Stripe: Find An Unnoticed Pain (And Build A Business To Solve It)

How does discovering a pain that people don’t even notice lead to a successful new business?

Patrick Collison is the cofounder of Stripe, which makes it easier to accept payments on the Web.

Stripe is used by thousands of online companies, including Shopify, Foursquare, New York MOMA, and Tarsnap.

Patrick Collison

Patrick Collison


Patrick Collison is the cofounder of Stripe, which makes it easier to accept payments on the Web.



Full Interview Transcript

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Here’s the program.

Hey there, freedom fighters, my name is Andrew Warner. I’m the founder of, home of the ambitious upstart. Over 700 interviews with proven entrepreneurs who come here to tell you how they built their businesses, so you can go out there, build your own company and, hopefully, come back here once you do and do what today’s guest is doing, which is tell your story and teach others.

So, what I want to find out in this interview is, how can discovering a pain that most people, most business people even, don’t notice that they have. How can doing that lead to building a successful new business? Patrick Collison is the co-founder of Stripe, which makes it easy to accept payments on the web. Stripe is used by thousands of online companies, including Shopify, Four Square, New York MoMA, and Car Snap [??]. Patrick, welcome to Mixergy.

Patrick: Thank you. It’s great to be here.

Andrew: So, Paul Graham, the guy who backed your company twice now, actually, right?

Patrick: Yeah, he was also an investor in our previous company.

Andrews: So, he said, one of the things that he admired about your business is that you notice the problem that most people didn’t even realize they had. How did you do it? How did you identify this big problem that the rest of us didn’t notice at all?

Patrick: So, here’s the thing, I guess, most people never run into the problem of having to accept payments online and that most people don’t actually, or most internet users don’t have a product, or service, or anything to charge for. As it happens, we’re web developers, we built a lot of software, and this is, in fact, something that we’d encountered. A couple of times, I just built little side projects or something and I thought it would be kind of cool to charge for it; just to see, maybe there’s, maybe unexpectedly there’s some rich [??] or something. You know, it doesn’t necessarily sound all that lucrative, but there might actually be something there; and we’d actually experienced this.

Andrew: Could you give me an example?

Patrick: Yeah, so, with the App Store we’d run into this. A couple of years ago, I built an application for the iPhone, which stored a copy of Wikipedia on the iPhone, so you could read it without internet access. We launched this in the App Store and we charged for it, because you have to download a 2 GB dump [??] from our service, which cost a fair bit in bandwidth. So, it was an awful lot to charge for a $1.20 app, expecting maybe a couple of people would like it, but it was more just a fun side project. Then it ended up becoming really popular, and it got tons of downloads, and it actually was a major income stream for a while. There was just no way that I would have expected or predicted that. If it hadn’t been so easy to integrate payments into the app, or to charge for it, there’s just no way I’d ever discovered that.

Andrew: You were able to integrate payments into the app through Apple’s system, right?

Patrick: Through Apple’s [??]. They had made it incredibly easy to charge for the software you built.

Andrew: Okay.

Patrick: Every time I built a little tool, or project, or something like that I’d either, most of the time I actually hadn’t [??] integrated it, just because it seemed like so much work.

Andrew: Can you give me a specific example? Tell me of a time when you were building a business and you were adding payments and you said, this is infuriating, there’s got to be a better way.

Patrick: I can give you three examples. One is [??], this was our last company, which was also funded by [??], and it made it really easy for people to sell things on eBay. There, we never integrated payments …

Andrews: You never integrated any payments into it?

Patrick: Simply because it was just too much hassle.

Andrews: Do you remember when you tried integrating and what you experienced when you tried to add it on?

Patrick: I don’t believe that we never went very far down the road with accepting payments, just because we knew it would be so much hassle, and so it was always kind of on the road map for the future at some point. We never actually got to the point where we had the conversations. The next project was a thing called “Change Feeds” [SP], which was kind of just a tool I went with myself. It was a thing where you get the URL and it monitors the URL for changes and then gives you an RSS feed with a [??] every time the link changes. So it’s cool for something like Terms of Service and things like that.

Andrew: So a quick way to get an alert when a page online changes?

Patrick: Yes, yes.

Andrew: I see.

Patrick: That is not only something I wanted to do for myself, but it was as easy to make it available for others as it was for just myself. And there I went about setting up payments for it, and discovered that it was just a huge amount of hassle.

Andrew: Here’s the thing that I know about you. … Paul Graham [SP] thinks that you’re so brilliant that he brought you to the Optomatic [SP] team, right? He said, this guy Patrick is brilliant. You guys should meet him and work with him. … Everywhere I look when I look you up, I kept seeing people compliment how bright you are, how great a developer you are, how impressive the projects you worked on were. Including Encyclopedia, which is what you talked about a moment ago. So you’re a guy who could do anything. You could even create a mobile payment system. Why was payment so tough for you? What were you seeing?

Patrick: It was two things, I think. One was that, yes, ultimately people can in fact accept payments online like this is a [??] problem and people do it. It is just so much hassle that it just ends up getting pushed back, all right? There are always so many things competing for our attention, and its [??], right? With Change Feed it wasn’t like I’m not able to integrate payments, therefore, shit, I’m stuck, right? It was more like I could integrate payments, but it looks like that will probably take me a day, so I will just build a new feature and not bother charging. Because, chances are, I won’t make much money anyway. Its like, “Who cares?”

Andrew: I see.

Patrick: But also, it’s just that it’s so complicated. There are merchant accounts, gateways, and processors, and ISOs, and recurring billing providers, and PCI, and vaults, and interchange, and qualified, and non- qualified and all these terms and PDFs and tutorials to teach you about all this stuff, and so it’s like, from my standpoint, before I do anything, is industry. For all I knew, what you actually needed to do is pretty simple, but there was so much stuff there that I didn’t even know if it was simple or not, or where it is on that continuum of ours. And so, it just ended up getting deferred.

Andrew: I see.

Patrick: It was never the most pressing thing. I never could have wrapped my experiment by charging a couple of dollars. For all I know, Change Feed could have become really popular or my mom would have paid for it and nobody else, ever. I just don’t know. I never got to find out.

Andrew: I see. You know what? You’re right. You’re reminding me of all the steps that went into even us charging here at Mixergy. We had to get, which is a gateway, we had to get Power Pay [SP].

