John Collison
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So my idea for you guys is you guys just have like regular normal boring ads on the podcast. I think you need to do the post-red ads where it's like, you know, we say a lot that everything is securities fraud. Is having a bad night's sleep securities fraud? Now you don't need to worry about the Casper mattress. Or like I could do like the men's shaving club ads or something. That could be fun too. When buying short dated out of the money call options, I use Surfshark. Right? Yeah. I think it'd be good.

Hello and welcome to the Money Stuff Podcast. I'm Matt Levine. I write the Money Stuff column at Bloomberg Opinion. And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television. Katie, today we're doing something new. We're doing our first interview on the Money Stuff Podcast. Are you nervous? I'm pretty nervous. I'm a little bit nervous too. We're recording this after it happens, so we're not really nervous.

I'm still stressed out. Speak for yourself. I'm pretty nervous. I haven't listened to it yet. Today, our guest is John Collison of Stripe. Stripe is a payments and financial technology company. And John and his brother and co-founder, Patrick, are kind of tech industry celebrities. Yeah. He's an Irish billionaire. He's from Limerick. That's cool. Katie's wearing her Limerick jacket. I am. But we'll probably get into that during the podcast. That's true. It's a little embarrassing that I wore this. It's a medium amount of embarrassing. I truly didn't mean to.

But as I said to you, in our office, it was 47 degrees when I left my apartment this morning, pre-dawn, and I needed a top. And this is my favorite medium weight jacket. This is the behind the scenes content that Money Stuff podcast listeners really crave. Yeah. Let's jump right back into that interview. Nailed it. Should I do like a crashing transition to talking about...

Striper. Yeah, so how do you guys usually start these? How do you want to? I guess you haven't done these. We haven't done these. We could invent the format. Yeah. Start by reviewing the advertisements I've heard on the podcast. We start the podcast with much like this. We walk into the room

and bullshit for a bit and then record that. Yeah. And then we eventually say, hello and welcome to the Money Step Podcast. And we talk about whatever the thing we're talking about today. So now we're talking about Stripe, capital markets. Yeah. Destiny Tech. Okay. So this is a podcast with you. You talk a lot about your interest in business history. Like you've learned from the tech companies of the past and the conglomerates of the conglomerate wave. Yeah.

I have not heard you talk about the lessons you've learned from financial services companies. And I write about finance and think of Stripe in many ways as like a financial services-esque company or like some evolution of a financial services company. So I'm curious, like, I don't know, what do you think about financial services? Yeah, in general, we try to learn a lot from other people.

businesses and okay one things I really like is we live in a golden age of learning about other businesses right now and one of the reasons I like this is because I think learning about other businesses at some level learning about the world or certainly the economy because you know you're getting sense for how all the various entities work together with financial services in particular

You came up with the framing that, you know, Stripe is in a way kind of a new kind of scaled investment bank. Was it your framing? I think I said something like that. Yeah, yeah, yeah. I would love for you to tell me that's right, but I'm assuming you'll tell me it's wrong. No, I actually kind of like it because if you think about what are the potential sources of funding for a business, like if you want to scale up a business, how can you fund it? There's three ways you can fund a business. You can do it through debt, equity, or capital.

retained earnings. And so if you just tick through each one of those on the earnings side, maybe that's a place where a stripe is kind of the

of the most directly doing this, where we're making it easier for businesses to self-fund their growth. And we see tons of bootstrapped or kind of certainly early monetizing businesses on Stripe. Like we have this customer in Stripe Photo Room, and they do online kind of Gen-AI powered photo editing. They're based in France. And maybe 10 years ago, they would have raised a whole bunch of VC and scaled up that way. They're actually profitable within a year, and they've just kind of scaled up profitably

Since then, 98% of their business comes from outside France, and so they're kind of selling this product to a global audience, and Stripe's making it easy to do that. And we've seen that in general with, I guess, the AI companies in particular, where during the social media boom, maybe companies scaled up first with raising lots of VC dollars, and then later on figured out monetization. With a lot of the AI companies, OpenAI, Perplexity, Clogged, the PhotoRoom who I was mentioning, they actually monetized from pretty early on using Stripe, and so that's one source of funding.

Stripe allows early stage companies to monetize so efficiently that there's less need for debt and equity in the world because companies can self-fund. You're putting VCs out of business. Yeah, and obviously we think it's a more slightly more

healthy dynamic for the businesses. A classic trap that early stage companies fall into is, you know, and Y Combinator, say, tries to get their companies to avoid falling into this failure mode is kind of they raise money and then they think kind of valuation milestones or any kind of

financial or investor milestones are the milestones that matter for the business. Whereas obviously that's not the case. It's are you building something of value in the world, which will generally be measured by does anyone want to buy it? And so I think maybe it gets people on the right leaderboard earlier on where a revenue leaderboard is just a much healthier leaderboard to be thinking about than a fundraising valuation leaderboard. But we also play in the other parts of the capital stack where on the debt side, I mean, you guys probably watch this, but banks are

have kind of gotten out of the SMB lending space since the financial crisis as just the compliance costs have gone up. Like people do not go to a bank for a $5,000 loan anymore. And so we now lend

through our lending partners, billions of dollars to startups. We do that entirely programmatically through ML models, you know, cashflow based lending. So we're not looking at a balance sheet. We're not trying to do kind of credit checks on the individual or something like that. We're looking at the stream of cash flows. Is it a healthy, reliable stream of cash flows that can support some debt? That's because you're doing the cash flows so you can

Exactly. We see the cash flows and people repay out of the Stripe cash flows. And so that is a new kind of lending product that exists in the market that now, again, is in the billions of dollars in terms of the debt we're providing. It's kind of ironic in a way. If you want to raise $100 million of debt, that is a very competitive market. Lots of people are playing in that. If you want to raise $5,000 of debt for your company, it's actually much harder to get that than it was, say, 20 or 30 years ago. We've gone backwards there. And then on the equity side...

