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Stripe's 22-Year-Old Irish-Born Founder Is Just Getting Started (inc.com)
223 points by jkuria on Nov 26, 2012 | hide | past | web | favorite | 89 comments

Patrick and his brother John are two of the smartest cookies on the planet that I know about. These guys will go very far, and I'll be cheering them on all the way. They are not only successful and smart, they're genuinely nice, and that's a pretty rare combination.

+1 I've met John and spoken to Patrick on email. Both super nice dudes.

Never was there a comment I agreed more with on HN

Very impressive achievement for his age, though there is of course also a lot of spin-doctoring involved[1]. Stripe seems to be heading into the right direction.

[1] The whole "millionaire at 17" bit decodes to getting a big stock-based exit for Auctomatic with modest cash. Said stock then dropping to pennies shortly thereafter (~40x drop in stock price). Add in the merger and $600k in financing and there probably wasn't left other than a bailout for the investors. http://www.otcmarkets.com/stock/LIVC/chart

So, if we limit the 'millionaire at 17' bit to 'those that made a non-cash exit for 6 figures and up' would that satisfy you?

To take cash or stock is a difficult decision for seasoned business people, I really can't fault a 17 year old for going that route and through no fault of their own see the value of that stock evaporate a short while later.

I've known quite a few people that went bust during the .com debacle in exactly the same way and none of them was 17 or even close to it.

It's easy enough to identify your mistakes after the fact (heck, I've made plenty, just this particular one I've managed to avoid), but the big trick is to predict them ahead of time.

How are you doing?

What company did you sell for any amount when you were 17?

And was that in stock or cash?

I didn't read the parent as saying 'not actually a millionaire because he's an idiot', you seem a little touchy here. It seems reasonable to ask for that clarification - if you make the assumption that both brothers came into control of millions of dollars worth of available assets, you might wonder what they were doing with the money, especially as related to their continuing business ventures. The additional information that they don't actually have it answers that question.

'spindoctoring' indicates a conscious effort to increase the stature of the subject of the article, and is a word with a strong negative connotation.

The fact that they had an idea, built it and executed their vision successfully enough that another company bought them out are the bits that matter. That the buying party was significantly reduced in value after the acquisition is not their fault, and even if it had not it would have been stock (likely with all kinds of encumbrances) not cash.

Doing a stock deal is risky at best and can end very bad for the acquiree. Assets are not money, stock is not money, even so for a 17 year old that was an absolutely amazing track record.

I'm not clear on the details of that particular deal, and frankly I don't even care. All I know is that most people here would dream of doing a deal like that or even being in the position to make that particular mistake, and hindsight (the company acquiring tanking shortly thereafter) is 20/20.

> "The fact that they had an idea, built it and executed their vision successfully enough that another company bought them out are the bits that matter."

As far as I remember, it was a "buy the team, shut down the company" deal.

The very fact that people in this thread are mistakenly saying that eBay bought the company, shows how well the spindoctoring worked.

Jacques, I don't see what relevant my track record has on the argument [1]. I have nothing but admiration for the two brothers. They have done impressive things for their age. My comment was directed at the spin doctoring of Silicon Valley which is likely the aggregate results of marketing effort by Ycombinator (great exit story), their other investors (same), the brothers themselves (CV building) and the general SV media frenzy ("teen millionaire" sells). The problem is that such craziness only fuels silly perceptions. Look at this post. Much of it is devoted to finding some magic process in their parenting! The story real story here is likely along the lines of: be born with good intellectual capacity (genetics), have educated parents of reasonable means in an advanced country who can provide good schooling (lottery), don't have too many social strains during upbringing (divorces, violence, drugs, etc.), enroll in an elite program (Ycombinator), and rely on the efforts of a whole ecosystem to enable PR wins. Much of the above is luck and not some kind of easily repeatable process for creating successful people. Note that this doesn't take anything way from the brothers. They still needed to follow the path, work hard and make good decisions. That's impressive but there is no magic here.

