Stripe's $1.4 trillion Year: Q&A with John Collison on the 2024 Annual Letter

Since 2010, Stripe has fundamentally rewired the internet's economic infrastructure. What began as nine lines of code has evolved into the backbone of digital commerce, processing over $1.4 trillion in volume annually. 

Today, I'm speaking with one of the architects of this transformation, John Collison. They just released their annual letter with some incredible statistics. My highlights

• $1.4trn Total Processed Volume (TPV) is a 40% increase YoY

• Their client’s TPV is growing 7x faster than the S&P 500 Average

• 80% of the Forbes Cloud 100, and 78% of the Forbes AI 50 are clients

• Stripe Billing is delivering $500m in annual run rate revenue

The company is constantly re-inventing itself. Whether its embedded finance with Shopify, multi-party payouts with Instacart, helping build 1 in 6 new startups with Atlas, and now, making agentic payments a reality.

Today Stripe estimates over 78% of Forbes 50 AI start-ups on a recent market map are their clients. They're the default for the online economy, and their clients are growing payments volume 7x faster than S&P 500 company averages.

But can it continue to ride, whatever is next? Why would every AI company choose Stripe in 3 years? Hot from their $1.1bn acquisition of Bridge, will Stablecoins be their next big growth engine?

Find out in this Q&A with John Collison Co-founder and President of Stripe. 

The following is a loosely edited transcript of our conversation

ST: Thanks for doing this John, I’ve been a follower of Stripe for a long time, and as an aside, I’m a huge fan of the work of Arc Institute, that’s very cool!

JC: Thanks we’re excited by it.

ST: So I read your annual letter, some big surprises in there for me, especially the TPV growth, but what was your biggest surprise this year?

JC: The most surprising thing to us was that we got our start serving startups. People would have said five or 10 years ago, “oh, Stripe, that's just for startups.” And that's definitely, the genesis of Stripe. But now, what we're seeing and what we saw in 2024 is some of the world's largest companies coming to Stripe.

Everyone we talked about in the letter, from Hertz to Amazon to Comcast to Pepsi to Hershey's. Often, when these companies come to Stripe, they just see an immediate revenue uplift due to their move.

So Hertz saw a four percentage point improvement in the revenue they were receiving on their online payments. And I think a lot of this is people moving from legacy systems. This means that some of these really old payment systems are running on mainframes, or what have you? They are just very under-optimized for payments in today's digital world. And so that's, I would say, a new trend that we continue to be pleasantly surprised by.

ST: Yeah, I saw the Church of England and the University of Oxford in there

JC: We have a lot of businesses on Stripe from, you know, the 1600s!

ST: So you've dedicated quite a lot of the letter as well to fraud. It's a big subject this year. Why was that and what's your role in that ecosystem?

JC: We spent a lot of time discussing fraud because, firstly, it's a big issue for businesses that lose three percent of their revenue each year to fraud.

There are issues now of spearfishing, deepfakes, and things like that, and obviously, people in our industry are familiar with all the problems of credit card fraud. what's nice is that now it's Stripe scale. Stripe is acting as a reputation network.

And so it means we're not just looking out for known bad behavior, even though we do certainly look out for that. We can even have a sense of goodness and reputation on the network. We can use that to drive down fraud for merchants on Stripe.

And we've reduced it by 80% over the past two years, and we talked about how we do that in the letter. But yeah, I think this reputation network is really powerful because it's a huge source of frustration for merchants.

ST: It's crazy that people never look at what baselining a good user can do compared to bad users. It's an incredibly powerful technique we use at Sardine. So you've maintained quite a different relationship with capital than some of your fintech peers who've either gone public, or know, there are talks of Klarna and Chime going public. How do you think your relationship to capital has influenced your product decisions?

JC: We're not obsessed with the idea of particular financing events or capital events or anything like that. It's not what drives us. We want to build really great products and great business and serve customers for a long time. And so we have very much liked being able to do so as a private company because it allows us to focus on building the right products over a five or a 10-year time horizon.

There can be this dynamic, especially with financial businesses, where they can be kind of lumpy. This year, we saw a whole bunch of growth and accelerated from 2023. You have FY’23 down, then going up in 24, and probably coming back some in 2025.

We just try to keep the main thing, the main thing, which is we want to be the best way for businesses to accept revenue and move money online.

And we figure if we do that, that will turn, turn into a good business over the long term.

ST: One of my questions for you guys was, how do you stay close to the next thing? And the big next thing is agentic payments. Everybody's talking about them.

JC: In terms of relevance, I think it just is like, like Mad-Eye Moody said, “constant vigilance,” where we're always paranoid and trying to think about what it is that's coming next and just making sure that Stripe is the best product for what people are doing these days. Certainly, what AI companies are doing has changed things, and they tend to go global much quicker than prior generations of companies. And now, as you reference, agentic commerce is coming.

We currently have an AI agent do stuff for us. I was deep researching up a storm yesterday i was trying to find some numbers on something, so I sent deep research off to look at it. But Right now, they’re operating in read mode. They're not actually kind of manipulating things or undertaking commerce in the wider world that will change.

ST: Yeah, but Agentic Payments changes that.

JC: And you can imagine a world where you say, know, hey, I like this shirt but its starting to get worn out. I'd like to buy another version. There's no reason an LLM couldn't go through your email, find the receipt, find which specific one it is, go buy it again, maybe confirm with you, or maybe it's confident enough, and then actually go buy it.

But you need the toolkit to do that. And, know, AIs aren't necessarily allowed to hold actual, you know, human credit cards. So we do virtual credit cards for them where it's just like a one-time use card or something like that. We’re also

But given all the value we are getting from LLMs, it feels unlikely that they will not be participating in commerce. And so we're positioning ourselves for that work.

