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Building Stripe: 4 Early Startup Principles
From Patrick Collison, cofounder & CEO
Brian Bourque
October 21, 2023
Hello to every unicorn in the galaxy.
I recently watched an old interview with Patrick Collison, one of the two brothers who cofounded Stripe.
If you’re not familiar, Stripe is a payments company that did $14 billion in revenue last year.
It’s also one of the rare companies where you use the product and are like “wow, everything should be this easy.”
Patrick is extremely articulate and I appreciated a lot of his insights.
I thought you might too, so I’m going to share some of them here.
Here are 4 of Patrick Collison’s startup growth principles:
Iterate quickly based on qualitative user feedback
Probe job candidates for intellectual honesty
Think long-term early on
Stay open to unconventional ideas
Scroll to the end for the full video.
Today’s growth strategy is Stripe’s Early Growth Principles.
Growth stage: Early
Difficulty level: Medium
Iterate Quickly Based on Qualitative Feedback
"Pre product-market fit metrics are actually relatively unhelpful and you should bias very strongly towards kind of as much inspection and high throughput qualitative feedback as possible."
Stripe was hyper-focused on gathering qualitative user feedback in the early days:
They had a public chat room for user support, so they could see any issues users encountered integrating Stripe. This put pressure on them to improve the product.
They configured their system to email the founders every single API request sent to Stripe. By reviewing these, they could understand how users were actually using the APIs and iterate based on that.
Whenever a user got an error, it triggered a high priority email alert so the founders could immediately reach out to the user, fix the issue, and improve the experience.
They had a feedback box on every page asking "What's your favorite/least favorite part of Stripe?" to gather direct qualitative feedback.
When they saw businesses try Stripe but not fully launch, they would individually email them to understand why and see how the product fell short.
They changed their dashboard 3 times and their API 2-3 times in major ways within the first year based on qualitative feedback and data they were reviewing.
They started with a handful of test users, observed them closely, then gradually expanded to 100 pre-launch users within a year to iterate safely.
The key was optimizing their workflow to be highly responsive to user struggles and feedback. By reviewing granular usage data and having direct conversations with users, they could rapidly iterate to improve product-market fit.
Hiring Decisions
"It's oddly hard to fake being intellectually honest and being able to see multiple sides of a debate or an argument."
Don't over-optimize for credentials. Focus on hiring smart people who are intellectually honest, care about the mission, and have a bias toward action. These attributes are harder to fake.
In the early days, hire the smallest team possible that can help you iterate quickly on product-market fit. Between 2-10 people is ideal.
Hire for specialized skills like partnerships and business development earlier than you might expect. Those hires can unlock growth.
Give promising generalists a chance to develop new skills rather than pigeon-holing people based on experience.
Use outside validation if needed - they hired a key business development person because an advisor guaranteed to cover his salary if it didn't work out.
Look for people who are pleasant, warm, and make others happy. Culture fit matters when the team is small.
Ask questions and have discussions to assess intellectual honesty - watch for certainty or unwillingness to see other perspectives.
The key hiring filters he looks for are around intelligence, mindset, and culture add rather than narrowly on background.
Thinking Long-Term
"A much better mental model to have is you're serving some market and that market is relatively finite in size."
Patrick Collison's advice for maintaining a long-term vision despite short-term demands:
He emphasizes thinking about the total addressable market and planning the organization needed to fully serve that market, rather than just chasing short-term growth.
For example, 6 months after launching, he wishes Stripe had mapped out expanding concentric circles of customers to serve (startups, tech companies, all businesses, etc) and built the team to pursue that.
He points to experienced founders willing to build organizational capacity ahead of current needs as an example. They think "what's needed to serve the whole market" and work backwards.
Stripe's new distributed hub model (engineering centers in Singapore, Seattle, etc) is a break from the typical Silicon Valley HQ model focused on global infrastructure and access.
He sees Stripe as righting a deficiency that online payments are not easily globally accessible. The vision is empowering global participation, not just serving today's needs.
He aims for Stripe to work just as well for companies in Nigeria or Brazil as the Western world. That guides what problems they focus on solving.
Even though it's risky and unconventional, he says companies have to be willing to make farsighted bets to build breakthrough products versus myopic iteration.
Overall, Patrick advocates letting the long-term, global vision guide what you build, rather than just reacting to immediate customer demands.
Stay Open to Unconventional Thinking
"People can sort of add ideas to it that they think are probably a bad idea but if they worked might be a great idea and it’s very important that they have to be probably a bad idea."
How Patrick Collison recommends maintaining a "yes and" culture:
A "yes and" culture is open and receptive to new ideas, even if most ideas are bad or not feasible.
He tries to cultivate an enjoyment of contemplating possibilities and options, while still being disciplined about what gets executed.
Stripe does an annual "Crazy Ideas" document where everyone contributes ideas that are likely bad, but could be great if they worked. This surfaces unconventional thinking.
Leaders should visibly appreciate ideas and possibilities, not shut them down, even if most can't be pursued.
They use techniques like the "Crazy Ideas" doc to separate idea generation from vetting, so people don't self-censor.
Regularly changing processes force re-examination versus ossifying the status quo.
Patrick aims to institutionalize idea flow, create psychological safety, hire for openness, and role model curiosity as a leader.
You can check out the full interview here:
✨ That’s it for today!
I hope this helps you in your growth journey.
-Brian
PS - Ahrefs recently published a link building guide for beginners. If you’re just getting started, check it out.
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