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5.
Founder.
>> You're watching TVN. We are here live at Stripe Sessions. We're joined by John and Patrick Collison. Thank you for having us. How is it going so far?
>> It's incredible. We have 10,000 people here. Yeah. And it is just the center. The economy is replatforming around AI and I think that's the theme of the conference.
>> Which economy is that? The global economy of which you control 1.6%.
>> That is the we talk about the internet economy but you know yourself everything is in the internet economy these days. There's very few companies that are not interesting at being at the center of the internet economy. So it's increasingly the whole thing.
>> And when we spoke back a couple of weeks ago which in singularity time is, you know, a couple months ago or exactly. Yeah. Um we said that we're seeing a significant surge in new business creation.
That has roughly doubled again since then. Uh and so as of um...
>> And wait are you tracking that through Stripe Atlas specifically or through just new companies that are onboarding to Stripe as a payment processor?
>> Both both. So uh March was an all-time record for new incorporations with Stripe Atlas. And then in Q1 overall for just new businesses joining Stripe that was up 71% year-over-year. We showed the chart at the beginning of our keynote yesterday. It is uh it is parabolic. It is exponential. I'm, you know, running out of mathematical terms, but it's it's really very striking.
>> And do you like the I guess my colors all ruffled. There we go.
>> Someone's ruffled. Yeah.
>> And and and and do you like the idea that uh this is driven by AI? This is driven by democratization of more tools, smaller companies, that there's more sort of like lifestyle businesses popping up.
I so initially I thought when I saw these charts that it's um that's about new vibecoded uh businesses that are more abundant in number but on a on any in any given instance uh maybe not as significant or not growing as quickly or you know whatever. What we're actually finding is not only are there so many more businesses but the average revenue per business is also increasing. Okay. Uh and so it's not just more new tiny ones uh somehow um the uh the median business is also doing better.
>> Yeah. I think even the term lifestyle business, you know, like a bit pejorative. It betrays a worldview. Whereas what we're seeing is there's tons of business now making more than a million dollars a year. Uh uh like that number is really inflecting. And in general, like we think about it in...
You got the little collar service. I mean I just been doing my color myself.
Um so uh you also have to look at it almost in coian terms where what we're seeing is more...
>> Citizenship revoked for drinking this.
>> I just want to clarify that these are full size. These are full size plants. We're just very large humans.
>> I just want to clarify that it's Guinness 00, which is very good, but given that it's 11 a.m., it's a little early. Yeah.
>> Oh, just Yeah, we're seeing thanks to AI, you now have more small businesses able to do million dollars plus of revenue and be really impactful. And so, we think you'll probably see smaller firms have a big impact. And and and what's driving this is you think AI is making every little step of entrepreneurship slightly easier, like slightly easier to incorporate, slightly easier to create a contract or to hire somebody, slightly easier to create an ad, and then you add all of that together.
>> It's the merging of all the functions. It's the fact that you can do your design and your PM and your engineering all yourself as one really effective person. Sam Alman was here yesterday on stage and he was talking about the the return of the idea guy. The fact that...
Exactly. Yeah. Yeah. [laughter] Yeah.
The fact that if you uh the long maligned idea guy but now if you have really good ideas you can actually go execute them and you have so much more capability to do so and again we are seeing that born out in the stripe data where I think this phenomenon shows up as 71% year-over-year growth in in businesses launching.
>> So I mean it feels like you could do nothing and win Stripe's in the right place at the right time but you're probably not taking...
>> We are not doing nothing I'll tell you that.
Yeah so tell me what you're actually doing how are you accelerating these businesses like what are you changing about Stripe what products are you adding what functionalities are you...
So all the commerce is going agentic. Uh we think that people will like people will still be doing stuff but they will do it through their agent. So what does that mean on the consumer side of things? Like we've all had the experience of you know you're in chat GPT and you're re like I was trying to buy a case for my bike and I was going back and forth and I was you know asking questions about you hard versus soft things like that. But anyway at the end of that you just want to uh be able to hit buy rather than like no one wants to fill out web forms. It's not a value add activity. And so we just announced that Google is joining our agent commerce suite. So now we have Google, OpenAI, Microsoft and um Meta all working with us on this agent commerce modality where you can just buy there. That is the consumer side of things. Do you want to talk about the developer side of things?