ST: Could stable coins have a really meaningful impact? Or is it largely just regulatory arbitrage? You know, is it the offshore dollar? Or will it be onshore too?

JC: We think stablecoins are a big deal and will be a major part of the payment ecosystem going forward.

They sell to businesses, and you have a lot of companies that want to manage global corporate treasury you know they're moving money around the world they want to do it in stablecoins

[In the letter] we talked about the use case of Scale AI paying out contract workers using stablecoins. Paying out people around the world, I mean sure, yeah in the US and in Europe, we've pretty well-developed payment systems for these things as you start going further afield, it gets pretty expensive it gets slow, and so stable coins are a really nice solution for that,

That's what we're investing in is, you know, building a platform for orchestrating stable coins and using them in kind of regular money movement. And we think there'll be a big part of that going forward.

ST: Yeah, it's fascinating. Payments have a last mile problem, but crypto always had a first mile problem. And actually, you guys can solve for some of the first mile. Do you think we will get some more regulatory clarity, and will that be an unlock for Stripe, particularly in its ambitions?

JC: It seems like we will get a stablecoin bill in the US that's certainly what the talk is, and I think that'd be good, especially if people have balances in stablecoins I think you just want to have some sensible regulatory apparatus around that and know it's been a little patchwork where you've had some self-regulation by the folks like Circle, you've had the New York DFS, the state regulator stepping in.

But I think we'd certainly welcome a federal stablecoin bill, and as far as I can tell, all the proposals on the table are broadly quite sensible.

Stablecoin Curious?

You might enjoy this conversation from the Tokenized podcast with Bridge’s CEO from weeks before Stripe acquired them

ST: Stripe Billing has had quite a year passing 500 million in revenue. There are, like, I don't know how many startups like a name that have gotten 10 % of that. And that's all they do. So why is this taking off quite so well?

JC: If you talk to any company or talk to the CIO at any company, the billing system is absolutely doing their head in. It makes it harder for them to close their books. They are blocked from being able to launch new products on it.

You can sometimes get this effect where where you'll have one of the leading Silicon Valley tech companies and they're off inventing new kinds of chips and teaching Silicon to think and everything like that. But their billing system is holding them back from being able to launch.

So Stripe Billing is a solution for that, where we think it's really important that people have perfectly reliable billing systems. So they can also launch new products and expand internationally. Stripe Billing is really optimized for products that change and evolve over time. Companies launching new things or they're testing new prices or they're expanding to a new market or something like that.

As we talk to legacy companies, their billing systems traditionally hold them up, and we want to help them fix that. So we've seen fabulous adoption, you know, in particular, among a lot of, you know, consumer media companies and also a lot of SaaS companies, know, folks of the likes of Atlassian or Intercom or people like that, where they are building their billing stack on top.

ST: You also have Stripe Issuing now. While companies like FIS and WorldPay are separating, you’re going deeper into both sides. Feels like a countermove. Can you be both things or does it break some fundamental laws of payment physics?

JC: So I think people with a credit card industry lens on the business would think of Stripe as acquiring. But if you look at what Stripe does, I think it's more being your revenue platform. And there are a whole bunch of things that tie together. And we have many irons in that fire.

The issuing business is very strategic to us because it allows us to continue adapting and expanding as the world expands. The perfect example is what we talked about earlier with agent-to-agent commerce. The fact that we have an issuing platform means that people can build agents that manipulate the wider world. You essentially get backward compatibility with the existing system.

Whereas if you tried to, if you built an agent commerce platform that was like totally new and use some new protocol or use just stablecoins or whatever, they wouldn't be able to do anything in the world that we have today

ST: It gives you backward compatibility with like cards and everything that's already got a large user base and network effects. Are agents going to be using checkouts? Is the checkout obsolete? Like, do you have any insight to that? What are you seeing at the forefront here?

JC: It feels like AI is going to change things in a big way and no one is quite sure how that's going to happen. No one's really sure what the new robots.txt protocol should look like. No one's quite sure how the agentic payments will play out. I mean, it feels like there's a lot of content on the internet that people previously used to read directly. And now that content is synthesized by AI is for us. And so it's going to be very different, and we're not quite sure exactly what it will look like

What’s the new robots.txt, or sitemap or llms.txt? There’s a whole language and communication for agents to merchants to be built, and we’re seeing lots of experimentation

ST: I'm sitting in London; you’re a proud Irish boy. What do you think Europe needs to do, and what role can Stripe, other companies, and the fintech industry play in that?

JC: Yeah, look, we're Irish, we're very passionate about Europe getting this right, and we think that it's healthy that a bit more of discussion has opened up on the competitiveness gap, and I think the Draghi reports will go down as extremely influential in that regard.

So we just tried to trot out a few things on our minds in the spirit of being helpful. I think the difference in financing structures is interesting to note and point out. And then I think the regulatory encumbrances have been talked about a lot, but we'll just stay talking about them until they're fixed. Because you talk to entrepreneurs in the thick of this in Europe and just like, exactly, yeah, yeah, it's no bueno.

ST: From me to you, thank you for building what you've built, and thanks for talking to me today.

JC: Great to see you, Simon, bye-bye.

Enjoyed this? You might also like:

My previous work on Stripe and Payments. 👇

1. Why Stripe spent $1.1bn on Bridge (Stripe the software above payments)

2. Is Payments a Race to the bottom? (Good payments market overview)

3. Stripes difficult teenage phase (Stripe’s history and superpowers)

That’s all Folks 👋

I’ll be back on Sunday with a regularly scheduled Brainfood 🫡