Edit: Based on the published data I can find, Stripe and Coinbase alone have added more to their valuations in the last year than the total valuation of the top 50 YC-funded startups including Stripe and Coinbase was last year.
I mean, nearly all of the top companies in that list were started in the very late '00s and early '10s time frame, when Ruby (and to a lesser extent Rails) was (a) very well established and (b) known for being a high-productivity language for small teams.
For example, NodeJS and Go barely existed when many of those companies were founded (or, in some cases like AirBnB, didn't exist), so I definitely think there is likely to be a different list of languages for top startups in 10 years time.
I do think, though, that it is definitely no accident that languages like Java and C++ appear way under-represented given their prevalence in the industry at large. My personal theory is that what is most important for developer productivity is the feedback loop between making a code change and being able to see that change in a running application. Scripting languages make it often as trivial as saving a file and refreshing, while compiled languages can, in addition to having a costly compile step, also have a very costly deployment step. I remember in the early 00s the painful experience of editing Java code and waiting nearly minutes for a local deploy step to get that code running again.
FWIW, Airbnb has moved more and more of its backend tech stack off of Rails and onto the JVM; I'm not sure if that's true of other companies in the list. Since that effort started in... 2013-ish? Airbnb went from single-digit billions in valuation to three digit billions, despite a global pandemic ravaging the travel sector. So it's not as clear cut as that list makes it look! Most of Airbnb's valuation was made during a time when it was actively switching away from being a Ruby/Rails shop, and onto a hybrid-but-dominated-by-JVM (backend) company.
I agree generally that productivity helps differentiate successful software companies from unsuccessful ones (although there are lots of other factors too). I think it's more nuanced though than just the feedback between code change in editor to change reflected in locally running application. I used to work on DevTools at Airbnb, and the Rails app was viewed as much less productive to work in according to internal surveys than Java services, despite not needing to wait for Gradle builds. One reason the Java services felt more productive was because the delta between code change and code running in production was much lower — in part because the type system caught more bugs, so there were fewer rollbacks. The Rails monolith needed massive test coverage to keep it stable, and even then, tests missed bugs that Java's type system — as anemic as it is — caught. (Of course, the Java services had tests too; the advantage was they had both types and tests.) Rollbacks caused more havoc than a little time waiting for a Gradle build. FWIW, there were also small Rails services outside of the Ruby monolith, but those tended to not be particularly popular to work on either — so it wasn't just about services vs monolith. Although not everyone felt this way, overall more folks preferred Java to Ruby once Airbnb hit a certain size, even in terms of productivity. People didn't feel done with their change until it shipped successfully, so faster time-to-see-local-changes but slower time-to-ship-overall due to rollbacks ended up feeling less productive overall — especially as code aged and the original authors moved onto different projects or left the company.
Of course, that's something that matters more once you have a larger team and a larger (and older) codebase. Since the list is about original tech stack rather than current tech stack, maybe in ten years the list will still look biased towards environments that favor fast local changes over anything else — even though that won't necessarily reflect what those companies still use.
(Or maybe newer languages like Go and TypeScript balance time-to-see-local-changes and low-defect-rate well enough that the difference will be less obvious? Go's incredibly fast build times feel almost like a scripting language, and a TypeScript/React setup with Hot Module Reloading makes Rails feel practically sluggish in comparison; maybe this is no longer as much of a tradeoff.)
I feel like this data should be one of the most important aspect of choosing a tech stack. Even though it’s hard to infer the data because there’s years of delay between inital tech stack choice and the success of the startup.
Though we hired a bunch of people from Google, who brought Java, and we went hard towards SOA. Around 2013 there was a Java vs Ruby war in engineering, with many upset people. It ended in peaceful coexistence. But most things in the main payment flow ended up Java.
I have worked in payments for over 10 years and I can tell you Stripe changed the game, made payments better and made it accessible to all.