I think Stripe Atlas has actually helped make more companies investable because

What a lot of people don't realize is Stripe Atlas is our incorporation product, but it lets companies where the founders might be in Israel or might be in Singapore or something like that, create a US Delaware company, and that makes it much more investable. And so we've seen a lot of foreign founders kind of virtually creating a US company, which it just turns out foreign companies, investors find too scary.

So I guess I'm responsible for the framing that you're sort of in some ways a substitute for an investment bank. So like your framing is like increase the GDP of the internet, but like, you know, you have these businesses like incorporating companies, like what is the principle? And like, I was like a real investment banker. I was doing like corporate derivatives and like, I assume you would never get into that business, but am I wrong? We're certainly not planning on it. We build products that are scalable in some way through tech. And so, you know, Stripe itself,

This past year, we did a trillion dollars in payments through the Stripe platform. That's still growing in a pretty healthy clip. The number of businesses served is millions of dollars. And so if there's something that is solved by just throwing an army of people at it, I mean, all the investment banking firms are exceptional at recruiting armies of people, and that is a very competitive space. Whereas the space of, like I was saying with the lending side of things, that was just an underserved market where we came at it by talking to our customers, and they said, "We really need growth capital. That's actually very annoying for us to get it."

I guess we try to find the underserved spaces and investment banking for, you know, certainly on the larger side does not seem underserved right now. I've listened to a lot of podcasts you've been on in the past several weeks. I'm so sorry. No, it's been really interesting. You interviewed Charlie Munger, which was... I much prefer interviewing to being interviewed. So we'll come back for the second round of this where you guys are put on the spot. That'll be a lot of fun. We'll put that on the calendar. But at one point, Charlie Munger started talking about like

and they're selling these sleazy products. And of course, I couldn't see if you were nodding along. Matt and I were talking about, you know, whether you would chafe at sort of the comparison to, you know, an investment bank, for example. But it sounds like you don't. No, I don't. Investment banking provides a useful set of services in the world. And OK, one of the things I really like about the Money Stuff newsletter is a studied detachment from what's going on, where there are people and people respond to incentives and that creates behaviors in the world. I like Matt does have views and, you know, dislikes.

crypto and all sorts of things. And you can kind of, the views occasionally come out, but it's mostly this very detached view of what's going on in the world. But the way we think about it, like for example, we think Stripe's scale and revenue are actually pretty decent proxies for the value Stripe is providing in the world. That's not always the case with a business. You could have an extractive business somewhere or monopolies or rent extraction or something like that. But in our case, we haven't.

We have very informed buyers and a very competitive market. There are lots of other places people could go for payment acceptance or billing software or something like that. And so generally, if customers are choosing you and paying you money for a service, it's because you're providing something of value that you can't get elsewhere. And similarly with investment banks. I think if people are going to investment banks for a thing, that's probably because they're providing some value to them. And so that's the framework I tend to take. I think Charlie, rest in peace, generally took a lot of offense at where he saw...

People hyping things, principal agent problems. You know, there's a set of things that bothered him. Crypto, Robinhood, mutual fund advisors. And, you know, you could understand, I could construct the steel man for those cases. I mean, I think there's a lot of opacity and pricing and value in financial services that

There's probably a lot less of in your business, right? Like you're kind of charging a transparent fee to people. Yeah. And certainly the more scaled something is, the more price comparison there'll be, the more efficient the pricing will be. Whereas, yeah, there's more room for extracting price when you get into bespoke deals.

One thing I think of when I think of investment banking is just serving as an advisor to CEOs and giving them general advice on their business. We were talking before about you are now interacting with a lot of big companies and you had some views on the ability of a big company CEO to understand her company. I'd love for you to talk about them. Yeah.

I think people think that CEOs are able to drive change in their organizations. I'm just talking about organizations generally. I'm not talking about Stripe. People think that a CEO lands in a new job. They take over a company and they're able to just whip everything into shape and change everything. And

I think the general experience of CEOs landing in new jobs is that is not the case and organizations are pretty hard to change. And in fact, one of the things that we believe strongly at Stripe is it's very important for people to get close to the work or you will not be able to drive

any meaningful, useful change. And so there's a bunch of different ways in which we do that. It actually reminds me of the lean manufacturing principle. They have all these very nice aesthetic Japanese terms for things. And so there's the English equivalence, very much for the Japanese terms. But one of them is Genba, which is this idea that managers should walk the factory floor and solicit ideas from the people who are on the production line and things like that. And all companies, like a tech company like Stripe, has its equivalence. And so we very much encourage

engineering managers to actually write code at Stripes to get the experience of what is it like working in their corner of the code base, what problems are engineers running into. I really enjoyed being CFO last year when we were between CFOs. And one of the reasons I really enjoyed that, again, was getting closer to the

the actual numbers, the processes by which we drive the business. Like we're going to hold Stripe to a budget regardless. And aren't you interested in how that process is actually set and how those numbers are set and everything like that? So, you know, I say that I think every founder should be CFO of their business for at some point during its lifespan. It's a very educational experience. Does it ever be like product ideas? Did you do that and come away with like, we need to do...

