Speaker 1: Bloomberg Audio Studios, podcasts, radio news. So my idea for
Speaker 1: you guys is you guys just have like regular normal,
Speaker 1: boring ads on the podcast. I think you need to
Speaker 1: do the post red ads for yeah, say a lot
Speaker 1: that everything in securities, frauds is having a bad night
Speaker 1: sleep securities for us.
Speaker 2: Well, like I could do like the men's shaving club
Speaker 2: ads or something that could be fun too.
Speaker 1: When buying short data out of the money called out right, Yeah,
Speaker 1: I think we good.
Speaker 3: Hello and welcome to The Money Stuff Podcast. I'm Matt Levine,
Speaker 3: I read The Money Stuff Colm at Bloomberg.
Speaker 2: Opinion, and I'm Katie Greifeld, a reporter for Bloomberg News
Speaker 2: and an anchor for Bloomberg Television.
Speaker 1: Katy.
Speaker 3: Today we're doing something new. We're doing our first interview
Speaker 3: on The Money Stuff Podcast.
Speaker 2: Are you nervous, I'm pretty nervous. I'm a little bit
Speaker 2: nervous too.
Speaker 3: We're recording this after it happens, and we're not really nervous.
Speaker 2: I'm still stressed out.
Speaker 1: To speak for yourself, I'm pretty nervous.
Speaker 3: I haven't listened to it yet. Today our guest is
Speaker 3: John Collinson. Stripe is a payments and financial technology company,
Speaker 3: and John and his brother and co founder Patrick are
Speaker 3: kind of tech industry celebrities.
Speaker 2: Yeah, he's an Irish billionaire. He's from Limerick. That's cool.
Speaker 3: Katy's wearing her Limerick jacket, but we'll probably get into
Speaker 3: that during the podcast.
Speaker 2: That's true. It's a little embarrassing.
Speaker 3: That I wore this medium amount of embarrassing.
Speaker 2: I truly didn't mean to, but as I said to
Speaker 2: you in our office, it was forty seven degrees when
Speaker 2: I left my apartment this morning, pre dawn, and I
Speaker 2: needed a top. And this is my favorite medium weight jacket.
Speaker 3: This is the behind the scenes content that my stuff
Speaker 3: podcast listener is really grave. Yeah, let's jump right back
Speaker 3: into that Internet failed it should I do like a
Speaker 3: crashing transition to talking about striper?
Speaker 1: Yeah, so how do you guys usually start these? How
Speaker 1: do you one? I guess you haven't done that, You
Speaker 1: haven't done that, you could invent the forduct. Yes, start
Speaker 1: by review of the advertisements I've heard the podcast.
Speaker 3: We start the podcas us with much like this. We
Speaker 3: walk into the room and bullshit a bit and then
Speaker 3: record that. Yeah, and then we eventually say hello and
Speaker 3: welcome to the Money Stuff Podcast. Then we talk about
Speaker 3: whatever the thing we're talking about today. So now we're
Speaker 3: talking about stribe, capital markets, Yeah, destiny tech. Okay, So
Speaker 3: listens in podcasts with you, you talk a lot about
Speaker 3: your interest in business history and like you've learned from
Speaker 3: the tech companies of the past and the conglomerates of
Speaker 3: the conglomerate wave. I have not heard you talk about
Speaker 3: the lessons you've learned from financial services companies. And I
Speaker 3: write about finance and think of Stripe in many ways
Speaker 3: as like a financial services esque company here, like some
Speaker 3: evolution to a financial services company. So I'm curious, like,
Speaker 3: I don't know we you think about financial services.
Speaker 1: Yeah, in general, we try to learn a lot from
Speaker 1: other businesses. And Okay, one things I really like is
Speaker 1: we live in a golden age of learning about other
Speaker 1: businesses right now. And one of the reasons I like
Speaker 1: this is because I think learning about other businesses at
Speaker 1: some level learning about the world or certainly the economy,
Speaker 1: because you know, you're getting sense for how all the
Speaker 1: various entities work together. With financial services in particular, you
Speaker 1: came up with the framing that you know, Stripe is
Speaker 1: in a way kind of a new kind of scaled
Speaker 1: investment bank. Was it you're framing I think?
Speaker 3: I said, yeah, yeah, but I would love for you
Speaker 3: to tell me that's right, but I'm assuming you'll tell
Speaker 3: me it's wrong.
Speaker 1: No. I actually kind of like it because if you
Speaker 1: think about what are the potential source of funding for
Speaker 1: a business, Like, if you want to scale off a business,
Speaker 1: how can you fund it? There's three ways you can
Speaker 1: fund a business. You can do it through debt, equity,
Speaker 1: or retain earnings. And so if you just tick through
Speaker 1: each one of those on the earning side, maybe that's
Speaker 1: the place where a Stripe is kind of the most
Speaker 1: directly doing this, where we're making it easier for businesses
Speaker 1: to self fund their growth. And we see tons of
Speaker 1: bootstrapped or kind of certainly airly monetizing businesses on the Stripe,
Speaker 1: like with this customer and Stripe Photo Room, and they
Speaker 1: do online kind of GENI powered photo editing. They're based
Speaker 1: in France, and you know, maybe ten years ago they
Speaker 1: would have you know, raised a whole bunch of VC
Speaker 1: and scaled up that way. They're actually profitable within a
Speaker 1: year and they've just kind of scaled up profitably since then.
Speaker 1: Ninety eight percent of their business comes from outside France
Speaker 1: and so they're kind of selling this product to a
Speaker 1: global audience and stripes making it easy to do that.
Speaker 1: And we've seen that in general, I guess the AI
Speaker 1: companies in particular, where you know, during the social media boom,
Speaker 1: maybe companies scaled up first with raising lots of VC
Speaker 1: dollars and then later on figured out monetization. With a
Speaker 1: lot of the AI companies, you know, open the eye
Speaker 1: perplexity clause, you know, the photo room who I was mentioning,
Speaker 1: they actually monetized from pretty early on using stripe, and
Speaker 1: so that's one source of funding.
Speaker 3: Stripe allows early stage companies to monetize so efficiently that
Speaker 3: like there is less need for data and equity in
Speaker 3: the world because companies can sell fund like you're putting
Speaker 3: vcs out of business.
Speaker 1: Yeah, and obviously we think it's a more slightly more
Speaker 1: healthy dynamic for the businesses. A classic trap that early
Speaker 1: stage companies fall into is you know, and why combinators
Speaker 1: say tries to get their companies to avoid falling into
Speaker 1: this failure mode is kind of they raise money and
Speaker 1: then they think kind of valuation milestones or any kind
Speaker 1: of financial or investor milestones are the milestones that matter
Speaker 1: for the business, whereas obviously that's not the case. It's
Speaker 1: are you building something of value in the world which
Speaker 1: will generally be measured by does anyone want to buy it?
Speaker 1: And so I think maybe it gets people on the
Speaker 1: right leaderboard earlier on, where a revenue leader board is
Speaker 1: just a much healthier leaderboard to be thinking about than
Speaker 1: a fundraising valuation leaderboard. But we also play in the
Speaker 1: other parts of the capital stack, where on the debt side.
Speaker 1: I mean, you guys have probably watched this, but banks
Speaker 1: have kind of gotten out of the SMB lending space
Speaker 1: since the financial crisis, as just the compliance costs have
Speaker 1: gone up, Like people do not go to a bank
Speaker 1: for a five thousand dollars loan anymore, and so we
Speaker 1: now lend through our lending partners billions of dollars to startups.
Speaker 1: We do that entirely programmatically through amount models, you know,
Speaker 1: cash flow based lending. So we're not looking at the
Speaker 1: balance sheet, We're not trying to do credit checks on
Speaker 1: the individual or something like that. We're looking at the
Speaker 1: stream of cash flows. Is it a healthy, reliable stream
Speaker 1: of cash flows that can support some debt?
