions are less clear or whatever. But I think they're actually easier in a really significant way and that's they're they're easier to motivate yourself to work on and motivate others to work on and like to to sort of get a bunch of people together to like really solve something.
63:36 And so I mean I hate to sort of pick a specific vertical because in almost like any area there there are actually some good companies that are doing like really good work. But like let's just take recipe apps since that's the example he uses. But I have nothing against recipe apps. Maybe with some recipe app like you want to assemble a bunch of amazing people to like really go nails some problem and maybe if it's a recipe app like it's harder to do that like I'm like you know Andrew you know this this whole interview stuff you know this is all awesome but why don't we go and solve recipes right just that can be harder and not just harder you want to make other like just for yourself when you wake up in the morning you're like I'm really going to like solve recipes today right whereas if you're if you're take the other extreme where you're Elon Musk and you're like you know you wake up in the morning like right you know what's the next step in putting man on bars and and I think that in that kind of I don't know philosophical existential way or something the hard problems are actually kind of easier I think that's that's just like a huge win just makes life so much easier for you in so many ways like when people like really get excited about the problem you're solving and so for us the fact that like we're trying to fix this like economic infrastructure for the internet as a whole like that that gets people motivated and excited.
64:49 and so yeah, that's that's the one piece of advice I have. >> That's a great place to leave it. Thank you so much for doing this. And of course, guys, the site is stripe.com. Thanks. >> Thank you very much. >> You bet.