Stripe

Compete on terms-and-conditions incumbents can't touch

Shaan's 'Stripe for Vice' framework: rather than copying what a monopoly isn't doing yet, attack the customers their terms of service explicitly ban. Stripe can't serve cannabis or porn without threatening its banking relationships, just as Instagram won't build OnlyFans without risking its advertisers, so that ground is safe to take.

“And so terms and conditions is actually an amazing way to compete against big successful incumbents. Go do what they explicitly say they won't do and they can't do.”

Steal thisRead an incumbent's terms of service, list every customer type they ban, and build the product that serves exactly those banned customers.

Compete on terms-and-conditions incumbents can't touch

Shaan's 'Stripe for Vice' framework: rather than copying what a monopoly isn't doing yet, attack the customers their terms of service explicitly ban. Stripe can't serve cannabis or porn without threatening its banking relationships, just as Instagram won't build OnlyFans without risking its advertisers, so that ground is safe to take.

“And so terms and conditions is actually an amazing way to compete against big successful incumbents. Go do what they explicitly say they won't do and they can't do.”

Steal thisRead an incumbent's terms of service, list every customer type they ban, and build the product that serves exactly those banned customers.

Zapier for sounds: celebrations as a service

Shaan pitches a SaaS that connects any service (Stripe, your email list, your bank) to a sound — play a custom chime on your phone or office Sonos when a good event fires, with rules so it stays meaningful as volume grows. He frames the upside as 'celebrations as a service.'

“anytime the good— you just basically create these formulas. You say if this good thing happens, play this sound, play it on my phone as essentially like a ringtone, or play it on my Sonos speakers or whatever in my office. And so the cool thing that you could do with this is I think that's a pretty simple problem, and I think people will like that.”

Steal thisBuild a Zapier-style tool that triggers configurable celebration sounds on phones and office speakers when key business events fire — with threshold rules so it never gets annoying.

Build 'Stripe for Vice' to process sex, cannabis and porn payments

Stripe bans sexual products, cannabis, and porn, which blocks Shopify checkout for whole categories. Shaan pitches a payments processor purpose-built for vice industries, noting the three verticals alone move hundreds of billions of dollars.

“And so there's an opportunity, I think, for, you know, building Stripe for vice products, because cannabis can't use Stripe, and neither can any sex products. Porn can't use Stripe. And so if, you know, just those three industries alone, That's like multiple hundreds of billions of dollars of turnover. And so who's building Stripe for Vice?”

Steal thisBuild a payments processor for industries Stripe bans: sex, cannabis, porn.

Media companies buying media: the new acquisition playbook

Shaan frames a pattern: non-media companies acquiring media/community brands to own an audience. Examples include Robinhood buying Snacks, Stripe buying IndieHackers, HubSpot buying The Hustle, and Spotify buying The Ringer.

“Robinhood bought, uh, Snacks, which was like a kind of a media company. So Robinhood, this exchange, not a media company, buys a media company. Stripe bought IndieHackers, right? Stripe, not a media company, bought IndieHackers, this community of kind of makers. HubSpot buying The Hustle. And there's a few other ones that are actually somewhat prominent. Spotify buying, let's say, The Ringer or things like that.”

Steal thisIf you run a software company, consider buying an audience instead of building one from scratch.

Stripe for Vice: build what the incumbent's terms forbid

Suli pitches building a payments processor for the businesses Stripe's terms of service forbid (marijuana, MLM, OnlyFans). The beauty: Stripe will never compete because it's written into their TOS, so you're safe from the incumbent.

“And what I love about Stripe for Vice is Stripe, which is an incredibly great business, will never compete with you because it's in their terms of service that like, we will never do these things.”

Steal thisFind an incumbent's TOS exclusions and build the business they've promised never to enter.

Sell pickaxes to gold miners: own Coinbase, not Bitcoin

Andrew's investing principle: instead of betting on a single asset, own the infrastructure that profits from the whole trend — Coinbase for crypto, Stripe for internet commerce — to capture upside while taking less risk.

