The future of the internet economy with Stripe co-founder: John Collison

So look, I mean, I think most people maybe know us as a way to accept credit cards, which might seem like a pretty random thing for two Irish kids to have started. But you know, the way we got to it was just we had run an internet business before Stripe, and it was the hardest thing about running the business. Like the code we could handle, the operations we could handle, but just actually being able to accept money from people over the internet, we said this is surprisingly hard. And so we started with that. But since then, we've—you may have heard us—we talk sometimes about this desire to grow the GDP of the internet. And we can talk a little bit about, you know, the internet economy and how, I guess, it's titled to talk, and how we think about doing that. But a big part of it is we keep kind of iterating, going, asking, just asking the businesses running on Stripe, what's holding you back? What is hassle that you'd rather not have to deal with? And so since then we've expanded quite a bit from maybe what people originally associate us with. And we do things now like, you know, handling VAT for people, where this is something that it's simultaneously—it's meant to be formulaic. You know, I think when they came up with the construct, it was meant to be, oh, very simple, you take this product, multiply by the number, whatever. And actually, you talk to any actual real business, and handling that is a huge pain in the neck, especially if they're selling across Europe. And so we said, oh, we could probably—I mean, they're already using Stripe to accept payments—probably handle that for them too. So we're kind of increasingly the platform for running an internet business.

Yeah, and it is this part of it where you're along for the ride, right? And I think actually one of the things—like, you know, I've spent a lot of time in Silicon Valley now, that's where we really started working on Stripe—and I've noticed an important part of being a Silicon Valley entrepreneur is pretending everything was part of your grand plan and pretending everything was intentional along the way and you had the foresight to see exactly how this industry would shape out. Where actually the way things happen is you're like puttering along and you can see about—you know, you're in a fog and you can see kind of five feet into the distance. And so we knew that this is a problem we had, we talked to a few friends of ours, we knew it was a problem for them. It's like, okay, we'll try that. What was our market size? What was our vision for the way things would unfold? We—I was 19, you know what I mean? We didn't know. But again, as an internet entrepreneur, you have to be a visionary. And you're like—I remember seeing someone, one of the Twitter founders, and, you know, 'we set out to redefine communication.' What does that mean? How do you go about that? Like, just another day redefining communication. And so for us, I think we have been part of a number of very important trends. We've been the beneficiary of a number of important trends. We have been—this amounts to right place, right time. I think we've helped some of those trends along. And so, you know, part of it is just the internet economy was actually quite small in, you know, 2010 when we got going. It's actually still quite small in the scheme of things. You know, 4% of Ireland's economy is e-commerce. That's pretty small in kind of the grand scheme of things compared to probably where it will go. You know, there's other—you know, we talk about globalization and things like this, kind of the wave of more and more people starting businesses. But I think, yeah, part of it is we were in the right place, the right time.