accounting software? No, no. Or I mean, maybe in an abstract way, but again, Stripe's finance needs are maybe a little different from the broader ones. But again, I just think for getting close to how the business actually runs, that's maybe the thing that's

hard for CEOs to do. And, you know, we try to do it from a customer perspective. A huge amount of even some of the products we're talking about, like Stripe Capital, they basically come from us trying to spend more time with our customers than our competitors do. And so, you know, we'll start every leadership team meeting

8 a.m. Monday morning with hearing from a customer. We just ask them to come and give us candid feedback on the product. If you were to sit in on those meetings, it's not an A-plus report card that we're getting. You know, there are things they want us to fix. But I find that

It's easy for product managers to overcomplicate things, and you can get in your own head and construct some really convoluted castle in the sky. And there's nothing quite as grounding as hearing directly from a customer talk about what is not working for them in the product. And we do the same on Fridays with an all-company thing, bring customers to talk to that. But anyway, I think the essence of this for CEOs is getting close to the actual production function. And that is sometimes hard for them. MELANIE WARRICK: So I have two points.

It's interesting to hear you say that. First of all, my brain immediately goes to Elon Musk, like on the factory floor at SpaceX and Tesla. But it was interesting. We had Home Depot this week announce that they were going to require corporate employees to work eight-hour factory shifts, which is interesting, like retail shifts. Starbucks did something similar, right? Yeah, which makes a lot of sense. I mean, especially in brutal jobs such as that one. And then the other thing, I mean, given that you do know so much about his business,

business history and, you know, just love looking at companies. But those 8 a.m. meetings where you're just talking to your different companies, like you see so many different types of companies, which is interesting. Yeah. And it is definitely a pretty interesting time. I think the behavior we observe is

is that tech has been very well covered. And so I think everyone knows broadly kind of what's going on in the tech world. What we find interesting is the businesses that are, you know, the Sherwin-Williams of the world, you know, the businesses that are 10, 20, 50, 100, 200 years old and how they are adapting to the modern world. And generally what we find is that COVID-19

provided a useful long-term change to those businesses because those kinds of businesses all employed a chief digital innovation officer prior to COVID. And that person had a team of 10 people and they produced all these slides and ideas and the ideas were pretty good. And the company just ignored all of them and just didn't do any of them. And so they had the kind of idea generation part and nothing happened. And then COVID happened and it was this oh sh*t moment where

People, they were forced to adapt because, you know, obviously the stores were locked down and were not open. And so you maybe had gym companies moving to virtual training or something like that. But that created a mandate for actually getting serious about the digital stuff. And we see much higher quality digital execution coming out of that. And there's kind of a few common patterns in what everyone's trying to do. I think everyone is different.

questioning their middlemen. I don't think middlemen are going away, but they're questioning the middlemen and do middlemen add value? And they are starting to do much more direct customer relationship stuff.

Part of that is the product experience where, you know, Hershey's using Stripe to sell candy directly online and the customization and things like that. And then everyone's just trying to build some kind of recurring revenue. And so, you know, we think there's two kinds of businesses in the world. There's those who have recurring revenue and those who want recurring revenue. And we'll talk about the engine, you know, the airplane engine makers with power by the hour. You know, you actually don't buy an engine. You buy, you know, exactly. You buy thrust, you know, by the hour.

by the minute. But that is actually what all companies are moving towards because it's kind of better on both sides of the equation. And obviously, that's pretty complex from an implementation point of view. And so they end up coming to Stripe.

Each week, hosts Lizanne Saunders, Schwab's chief investment strategist, and Kathy Jones, Schwab's chief fixed income strategist, analyze economic developments and bring you fresh insights on what's happening in the market now. Join Kathy and Lizanne as they explore questions like, what indicators should you watch for signs of change? And,

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I did like a striped fire side a while back and you were like, what should we do? And I was like, I should fix paywalls. Have you done it? We're getting there because one of the... Why is it hard? Why is it hard? Okay. It's hard for a few reasons. One...

I think people confuse paywalls with micropayments. And I think more consumers want micropayments than publishers, where the publishers want macropayments. I think nobody wants micropayments and everyone wants to talk about it, but maybe I'm wrong. Okay, yeah, yeah. So anyway, once we move past the micropayments thing, then it's hard because...

You ultimately need to smooth the onboarding friction and you probably need some cross publisher network. And, you know, publishers are not competing. They're maybe not inclined to work together. And then it's just a bunch of tech upgrades, which are actually kind of

somewhat prosaic long-running projects, but you know you need to be able to have the patience to work with a media company to spend a year or year and a half upgrading their stack. The way we've ended up doing this is with our product, Link, which is very simple, but it's really starting to work. It just remembers, you guys maybe run into it on the internet, it just remembers your credentials across websites. And so if you've bought on website A with Stripe and you have the box checked to remember your payment details, then you'll be able to buy on site B without entering your payment details again. And

You might think it will lead to a big increase in conversion if a lot of consumers have their payment credentials remembered. So they don't have to type any extra data in. They can just click buy. And turns out it does. And there's obviously a virtuous cycle here where the more people sign up for it, the denser the network gets. So that's really starting to work. And so we have some media properties starting to use that. And so what it means is they get lots of people coming with credentials all pre-filled, and they just need to hit buy.

