The £3.2bn tech start-up you've never heard of

We chat to James Allgrove, UK head of payment start-up Stripe

Three reasons you should be watching them

1. Stripe hopes to increase the GDP of the internet by bringing new types of business models and transactions online

2. Businesses large and small are using Stripe to reach a global audience and transform the way we shop on mobile

3. Stripe’s partnerships with Facebook, Twitter and Pinterest will enable businesses to sell on social media

 

THE NEED-TO-KNOW

What problem are you trying to solve?

The biggest challenge we care about is economic connectivity across the internet. While the web is 25 years old and superficially global, commerce online is still very much localised. In fact most people in the world are essentially prevented from participating in the internet economy altogether: either they don’t have a credit card or their bank doesn’t allow them to accept online payments. Our aim is to build the software tools that will accelerate global economic development and empower anyone anywhere to start a business.

 

How big is the market – and how much of it do you think you can own?

It wouldn’t be right to think of Stripe as looking to take market share from other companies. Less than 5% of consumer spending happens online, so as we help bring more commerce on to the internet, we think of it as growing the pie, not taking a slice for ourselves — a rising tide lifts all boats.

 

How do you make money?

Stripe charges 2.4% + 20p per successful charge for any UK business. We also offer volume discounts for any user processing over £20,000 per month. We process payments for companies of all sizes, from London-based startups such as Deliveroo and Seedrs through to established, global organisations like UNICEF and the Guardian.

 

Who’s on your team that makes you think you can do this?

Everyone at Stripe is singularly focused on building the best technological infrastructure for the future of commerce. We look for people who are able to see through the challenges that others assumed to be blockers. By thinking things through from first principles, we’ve been able to approach the challenge of solving commerce on the internet in a new way.

Stripes have joined us from established companies like Goldman Sachs, Facebook, Bain & Company, Credit Suisse, Apple and Google. Since Stripe aims to solve a global problem, we’ve hired a diverse group of people. Headquartered in San Francisco, about 40% of our global workforce grew up outside of the U.S. About 20% are former founders, so we take a great deal of ownership in everything we do.

 

Who’s bankrolling you?

Stripe has raised about $200m to date from investors like Sequoia Capital, Andreessen Horowitz, Khosla Ventures, and PayPal co-founders Peter Thiel, Max Levchin and Elon Musk.

 

What advice would you give other entrepreneurs trying to secure that kind of finance?

Try to see beyond assumptions about how big a market currently is. Instead, be ambitious about creating technology to open up new markets which don’t exist today. If you think about the most successful technology companies today (Facebook, Airbnb, Google, etc.) they all created the market they play in, rather than entering an existing market.

 

What do you believe the key to growing this business is?

Whether a budding company in a new market or an established brand looking to compete in the age of mobile, businesses want to work with Stripe because we’re constantly innovating and building new tools that allow them to compete in a rapidly changing world.

Partnerships with Apple Pay, Android Pay, Facebook, Twitter, and Pinterest, indicate that Stripe is at the forefront of emerging trends in internet and mobile commerce. These companies choose to work with us because they know that whatever shifts happen in the future, odds are that we’ll be working on them.

 

What metrics do you look at every day?

We try not to get too distracted by day-to-day metrics so we can stay focussed on the bigger challenge of breaking down barriers to transacting with one another online. That said, we keep a close eye on things like how quickly businesses are integrating Stripe and scaling internationally on our platform. Making sure our support is top-notch is also a high priority for us in the day-to-day running of the business.

 

What’s been the most unexpectedly valuable lesson you’ve learnt so far?

In expanding internationally, we wanted to be sure to keep a consistent culture globally. Early on in building our UK team, we found that making the right hiring decisions is so important to make sure culture is seeded properly. For me, creating a consistent experience for customers as well as people on the team is critical to getting international expansion right.

We’ve also learned some really valuable product lessons. Generally speaking, businesses in the UK have global or regional ambitions much faster than those in the U.S. Building a product that is a natural springboard for them to grow into other markets has been really important for us.

 

What’s been your biggest mistake so far?

My most interesting mistake has been assuming that when hiring for sales roles, you want people who have a lot of sales experience and can hit whatever quota you set them. Instead, we’ve found that the best sales people at Stripe are those who are passionate about the product, technology and helping our users do well.

 

What do you think is on the horizon for your industry in the year ahead?

Companies in the sharing economy rank among the fastest-growing businesses in the world right now. Payments used to be a blocker for this model, but now it’s an enabler. If you look at the fastest growing marketplaces at the moment, they’ve all brought the entire transaction into their scope, as controlling the whole experience for both buyers and sellers is key.

Stripe is building a new kind of commerce platform to meet the needs and workflows of sharing economy businesses. It means that they no longer need for armies of payments professionals to expand internationally; businesses powered by Stripe, such as Kickstarter, Deliveroo and Handy, are able to scale now more than ever and consume once-offline worlds.

 

Which London startup/s are you watching, and why?

One of the most interesting parts of my job is that I get a preview of what’s going to be big in the UK startup ecosystem. We’ve had strong traction in London with all sorts of startups, especially the savviest most forward-thinking businesses with complex payments requirements. This includes online marketplaces likes Lyst and Handy, mobile-first businesses like Songkick and Bloom & Wild, and subscription models like Honest Brew and Pact Coffee.

 

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