Regarding the Auctomatic exit, keep in mind that they were not bought by some gigantic company whose stock price was subject to many outside factors (like ebay - spin doctor much?). Their buyer, Live Current Media, was specifically created as a new public company for their acquisition. The stock price of the company at $2/share is almost entirely an imaginary number (no meaningful capital was raised during the founding "IPO" so there is no external validation - the first real material share transaction a few months later pegs the price below $0.2 already). Cash payment during the transaction appears to have been around $800k which was later converted to convertible notes when Live Current Media couldn't pay and had to restructure the deal in 2009. The remaining stock portion of ~$4M converts to ~2M shares (at $2/share) which then dropped to about $100k. Allocation to the four (or three) founders seemed to have been ~400k shares, so $20k on liquidity (for all of them together) [2].

During that period (new entity in 2008, restructuring in 2009), it appears that one or both of the brothers were part of the management team of the new entity (I am not saying that they caused the stock drop, just that this is different from selling a company to Google and then have Google's stock drop later).

Again, their accomplishment relative to their age is impressive. Building and selling anything is hard. But Live Current Media basically bought a domain name and paid domain name dollars for it (in real dollars).

[1] Ironically, I did sell a company for mid 7 digits (all cash), though I was a few years older than the brothers. Doesn't matter to the argument though.

[2] I know nothing about the transaction but I can read financial reports like this one: http://www.faqs.org/sec-filings/100329/Live-Current-Media-In...

Lots of words for a simple thing: they were young, inexperienced and likely got screwed, I highly doubt that will happen again.

I'm pretty suspicious of accounts that are made with the express goal of damning other participants here with faint praise.

Wow, this guy is amazing. Read his wikipedia page: http://en.wikipedia.org/wiki/John_Collison

I was born the same year as this guy . How do I reconcile myself to the fact that I may never achieve so much even in my entire life ? Is it a matter of lowering ones expectations ? If this is the kind of brilliance it takes to succeed in the start up world I'm quite discouraged.

Don't stress out over it.

I'm Patrick, John's brother.

I too constantly feel that I should be more successful, and I'm pretty sure the feeling doesn't go away -- no matter what's achieved.

I think looking at others can be a useful gut check: am I working as hard as I could? Am I as focused as I'd like to be? But given that there's so much randomness and circumstance there too, it's a bad benchmark for anything.

(For what it's worth, the check I use personally is: "is there a difference between how those who know me best would describe me, and how I'd like to be?" Most of the time, I just try to fix those gaps.)

Good luck!

>> (For what it's worth, the check I use personally is: "is there a difference between how those who know me best would describe me, and how I'd like to be?" Most of the time, I just try to fix those gaps.)

^^^ If only I could up vote this many more times..

Interesting to have you commenting. Thanks for chipping in.

As a quick check: How important has luck been to you guys?

So, if you don't mind me asking, do speak about your (and your brother's) upbringing.

What was your childhood like? Did you parents teach you programming? Did you play with legos a lot?

Write as if you were giving advice to future-fathers.

Please, let's all stop this cult of parenting, and cult of personality. Let's assume that Patrick and John had played with legos, and that their parents taught them programming. What would that teach us? That we should teach our kids Programming and let them play with legos? Certainly not.

Much respect to John and Patrick, I hope that they continue to do impressive things and that a few years down the road they'll look at the things they did in their 20s as 'merely setting the stage' for whatever else they'll be doing then.

Yep. Cargo-cult parenting, that's got to be a new one. I'm quite surprised at how people will latch on to the parenting as something to imitate. I'm sure it can be a factor but you can't assume that you will get identical results by cloning the procedure. Nothing good can come of that.

No, that kind of brilliance is not what it takes to succeed.

It doesn't hurt either, but the biggest factor is perseverance.

If you get discouraged because someone younger than you can succeed when you can't then that perseverance element is exactly what you have to work on.