Right. So I mean, in a way, there is no internet economy, right? Where there is commerce that is more or less mediated by the internet, but it's somewhat of a porous space where, you know, if you buy something online and it's shipped to you, that's kind of the internet economy. It's not like a physical thing at the end of the day. But there's two big trends that we see as part of the internet economy we're quite excited about and we're really trying to help drive. The first is just it being easier to start a business and it continuing to be easier and easier to start a business that addresses a large audience. And so, you know, historically speaking, not actually that easy to start a business on the high street here, right? You probably have to go get a loan, you have to go get a premises. If you're starting a coffee shop, like, you know, espresso machines are pretty expensive. Like, the barriers to entry are not trivial. Whereas Stripe, when we started it, it was the two of us, we were coding away on our laptops, and, you know, the cost of starting a business kind of was more or less zero. And so you have on the one hand the kind of decline of the actual capital investment required to start a business, on the other hand you can address way more customers. We can sell this product to anyone around the world. And, you know, Stripe serves a lot of exporters where now, you know, a lot of the people we'd have—McNutt, the, you know, who make woolen products in Donegal—they're selling actually majority on an export basis, you know, all around the world. It's not just kind of selling to Ireland. However, I think that status of the internet being a fabulous place to do business is threatened, where there's more and more complexity that goes into running an internet business. And, you know, I mentioned VAT as one where it's just like a good notion, you know, the implementation means that it is yet another thing that businesses have to deal with. There's GDPR, there's regulation, there's kind of all these—there's all this weight that is placed on businesses, all this complexity. And, you know, every individual aspect might have a good reason for things like that, but the sum is just this weight of complexity that weighs on businesses. I think there's an interesting bridging point ahead of us where is the internet economy controlled by a very small number of businesses or is it a vibrant ecosystem where you can kind of have lots of small businesses? And I think it's not actually obvious where it goes. That if you look at kind of lots of industries, you know, there aren't—you look at kind of the media business and, you know, TV channels and things like that, you know, cable or satellite or something like that, it's a very small number of, you know, conglomerates basically. And it's almost, you know, it's a trope in fiction. Like, I remember I enjoyed reading the Kim Stanley Robinson Red Mars series. I think the first one's better than the—he kind of ran out of steam a little bit in some of the subsequent ones. But the bogeymen in these books, which are about Mars exploration, are the transnational companies, which are kind of the, you know, mega-nationals on steroids. Now you are one, so just—very boss, okay, on steroids—that run the world. But again, it's like it's a trope in fiction, the kind of evil big companies. And we just think that would be a bad direction for the internet economy. And so you want to make it the case that it's easy for upstarts to come along, new people to start businesses, things like that. But you actually have to invest to make that possible. Like entropy, you know, the amount of entropy in the world increases over time. You actually have to work to condense complexity. And so that is one of the big trends that we are kind of monitoring with the internet economy, which is it should be the case that we have a Cambrian explosion of exciting new businesses. I don't think we can take that for granted. And I think you could see some consolidation.

Yeah, I think you—I think in any industry you want to make sure that, you know, new entrants can come along and, you know, upstarts can come along. Now, I think with, say, the current slate of tech companies, I think sometimes people tend to over-worry a little bit. And you would say that—no, like, I'm talking about the, you know, the Googles and Facebooks and things like this, where, you know, there was a time in Silicon Valley where IBM was absolutely invincible and, you know, IBM is a monopoly and there'll be no kind of new computer companies founded. And then, you know, we all know where that went. And then there was a time, you know, when Microsoft was this behemoth and everyone was worried that, you know, there would be no more startups because, you know, Microsoft would come along and things like that. And now Facebook, you know, people were saying there will be no new social networks and things like that. That's kind of obviously untrue. But I think people tend to over—people tend to use the word monopoly and just use it in a very loose term. And if you look at social networks or something like that, there sure seem to be a lot of social networks and things like that. So I think one should be worried about—and we pay a lot of attention to ease of doing business indexes and things like that, you know, is it possible for people to come along and start a business? But I actually think the reason why it is hard to start a business is seldom because Google exists or something like that.

I'm not sure we were particularly—we weren't kind of business people before we started Stripe. We didn't know that much about business. Didn't know how to read a balance sheet or an income statement or anything like that. All that we picked up along the way during the company. And one of the things that I like about, again, the internet economy is that there is this very gradual spectrum between doing a project, doing a hobby, and doing a business. Again, in the real world, if you decide like I'm going to set up a coffee shop, I mean, yeah, there's some, you know, maybe kind of halfway steps like a, you know, a truck or something like that, but broadly speaking, at some point you have to decide, okay, I'm going to go rent out premises, I'm going to buy all the equipment. It's quite a quantum jump. Whereas online, in our case, we started building this project that we thought was interesting. Like, we were in college at the time when we started it, and it was a side project. It wasn't even our only side project. So one of the side projects we had going on was this kind of Stripe thing. We got some customers, and then, you know, over time, the customers ask for stuff and, you know, they have complaints and everything like that. So you kind of continue progressing more and more. But it can be very gradual. And this is one thing I get very excited about is, again, as I look at the internet economy, people are starting to throw on the term now 'creator economy.' And like all these terms, it can become a little bit of a buzzword, but there is something real there. The notion that previously people might just blog and that was, you know, a thing that people would do, and there's still lots of bloggers out there. But now this thing Substack, where people can actually start a little mini media outlet by themselves. And, you know, certain people start, you know, writing on the side, they can actually get paid by their readers for what they're producing. And oftentimes, you know, it becomes significant enough that they can actually afford to go full-time on it and things like this. But again, it smooths out all the edges that you have where previously, you know, I am either, you know, working in my current job or I'm going to, you know, go become a journalist. And here you can have I'm a blogger, I'm a blogger with a, you know, a paid button on the site, I'm actually earning a little bit of an income on this. Okay, I'm actually going full-time on my Substack. And we see that again and again across all sorts of different industries. And I think that the ability for people to gradually ease into running a business, I think, is a very good trend.