Patrick: Yep.

Andrew: We had to do something with American Express and Discover.

Patrick: Yes, separately sign up for those.

Andrew: And then we had to set up a shopping cart.

Patrick: Yup.

Andrew: By the way, I didn’t know that, months later, we had and I didn’t even know about Power Pay, even though I must have signed something to get it on, until I had an issue with someone, who months later wanted a refund, and needed to figure out how to do it and then they told me about Power Pay. And I go, “What?” It’s all these steps, so you’re right. So it’s not just the development part. You could probably knock that out fairly quickly. You’re saying it’s all the different agreements you need and all the different people you need to interact with.

Patrick: Right. And even just figuring out which companies to be talking to, or what even do I need? Like are these merchant accounts or what is a gateway? Aren’t they the same thing? Are these different roles? It’s like you need to assemble a server from scratch yourself, when you don’t know what any of the terms actually are. Which you don’t even know that you need. And then call that, especially for, I guess, folks like us who are developers and like making things…If someone tasks you, and you must have it done by this weekend or you have a week to do it, then, sure, you’d figure it out. But, if it’s just like a speculative thing or some kind of experiment, its often something you defer and you never get to it.

Andrew: So, when you’re deferring it, how do you get to a place where you start to notice that this is something you’re deferring, and that you’re deferring it, not because you’re afraid of charging, which some people are, not because you just want to keep the product pure, but because, hey, there’s a hassle here that my mind just doesn’t want to tackle, and I wasn’t aware of it? How do you become aware of it?

Patrick: Yeah, so, I guess for us, it was this happening repeatedly as it was another- So, I built an App Store analytics product, again just for my own use to track sales of this [??]; so I actually wrote the app before the App Store existed, and you know, released it pretty early in the history of the App Store, and so there weren’t really many analytics tools out there. Even the most basic questions like ‘How much money did I make yesterday?’ there were no- Like, Apple’s tools didn’t even tell you that. So I built this, like, really simple web-based tool, again [??] payments for it, but I actually remember the day where I was chatting with John, and I am just, like, so frustrated with it. So, I guess, having the experience to see how transformative it can be to sort of discover that something you built can actually be an income stream, and then, kind of, having the experience of repeatedly shirking this is other areas, the pennies sort of started to drop and you start to realize that, ‘OK. You know, there’s actually kind of something broken here.’ And then, I guess, in parallel with that, there was something really kind of interesting happening in the hosting industry, where like, 15 years ago or something, hosting meant something like calling a sales rep at some hosting company and then getting, like, a physical server set up, a contract; and now there are like, items tied with your name, and you [??] the details of the specs, and upgrade the server, and just like, all this stuff, right?

And then EzQueue, Linode, Slicehost, and all these new companies come around where, they give you, sort of, all the advantages of shared hosting infrastructure, where it’s like you can set up instantaneously, and you don’t have to worry about, sort of, the physical completion details, there are no contracts, and you know, things are pretty standardized. But they also gave you, sort of, the complete control of [??] your own box. It just really struck us, like, ‘Hey, why doesn’t that [??]?’ Like, I [??] all the benefits of a merchant account, and the ability to sort of define my own user experience, and I just have credit card payments that are really well implemented, or integrated, on our site. But sort of as easy to set up on our server as on Slicehost or EzQueue or something. I think that shift in the industry- where like, hosting now just looks completely different. For some people it occasionally makes sense to go an actually rent a physical server, but for the vast majority of people, you should just spin up a VPS with one of these services. It just seemed really clear that something like this should exist for all the major pieces of infrastructure that go into building a business on the Internet. And so it’s this repeated personal experience and that kind of shift in the hosting industry that we started to realize.

Andrew: OK. So, one thing I’ve noticed on a personal level is, that when people scratch their own itch as you have- they solve a problem that they have for themselves- often they end up creating a solution that they are the only ones who understand because they didn’t talk to anyone else, they didn’t try to address anyone else’s needs, they thought everyone else was exactly like them and could understand their solution exactly the way they did. How did you avoid that problem?

Patrick: Good question. That’s a mistake that I made before. I built tons-

Andrew: When? When did you make a mistake of solving your own problem and having it be a solution that works just so well for you and not for anyone else?

Patrick: I worked, when I was pretty young, on new programming languages. In particular, I worked on a language called Chroma, which was a new Lisp variant. That, I realized, was very much tailored to things I cared about and my own needs, but not necessarily to things that everybody else cared about. Building a programming language is actually kind of an exercise in product design, and that never got much traction.

Andrew: It didn’t get much traction because you were building it just for- you were building it based on your need?

Patrick: I mean, I thought I was building it for anybody’s needs, but in reality I was entirely building it for my own needs.

Andrew: So that’s one thing that you’ve built that made sense for you, but if you took it out to the rest of the world it just wouldn’t make much sense to them.

Patrick: Yeah, that’s what I’m saying, Chroma did not make sense.

Andrew: So you’re saying the whole thing didn’t make sense?

Patrick: Yes.

Andrew: Why not?

Patrick: It just didn’t solve problems other people cared much about. I cared about the problems-

Andrew: What’s a problem you cared about that the rest of us didn’t care about?

Patrick: I wanted to serialize [??] continuations in my program language, and very few other people want that, as it turns out.

Andrew: OK. You know what? Before you even answer the answer the next question, the previous question, which is, ‘How did you make sure that Stripe didn’t suffer the same fate?’ I’ve got to take a pause here and do something that maybe I should have done before, but I kind of assume everyone in my audience know Stripe. In fact, they’re the ones emailing me and telling me to have you on because they integrate Stripe into their businesses, but maybe we should just take a moment and tell people – what exactly is Stripe for someone who doesn’t know it?

Patrick: Sure. Stripe is the easiest way to start accepting payments on the Internet.

Andrew: How quickly can I accept payments?

Patrick: You can accept payments instantaneously. You can accept payments as quickly as you can integrate Stripe. There’s no sort of synchronous blockers on our end, so go to Stripe, create an account, fill out basic details, like your name and your phone number, stuff like that, integrate Stripe.js onto your webpage, or integrate onto your mobile app or whatever, and you can just start charging credit cards and there’s no sort of phoning us up, or submitting faxed paperwork, or any of that. It’s instant set-up. Andrew: Conceivably somebody who’s listening to us right now and is looking for something to do, maybe fidgeting at their keyboard, they can go to Stripe, sign up, get an account and while they’re listening to this interview…

Patrick: They can be live, taking Stripe on their website, and…

Andrew: Accepting payments.