>> Well, I'll give you three other things. So first we're seeing a a change across the economy and business models uh where with inference cost with tokens and so forth and so many businesses, you know, in some way taking advantage of AI in their products. We're seeing a shift from SAS from seatbased business models to usage based business models. Uh and I think this is this is pretty profound. So, we acquired a company called Metronome back a couple months ago and we're now integrating that cohesively throughout the Stripe platform. We demoed yesterday something that I think is very cool and as the intersection between crypto/stable coins and usagebased billing where basically you can have streaming payments uh where you're paying for each token as it's delivered in real time.
>> Yeah, exactly. Today there's a kind of credit extension that implicitly happens with any uh you know token token billing when you're when you're build at the end of the month and so forth which is actually pretty tricky because if you've token thieves if you've you know some failed billing after somebody's racked up a million dollar uh uh credit card tab or something you know that that that's a real problem for the provider. So anyway we're doing a lot around usage trace billing and this economywide structural transformation. Then secondly to this fraud point we're seeing I mean conccommittent with the enormous increase in new business creation we're also seeing a lot of fraud um and um there's...
>> A lot of fraud attempt.
>> Yeah. So uh you know when you um you can't resell access to software and so if you got illicit access to some SAS tool two years ago there wasn't much you could do with that to monetize so to speak. There wasn't much incentive to steal SAS.
>> Um but you can resell tokens. It's very lucrative to do so. Uh and so all these new AI companies and all these new AI products, growth is not really a problem for them. They have a surfet of growth, but they're also a lot of people um token pilferers uh looking to uh to near do well.
>> Exactly. Looking to uh run away with these uh these, you know, this precious value.
>> And and and walk us through how that would work, how that works in practice. Is that somebody spinning up a bunch of free accounts and then like hitting them with just kind of the bare mining motivation distillation or actual reselling?
So, it's really both. Yeah. So, so there's definitely just straight resell, but there's also more sophisticated attacks of distillation. So, anyway, like we've seen that one in six new accounts across this ecosystem are fraudulent. Um uh and for many providers, it's actually difficult now to offer free trials uh because you know the uh um the illicit accounts that set up for these free trials, they drive so much expense that it's hard to make the overall economics work out. Anyway, we're extending Stripe Radar to use the intelligence of the Stripe network to help any of these companies not only score payments, but score customer signups, to score trials, and we're, you know, turning Stripe Radar into this um into this uh sort of um X-ray vision uh for the AI economy to try to prevent these new and more sophisticated attacks. I think this is really important in that we're not going to have an internet with self-s serve access unless...
>> So uh just to repeat it back to you the the if if somebody signs up and they can basically pay for tokens streaming with stable coins that would enable like let's say a big AI company to be able to offer a self-s served product and not worry about come someone coming in running up a big to token bill and then saying like see you I'm not even in the country.
>> That's exactly right. But we're also going to try to protect the regular signup flows as well and the kind of more straightforward consumer access.
>> If you run any physical store, you have to worry about shrinkage and you know no one wants the direction of travel where you know you go to a CVS and everything is locked up behind a painting you know good uh uh you know upstanding people suffer from you know the small percentage of crime that happens. It's the exact same in the AI land where similarly they are selling a you know product that has you know real value real resale value exactly real cost associated and so therefore they need to prevent fraud not just for financial loss for themselves but also so they can continue to offer a great experience to all the good users.
>> I I want to go way deeper but I know you have a hard stop do you have something else to say.
>> Well I was going to say one thing before I have to scurry away which is um uh you know so we're we have this usage based billing stuff we have the agent commerce stuff that John just described we have these this new fraud functionality and then The other thing is Stripe started out of course as a payments company, but we've, you know, over the last couple of years, Stripe has uh been becoming uh a uh a broader programmable financial services platform. And that's a bit of a mouthful, but what it means in practice uh is that not only should you be able to get paid with Stripe, but you should be able to hold money in Stripe, be able to pay people around the world, to be able to orchestrate your entire financial services business. uh sort of be an operating system for for global money movement. And so we announced Stripe Treasury where businesses can hold balances in Stripe. They can dispatch money to more than 150 countries. The instant free Stripe Stripe account transfers and so forth. And so rather than stripe this sort of conduit where money ephemerally passes through, Stripe is becoming a home. And this is very valuable we think because Stripe's expertise in building programmable tools and APIs and CLI functionality and all the rest. This is obviously much more important in the tech era.
>> Was sorry to cut you off. Was this in the seed pitch deck?