“My approach to all this stuff is to sell pickaxes to gold miners. Instead of owning Bitcoin, I'd way rather own Coinbase. I'd rather own Coinbase. It's a way to bet on crypto as a trend versus an individual currency.”

Steal thisBet on a trend by owning the toll-taking infrastructure everyone in the trend must use, not a single speculative asset.

Shaan's blown Stripe interview cost ~$10M+ in stock

Stripe was worth ~$100M when Shaan interviewed in 2012 and ~$35B at recording (350x). He estimates a $100K grant would have grown to $35M, and conservatively he could have made $10M+ had he not blown the interview.

“So they're worth about $35 billion now. So 350x. So let's pretend that you had $100 grand, $100,000 worth of, uh, stock, you know, round math, uh, you know, there's dilution and there's all kinds of other things, but that's $35 million.”

Semil Shah's breakout-company-of-the-year track record

Investor Semil Shah picks one breakout company each year. His list: Stripe (2012), Snapchat (2013), Slack (2014), Coinbase (2017), Airtable (2018), Superhuman (2019), and Hopin (2020) — a near-perfect hit rate of generational companies.

“So 2012, he picked Stripe. 2013, he picked Snapchat. 2014, he picked Slack. Um, didn't do 2015, didn't do 2016. 2017, he did Coinbase. Um, 2018, Airtable. 2019 was Superhuman. And for 2020, he picked Hoppin.”

Steal thisTrack who the best investors publicly call as breakout each year, and study what those companies have in common.

Only your entry price and multiple matter, not whether a company is already big

Shaan reframes the Stripe-is-the-next-Google debate: it doesn't matter that a company is already huge. What matters is whether it can still 10x-100x from your entry point, because the return is entirely a function of entry price and multiple, whether it's 5 to 50 or 50 to 500.

“His point is, it doesn't matter if it's already big. The question is, can it still grow 100x from here? Can it still grow 10x, 20x, 30x from here? Because all that matters is your entry and your multiple. It doesn't matter if it's 5 that becomes 50 or 50 that becomes 500. It's the same thing.”

Steal thisJudge an opportunity by its remaining multiple from your entry, not by its current size.

Inside AWS: 3 bets where EC2 was the unicorn that paid for the losses

Shaan relays what an Amazon Prime exec told him about AWS's origins: it started small with three services (S3, EC2, SimpleDB) built by a two-pizza team. Treated like a VC portfolio, S3 was a small win, EC2 was the hockey-stick unicorn, SimpleDB a small loss, and Amazon famously whiffed on payments, leaving the gap that Stripe filled.

“if you think about like a VC portfolio, AWS was 3 bets. One was a, we can get our money back with a little bit of profit acquisition exit. Like S3 was like a small win. EC2 was like a unicorn IP that went to IPO. And one was a small loss, which was SimpleDB. But you know how, you know how it goes. The unicorn pays for all the other losses that you had.”

Productize 'Stripe Home': a branded new-tab homepage for every company

Shaan pitches turning the internal company-homepage that firms like Stripe (Stripe Home), Amazon (Phone Tool), and Clearbit built for themselves into an out-of-the-box, design-led product. Any engineer could enable a branded new-tab homepage bottoms-up, showing new hires, announcements, and org data — and he'd invest to get it built.

“anytime some, anytime you see several companies building the same in-house system, for themselves, that's something that you could export out and can be given to any company out of the box, uh, as an easy-to-use thing. And this is something that literally you just win on design.”

Steal thisWhen multiple companies build the same internal tool, productize it as an out-of-the-box offering and win on design.

Align: a 'Stripe for income share agreements'

Shaan describes Align (helloalign.com), which lets anyone set up an income-share-agreement program with a line of code, handling the finance, compliance, and legal work out of the box — the way Twilio did for SMS and Stripe did for card processing.

“So it's just a way for anybody who wants to set up an income share agreement to do so with like sort of one line of code type of thing. They take care of the whole income share agreement process.”

Steal thisSpot an emerging financial instrument and build the out-of-the-box infrastructure layer that makes it one line of code.