Speaker 3: You're doing the cash flows you can see exactly.
Speaker 1: We see the cash flows and people repay out of
Speaker 1: the stripe cash flows, and so that is a new
Speaker 1: kind of lending product that exists in the market. That
Speaker 1: now again is you know, in the billions of dollars
Speaker 1: in terms of the debt we're providing. It's kind of
Speaker 1: ironic in a way. If you want to raise one
Speaker 1: hundred million dollars of debt, that is a very competitive market.
Speaker 1: Lots of people are playing in that. If you want
Speaker 1: to raise five thousand dollars of debt for your company,
Speaker 1: it's actually much harder to get that than it was,
Speaker 1: say twenty or thirty years ago. We've gone backwards there.
Speaker 1: And then on the equity side, I think stripeatless has
Speaker 1: actually helped make more companies investable because what a lot
Speaker 1: of people don't realize is stripeatlists are in corporation product.
Speaker 1: But it lets companies where the founders might be in
Speaker 1: Israel or might be you know, in Singapore or something
Speaker 1: like that, create a US Delaware company and that makes
Speaker 1: it much more investable. And so we've seen a lot
Speaker 1: of foreign founders kind of virtually creating a US company,
Speaker 1: which it just turns out foreign companies investors fanan too scary.
Speaker 3: So I guess I'm responsible for the framing that you're
Speaker 3: sort of in somebody's a substitute for an investment back.
Speaker 3: So like your framing is like increase the GDP of
Speaker 3: the Internet. But like you know, you have these businesses
Speaker 3: like incorporating companies, like what is the principle? And like
Speaker 3: that was like a real investment banker I was doing,
Speaker 3: like corporate derivatives. I'm like, I assume you would never
Speaker 3: get into that business, But am I wrong?
Speaker 1: We're certainly not planning on us. We build products that
Speaker 1: are scalable in some way through tech and so you know,
Speaker 1: Stripe itself. This past year we did trillion dollars in
Speaker 1: payment through the strip platform. That's still growing in a
Speaker 1: pretty healthy clip. The number of businesses served is millions
Speaker 1: of dollars. And so if there's something that is solved
Speaker 1: by just throwing an army of people at it, I mean,
Speaker 1: you know, all the investment banking firms are exceptional ash
Speaker 1: recruiting armies of people, and that is a very competitive space,
Speaker 1: whereas the space of you know, like I was saying,
Speaker 1: with the lending side of things, that was just an
Speaker 1: underserved marketers where we came at it by talking to
Speaker 1: our customers and they said, we really need growth capital
Speaker 1: as actually very annoying for us to get us and
Speaker 1: so I guess we try to find the underserved spaces,
Speaker 1: and investment banking, for you know, certainly on the larger side,
Speaker 1: does not seem underserved right now.
Speaker 2: I've listened to a lot of podcasts you've been on
Speaker 2: in the past several weeks, so sorry, no, no, it's
Speaker 2: been really interesting. You interviewed Charlie Munger, which was I.
Speaker 1: Much prefer interviewing to being interviewed. So we'll come back
Speaker 1: for the second round of this where you guys are
Speaker 1: put on the spot.
Speaker 2: That'll be a lot of fun. We'll put that on
Speaker 2: the calendar. But at one point Charlie Munger started talking
Speaker 2: about like banks and they're selling these sleazy products, and
Speaker 2: of course I couldn't see if you were nodding along
Speaker 2: and I were talking about, you know, whether you would chafe.
Speaker 2: It's sort of the comparison to you know, an investment bank,
Speaker 2: for example, but it sounds like you don't, No, I don't.
Speaker 1: Investment banking provides a useful set of services in the
Speaker 1: world and Okay, one things I really like about the
Speaker 1: Money Stuff newsletter is a studied detachment from what's going
Speaker 1: on where there are people and people respond to incentives
Speaker 1: and that creates behaviors in the world. I like Matt
Speaker 1: does have views and you know, just like crypto and
Speaker 1: you know, all sorts of things, and you can kind
Speaker 1: of the views that occasionally come out, but it's mostly
Speaker 1: this very detached view of what's going on in the world.
Speaker 1: But the way we think about it, like, for example,
Speaker 1: we think, you know, stripes, scale and revenue are actually
Speaker 1: pretty decent proxies for the value stripe is providing in
Speaker 1: the world. That's not always the case with the business.
Speaker 1: You could have an extract of business somewhere, or monopolies
Speaker 1: or rent extraction or something like that. But in our
Speaker 1: case we have very INFORGMNED buyers and a very competitive market.
Speaker 1: There are lots of other places people could go for
Speaker 1: payment acceptance or billing software or something like that, and
Speaker 1: so generally, if customers are choosing you and paying you
Speaker 1: money for a service, it's because you're providing something of
Speaker 1: value that you can't get elsewhere. And similar with investment banks,
Speaker 1: I think if people are going to investment banks for
Speaker 1: a thing, that's probably because they're providing some value to them.
Speaker 1: And so that's the frame of guy I tend to take.
Speaker 1: I think Charlie rest in Peace generally took a lot
Speaker 1: of offense as where he saw people hyping things, principal
Speaker 1: agent problems. You know, there's a set of things that
Speaker 1: bothered him, Crypto Robinhood, mutual fund advisors, and you know,
Speaker 1: you could understand I could construct the Steelman for those cases.
Speaker 3: I think there's a lot of opacity and pricing and
Speaker 3: value in financial services that there's probably a lot less
Speaker 3: of in your business, right, Like you're kind of charging
Speaker 3: a transparent feed to people.
Speaker 1: Yeah, and certain the more scaled something is, the more
Speaker 1: price comparison they'll be, the more efficient the pricing will be. Whereas, yeah,
Speaker 1: there's more room for extracting price in the when you
Speaker 1: get into bespoke deals.
Speaker 3: So one thing I think of when I give investment
Speaker 3: banking is just serving as an advisor to CEOs and
Speaker 3: sort of giving them general advice on their business. And
Speaker 3: we were talking before about you know, you are now
Speaker 3: interacting with a lot of big companies, and you had
Speaker 3: some views on like the ability of a big company
Speaker 3: to CEO to sort of understand her company, and I'm
Speaker 3: I'd love for you to talk about them.
Speaker 1: Yeah, I think people think that CEOs are able to
Speaker 1: drive change in their organizations. I'm talking about organizations in general.
Speaker 1: I'm not talking about the Stripe. People think that a CEO
Speaker 1: lands in a new job, they take over a company,
Speaker 1: and they're able to just whip everything into shape and
Speaker 1: change everything. And I think the general experience of CEOs
Speaker 1: and in new jobs is that is not the case.
Speaker 1: And organizations are pretty hard to change. And in fact,
Speaker 1: one of the things that we believe strongly at STRIPE
Speaker 1: is it's very important for people to get close to
Speaker 1: the work or you will not be able to drive
Speaker 1: any meaningful, useful change. And so like a bunch of
Speaker 1: different ways in which we do that. It actually reminds
Speaker 1: me of the lean manufacturing principle, you know. And they
Speaker 1: have all these very nice esthetic Japanese terms for things,
Speaker 1: and so you know, there's the English equivalent per much
Speaker 1: for the Japanese terms, but in them is gemba, which
Speaker 1: is this idea that managers should you know, walk the
Speaker 1: factory floor and solicit ideas from the people who are
Speaker 1: on the production line and things like that, and all companies,
Speaker 1: like a tech company like Stripe has its equivalents. And
Speaker 1: so we very much encourage engineering managers to actually write
Speaker 1: code at Stripe to get the experience of what is
Speaker 1: it like working in their corner of the code baselat
Speaker 1: problems our engineers running into. I really enjoyed being a
Speaker 1: CFO last year when we were between CFOs, and the
Speaker 1: reasons I really enjoyed that again was getting closer to
Speaker 1: the actual numbers, the processes by which we drive the business,
Speaker 1: Like we're going to hold Stripe to a budget regardless,
Speaker 1: and aren't you interested in how that process is actually
Speaker 1: set and how those numbers are set and everything like that.