>> None of this was in the seed pitch deck. [laughter]
>> No, but but I imagine like you're in the fund. You're you're telling people we're in the funds flow at some point or another. We won't just pass this back to their bank account. We'll actually be able to unlock the value of the...
>> That wasn't in the seed pitch deck. And in general, you know, the secret to being a Silicon Valley founder is you have to like get lucky for many many years in a row and then you go back and you pretend that that was, you know, your plan all along, you know, resell.
Exactly. Yeah. You do a lot of recconing. That's that that's very important. However, what I will say is interesting is we did focus from the very beginning on developers. Uh, and we thought developers were very important under serve. I mean, Stripe's original name was SLDev/payments and you know, payments for developers was that you can go back in the wayback machine that was the tagline on the uh on the website. I think what's interesting now obviously is that the you know all the agent coding tools need something with well doumented APIs with everything being available on an API basis and so I think we have always thought that companies should take developers more seriously I think we're now seeing just industrywide companies that took developers seriously are now really benefiting from this AI moment because they built their stuff for the agents.
>> Also everyone's a developer now going back.
>> And and agents feel like they are developer shaped at least.
>> Agents want good DX developer experience even more than humans do. And so if you don't have it, I mean, it's it's a real problem. I think you're going to kill me if we keep you any longer. We'll let you get out of here. We did want to sign this plaque. Can you explain to us what this is and what it what it stands for? You familiar? This is the original print that went into...
How did you get that? That's...
>> It was given to us and we want you to sign it here and here. We have a museum of business where we try and uh accumulate signed objects of historical.
>> This is the new poor Charlie paper cover.
>> Hey, this is the paperback paper cover of poor Charlie.
>> It's heavy. It's this is how we made the original hard cover if you have it of poor Charlie's almanac. So, sorry. And we'll have right over there.
>> Yeah. And this will live on the literal gold master of business. And we will let you get out of here. Uh and we will go way deeper. Stay with us. We are going to continue our interview with John Collison from Stripe at Stripe Sessions here in San Francisco. Uh, thank you so much, Patrick, for taking the time to come chat with us. Really appreciate having you on the show. It's always a pleasure and congratulations. We do want to hit Have you Can we have you hit the gong?
>> What is the headline number? Let's...
>> Is it 1.6? Is that the headline?
>> That is the 2025 number. Stay tuned for the 2026 number.
Powerful, powerful hit. Powerful hit. I see what you can tell. He's been lifting.
>> Yes. Yes. Yes. Uh well, thank you. Have a great rest of sessions. We really appreciate you coming on the show.
Uh I want to just shift over to another Stripe Press book. This is uh Maintenance of Everything by Stuart Brand. And in here, the general thesis is uh what what maintenance of everything. I I mean, I'd love to know what you took away from this, but uh maintenance is what keeps everything going. It's what keeps life going. and he gives a ton of really interesting anecdotes about cars and repairs and weaponry and sailing and there's so many interesting anecdotes and I'm wondering about your thoughts on maintenance in the age of AI and what you feel and see in this like we're in this maybe there's like this job replacement thing AI does everything but then there's so much that goes on in the maintenance...
>> Acceleration of technical debt.
>> And so I was wondering if you could just reflect on like brands work in the age of AI.
>> So Stuart Brand is obviously amazing and um uh you know is maybe famous for the uh the whole earth catalog originally which you know Steve Jobs talked about in that uh that famous commencement speech but Stuart Brand has been around for the entirety of Silicon Valley history. Like if you go back and read the uh the Tom Wolf book, the electric Kool-Aid asset test. I don't know if you guys are big Tom Wolf fans, but was talking about like the early LSD culture of the 1960s in the Bay Area having these parties. Stuart Brand is in the book, you know, he's like there at those early parties and everything like that. Yeah. when like the uh you know the Grateful Dead and everything like that and so he's just been like there for everything all along. He was the uh he was the manning the computer at the mother of all demos. You know the angel famous demo. So...
>> Is where the the original mouse was demoed.
>> Exactly. Where where the mouse was shown. Exactly.
>> Among among a ton of other things.