No, I think that is accurate, where, you know, I spend a lot of time in Silicon Valley, spend a decent amount of time back here as well. And I actually really like it, where getting to observe a culture from the outside, or kind of having a point of comparison, as opposed to, you know, being the—like the two fish passing each other, 'lovely water today,' 'oh, what's water?'—and, you know, not knowing it. Like, you know, you talk to Americans and it's a very funny thing. Americans think they don't have an accent. Like, they say, you know, 'you have an accent and I don't,' but they have. Whereas getting to—they're like people from Dublin. Exactly. And so kind of getting to observe the American culture from the outside and appreciate kind of certain parts of it, and then kind of conversely, then kind of spending time in Ireland, getting to kind of observe the Irish culture from the outside, that's actually quite fun.

Yeah, I mean, there's a set of things that people talk about. And I think when people try to understand differences in ecosystems, say, they try to look at what you can measure. And so, you know, economists love looking at the—sorry for you, defend your profession—but it's all right, it's all right, we start by slagging, then we defend. Yeah, they love to look at the number of patents. And, you know, they say, well, the difference between number of patents in Ireland or number of patents in Silicon Valley or something like that. And I think that's, you know, obviously wrong. Like, again, actually the company with the most number of patents being produced is IBM. And so make of that, you know, quality, exactly what you will. But, you know, maybe more subtle one is people talk about the amount of capital invested in startups. And, you know, they use that as a metric. And, you know, if that number is going up, we should feel happy about the Irish tech world. And if it's, you know, somewhat stagnant, then we'll maybe feel somewhat disappointed or, you know, we'll bemoan the fact that it's smaller than the US. Again, I feel that's a little bit of the—it's like the drunk looking for their watch under the lamplight. You know, we're looking at that metric because that's a thing that we can measure. I think the thing that I see much more in the US scene is there's definitely a huge amount of ambition. And, you know, in certain areas, you know, where you get these larger-than-life characters, or, you know, we can make fun of it a bit, but it's real as well. And, you know, people in Ireland talk about the begrudgery, and like, there is a little bit of the tall poppy syndrome that you can see at times. Whereas in the US, there is kind of a real celebration of ambition and enthusiasm for ambition, kind of for the sake of it. And again, the US is for the longest time, you know, the gold rush in California or, you know, the railway—like, there's been these larger-than-life characters all throughout its history. The other thing is that it's a very risk-seeking place. And so one of the things that Stripe definitely benefited from is in the early days in the US, the fact that, you know, here we are, two Irish hooligans, you know, who managed to raise a little bit of money and working on a startup. But you very quickly need to actually have, you know, people with real experience building a company to scale up. And, you know, one of the—I think like the really unfair things that happens with a company is that, you know, people want to write about me and Patrick. You know, that's what the headlines will tend to be about. There's tons of people at Stripe who've been there five, six, seven, eight, ten years, have been a huge part of, you know, what the company has become, the culture, the achievements of it. But, you know, the attention is somewhat tilted. But anyway, in those early days, you'd be ten people in a kind of little grubby office. That doesn't exactly—photos exactly, you see some of the photos, bikes hanging here. You might have someone who's a very experienced, you know, technology executive or something like that saying, 'sure, I'll give it a try, and if it doesn't work out, I'll go to something else.' That's the risk. And I think the risk-seeking, not just on the entrepreneurial side, but in the—that's in the water. And even in their careers, they say, 'I'll give these guys a go, we'll figure this out.' Correct. And that doesn't happen here, or it's not—it's quite American, you know, it feels quite American.

