Interview with Patrick Collison

In a captivating session of Greylock's "Blitzscaling" class, Patrick Collison, co-founder and CEO of Stripe, offered a rare glimpse into the early days, philosophical underpinnings, and unique scaling strategies of one of the world's most influential tech companies. Known for his profound thoughtfulness and wide-ranging intellect, Collison engaged in a narrative-driven discussion that went far beyond typical startup anecdotes, providing invaluable lessons for aspiring entrepreneurs and seasoned builders alike.

The Genesis of Stripe: From iPhone Apps to a "Yak Shave"

The story of Stripe, as Patrick tells it, began not with a grand vision for global payments, but with a seemingly mundane frustration. He and his brother, John, were building iPhone apps to pay for college and realized how incredibly easy it was to charge for things within the app ecosystem. This contrasted sharply with the nightmare of accepting payments online. "Why do we never charge for anything online?" Patrick pondered, realizing, "it's such a pain in the ass to sort of accept payments on the Internet. You have to sort of hop through all these hoops and basically get a mortgage."

Inspired by Slicehost's simplicity in providing server infrastructure, the Collison brothers envisioned a "Slicehost for payments." In October 2009, John casually suggested, "we should just build a prototype, it probably won't be that hard." Patrick fondly recalled Avi Bryant, a Stripe employee, dubbing the entire company "the world's biggest ever yak shave," a term for endlessly chasing prerequisite tasks. Their initial prototype, /dev/payments, launched in January 2010 to a few friends, built with "duct tape and wire," yet it instantly took off by word of mouth, surprising them for an API-focused product. Their early network within the Lisp programming community and Y Combinator proved invaluable, as friends on the cusp of starting companies needed exactly what they were building.

Key Insights:

• Identify Core Friction: Stripe emerged from a deep frustration with an existing process (online payments) that was surprisingly difficult.
• Leverage Simplicity: The "Slicehost for payments" idea highlighted the power of an incredibly straightforward user experience, even for complex technical problems.
• Embrace Early Manual Processes: Initially filling out paperwork manually for dozens of users allowed them to validate demand without premature automation.

A Deep Dive into History: The "Cheat Code" for Innovation

Perhaps one of the most distinctive aspects of Patrick Collison's approach to building is his deep reverence for history. He openly admits to reading "a ton of history" and views it as "a way to cheat. Everyone else ignores all the good ideas from history, and so you can just be much smarter." Collison laments the "pop culture" nature of computer science, where progress often feels like "brownie in motion through the problem space" with little regard for prior advancements.

He points to pioneers like Doug Engelbart, who in '67-'68, not only invented the mouse but demoed real-time collaborative word processors, video conferencing, and hyperlinking – systems arguably "better than Hangouts" today. This early work was driven by a vision of "intelligence augmentation" and "augmenting human intellect," in stark contrast to much of today's tech, which often focuses on basic utilities or entertainment. Collison believes the industry suffers from a "systematic undervaluing of tools" and their enabling impact, encapsulating Stripe's philosophy: "most technology companies are building cars, whereas Stripe is building roads, that kind of distinction."

Key Learnings:

• History as a Strategic Advantage: Deliberately studying past innovations and philosophical approaches can unearth overlooked ideas and provide a unique perspective.
• Question Modern Ambition: Reflect on whether current technological endeavors align with the foundational ambitions of "intelligence augmentation" or primarily serve utility/entertainment.
• Focus on Enabling Infrastructure: Recognize the profound, though often less visible, impact of building fundamental tools and platforms that empower others.

Scaling with Purpose: Conventional Organization, Unconventional Hiring

When discussing Stripe's organization, Patrick offers a refreshingly grounded perspective. At 330 people and doubling annually, Stripe is "wildly conventionally organized." He cautions against the "temptation... to go and sort of reconceive the nature of humanity" in early startups. Instead, he advises, "you should really kind of try to discourage that inner voice." His reasoning is two-fold: standard organizational structures have proven effective for giants like Google and Facebook, and any alternative "you could conceive are things that you haven't been exposed to today, you just don't have the life experience to sort of anticipate."

