Conversation with Stripe Founder: How to Effectively Operate a Startup Company?
Talk with Stripe Founder: How to Run a Startup Effectively?
Effective decision-making mechanisms are crucial for team success.
Background on Stripe
Stripe is a US-based technology company founded in 2010, headquartered in San Francisco, providing global online payment processing services. Stripe’s services allow individuals and businesses to easily accept credit cards and other payment methods on their websites and handle related payment transactions for them.
Stripe’s flagship product is its API, which developers can use to integrate payment functionality into their websites or applications. Stripe’s API supports multiple programming languages and frameworks, enabling developers to add payment functionality to their projects with minimal hassle.
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In addition to online payment processing services, Stripe also provides a range of other tools and services such as the “Radar” anti-fraud system, the “Sigma” data analysis tool, and the “Atlas” entrepreneur service to help businesses better manage and grow their businesses.
As of 2021, Stripe has received support from many well-known investors, including Amazon founder Jeff Bezos, and has a valuation of $95 billion, making it one of the most valuable private technology startups in the world.
Founding of Stripe
Stripe co-founder and CEO Patrick founded Stripe with his brother John in 2010. However, it was not officially launched until September 2011 due to the need to establish many bank partnerships, etc. Prior to this, they tried to gradually increase the number of users each month, and although there was no public information, they already had the first production user. Because it took a long time to go public, they tried to expand the number of users each month very disciplinedly.
Communicating with Customers and Collecting Feedback
Firstly, user surveys and feedback are good methods to obtain feedback on product ranking, user experience, etc. Through this method, the designed product can be more intuitive, streamlined, user-friendly, and avoid difficulties or pain for users when using the product.
Secondly, when recommending Stripe, delays and procrastination often occur. To solve this problem, it is recommended to have face-to-face communication with customers to discuss why to choose Stripe, when to choose Stripe, etc., in order to better help customers make decisions.
In conclusion, by communicating with customers and collecting feedback, products and services can be improved better, and customers can be helped to make wiser decisions.
Team decision-making mechanism
Effective decision-making mechanisms are crucial for the success of a team. Consensus is not always feasible, especially when there are multiple founders and people with similar status within the team. A lack of effective decision-making mechanisms can lead to failure.
Even a somewhat democratic vote may not be a good idea. Therefore, we can assign work to areas where each person excels and respect each other’s decisions.
On key decisions, if team members have different opinions, we can try to make the best decision based on the interests of the team. The best way to work as a team is for everyone to want the best idea to win, not just their own idea. This requires a compromising and selfless attitude to achieve this goal.
Entrepreneurial narrative framework
I believe that the story of an entrepreneur can be divided into two parts: entering the market and subsequent development. Although there is no obvious binary line between these two parts, it is helpful to frame them when telling the story.
For Stripe, we basically had it when we launched. We went through multiple refactors in response to user feedback and to address issues in the product. At launch, we immediately faced a bottleneck because we were able to meet user needs but not generate them.
In a sense, this was an early reversal, where we were trying to figure out how to meet user needs and retain them. As the number of users increased, so did the demands, resulting in the product showing a trend of superlinear growth.
When we launched Stripe, 500 companies registered, and then they quickly spread to other businesses, needing to keep up with market demand rather than adjusting the product to serve the market.
Attention to detail and user feedback collection
We pay great attention to details and strive to deeply understand the issues and challenges in the user experience. For example, we provided a public chat room support integration when promoting Stripe. Whenever someone sends an API request, we look at the type of request to quickly discover and resolve any issues.
Although we are not good at celebrating, on the occasion of Stripe’s seventh anniversary, we sent a statistical data email, including information such as 22 payments processed in the first hour and a list of businesses that submitted API requests but did not go live.
We try to focus on micro-details, iterate the product quickly, and adjust based on a large amount of qualitative feedback. For pre-market fit indicators of the product, we consider them relatively useless, and focus more on checking and understanding user behavior and needs in the process of using the product. Even with only 20 users, we can better understand the pros and cons of the product.
