
Memo to Stripe: Winning the hearts of Valley startups is not winning payments - dzhao
http://pando.com/2014/01/24/memo-to-stripe-winning-the-hearts-of-valley-startups-is-not-winning-payments/
======
pc
Stripe cofounder here. Needless to say, this article contains many factual
inaccuracies.

More broadly, articles like this are part of why we didn't announce our
previous financings. If you don't also announce metrics, it's easy to write
articles like this.

~~~
mcarney7
Hey Patrick, we'd be happy to include any numbers that you share publicly. We
gave you that opportunity yesterday, but you declined. You guys have been
fundraising and having M&A talks over the last 6+ mo, meaning your numbers are
"out there." I find it hard to believe that everyone we spoke to is grossly
inaccurate in the exact same ballpark. I'm happy to concede that the figures
may be outdated, and we acknowledged that in the article. But we also compared
you guys against competitors' metrics from the same period. Our goal is to be
fair and accurate. The more you share, obviously, the better.

~~~
ivanca
>I'm happy to concede that the figures may be outdated

"Share your metrics or we are going to assume and publish your company as
being today where it was many months ago" is pretty shady journalism.

>We gave you that opportunity yesterday

How generous of you.

~~~
wdewind
No, they make it extremely clear that the numbers are old in the article, and
then give a pretty generous extrapolated figure.

~~~
ivanca
"Extremly clear" would have been to mention the time-period in the title. And
"pretty generous" according to who? you?

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sama
Three things:

1) There are almost certainly a lot of inaccuracies in here. I saw a few on a
quick skim of the article.

2) Exponential growth is a hard thing for most people to wrap their minds
around. The best tech investors--many of which invested in this round--
understand it. Most bloggers do not. The former camp has a better track record
on valuing companies like these, although of course a lot of investments don't
work out. But I would much prefer to give money to the investors in this round
to invest for me than the writers of this article.

3) It's easier to spew hate than it is to build value. While bloggers write
stuff like this, companies can just ignore it and laugh about it over drinks
in a few years.

~~~
mcphilip
Basically your comment boils down to "I skimmed the article and it seemed
hateful and inaccurate". And then something strange about spotting exponential
growth being left to the big boys.

On the contrary, I read the entire article and found it useful. The author
admits that getting accurate numbers on Stripe isn't possible at this point. I
wish Stripe all the best, but it still has a tough road ahead.

~~~
pg
Sam knows Stripe's numbers. So the fact that he was able to see inaccuracies
immediately is more meaningful than the fact that you read the entire article
and found it useful.

~~~
mcphilip
I clicked on his profile before replying just to make sure I wasn't countering
someone in the know. I made the wrong assumption.

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codegeek
This article seems very dismissive of Stripe even though it claims to be fair
to them.

"But that was before 2011: When PayPal realized it was hated and named a new
president in David Marcus who dramatically changed the culture "

Really, is this true ? The above statement seems to claim that Paypal is _not
that_ hated anymore. Current paypal users who have been long term users, I
wonder what they have to say.

"The reason PayPal held its ground for so long despite its poor reputation is
because it had the most consumer account data and the most name recognition."

Umm, I would say No. The reason was "monopoly" and companies like Stripe have
been a major reason that the monopoly has dwindled.

"PayPal had become the big, ugly monster, screwing up transactions left and
right with a mix of poor technology and bad customer service. Merchant
accounts were frozen haphazardly, and the company often took its sweet time
unfreezing them. PayPal was so widely loathed among developers, founders, and
customers that even with its advantages of scale, ubiquity, and familiarity,
companies were eager to try something else."

Is this all really in past tense ?

~~~
dangrossman
> Current paypal users who have been long term users, I wonder what they have
> to say.

I opened my PayPal account in July of 2000 and they were my primary processor
for 11 of the 13+ years since. They've never given me a reason to hate them,
or even dislike them. None of the "horror stories" I've read about others
seemed irrational once all the facts were on the table. I never understood the
integration gripes either, particularly before all the newer offerings came
about (express checkout, paypal pro, etc). It was always just pasting in a
payment button, defining a notification URL, and an IPN script comprised of 20
lines of code in any language -- it's just POSTing back the same POST you
received.

~~~
jarrett
I tried them in the early 2010s. My biggest gripes:

* Hard-to-find, outdated, labyrinthine documentation.

* Confusing web front end.

* Flakey login. I had trouble accessing my account more than I should have.

* Flakey POSTing back to my server. Notifications came through late or not at all.

All of that together was a deal killer for me.

Granted, a few years have passed. So perhaps these issues have been corrected.
But it would be hard to persuade me to use PayPal again.

~~~
zengr
>> Hard-to-find, outdated, labyrinthine documentation

You should check the current documentation, up there since 2012:
[https://developer.paypal.com/](https://developer.paypal.com/)

------
dangrossman
Bit of a tangent: my first "traditional" merchant account provider processed 6
times PayPal's volume last year ($1.2 trillion), and charges as little as
0.09%+$0.30 for debit cards versus the 2.9%+$0.30 flat rate all these 3rd
party processors start at. Why do so many startups write off going straight to
an ISO/MSP? Or do they, but Stripe/Braintree make better offers? They don't
all have BS fees, and flat markups over interchange are becoming the norm for
pricing. Popular payment gateways like Authorize.net have drop-in libraries
for just about any language or shopping cart you can imagine.

~~~
rebelidealist
How much do they charge you for credit cards? Do they add a % for AMEX,
Discover + "unqualified" transactions? What about monthly fees?