For every Patrick and every John there are 10's of thousands of people that succeed. And almost all of them are not nearly as brilliant or as young. Imagine a world without them. In that world you would be closer to the top. But your chances of success would not be diminished, nor would they be decreased.

Now repeat that process for all those that are smarter, richer and more dedicated than you. At some point you'll be the one at the top. What would you blame it on if you then still did not succeed?

In the end, all that matters is when and how you decide to make a go of it, how much you apply yourself, how well you'll deal with the unavoidable hardships and how much luck you will have and how the timing will favor you.

It doesn't really matter how much higher than 120 your IQ is, plenty of people with less than that have succeeded at a level that even Patrick or John will never exceed simply by being in the right place at the right time and making use of every opportunity that life threw at them.

If you want to measure yourself do it with people that started off with less than you had and that still made it. Then figure out what they did right that you're doing wrong and go for it.

"[Julius] Caesar served in 63 BC as a quaestor in Spain, where in Cadiz he is said to have broken down and wept in front of a statue of Alexander the Great, realizing that where Alexander had conquered most of the known world at thirty, Caesar at that age was merely seen as a dandy who had squandered his wife’s fortunes as well as his own." [1]

[1] http://www.roman-empire.net/republic/caesar.html

IMHO you might want to reassess your idea of success. Having a great family life, bringing up children, enjoying each day. Those are good measures of success.

How do I reconcile myself to the fact that I may never achieve so much even in my entire life ? Is it a matter of lowering ones expectations ?

Just let go. If there is success, there is success. If there is no success, there is no success.

If you reach a decent standard of living, there will be plenty to enjoy. Do not forget to do so.

One of Britain's richest people was a bum until he was 30 (and he did it all from scratch): http://www.youtube.com/watch?v=K2h_GIP019c .. so you don't have to reconcile. Just be a late bloomer.

He's also a pilot and pianist and he's only 22. I'm now asking myself where did my life going wrong?

Not to take anything away from him, but I think his other achievements are far more impressive. Learning to fly or play the piano generally "just" takes time and money. The really hard things are those where you can apply yourself fully and still fail.

Learning to fly takes time and money, but how many people with money and the time to spare have you heard of being able to pilot a plane by themselves at the age of 22? It takes an incredible amount of hours before you can become a pilot. May be trivial, but I think it actually shows just how incredibly committed and talented he actually is.

Lets just hope he continues to use his intellectual gifts for good and not to better his pockets. He's off to a good start though.

No it doesn't take all that long, not at least for a PPL with no ratings.

In theory, a PPL can be earned with just 40 hours of flight time, although the actual average is closer to 60-70 hours. There's obviously a ground school component, which can be self-study, and depending on learning speed might require about another 100 hours. Factor in the time to write the written exams and pass a checkride, and it's not a horrendous time commitment. I've heard of people doing it in a month, albeit working on it nearly full time.

It's still an admiral accomplishment. There's a lot to learn while learning to fly!

I know a number of people under 22 that have their pilot license. While not a huge percentage, not rare either. And the initial time is not that long at all.

Additional anecdotal data: of the four or five pilots I know personally (ages 23 - 65), all had their pilot's license before turning 18. So, yeah, not all that uncommon.

Note: I'm not a pilot, these aren't coworkers, just natural friends.


His father may be a businessman (yes, I read the part where he says he's an electrical engineer), I'm not sure.

Based on what things cost in Ireland today and the salary one can make, it does not look good. And any salary considered 'high' pays 41% in taxes (where high is > $41k per year)

> And any salary considered 'high' pays 41% in taxes (where high is > $41k per year)

That's incorrect. You don't pay the high rate of income tax on all of your income, but only on income over a certain threshold depending on your circumstances. Actually we have pretty low income tax rates when compared to other EU countries:


I know that (and this often confuses people), I didn't want to add all the explanation there.

But yes, you'll pay 41% on what goes over a certain limit (that is, above $41k annually or 32.8KEUR).