>> Exactly. So and Stuart Brand is still you know he just published this book. And so Stuart Brand is so intertwined with the uh the history of technology and Silicon Valley technology and obviously what this book is getting at and also uh the whole earth catalog is this passion for tools and taking care of your tools and kind of thinking about tools and it's interesting you bring that up in the context of AI because one thing that I get excited about in the current moment is this idea of individual empowerment and you know you could have different visions of AI and I definitely have an adverse reaction to this, you know, very passive uh, you know, I think the term slop is, you know, the term we use for this just, you know, being a passive recipient of AI generated stuff and no one wants the, you know, brave new world soma uh, kind of vision and instead h if you look at something like um, like OpenClaw, I get very excited about that because you are giving computing power and the ability to do stuff with programming and tinkering with technology. It's the homebrew computer club all over again. It's this tinkering energy that's back. And so I just get really excited about how I think tools and passion for...
>> Surprising how much negativity there's been towards the entire like Mac mini open claw movement when it's like...
>> For how how long how long has Silicon Valley been like I missed the days of like the hacker era and then the hacker era comes back and then and then people people are quick to mock it. I agree. And okay, I was reflecting on this. I think there's something interesting where people maybe have an adverse reaction to early adopter enthusiast culture. Uh the early open claw um enthusiast uh group really reminds me of the early Bitcoin enthusiast uh group who also got people's backs up in a way. Like you remember that famous New York Times article with like the guys with the sweaters? Like those guys are presumably big into OpenClaw uh right now. [laughter] Uh, so there's something about the maybe because people tend to overhype stuff, you know, they say my open claw does this like maybe it doesn't quite or something like that.
>> But the tinkering is back and I think that's really cool. So I agree with you. It's crazy that um, you know, people have this skepticism because it's easily like the most fun you can have with computers.
>> Yeah. People on people on X, you know, see an openclaw meet up in some place like Tokyo and they're just like mocking it, right? And it's like...
>> Isn't this isn't this isn't this like core to the culture?
>> Exactly. Yeah, I'm totally with you.
>> Like that is the optimistic uh take on open claw tinkering. I love that. That's what I believe. But there is the other side which is the not just the tools but the tool-shaped objects. You've heard of this criticism that uh you wind up I I've I've had this exact experience where I've gone to codeex and built a whole thing and been like that could have just been a prompt and like I didn't actually need to have it instantiate a Python script. I could have and and and I think there is a risk in some enterprises of having 25 people vibe coding dashboards when you could have just had one. There is some managerial dduping and overhead and management and I'm wondering how you've grappled with that side of AI.
>> Yeah, I mean a few thoughts here. One is uh I I think it's just awesome that software is becoming so accessible. I think we should really um celebrate that. like I'm writing much more software even just from a kind of a fun perspective because it is so fun and it's this kind of addictive feeling.
>> I think we're also very clearly in a transitional state where it just doesn't feel to me that the way we do things in 2026 where you know you uh need to prompt it to you know make no mistakes or you know you saw the caveman token efficiency thing where it's like if you talk like a caveman and ask a talk like it just uses fewer tokens and so uh but gets the same result you know it's as effective and so if you want to kind of economize in the token budget every prompt was no six fingers and I haven't seen an AI image with six fingers in a year. Exactly. It just we just crossed that chasm.
>> Exactly. You know, if you're doing anything with financial data, you know, you need to prompt it to uh do not make up any numbers and then it's much better at, you know, not making up numbers. Right. So, like where we are in 26 is clearly not where we're going to be. The models are getting much better, but I think right now we're in this interesting transitional period. There is this software fatigue as you say where you know from software maintenance things like that. I think we'll we'll get there. And like all these things, you know, there's puts and takes. People are talking a lot about the offensive side of security, which is true with, you know, the very powerful new models. But of course, you also have the defensive side of things where if you ask your uh, you know, uh, uh, 5.5 to audit, go take a look at this application, take a look at this, just like go putter around this server and give me a security audit suggestions to lock it down. It'll do a great job of that. And so again, I think we just haven't figured out what the end state is.
>> Yeah. Yeah. It it does feel like as we move up the layers of abstraction, we go from, you know, pair programming alongside an AI to uh being more of a product manager to almost winding up more in a build versus buy mentality. And yes, you could vibe code that, but if it already exists or it's open sourced already or there's something you can pull off the shelf and it's going to be cheaper than the token cost, cheaper than the maintenance like maybe...
