On Wednesday I got the chance to listen to one of Stripe’s ‘Brothers Collison’ (John) live at AXIOS’s BFD event in San Francisco. It was an interesting setting for the co-head of one of the world’s largest payments orchestration platforms in that historically, financial and strategic information about the still, privately held company must be teased-out of miscellaneous print reports. As such, watching Collison take ‘fastball’ questions from Axios’ business editor, author of the Axios Pro Rata newsletter, and lead journo covering VC, PE and M&A, Dan Primack, in real-time, was pretty extraordinary, and the Q&A did deliver some newsworthy nuggets commensurate with the status of the event’s marquee guest. Collison was pretty transparent on Stripe’s relative valuation compared to its peers, and offered some not-so-trite commentary on some of contemporary tech’s sexier topics, including artificial intelligence and cryptocurrency.
On being questioned about Stripe’s own valuation, Collison veered away from any absolute formulation based on revenue, profitability, and growth, and cleverly stayed on a relative valuation tack, claiming that compared to Stripe’s fintech and payments peers, especially the cohort that went public during the pandemic speculative boom, Stripe’s valuation has stood up reasonably well. As much as Primack tried to get Collison to cough-up the actual financial metrics (top line growth and free cash flow), Collison shut him down. But, he did share that the company’s road map does not emphasize short-term profitability, which is interesting in its own right, especially in light of today’s market dynamics where venture capital and private equity firms have been investing in companies with clear pathways to profitability in very short time frames. Instead, Collision said Stripe is content to focus on developing more products, with special attention paid to those that get the payments giant into the back offices of businesses (think recurring payments and AR automation), and for now, he aims to run the company, inclusive of robust R&D spend, at break-even.
On Crypto, Collison was more colorful in his commentary. In explaining Stripe’s return to utilizing crypto as a form of payment, he noted that for many long-tail countries (countries who do not have a functional or well-developed banking and payments system) crypto, in the form of USDC stablecoin running on ethereum-based blockchain, has become a useful tool for cross-border payments, and Stripe will continue to explore use cases with that modality. On Bitcoin itself, Collison suggested that Stripe may revisit its usage in the future now that layer-2 technologies, especially the Lightning Network, have advanced appreciably. He followed this with a curt explanation of the rationale behind Stripe’s prior start-and-stop with Bitcoin, saying that “pre-Lightning”, he thought it was a “terrible” form factor for payments.
I thought that Colison’s comments regarding artificial intelligence and its role in payments (generally) and Stripe in particular, were the most noteworthy. Against the backdrop of Microsoft launching ChatGPT and Google launching Bard, and the subsequent push-back from many leaders in the AI community for introducing this large language model technology for commercial use without any regulatory guardrails, Collison was surprisingly optimistic about AI’s utility in payments. He sees a well defined role for the technology, particularly relating to data analytics driven inferential AI. He is not an AI doom-and-gloomer. In terms of AI’s role within Stripe itself (short term), he expects it to be implemented incrementally from the “ground up.” His sense being that, at least initially, AI will begin to replace lower-level, repetitive tasks and the people who now perform them. In other words, he sees AI’s most likely use case in automating manual workflows to increase operational efficiency.
Cheers! And a happy Mother’s Day to all!