About your second statement, not really: http://en.wikipedia.org/wiki/Tax_rates_of_Europe

Comparing taxes is hard. There are various other 'hidden' taxes that Ireland doesn't have. e.g. no 'council tax' or property tax (though they are bringing one in, most likely just for people who own, not rent), there are no water charges (yet), etc. All of this can mean that someone can have more in their pocket at the end of the month in Ireland. It all depends.

Yes, also cost of living is important.

If you're paying less taxes and taking more home but things cost more then it may negate the advantage.

Ireland's cost of living has been in decline in recent years due to the recession triggered by the global credit crunch and a substantial local property market collapse. For example, this is from 2009:

"Biggest drop in cost of living since 1933" http://www.irishexaminer.com/ireland/biggest-drop-in-cost-of...

And between 2009 and now, our economy has been flat at best. I think it's important to look at all of these factors when examining a country's economy. The real problem Ireland has is unemployment: we went from ~4% to ~14% unemployment in just a few years. This has added to the decline in the cost of living however (less demand for goods and services).

The unemployment rate is sorta higher, but is hidden by a lot of unskilled labour emigrating abroad for work. Irish culture has a history of accepting emmigration to find work when things are bad.

Rent and property have also fallen in value, making it cheaper to rent.

He also got his company sold to eBay at the age of 17 for $5 million.

Our Dani Fong here has a similar story -- dropped out of Princeton at the age of 17... where she was doing her doctorate.

I think the parents of these two need to come out and explain to us what exactly their parenting methods are.

Dani Fong was allowed to stop going to normal school at around age 12, because she hated it to the bone and her parents listened. After that she went on to an alternative track that involved programming, horse back riding and community college and shortly after, a physics undergrad that took 5 years.

That's what I gathered from her history. I know of a bunch of people that could of been like that, but stuck to normal school and the pace that it sets with it's busy work and so on limited their potential. I think there is a lot of kids where you could just 'skip the bullshit' and put them in some sort of college degree but instead they flounder in a school system where they don't fit in and is not suited for them.

She started her own company because similarly, she really doesn't like being an employee.


'Skipping the bullshit' is in fact the lesson I'd like people to draw on. And it doesn't end with school. Too many people are stuck in jobs and relationships and situations they don't enjoy. Get unstuck.

Although, I will annotate to your analysis -- the reason I started this particular company was that I wanted to make a difference. The reason I had to start some company was because I am rather insubordinate, and lack consistency of attendance and effort on things that I am less than passionately attached to.

Be careful of generalizing parenting methods, also don't put too much weight on parenting when there's at least as much (though probably more) due to genetics. (There's also a nice low-hanging fruit plucked by making sure the child has enough iodine in the womb/early infancy[1].) With parenting tricks, what seems to "work" remarkably well for one child might not work at all for another child, even in the same family! I'm not a parent so I observe this lack of generalized techniques from multi-sibling families with very different sibling life outcomes and also from Feynman's anecdote on his son and his daughter. Here's him telling it: http://www.youtube.com/watch?v=Fzg1CU8t9nw (at the 49 minute mark).

[1] http://www.gwern.net/Nootropics#iodine

Oh wow I'd never realized that she was from my home town. She's done some pretty spectacular things.

If there's one thing I've seen in common among entrepreneurs who've been successful and started young, it's an absence of parenting, or at least very hands-off parenting.

Having mom or dad to go running to trains you to spend your entire life hiding under the wing of "mom" or "dad". Having parents who go "So?" when you go "Timmy hit me at school" teaches you to sort out your own problems and find your own solutions.

The vast majority of people I know who've made it/are making it (the one's who're actually profitable, or have product(s) attracting investment) have either no, or highly dysfunctional, relationships with their parents.

I was thinking this before I read your comment.

What's also impressive is the choice of project: pg has written about this (think he calls it the schelp filter or something). Payments is one of the most difficult, red-tape entangled, regulation-choked domains to start a company in. Not to mention the extreme security requirements and general unsexiness of it all.