And then the commercial proposition just needs to work. I just feel like the media paywall problem for me is not even the payment credentials. It's once you've paid for a paywall. Keeping you logged in. You're on your phone. Cross devices. You're on two computers. Yeah, yeah, yeah. You get something emailed to you. Can it scan my face and just remember me? It's really frustrating. We should and may get to that as well. I agree. That's part two of it. To me, that's related to online identity and the stuff that crypto people are talking about. Yeah.

I also have listened to you on podcasts. One thing that you've said is that when you started raising money for Stripe, people were like, why isn't this a solid problem? PayPal exists. Can you tell us why it's not or why it wasn't or why it isn't a solid? Like, why is payments hard? And like, there were payments companies before you. Like, what's the thing that you're solving they didn't?

It wasn't solved for a few reasons. Payments requires you to be good at two very different things that are quite distinct skill sets. There's technology and there's financial services. And so prior to Stripe, you had some payment companies that just did the technology layer. They said, we're a nice API and we plug into whatever bank you use. But that wasn't a good payment experience because you would then try to sign up with the bank and it spends...

weeks shuffling paperwork around or something like that. And so a huge amount of what we do is at the intersection of those things where you have AML, KYC considerations, where Stripe is essentially aiming to look at the activity going on on its platform and ensure that it is licit and acceptable activity that's happening on the platform. And so we do lots of cool ML work. We don't talk about it

really that much publicly because it is just what goes into operating a skilled platform like this. But it's a huge amount of the special sauce that makes Stripe tick. At the same time, the tech has to be really good and nice and usable, and customers really care about latency. They really care about how easy the API integration experience is. And so I would say...

companies prior to Stripe tended to pick a lane a bit where you had a few purely tech companies where, you know, they'd say we're a payments gateway and we just don't think about anything. We just hand off the transaction to someone else. Or there was banks and they actually just generally...

outsourced the tech. They didn't even really do it themselves. Or if they did it themselves, they did not do it particularly well. And so it was a very crummy experience for the developers actually using it. And of course, the tech changes. Mobile was just coming along as we were getting started. The iPhone app store came out in 2008. We started Stripe in 2009. So we were just in time for that. And so mobile was a very relevant consideration. Even just the web apps and SaaS and everything grew a huge amount. And so I think the banks had not built for that and did not

build for that. And so there was maybe a gap between the existing providers and there was that set of things that you have to be really good at. There were a huge number of things with Stripe that we did by intuitive feel. They were not part of a particularly deliberate tops down strategy that was written down in the business plan, but ended up working out well. And so one was our really early focus on developers where our go to market was through developers. We started by selling to startups and it was this really

I would say kind of bottoms up sort of adoption motion. But again, ultimately, the product we're selling is a technical API product. And so, of course, you should be thinking about what the developers want. We just had the developer focus because we were software engineers ourselves. And we just wanted to build a product that we thought was a good product. But I think it ended up being more strategic than we maybe realized in the beginning. There's a lot of like...

mess in the legal and infrastructure of the payment system. And your job is to provide people a very clean abstraction to that mess. And that means handling all of the mess and actually going out and figuring stuff out and then being able to put that in the backend of your API so the API is a very clean abstraction. Is that...

Bern Hobart had a line that I liked in one of his newsletters that Stripe makes the financial system work the way people think it already does. And that, I think, is actually a pretty nice design principle for us. And, you know, maybe a good example of this is... See, when I hear that, I want you to do like equity derivatives. I want you to do more of this stuff in my world. But I don't think we have a view on how equity derivatives could be improved. Maybe we need to think about it more.

I do want to talk about crypto. Yeah, we debated this internally. But when it comes to the payments world, I mean, the conversation tends to devolve into a crypto conversation because I feel like crypto is trying to

solve a lot of payments problems, especially when it comes to cross-border payments. And I'm not asking you about like the price of Bitcoin or whether you're bullish on, you know, number go up. But when it comes to crypto and the problems that it's trying to solve, I mean, how do you think about it? We're quite excited about crypto at the moment. I interpret money stuff as the house position as moderately crypto skeptical. And so I guess what I would say to a moderately crypto skeptical audience, maybe two things. One,

There are just a bunch of scams and dodgy characters and everything like that. But it kind of reminds me of... I grew up in Ireland. The first time I went to Vegas was for a work conference. There I was for a work conference. And, you know, at the Venetian or something like that, probably Monday 2020. And...

You're going into the hotel past like all the people smoking indoors and like the people just addicted to the slot machines, just pressing them again and again and again. And all the blinking lights and, you know, the I guess the clatter of the coins paying out. And you have to walk past this degenerate gambling area. Grim scene. Yeah, it's a grim scene to get to your serious industry conference. And that was very surprising to me. And.