Patrick: Yes. And, crucially, there have been ? Before like Google Checkout and PayPal and Amazon payments and all that stuff, and some of those were kind of easy to set up on some level, but they really compromised the user experience. Users were sort of foiled away in some off-site vortex or something and they twist around in that for a while and dumped out back onto a site at some point, kind of dazed and confused…

Andrew: You know what, that’s exactly what I did when I first started. I’m sorry to interrupt, but you’re absolutely right. I’ve got to jump in here. When I needed to quickly set up payment, I went and I used PayPal; quickly you can set up and start collecting payments. But what I didn’t notice was, until I logged in using somebody else’s account, they were basically up-selling my customers on their products at PayPal and causing confusion that would basically lead someone to go buy a PayPal product and maybe never buy mine.

Patrick: Yes and ?? on all those things really sucks, so the thing we wanted to do with Stripe was provide a first class user experience, i.e., one that you completely define; you integrate onto your site whatever makes sense for you and provides the same sort of instant set-up and super easy benefits that they have. And then, while we’re looking at it, the other problem with some of the PayPal and the Amazon payments and the Google checkouts or whatever is the perceptions are kind of for smaller operations are like by having a Google checkout on your site is kind of a signal that you’re not all that serious or big of a business because you rarely see those on large or serious businesses. And also, they don’t tend to scale very well. And by scale very well, it means that they are really targeted at smaller users. It’s really basic tangible stuff like how you export your data, or how you search for a transaction, or how you do reconciliation, or how you match up transfers with your back up and all those things that you care about, ??? but they don’t do very well. So what we wanted to do is add Stripe to the work and incredibly well and that initial moment where you want to integrate ?? into your Stripe and let’s say your business takes off and you’re doing 100K a year or maybe a million a year or in the wildly successful case, a hundred million a year. We wanted Stripe to scale really well at each of those points. Just like a ?? or something or ?? will work really well if it’s just you and it’s like?? experiments, but it will also work really well for Netflix. We sort of wanted Stripe to span the gap so ?? if you want to integrate payments for any size and make it incredibly easy to get started and then really effective on our businesses.

Andrew: All right, so going back to the question that I had earlier. You have this problem, you are unique, how do you make sure that you don’t solve the problem for people who are uniquely like you, which is nobody, what did you do to make sure that it applied to other people? Patrick: There’s only one good answer that I know of to that question, and that’s “get other people using it as quickly as you possibly can”, so John and I, John’s a co-founder, and brother actually, started – we had this idea and then, just after Christmas one year, we had to go and take a month’s holiday and went to Buenos Ares and we just had to start? like this. I think we got there on January 1 or 2nd. And we had our first live production user on Stripe on January 11th, but I’m not completely sure about that, but I think January 11th, basically like 10 days after we started ??, we had our first real user using Stripe running payments through it.

Andrew: How’d you get your first user?

Patrick: It was a friend of ours. It was actually ?? from?? the guys that built the Cappuccino web framework. And then we had another user, and a couple more after that. And so it just, right from the start we had these real ?? and ?? from Gmail tells this great story about how he prototyped Geno, where he built it on top of Google Groups, because that was already kind of in the middle of our product. He just Hooked the Google Groups UI to his own email, so he could browse and search his email, then he started giving access to other people. The other people are, like, hmm. This seems really great, but how about instead of showing me your email, show me my email. It was kind of like that with Stripe. When we first released it to Ross, it was an incredibly minimal product.

Andrew: Let’s talk about. . . How long did it take before you got the first user again? What was the number of days?

Patrick: I don’t know the precise dates, but let’s say it was about ten days.

Andrew: Roughly 10 days. What did you build in those ten days?

Patrick: What we built was an API that allowed you to charge credit cards, and a really… I believe we had a really minimal web interface that allowed you to view those charges, but we may not even have had that. It may literally have been just an API you can submit a credit card number and an amount, and we will charge it.

Andrew: So I just send you a credit card number, an amount, a name, etc., and you just say, “charged.”

Patrick: Yes.

Andrew: That’s it.

Patrick: That’s pretty much it. You definitely couldn’t refund transactions. We had to build that as you [??] it. The web interface for viewing transactions and searching, all that stuff, that all came later. Even the infrastructure around transferring money to bank accounts I think came later. I think that wasn’t there on day one.

Andrew: So basically on day one, the money was staying in your bank account. Ross couldn’t get the cash out for himself yet.

Patrick: We built it in a couple of days, but yeah. It was just what is the simplest possible thing we could build that would enable Ross to start using this. Of course were helped by the fact that he was a good friend, right? It wouldn’t have been acceptable to release this to, quote unquote, a paying user.

Andrew: So Ross did this because he’s a good friend?

Patrick: Yes.

Andrew: Why else would he do this? You have tons of great friends, and tons of people who would die to help you out, because they know you’re going places. They want to be helpful early on. Why Ross, specifically?

Patrick: It was a combination of things. We knew him, we knew that he needed to accept payments for this product they were building. We really respected his design sense, and technical sense. We thought the feedback he was likely to give us would be really good. I don’t know how many of your viewers know of Cappuccino, the web framework, but Cappuccino is just unbelievable. A few of our [??] this new breed of modern web frameworks, like built in JavaScript, and coffee script, and ember, backbone, all this stuff. Cappuccino is still, I think, the most advanced web framework, certainly client-side web framework, ever written. Basically done by these three guys in a pretty short span of time. They’re just incredible software engineers. We were building a product, where we’re trying to fix a deficiency on the web, on some level. This was all to their mindset. Part of the primitives that we should use to build big parts of the web. That confluence of things where he needed this product, we were friends, and his really good design sense. Ross makes for a pretty good first user.

Andrew: OK. Was he also looking at the world and saying, hey I don’t like whatever’s out there, and I don’t want to spend time building it either?

Patrick: Yes. Very much so.

Andrew: The same pain that you had, he had, too.

Patrick: Yes. Very much so.