Think they've managed to do an awesome through all the hurdles - if I ever decide to follow their example and start a payments company in India it will simply be "Stripe-API compliant". That's pretty much all the marketing / features it will need.

Loosely related with the article, do you need to give significant share to "locals" if you're starting a company in the US? For example, in Malaysia and Singapore (CMIIW), unless you put huge amount of money up front, foreigners are required to partner with locals and give >50% share to them. I.e. foreigners cannot have majority share if they start a "normal" company (not big).

Just to clarify - this is not the case in Singapore. A local director is required if the directors do not have work visas, but the companies can be wholly owned by foreigners.

No, you don't. You can even incorporate as a sole proprietor without any locals having a stake at all. Ditto in Canada and most of Western Europe with some exceptions.

No way what you're saying is true for both Singapore and Malaysia. Some shares need to be allocated to locals though if you IPO in the country.

It's interesting to see people put their studies on hold to pursue something they loved.

I don't quite understand why they moved to San Francisco; the article didn't really make that clear.

I'd love to have a cup of coffee with either of them though. Great people!

Patrick writes about this extensively here http://patrickcollison.com/post/stripe-ireland

Probably pressure from investors/YC/friends/etc and own desire. TBH, if you're starting a tech company and have the opportunity to move to the SF Bay Area (ie no family imperatives etc.), you'd be silly not to take it.

Really amazing guy. Kinda makes me feel inadequate all of a sudden :(

I wouldn't worry about it, just try a little harder. In the long run it doesn't really matter what your situation is today, what matters more is how you allocate your future time and how you will deal with the opportunities that come your way.

The luck element is out of control for everybody, timing you only control so much, execution and attitude you control 100%.

This guy inspired me. I'm just reading about Stripe a while ago and I don't know the founder is just 22!

I'm 20, and I think I need to rush some things. I don't want to be late.

It sure would be a shame if you end up being a sluggard like Jeff Bezos who started Amazon at the ripe old age of 30. :)

Late for what?

The experience of reading young success stories is both exhilarating and depressing to me. On one hand it expands my vision of what is really possible at such young age, on the other I realize that I am at the point in my youth where people like Patrick and John have achieved so much. It shows a little ingenuity and complete persistence can make you go real far.

Kudos to both of them, and godspeed on their current endeavor.

That's it. I'm doing a startup after med school.

...so what's the policy on using investment money to pay back loans?

> ...so what's the policy on using investment money to pay back loans?

It's a no-no unless you negotiate that up front. And likely you'll get a bunch of rejections as a result unless you can come up with a really good reason for that (I can think of a few).

I'm all ears, Jacques!

In your inbox. hth :)

For the hiring/visa issue, would a solution, say if two of their hires were from the EU, start a company in an EU country, employ them with said company, and then have the US company "contract" the EU company for their part of the work?

I've done the opposite: Launch a Canadian subsidiary from Europe, then employ myself at the subsidiary. That worked but it is a pretty roundabout way.

If you can qualify under some program that is less difficult then I would definitely not advise this route.

Amazing guy, inspiring and at the same time, depressing...

Ok, stripe's wonderful, but... why is stripe wonderful?

It's a payment service provider. An expensive payment service provider. They have an API. It's nicely written - but a nicely written API doesn't make a product. They're available in the US and Canada. OK, but there's a whole planet out there.

So, yeah. What exactly is it that's so amazing about stripe?

I work in eCommerce, run and developed a little platform that does a few £bn a year through it, so know my PSPs, and fail to see the differentiation.

> So, yeah. What exactly is it that's so amazing about stripe?

You have to remember, they are a Y Combinator funded start-up and this is a Y Combinator site, so there is a fair amount of hype on here about Stripe.

That said, I think they are doing something interesting and useful (in a real-world commerce sense), and wish them well with it.

Oh, likewise - I think they've real promise, but they're in a crowded marketplace with a lot of really entrenched players.