Before Stripe payment processing was a nightmare. Payment processors had overly complicated APIs and poor documentation(if at all). The fee structures were intentionally not clear and plenty of them had minimum processing amounts and/or monthly fees which made payments processing (outside of PayPal) inaccessible to companies or individuals that lacked capital.
Stripe fixed the sh*t show that was payments by creating a really good payments API with clear documentation and a fee structure that was clear and affordable for even the smallest of companies.
Next Stripe created Atlas. Now let me tell you something, as someone that does not live in the US, but had a startup, this was huge. When I had a startup, and was looking for a local payment processor that could process in the US, they wanted to charge me thousands of dollars just to get started and that is when I personally knew a large chunk of their senior management.
Atlas (which I have never been a customer of) made the opening of a company in the US easy a which gives me and countless others access to Stripe, an affordable high quality payment processor.
And I can go on and on about the other things Stripe has done to make payments and finance on the internet better (connect, capital etc.).
Watching the Stripe rocket ship from a far has been amazing. They are changing payments and finance and I look forward to seeing them continue to innovate and push the limits of what can be done.
Congrats Patrick, John and the Stripe team.
Great to see them investing further in their home country as well, and mentioning that some of their global leadership team will be based in Dublin.
It helps that the Collisons' are from Ireland, but there's also a highly educated workforce, native English speakers, a pro-business government, world class backbone internet connectivity, favourable timezone, plenty of renewables on the electricity grid.
If a company does business within your borders while your army looks on and the populace waxes lyrical about it being unjust, who is really at fault for that?
Do foreign countries not have the right of sovereignty to make their own laws and tax rates?
Feel free to prove me wrong on that matter, we are in a sub-thread about Ireland being a tax haven if you need a reminder.
I was saying that they should in my opinion.
Your pessimism seems to ignore the fact that this is a good thing regardless.
It'd be a breath of fresh air if CEO's could just say it like it is. I think more people would trust their brand and be more willing to invest in them. Our inner monologue wouldn't have had to fill in the blank with a possible hidden motive. Addressing the most common reason why companies "move" to Ireland could have been an opportunity to build trust.
Like, I am very glad that the Irish government supported these brothers, and very sad that the Irish banks refused to work with them when they tried to start Stripe in Ireland.
Or are you saying all Irish businesses are bad because they are based in the tax haven.
If you don't invest in developing your home country, which country should you focus on? Or we can throw a dart at a map and choose whatever country the dart lands on?
Throw a dart and solve problems/invest in solutions for where it sticks. Mostly be fixing ocean problems but I'm OK with that.
Well, throwing a dart wouldn't be too bad though....
edit: Looking at my map, I think they arbitrarily shrank the size of the oceans to prioritize landmass (it's one of those ones where you scratch off the countries you've been to), so it's quite possible that the proportion of darts hitting water would be higher normally
However, most of them don't put engineering there, and a lot of the leadership is often in London.
That's the context of the post that you replied to, so that you can maybe understand more of the nuances.
95B honestly seems relatively cheap.
Trying to figure out why this was announced on a Sunday (in the US) though.
- One tenth of Apple,
- One seventh of Google,
- (Joke entry: 2/7 Teslas),
- More than half a Walmart,
- Just under one Netflix,
- A SalesForce,
- A Pfizer,
- Nearly 2 IBMs (Makes sense to me),
- 2.7 GMs.
Strong statements, though I'll never put money against this sort of thing.
I think PayPal should be the better comparison/overtake target, at 290B.
What are the profit margins on consumer banking? It seems like a commodity product, I expect it to be not amazing (compared to tech companies’ profit margins).
Why would giving 5% cash back solve any of Stripe’s problem? Any of the other banks can do the same now, but they obviously don’t think it’s worth it to lose that much money for customer acquisition, especially when switching costs are so low.
Where does Stripe rank among the world's most valuable private companies, though? It's easy to find lists of dubious quality like this: https://news.yahoo.com/10-most-valuable-private-companies-21..., but I'm sure there are more lurking. What are they?