Speaker 1: So you know, I say that I think every founder
Speaker 1: should be CFO of their business for at some point
Speaker 1: during its lifespan. It's it's a very educational experience.
Speaker 3: Did like product ideas? Did you do that and come
Speaker 3: away with like we need to do accounting software? No? No?
Speaker 4: Or or?
Speaker 1: I mean I mean maybe in an abstract way, but again,
Speaker 1: Stripes finance needs are are maybe a little different from
Speaker 1: the broader ones. But again, I just think for getting
Speaker 1: close to how the business actually runs that's maybe the
Speaker 1: thing that's hard for CEOs to do, and you know,
Speaker 1: we tried to do it from a customer perspective a
Speaker 1: huge amount of Even some of the products we're talking about,
Speaker 1: like Stripe Capital, they basically come from us trying to
Speaker 1: spend more time with our customers than our competitors do.
Speaker 1: And so you know, we'll start every leadership team meeting
Speaker 1: at am Monday morning with hearing from a customer. We
Speaker 1: just asked them to come and give us kind of
Speaker 1: feedback on the product. If you were to sit in
Speaker 1: on those meetings, it's not an A plus report card
Speaker 1: that we're getting. You know, there are things they want
Speaker 1: us to fix. But I find that it's easy for
Speaker 1: like product managers to overcomplicate things, and you know, you
Speaker 1: can get in your own heads and construct some really
Speaker 1: convolutioned castle in the sky, and there's nothing quite as
Speaker 1: grounding as hearing directly from a customer talk about what
Speaker 1: is not working for them in the product. And you know,
Speaker 1: we do the same on Fridays with like an all
Speaker 1: company thing, bring customers to talk to that. But anyway,
Speaker 1: I think the essence of this for CEOs is getting
Speaker 1: close to the actual production function. And that is sometimes
Speaker 1: hard for them.
Speaker 2: So I have two points. It's interesting to hear you
Speaker 2: say that. First of all, my brain immediately goes to
Speaker 2: Elon Musk, like on the factory floor at SpaceX and Tesla.
Speaker 2: But it was interesting. We had Home Depot this week
Speaker 2: announced that they were going to require corporate employees to
Speaker 2: work eight hour factory shifts, which is interesting, like retail shifts.
Speaker 1: So Starbucks did something similar.
Speaker 2: Right, Yeah, which makes a lot of sense, I mean,
Speaker 2: especially in brutal jobs. Is that one and then the
Speaker 2: other thing? I mean, given that you do know so
Speaker 2: much about his business history and you know, just love
Speaker 2: looking at companies, but those eight am meetings where you're
Speaker 2: just talking to your different companies, like, you see so
Speaker 2: many different types of companies, which is interesting.
Speaker 1: Yeah, And it's definitely a pretty interesting time. I think
Speaker 1: the behavior we observe is that tech has been very
Speaker 1: well covered, and so I think everyone knows broadly kind
Speaker 1: of what's going on in the tech world. What we
Speaker 1: find interesting is the businesses that are the Sherwin Williams
Speaker 1: of the world, you know, the businesses that are ten,
Speaker 1: twenty fifty, one hundred and two hundred years old, and
Speaker 1: how they are adapting to the modern world. And generally,
Speaker 1: what we find is that COVID provided a useful long
Speaker 1: term change to those businesses because those kinds of businesses
Speaker 1: all employed a chief Digital Innovation officer prior to Covid,
Speaker 1: and that person had a team to ten people, and
Speaker 1: they produced all these slides and ideas, and the ideas
Speaker 1: were pretty good, and the company just ignored all them
Speaker 1: and just didn't do any of them. And so they
Speaker 1: had the kind of idea generation part and nothing happened.
Speaker 1: And then it happened, and it was this oh moment
Speaker 1: where people they were forced to adapt because you know,
Speaker 1: obviously the stories were locked down or we're not open,
Speaker 1: and so you maybe had gym companies moving to virtual
Speaker 1: training or something like that. But that created a mandate
Speaker 1: for actually getting serious about the digital stuff. And we
Speaker 1: see much higher quality digital execution coming out of that.
Speaker 1: And there's kind of a few common patterns in what
Speaker 1: everyone's trying to do. I think everyone is questioning their middlemen.
Speaker 1: I don't think middlemen are going away, but they're questioning
Speaker 1: the middlemen and do middlemen add value? And they are
Speaker 1: starting to do much more direct customer relationship stuff. Part
Speaker 1: of that is the product experience where you know, Hershey's
Speaker 1: using Stripe to sell candy directly online, and the customization
Speaker 1: and things like that, and then everyone's just trying to
Speaker 1: build some kind of recurring revenue. And so, you know,
Speaker 1: we think there's two kinds of business in the world.
Speaker 1: There's those who have recurring revenue and those who want
Speaker 1: recurring revenue. And people talk about the engine, you know,
Speaker 1: the airplane engineers with power by the hour. You know,
Speaker 1: you actually don't buy an engine, you buy you know,
Speaker 1: specially exactly. You might trust, you know, the by the minute.
Speaker 1: But that is actually was all companies are moving towards
Speaker 1: because it's kind of better on both sides of the equation.
Speaker 1: And obviously that's pretty complex from an implementation point of view.
Speaker 4: And so the intercomanent Stripe.
Speaker 3: I did like the Stripe fire side a while back,
Speaker 3: and You're like, what should we do? And I was like,
Speaker 3: you should fix paywalls. Have you done it?
Speaker 1: We're getting there because one of us hard. Why is
Speaker 1: it hard? Okay, it's hard for a few reasons. One,
Speaker 1: I think people confuse paywalls with micropayments, and I think
Speaker 1: more consumers want micropayments than publishers. For the publishers want macropayments.
Speaker 3: I think nobody wants micropayments and ever wants to talk
Speaker 3: about it wrong.
Speaker 1: Okay, yeah, yeah. So anyway, once we move past the
Speaker 1: micropayments thing, then it's hard because you ultimately need to
Speaker 1: smooth the onboarding friction and you probably need some cross
Speaker 1: publisher network and you know, publishers are not competing, they're
Speaker 1: maybe not inclined to work together, and then it's just
Speaker 1: a bunch of tech upgrades which are actually kind of
Speaker 1: somewhat prosaic long running projects, but you know, you need
Speaker 1: to be able to have the patients to work with
Speaker 1: the media company to spend a year or year and
Speaker 1: a half upgrade in their stack. The way we've ended
Speaker 1: up doing this is with our product link, which is
Speaker 1: very simple but is really starting to work. It just
Speaker 1: remember you guys, maybe run into it on the internet.
Speaker 1: It just remembers your credentials across websites, and so if
Speaker 1: you've bought on websites A with stripe and you have
Speaker 1: the box checked to remember your payment details, then you'll
Speaker 1: be able to buy on site B without entering your
Speaker 1: payment details again and you might think it will lead
Speaker 1: to a big increase in conversion if a lot of
Speaker 1: consumers have their payment credentials remembered so they don't have
Speaker 1: to type any extra data in they can just click buy.
Speaker 1: And turns out it does. And there's obviously a virtuous
Speaker 1: cycle here where you know, the more people sign up
Speaker 1: for it, but denser the network gets. So that's where
Speaker 1: it's starting to work. And so we have some media
Speaker 1: properties starting to use that. And so what it means
Speaker 1: is they get lots of people coming with credentials all
Speaker 1: pre filled and they just need to hit by and
Speaker 1: then the commercial proposition just needs to work.
Speaker 3: I just feel like the media payoll problem for me
Speaker 3: is not even the payment credentials. It's once you've paid
Speaker 3: for a payoll, keeping you logged in, you're on your
Speaker 3: phone to computers, you're like, you get something emailed to you.
