How the Collison Brothers went from a startup to $9b in 6 years with 7 lines of Code

From the desk of Bob Pritchard 

The Collison brothers were born in Limerick to parents with scientific backgrounds—father in electrical engineering, mother in microbiology.  Dad ran a 24-bedroom hotel while Mom operated a corporate training company from home.  The boys went to a tiny and Patrick spent his last year studying at home so he could graduate at 16. At 16 Patrick was named Young Scientist of the Year for developing a programming language and artificial intelligence system. He condensed a two-year test-taking process into a 20-day period in which he aced 30 exams.

Patrick enrolled at MIT in 2006 and John followed him to America, attending Harvard. In their spare time, they developed iPhone apps. They helped create a way to manage EBay auctions and sold that company, Auctomatic Inc., for $5 million in 2008.

They dropped out of college and in 2009 they set up an office in Palo Alto, across the street from the old digs of PayPal. There’s such an improbability to their story, that these brothers from a little village would build what could well be one of the most important companies on the internet.

Stripe began in 2011 with Patrick as CEO and John as president. They spent two years testing their service and forming relationships with banks, credit card companies, and regulators so customers wouldn’t have to.  With Stripe, all a startup had to do was add seven lines of code to its site to handle payments: What once took weeks was now a cut-and-paste job. Silicon Valley coders spread word of this elegant new architecture.

Every day, Americans spend about $1.2 billion online and growing rapidly. But, the web’s financial infrastructure is old and slow. Companies wanting to set up shop have had to go to a bank, a payment processor, and “gateways” that handle connections between the two. In 2010, the Collison brothers company, Stripe Inc., built software that businesses could plug into websites and apps to instantly connect with credit card and banking systems and receive payments. The product was a hit with Silicon Valley startups. 

Businesses such as Lyft, Facebook, DoorDash, and thousands of others turned Stripe into the financial backbone of their operations.

They charge a small fee on each transaction and half of Americans who bought something online in the past year did so via Stripe. 

This has given it a $9.2 billion valuation and made Patrick, 28, and John, 26, two of the world’s youngest billionaires.

One way to justify the number: Stripe’s new partnership with Amazon. com Inc., the largest and most sought-after customer on the internet. Over the past couple of weeks, Stripe began handling a large portion of Amazon’s transactions.

Stripe is beginning to move beyond payments by writing software that helps companies retool the way they incorporate, pay workers, and detect fraud. It’s part of an ambitious bid to revamp how online business has been conducted for 20 years and to give anyone with a bright idea a chance to compete. It gives two people in a garage the same infrastructure as a 100,000-person corporation.

Today, Stripe is the financial engine for more than 100,000 businesses. It stores key financial information such as credit card numbers, deals with fraud, and adds support for new services such as Apple Pay as they arise. It’s getting close to handling $50 billion in commerce annually, which would translate to about $1.5 billion in revenue.

Three years ago, Stripe had 80 employees. Now it has 750.