>> But again, we'll end up in a new equilibrium where uh you know the I think exporting your data will become more important because you'll get back to the Unix philosophy of you know you have individual tools that are much easier to interoperate between each other. you can kind of pipe your data conceptually between applications. If I can also bring this back to payments for a moment, a very important angle on all this stuff. You guys have probably had the experience of um when you are doing something in codeex when you're vibe coding away, you are the adult that needs to reach for things on the high shelves for it. And so it is much better at writing code than you. It's able to architect an application. So what do you need to do? you need to go uh sign up for an API key for...
>> Get a PDF of a website that I can't access.
>> Exactly. Log in and please get me API keys is like something you end up doing a lot. And so uh one of our biggest announcements this year was something called Stripe Projects where you are able to agentically do stuff in the wider world. And so you can hook up your codec to stripe projects and if you want to we've done this if you want to uh deploy a website it can go sign up for Versell for you and it can pay for it. And so now what was previously a multi-step process where it could kind of do some of it and it could like orchestrate Versel but it couldn't sign up for it. Now it can pay for Versell, it can pay for Cloudflare, it can pay for browser base if you want to, you know, do uh uh uh headless web browsing and things like that. It can do all this stuff. And so we think the agents are going to get so much more powerful because we're we're giving them the ability to actually go buy what they need in the wider world and then it can do way more end to end. And so that's Stripe projects which is kind of the second side of agentic commerce is your your agent needs to be able to go do stuff on your behalf. And you're exactly right agentic coding agents are not just for coding. They're for doing stuff. You know we demoed today write a research report for me buy some data in the process of doing that research report. But again that's not I happen to use a coding agent for it. It is not a coding task. It's a it's a research task.
>> Yeah. Yeah. This happened. I on the show I used codeex. We vibe coded a a a beautiful web page for some joke we were joking about and I was like I it's on my local host. I need to send it to Jordy and actually deploying it was the harder part which supposed to be so easy and that's that's...
>> Right projects is the only way you can agentically buy a domain like you don't need to have anything. You don't need to have an account with any of these providers. You can just go buy a domain. It's super cool.
>> And I feel like that's really important. How is how is recruiting how has recruiting changed over the last few years? Because I feel like so much of of what made has made Stripe such an incredible company is convincing the smartest, most ambitious people in the world to work in payments, a place that they historically maybe wouldn't have been excited to work. And then now I imagine the job of any any person that that could get a job at Stripe, can probably also get an offer at at OpenAI, Anthropic, you know, some of these other labs. And so I imagine you you find yourself having conversations with folks uh and uh helping them make a decision.
>> Yes. So I mean so many place you go there. One as you say uh I think we have always encouraged people to think bigger than just payments and I think if you know Stripe was just about payments fewer people would have been interested in joining but I think they understand that going back to tools and the importance of them. I think people understand that the infrastructure that we give people for entrepreneurship actually changes the outcomes. You know removing the supply demand curve and so we can encourage there to be more entrepreneurship. Again Patrick talked about 71% year-over-year growth in the number of businesses being created on Stripe. That's not all Stripe, but we definitely contribute to it by making the whole entrepreneurship journey easier. And then when those companies scale, you know, OpenAI sells Chat GPD, I think, in more countries than it otherwise would have because all that infrastructure is just super available and on Rails. And so it exists that kind of the small getting started end of the spectrum and for you know the biggest companies in the world, the Amazons and Herzes and Metas and everyone like that that we work with on uh on projects like this. You probably saw like the stablecoin thing. We'd answer them. Okay. So that's one part of it is like you have to genuinely have a mission that's interesting and uh I think we believed and believe that this stuff actually really matters and you can change the the end equilib that's one. Second thing is that it has always been uh the most competitive time I can remember [laughter] to compete for talent. It's just like I can never remember a time when it wasn't the case. It was easy when you were competing with Mark Zuckerberg...
>> And then it was easy when you were competing against Elon Musk.
>> I never forget when we're like no man steps in the same river twice because you know he's not the same man. It's not the same river. Like I remember, you know, when we were recruiting Greg Brockman, who's our second employee, who, you know, we're going to have a speak um yesterday, but with Sam instead, h because there's a lot going on this week, but...