Speaker 2: And just remember me. It's really frustrating.
Speaker 1: We should and may get to that as well. I agree,
Speaker 1: that's that's part two of it. To me.
Speaker 3: That's related to like online identity and the stuff that
Speaker 3: people are crypto people away talking about. So I also
Speaker 3: have listened to you on podcasts. One thing that you've said,
Speaker 3: is that when you started raising money for a shripe,
Speaker 3: people are like, why isn't this assault problem pay exists?
Speaker 3: Can you tell us why it's not right it wasn't
Speaker 3: or why is it isn't? Like why is payments hard?
Speaker 3: And like there were payments companies before you, like, what's
Speaker 3: the thing that you're solving?
Speaker 4: They didn't.
Speaker 1: It wasn't solved for a few reasons. Payments requires you
Speaker 1: to be good at two very different things that are
Speaker 1: quite distinct skill sets. There's technology and there's financial services.
Speaker 1: And so prior to Stripe, you had some payment companies
Speaker 1: that just did the technology layer. You know, they said,
Speaker 1: we're a nice API and we plug into you know,
Speaker 1: whatever bank you use. But that wasn't a good payment
Speaker 1: experience because you then try to sign up with the
Speaker 1: bank and you know, it's spent week shuffling paperwork around
Speaker 1: or something like that. And so a huge amount of
Speaker 1: what we do is at the intersection of those things,
Speaker 1: where you have AMLKYC considerations, where you know, a stripe
Speaker 1: is essentially aiming to look at the activity going on
Speaker 1: on its platform and ensure that it is lisit and
Speaker 1: you know, acceptable activity that's happening on the platform, and
Speaker 1: so we do lots of cool mL work. You know,
Speaker 1: we don't talk about it really that much publicly because
Speaker 1: it is just what goes into operating a skilled platform
Speaker 1: like this, but it's a huge amount of the special
Speaker 1: sauce that makes Stripe tick. At the same time, the
Speaker 1: tech has to be really good and nice and usable,
Speaker 1: and customers really care about latency, they really care about
Speaker 1: how easy the API integration experiences, and so I would
Speaker 1: say companies prior to Stripe tended to pick a lane
Speaker 1: a bit where you had a few purely tech companies
Speaker 1: where you know, they'd say, we're a payment s gateway
Speaker 1: and we just don't think about anything. We just handle
Speaker 1: off the transaction of something someone else or those banks,
Speaker 1: and they actually just generally outsourced the tech. They didn't
Speaker 1: even really do it themselves, or if they did themselves,
Speaker 1: they did not do it particularly well, and so it
Speaker 1: was a very crummy experience for the developers actually using it.
Speaker 1: And of course, the tech changes Mobile was just coming
Speaker 1: along as we were getting started. You know, the iPhone
Speaker 1: App Store came out in two thousand and eight. We
Speaker 1: started Stripe in two thousand and nine, so like we
Speaker 1: were just in time for that, and so mobile was
Speaker 1: a very relevant consideration. You know, even just the web
Speaker 1: apps and SaaS and everything grew a huge amount, and
Speaker 1: so I think the banks had not built for that
Speaker 1: and did not build for that, and so there was
Speaker 1: maybe a gap between the existing providers and there was
Speaker 1: that sort of things that you had to be really
Speaker 1: good at. There were huge number of things with Stripe
Speaker 1: that we did buy intuitive feel they were not part
Speaker 1: of a particularly deliberate tops down strategy that was written
Speaker 1: down in the business plan, but ended up working out well.
Speaker 1: And so one was our really early focus on developers,
Speaker 1: where our go to market was through developers. We started
Speaker 1: by selling to startups and there was this really i
Speaker 1: would say, kind of bottoms up sort of adoption motion.
Speaker 1: But again, ultimately the product we're selling is a technical
Speaker 1: API product, and so of course you should be thinking
Speaker 1: about what the developers want. We just had the developer
Speaker 1: focus because we were software engineers ourselves. We just wanted
Speaker 1: to build a product that we thought was a good product.
Speaker 1: But I think it ended up being more strategic than
Speaker 1: we maybe realized in the beginning.
Speaker 3: There's a lot of like mess in the legal and
Speaker 3: like infrastructure of the payment system, and like your job
Speaker 3: is to provide people a very clean abstraction to that mess,
Speaker 3: and like that means handling all of the mess and
Speaker 3: you know, actually going on figuring stuff out and then
Speaker 3: being able to put that in the back end of
Speaker 3: your API. So the API is like a very clean abstraction.
Speaker 1: Like is that burn Hobart had a line that I
Speaker 1: liked in one of his newsletters that stripe makes the
Speaker 1: financial system work the way people think it already does.
Speaker 1: And that's I think is actually a pretty nice design
Speaker 1: principle for us. And you know, maybe a good example
Speaker 1: of this is.
Speaker 3: See when I hear that I want you to do
Speaker 3: like equity derivatives, I want you to do more of
Speaker 3: this stuff in my world.
Speaker 1: But I don't think we have a view on how improved.
Speaker 1: No one has, sad maybe we just think about it more.
Speaker 2: I do want to talk about crypto. Yeah, we debated
Speaker 2: this internally, but when it comes to the payments world,
Speaker 2: I mean, the conversation tends to devolve into a crypto
Speaker 2: conversation because I feel like crypto is trying to solve
Speaker 2: a lot of payments problems, especially when it comes to
Speaker 2: cross border payments and I'm not asking you about like
Speaker 2: the price of bitcoin or whether you're bullish on you know,
Speaker 2: number go up. But when it comes to crypto and
Speaker 2: the problems that it's trying to solve, I mean, how
Speaker 2: do you think about it?
Speaker 1: We're quite excited about crypto at the moment. I interpret
Speaker 1: money stuff as the house position as moderately cryptoskeptical, and
Speaker 1: so I guess what I would say to a moderately
Speaker 1: cryptoskeptical audience, They'd be two things. One, there are just
Speaker 1: a bunch of scams and dodgy characters and everything like that.
Speaker 1: But it kind of reminds me of I at the
Speaker 1: first I grew up in Ireland. The first time I
Speaker 1: went to Vegas was for work conference there. It was
Speaker 1: for a work conference, and you know, at the Venetian
Speaker 1: or something like that, probably Money twenty twenty, and you're
Speaker 1: going into the hotel past like all the people smoking
Speaker 1: indoors and like the people just addicted to the slot machines,
Speaker 1: just pressing them again and again again, and it's all
Speaker 1: the blinking lights and you know the I guess, the
Speaker 1: clatter of the coins paying out, and you have to
Speaker 1: walk past this degenerate gambling area crazy scene. Yeah, it's
Speaker 1: a grim scene to get to your serious industry conference,
Speaker 1: and those very surprising to me. And I don't know,
Speaker 1: there's something similar in crypto where you have the casino
Speaker 1: dogecoin value speculating part of it, and then there's people
Speaker 1: doing all the serious work over in say stable coins
Speaker 1: or something like that, and those two things just exist.
Speaker 1: But I think one cannot use the existence of the
Speaker 1: slots in the Vegas casino to write off the work
Speaker 1: atnomment stretching the analogy.
Speaker 3: No, this is good, so because like, yeah, yeah, you're
Speaker 3: excited with there's like, well, your friend Patio eleven would
Speaker 3: say it's a kyic avoidance mechanism. Basically, it's like a yeah.
Speaker 1: Well. The thing about crypto is there's been a lot
Speaker 1: of hype on what crypto is useful for. And so
Speaker 1: for example, if you go back and read the original
Speaker 1: Bitcoin paper, which is a great read. It's a very readable
Speaker 1: original paper, it actually used the word interchange in there
Speaker 1: and talks about kind of the use of bitcoin as
Speaker 1: a payment method. But bitcoin turned out to be certainly
Speaker 1: stock bitcoin, you know, before lightning and everything like that
Speaker 1: should have to be a horrible payment method, like slow expensive,
Speaker 1: let's not do that. And now the technology has matured
Speaker 1: through what has been kind of fourteen years of development.
