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The Collison Brothers who founded Stripe.

Published by: Stephen Masters
June 20, 2022 1:41 am

Stripe is the hottest in the investment world, with news roaming all-around of an IPO in the upcoming months. The silicon-based startup is among the highest valued startups until the date, with an expected valuation of over $95 billion. The company showed an immense growth of 70% in the unfortunate economic depression of COVID-19 and is still expected to grow manifold in the upcoming years.

But what really is Stripe and where did it come from? Well, for starters, Stripe is primarily an online payment tool that allows vendors to accept online payments through their website or any similar online presence. But this multimillion-dollar behemoth of a startup was not always the size it is today, as any reasonable person would expect. 

The beginnings of Stripe were rather humble. It all began in 2010 when two brothers Patrick and John Collison had a debate for a couple of months about why it is being so difficult to make online payments. At that time. Patrick was an MIT student who had already founded and sold an auction management system named ‘Auctomatic’ within just 10 of incorporating the company for $5 million. Auctomatic had joined the Y Combinator in 2007 and Patrick had ample experience and expertise up his sleeve to found and grow a new startup from scratch. His connections would also be beneficial in the upcoming years when Stripe would secure its first funding of about $30,000 from Y Combinator. 

The younger John Collison was a genius of his own, who received the highest-ever score on the Irish Leaving Certificate. In 2009, he was already enrolled at Harvard and was enjoying the fruitful company of hundreds of intellectual minds who were destined to leave their mark on the world’s future. We might need to research a bit about what John’s other fellows did in their years post-graduation, but we surely know what John did.

During his degree, Patrick got himself involved in a few projects here and there. It was not long before he realized that online payments all around the world were an absolute headache. The two brothers joined heads and ended up concluding that the payment processing system has millions of lacunas and the resultant user experience is simply a disaster. Mind you, this includes the likes of systems offered by PayPal. 

The Collisons had grown up in an entrepreneurial environment, where their parents had been experimenting with ideas and inspirations. The boys always had the knack for startups. When they struck upon the idea of an easy-to-use payment system, they knew it was the next big thing for them.

Both the brothers dropped out of their universities and began working on Stripe, or the originally called ‘/dev/payments’. Yeah, we do not consider it to be a cool name either. The duo developed their initial system and showed it around their friend circle to get to know about their views. This was the start of Stripe’s marketing. Where brands usually spend millions of dollars on their launch promotions, Stripe gained its very first users through the word of mouth. This limited test audience provided the most valuable insights that the brothers needed to refine their idea and pluck out as many difficulties from the online payment systems as they practically could.

Meanwhile, the product was reaching maturing, and it was time to grab some bucks from well-versed investors who could help to grow the company to the next stage. YC had been the biggest support for the brothers since day 1, and it continued to bring good luck for them. Patrick and John Collison got an opportunity to meet Peter Thiel, the founder of PayPal. Apart from securing an offer for investment in the company, Peter shared his thoughts about the payment market, things as much as how could PayPal be better. The Collison boys had just hit their jackpot, with masterminds like Peter Thiel and Elon Musk on board and investors like Sequoia Capital and Andreessen Horowitz lining up to secure their share of the pie. Stripe raised a total of $2 million by the end of their lucky season in 2010.

It was time to expand the team and get the product on the market as soon as possible. Stripe hired employees with the best skills and expertise in their field, but they also had an additional requirement. Each employee should be such a person that rest of the employees would like to hang out with him/her. This combined with tough working conditions of a startup resulted in an exceptionally high workforce turnover rate. Continued workforce shortages in upcoming years would result in reprimand from Amazon and Shopify in the years to come because of high downtimes that the system would experience sporadically.

Cutting to the chase, the company introduced their first product in 2011, and it was not a blast. Yet, the idea was greatly appreciated in the form of fresh investments in upcoming months. The company worked on their interface and improved their usability over the years, for not just a developer but an average internet user who wants to start an online business. 

Over time the company became aware of more opportunities in the space including fraud detection and prevention, and preferential treatment for corporate clients and continued to add more products in their offerings. They expanded their operations across 50 countries when COVID-19 struck. Like any other cloud that has a silver lining, it was hallelujah for the payment intermediary.

In March 2021, Stripe was valued at $95 billion by Fidelity, one of the few shareholders in Stripe when the company was rumored about looking forward to an IPO. However, the strong-form-efficient investor has expressed its response towards the upcoming decline in the company’s growth and has reduced Stripe’s share price by 20% in March 2022.

Nonetheless, Stripe continues to be the new favourite of the investor world. While the owners continue to assert that Stripe has still a long way ahead and the owners are still busy in refining the products down to the very lines of code, the Collison brothers have made themselves a fortune, and it may not be long before the rest of the market gets to have a slice of the cake.

The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.

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