Stripe has not been a startup for a while, they've been in public operations for about 10 years now and probably power a large portion of online purchases.
Trading businesses never get high valuations. But they throw off real cash. Different strokes for different folks.
They don't get high valuations because their earnings fluctuate a lot, and their average profit margin is like 1-3%, as compared to like stripe or apple which probably has like 30%.
This is true, but it's unclear how much debt they are carrying, and a quick Google couldn't find out.
If they are profitable, why go the expensive equity route rather than using retained earnings? Or bonds? American Airlines recently sold $10 billion of them at 5.5%. Surely Stripe could do just as well or better.
And when they inevitably do go public, they'll likely have a very pretty balance sheet, with a massive cash war-chest.
Keep in mind that they are a cash-heavy enterprise -- their risk exposure is any company that uses them goes bankrupt and they're on the hook for all the chargebacks.
Their blog post describes some business that aren't allowed, but provides some insight into their exposure:
> We recognized that the private jet market is different and analyzed financial statements, payment flows, customer profiles, and more to fully understand the underlying mechanics of the business. We modeled OpenJet’s business and determined that the credit exposure was within an acceptable range. We engaged our banking partners with concrete financial analysis, put in controls to monitor risk as the company grows, and OpenJet successfully launched on Stripe.
Let's say OpenJet as an example has ~$10MM of annual revenue. Let's liberally assume people don't book flights out further out than 6 months -- so ~$5MM of annual revenue is up in the air, so to speak. If OpenJet goes bust tomorrow, OpenJet's creditors -- including Stripe -- are on the hook for anywhere from $0 to $5MM of outstanding fares that could get charged back.
That's just one business. From TFA:
> Stripe has ridden the wave of ecommerce growth, with more than 200,000 new companies in Europe signing up to the platform since the start of the pandemic. John Collison said it handled almost 5,000 transaction requests a second in 2020.
How many of these companies will go bust? Even if we assume Stripe is profitable, their losses are surely huge and unpredictable, so having a huge pile of cash helps insulate them against market swings and lets them take bigger risks on bigger, possibly riskier customers, which in turn helps them make even more money.
Keeping away from the public markets has allowed Stripe to keep a tight lid on financial details; it has not disclosed revenues or profitability.
However, a person close to the San Francisco-based company said it handles a larger volume of payments than its European rival Adyen, which has a market capitalisation of €60bn and processed €303.6bn in 2020.
Eh? How can it be all three of these things at the same time? If it's easy and popular, won't that push down the prices you can charge?
The fact that we can think "what's so hard about that?" is declaring Stripe's moat without even knowing you did it.
So a shitty UI with a million random buttons looks complicated and hard and users respect it, but an intuitive UI looks so simple and clean it's like the software's barely doing anything!
Anyone looking to compete with Stripe will have the same thought process and probably won't bother.
And if they do then they will have to execute as successfully as Stripe over an extended period.
Edit: Just to add that the podcast was "The Knowledge Project"  - just a fascinating conversation.
Sure you'd like an identical service to Stripe for a lower fee but the moat is that doing what Stripe does isn't easy at all. You're paying for that fact.
But for a lot (the majority?) of businesses probably want to focus on other things.
It's expensive when you're small because it's replacing significant engineering resources in a company.
HN loves Stripe's Payments API, but in my experience from having worked on payments at a large ecommerce unicorn, APIs from companies like Adyen and Checkout.com are just as easy to work with.
Stripe's real moat is that they offer so many useful products around payments and finance that integrate really well. You can get fraud detection, billing, invoicing etc. from other merchants, or you can build your own, but it's probably cheaper (and much simpler) to use Stripe for all of that.
At the moment this is true from small to medium sized companies. Past a certain size you will most likely be using multiple Payment Service Providers anyway, so the vertical integration is not as useful.
Every ecommerce company and retailer looks at payment fees as money left on the table.
The more money Stripe take on, the more they need to return to investors, and so the more pressure to make margin. That is the opportunity for the future.