Speaker 1: I think the crypto haters used this argument that like, well,
Speaker 1: you know, it is the Web in ninety three for
Speaker 1: you know, many many years, whereas the actual web coming along.
Speaker 1: But there's been fourteen years of lots of technical development
Speaker 1: happening such that we've ended up with much more advanced technologies.
Speaker 1: And so what you specifically have now with stable coins
Speaker 1: is you have, firstly, something that's value doesn't change and
Speaker 1: so there's none of the kind of speculation stuff that
Speaker 1: we're talking about. You have something that's actually very technically scalable,
Speaker 1: so with the current L two's there's no real scalability
Speaker 1: issues with them, and you have a pretty sensible construct
Speaker 1: where in a way, it's narrow banking. Right. We've been
Speaker 1: talking about narrow banking in this country for decades, and
Speaker 1: we have ended up with narrow banking through stable coins,
Speaker 1: where let's say a good stable coin, you know that
Speaker 1: like a PAXOS or a USDC. In the case of USDC,
Speaker 1: it is fully backed by short term treasuries. And that
Speaker 1: actually just seems like a pretty good construct to me.
Speaker 1: And so you know, we now make it where you can,
Speaker 1: you know, accept money and strive via crypto. You can
Speaker 1: do some payouts things like that. And the obvious thing
Speaker 1: that people say is true where in the US you
Speaker 1: will be slightly too biased against crypto because the US
Speaker 1: is the world's best currency. You know, the US has
Speaker 1: the world's reserve currency where you get to spend and
Speaker 1: might back exactly. And so of course people in the
Speaker 1: US think the USD is awesome because it is an
Speaker 1: awesome currency, whereas many people in many other countries have
Speaker 1: a much more adversarial relationship with their own currency. And
Speaker 1: I'm not even talking about Zimbabwe, though it is true.
Speaker 1: I'm talking about Turkey, which is a very large country
Speaker 1: and economy and population, but people there do not have
Speaker 1: full faith in the lira, and they think about what's
Speaker 1: a better place to keep money than lira.
Speaker 3: I thin guess the other like US bias is that
Speaker 3: the US government really wants dollar payments to flow through
Speaker 3: the KYCED banking system. And like there's some suspicion that.
Speaker 1: I think all the serious grown up crypto players today,
Speaker 1: I mean they're subject to the fincent travel rule. They
Speaker 1: are ky seeing the actors, and so if you go
Speaker 1: through a crypto flow today, you will see the normal
Speaker 1: frictions of dealing with a regulator financial product where you
Speaker 1: are asked to provide your you know, last for your
Speaker 1: social or upload a driver's license or things like that.
Speaker 1: And so I think just in most of the crypto
Speaker 1: use cases that are being tough. Obviously there's the sketchy
Speaker 1: dark web stuff exists as well, but in most of
Speaker 1: the use cases we are talking about where serious businesses
Speaker 1: like stripe or serious merchants are using crypto, it is
Speaker 1: the custodial lissis part of the crystals.
Speaker 3: On chain, like non costardical transfer.
Speaker 2: Like correct, I'm true. I mean, if you look into
Speaker 2: your crystal ball and you know, it's been fourteen years
Speaker 2: since bitcoin was created, as you said, we've seen a
Speaker 2: ton of technology advancement since then. I mean, you said
Speaker 2: you're quite excited about crypto, but I mean, how far
Speaker 2: can we run that out? Do you think it's the future?
Speaker 2: For example, would you go that far if you look
Speaker 2: fifty one hundred years into the future.
Speaker 1: I don't think it's a singular future. And again there's
Speaker 1: a bit of overpromising that's happened in the crypto world. Again,
Speaker 1: I think that's what gets people's backed up. Actually, speaking
Speaker 1: of bern Hobart, we just Stripe Press published this new book.
Speaker 1: The title is Boom, and the pieces of the book
Speaker 1: is that we generally view financial bubbles as societally net
Speaker 1: negative because you know, they cause misallocation of resources and
Speaker 1: they cause you know, ultimately people lose out. And he
Speaker 1: makes the argument that bubbles provide a societally useful function
Speaker 1: by essentially coordinating efforts. And you know, maybe the dot
Speaker 1: com boom is incorrectly understood as a pets dot common webvan.
Speaker 1: It was really like bit dollars put into it, as
Speaker 1: you guys probably know, it was a telecoms boom, and
Speaker 1: it was a fiber rollout boom. But it led to
Speaker 1: the US having just amazing fiber overcapacity that then led
Speaker 1: to the steady growth of the Internet for the decades
Speaker 1: that followed. And so that's maybe an example of it
Speaker 1: was a bubble, but it was a societally useful bubble
Speaker 1: because then it led to this overcapacity that had lots
Speaker 1: of positive externalities. And I think you make that argument
Speaker 1: about crypto, that.
Speaker 3: Argument made as crypto led to a build out of
Speaker 3: GPUs that led to the AI boomah.
Speaker 1: Oh interesting. I wasn't even making that case. You could
Speaker 1: make that argument too, though obviously there was a lot
Speaker 1: of GPU spent happening even even before crypto. No. I
Speaker 1: was just making the argument that I think the speculative
Speaker 1: side of crypto, you could make the argument pulled in
Speaker 1: attention and resources that was then used to build the
Speaker 1: very boring useful parts of crypto, like you know, ethereum
Speaker 1: to or against stable coins or things like that.
Speaker 3: We could talk more about this. Do you want to
Speaker 3: make sure are we talking about the things you don't
Speaker 3: want to talk you about?
Speaker 2: Yeah? Great, which we do want to talk about.
Speaker 3: So another money stuff theme that we'll probably do on
Speaker 3: our ad reads is that private markets are the new
Speaker 3: public markets. You guys are among the poster children for that.
Speaker 3: You're at the CFO. Tell me about what it's like
Speaker 3: being private. I don't know, Like, I mean, how should
Speaker 3: I think about like the idea that, like, you're an
Speaker 3: enormous company and you've stayed private and have no enthusiasm
Speaker 3: as far as we know, for going public or even
Speaker 3: talking about this twenty years ago? Would you have been
Speaker 3: able to do that?
Speaker 1: Yeah? We spend a lot of time internally at Stripe
Speaker 1: thinking about the value of the Stripe business. I think
Speaker 1: the external world spends a lot of time thinking about
Speaker 1: the value of the Stripe stock price, which are related
Speaker 1: plus different things. We have definitely stayed private longer than
Speaker 1: some people expected. I think we'll continue to stay private
Speaker 1: longer than maybe some people expect. But there's no complex answer.
Speaker 1: It's just a simple answer, which is we don't think
Speaker 1: companies should sleep walk into going public. We think they
Speaker 1: should be deliberate about it. And why would Stripe run
Speaker 1: out and go public. It could be if we wanted
Speaker 1: to sell stock broadly to a retail audience. That's not
Speaker 1: something that we've had that, you know, we just the
Speaker 1: business is profitable, you know, we haven't needed to raise
Speaker 1: very large amounts of capital. A traditional reason might be
Speaker 1: return of capital, not just kind of a capital raise
Speaker 1: for running the business, but return of capital to existing shareholders.