~~~
dangrossman
The same as debit: interchange plus 0.04%+$0.10. Even though I sell mostly
B2B, Visa debit cards make up over 25% of my transactions, all at 0.05%
interchange. Interchange on CNP credit ranges from 1.6% to 2.8%, but most
cards are closer to the low end.

There are no extra fees for Amex/Discover, and "unqualified transactions"
(which is nothing but commercial purchasing cards sent to the gateway without
line-item info) are <5% of volume over the past 12 months.

The MAP charges $15/mo in fixed monthly fees, which includes paying for a 3rd-
party for PCIDSS compliance (the SAQ and quarterly scans). The payment gateway
costs an extra $20/month I think. Regardless, the savings on transaction fees
pays for them immediately.

~~~
rebelidealist
Mind if I ask what is your recent total rate for Credit Cards (interchange
plus 0.04%+$0.10.)?

You must being doing a ton of volume to get this rate.

~~~
dangrossman
No, they gave me that rate when I was doing just a few thousand a month in
volume, before I launched my current SAAS business and switched off PayPal
subscriptions. I'm getting that through Vantage now. I used to use FDIS, which
initially gave me similar rates, but they had a habit of adding new fees every
month which is why I switched to a processor that does interchange-plus
instead of a rate table.

[http://www.vantagecard.com/](http://www.vantagecard.com/)

I happen to have this picture I took for someone else that didn't believe me a
few months back. This was the rate sheet in the paper application I signed to
open the account.

[http://i.imgur.com/Od6510E.jpg](http://i.imgur.com/Od6510E.jpg)

~~~
b1daly
Do you think there is a value to the somewhat ubiquitous use of paypal in the
consumer online space in that many customers have paypal accounts? In the
sense that it is a bit more frictionless? I can see how a B2B market might be
different.

------
noir_lord
I don't care if they win or not as long as they are sustainable and stay
awesome.

I'll use them for my stuff and my business and others can use whatever they
want.

I literally wouldn't use PayPal if they paid _me_ to use them (in fact I would
pay for and setup a merchant account with online payments processing long
before I would touch PayPal).

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tomasien
Given that Stripe is about to process payments for Twitter, I wouldn't be
tremendously worried.

As a side note - Braintree was around before Stripe. Remember that. It's not
Apples to Apples on their size, it's about growth, and as PG has publicly
shared several times, Stripe is growing at a ridiculous rate.
[https://twitter.com/paulg/status/403183731449413632/photo/1](https://twitter.com/paulg/status/403183731449413632/photo/1)

~~~
mcarney7
Agreed that Braintree had a head start and that's not to be overlooked. Also,
landing Twitter would be a big coup, and potentially lucrative depending on
what kind of commerce they enable. But I'd dispute the claim that they're
growing at a ridiculous rate. Everything we've heard puts it close to 50%/yr,
which is not great given their size and valuation. Braintree was above 100%
last year, Square grew 200%, and even PayPal grew 30%.

~~~
tomasien
I believe PG indicated they're growing 10% month over month recently, maybe
more. I didn't find that exact Tweet, but relevant -
[https://twitter.com/paulg/status/403183731449413632/photo/1](https://twitter.com/paulg/status/403183731449413632/photo/1)

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stevenj
This article is awful.

One of its inaccuracies:

>Young founders in their early 20s take on the online payments sector with
nothing more than a YC pedigree to their name.

Patrick actually co-founded Auctomatic in the beginning of 2007. It sold about
a year later for $5 million.

[http://www.crunchbase.com/company/auctomatic](http://www.crunchbase.com/company/auctomatic)

[http://techcrunch.com/2008/03/26/communicate-acquires-y-
comb...](http://techcrunch.com/2008/03/26/communicate-acquires-y-combinator-
startup-auctomatic-unveils-new-business-strategy/)

------
dkrich
_Stripe is a transaction-based business with a clear model — and one not
growing particularly rapidly if it took two years to get to just $1.5 billion
in annual payments volume our sources report as of six months ago._

Another way to interpret this story is that in just two years, they grew to
process $1.5 billion. Braintree is processing $12 billion after having been
around for an additional four years.

I didn't see any analysis of the components of that $12 billion, either. What
if Uber comprises 30% of their volume? Then perhaps they aren't as valuable as
it seems. After all, if Uber decides to switch processors, then Braintree is
fucked. It seems having a wider base of customers is usually advantageous and
less risky when compared to relying on a few whales.

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felix
“It’s literally inconceivable that someone starting a company would choose to
use Braintree or PayPal,” Rabois says. “Stripe has become the monopoly for new
startups.”

You keep using that word. I do not think it means what you think it means.
Really.

Braintree and Venmo are services that he could not even _conceive_ of a
startup using? I suspect that they might have like.. um.. facts that might
dispute that worldview.

~~~
jmngomes
I didn't get it either. I'm actually considering Braintree for accepting
payments because their price is lower.

