As one of the fastest growing payment companies, all eyes are on Stripe. But if the industry expects the company to launch a sexy, new application they're unlikely to get it.
Stripe is staying focused on its core business of enabling quick and easy Web and mobile payments acceptance, and expanding access to more small businesses, said Patrick Collison, the company's CEO.
"Peter Thiel was our first angel investor. And when Peter invested in us … we thought he'd want us to expand into seasteading or immortality," Collison said, jokingly, during a keynote at Money2020 in Las Vegas on Oct. 25.
But when Collison returned to Thiel with solutions to tackling other problems, Thiel would tell him to stay focused on what Stripe was already doing.
While that might not be as "sexy" as launching new products every year, Collison stated that it makes him feel better about Stripe's decision. Only about 2% to 3% of total purchases happen online today; "it's difficult to wrap your head around just how much potential there is," he said.
The problem many startups face is they are too eager to do something different. There is a constant battle between startups and legacy companies, and this is often depicted as the big banks being too rigid to accept the input of startups. But the startups are just as often too stubborn to accept the wisdom of the incumbents, he said.
"People underrate strategy," Collison said. Startups think "strategy is what business people do, and not for startups."
The company's success can be linked back to its approach of making the setup of online and mobile stores nearly instantaneous rather than requiring a lot of up-front paperwork and a wait of several days or even weeks to set up a digital storefront. And more important, Collison said, was Stripe's realization that the transaction was just the beginning service it needed to provide.
For instance, the first generation of Internet companies existed purely online and profited through advertising. But as these companies mature, they're exploring business models that require a real-world presence. Think Uber, Airbnb and Starbucks.
"[For] this generation of companies … the product experience is much more important," Collison said. "It's not good enough to get just an electrical outlet to the payments space. You need rich APIs built on top of that."
Even when Stripe developed new products, it built on its core business rather than being distracted from it. Stripe's focus on expanding the use of its services is why it revamped Connect, its tool for online credit and debit card acceptance, earlier this year to serve international marketplaces.
Stripe is trying to build an Uber-like purchasing experience for people shopping on mobile, and it's getting noticed by payments incumbents, including Visa, which invested in the company this summer.
Speaking of Visa, Vinod Khosla, founder at Khosla Ventures who was part of the fireside chat keynote with Collison, said, "If any site uses Verified by Visa, I will leave."
Verified by Visa allows users to pay with a saved payment card by inputting a Verified by Visa username and password. The service was criticized for adding to the number of usernames and passwords consumers had to create and remember; Visa and MasterCard have been working to address this issue and are improving the process through the use of richer cardholder data.
Though agreeing with this sentiment would seem to be biting the hand that feeds him, Collison said Khosla hit the nail on the head.
"Mobile transactions are not working," he said, although he added that new players in the payments industry often underrate what the card networks have done in creating an interoperable product that's authorized in real time.
Stripe's recently launched Relay, an application designed to facilitate the development of "buy buttons," similarly fits with the company's mission of enabling digital payments. The company talked to its merchants and found they were interested in facilitating social commerce, which means shopping on sites like Twitter and Facebook rather than forcing shoppers to use the merchant's website or app.
Historically, social commerce has had trouble garnering consumer attention, but Collison says the time for such a concept has finally come.
"I find it hard to believe that all this [consumer] traffic and all this [merchant] marketing … will not turn into transactions eventually," he said. "It's just the purchasing experience has been so backwards."
Another trend likely to change the payments game substantially is artificial intelligence and the use of machine learning software to detect fraud, said Collison. Stripe is already using machine learning on a merchant-by-merchant basis, so the system can be trained based on the client's specific customers and transaction types.