Stripe has been getting a lot of hype lately. My understanding is that their core business is a payments API. What makes Stripe’s product uniquely appealing? I acknowledge that they now have many other products that are not payments, but it seems to me like other tech companies can easily launch their own payments APIs and compete with Stripe. Many companies like Amazon, Google, Shopify, Square, and Apple already have the infrastructure in place to offer payments. I also don’t see payments APIs as having the same level of stickiness as something like a cloud provider, where migrating from AWS to GCP might be a multi month or even multi year project. As a customer, isn’t swapping one Payments API for another a fairly trivial task? What’s stopping customers from using a competitor? What am I missing?
Payment APIs internally are widely untrivial @ scale due to race conditions, loads, etc which in turns causes complex apis Stripe somehow made their Api really trivial
What is stopping a company like Amazon from offering a similar API?
They do have one Amazon Pay. But Amazon apis are never trivial. Company Size != Engineering talent. If anything the relationship is probably inversely proportional
Putting aside any questions around “why people want to work there” the appeal has always been a really simple api and good docs. The downside is high fees. If you’ve ever done any work on checkout or billing systems, especially a migration, you’ll find it’s definitely not trivial. It’s always a huge fucking black hole.
For reference, the “simplest” solution is probably: Everything is a kafka consumer. We use 1 transaction per db shard it interacts with per event (eg 1 transaction to decrement an amount, and one to increment an amount in another row). We need an audit service that makes sure all the consumers of event processed successfully, and can either retry or outright reverse all transactions. In addition we need a really fast rate limiter at the beginning that can make good estimations on whether someone is spending more money than they have, so that $10m isn’t transferred to another account and disappears before the auditor catches it.
Ok. You should be good for the systems interview.
Isn't that the story of every successful unicorn - Snap, Pinterest, Square, Airbnb, etc
Tldr: it's hyped by the vcs -- sequoia and the bunch. There is nothing unique or defensible in their business model. Low margin payments business will always be a race to the bottom no matter how much fake hype they generate.
One big point that people are welcome to contest is that stripe’s high fees are fine for young companies in exchange for ease of implementation. At some point these companies grow up a little and are obliged to seek out a cheaper less hyped payments provider like zuora.
Also young companies are more likely to use what the VCs told them to use, not so much with bigger ones
Stripe is done once Apple turns on “tap to pay”
What? Apple pay is already there right
https://www.apple.com/newsroom/2022/02/apple-unveils-contactless-payments-via-tap-to-pay-on-iphone/
Couldn’t someone have asked the same question about Google and what differentiates them and sets them apart in Search, which seemed easy to replicate?
Except internet search and transfer of money are different problems
Most definitely, and I wasn’t saying they were. I was pointing a hole in the logic of saying “anyone can do this” about something that actually is more complex than you think. Google obviously dominated search and reaped the rewards by making very forward looking and strategic decisions. Stripe could do the same in payments space if they fire on all cylinders, hence the premium valuation.
Stripe is very anti-competitive (try to get through YC with a competitor and best of luck) Fintech is exploding everywhere and they were early on that.
I’d say that, like most startups, their best chance at staying relevant is to be acquired by a bigger company that wants their stuff.
Gotta be a higher chance of them IPOing than getting acquired at a ~$100B valuation (even if it's dropped some during the last year) right?
I assume the problem is that, if they don’t get acquired, then eventually a big company will implement something similar that will take a bite out of their main revenue. Stripe would probably be like Netflix and big companies would probably be like Disney Plus. Or maybe Snap vs. Instagram.