Speaker 1: But again that's where you're maybe referencing the private markets
Speaker 1: have gotten deeper, and you know, in our case, we've
Speaker 1: run two unlimited employee tenders, you know, last year and
Speaker 1: this year. You know, Sequoia just did an LP tender
Speaker 1: where they gave liquidity to some of their LPs, but
Speaker 1: liquidity is available to people in the private markets, and
Speaker 1: so it's more I think the default spring where companies,
Speaker 1: you know, a SaaS company would be started and you know,
Speaker 1: go from zero to one hundred million ar R and
Speaker 1: then just run out and go public. Default is being
Speaker 1: questioned a little bit in Silicon Valley. Obviously lots of
Speaker 1: companies are still going public, but the default is being questioned,
Speaker 1: and the default is more of a Silicon Valley tech
Speaker 1: default than maybe a broader global default. So like in
Speaker 1: financial suit, we know exactly so as Bloomberg employees, you
Speaker 1: may be familiar with it, but Bloomberg is the example
Speaker 1: that everyone cites. But if you just quickly run through
Speaker 1: financial services, you know, take the world's leading market maker,
Speaker 1: Citadel Securities private company, take the world's leading prop trade.
Speaker 1: I'm probably offending one of the world's leading in all
Speaker 1: these cases. So don't defend anyone. But if you look
Speaker 1: at Jane Street, you know, which it's been reported on
Speaker 1: a lot these days, just how good a business it is.
Speaker 1: You know, whether they're at a ten billion profits run
Speaker 1: rate or something like that. Private company Fidelity, when the
Speaker 1: world's leading brokerages, private company Goldban Sachs, your former employer.
Speaker 3: I assume that that a big difference is that a
Speaker 3: lot like Chance Street writes very large checks. And the
Speaker 3: Silicon Valley difference is not just that like you have vcs,
Speaker 3: you might be hunger to get at whereas like said,
Speaker 3: at all dozen, but like it's also you have employees
Speaker 3: who are getting paid in equity and they're getting tender
Speaker 3: as every Oh yeah, like is it tender every year
Speaker 3: just as good as publicly traded stock?
Speaker 1: We think the tender every year is in nice solution.
Speaker 1: And there are some things that will be different if
Speaker 1: we're a public company for the better. There's some things
Speaker 1: that'd be different as a public company for the worse.
Speaker 1: And you get it, you know, trading windows and who's
Speaker 1: an insider and things like that. But it's thus far
Speaker 1: work quite nicely for a solution.
Speaker 2: So is that the model then? Like tender every year,
Speaker 2: you've only done.
Speaker 1: Two, but we don't have forward looking plans to announce,
Speaker 1: and so I'd come back to it at some stage with
Speaker 1: you know, we could go do something that you don't expect,
Speaker 1: and we're not announcing the plans because genuinely it's not
Speaker 1: like there's a written down plan at stride that we're
Speaker 1: going to do this, this and then this. We are
Speaker 1: always reevaluating it. But again, up to this point, it
Speaker 1: has made more sense for us to grow as a
Speaker 1: capital efficient private company, then it's made sense for us
Speaker 1: to be a public company.
Speaker 3: Sure, Like Chancer just makes money every year and they
Speaker 3: don't need to raise capital, and so that.
Speaker 1: Just seems like great business has money to people. Right.
Speaker 3: I don't know what the economics that is, literally, but
Speaker 3: they seem extremely good. But like, it does seem possible
Speaker 3: that you could just make cash every year and fund
Speaker 3: the business out of that, and out of that I.
Speaker 1: Never need to for twenty four, we're trying to make
Speaker 1: a decision for twenty four, and for twenty five, we'll
Speaker 1: try to make a decision for twenty five. So luckily,
Speaker 1: it's not the case that you're faced with a you know,
Speaker 1: a fork in the roads and you have to make
Speaker 1: some kind of permanent decision. We do constantly re evaluated when.
Speaker 3: I write about this topic. One concern that people have
Speaker 3: is that there are a lot of cool companies, like
Speaker 3: an increasing number of them, like fast growing, profitable companies
Speaker 3: that or sorry, I should say fast growing, not profitable
Speaker 3: early stage companies, stage company companies, high growth companies that
Speaker 3: don't go public, and that deprives like ordinary investors of
Speaker 3: access to those companies, and therefore it should be like
Speaker 3: made easier to go public or whatever. Right, So for you,
Speaker 3: do you worry at all about that from like a
Speaker 3: systemic perspective that you're depriving like American retirement savers of
Speaker 3: access to the stripe And then two, you're not entirely
Speaker 3: because there are people who are going around selling stripe
Speaker 3: shares in a way that I believe you do not like.
Speaker 3: And I don't know, like there's like a way around
Speaker 3: of the barrier that you've set up. I guess.
Speaker 1: Yeah, Look, do you think the debate over who should
Speaker 1: be allowed by private assets is a good debate? And
Speaker 1: the accredited investor rule is it's kind of an odd rule,
Speaker 1: like we're able to take it for granted that it's
Speaker 1: been around for a long time, but basically we define
Speaker 1: sophisticated investors as rich people, which is, you know, maybe
Speaker 1: some a historic and in.
Speaker 3: Like a declining standard of rich where it's now like
Speaker 3: sort of upper middle class people.
Speaker 1: Correct. Yeah, So I think debate on that is a
Speaker 1: good thing in Stripes case. You know, most of the
Speaker 1: non employee ownership is through essentially kind of VC funds,
Speaker 1: and the underlying VC fund ownership the LPs there tend
Speaker 1: to be pension funds, college endowments, people. I think we
Speaker 1: feel quite good about making money for it, and so
Speaker 1: I don't think it's the case that's kind of broader society,
Speaker 1: it doesn't get to benefit from the appreciation. I think
Speaker 1: we feel quite good about the LP base of the
Speaker 1: investors that are behind Striping. Again, I think that's another
Speaker 1: thing that has allowed us to stay private for as
Speaker 1: long as we have, which is actually the very long
Speaker 1: term vcs. I think if we had a different set
Speaker 1: of vcs, we would have been less fortunate in being
Speaker 1: able to grow Stripe as a private company because maybe
Speaker 1: they would have felt the need for a win or
Speaker 1: something like that. But I think luckily, you know, Sequahic
Speaker 1: Capital is one of the best VC firms that there
Speaker 1: is that don't quite need to prove themselves.
Speaker 3: They probably count you as a win anyway. Again, they
Speaker 3: probably count you as a win exactly.
Speaker 2: Yeah.
Speaker 1: Yeah. And then on the I don't know what you
Speaker 1: call them, but the firms out there at this market.
Speaker 3: We've taught on the podcast about Destiny Tech one hundred,
Speaker 3: which has a private market. I was the fund situation
Speaker 3: with like some Stripe forward contracts, and like there's like
Speaker 3: a general there's like a market for forward contracts, which
Speaker 3: all seemed to be not really approveiate this.
Speaker 1: It's not going to end well because generally hyping financial
Speaker 1: assets has a bad history. It worked out badly with SPACs,
Speaker 1: it worked out badly with icos, and it just tends
Speaker 1: to work out badly, which is why it tends to
Speaker 1: be regulated this. You know, financial regulators tried to in
Speaker 1: the hyping of private assets. And so again Stripe is
Speaker 1: not a public company. We do not enable broad retail
Speaker 1: ownership of Stripe stock, and so if people try to
Speaker 1: back into that by having private company stock in a
Speaker 1: vehicle that that is then available to public mark investors,
Speaker 1: we just think it's not a good construct. Like it's underdisclosed,
Speaker 1: where people are buying an interest in things based on
Speaker 1: name brand recognition but not based on going over the
Speaker 1: financials or understanding what it actually is. They tend to
Speaker 1: all be very high fees. I mean, it depends on
Speaker 1: the vehicle, but they tend to be fairly distractive in
Speaker 1: that way, and so we don't like it. We don't
Speaker 1: we don't permit it, and I'm personally not a fan.
Speaker 2: Is there much that you can do about it? Like
Speaker 2: in the case of a Destiny Tech, for example, that
Speaker 2: says that you know they have stripe forwards zuchorrect. Yeah,
Speaker 2: I mean, what can you do?
Speaker 1: We prohibit forward, So we had a bit of a
Speaker 1: about that people do them anyway?