I think it might have been the summer of 2010. We had been working on it as a, again, as a little bit of a side project, but it was just starting to work and customers really liked it. And again, this was kind of how we pitched it as the main thing we were going to do. And again, you know, I had to make a decision as to whether I was going to drop out of college.

Which I did, yeah. And does anybody in Silicon Valley finish college? Just so you know, I've got two kids now, we can—I'm looking for advice. It happens more than you think. Yeah, you know, people might bring it up and play it down, but it happens. But no, so anyway, that summer we kind of had to make a decision of is this what we're doing? And just as we talked to customers and they said this kind of really solves a problem for me, that was an indication that we should make it.

Well, it's all been gradual, right? In that we are the boiled frogs. And, you know, we're now—Stripe is 8,000 people and we have offices around the world, you know, big presence here, big presence in kind of lots of places. But there was never any one moment that was discontinuous. And so you're hiring and you're building up the business and things like that. And so I think part of what makes it easier is—and again, you know, I definitely, if you dropped me in at the beginning into kind of the current position, I would fail miserably. Whereas you actually have, you know, now for the job I'm doing, I at least have 11 years of training. And so that's, you know, the only thing that helps me.

Oh yeah, I think so. Where I think that so Stripe is a very global business and is part of a trend of globalization. Like, one thing that we're fascinated by is the economists talk about the gravity equation in trade, which you're probably familiar with, where basically, you know, gravity falls off with the square of the distance from the thing you're at. And trade actually weirdly does the same thing, where the amount of trade with a certain point tends to be—if you look at on a scatter plot—it falls off often in an exponential way. And so we trade much more with countries that are closer to us than countries that are further away. And again, one of the big trends that I guess Stripe is a bet on is that you probably want to enable much more cross-border trade, much more trade with kind of people all around the world than we see today. And it's probably somewhat silly impediments like payment methods that is holding this back. So Stripe is really a bet on globalization, more global interconnectedness.

Sorry, in what sense?

I mean, I think your name matters for lots of reasons. No, but no, but in this regard, no. But exactly, I do think if you just like log on to an internet forum and you're chatting away to people, you'd be talking to people all around the world. And yet when it comes to trade, there's still that gravitational pull that I think is probably stronger than it should be. And so, you know, say, you know, we're always talking about the EU single digital market as a thing that hasn't really happened yet, if you look at the numbers. And again, we think it should be the case much more. But I think Ireland is a—I think what helps us is Ireland has always been a very outward-looking nation. And people tell that in the immigration story, but I actually think they probably don't tell it as much as they should. Where if you're a small country, you have to look outwards. You have to actually be engaging with, you know, a huge amount of the rest of the world. Whereas again, I mean, the US, you just look at the sheer scale of it, they can kind of think more in terms of what's going on with the US. And I actually think we probably—we like to over, you know, talk about our Irishness and, you know, the history over the last kind of hundred years, and maybe under-talk about a pretty interesting aspect, which I think is we have always been somewhat globally-minded citizens. Again, even beyond just the pure immigration story, where, you know, you're talking about Joyce earlier, who was bopping around Europe and spending time in Trieste and things like that. Or, you know, you look at the history of Ireland has always punched way above its weight in the sciences. And you look at people like Boyle or people like that, they weren't part of an Irish scientific community—I mean, they were—but they were part of a broader European scientific movement. And, you know, Boyle was looking at what the Germans were doing and building on that work and things like that. And so anyway, I think Ireland has always actually been very much outward-looking. And I think we, as we look back on 1922 and things like that, we like to look at the Irishness and kind of focus very much on what's going on in the island, and that's important. But I think we probably under-tell this story of Ireland interacting with the rest of the world.