I don't know. There's something similar in crypto where you have the casino Dogecoin value speculating part of it. And then there's people doing all the serious work over in, say, stable coins or something like that. And those two things just exist. But I think one cannot use the existence of the slots in the Vegas casino to write off the work. I know maybe I'm stretching the analogy. No, this is good. Pitch me on stable coins. So because like, yeah, yeah. Your friend Patio11 would say,

It's a KYC avoidance mechanism, basically. Yeah, well, the thing about crypto is there's been a lot of hype on what crypto is useful for. And so, for example, if you go back and read the original Bitcoin paper, which is a great read, it's a very readable original paper. It actually used the word interchange in there and talks about kind of the use of Bitcoin as a payment method. But Bitcoin turned out to be certainly stock cryptocurrency.

Bitcoin, you know, before lightning and everything like that. It turned out to be a horrible payment method, like slow, expensive. Let's not do that. And now the technology has matured through what has been kind of 14 years of development. I think the crypto haters use this argument that like, well, you know, is the web in 93 for many, many years? Where is the actual web coming along? But there's been 14 years of lots of technical development happening such that we've ended up with much more advanced technologies. And so what you specifically have now with stable coins is you have

Firstly, something that's value doesn't change. And so there's none of the kind of speculation stuff that we're talking about. You have something that's actually very technically scalable. So with the current L2s, there's no real scalability issues with them. And you have a pretty sensible construct where in a way it's narrow banking, right? We've been talking about narrow banking in this country for decades and we've ended up with narrow banking through stablecoins.

where, let's say, a good stablecoin, you know, that's like a Paxos or a USDC. In the case of USDC, it is fully backed by short-term treasuries. And that actually just seems like a pretty good construct to me. And so, you know, we now make it where you can, you know, accept money in Stripe via crypto. You can do some payouts, things like that. And the obvious thing that people say is true, where...

In the U.S., you will be slightly too biased against crypto because the U.S. has the world's best currency. You know, the U.S. has the world's reserve currency where you get to spend. The mighty greenback. Exactly. And so, of course, people in the U.S. think the USD is awesome because it is an awesome currency, whereas many people in many other countries have a much more adversarial relationship with their own currency. And I'm not even talking about Zimbabwe, though it is true there. I'm talking about Turkey, which is a very large country in economy and population. But people there are

do not have full faith in the lira and they think about what's a better place to keep money than lira. I guess the other US bias is that

the US government really wants dollar payments to flow through the KYC banking system. And like, there's some suspicion that... I think all the serious grown-up crypto players today, I mean, they're subject to the FinCEN travel rule. They are KYC-ing the actors. And so if you go through a crypto flow today, you will see the normal frictions of dealing with a regulated financial product where you are asked to provide your last four-year social or upload a driver's license or things like that. And so I think just in most of the

crypto use cases that are being taught. Obviously, there's the sketchy dark web stuff exists as well. But in most of these cases we are talking about where serious businesses like Stripe or serious merchants are using crypto, it is the custodial-licious part of the crypto system. So it's not like just sort of like an on-chain, like non-custodial transfer, like... Correct. I'm curious. I mean, if you look into your crystal ball and, you know, it's been 14 years since Bitcoin was created. As you said, we've seen a ton of technology advancements since then. I mean...

You said you're quite excited about crypto, but I mean, how far can we run that out? Do you think it's the future, for example? Would you go that far if you look 50, 100 years into the future? I don't think it's a singular future. And again, there's a bit of overpromising that's happened in the crypto world. And I think that's what gets people's backs up. Actually, speaking of Berne Hobart, we just at Stripe Press published his new book. The title is Boom. And the thesis of the book is that

We generally view financial bubbles as societally net negative because, you know, they cause misallocation of resources and they cause, you know, ultimately people lose out. And he makes the argument that bubbles provide a societally useful function by essentially coordinating everything

effort. And, you know, maybe the dot-com boom is incorrectly understood as a, you know, pets.com and webvan. It was really like by dollars put into it. As you guys probably know, it was a telecoms boom and it was a fiber rollout boom, but it led to the U.S. having just amazing fiber overcapacity that then led to the steady growth of the internet for the decades that followed. And so that's maybe an example of it was a bubble, but it was a societally useful bubble because then it led to this overcapacity that had lots of

positive externalities. Anyway, I think you can make that argument about crypto. I think that argument made is crypto led to a build-out of GPUs that led to the AI boom. Oh, interesting. I wasn't even making that case. You could make that argument too, though obviously there was a lot of GPU...

spent happening even before crypto. No, I was just making the argument that I think the speculative side of crypto, you could make the argument hold in attention and resources that was then used to build the very boring, useful parts of crypto, like Ethereum 2 or, again, stablecoins or things like that. We could talk more about this. I do want to make sure.

Are we talking about the things you don't want to talk about? Yeah. Great. Which we do want to talk about. So another money stuff theme that we'll probably do on our ad reads is that private markets are the new public markets. You guys are among the poster children for that. You're the CFO. Tell me about what it's like being private. I don't know. Like, I mean, how should I think about like the idea that like you're an enormous company and you've

stayed private and have no enthusiasm, as far as we know, for going public or even talking about this. 20 years ago, would you have been able to do that? Yeah, we spend a lot of time internally at Stripe thinking about the value of the Stripe business. I think the external world spends a lot of time thinking about the value of the Stripe stock price, which are related, but different things. We have definitely stayed private longer than some people expected. I think we'll continue to stay private longer than maybe some people expect.

