Two Irish brothers in their 20s outplayed the finance industry with seven lines of code
On June 24 last year, Patrick Collison, the co-founder of Stripe, posted a Tweet saying
Hit our engagement metrics this weekend!
The Tweet was accompanied by an engagement ring — which explained the kind of metrics Patrick was talking about.
Suhail Doshi, the founder of Mixpanel, was quick with a response:
That’s one way to increase user retention.
Yeah,
it’s safe to say these guys have a great sense of humor. Which isn’t
surprising, considering their seemingly absurd solution to online
payments.
Instead of chasing 1000-hour programming contracts to build clunky payments solutions for each individual client, the Collison brothers built 7 lines of code that developers could simply plug into their websites.
The result is Stripe — a company that has more cash than it knows what to do with.
Here are the two main reasons why this worked so well.
1. They empowered developers
When Stripe was launched in 2010, it was essentially a community of developers
See,
back in 2010, setting up a payments system for your business was an
extremely tedious process. Most integrations at the time took weeks and
months to set up. It was an exhaustive process, involving several
departments — from legal to accounting.
In
most companies, financial integrations were a top-down decision that
came from managers who knew little about the technical nightmare of the
integration process. They would set arbitrary goals and deadlines, and
pass the responsibility onto developers who had to outdo themselves in
order to meet expectations.
Stripe changed all that by giving developers a quick and reliable way to set up payments. As a result, they built an army of champions for their product, effectively bypassing the “decision makers,” most of whom would have never believed that 7 lines of code can replace custom integrations that took up to 6 months to build.
2. They made payments ridiculously simple
Banks. Credit card companies. Regulators. Yes, the payments industry has a lot of police officers. And you need to get approval from all of them before the dollars falling into your bank account are considered legal.
Stripe
changed all that. Collison brothers spent 2 years testing their
platform and building relationships with credit card companies, banks
and regulatory institutions. John and Patrick spent countless hours
presenting their product to authorities and building enough trust to
partner with them. As a result, users only have to upload a couple of
documents to set up their fully operational Stripe account.
Even
Mike Moritz, one of Paypal’s first investors, agrees that setting up
payments for businesses was way too complicated before Stripe.
Another
reason why Stripe blew up is because it was so universal. Platforms
like Shopify and Lyft rely on payment simplicity — each additional step
in account verification can mean millions of churned users. Stripe’s 7
lines of core code worked just as well in any environment, enabling
billions of emerging platform users with same-week verification.
Stripe = Genius + Humility
There’s
no going around the fact that the Collison brothers are aggressively
smart. Patrick quit high school a year early to join MIT at the age of
16, only to drop out a year later to raise cash for his first startup,
Shuppa. He soon sold the startup to Auctomatic for $5 million.
Tim
Ferriss, who interviewed Patrick, says that the entrepreneur is
probably the most aggressive reader he’d ever met — and that means a lot
coming from a guy who’s interviewed hundreds of top performers. Derek
Anderson, the founder of Startup Grind, has publicly called Collison a
genius.
However,
genius alone didn’t get Patrick to where he is today. The Collisons
were born in a small Irish town, and their humble, problem-solving,
product-first approach is what turned them into a massive success.
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