Speaker 3: Can you then avoid them?
Speaker 1: And I don't know where this goes, Yeah, because right, I.
Speaker 3: Mean, it seems like they're prohibited and people do them.
Speaker 1: And yeah, we put it up on the website just
Speaker 1: to make it abundantly clear, so everyone has the same information.
Speaker 1: It's allowed, they're not allowed. So I don't know. There's
Speaker 1: some areas where people have to read the tea leaves
Speaker 1: or the body language. We tried to make it abundantly clear,
Speaker 1: get out there with the semaphore flags. So this people
Speaker 1: are not in any doubt.
Speaker 2: On the topic of going public. It doesn't sound like
Speaker 2: you're in any rush, obviously, you said in June, and
Speaker 2: I thought this was interesting that many companies make the
Speaker 2: decision to go public too early. That you personally see
Speaker 2: tons of opportunities to change and grow the business quite
Speaker 2: a lot, and I think it's interesting that you want
Speaker 2: to stay private to do that, and I think a
Speaker 2: lot of founders would agree with you. But just the
Speaker 2: fact that, you know, sort of like going public. You
Speaker 2: see this as this sign of maturity and maybe that
Speaker 2: you're not innovating as much as you would in the privates.
Speaker 1: I don't know.
Speaker 2: It kind of made me think of tech company is
Speaker 2: like offering dividends. Like I remember when Metas started giving
Speaker 2: out dividends earlier this year. Everyone was like, oh, well,
Speaker 2: they're old news now and they're too mature.
Speaker 1: Well, I think Meta is the wrong example to use
Speaker 1: for that argument, because they currently seem to be doing
Speaker 1: extraordinarily well in the AI race. And I'm not making
Speaker 1: the claim that you know, one cannot innovate as a
Speaker 1: public company, because that is clearly an absurd claim and
Speaker 1: you would just be kind of constantly slapped in the
Speaker 1: face by counterexamples. And Meta would be the perfect one
Speaker 1: where they just dem at the ring glasses and those
Speaker 1: look amazing, and again they're just nailing it in the
Speaker 1: AI race, and so they'll basically argument I do think
Speaker 1: that on the margin, if you are developing large number
Speaker 1: of new products, if you have a fast growing business,
Speaker 1: if you're constantly reinventing how the business works. And again
Speaker 1: in our case, we are transforming Stripe from not just
Speaker 1: being a payments business to there are all these new
Speaker 1: software lines of business that are much earlier, that are
Speaker 1: harder to predict how they grow. Everything like this. You know,
Speaker 1: we're changing out the underlying payment methods. You know, we
Speaker 1: talked about crypto, we didn't talk about around the world,
Speaker 1: there are all these interesting trends happening in new payment
Speaker 1: methods where are basically bank transfers, and things like UPI
Speaker 1: and picks in Brazil and things like that are becoming
Speaker 1: much more relevant to anyway, the huge amount of change,
Speaker 1: I think on the margin, the public company valuation apparatus
Speaker 1: is set. You see it how people you know, the
Speaker 1: quarter of the earnings and the miss and the beat
Speaker 1: and everything like that. It is optimized for mature, predictable businesses.
Speaker 1: And indeed people talk about kind of business predictability, whereas
Speaker 1: you know, for a business that is still in the
Speaker 1: you know, in the early stages like Stripe, and we
Speaker 1: think about a lot of new products on a five
Speaker 1: or ten year time horizon. Again, I think on the margin,
Speaker 1: there are some benefits to doing that as a private
Speaker 1: company because you get to kind of completely retool the
Speaker 1: business as you go without necessarily wondering about, you know,
Speaker 1: what will the reception be for this in you know,
Speaker 1: the next quarter's earnings release.
Speaker 3: I know you're not in any phase of learning an IPO,
Speaker 3: but I was a capital markets banker, and I know
Speaker 3: you've had thoughts about like the IPO process, and like,
Speaker 3: I don't know if you're doing an IPO, like would
Speaker 3: you change about the process.
Speaker 1: I find all the debates about IPO mechanics really uninteresting
Speaker 1: because it just doesn't matter. Like, if you have a
Speaker 1: great business that's valuable for customers that millions of people
Speaker 1: use and makes money as a result, you can do
Speaker 1: whatever you want. Like, you know, I think Facebook would
Speaker 1: say they botch the IPO, but they have like an
Speaker 1: incredible business, so it doesn't matter and no one remembers it.
Speaker 1: And then you can have like the world's best IPO
Speaker 1: plan and if the business isn't good, it doesn't matter.
Speaker 1: And so people get into all these debates about direct
Speaker 1: listing versus regular IPO and then Bill Gurly complains that
Speaker 1: the bankers are taking too many fees, and then it
Speaker 1: just doesn't matter. Like, build a great business and you
Speaker 1: could write your prospectus on a cocktail mapp and it'll
Speaker 1: be fine.
Speaker 3: Really, this is like why Charliemker doesn't like financial services
Speaker 3: business because you're like like, oh, this is around business.
Speaker 3: It's true, but it's.
Speaker 1: True, right, Yeah. And the thing is investors are smart.
Speaker 1: I think people try to do too much of a
Speaker 1: song and a dance with investor relations and try to
Speaker 1: you know, gin things up. And ultimately, when you meet
Speaker 1: professional investors, you know they're really smart and they look
Speaker 1: through and understand the fundamental dynamics of a business. And
Speaker 1: so the secret to good investor relations is have a
Speaker 1: good business that's growing and it is profitable.
Speaker 2: Where people should do that exactly. Ye, Well, oh you
Speaker 2: have an airport. Do you want to talk about that?
Speaker 2: Is that something?
Speaker 1: Okay?
Speaker 2: Why where did that come from?
Speaker 1: Well? I should not be listened to for any rational
Speaker 1: financial investment advisor.
Speaker 2: I don't know. I don't have the pockets.
Speaker 1: Well, I'm a pilot and an aviation and I grew
Speaker 1: up interested in US and I've been flying since I
Speaker 1: was a teenager and you know, still really love to
Speaker 1: do it, and I'm flying my spare time, and so
Speaker 1: I would say it's not necessarily the most rational business
Speaker 1: interest of mine. But the case the airport, so Dublin
Speaker 1: basically is three airports. Doublin International, which you've been to Dublin,
Speaker 1: that's the one you've been to. I guess three if
Speaker 1: you count the military airport, Belt Donal, and then Western,
Speaker 1: which is the general aviation airport. And so general aviation
Speaker 1: is all the stuff that is not airlines. So it
Speaker 1: could be public service flights like search and rescuer, air ambulance.
Speaker 1: It could be flight training, you know, people getting their
Speaker 1: pilot's licenses. It could be corporate jets, it could be
Speaker 1: all this kind of stuff. And generally speaking, the appropriate
Speaker 1: home for the general aviation stuff is not where all
Speaker 1: the airlines are because they just don't mix that well.
Speaker 1: And so most places will have you know, if someone's
Speaker 1: doing flight training in New York, they'll not do it
Speaker 1: at GfK. They'll do it you know, Westchester or something
Speaker 1: like that. Yeah, Yeah, they really don't mix well. And
Speaker 1: in the case of Dublin's Western Airport, I end up
Speaker 1: buying it back in twenty twenty one, and it needed
Speaker 1: a bunch of investment, and so A bought it and
Speaker 1: we've been investing in giving it the facility that needs around,
Speaker 1: you know, instrument landing capabilities and you know, redoing the
Speaker 1: terminal and the capital stock and things like that, and
Speaker 1: so it's partly I think it's a good I mean,
Speaker 1: they are in the US, they're not for profit businesses.
Speaker 1: They tend to be government owned and federally funded. Internationally
Speaker 1: they are like he throws, a for profit business and
Speaker 1: they just make money off landing fees. And so I
Speaker 1: actually think it will, in the fullness of time, be
Speaker 1: a good business once it's kind of come out on
Speaker 1: the right side of the growth curve. But it's also
Speaker 1: a passion.