The level of love that users have for a product is subjective and can be measured by the anxiety they feel when the product disappears. For this reason, we have set up a small text box at the bottom of each page for users to tell us what they love most about Stripe. This is helpful for us to receive feedback. Most of the feedback is negative, but this is also a way to collect user feedback. Although we often see some negative feedback, it is helpful for us to organize our next steps.
Finding fulfillment from challenges
Happiness is a difficult concept to understand, but at Stripe, we derive fulfillment from the process of problem-solving and climbing peaks. Even when we are aware of serious defects in the product and face challenges, we can still find joy and fulfillment from working with smart colleagues and clients. Although this process cannot guarantee happiness, it has practical value and meaning. It is similar to the feeling that scientists experience when pursuing answers, even if most experiments are not successful, they still have meaning and value to some extent.
There are many difficulties and challenges every day when doing anything, but if you step back and look at it on a weekly or monthly basis, you can see the progress you have made. If you are really unhappy doing something, continuing may be a bad idea. It is also important to judge whether to give up from a time perspective. In the process of pursuing goals, it is necessary to find happiness, satisfaction, and fulfillment. It is recommended to slowly move forward every week or month and recommend a book called “Fulfillment”.
Success and experience of Stripe
Not everything is good at everything, but that doesn’t mean self-deprecation. At Stripe, some tasks are better suited to others than I am. We need to recognize that we may not be experts in a certain field and learn to admit it. For example, we are not very good at establishing partnerships with banks. To solve this problem, we hired a non-engineer named Billy Alvarado to help us. Although we weren’t sure what he could do for us at first, this decision ultimately became the key to changing our trajectory.
Service-oriented organizational structure
In addition, our successful transition was due to our ability to license, own other features, and do business. If you put yourself in my shoes, you can overcome difficulties by learning to recognize that you are not an expert in a particular field and finding the right people for that field.
If we can work more disciplined and self-aware, we may be able to improve efficiency by a year or two.
We cannot simply maintain the current state or slightly bend the growth curve upwards, as this will hinder our progress. Instead, we should build an organization centered around serving the market and adapting to its demands. The enterprise market is easier to understand because enterprises are rational entities, while consumer software is more difficult to predict people’s needs.
A better mental model is to focus on the service market, target market size and service proportions, and build an organization capable of expanding market share and products to segmented markets. Founders should build this type of organization before starting a business, as the growth curve is controllable, especially for B2B use cases.
Learning from startup experience: selling software to enterprises is better than to consumers
When we want consumer software, it is difficult to predict what we want because it is an amorphous space. In contrast, enterprises are rational and easier to understand. So selling software to enterprises is better than to consumers. When I first met Aaron Levie, he told me this point of view and praised the advantages of entities that know what they want to build software. Aaron is the CEO of Stripe and found us on Facebook requesting investment. Although we did not reply to him, we later heard about Box and Aaron, read his interesting tweets, and eventually moved to San Francisco to meet him.
Hiring strategy for startups
The adaptation stage before the product is launched is very important because it can help you determine if the product is suitable for the market. In this stage, it is important to iterate quickly in response to user feedback and observed behavior. The optimal response size depends on the type of product you are building. Although early personnel may help with product construction, a team that is too large will affect response time. Therefore, rapid response is crucial, whether it is from the perspective of necessity, defects, or observation of user behavior characteristics. The key is to minimize response time.
Trade-offs in Hiring Employees
Startups face many complex judgment demands in high-dimensional possibility space. While breaking them down into a set of simple trade-offs is somewhat difficult, considering the time cost in hiring can slow things down. Cultural assimilation and technical learning also take time and cost. Additionally, every new employee adds additional ongoing costs that are not just linear, but composed of multiple factors. Therefore, the question is whether new employees can help us respond more effectively to user needs and whether they are worth all other costs. The ultimate arbiter should make decisions based on product complexity and market complexity.
