In the high-tech world, the word 'disruptive' is frequently thrown around, often to describe products and services that offer incremental improvements as opposed to eye-catching innovation.
But for Stripe, a San Francisco-based company that makes it easy for online businesses to accept credit card payments in a cost-efficient way, the term 'disruptive' may be appropriate.
At a glance, their value proposition appears straightforward. But once you realize how complicated and expensive it can be to accept credit card payment online, Stripe's potential to become a global payment-processing powerhouse becomes readily apparent.
"If you look at the Internet as a whole, transactions and the economic infrastructure work really poorly, particularly if you think about a business setting up online," said Patrick Collison, co-founder of Stripe. "The difficulty in accepting payments Balkanizes the different payment systems rather than having a single system."
With $38-million of cash, Stripe is gearing itself up for aggressive international expansion, including a recent move into Canada. It has already spent several months of beta testing with companies such as Ottawa-based Shopify, one of Canada's leading e-commerce players.
Shopify CEO Tobias Lütke said Stripe's technology can be a key tool for companies to run successful businesses.
"We got hooked on offering Stripe's services to our customers because they understand how simple it can be – and should be – for businesses to grow and transact online," he said. "For Canadians, this means more choice for purchasing a variety of products and services from businesses, which are now able to operate online."
When asked if Stripe is 'disruptive,' the 23-year-old Mr. Collison conceded the term is overused, but he believes there is no doubt the company is completely changing the structure of the online payment industry and the profit model.
While there is considerable buzz about Stripe, there is also plenty of competition within the online payment-processing marketplace. The 800-pound gorilla is eBay-owned PayPal, which operates a global, multi-billion dollar business with more than 110 million registered users.
Stripe is banking on its ability to establish a strong foothold, and to beat its competitors, by making online payment processing more accessible to companies around the world.
A key part of its appeal will be low fees. It charges a flat fee of 2.9 per cent, plus 30 cents per transaction. As important, companies don't have to set up a merchant account with a bank or use a payment gateway.
What makes Stripe intriguing is it is backed by PayPal founders Peter Thiel, Elon Musk and Max Levchin. The company has also raised money from high-profile venture capitalist: Sequoia Capital and Redpoint Capital.
With 32 full-time employees, Mr. Collison said Stripe doesn't need to have a large workforce to build the business so the capital will be used to open international offices, infrastructure and dealing with regulatory issues and processes.
Nevertheless, hiring the right people will be a key part of Stripe's growth plans, he explains.
"We place a lot of stock on referrals from people who have worked with others in the past," he said in describing the company's approach to hiring. "Rather than evaluate people in a contrived interview situation, we do it with people who have worked together for months and years."
"We also really want to find people who others want to work with. We don't just want someone who is really talent, we try to look at the overall health of the company, and the question we ask ourselves is 'if this person was in the office by themselves on Sunday evening an you were also there by themselves, would you come just to hang out?' Setting that threshold for people you want to be around. We have tried to do that for every single person we have hired so far, and that has been really helpful."
Mark Evans is the principal with ME Consulting, which helps startup and entrepreneurs jump-start their marketing activities. Mark has worked with fourstartups–Blanketware, b5Media,PlanetEyeandSysomos. He was a technology reporter for more than a decade with The Globe and Mail,BloombergNews and the Financial Post. Mark is also one of the co-organizers of the mesh and the meshmarketingconferences.
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