>> Um h but I remember recruiting Greg to join Stripe as our second employee, flying across the country to Boston to go meet with them because like, you know, why would you join this like no-name company that you've ever heard of and that's the kind of stuff you do then? And like you stuff and so it's always the most competitive time that it's ever been with recruiting and this is certainly no exception. And you know, people have a lot of um uh great options. That kind of gets to I think you know, people are talking about the death of software engineering and honestly the closer people are to AI the more they're like oh you know software engineering is cooked you know it's got two years left. I think those people are all high honestly like [laughter] um just you have you have so much you have you are able to work with AI so much better if you understand the underlying concepts and you're so much better prepared for that and I'd almost analize it to you remember in the '9s people had this view that like okay you know the cloud or like a protocloud back then is coming along the network is the computer all this vision and people tried to have these leaky abst abraction or like abstra, you know, they thought they had a beautiful abstraction where you would have uh, you know, a folder that just happened to be on the network in the cloud and h, you know, you still have that on the Mac today, you know, your iCloud folder and things like that and same on Microsoft Windows. Those never work that well because it turns out the network exists and you know, it can sometimes be down in a way that your hard drive wasn't and things like that. And so it was always important to understand disio and RAM swap and all these kind of things even if you had useful helper abstractions over them. I think with AI similarly to be really effective working with AI you need to understand what it's doing and what's going on underneath the hood you need to understand that the model and then the memory and then you have your harnesses and you've you got your skills and everything like that and how they all interact and so I I think all these people calling the death of software engineering yeah are are smoking something.
>> Yeah. I mean there's also just the software engineers are dynamic and intelligent creative and can operate at various levels of abstraction and there have been transitions If you want to make the argument that that AI will will transform every aspect of the economy, but that engineering like core understanding of engineering and software engineering will no longer be valuable. That's that's and and and and obviously some some of the people that are are more bearish on on the practice of software engineering have um you know uptime issues and like Stripe is a category where you guys can't really afford to have um you know uh reliability issues. There's two categories of people I would be super bullish on right now I think will do incredibly well over the coming 10 to 20 years. Firstly, high agency people. We know this at Stripe. The people who are like, I've been talking to customers. I know exactly what we should do. We got to go fix this. But the people who have that pep in their step and they want to go make Stripe better. Um they are now so much more empowered thanks to AI. The second is double majors. I think if you understand software and understand finance or if you understand software and understand marketing, you now can go massively improve the entire marketing funnel for your company. And one person can do what would have taken 20 people dredging through all these systems previously.
>> Famous Paul Graham quote about that too. Yeah. That typically an entrepreneurship team, a founding team has a collection of like five or six skills between two founders, three founders.
>> Charlie Mer talked about the importance of being multiddisciplinary and multi-disiplinary thinking and implied...
He thinks getting a functional understanding of many disciplines is not that hard. You can just go read the books now. You can talk to your AI about it. And so I think multidisciplinary thinkers are going to do incredibly well.
Yeah. Do we have a minute to talk about stable coins?
We have one minute. Yeah.
Okay. One minute. The economist in Buttonwood, there's a lot of doom and gloom about the stable coin winter. I put a ton of money in stable coins. Didn't make a dime.
They're saying it's too stable. But they are saying that the market grew 30% in the six months up until late October. But total stable coin assets have barely budged since. Are we in a stable coin winter broadly? Are you seeing adoption?
This is the economist not processing that there can be a correction in crypto asset prices and yet more adoption than ever and actual utility of stable coins. The two things are not the same.
We're always trying to point out to people the difference between price curves and the underlying activity, and those are very different things. We were talking about that in the SaaS apocalypse in the context of SaaS growth has been really good, companies are still growing top lines.
Exactly, top line growth is really good and everything like that. And so kind of a similar story with stable coins where we see volumes continue to grow. And again, we had this in a lot of our demos with agentic pay-per-use payments or streaming payments or things like that. You actually have to use something like Tempo, you have to use stable coins because economically speaking, what else are you going to do? And so we are as bullish on stable coins as I've ever been.
Fantastic. Well, thank you so much for taking the time to come on the show.
Thanks for having us at the Cheeky Pine.
Cheeky Pine. You guys are the perfect setup. Have a great rest of Stripe session. Grab your headphones off and we will bring on our next guest.
All righty. Tap out. Cheers.
There we go. Goodbye. And we will bring on Henry next. Welcome back to the show. Last time we were in person, we'll let you put those headphones on. I think last time you were in person, didn't you help us translate something in French? Something random. Do you remember that?
Yes, I do. This is my second audition. It was about, uh, Meta's acquisitions.