But there's no complex answer. It's just a simple answer, which is we don't think companies should sleepwalk into going public. We think they should be deliberate about it. And why would Stripe run out and go public? It could be if we wanted to sell stock broadly to a retail audience. That's not something that we've had. You know, we just have a business perspective.

is profitable you know we haven't needed to raise very large amounts of capital a traditional reason might be return of capital not just kind of a capital raise for running the business but return of capital to existing shareholders but again that's where you're maybe referencing the private markets have gotten deeper and you know in our case we've run two unlimited employee tenders you know last year and this year you know sequoia just did an lp tender where they gave liquidity to some of their lps but liquidity is available to people in the private markets and so it's more i think the

default spring where companies, you know, a SaaS company would be started and, you know, go from zero to 100 billion in ARR and then just run out and go public. Default is being questioned a little bit in Silicon Valley. Obviously, lots of companies are still going public, but the default is being questioned. And the default is more of a Silicon Valley tech default.

than maybe a broader global default. So like in financial... We know that. Exactly. So as Bloomberg employees, you may be familiar with it, but Bloomberg is the example that everyone cites. But if you just quickly run through financial services, you know, take the world's leading market maker, Citadel Securities, private company, take the world's leading prop trader, I'm probably offending one of the world's leading in all these cases, so don't offend anyone. But if you look at Jane Street, you know, which it's been

reported on a lot these days just how good a business it is. I don't know, a 10 billion profit run rate or something like that. Private company. Fidelity, one of the world's leading brokerages. Private company. Goldman Sachs, your former employer? I assume that a big difference is that a lot, like, Jane Street writes very large checks and

The Silicon Valley difference is not just that you have VCs who might be hungry to get out, whereas Citadel doesn't, but it's also you have employees who are getting paid in equity and they're getting tenders every year. Is a tender every year just as good as publicly traded stock?

We think the tender every year is a nice solution. And there are some things that would be different if we were a public company. For the better, there's some things that would be different as a public company. For the worse, and you get into trading windows and who's an insider and things like that. But it's thus far worked quite nicely for us as a solution. So is that the model then? Like tender every year? You've only done two, but...

We don't have forward-looking plans to announce. And so I come back to you at some stage with, you know, we could go do something that you don't expect. And we're not announcing the plans because genuinely it's not like there is a written down plan at Stride that we're going to do this, this, and then this. We

are always reevaluating it. But again, up to this point, it has made more sense for us to grow as a capital efficient private company than it's made sense for us to be a public company. Sure. Like Jane Street just makes money every year and they don't need to raise capital. And so they just- Seems like great business. Pay the money to people, right? I don't know what the economics of that business are like, but they seem extremely good. But like, it does seem possible that you could just

make cash every year and fund the business out of that and pay people out of that and never need to... For 24, we're trying to make a decision for 24. And for 25, we'll try to make a decision for 25. So luckily, it's not the case that you're faced with a fork in the road and you have to make some kind of permanent decision. We do constantly reevaluate it. When I write about this topic, one concern that people have is that there are a lot of cool companies, like an increasing number of them, like fast-growing, profitable companies that

Or sorry, I should say fast-growing, not profitable, like early-stage companies, middle-stage companies. Yeah, yeah, yeah, high-growth companies. High-growth companies that don't go public and that deprives ordinary investors of access to those companies. And therefore, it should be made easier to go public or whatever, right? So for you...

Do you worry at all about that from a systemic perspective, that you're depriving American retirement savers of access to Stripe? And then two, you're not entirely, because there are people who are going around selling Stripe shares in a way that I believe you do not like. I don't know. There's a way around of the barrier that you've set up, I guess. Yeah. Look, I do think the debate over who should be allowed by private assets is a good debate. And

The accredited investor rule is kind of an odd rule. We take it for granted that it's been around for a long time, but basically we define sophisticated investors as rich people, which is maybe somewhat ahistoric. And like a declining standard of rich, where it's now sort of upper middle class people. Correct, yeah. So I think debate on that is a good thing. In Stripe's case,

You know, most of the non-employee ownership is through essentially kind of VC funds and the underlying VC fund ownership, the LPs there, tend to be pension funds, college endowments, people I think we feel quite good about making money for it.

And so I don't think it's the case that broader society doesn't get to benefit from the appreciation. I think we feel quite good about the LP base of the investors that are behind Stripe. And again, I think that's another thing that has allowed us to stay private for as long as we have, which is we're actually in very long-term VCs. And I think if we had a different set of VCs, we would have been less fortunate in being able to grow Stripe as a private company because maybe they would have felt the need for a win or something like that. But I think luckily, Sequoia Capital is...

one of the best VC firms there is. They don't quite need to prove themselves. They probably count you as a win anyway. Say again? They probably count you as a win. No, exactly. Yeah, yeah, yeah. And then on the, I don't know what you call them, but the firms out there, the market. We've talked on the podcast about Destiny Tech 100, which has a private market

closed-end fund situation with some Stripe forward contracts. And there's a general market for forward contracts, which all seem to be not really approved. Yeah, this is not going to end well because generally hyping financial assets has a

bad history. It worked out badly with SPACs. It worked out badly with ICOs. And again, it just tends to work out badly, which is why it tends to be regulated. The financial regulators tried to rein in the hyping of private assets. And so again, Stripe is not a public company. We do not enable broad retail ownership of Stripe stock. And so if people try to

back into that by having private company stock in a vehicle that is then available to public market investors. We just think it's not a good construct. It's under-disclosed where people are buying an interest in things based on name brand recognition, but not based on going over the financials or understanding what it actually is. They tend to all be very high fees. I mean, it depends on the vehicle, but they tend to be fairly extractive in that way. And so...

we don't like it we don't approve it we don't permit it and I'm personally not a fan is there much that you can do about it like in the case of a destiny tech for example that says that you know they have stripe forwards is that correct yeah I mean what can you do we prohibit forwards so we had a bit of a tete-a-tete about that people do them anyway

Can you then void them? I don't know where this goes. Because, right, I mean, it seems like they're prohibited and people do them and...