I guess their principle differentiator is the market they target - but pitching to developers is a big bet. If you've worked around enough enterprises you know by now that developers have little say in business decisions - meaning that their main opportunity is to be chosen by startups, and to hope to high hell that one of them makes it big, and piggyback - and hope to high hell that a big player doesn't use their clout and cash to undercut them and shoulder them out.

Either way, kudos to them for building what's undeniably a good product, but I just don't see it as a gamer-changer in the same way as others seem to.

Honest questions: what percentage of Paypal's revenue comes from eBay? Is Stripe's pricing model unsustainable at the lower tiers? In other words, what's stopping them from serving millions of small merchants instead of a few giant ones?

Paypal/eBay - couldn't find any published figures on this, but looking at eBay's revenues vs. PayPal's revenues, it'd appear that it's a substantial but not dominant share of their revenue.

Pricing model - no, it's great, but as you grow, it becomes uneconomical.

What's stopping them? Fraud. Fraud fraud fraud. They will end up with an approval process, as if they get hit big a few times (they will), their merchant acquirers/clearers will insist on it.

I am still amazed Stripe is around with the huge fraud potential. Paperwork sucks, but its needed.

The thing is, most paperwork doesn't actually help eliminate fraud. It just creates inefficiency and friction.

They were also the first (or one of the first) to (nearly) eliminate the approval process. You could go from registration form to accepting payments in hours rather than the old process of getting merchant service account and then payment gateway.

Braintree, which was the "pro-developer" option has only recently followed suit and begun offering this "instant underwriting".


They also eliminated the need for merchant accounts which is a pretty big benefit compared to Braintree. One could also use Paypal but...

But CC bill had all that before, and before CC bill Ibill had it, and before Ibill DMR had it and so on.

In fact, if there is one Achilles heel in Stripe it is that they don't segregate their merchant accounts. In other words, as far as I understand their set-up, if they lose their merchant account the whole thing goes up in smoke.

You make it sound like the banking equivalent of running on a single Slicehost VPS, which I think does a disservice to the incredibly smart people running Stripe. I doubt there is any risk at all of "if they lose their merchant account the whole thing goes up in smoke".

It doesn't do a disservice to them at all. It's just that there are a few inherent risks to this model and I can't see how 'no merchant account' is a plus for any serious business.

A merchant account is expensive and integration can be a pain but there are also distinct advantages to having your own. That does not mean that I underestimate the smarts of the people running Stripe, anything but.

I don't understand what the risk is. Can you go into more detail?

Sure. Fraud is one of the bigger risks when you deal with non-segregated merchant accounts. This basically means that when it comes to fraud there is an overall chargeback limit that you share with all the other merchants in the same cluster, as well as the risk that one or more of the merchants are processing so-called high risk transaction on a non-high-risk merchant account (or maybe even downright illegal transactions). If one of those merchants is substantially larger than the rest or if you are in a group that has a higher risk profile than you yourself have chances are that at some point VISA/MC/Whichever will fine the holder of the merchant account or will shut down the merchant account altogether. These fines can be substantial (sometimes in the millions) and this can cause the whole thing to collapse. If you're even more unlucky the money that was still pending deposit on the merchant account will be used to pay off part of the fine. If you have your own merchant account then if the payment service provider (Stripe in this case) makes a bad decision with acceptance of a particular merchant then that will only affect one merchant.

Exactly what the fall-out of such a problem is is highly dependent on the acceptance policy and the level of fraud prevention in place to make sure that bad apples are detected before it becomes a problem for a larger group of merchants as well as the size and composition of the clusters (sometimes there is only one such as was the case with IBill). This is - obviously - not under the control of the individual merchants so you have absolutely no guarantee that there is no risk from this angle and it is not in the interest of an IPSP using this model to disclose who their customers are and what the exact setup is (since this would give bad merchants a leg up on how to game the system).

The IPSP game is complex, there are lots of gotchas and there are a ton of things that have been tried in an arms race that is now roughly 18 years old. A late entrant to this arms race will find a lot of opposition armed to the teeth and battle hardened.