I too doubt it would come from a bank, nor from Visa and Mastercard... but could another exist? Yes!
If it came from a big player, I'd be looking at Shopify.
My employer never bothers switching to any competitor because Stripe match any deal that their competitors present to us.
Could you, a single person and $500m of seed funding match Stripe's prices? Not without hemorrhaging cash.
One of Amazon's moats is low pricing as well, which can only be achieved with eye-watering scale (their margins are 0% in some categories, they make it up by delaying payments to vendors and pocketing the interest).
Not only was the offer from Braintree way better, they gave us a better deal on PayPal fees as well.
Stripe’s focus on their supplementary offerings, like Billing (which used to be effectively free) and Checkout show that they’re trying to eat more of the transaction percentage. Try mentioning PayPal button on a Stripe Checkout page and you will be muted from talking in their YouTube broadcast.
Overall, I’m bearish on Stripe and look forward to shorting them on the public market, whenever that day comes.
It'll probably go down very well with potential investors.
What negotiation are you referring to? Interchange pricing is fixed; they are not negotiating discounts on that.
If you mean Stripe has VC funding to be a loss leader then, correct, but that’s not a moat. Moats are what protect profitable businesses. The resultant scale could be a moat but Stripe is still a small slice of the payment processing market.
Their play here is to upsell premium services. Developer friendliness and moderate pricing (it’s actually not that low) are hooks to get in the door of startups.
Why is that? Is it something Stripe achieved over time?
It's like the soft drink market. You don't have to be #1 or #2 and you can still do quite well.
Stripe might never be on top but it'll print money fairly easily for a long time.
The developer-friendly bit is just a marketing/sales tactic (make the developers swoon to force the hand of co's to implement it).
As these companies eat into traditional banking, even if they halve or quarter the overall market cap through disruption, it remains an obscene amount of money. Except it's more monopolized into a few dozen global tech companies who can execute than what used to be a market of tens of thousands of banks, insurance, stock brokers etc.
Lmao. Is that some kind of Poe's Law? Can't believe someone would say anything like this seriously.
The huge exception this past decade has been crypto.
If I type in my credit card on the site they might use stripe or evopay or something else I wouldn't know either way. My details are save on the site.
On digitalocean you can pay via credit card or paypal. If you pay via credit card they take money out for service automatically. If you use paypal you manually buy the amount if credit you wish.
There's always accepting checks and cash. Or ACH payments, but each of these will probably cause drop-off in people who'd prefer to use a CC.
I would tend to expect that the ease of donating via CC readily outweighs the fees you'd save by ditching it. I've seen a few charities have a checkbox on the form that says something like "processing this costs us 3%; will you add that much to cover it?"
You do, of course, have to pay Interchange fees no matter what, there's no way to get to 0-fee with a card payment.
I believe in EU it is common to give a routing and account number though I think that is setup to allow input only.
> There is now little cost difference between Amex and other card networks today — Nilson reports only a .04% difference between Amex and Visa and Mastercard (2.3% vs. 2.26% respectively).
> Amex attributes this shift in part to its OptBlue program. This initiative began in 2014 and provides a way for small businesses to accept Amex cards through a third-party processor (so long as that processor is partnered with Amex).
Stripe is one of those OptBlue processors listed on https://www.americanexpress.com/us/merchant/optblue.html.
Edit: This is also reflected in Stripe's pricing. They charge EU customers 1.4%+25ct on EU cards and honestly you can go lower. Adyen does Interchange++ and 10ct, which if you're not a big customer probably works out to around 1%+10ct.
Neither is especially likely at this point in the US.
There is a complete disconnect between regulations in the public and private markets. Regulations that make great companies like Stripe pause on going public need to be reassessed.
Sorta like Uber being a taxi service without having to follow any of the rules of a taxi service.
My guess is it's very expensive to beat someone who has already broken the rules to get to where they are before the rules caught up to them.