Speaker 2: Product in that's awesome. I mean this not as an insult,
Speaker 2: but I feel like to enjoy being a pilot, like
Speaker 2: casually you have to be like a little bit crazy,
Speaker 2: like that seems like an insane proposition, but maybe I'm
Speaker 2: just really risking.
Speaker 1: So no, it just it requires a lot of discipline,
Speaker 1: you know, checklist discipline, and you know, recurrent training. I
Speaker 1: just went through some recurrent training and it just I
Speaker 1: actually find it more interesting because obviously aviation safety is
Speaker 1: generally talked about correctly as one of the best examples
Speaker 1: of process optimization over the last you know, five decades,
Speaker 1: where we have taken a system and just improved the
Speaker 1: crap out of it until it's like so good. If
Speaker 1: they talk guys, how can go buy on Twitter recently
Speaker 1: where the FA doesn't and date car seats on airplanes
Speaker 1: because flying is so safe compared to driving that they're
Speaker 1: worries that if they mandated car seats on airplanes, even
Speaker 1: though like you have a tiny benefit, it would lead
Speaker 1: to people choosing not to fly and choose to drive
Speaker 1: instead and get into car accidents and therefore be net
Speaker 1: less safe. But I find it funny that, you know, again,
Speaker 1: flying an airplane feels like in principle it should be
Speaker 1: like kind of hard to do, and driving car on
Speaker 1: the ground should be easy to but permile. Obviously flying
Speaker 1: wins out, And so again you have this decades and
Speaker 1: decades and decades of history where we've taken the lessons
Speaker 1: of you know, they say the rules and regulations they
Speaker 1: are written in blood. You know, we take the lessons
Speaker 1: of the previous accidents that have happened and then we
Speaker 1: wrap them into future training. And you know, generally, when
Speaker 1: you do pilot training, you're studying a lot of specific
Speaker 1: accidents that happened and you know what the learnings were
Speaker 1: for them. And so I think if you're interested in
Speaker 1: systems design, engineering, process optimization, things like that, lessons.
Speaker 3: From piloting like inform your software engineering.
Speaker 1: I mean they're pretty separate, but I think the software
Speaker 1: engineering brain tends to be a t to flying. And
Speaker 1: you know, you got Palo Alto Airport was a little
Speaker 1: general Afacian airport in the Barians when the busy general
Speaker 1: aviation airports in the entire country. Because I think engineering minds,
Speaker 1: of which there are lots in Palo Alta, tend to
Speaker 1: enjoy it. And again you're mixing you know, a kinesthetic
Speaker 1: skill and meteorology and you know, mechanical understanding of you know,
Speaker 1: a combustion engine and all the attendance systems and you
Speaker 1: know airspace and everything like that.
Speaker 2: So it wasn't like fueled by you being in an
Speaker 2: adrenaline junkie like I want to go fast and I
Speaker 2: want to fly in the sky.
Speaker 1: Adrenaline Like if you're feeling adrenaline while flying you're doing
Speaker 1: something wrong.
Speaker 2: I feel it all the time when flying, like God,
Speaker 2: I hope we stay in the air.
Speaker 1: There was that, you know, you read entron descentic Zuperie
Speaker 1: and you know, flying in Africa during the b nineteen
Speaker 1: twenties in his case, and you know, getting shot down
Speaker 1: and all these kind of things. There clearly was a
Speaker 1: that would make you feel something. Yeah, that exactly. I
Speaker 1: think that kind of stuff would make you feel something.
Speaker 1: But again in these days it has become much more
Speaker 1: safety oriented and the cowboys stuff has been pulled out.
Speaker 1: And again they actually describe one of the cultural challenges
Speaker 1: that happened in the aviation industry underwent was that we
Speaker 1: produced all these military pilots in you know, the World
Speaker 1: War Two, in the Vietnam War, and those people then
Speaker 1: went into you know, PanAm cockpits and they actually kind
Speaker 1: of made bad captains in a certain way because it
Speaker 1: was like very much shut up, this is my cockpit.
Speaker 1: And so the CRM Crew Resource Management, I guess thing
Speaker 1: basically was a multi decade efforts to get rid of
Speaker 1: the the captain mindset and get towards a collaborative problem solving.
Speaker 3: A lot of like I'm going on a like seven
Speaker 3: seven the pilot landed fourteen line carriers, Like that's got
Speaker 3: to be the safest possible way to fly.
Speaker 2: But apparently not, No, he's gone rogue.
Speaker 3: Not listening to his second officer or whatever.
Speaker 1: Do European airlines have a different model than the US
Speaker 1: airlines where they take pilots who have two hundred and
Speaker 1: fifty hours only, which the US would consider very low,
Speaker 1: and they put them in the right seat of airliners
Speaker 1: and they have like a really strong safety record, and
Speaker 1: so as you fly around an airliner in Europe, you
Speaker 1: could have someone who only learned to fly a few
Speaker 1: years ago. And the way they do that is a
Speaker 1: huge amount of standardization, a huge amount of process orientation.
Speaker 1: You know, people make fun of Ryanair for the hard landings,
Speaker 1: you know, the Ryanair landing in europehere they really plunk
Speaker 1: it on the runway. That is one of their safety
Speaker 1: SOPs where they say a positive landing, as it's known
Speaker 1: in the industry, is safer because it reduces the risk
Speaker 1: of hydroplaning if it's wet, and so it reduces the
Speaker 1: like very small risk that you run off the end
Speaker 1: of the runway if the runway is wet, but we're
Speaker 1: just going to every landing. We're going to plunk it
Speaker 1: on and that's safer. But again, it's generally process orientation,
Speaker 1: standards and a lot of that kind of stuff that's
Speaker 1: driven to safety and not excessive piloting skill. And again,
Speaker 1: if you're relying on incredible piloting skill, something has gone
Speaker 1: wrong in your system. Because we should be able to
Speaker 1: have a seven seven seven full of passengers be safe
Speaker 1: even if the pilots are fatigued or something like that.
Speaker 2: That's wild. I did not know that about Ryanair. I
Speaker 2: feel like they should put that fact out there. You
Speaker 2: know that it's intentional that we're plunking down.
Speaker 1: That's true. Yeah, yeah, because you know it's quite Yeah,
Speaker 1: that's question exactly. Yeah.
Speaker 3: Draw attention to.
Speaker 2: It being uncomfortable, Well, everyone knows.
Speaker 4: That's sure. That's true.
Speaker 1: That's true.
Speaker 3: John Colls and thanks for coming on the Money Stuff Podcast.
Speaker 1: Thank you guys, it's fun our first guests.
Speaker 3: Yeah, I'm honored, and that was the Money Stuff Podcast.
Speaker 2: I'm Matt Levian and I'm Katie Greifeld.
Speaker 3: You can find my work by subscribing to the Money
Speaker 3: Stuff newsletter at Bloomberg.
Speaker 2: Dot com and you can find me on Bloomberg TV
Speaker 2: every day on Open Interest between nine to eleven am Eastern.
Speaker 3: We'd love to hear from you. You can send an
Speaker 3: email to Moneypod at Bloomberg dot net, ask us a
Speaker 3: question and we might answer it on air.
Speaker 2: You can also subscribe to our show wherever you're listening
Speaker 2: right now and leave us a review. It helps more
Speaker 2: people find the show.
Speaker 3: The Money Stuff Podcast is produced by Annamsarakus and Moses
Speaker 3: I'm Special thanks this week to Stacey wom.
Speaker 2: Our theme music was composed by Blake Maples.
Speaker 3: Brandon Francis Newnhim is our executive producer, and.
Speaker 2: Stage Ballman is Flimberg's head of podcasts.
Speaker 3: Thanks for listening to The Money Stuff Podcast. We'll be
Speaker 3: back next week with more stuff