Andrew: By the way, before I even ask you about his feedback, what about you? You don’t even feel awkward saying to this guy who you admire, whose feedback you want, you know what, you’re never going to get refunds, or you’re not going to get refunds in version one. You’re not going to get all this other stuff.

Patrick: We’re pretty upfront about that, but from his time I think you can look at it the other way. Online payment sucks, there’s all these dinosaurs that provide terrible service. We will build the product that you want, and you can start using it right now. As you give us feedback, we’ll immediately go and build this stuff that you’d like to see. I think actually from the other person’s perspective, that’s actually a compelling proposition. If somebody else who I actually thought could execute it, and was good, came to me and said they would solve this acute problem that I have, and as soon as I could give feedback, they’ll go and iterate on it. Basically my own boutique. . .

Andrew: Consulting company. Like they get a free consultant.

Patrick: Exactly, yes. Yes. I think that would be awesome. I think there are few things that are more motivating for a user, with software, than to see it improve really quickly, in a direction you approve of. Even if it’s not quite there yet.

Andrew: I know what you mean. That is inspiring.

Patrick: Yeah. I don’t think he was perturbed.

Andrew: What about before you launched. Did you talk to Paul Buchheit, the founder of Gmail? Did you talk to friends and say, hey, do you have this guy’s problem, too? What are you doing?

Patrick: Yes. We talked to Paul a bunch in the past. He’s actually also an investor, again in our previous company. I guess we just talked with a lot of people, about this problem space generally, and learned about what their pain points were, what they used, and what they wished existed. . .

Andrew: What’s one thing that you discovered in these conversations that you didn’t know when you were just thinking about it on your own?

Patrick: In the beginning, we were much more focused on the ease of setup, because that was the real issue that we kept hitting. As we had more of these conversations, we realized that even for the people who got set up, and were actually attempting [??], the experience still sucked for them. They got statements in the mail. They couldn’t possibly figure out. . . The most basic stuff, most of the people we talked to didn’t know how much they were paying. Right? As in, they were getting some amount of money into their bank account, every month. It was roughly of the order of what they were charging. What are they paying, one percent, two percent, three percent, five percent, ten percent? They just didn’t know, and often they’d tell us numbers. We’d be like, oh, interesting. At some point later we’d ask if we could see their statements, because we really wanted to analyze what they were being charged for and why and how, and we found that in most cases what they thought they were paying actually wasn’t what they were paying. [??] intentional obfuscation.

The ongoing stuff, and the, again, really prosaic issues, like there’s one guy who now uses Strike who is a pretty heavy user and previously used PayPal. His issues with PayPal were stuff like it’s really hard find a transaction and just refund it. It was a basic thing. I’d log into PayPal, and I’d have to page through all of these transactions, and every page of them was really slow. The whole process of refunding a transaction would take me 10 minutes. Whereas instead [??] type in a tip and hit search bar, press enter, then check refunds. The really basic things, all of them suck. Anyway, through all of these conversations, we started to think much more about how we can make Strike for people who were already up and running, and had real businesses, and not just try to figure out how we could turn all those people who are put off by even the notion of online payments and how to turn those into people [??] payments.

Andrew: So from what I’m understanding, there wasn’t a formal list of questions, or a formal process of asking people, right?

Patrick: Yes, that’s correct.

Andrew: So, what a lot of entrepreneurs who I interview, who talk to customers and figure out what to build based on those conversations, what they often warn me against is, you don’t want to ask a question with the expectation that people are going to come back to you with a specific kind of answer. You don’t want to say, ‘hey, I’m thinking of building this. Is this the best?’ and not give them room to say, ‘no, it’s no.’ How did you do it? If you were just casual, how did you make sure that you weren’t influencing the answers that they were giving you?

Patrick: That’s a good question. I’m not sure that we did a fantastic job of not influencing their answers. We may actually have influenced them, and I think that on some level with Strike we were just looking. Where, we stumbled upon this geezer, just this giant problem area, the payments infrastructure of the internet sucks. I don’t think that we necessarily did it in an especially good job of being systematic of how to discover the optimal product here. It was more just our instincts, where this should be built for developers and makers, and the end users, as opposed to some of the businesspeople. There should be instant setup, and basically treat it as a technology problem as opposed to a finance problem. I can’t claim that we had a great, very disciplined process for proving that that was the case. It was more just our own suspicion. Part of me can finally say, on some level I think we were just walking. The one thing that I think was helpful was that had real production usage, almost literally from day one.

Andrew: Real production usage. By the way then, this shows that even if you’re not perfect, as long as you talk to customers, the influence that they have on your product is going to be positive. The way they open your eyes to issues that you didn’t know, because you didn’t feel them, because you weren’t depending on those payments to come through Power Pay, whoever else. That’s helpful.

Patrick: For sure, for sure. There’s lots of schools of thought here, in that there’s the classic Henry Ford, [??] asking customers, you’d get a faster horse and better, [??]. Obviously I can’t go into their [??] balance [??]

Andrew: You know what, actually?

Patrick: Once you’ve decided where the future should be, [??] you’re just thinking rationally about how the internet should work. Like, this kind of service should exist. I think once you kind of meet that need that customers might not necessarily tell you about, then for implementing that concept you should talk to users as much as you possibly can. Certainly for Henry Ford, he might decide that OK, the motor car, that’s where it’s going to be, right? But once he’s done that, it would probably be greatly to his benefit to go and talk to customers for the car, like constantly, and figure out how these issues and bugs and [??]. So, I think the [??] a balancing act, but yeah, I think once you have the underneath and you’ve kind of crossed that chasm in your mind, then talk with users as much as possible is an almost immediate good thing.

Andrew: All right, so you showed it to a first customer within about ten days; what did the first customer say? What was the feedback that you got?

Patrick: I have to dig up the emails here, and transcripts. . .

Andrew: Does anything stand out?

Patrick: Not much of my recollection is that [??]. He just very [??]. It’s like ‘Oh, this is how it should be, great.’ It’s not [??], it’s just [??] is just kind of amazing. Not so much because it’s sort of this wholly implausible, like, technological leap. It’s more like, [??] is amazing. It’s amazing relative to everything else. It’s amazing like everything else was so bad and this finally exists. I think with a lot of users, computing [??] was like, ‘Yes, good job. This is, in fact, indeed, what I’ve always wanted.’

