Entrepreneur Stories

August 25, 2023

6 mins

7 lines of code that created the most valuable fintech company in the United States

Two brothers from a rural village in Ireland changed how businesses handle payments with just 7 lines of code. This is the story of two brothers who have created the most valuable fintech company in the United States.

Early Years: A Humble Upbringing in Dromineer

Patrick and John Collison were born in the tiny village of Dromineer with a population of 102. Dromineer was so rural that the brothers went to school 40 minutes away where there were fewer than 20 kids per class. The brothers often found their school boring. Luckily, their father was an electronics engineer and their mother a microbiologist, and this meant Patrick and John learned a lot at home, often more than in school. 

Early Achievements

The brothers were child prodigies. By the time he was 16, Patrick won the Esat BT Young Scientist of the Year, which was Ireland’s annual school students’ science competition. His winning project was the creation of his own coding language called Croma, a new dialect for LISP (the second oldest programming language still in use).  Patrick graduated high school early by acing all 30 exams needed for his senior year. He was then accepted into MIT in 2006 using the SAT he took when he was 13. Patrick’s younger brother, John, was also gifted and achieved the highest score ever by a student for the Irish Leaving Certificate. Together, the brothers launched their first startup, Auctomatic, at ages 17 and 15. It was a service that would help eBay sellers track inventory and traffic. In 2008, a year after being created, Auctomatic was bought by Live Current Media for $5 million. After becoming teenage millionaires, the brothers went back to traditional schooling with Patrick going to MIT and John going to Harvard. 

Inception of Stripe

In 2010, Patrick and John began working on Stripe. The inspiration came while the brothers were working on their side projects. They wondered why it was still so difficult to accept payments on the web despite platforms like PayPal existing. The brothers took their frustration and wrote 7 lines of code that anyone could insert onto their website in order to make accepting payments a whole lot easier. It was called /dev/payments. In the beginning, they weren’t sure what the market for something like /dev/payments looked like or if they could fully address issues like fraud and international payments. Because of this, they partnered with a payments company but quickly realized that the only way to control the entire user experience was to control all parts of the process. By the fall, /dev/payments became their full-time job and the brothers dropped out of college to officially launch in San Francisco.

Early Challenges and Growth

In the beginning, /dev/payments was bootstrapped, but Patrick and John quickly realized they needed to find an institutional investor to give them the credibility when looking for new clients. Since Patrick knew Paul Graham through his previous startups, their first seed investment of $30,000 came from Y Combinator. During this time, the brothers also changed their company’s name to Stripe due to Delaware not permitting leading slashes in corporation names. In 2011, Patrick and John were able to meet Peter Thiel who gave them great insights and offered to invest. From there, Stripe raised $2 million from investors such as Sequoia Capital and Andreessen Horowitz. Stripe began to grow quickly mainly from word of mouth through other developers. 

Word-of-Mouth Success and High-Profile Partnerships

As Patrick said in a TechZing interview, "Initially it very much spread through a word-of-mouth process. That was surprising to us because it’s a payment system, not a social network so it’s not something you’d think would have any virality whatsoever. But it became clear that everything else was so bad and painful to work with that people were selling this to their friends."

Stripe was solving a core issue and so they didn’t need to spend money on advertising. Its main services continued to expand but its overall goal remained to process payments for e-commerce businesses. Companies used to spend weeks setting up merchant accounts, dealing with regulations, etc, but Stripe was able to wrap all the logic of collecting card details, securely storing them, and charging consumers within a simple and clean library designed for developers. Stripe truly began to grow from the products that Patrick and John built on top of the initial API such as Stripe Connect, which was created to help marketplaces like Uber facilitate transactions. Stripe continued to grow their partners and signed deals with Lyft, Facebook, DoorDash, The Guardian, Shopify, and TaskRabbit. With this business model, Stripe’s revenue has been growing every year with it going from $2 billion in 2019 to $14 billion in 2022.

Stripe's growth strategy is centered around international expansion, the growth of its ecosystem around payments, and disrupting existing payments infrastructure. Internationally, Stripe operates in 46 countries, roughly even with major global payment processors like Fiserv, Global Payments, and FIS.

Another main factor in Stripe’s growth was the funding and the attention it received from VCs.  In total, Stripe has gone through 20 equity funding rounds from its pre-seed funding from Y Combinator to its recent $1.5 billion Series I round, which valued the company at $50 billion. Stripe’s success led to Patrick and John being worth $5 billion each. 

Controversies and Criticism

Despite its impressive growth and success, Stripe has not been without its share of controversies and challenges. One of the main issues has been its delay in going public, which has led to complications with employee stock options. Stripe has offered restricted stock units (RSUs) to employees since 2016, which allow workers to cash out if the company goes public or is taken over. However, some of these RSUs are expiring soon, and changing the terms of the stock awards triggers a tax liability for employees and the company. Stripe’s latest round was intended to cover these costs and help incentivize employees to stay with Stripe for the longer term. 

Stripe has also faced criticism for its customer service and communication. Some businesses have reported problems with account instability and a lack of communication from Stripe when issues arise. Despite these challenges, Stripe continues to be a major player in the fintech industry, and its future growth opportunities remain strong. 

Stripe’s success has garnered a fair amount of opinions in social media, with some heralding it as the best payments company ever built, to others talking about how Stripe’s overwhelming presence among VCs and investors causing a “Stripe Mafia” (link to Ryan From Bolt’s article), and is a part of many culture-establishing memes and satirical posts on social media around its valuation.

Whatever one’s opinion may be on Stripe’s valuation and cultural hold, no one can deny that Stripe has revolutionized digital payments for the better, and while the timeline is still unclear, Stripe seems to be headed for a highly anticipated IPO sometime this year or next. 

From 7 lines of code to one of the most loved and talked about companies in fintech, the Collision brothers have come a long way.


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