What if Stripe is the next Google?
Working out a thought exercise by Paul Graham. #reflections
Read time: 2 minutes Published:
A while ago, Paul Graham made a big call:
"I'm going to risk calling it. The feeling of deja vu is too strong. Stripe is the next Google."
This would be a lifetime peak valuation for most exited startups (Uber changed transportation and Airbnb changed hotels, and both are currently worth $80b), so what Paul was really doing here is making an active prediction that the ceiling for Stripe is much higher. Google is valued at $1500 billion at time of writing — and Paul thinks they will "probably" be bigger ("There is more money in money than search").
It isn't a given by any means (though Paul has had a decent streak in calls lately). Stripe does face competition in established payment processors, as well as Adyen, though momentum appears weak. You could handicap its odds of being "the next Google" at, say, a fairly conservative 50%.
That means the expected return of betting on Stripe for the next decade is ~10x (it's more like 8x, but who's counting). You don't get this fat a pitch in this league.
So given that you have a definite optimist approach to the future, what do you do with this information?
I think about this question a lot. The simple first order answer, of course, is to join Stripe. Most engineers will be millionaires 10x-ing on option grants.
But that may not even be the best use of time for you. Stripe aims to be a platform of platforms. The Mullenweg-Gates Line notes that effective platforms capture only about 5% of the total value they create. There's approximately $14 trillion ((EV of 800b - Current Valuation 100b)/5%) in value of platform to be built atop Stripe.
Stripe currently lists 10 products on its home page, from the classic Payments and Billing to the newer Atlas and Climate. The vast majority of developers have only a narrow view of Stripe's world. I would explore ways to explore and exploit the capabilities opened up by Stripe's newer products — in particular the recently launched Capital and Treasury services.
You could also become a domain expert in optimizing for Stripe. Platforms tend to reward this behavior greatly. There is no Stripe podcast. No Stripe newsletter. No "Stripe Enterprise Optimization" cottage industry. The room for the "Danny Sullivan of Stripe" exists.
There's also the challenger status - figure out what Stripe is philosophically prevented from doing, and counter-position in that exact thing. DuckDuckGo is growing >50% a year being the credible anti-Google. The obvious angle here is that Stripe is very traditional-economy oriented (with attendant frustrations): what is the decentralized, permissionless, equivalent of Stripe? The reason I don't love this as much is it feels like too much of a "bank shot", but surely there's a few billion of value in here for the patient and ideologically committed.
Disclosures: These are just off the cuff thoughts; I may return to flesh these out over a period of years.
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