Oh, yeah. That's right. Yeah. Because we were interviewed for French TV and we didn't know what they were saying and you helped us understand it. That was fun. What a wild time. I mean, I guess it's only getting wilder. Have you been struggling with any of the talent wars or have you been recruiting for your team? Are you growing your organization now?
All of the above. I mean, so when we were acquired, this is coming up on 9 months, we were about 30 people at Privy. We're about 60 now. And then Stripe generally is doing so much more. The board made it incredible. And then Stripe is doing a lot more in the space. So generally I think the talent wars are real. But also the reality is twofold. First, you had to be a little bit damaged to go into crypto and stable coins to begin with and so we're seeing these people who are still coming in. And then actually we're seeing a lot more merging of the two, which is to say yesterday was a good demo on like streaming micropayments. There's a lot more that I think stable coins and internet native money is going to enable for agentic use cases. It's still very much in its infancy.
Yeah, we just spoke with the Collisons around all this issue around AI fraud, people signing up for a bunch of free accounts to get access to tokens or people signing up for an account, running up a bill, and then basically stiffing the provider. And how stable coins could effectively be a solve for that, which is like, hey, if you're going to just sign up and use this tool, that's fine. We don't necessarily know who you are. We don't need to KYC to use a language model, but you might need to use stable coins to pay as you go. So there's no risk.
For sure. I think a lot about it in terms of tier one, tier two, tier three ISPs where you'll call between Verizon and AT&T and then at the end of the month you'll settle the bill across the tier ones. I think there's just such an interesting design space for managing token spend payments and so on using programmable money in the era we're coming into.
Have you been tracking the showdown between the stable coin community and the banks? This was in the economist article as well. And I want to know if you think that this is a true collision course, if there will really be a showdown. The concept here as put in Buttonwood in the economist is the prospect of stable coin growth spooked America's banks. This is because a loophole in the law let stable coins offer deposit-like yield without bank-like regulatory burden. The American Bankers Association warned that a $2 trillion market for stable coins, if it was all dollar pegged, could lead to a 10% decline in bank deposits that would raise average funding cost for lenders by about a quarter of a percentage point, they said, crimping their profits and driving up interest rates on all manner of loans for everyone else. Is this a real issue? Is there a logical solution? Is there going to be some sort of unification where the stable coin community and the bank industry...
Did they not get a solution with the Genius Act?
I think it's... Yeah, please.
Oh, well I mean in here it says bankers and stable coin issuers have since been locked in a fight over the final shape of a follow-up bill, the Clarity Act. And so that's where we are right now. But I want to know where you think it goes from here. So Polymarket last I checked has it around 45% that the clarity bill will make it out of committee and actually pass. And I think the reality is Genius was basically as buttoned down as it could be on this specific issue and this is why Clarity needs to exist to set standards and procedures for actually doing this. I think it's a really...
They were such a genius, should have provided more clarity.
It's very good. But this is why the show exists.
I see this crowd doesn't like say it flopped.
For those of you viewing, I see this as the acoustic set versus the Ultradome. This is your guys coming in unplugged.
Totally. But no, I think it's an essential issue and I think right now you're seeing also a twin thing around tokenized deposits versus stable coins and like two different formats for how digital assets can impact finance and fintech generally. The reality is I think more competition...
Say more about tokenized deposits. I can imagine what that is which is like I go to a bank I give them an actual dollar and you tokenize it but then they're keeping the dollar there. They're lending against it.
So it is akin to being handed a coat check ticket. And you get to walk around with your ticket and at some point you can redeem it at the coat check or another coat check potentially versus the stable coin where you're actually holding the asset itself. And I think those are the two pathways that are getting a lot of exploration in the space. Ultimately I think a lot of these rails will merge and I think more importantly the question is one of competition for the consumer. The consumer should have more ways of actually earning on their assets. And so the idea that we need greater clarity as it were with issuers and institutions that are putting out stable coins is still absolutely clear. But I think we should view it first and foremost from the question of what benefits the companies that are using stable coins or the internet generally. What benefits the users, not how different is this from the current infrastructure that we have because that is not a way to build new systems in the world.
Yeah. And then I guess there is also the sort of additive outcome where yes you get to $2 trillion in stable coin assets but it's for new use cases that are not competing with like the traditional credit card lending, mortgage lending, asset backed loan industry. And so it's not putting that downward pressure necessarily on the traditional banking system. And so I'm sure the banking industry is sort of like cautiously optimistic. This is all net new dollars that are being created and used around the globe and for different purposes. But if it does directly come after, well this company used to just use credit cards for everything and now they're not paying us, then that maybe has some negative effects.