Yeah, we put it up on the website just to make it abundantly clear so everyone has the same information. This is not allowed. These instruments are not allowed. So I don't know. There's some areas where people have to read the tea leaves or the body language. We tried to make it abundantly clear, get out there with the semaphore flags so that people are not in any doubt. On the topic of going public, it doesn't sound like you're in any rush, obviously. You said in June, and I thought this was interesting, that many companies make the decision to go public too early, that you personally see tons of opportunities to change and grow the business faster.

quite a lot. And I think it's interesting that you want to stay private to do that. And I think a lot of founders would agree with you. But just the fact that, you know, sort of like going public, you see this as the sign of maturity and maybe that you're not innovating as much as you would in the privates. I don't know. It kind of made me think of tech companies like offering dividends. Like I remember when Meta started giving out dividends earlier this year, everyone was like, oh, well,

they're old news now. They're too mature. Well, I think Meta is the wrong example to use for that argument because they currently seem to be doing extraordinarily well in the AI race. And I'm not making the claim that one cannot innovate as a public company because that is clearly an absurd claim and you would just be kind of constantly slapped in the face by counterexamples. And Meta would be the perfect one where they just demoed the Orion glasses and those look amazing. And again, they're just nailing it in the AI race. And so that would be a silly argument. I do think that on the margin,

If you are developing large number of new products, if you have a fast-growing business, if you're constantly reinventing how the business works, and again, in our case, we are transforming Stripe from not just being a payments business to there are all these new software lines of business that are much earlier, that are harder to predict how they grow, everything like this. You know, we're changing out the underlying payment methods. You know, we talked about crypto. We didn't talk about around the

world, there are all these interesting trends happening in new payment methods where basically bank transfers and things like UPI and PICs in Brazil and things like that are becoming much more relevant. So anyway, there's a huge amount of change. I think on the margin, the public company valuation apparatus is... You see it how people, you know, the quarterly earnings and the miss and the beat and everything like that. It is optimized for...

mature, predictable businesses. And indeed, people talk about kind of business predictability, whereas for a business that is still in the early stages like Stripe, and we think about a lot of new products on a five or 10 year time horizon. Again, I think on the margin, there are some benefits to doing that as a private company because you get to kind of completely retool the business as you go without necessarily wondering about what will the reception be for this in the next quarter's earnings release. I know you're not

in any phase of planning an IPO. But I was a capital markets banker, and I know you've had thoughts about the IPO process. And I don't know, if you were doing an IPO, what would you change about the process? MARK BLYTH: I find all the debates about IPO mechanics really uninteresting, because it just doesn't matter. If you have a great business that's valuable for customers, that millions of people use, and makes money as a result, you can do whatever you want. I think Facebook would say they botched the IPO, but they have an incredible business, so it doesn't matter.

And no one remembers it. And then you can have like the world's best IPO plan. And if the business isn't good, it doesn't matter. And so people get into all these debates about direct listing versus regular IPO. And then Bill Gurley complains that the bankers are taking too many fees and then it just doesn't matter. Like build a great business and you could write your prospectus on a cocktail napkin and it'd be fine.

This is like why Charlie Munger doesn't like financial services businesses, right? Because you're like, oh, this is irrelevant. I used to build a great business. It's like, it's true. But it's true, right? Yeah. And the thing is, investors are smart. I think people trust

try to do too much of a song and dance with investor relations and try to, you know, gin things up. And ultimately, when you meet professional investors, you know, they're really smart and they can look through and understand the fundamental dynamics of a business. And so the secret to good investor relations is have a good business that's growing and is profitable. More people should do that. Exactly. Yeah.

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I should not be listened to for any rational financial or investment advice on this topic. I don't know. I don't have the pockets to buy an airport right now. Well, no, just I'm a pilot and an aviation us. Oh, cool. And I grew up interested in it and have been flying since I was a teenager and still really love to do it. Wow. And I'm flying my spare time. And so I would say it's not necessarily the most rational business interest of mine. But in the case of the airport, so Dublin Airport.

basically has three airports, Dublin International, which if you've been to Dublin, that's the one you've been to. I guess three if you count the military airport, and then Western, which is the general aviation airport. And so general aviation is all the stuff that is not airlines. So it could be public service flights like search and rescue or air ambulance. It could be flight training, people getting their pilot's licenses. It could be corporate jets. It could be all this kind of stuff. And generally speaking,

The appropriate home for the general aviation stuff is not where all the airlines are because they just don't mix that well. And so most places will have, you know, if someone's doing flight training in New York, they'll not do it at JFK. They'll do it at Westchester or something like that. Yeah. Yeah. They really don't mix well.

as well. And in the case of Dublin's Western Airport, I ended up buying it back in 2021. And it needed a bunch of investment. And so I bought it. And we've been investing in giving it the facilities it needs around instrument landing capabilities and redoing the terminal and the capital stock and things like that. And so it's-- partly, I think it's a good-- I mean, they are-- in the US, they're not for-profit businesses. They tend to be government-owned and federally funded. Internationally, they are-- like Heathrow is a for-profit business, and they just make money off landing fees.

