How Stripe Is Building Products, Partnerships and a New App Ecosystem

John Collision, Unplugged

On October 25, I had front-row seats to a Code Commerce Series event in Las Vegas, featuring a conversation with Recode’s Jason Del Ray and Stripe co-founder and president, John Collison.

It’s been 5 years since Stripe launched to the world with the intention of eliminating the friction of starting an online business and increasing the GDP of the Internet. Here are a few highlights of Stripe’s accomplishments:

• Stripe Connect, enabling painless payment acceptance across omnichannels.
• Stripe Atlas, a program enabling international startups to access the same resources as those in the Silicon Valley.
• Stripe Relay, an app enabling consumers to buy directly from their mobile devices.

In a short period of time, Stripe has changed merchant and consumer expectations for all facets of conducting business and making purchases online. At Code Commerce, Collison gave us a preview of what to expect emerging on the horizon for Stripe — and therefore all of payments and online commerce.

New Stripe Products: Embracing a contrarian approach

The world works like this… We believe it should work like this…

This contrarian perspective has been the whole thesis behind Stripe from the very start. Initially, they noticed that the digital payment system was broken — PayPal being the only option for quick online checkout. Just because there was only one option, that doesn’t make it the be all and end all.

To this day, before Stripe builds a new product, they like to create a thesis around a problem and put the current model under the microscope. Just because the world works like this, that doesn’t mean it should.

Radar: Security Reconceived

… And that was how Stripe’s latest fraud prevention product, Radar, was conceived.

Collison talked about how machine learning — although a key part in fraud detection — may, in fact, be causing a lot of frustration for legit consumers, hampering their experience.

The phrase he used was “random acts of machine learning.” Random acts of machine learning can create false negatives, flagging users erroneously.

Many gateways are using this type of automated blocking , which in turn, will just automatically decline a card if it triggers certain rules. This, of course, is frustrating from the merchant’s perspective. Stripe believes there should be a human intervention that makes the final decision.

Stripe’s approach with Radar is to give control to the merchants. Doing so allows them to create rules around the things they are watching for, be presented with the evidence, and ultimately decide whether a transaction is fraudulent or not, thus reducing chargebacks and false negatives.

The Price of Stripe Radar: An integrated value proposition

For larger merchants, it might be an add-on pricing feature, but, in general, it will be a part of the general Stripe layer. Stripe is committed to building a stack solution for payments and they see Radar as part of the stack and hence bundled into their overall value proposition.

Where Stripe Finds Inspiration

Stripe wants to help businesses at the top of the Alexa ranking — the sites that are the most frequented — succeed. Monitoring Alexa has allowed Stripe to be at the forefront of emerging eCommerce trends.

So, where are trends heading?

Well, if he could pick an eCommerce business to emulate, Collison would choose Wish.com.

Wish is incredibly data driven from end to end. Their highly customized approach to the client experience, the products they offer, and the promotion of their products is all based on data and algorithms. They are effectively setting the pace for eCommerce businesses.

Moreover, Wish is mobile first and has a highly engaged and mobile oriented audience — ranked right behind Amazon in its category.

Stripe wants to be participating in highly engaged communities, where consumers are obsessing over product updates. Wish, at the moment, is that business and community.

Going Public?

It’s hard to deny Stripe’s success, having processed $10-billion in volume. The next step could be an IPO, right? Not in Collison’s mind. He likes operating as a private company, focusing on building and producing good products.

Stripe is not micro-scrutinized the way public companies are.

As a public company, people obsess over fluctuations — and stocks are volatile. Operating privately, Stripe doesn’t have to deal with the pressure of watching their stock going up 10% one day and going down 15% the day after.

Stripe doesn’t let thoughts of an IPO cloud their focus, and doesn’t have the ultimate ambition of being that “Machiavellian unicorn.”

Partnering — Not Competing — with Disruptors

Collison touted Apple Pay and Android Pay as the most significant disruptions to the payments ecosystem because Apple and Android devices are now ubiquitous online and offline.

The two brands offer their own seamlessness features while having very different checkouts overall. Nevertheless, there is a trusted familiarity with the brands and that is a reason why Stripe has partnered with Apple and Android to help power the unique checkout experiences.

While Collison could not offer any sensitive data points, he did note that Indigogo experienced a 2x lift in conversions and Instacart achieved a 50% faster checkout using Apple Pay.

When asked if Stripe will be building a wallet like PayPal, Collison affirms that wallet is not their ambition. He sees Apple more as the wallet and Stripe as the payment infrastructure powering it. So they have no intent to compete with Apple to be that next generation digital wallet.

Stripe does not want to be involved in channel conflict, they don’t want to compete with partners. If they build a wallet, they’ll be in direct competition with their partners Apple Pay and Android Pay.

Any Critiques on The History of Stripe

There is much to anticipate in the future of Stripe, but Collison also took a moment to reflect on his company’s history at Code Commerce.

If you recall, Stripe wasn’t the original name, it was called /dev/payments at the start. They deliberately made it nerdy so that it would appeal to developers. Stripe wanted it to be technical so that the technical user would immediately understand the value of their development-centric APIs

In hindsight, they might have initially made their positioning too technical, leading as a developer-focused product and in doing so failing to represent the voice of the business operator, the SMB end users.

Collison offered some parting wisdom: “Nerdiness can be both a blessing and a curse.”

Originally published at https://medium.com on November 17, 2016.