And I think the two things you'll see as run-ons is basically how does stablecoin deployment evolve worldwide? To what extent is it a western thing versus a rest of the world thing that probably has impact on USDT versus USDC market share? There's a lot of interesting run-ons to this exact question. The second thing is, at least this is why I'm excited to be at Stripe and Stripe isn't doing any crypto things for crypto's sake. They're doing, how do we build better rails for our users, no matter what the rail is under the hood.
Yeah. And there's less ideological and more pragmatic first principles.
This is a very good tool. Exactly. And we should put it to use in ways that better the experiences. This is where I'm interested in some of... I mean, DeFi has had a very complicated few months with basically a lot of exploits and things like that. This is still an industry in its infancy and yet we're seeing a very interesting merging of the rails with for example vault curators on Morpho, folks like Apollo and others taking part in it. And so we're seeing again just a merging of traditional finance and online finance in a way that I think is going to continue to...
Recent exploits, is that more social engineering for the most part? This is not AI?
In those specific cases my understanding is it is not AI. I think it's very much social engineering, bad setups in various places that have led to unfortunate outcomes. And I think it's just the space maturing. I think we are seeing as a side note, this is very interesting. We use at Privy a number of AI tools to do constant pent testing, to review every PR that goes out, to do a lot of this. And we're also seeing quite a bit of just better bug bounties coming in, much more sophisticated. But the baseline on the bug bounty has gone much better and you're now able to string together more complex attack vectors that you couldn't do before. So that evolution is mega clear. And one of our engineers, Andrew McPherson, used ChatGPT to find an exploit in React.
It was a zero day in React and the fact that React is a 15-year-old library put out by Meta, it's open source, it's been beaten to death because it basically backs every product on the web. The fact that we're finding these now is insane. And do you have more clarity on like a zero day? Does that allow someone to potentially get into someone's computer, their browser, or is it more just like cause the browser to crash in a certain way or be strung together? Because there's a wide range of what you can do once you exploit something. You can just take the service offline which is bad or you can get into the database, steal... there's a wide range of negative outcomes.
Yeah. I'm not actually sure what the ramification of his was, but you know their price, there's a very good economic market for buying zero days and the price will depend on what it allows you to do.
That makes sense. Have you been tracking any movements in the stable coin community to do interesting non-dollar-backed stable coins? I'm thinking of like Peter Thiel back in like '99 sort of proposed like a Vanguard total index like a VTI backed stable coin where you have one dollar but the dollar is backed by basically a massive basket of assets that includes gold, oil, real estate, a slice of stocks and bonds. And so it's sort of more diversified than even the US dollar could be. And maybe it's less stable relative to the dollar, but you're bought in on the global economy.
So, I think first we're going to see a rise of non-dollar stable coins as more people embrace it, especially...
And that would just be foreign currencies.
Yeah, foreign currencies. Second, I've heard of a few projects that are trying to basically have an inflation stable coin which is the stable actually grows with inflation so that you're on a purchasing power parity standpoint are the famous assets you can buy from the treasury. Treasury Inflation-Protected Securities. I forget that one. But that's the idea of one of them. I think they're really hard to instrument and get quite right, which is why I don't think they've taken off just yet. And then I think the third piece is this is not a stable coin, but it was a project I heard about recently I thought was very interesting. There's a company called Pearl that is finding a way to do fast matrix multiplication and back a blockchain on this. So you can issue tokens based on how much compute you've got ready to do useful inference. That's interesting. And so there was a question for me of what other useful work could you back the currency on?
Yeah, that... I mean we've talked to Prime Intellect a few times. They've been doing early on some crypto token-backed compute. And interestingly the 3D rendering community. I don't know if you're familiar with the Render token, but basically most 3D artists if they're rendering a CGI for a movie, TV show, something like that, animation, they will typically have an on-premise rack of GPUs that they use to render the graphics or the final output. And the Render network was an effort that I think was pretty successful to basically, well I'm not rendering my project I'll render yours and I get tokens that I can put back on the network because each frame is deterministic and separate. So you can render, if there's 24 frames a second you can render thousands of frames across a whole bunch of different machines they all will look the same when they come together. And so that was the first example of a crypto project that's being done for useful work marshalling compute around and now you can imagine a thousand times more ways to...