While Stripe embraces conventional structures, they fiercely question other ingrained Silicon Valley norms, especially in hiring. Patrick highlights the "insane" prevalence of algorithm-style whiteboard interviews, despite Google's own findings of "almost no correlation" with job performance. Stripe's approach is different: "we just try to think about, well, what it is that people at Stripe are actually doing day-to-day... they're writing code on laptops." Their interviews involve candidates coding on their own laptops in a familiar environment, a pragmatic shift that "works really well."

Key Practices:

• Default to Conventional Organization: Avoid unnecessary innovation in organizational structure; focus energy on core product and business challenges.
• First Principles in Hiring: Design interview processes based on the actual day-to-day work employees will perform, rather than inherited industry norms.
• Challenge "Memetic Force": Be critical of widely adopted industry practices that lack empirical backing or don't align with your company's reality.

Beyond the API: Stripe's Evolving Product & "Building Roads"

Stripe's initial product-market fit for a simple payment API was clear, but Patrick emphasizes that its journey involved "successive product market fits." Early on, the Collisons realized the market was "tiny" – only about 2% of consumer spending happened online. This indicated vast growth potential, particularly with the global rise of smartphones and promising emerging markets.

Crucially, Stripe anticipated and built for a new wave of "increasingly just complicated transaction-oriented services." This led to products like Connect, which enables marketplaces like Instacart, Uber, and Airbnb to facilitate payments between multiple parties. "These are kind of these new kind of real world economic relationships where it's an integral part," Patrick explains. He differentiates this from simple person-to-person transfers like PayPal, stressing that while superficially similar, the underlying problems are "completely kind of different" – dealing with refunds, tips, international complexities, and tax issues. This deeper infrastructure focus, while harder for outsiders to grasp, has been a strategic advantage, as "competitors also don't really get it."

Key Changes:

• Anticipate Market Evolution: While starting with a clear problem, actively look for "larger secular trends" and emerging use cases that will demand more complex solutions.
• Build Foundational Infrastructure: Focus on enabling platforms that support new economic models rather than just singular applications.
• Embrace Complexity (Strategically): Understand that solving deeper, more intricate problems can create defensible moats, even if the value is less immediately apparent.

The Persistence of Talent: The Art of Unhurried Hiring and Early Allies

One of the most striking revelations about Stripe's early days was their extreme patience in hiring. Patrick describes taking "a really long time to hire people," with the first two employees taking six months, essentially "a person per quarter." This painful persistence involved "week-long trials" and what he jokingly calls "three-month life conversation about it, I mean therapy session." His philosophy is to "first look for the good ones, and then try to sort of convert them to expressed interest," which means being okay with lengthy recruitment cycles. He mentions "multiple people at Stripe now today who took us several years to hire, like, I can think off the top of my head of five people who took three plus years to hire."

This commitment to quality extended even to roles outside of engineering. Early on, faced with the daunting task of securing bank relationships (Wells Fargo initially declined), they sought advice from an investor, Geoff Ralston, who pointed them to Billy Alvarado, a co-founder of Lala. Despite internal anguish about hiring a "BD guy" as the fifth or sixth person ("He doesn't write code, I mean, should we hire a person who doesn't write code?"), Billy proved invaluable. He not only secured the Wells Fargo relationship in two months but also brought crucial operational knowledge, asking early questions like "how we do payroll?" when the Collisons were manually calculating salaries. This exemplified the company's willingness to make unconventional hires when strategic needs arose, trusting in the "light cone" of impact a truly great person would have.

Key Practices:

• Radical Persistence in Hiring: Be prepared to invest significant time and effort, even years, to attract the absolute best talent, viewing each hire as a "giant branch of a potential future organization."
• Prioritize Talent Over Immediate Skill Fit: Focus on identifying exceptional individuals first, then work to align their interests with your company's needs.
• Strategic Non-Engineer Hires: Recognize when specialized expertise outside of core engineering (e.g., business development, operations) is critical, even at a very early stage.

"Most technology companies are building cars, whereas Stripe is building roads, that kind of distinction." - Patrick Collison