Andrew: So you’re showing it to customers, not just necessarily the first one, but you’re showing it to a handful of customers early on because you want their feedback, and you want their influence on your product.

Patrick: Yes.

Andrew: So, let’s step away then from the first customer, and talk about those early experiences. What did showing your product to real people teach you that you wouldn’t have known if you were just building it on your own with your brother?

Patrick: I guess I’ve already kind of talked about the kind of – the ongoing account [??]. . .

Andrew: OK.

Patrick: . . . [??] and; I mean, there are a lot of just kind of use cases that we haven’t talked a lot about.

Andrew: Can you give me an example? What’s one thing that hadn’t occurred to you?

Patrick: For example, recurring billing. Obviously, a ton of people do recurring billing. We’re now at our, sort of, kind of major, version of our recurring billing infrastructure. We sort of first talked to a bunch of people and sort of figured out a set of instructions without a [??]. You know, most use cases are pretty [??]. We then realized that we were actually missing a bunch, we wrote another version, and now we’re on third. I think there’s a good chance there’ll be a fourth. So, and that even can only really come from-

Andrew: But the whole idea of recurring billing wouldn’t have occurred to you as being so important?

Patrick: Actually, yes. In the beginning, I’m pretty sure that I thought that we shouldn’t even have recurring billing features; that that was pretty easy for developers to build themselves and they should just do that. And then, after we’re asked for it – like probably half of our users had [??] – we realized we should probably just build it ourselves. Actually, they’re kind of, moving up, the sort of, through the levels of abstraction that our first recurring [??] tool was just like, a clock, and you still had to do most of the billing budget yourself. Whereas now in Strike, we actually [??] have this concept of plans and coupons, and invoices, and [??], we really have brought together all the sort of [??] that people typically tend to want to [??] and build subscription structure around. And that was entirely driven by our users; and actually, the person who built that recurring billing infrastructure – previous to working with Stripe – she built the company that subscription payments on top of Stripe, and she was very well positioned to go back.

Andrew: So why couldn’t people do recurring billing on their own? It does kind of seem to make sense that if you can program your side of the interaction as a merchant, and send Stripe credit card number and user name and so on for a customer, couldn’t you just do that again a month later? And then a month after that? What were you finding that made them say, “Hey, you guys should do this for us?”

Patrick: This is, I think, why it’s so- This is kind of what we thought, right? It’s just, charge a new balance every month.

Andrew: Right. Right.

Patrick: How hard can it be?

Andrew: That’s not the hard part. The hard part is actually just getting up and running quickly. The hard part is doing refunds and finding customers in an easy way.

Patrick: Yes. This is all we thought. And then you realize that, actually, well, they don’t want to charge every month. Maybe they want to charge every quarter, or every year, or every… twice a month, or something like that. And then, maybe… Like, do they want to charge after the service has been provided? Or before it’s provided? And then what happens if one charge fails? You probably want to… like, an item to update their credit card and charge them for, like, whatever stuff is pending. It might mean a couple payments kind of stacked up.

Andrew: Yep.

Patrick: And then maybe you sort of, you charge them some amount every month, but maybe instead of, you know, additional things they can buy, sort of, like, it’s a $20 base plan then your 5 or 10 or whatever dollars [??]. But I’m thinking there’s also some kind of usage-based portion, and then maybe you have coupons, where, like, you know it’s a 10% discount your first year if you have, like, such-and-such a code from such-and-such a podcast when you sign up or something. And just, like, it keeps going. Like, what happens when you… Say you have that add-on and then you, you only have it for half the month and, like, I only want to charge you like a prorated amount. It’s just like, this kind of fractal complexity where, yes ostensibly [________] allow us to do that, but once you really kind of dig into the real world scenarios and what we want to do, it turns out there is usually quite a bit of subtlety there and it’s kind of sufficiently universal and, sort of, common that we can, actually, did a pretty good job of…

Andrew: I see. It’s that point. When it’s that complex it does become a whole job for them, a whole other business and they don’t want to be in that business.

Patrick: Their entire company is kind of built around this, like there’s, there’s Chargify, there’s [??]. These are companies that basically do, sort of, subscription billing infrastructure.

Andrew: I see. Because it is such a big pain. Anything else that stood out like that? We’re talking about..

Patrick: Well…

Andrew: As you…

Patrick: Yeah. I guess this might not be too surprising, but one thing we just didn’t think much about initially that we sort of discovered that people really cared about was having visibility into, into the transfers coming into their bank account from Stripe. This is actually kind of an interesting one, because, like, before Stripe you had, like, merchant accounts, gateways, and, so, all these other companies. And they were all kind of loosely integrated together. Like you said, you’d authorize, what was the company? The…

Andrew: Yeah.

Patrick: OK. Yeah, right.

Andrew: American Express.

Patrick: Yeah. And so you get statements from American Express and maybe, like, bank transfers from American Express, or like bank transfers from, like this…

Andrew: Yes.

Patrick: … merchant account [??] whatever, and then… And the gateway doesn’t really know, sort of, what’s going on on, like, the bank side. It only knows what’s going on on, like, the API side, the charging side. And just, like, they have separate [??] And Stripe, because we integrate everything, it’s actually really easy for us to sort of know what’s going on on every side. At [??] we can do things which, for example, [??] just cannot do. Like, for example, tell you how I got the money after this charge. How do I know I got the money from this charge? There’s this transfer that went into my bank account. What was that for? Like, why did… You know, why did this happen? And, it turns out that our users actually cared a lot about that. And actually, in particular accountants just loved it and that, like, all these companies, if they, sort of, start to become successful [??] at the end of the year to do their taxes or something. This accountant, or whoever is charged with doing the books is like, going through the records and trying to reconcile everything, and for most systems it’s just, like, random amounts of money appeared and they had to do, like, a best guess as to why this happens and, like, what that corresponds to, and just kind of reconciling the one side of the business with the other. And with Stripe that was just really easy, and so actually we built this kind of transfers display, just because it seemed easy. Like, we figured maybe someone would be just curious about us, and then it turned out that accountants, like, loved it. And so, we ended up building this infrastructure like, export the data, the APIs, introspectives and you could sort of check… or you could view sort of which, exactly which charges went into a particular transfer, because, like, there’s really kind of granular detail.

Andrew: And that goes into the bank statement?