And so I actually think it will, in the fullness of time, be a good business once it's kind of come out on the right side of the growth curve. But it's also a passion project of mine. That's awesome. I mean this not as an insult, but I feel like to enjoy being a pilot, like casually, you have to be like a little bit crazy. Like that seems like an insane proposition, but maybe I'm just really risk averse. I don't think so. No, it just requires a lot of...

discipline, you know, checklist discipline and, you know, recurrent training. I just went through some recurrent training and it just I actually find it more interesting because obviously aviation safety is generally talked about correctly as one of the best examples of process optimization over the last, you know, five decades where we have taken a system and just improved the crap out of it until it's like,

So good. They talk, I saw a thing go by on Twitter recently where the FAA doesn't mandate car seats on airplanes because flying is so safe compared to driving that they're worried that if they mandated car seats on airplanes, even though like you have a tiny benefit, it would lead to people choosing not to fly and choose to drive instead and get into car accidents and therefore be net less safe.

But I find it funny that, you know, again, flying an airplane feels like in principle, it should be like kind of hard to do and driving a car on the ground should be easy to do. But per mile, obviously, flying wins out. And so, again, you have this decades and decades and decades of history where we've taken the lessons of, you know, they say the rules and regulations are written in blood. You know, we take the lessons of the previous accidents that have happened and then we wrap them into future training. And, you know, generally when you do pilot training, you're studying a lot of specific accidents that happened and, you know, what the learnings were for.

And so I think if you're interested in systems design, engineering, process optimization, things like that. Lessons from piloting, like inform your software engineering. I mean, they're pretty separate, but I think the software engineering brain tends to be attracted to flying. And, you know, you go to Palo Alto Airport, which is a little general aviation airport in the Bay Area, and it's one of the busiest general aviation airports in the entire country.

Because I think engineering minds, of which there are lots in Palo Alto, tend to enjoy it. And again, you're mixing, you know, kinesthetic skill and meteorology and, you know, mechanical understanding of, you know, combustion engine and all the attendant systems and, you know, airspace and everything like that.

So it wasn't like fueled by you being an adrenaline junkie, like I want to go fast and I want to fly in the sky. Adrenaline, like if you're feeling adrenaline while flying, you're doing something wrong. I feel it all the time when flying, like, God, I hope we stay in the air. There was that, you know, you read Antoine de Saint-Exupéry and, you know, flying in Africa during the 1920s in his case and, you know, getting shot down and all these kind of things. There clearly was a frontier. That would make you feel something.

Yeah, exactly. I think that kind of stuff would make you feel something. But again, these days it has become much more safety-oriented and the cowboy stuff has been pulled out. And again, they actually describe one of the cultural...

challenges that happened in the aviation industry underwent was that we produced all these military pilots in, you know, the World War II and the Vietnam War. And those people then went into, you know, Pan Am cockpits. And they actually kind of made bad captains in a certain way because it was like very much shut up, this is my cockpit. And so the CRM, Crew Resource Management,

I guess thing basically was a multi-decade effort to get rid of the captain mindset and get towards a collaborative problem solving. I had always thought of like, I'm going on a like 737 and the pilot landed F-14s on carriers. Like that's gotta be the safest possible way to fly, but apparently not. No, he's going rogue. He's not listening to his second officer or whatever.

The European airlines have a different model than the U.S. airlines, where they take pilots who have 250 hours only, which the U.S. would consider very low, and they put them in the right seat of airliners, and they have a really strong safety record. And so as you fly around an airliner in Europe, you could have someone who only learned to fly a few years ago. And the way they do that is a huge amount of standardization, a huge amount of process orientation. People make fun of Ryanair for the hard landings, the Ryanair landing in Europe.

where they really plunk it on the runway. That is one of their safety SOPs, where they say a positive landing, as it's known in the industry, is safer because it reduces the risk of hydroplaning if it's wet. And so it reduces the very small risk that you run off the end of the runway if the runway is wet. But we're just going to, every landing, we're going to plunk it on and that's safer. But again, it's generally process orientation standards and a lot of that kind of stuff that's driven the safety and not safety.

excessive piloting skill. And again, if you're relying on incredible piloting skill, something has gone wrong in your system because we should be able to have a 777 full of passengers be safe, even if the pilots are fatigued or something like that. That's wild. I did not know that about Ryanair. I feel like they should put that fact out there, you know, that it's intentional that we're plunking down. That's true. Yeah, yeah. Because, you know, it's quite, yeah, it's quite jarring. Exactly. Yeah. You really want to draw attention to it being uncomfortable. Well, everyone knows. Ryanair might.

That's true. That's true. John Coulson, thanks for coming on the Money Stuff podcast. Thank you guys. It was fun. Our first cast. Yeah. I'm honored.

And that was the Money Stuff Podcast. I'm Matt Levine. And I'm Katie Greifeld. You can find my work by subscribing to the Money Stuff newsletter on Bloomberg.com. And you can find me on Bloomberg TV every day on open interest between 9 to 11 a.m. Eastern. We'd love to hear from you. You can send an email to moneypod at Bloomberg.net. Ask us a question and we might answer it on air. You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

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