Stripe: How to Win When Your Competitor is Lazy

The honor and the glory is usually given to first movers - the trailblazers who set the path and capture the entire market share in the category.

But when there's not a lot of players in the game yet, there's always an opportunity to get into it fray and find your own place (and a piece of that marketshare).

This is how Stripe stole a piece of payment processor industry share from PayPal.

Stripe today:

• is valued at $94B

• has more than 2 million customers in 120 countries

• is used more than 300,000 websites

• has grown at 104% every year from 2015 to 2020

• holds 48 patents (and growing)

• has about 4000 employees

Stripe is the payment processor company founded by two Irish brothers, Patrick and John Collison. They saw the massive opportunity in the market of online payments -  an industry PayPal controlled and it still holds a massive share (~50%).

How they managed to succeed and blew their company up to near $100b valuation? By catering their needs to the right customer persona - the software engineer.

Finding Your Own Tribe - Software Engineers

With extensive documentation and a stable API, developers embraced Stripe because it fits any project's needs.

Instead of individuals buyers on eBay, Stripe’s target audience were developers. Genius since they’ve made their headway in YCombinator - the hungry masses were right outside their doors and they listened to their needs

Huge companies like Uber, Instacart, OpenTable, and Amazon needed a simple plug-and-play payment processor with flexibility to add their own changes.

PayPal finicky interface and API didn't allow for customizations. Well marketers, companies and engineers needed that customization to increase the conversion rates in their shopping carts. 

Stripe on the other hand, had extensive documentation and stellar support which earned them a loyal following among developers.

Moving Fast with Winning Features

Remember Conor McGregor - the famous MMA fighter and the champion of the UFC. The dude was the boss and behaved like that in and outside the ring. But after millions of dollars, lavish parties, and focusing more on the image and business rather than the actual training the Irishman fell from grace quick. 

This is the power of startups. Once the leaders became complacent, the hungry competitors swoop in and take a piece of the fame. 

This is what Stripe did. They adopted the things that worked from the current leader and quickly added the winning benefits to its capabilities.

In tech this is called being a Fast Follower. I’m stealing the definition from Thomas Ellsworth (the biz doctor).

Think about slipstreaming the leader by closely following their track and and at the right moment blowing past through with a series of quick iterations.

• Data-Portability - Stripe was so confident in their product, that they allowed free frictionless switching between payment solutions. With the move they showed they are proud and confident while also taking the risk on themselves rather than the customer.

• Quick Setup - Setting up Stripe is a breeze. Just create an account, and link it to your website or app.

• Fast Transactions - The problem with online payments was the speed of transactions. The incumbent - PayPal was was a decent solutions but boggled down with little frictions and annoyances that were a thorn in the side for engineers.

• Secure Transactions - PayPal hit some hurdles about security. When a competitor stumbles that's when the opportunity strikes. Stripe doubled-down on the messaging on how secure it is and how it follows the industry standards for data security, ensuring customer's information is protected.

• Stripe Atlas - Stripe stayed true to their audience of engineers and startups and rolled out Stripe Atlas - a service that helped startups incorporate and open an U.S Bank account

The Right Support

It wasn't just about the speed. Stripe was at the right time, at the right place, with the right partners. After getting initial seed money of $2M from Peter Thiel and Andreesen Horowitz (basically the Silicon Valley deities), they went ahead and collected funding from Sequoia Capital, General Capitalist, and AMEX Ventures. 

The last one deserves a special mention since it's the venture capital body of American Express - an American multinational financial services corporation specialized in payment cards. 

That was a huge deal. Having a financial institution in their corner as a strategic partner open up huge markets. In the following years Visa and MasterCard both joined the founding rounds and catapulted Stripe into the stratosphere.

Notable Success Stories

1. E-commerce giants like Amazon, Shopify, and ASOS trust Stripefor their payment processing needs.

2. Crowdfunding platforms such as Kickstarter and Indiegogo have integrated Stripe for secure and seamless transactions.

3. Subscription-based services like Spotify and Netflix rely on Stripe for recurring payments and hassle-free customer experiences.

4. Innovative tech companies including Slack, Zoom, and Peloton have chosen Stripe for their online payment solutions.

Just because there are leaders in the space it doesn’t mean that you can’t do their job faster and better. Stripe is a fine example how you can get your marketshare by imitating the main benefits and move fast to win the underserved market.

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