Patrick: That’s not on the bank statement, basically for, like, a particular transaction on the bank statement you can tell just, like, exactly why that…

Andrew: I see. By going back to

Patrick: Yeah.

Andrew: Yes, because you’re right. Otherwise, you look at your bank statement, or your accountant does and he sees that big, lots of little payments, lots of little expenses and revenues. And then, boom, this big number that you don’t know what it is.

Patrick: Yes, yes.

Andrew: And they have to go and figure out: can I go to the shopping cart for it or what?

Patrick: And including material, right, is it like, $457.13 to secure a new bank account. In which year did those sales occur? And even those basic questions like that are typically ones that you cannot answer with most merchant account infrastructure.

Andrew: So here’s the thing; I started out this interview thinking, how does a guy who scratches his own itch, figure out how to build a product that satisfies other people? Well, your itch stopped at, “I needed to get a merchant account and I just didn’t want to deal with all the headaches involved in that.” This would not have been a problem that you had yourself. So where did you even get the idea to create a page that accountants might get excited about?

Patrick: So this is interesting. This is what I mean about the idea starting to lead us. And this is what I mean by saying I’ve discovered a user, or an updraft or thermal. You’re just kind of pulled along by it. So I had this initial idea that it should be way easier to start [??] online, and all that infrastructure should look very different. And I started to dig into it, and we uncovered all of these other problems. And actually, Stripe itself underwent a very big shift in our own heads; in the beginning we really thought about it as this kind of side project. We’re building Slicehost, but for payments, or something like that; this is for folks just like us. And then, this was maybe 8 months later or so, over a subsequent summer, we realized that this is actually an enormous problem on the [internet]. It’s not that we’re building Slicehost for payments; the fundamental economic [??] of the internet are probably broken. It is incredibly difficult in every single case to transfer money from A to B. If I’m building a [??] service in the U. S., [??] credit cards, and getting that piece up and running.

The majority of the Internet users cannot transact with me, because most people don’t even have credit cards. If you’re in Indonesia, or Germany, or Guatemala, or wherever, chances are you probably can’t purchase from my website. I’m actually not selling online, or if I am, I’m selling to a small subset of internet users. And if I’m in fact in one of those countries, like Indonesia, or Guatemala, or Germany or wherever, it’s even harder for you to start accepting payments there than in the US, and you have all of these disenfranchised users. This whole raft of problems, that I think, because things have been so bad on the internet up to now, we’ve almost lost sight of just how bad it is. It’s kind of remarkable that we’re in 2012, and you cannot accept payments from a majority of internet users; that service is not available to you. And so as these realizations percolate in our minds, we started to take [??] seriously, and we started to really, systematically figure out, here or there, what pain points were.

Andrew: How do you systematically do it? What’s your process?

Patrick: Systematically, just talk to lots of users, get more of them, interact with them constantly.

Andrew: How do you do it? And by the way, I’m not looking for the most professional setup that everyone else can follow and gets taught in Harvard business classes. But even if it’s just a casual way, how do you do it in a consistent way?

Patrick: I think it’s all about maximizing the contact between the people building the product and choosing where it should be, and the people actually using it. For the first year, we were the only people doing support; you had a problem with Stripe, you emailed us and we fixed the problem. That’s all there was; and so that was a great incentive for us to fix the actual issues that people were running into. And to this day, both John and I do support; we deal with the Russians. And that’s not just general; most people at the company do support. Legal and building the product hear directly from users constantly. And I think, that’s the long and short of it. And we’d often have users come over to our office, or we’d go visit them, or we’d reach out to them.

Andrew: You visit people’s offices?

Patrick: Oh yeah, sure. We’ve visited tons of our users.

Andrew: What do you see when you look at someone’s office?

Patrick: With regard to Stripe or in general?

Andrew: With regard to Stripe. Do you remember walking into someone’s office, and looking at their computer, and seeing something that you wouldn’t have thought of, or learning something as a result of that that you couldn’t have done remotely?

Patrick: I’m trying to think [??] specific example.

Andrew: I am kind of putting you on the spot constantly asking “do you have a specific here? Do you have a specific there?”

Patrick: Well I know, it’s a good way to do it. Hm… Yes, so…

Andrew: Perfect.

Patrick: There was a company selling robots on top of Stripe and they were one of our favorite users, I mean, they’re selling robots, it was pretty awesome. I remember visiting their office and they didn’t sell a ton of robots and they were lots that were pretty expensive, and so… they actually haven’t automated the procedure for charging for a robot, and so what happened is when they got a sale for a robot when they’d type it in the program or whatever, they would review the order and I don’t know, I guess order some robots to build more robots or something, and then the guy would literally start typing a curl command against the API to charge the credit card. Well, that’s something that was kind of cool that the API was simple enough that he could do that every time, but on another level, it kind of suggested that we should possibly have a method within Strike for just performing an ad-hoc charge. And so now if you log into your Strike account you’re looking through payments you can see the button for new payment and you can type in a credit card number and the amounts and whatever, and charge the card and I remember, visiting his office that was the first time that I realized that I’ll pay back my fees to these guys.

Andrew: What a great story! So, when you walk in you’re just looking and saying “hey, how do you interact with Stripe, can I watch what you do, can I–”

Patrick: Oh yeah, I find that stuff super-interesting.

Andrew: That’s it, you just say “hey can I just see how you use our system?”

Patrick: Yes.

Andrew: Log in, do you have them do specific tasks, or do you just say “do whatever you do and I’ll watch?”

Patrick: So… yes, by and large, yes. And we’ve done lots of this that I would like, but yes, and actually, one more event, at our office, since around two months ago or so we’re using Stripe office hours, where you could come by the office and if you had a problem with Stripe or questions, or just wanted to integrate Stripe or thought you may want to integrate Stripe or something, you could come by and we’d just hang out and help out and watch things like interact with [??] that was really useful.

Andrew: So Patrick, that brings up another question, then: when you invite people into your office or you go to their office and you get a suggestion as a result of that, it’s really hard not to do it. On the other hand, if you do everything people suggest, Stripe is not going to be such a simple way for people to collect payments because it’ll be overloaded with features; you’re smiling, so how do you do it? How do you decide what to do and what not to?

Patrick: It’s hard. Again, I don’t have a great, profound answer. It’s [??] to ship things. We were into features, like Stripe has had features in the past that no longer exist, because… insufficiently large number of users cared about it.

