Patrick Collison on Stripe, market expansion, and staying user-focused

Patrick Collison, co-founder and CEO of California-based Stripe. Photo credit: Stripe.

Stripe already counts Grab and Air Nippon Airways among its clients in Asia. Since going into private beta in Hong Kong, the US-based payments company has been on a roll in the region. After going public in Singapore, Stripe officially launched in Japan.

With Southeast Asia’s digital economy projected to grow six-fold to US$200 billion by 2025, and Japan’s expected to scale to US$150 billion by 2020, Stripe has plenty of potential for long-term growth in revenue and transaction volume. But Patrick Collison, co-founder and CEO of Stripe, goes beyond conventional metrics when assessing market health.

“The short-term vision is much more qualitative. If a market is not huge yet, is it just not a big market? Is it because our product is wrong? Because we haven’t waited long enough? In different markets, which answer will be true turns out to be different,” he says.

No country for old assumptions

In a sense, Stripe market entry is an extension of “Collison Installation” – shorthand for personalized onboarding of potential users. The term was coined by Paul Graham, founder of Y Combinator and president of the accelerator, when Patrick and his brother John were building Stripe there.

Users in new markets get that same intense focus.

“We try to deliberately push against [US-centricity]. That’s why we have people on the ground in so many of these markets. That way we can be very honest and direct with ourselves so we can then have a more productive discussion,” Collison explains.

Many of Japan’s top-funded startups have already expanded overseas or are actively exploring international operations.

That approach has paid dividends in Japan already. A key component of the Stripe stack is support for payments in 130 currencies, meaning a user can set up international sales out of the box. When Stripe first started Japan preparations in 2014, such currency support did not exist, partly because of onerous technical and regulatory challenges.

It took the company two years to overcome those challenges. In the interim, Japan’s fintech industry caught fire and local startups like Spike and Pay.jp launched and quickly attracted users. Spike now boasts a full payment ecosystem including coupons and loyalty rewards. Pay.jp’s parent company even attracted investment from Mercari, a runaway success as a used-goods app.

But Stripe did not launch until it could provide Japanese users with its standard currency support. It is still the only service to offer such support. Despite the delay, Stripe in Japan is now better positioned to be an influential player in the local ecosystem.

Though Japan, Inc. has a deserved reputation for catering to its domestic base, Japanese startups are increasingly finding value overseas. A majority of Japan’s most-funded startups have already expanded overseas or are actively exploring international operations. Similarly, some of the most valuable exits in recent years (Gunosy, Gumi, Freakout, Akatsuki) have global aims.

Current and future generations of Japanese startups now have a tool that will make replicating, and possibly exceeding, the success of their predecessors easier.

On community and competition

Humility and user-focus are essential if Stripe is going to keep its forward momentum. The iron throne of the payments industry might be vacant, but there is no shortage of claimants to the title.