This is the reason why it is very hard to displace paypal, for all the flak they're getting they have the fraud angle under control. Stripe is still young and they are probably learning valuable lessons at a very fast rate. I have all the faith in them coming through this in one piece but that still does not detract from the fact that this particular model carries an extra risk.

If stripe were to offer an option (which likely would have to have better rates than their current plan) where higher volume merchants would be able to bring their own merchant account to the party then I think that would be positive for everybody. I'm not sure if they are thinking in this direction or if that option is even on the table for them. But it would make me feel a lot better about putting my apples in the stripe basket. And I really like the founders.

After having been bitten twice by the shared merchant account model I hope you'll forgive me my reservations, IBill and DMR cost me a very large amount of money and I'm not about to risk that once more. If you have $50 in sales every month then I can understand that a merchant account is not worth it but as soon as a business is more serious then your merchant account becomes your lifeline. IBill used some pretty dumb strategies for risk mitigation (such as adding low dollar amount charity charges into the mix to offset the high chargeback risk because the chargebacks were taken as a fraction of the total number of charges rather than of total charge volume which helped to mask a problem). Regardless of the rest of the setup, a merchant account you share with others translates into a (substantial) extra risk.

Another aspect here is that if your IPSP goes under that you lose access to your renewals, for a subscription based service that is lethal. And IPSPs are not usually allowed to give you a copy of the subscriber data because of card company regulations (PCI).

I hope that's detail enough for you.

I work at Stripe, and I can assure you that the situation you described would not apply to any of our users. All Stripe accounts are independent of each other, and the actions of one user do not affect anyone else. We've worked closely with our banking partners to ensure that this is the case in the US and Canada, and we're working to make sure we can provide the same level of service and ease of use in other countries as well.

Separately, Stripe is allowed to transfer customer data to other PCI-compliant providers. So if you ever want to move to another provider, we'll happily move your customer information to your new payment provider (or your own systems, if you are PCI-certified): https://stripe.com/us/help/faq#export-card-data

That last paragraph is really good news.

So do you or do you not have separate merchant accounts per customer?

And if they're not separate do you have multiple merchant accounts or just a single one?

> I can assure you that the situation you described would not apply to any of our users. All Stripe accounts are independent of each other, and the actions of one user do not affect anyone else.

If one stripe account maps onto one merchant account then I can see how that would work, but if that's not the case then I really fail to comprehend how you could make that claim.

I wouldn't quite think about it in terms of a merchant accounts -- it's an old term in a changing industry, and it doesn't apply to Stripe users. They get the same benefits that they'd get with a merchant account (independent reputation, fund segregation, your own name on card statements) and none of the associated hassle.

In fact, thinking about merchant accounts for your Stripe account is like thinking about the physical address of one of your AWS instances - it doesn't really matter.

I'm a 15 year veteran of the internet payment industry, I have yet to see a single cc transaction without a merchant account, as far as I know this is not some 'antiquated term', but simply how business is done.

> it doesn't apply to Stripe users.

But it does presumably apply to stripe.

I like stripe - a lot - but I really wished that you would separate marketing from fact here and make it plain whether or not transactions for multiple stripe account holders are passed through the same merchant account or not. If no merchant accounts are involved at all then that is also a valid answer but again, I fail to see how this is possible.

My direct experience is limited to:

  - DMR (gone out of business)
  - CCBill (barely survived after a buy-out but left 
    1000's of merchants stranded with their funds
    confiscated by the card companies)
  - Virtual Access
  - PaySquare
  - paypal
  - and quite a few others besides on behalf of customers
  - PayBuyNet (since gone out of business)
For most of those I have a pretty good idea of what happened behind the scenes. Either stripe has a new model or I am still not understanding you.

Thinking about merchant accounts matters because payments are the lifeblood of a company and not understanding how service provider implements such details can be the difference between surviving and getting caught up in something beyond your control.