Andrew: OK.

Patrick: We sort of iterate on features a lot, so a feature on Stripe has is–you’ve probably seen it–Stripe.js; you can sort of drop a single JavaScript into your page, and basically what that does is help you submit a credit card number directly to Stripe, we tokenize it and sort of remove the extra parts, and give you back just the token, that’s then not sensitive and not subject to PCI and you can pass that around in your web server or whatever and you no longer need to worry “oh we need credit card numbers in my [??].”

Andrew: ‘Kay.

Patrick: And that feature, Stripe.js, is really cool and help companies like outside of the [??] of PCI. That is on only its fourth or fifth major iteration, and it’s gone through a bunch of different implementations and what exactly it did and how exactly it worked. In ways it has been challenging for us, we have to have to support all the old users and make sure we don’t break anything for their charges, and constantly trying to figure out where the natural boundaries are in terms of functionality.

Andrew: Emmett Shear from TwitchTV said that what he does is he has people rank the frustrations that they have. So he might say, give it to me in 1 to 10 and that way he knows, the item I have identified as number one– really important to them–that’s what we should work on first. Do you do anything like that, maybe even internally?

Patrick: We do some of that internally; like we’ll often go through a bunch of our user communication, our support email and chat and we think [??]. It’s something I always want when I deal with companies, that you can just jump into a chat room immediately and start chatting with developers because that’s usually by far the…

Andrew: Someone sends you an email and you respond but you always say, “Hey, let’s get into this chat room here and start talking.”

Patrick: You don’t even need to email, you can go to and just start chatting. That ends up being [??], because especially one question often needs [??] and needs another thing. We often [??] with the chat transcripts and the emails and [??] people with [??] points and shoes [??] which is kind of similar to [??]. I guess we do that more latently, as in we don’t ask users to write them, we just sort of write them based on set of overall users it brought up. But it’s also, I guess, a lot of taste, as in it’s, “where do we think stripe should go,” or can we [??] it. Based on all the feedback we’ve gotten, maybe nobody has asked us for this specifically but if we actually did this, this would really solve a whole host of [??].

Andrew: I see.

Patrick: I guess we tend to be pretty… it’s almost a [??], like you always might be kind of sanding off the rough corners in the product, but I think you also [??] feedback drive you too much. I think we err pretty far on the side of trying to figuring out what the people actually want, because the people using stripe are people selling things, they’re not experts in payments and they shouldn’t have to be, that’s the whole point, they don’t need to learn everything about this infrastructure, this ecosystem. When they come to us with a problem, they might know what’s possible; for example, maybe they complain the PCI forms are confusing and talk to a future [??], “you guys should [??] some automated tool for filling out PCI forms.” An actual [??] would be way better, is if we just made PCI go away so that’s not even a thing you have to think about, so there’s a fair amount of that…

Andrew: What is a PCI form?

Patrick: I’m glad that you don’t know, or it’s nice that you don’t have to. So PCI is sort of the industry standards around the protection of credit card information and there are various self-assessment questionnaires that businesses are required to fill out depending on what they’re doing, and stripe.js enabled to get outside of the scope of PCI altogether [??].

Andrew: I see. So they would have asked you to make it simpler or help them automatically fill it out, and you say, ‘no, maybe what we should do is just get rid of it if it’s that frustrating.’

Patrick: Yes, exactly.

Andrew: Were you able to get rid of it for them pretty early on?

Patrick: You know, no, is the short answer. PCI is really complicated and it’s sort of…

Andrew: Oh, because they’re also storing numbers themselves right? If they’re…

Patrick: [??] What they do is they store the card on stripe and then we give them a sort of reference to that card, so they’re not actually ever storing a number themselves; a number never touches their servers. The PCI is pretty complicated and subtle and it’s really kind of an ongoing dialogue for PCI… you talk a lot to the folks, ‘making the standards, to the card companies, to the banks, to the auditors (who do the PCI audits – we are sort of PCI certified ourselves), so it’s just like an ongoing conversation, but that was something that came much later in the company.

Andrew: All right, let me say this, and then I’ve got to come back and ask you two follow-up questions based on, well actually two important questions. First, I’ll say this: if you’re a Mixergy premium member, well, actually, do you know this? That what KISSmetrics does and I guess a lot of people who follow Eric Ries’s Lean Startup philosophy, they actually go through a specific process of talking to customers, they have specific questions they go through and a specific way of handling it. Well we got someone who works for KISSmetrics, Jason Evanish, to come to Mixergy and teach the process that they use at KISSmetrics complete with the questions, how they get people to answer them, and so on. We’re editing (apparently the editor is working on it today and if you’re a Mixergy premium member, by the time you see this it should be on where you’ll see a formal process to do this and if you’re not, signup).

Patrick: [??] stripe?

Andrew: So I’d love to use stripe, because look at this by the way, this is bullshit. I shouldn’t be cursing in my own interviews but…

Patrick: No, but it is.

Andrew: This is bullshit that I get this, it’s bullshit that I get all of these different things that you’re talking about. I don’t want the paper. I don’t want to deal with it. I just don’t know how to integrate it with my membership plug-in. If I could, I would pay someone to integrate it with my membership plug-in properly, to integrate Stripe. I would much rather have Stripe than the fucking bullshit that I deal with now. I never talk badly and I’m not going to mention the Power Pays. I don’t think it’s a problem to talk badly about the process that involves Power Pay, but I wouldn’t talk badly about the system that I use.

Andrew: It’s not even Power Pay’s fault.

Patrick: That’s what I’m saying. There are people who are at fault in my system.

Andrew: They’re just, like, a legacy arcade infrastructure. It’s hard to do much better when you’re stuck at that level.

Patrick: I did need something really quick and dirty to get up and running, and the process works. It’s just not the ideal system. I see people who use Stripe, and I would pay someone to integrate Stripe properly. My plug-in is Wish List. That’s what we use to manage members. If I could get somebody to plug in a better system with them, I’d love it. I mean, Stripe, and a better system that does it. And I would pay them. It doesn’t have to be “Hey, I want to do a favor for Mixergy so I can raise my profile. I’m going to pay you.” Now that I’ve said that, I’m going to ask you two things based on my research on you that have nothing to do with what we’ve talked about so far. Well, maybe one does. First is, you sold your previous company, it’s public, right? For 5 million dollars to Live Current Media.