Establishing Clear Communication Patterns
When hiring employees, traits such as caring, kindness, responsibility, and intellectual honesty are very important. However, since everyone has their unique black box functions to explain understanding, it is difficult to determine whether they are suitable for the organization. This also means that different employees may have different biases towards consensus and decision-making. In the process of organizational expansion, it is necessary to consider how to reduce noise and bring everyone onto the same page. And when the organization reaches a certain size, clear communication patterns become even more important. Therefore, more careful consideration should be given to establishing clear decision-making communication mechanisms, and everyone’s functions and characteristics should be carefully considered.
Management and Culture Building
This is a delicate balancing act. On the one hand, you want orchestral speed and agile sorting, which involves factors such as hierarchy, symmetry-breaking mechanisms, and lens calls; on the other hand, you also need employees with a strong sense of ownership, because only in this way can things change, problems identified, and new ideas injected. However, too much hierarchy can also have negative effects.
Establishing Clear Decision-Making Communication Mechanisms
In the process of organizational expansion, we need to consider how to reduce noise and bring everyone onto the same page. When the organization reaches a certain size, it is very important to establish clear decision-making communication mechanisms, and everyone’s functions and characteristics should be carefully considered.
Company Size and Innovation Capability
As Stripe has grown, they are different from other companies in that their innovation capability has continued to increase while the company has grown, which is very rare. However, the larger the company, the more likely it is to become rigid, closed to new ideas, new directions, and things that are contrary to mainstream orthodox views. To avoid this, leaders need to care about the speed of progress and like to see things happen quickly.
Culture and Mechanisms
Therefore, when building a company culture, we need to establish a mechanism that affirms and encourages new ideas from employees. Such a mechanism needs to be constantly adjusted and pushed to ensure that everyone has sufficient autonomy and agency. In most organizations, people tend to self-censor because they don’t want to look foolish or be associated with all these quirky, bad ideas. Therefore, we need to establish a firm mechanism that encourages employees to add ideas to the problem and seriously consider the possibility of each idea.
Characteristics of Successful Organizations
The most successful large organizations usually succeed in iterative, repetitive, and enhancement-like processes, such as Amazon and Google. They need to be constantly attached to successful auxiliary businesses, but also need to avoid being overshadowed by this temptation.
Global Strategy of Stripe
Consensus orientation is a very significant divergence. Until recently, we were quite concentrated, and now we have some early-stage remote employees. However, Stripe is centralized in San Francisco. However, we recently announced our fourth global center: Seattle, Dublin, and Singapore. These locations will not only operate offices or satellite offices, but strategically establish product and engineering teams and other functions. We hope to establish successful product centers around the world.
Breaking Geographical Restrictions
We believe that this makes sense because the availability of talent is becoming increasingly dispersed geographically, and the geography of the Gulf region is also becoming more expensive. Stripe has become a global infrastructure that can play the same role in Asian markets, Latin American markets, or anywhere else as in American companies, mainly in North America or North America. Or American, Western European, or other. The era of this phenomenon has passed.
Risks of Success
Although we are optimistic that this can be done, it is also risky. We have no previous examples to prove whether this model is successful, but in the long run, we believe that this is a breakthrough in the best practices of the past. If successful, we will be the first company to establish major product and engineering centers in these places.
Building Global Economic Infrastructure
Stripe is working to build global economic infrastructure for the internet. The platform’s globalization and certain technological advancements mean that starting a company in Nigeria should be as easy as it is in New York, and buying from any of these companies should be as easy as buying from the Western world for some people in Brazil. But the idea is so crazy it hasn’t been realized yet, as it may take 10 to 20 years before Stripe was founded.
Correcting Flaws in Internet Infrastructure
Stripe is working to correct flaws in internet infrastructure, which will take at least five years to correct. In the future, all transactions should be digitized, and they are likely to be done piece by piece.
Serving More Markets
In the US, over 80% of adults have purchased something from a Stripe merchant in the past 12 months. In Singapore, the number is around 70%. To serve more markets, Stripe periodically reviews and counts coverage data, considering factors such as the pace of new company creation, which companies are getting started, and how successful those companies are. However, more importantly, it is about enabling these businesses to offer their products and services in these places. This is the core movement of Stripe’s daily work. Ultimately, the existence of these businesses will benefit everyone.