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Foundational companies often emerge when brilliant entrepreneurs create a product or service that they themselves want to use. For Patrick and John Collison, their passion took them on a journey to solve one of the last and toughest barriers to a global e-commerce economy: payments.
An authentic start
As teenagers in Ireland the Collison brothers developed several popular apps, as well as an auction site that later sold for $5 million. As they saw it, building products people wanted to use wasn’t the hardest part of building a business – the hardest part was being able to accept money for the things they’d built.
“Stripe was very much a product of our past experiences,” John explains. “With the auction site, we put off accepting payments for months because it took a huge amount of resources. We wound up not charging for the apps we built at all, because the payments part was so painful.”
Later Patrick enrolled in MIT and John in Harvard. In 2010, Patrick met Hemant Taneja while Taneja was there teaching his “Founder’s Journey” class.
Payments as an API
As developers first, the Collison brothers deeply understood the importance of designing powerful, yet elegant tools. Their genius was in reducing all the complexities behind accepting payments into a single set of developer-friendly APIs. Stripe was born in late 2010.
With Stripe you could get up and running in minutes and focus on building whatever type of purchasing experience you wanted for your customers. There was no wait, no hidden or confusing fees, no limits.
This was a profound shift. By giving developers the sophistication of a finance department that existed only in a large organization, Stripe leveled the playing field for every entrepreneur starting a new business. Taneja described Stripe as an enabling platform for his thesis around Economies of Unscale.
In the early days of Stripe, Patrick often referred to his most important customers as the businesses that hadn’t even been founded yet. That has proven to be true, as indeed some of the fastest growing Internet businesses like Kickstarter and Warby Parker all use Stripe today.
A mission driven partnership
When the Collisons prepared to launch and fund Stripe, they chose to include General Catalyst on the journey because of a shared mindset to transform the payments ecosystem.
“We were honored to support Stripe,” says Taneja. “When payments become a utility rather than something everyone has to develop themselves, vast resources and creativity are liberated for better things.” GC provided seed funding for Stripe, and invested in every successive round.
In 2013 Stripe launched a new capability that allows businesses to connect their Stripe accounts (and their Stripe data) directly with other services. Developers quickly began using the service to build valuable extensions to the Stripe platform for other Stripe users. Called Stripe Connect, GC viewed the acceleration of this ecosystem to be important for Stripe’s core mission, and in 2014 launched the GC Stripe Platform Fund to fund companies building on top of the Connect API. The first investment was awarded to Baremetrics, an analytics dashboard for SaaS businesses on Stripe.
Increasing the GDP of the net
Scale is critical to Stripe’s ultimate vision. “Today the most exciting technology companies are the mobile marketplaces, companies like Airbnb and Lyft,” says Patrick. “Software is suffusing every industry and sector and market. As technology companies expand into more markets that have been traditionally offline, it’s natural that business models are more about payments. Stripe is providing the infrastructure for the next wave of these companies.”
Today the Stripe platform processes billions of dollars of payments annually, operates in every major e-commerce country, and is used by nearly all new e-commerce companies. So when tomorrow’s entrepreneurs find their authentic start, a global marketplace will be just a few clicks away.