Andrew: That’s right.

Patrick: I heard that some people thought you sold too soon. What do you say about that?

Andrew: They might be right. It’s hard to know. For us, Optimatic, we’re very interested in this whole area of providing liquidity for used items. I think most of the exciting start-ups on the [??] are introducing or facilitating a new kind of coordination that once seemed impossible. If you look at Kick Starter and XV are some perfect recent examples of that, where they’re fundamentally about coordination. There are all these people in the world doing all of these disparate things, and these services kind of bring them together. I think in the case of used goods, it’s really inefficient that there’s so much stuff in the world. There’s totally somebody who could make use of this, for whom it would be of great value. Like the old iPhone. There’s probably tens, hundreds, millions of people who would love to have my own iPhone, who would even give me something for it, but how do I possibly find out who that is?

Patrick: Because it’s such a hassle to list it on eBay and go back and forth with people who are going to be unhappy, have a question, and so on, right.

Andrew: So we’re really interested in that whole sort of public space, generally, and Optimatic was sort of our first step in working with it. We we’re taken to all of these people who were already selling on eBay, and making the process of selling more effective. Then we tried to think of ways we could make money easier, or build a better marketplace, or whatever else. As it happens we just had a pretty interesting time for that whole ecosystem as a whole, where eBay was starting to decline a little bit, Google was really starting to think about it, Facebook had just launched Facebook Marketplace. Marketplaces on eBay [??]. I guess from our standpoint, it was a combination that we were really excited about what Live Current was doing, and in the conversations we had, it was pretty clear that they wanted to something very similar to what we had in mind. Frankly, we were pretty young, we didn’t have a ton of experience, Optimatic was pretty new, and it was a real [??] to the borrowing of money. The notion of having just that small bit of liquidity under our belts was actually pretty compelling. For all of us, subsequently, it’s enabled us to be freer in what we could explore and do, and what we can think about doing. Even for these side projects, for an Encyclopedia, for even Stripe, the fact that we can just go and take that month and [??] in Buenos Aires. That was, in part, facilitated by Barnett’s sale, where we just were freer.

Patrick: You didn’t have to worry about money, so you could think about what you wanted. It’s not that we were set for life or anything, but we were somewhat freer [??] because I’m telling that’s a little bit incremental for him, that is really radical and so I think that OK I have tremendous respect obviously for sort of the entrepreneurs that don’t sell and don’t even spike obviously we haven’t so far [??] our intend not to but I think that’s.

Andrew: He gave you the freedom, that’s the answer.

Patrick: And I think I guess what I’m saying it’s pretty sort of crushes on choice and kind of situation and circumstances and company dependent and all of those things.

Andrew: What about, sorry, I spent a year on Buenos Aires and I felt that working on Mixergy there made my interviews better, made my comfort in front of the camera better. It was just like what Bob [??].

Patrick: I had no idea that you spent time there.

Andrew: Yeah 2010, pretty much.

Patrick: It’s just a fantastic city.

Andrew: It’s fantastic, for me it was complete focus on my work, it was like my Shaolin as Bob called where I just got to focus and train every day and then of course people have dinner at 10 o’clock at night I could still go out at night and have dinner and friends and have conversations and we will back that day.

Patrick: [??] because I have been seeing like the exactly the same stuffs, it’s like the city on the hacker schedule it starts late, you can have dinner like mid-night no problem and like you can go to bed 3 AM or something like that, there is Wi-Fi everywhere, because you don’t speak any different language and I personally don’t speak Spanish so like over here all these conversations around me.

Andrew: You get sucked into meaningless conversations about things.

Patrick: Yeah, it’s really cheap which I guess is sort of nice. You just want to spend a ton of time there focusing on one thing, the food is great, the weather is great, there is Wi-Fi in all the cafes, I guess I’m preaching to be converted here.

Andrew: But I think it’s important to say that, it was huge for me, it was huge for you, it’s…

Patrick: I have incredibly fine memories of Buenos Aires. Haven’t been back since but I have been like trying to find excuse ever since I definitely working for [??].

Andrew: All right final question is what advice do you have, I’m looking by the way at Paul Graham’s blog post about how fantastic was it that he singled you out and your company out, that’s like a model of the kind of companies he admires and he goes for over a decade every hacker who would ever had the process payments online, knew how painful the experience was he says. Thousands of people must have known about this problem and yet when they started start-ups they decided to build recipe sites or aggregators for local events, why work on problems so few people care much about or and no one will pay for et cetera. So for someone who says I want to notice this problem that others are ignoring, do you have a piece of advice that will help them do that?

Patrick: Yes and I’m not sure how you notice them but I guess obviously I have about someplace think about them but I think that like in some, like almost definitely the harder problems are kind of like mechanically harder and there is more that you have to do and just like think about and solvent, made solutions are less [??] but they are actually easier and really significant right and that’s, they are easier to motivate yourself to work on and motivate others to work on and like to sort of get out on the field it’s better, like really solve something and so I mean I need to sort of take a specific vertical it’s almost like any area there are actions of good companies, they are doing like really good work but let’s just take recipe absence that’s the exact word what he uses but nothing against recipe app maybe some recipe app like you want to assemble a bunch of amazing people to like really do mails in public and maybe if it’s a recipe app like it’s harder to do that, like I’m like you know Andrew you this whole interview stuff, this is all awesome [??] right and just I mean much harder to motivate other just yourself, I mean wake up in the morning you’re like shit I’m really going to solve recipes today, right?

Whereas if you’re take the other extreme, where you’re on [??] like you wake up in the morning like right, no, of the next step including math and marks [SP] and I think that in that kind of I don’t know philosophical that’s essential way or something, the hard problems are actually kind of easier but that’s just sort of a huge way of just, makes life so much easier for you in so many ways that young people like really get excited about the problems you’re solving. So for us factored life we’re trying to fix this economic infrastructure through the internet as a whole like that, that gets them motivated and excited and so yeah that’s the one piece [??].

Andrew: That’s a great place to leave it. Thank you so much for doing this and of course the site is

Patrick: Thank you [???].

Andrew: You bet.

Who should we feature on Mixergy? Let us know who you think would make a great interviewee.