Fast Grants: YC-style science funding decided in under 48 hours

Shaan describes Fast Grants (created by Stripe's Patrick/John Collison), which fixes the slow science-grant system by making a $10K-$500K funding decision in under 48 hours, wired immediately. Backers include Paul Graham, Reid Hoffman, Chris Sacca, and Elon Musk, with over $15M committed.

“So Fast Grant is basically a $10,000 to $500,000 decision made in under 48 hours. If you approve the grant, if the grant is approved, you receive the payment as quickly as can be wired to your account. Now, and so they have the Carlson brothers behind it. They have Paul Graham, Reid Hoffman, Chris Sacca, Elon Musk, a whole bunch of different people. So they have— they've committed over $15 million already in fast grants.”

Pinterest and Stripe extended option exercise windows to 6-7 years

Most startups give departing employees only a 90-day window to buy their vested options or forfeit them — and many can't come up with the cash. Sam notes Pinterest and others extended their exercise windows to 6 or 7 years so employees don't lose earned shares.

“Some companies are being cool about it. Pinterest, uh, couple others, I don't remember, maybe Stripe. They increase their exercise window to 7 years or 6 years. That's crazy. So they're like, look, that's cool. We know this practice is a little bit crazy. It's hard to come up with that cash, and you worked here, you earned your shares, so we're not going to try to take those back.”

Josh Buckley 10x'd his money buying Stripe secondary stock at $2B

Sam recalls his friend Josh Buckley buying as much Stripe secondary stock as he could when the company was already valued at ~$2B. Sam dismissed it at the time; Stripe later hit ~$20B, making it a near-no-risk 10x. The framing: which $5B company today could become a $500B company?

“And he was like, yeah, I just think Stripe's a great company and there's secondary stock available and I'm just buying it. I'm like, well, what's the valuation? It's already like a $2 billion company. He's like, yeah, but it's like, Stripe's gonna be big. He's like, I think Stripe's gonna be huge, so I'm just buying up secondary.. And now, so Stripe's valued now at like $20 billion.”

Great investments look unclear at the start, then get a retrofitted narrative

Daniel Gross argues the best deals are tenuous at the beginning (Airbnb almost didn't get into YC, Stripe had no proper batch) and that media teams later retrofit a tidy origin story.

“I actually think all good investments at the beginning are super unclear. A lot of the great YC darlings almost didn't get into YC. Airbnb was super on the fence. I mean, even Stripe didn't properly do— I see there's no actual batch they participated in. And this is the truth about the world, I think, is a lot of the stuff that is great always starts humble and small. Then of course their media teams get together and retrofit the whole narrative”

Nearly every early unicorn broke a 'Silicon Valley rule'

Jack regretted following VC norms (no family/husband-wife teams, no co-CEO/president split). After leaving, he found that of the ~20 unicorns then existing, almost all broke one: Eventbrite (husband-wife), Stripe (brothers), Lyft (CEO + president).

“When I looked at them, pretty much every single one broke one of those rules. Rules. Um, Eventbrite is a husband and wife team. Um, Stripe, they are brothers. Um, Lyft, one of the co-founders is CEO, the other one is president. So kind of there is no rules in Silicon Valley”

Stripe emailed to buy IndieHackers before the founder ever pitched them

Courtland Allen had Stripe at the top of his dream-sponsor list for IndieHackers and was building up sales skills to one day pitch them. Before he got there, Stripe CEO Patrick Collison emailed asking to buy the company outright, which beat landing them as a sponsor.

“before I got to that point, Patrick, the CEO, emailed me and was like, hey, can we buy IndieHackers? So I was like, yeah, of course. It's much better than getting a sponsor.”

Nearly every early unicorn broke a Silicon Valley 'rule'

After leaving Vungle, Jack found that of the ~20 unicorns at the time, almost all violated conventional VC rules: Eventbrite is a husband-and-wife team, Stripe is brothers, and Lyft has one co-founder as CEO and one as president.

“When I looked at them, pretty much every single one broke one of those rules. Rules. Eventbrite is a husband and wife team. Stripe, they are brothers. Lyft, one of the co-founders is CEO, the other one is president. So kind of there is no rules in Silicon Valley, but at the time I kind of went along with different investors telling me.”