4 things I learned from Stripe in 4 years
Prior to joining Stripe, I was an equity investor at Fidelity. As a result, I had the fortunate opportunity to have one-on-one meetings with public companies (including S&P 500 companies)' CEOs and CFOs or host IPO roadshow meetings to hear management team pitch their stories. I was incredibly grateful to have met some of the best executives and operators, who ran high-quality businesses that compounded value consistently over decades. These firms are referred to as "long-term winners" by Fidelity. I was determined to join one of the "long-term winners" potential candidates when I left Fidelity, hoping to learn a thing or two about what leads to these companies’ long duration of growth and profitability.
I started my journey at Stripe in 2018 when the company had only 1,000 people. Over the next 4 years, it was fascinating to witness and contribute to Stripe’s extraordinary expansion and evolution. I found what I experienced as an operator reinforced what I had expected as an investor on a much deeper and practical level. Here are some reflections on this remarkable journey. Please note that anything you read here represents solely of my personal opinions.
A best-in-class company’s strategy stays surprisingly consistent over many years. My first encounter with Stripe dated back to 2015 when I visited the company on a Stanford MBA Tech trip. While some companies impressed me with their amazing offices, my biggest takeaway from the Stripe visit was one sentence from our host. He said Stripe focused on attracting start-ups; these start-ups grow and compound over time, and Stripe would grow alongside them. I recall thinking that this was so simple, yet so beautiful. I didn't completely appreciate how effective this strategy is or how tremendous the financial impact would be until I joined the company. In the period of seemingly limitless investor money, it was very simple to lose sight of business model (free cash flow and unit economics, not just top-line growth), especially for a company like Stripe that was never short of investor interests. Yes, Stripe is most well known for its great product and technology, but a big part of its success also comes down to the powerful business model and financial profile underlying its consistent long-term strategy.
Time horizon is a fantastic tool for best-in-class businesses to create and widen their moat. When I was an investor, it wasn't uncommon to see some leaders managing their companies on a 1 or 2-year time horizon. This was understandable because executives at S&P 500 companies receive 70%+ of their pay in the form of equity, so it made sense that they would be concerned with short-term price movement. With Stripe, long-range planning (LRP) for the following 4-5 years had always been important. And in 2021, when Stripe turned 10 years old, they ran a comprehensive 10-year planning process. While not everything in these long-term plans came to pass (as was the case for practically all organizations), Stripe's dedication to these long-term exercises encouraged the business to think ambitiously and lay the groundwork for future big bets. Led by founders, the company used long-term thinking to make hard decisions and was willing to suffer short-term setbacks to drive long-term value creation.
In addition to having outstanding visions and strong leadership qualities, the best executives also delve extremely deeply into operational minutiae. I spoke with public company executives in countless numbers over my time as an investor. As my knowledge increased, I could discern certain responses were more compelling than others, though I never fully understood why. When I had the good fortune to work with or attend meetings with senior management at Stripe, I was astonished by how thoroughly they probed problems and how "down-to-earth" they were in managing the company. For instance, they carefully read the shipped emails on internal and external product and engineering updates, participated in numerous customer calls and visits, demanded deep operational details in business reviews,and left insightful comments and questions on the thousands of documents they reviewed each year. I now have a greater understanding of what excellent leadership is. This requires the unique combination of setting the right high level strategy and having a strong grasp of the operational specifics, to effectively drive execution, push teams, and course correct where needed.
As cliché as it may sound, what makes a company special comes down to its people. I recall one of my favorite aspects of the investor job was going on site visits where I got to meet the firm’s employees, as opposed to only C-levels. Compared to what I read in SEC filings or heard on earnings calls, these site visits gave me a lot more information about the people, the culture, and the true inner workings of a company. When I first started at Stripe, I assumed I would learn the most from how the leaders set the strategy, what the product development process is, etc. I did, in fact, learn these. The best memories, however, were made with the amazing Stripes I worked with or during coffee chats with coworkers. I gained so much knowledge about product development from white-boarding product strategy together with PMs and engineers. Getting my hands dirty with pricing promotion and sales enablement taught me so much about marketing. I learned so much about sales through conversations with AEs, AMs, and BDRs, which helped me comprehend Stripe's revenue drivers on a much deeper level. Stripe was a special place because it attracted exceptional talent and its people were so willing to share and to collaborate together in an open environment.