Your AWS suggestion implies 'merchant account hopping' where transactions are processed through a variety of merchant accounts, is that what you are getting at?

> I like stripe - a lot - but I really wished that you would separate marketing from fact here and make it plain whether or not transactions for multiple stripe account holders are passed through the same merchant account or not.

That's fair (and thanks!)

Depending on the context, we use both individual merchant accounts as well as shared accounts with unique merchant identifiers. I should add that this model isn't unique to Stripe, but it's still a relatively new model in the industry.

A Stripe account is perhaps best thought of in terms of its properties rather than as a traditional, segregated merchant account or a shared account. The typical benefits of a traditional merchant account are:

1. Your name shows up on customers' statements.

2. Your funds are clearly segregated from those belonging to other users (and from the payment provider's as well).

3. Your account's reputation is independent of other users.

Let me know if I've missed any properties that you think are important. Stripe gives you all of these properties, with the added bonus of not requiring a lengthy form faxed in with a copy of your driver's license.

I completely agree with the concerns around merchant accounts. It's probably worthwhile noting that even with a segregated merchant account, it's important to make sure you're actually getting all the properties mentioned above.

Ok, that clears it up.

I've shot John an email reply outlining some new fraud developments (new to me, that is) which might impact this particular model in a negative way.

For now I'll be keeping my recurring income in my known-to-be-good merchant account(s) with standard IPSP hookup, we'll see how this plays out in the mid term and at some point I'll probably switch a portion of my volume over to stripe to see how it goes.

I'm fully aware of the model you are employing and its possible consequences, it has a lot of the benefits of segregation but not all of them, and it is still very much dependent on one important single variable, which is how many merchant accounts you have. Keep in mind that from the financial institutions point of view (even if you have multiple banks in multiple countries) Stripe is still a single entity and that if transactions from Stripe taken as a group carry too much risk then Stripe as a whole can be cut off from their processing ability. All it takes is one directive from VISA/MC and you will find it very hard to open new accounts or maintain existing ones. There are a lot of people that were the subject of such directives racking up huge amounts of air miles flying to exotic places (Cyprus, Antiqua and a whole bunch of others) trying to stay one step ahead of the grim reaper.

The bigger you are the more you'll be a target for fraudulent merchants, and the harder it will be to spot the fraud or money laundering before it hurts.

The best ways to mitigate those risks are to grow your merchant base slowly (somewhat contradictory to most business goals), to be absolutely top notch in your fraud detection and to review your existing customers as well as the new ones periodically to spot any abrupt changes in account activity.

I'm sure that's all old hat to you but just in case it isn't it might save you some grief.

Best of luck, and thanks for the candor.

Feature suggestion: allow large merchants to 'bring their own' to offset any or all of these worries.

> It's nicely written - but a nicely written API doesn't make a product.

I believe you should revisit that assumption. Stripe is successful because of its API and UI. Likewise, Facebook and the iPhone largely succeeded because of their UI and API.

The Stripe API is really good...but it's not perfect. It still requires a huge amount of manual development that services like Recur.ly and Spreedly already implement.

Having implemented several Stripe sites, I found I preferred more of an automated recurring subscription management service, and then Stripe is just a gateway at that point.

That being said, I use Stripe extensively and love it.

Facebook succeeded because they got the network effect right, and Zuck chose the initial rounds of members at Harvard carefully (mostly girls, mostly rabid networkers/socialisers), and the ensuing rollout to other colleges/countries were staged carefully to maximise demand.

iPhone - marketing, marketing, marketing, marketing, and the US had never really seen a smartphone before. Then, ecosystem and snowball.

That said, I agree that UI is a fundamental part of any product - API, however, not so much - Joe Public doesn't care and neither does your CFO - and as posited, developers, no matter how much we'd like to think we are, are not influencers in the markets where PSPs are entrenched.

The easy of implementing it into any app is incredible. The dashboard is also very simple and easy to use. It eliminates needs for Gateways, scammy Paypal and other merchants.

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