#32 Patrick Collison: Earning Your Stripes
Patrick Collison, co-founder and CEO of Stripe, shares insights on Stripe's journey from a small startup to a global internet infrastructure company. He discusses lessons learned in scaling, hiring, decision-making, and the profound impact of reading and personal connections.
Deep Dive Analysis
15 Topic Outline
Patrick Collison's Unconventional Educational Path
Cultural Influences of Ireland on Stripe's Ethos
Core Values and Hiring Philosophy at Stripe
Early Challenges and Lessons from Stripe's Founding
Scaling an Organization from Two to a Thousand Employees
Balancing Exploration and Exploitation in Business Strategy
Patrick Collison's Evolving Decision-Making Process
Organizational Learning and Feedback Mechanisms
Admired Company Cultures and Traits of Sustained Success
Epistemology and Bias Correction in Successful Institutions
Patrick Collison's Approach to Reading and Filtering Books
The Impact of Peer Groups and Mentors
The Future of E-commerce and Global Payments
Friction in Systems: Bugs or Features?
Silicon Valley's Challenges: Cost of Living and Innovation
7 Key Concepts
Transition Year
An optional year in the Irish high school system, typically between two major exam periods, designed to allow students to pursue non-academic interests like work experience or travel.
Cohesion over Correctness
A tendency in some organizations to prioritize smooth interpersonal interactions and agreement, even if it means sacrificing the pursuit of the most accurate or optimal solution. Stripe actively tries to identify people seeking correctness over cohesion.
Explore/Exploit Trade-off
The challenge for organizations to balance investing in new, speculative ventures (exploration) with optimizing existing, known successful activities (exploitation). Stripe aims for roughly 70-80% exploitation and 20% exploration.
Buxton Index
A concept referring to the time horizon upon which an organization makes its decisions. Organizations with very different Buxton indices often find it difficult to work together due to fundamental impedance mismatches.
Organizational Pace Layering
An analogy to Stuart Brand's concept for buildings, applied to organizations. It describes how different parts of an organization need to change at different rates to allow for both stability and the exploration of new, fundamentally different ideas.
Gravity Equation (Economics)
An economic model suggesting that the proclivity of any two countries to trade falls off with the square of their distance. This phenomenon might be influenced by prosaic factors like the complexities and hidden costs of payment methods.
Baumol's Cost Disease
A phenomenon where the costs of services (like healthcare or education) rise faster than inflation, often because productivity gains in other sectors (like manufacturing) lead to higher wages, increasing the opportunity cost of labor in less productive sectors.
11 Questions Answered
He became deeply interested in programming during an optional 'transition year' in high school, and later, after an initial startup success, he returned to MIT but decided that an academic career in physics was not for him, finding programming and technology more enjoyable.
His Irish upbringing fostered an outward-looking perspective, emphasizing globalization and openness to immigrants, and a cultural warmth that Stripe tries to replicate internally, such as playing music in common areas to put people at ease.
Stripe looks for rigor and clarity of thought, a determination and willfulness to push against the default outcome of non-existence, and interpersonal warmth with a desire to make others around them better off.
They realized that a straightforward API-based payment infrastructure for developers didn't exist, and the problems they perceived for small projects were also faced by larger companies, indicating a vast, nascent market where no 'dark energy' prevented a solution.
The difficulty lies in the uncontrollable rate at which problems appear across all organizational levels, often outstripping the rate at which solutions can be implemented, leading to psychological and emotional strain and the need to make consequential decisions under uncertainty.
Most organizations are institutionally resistant to bets because their primary focus is on optimizing existing systems, which requires a different mindset than fundamentally new, riskier ventures, leading to an 'impedance mismatch' between exploration and exploitation.
Not having the right peer group or not being deliberate enough about who they choose to spend time with, as these relationships are massively formative and influential in determining one's future trajectory.
He prioritizes books that are both 'really worth reading' and 'really enjoyable to read,' quickly discarding many if they don't meet the enjoyment criterion, and is willing to switch books as soon as a more interesting or important one is discovered.
Making it easy for any two parties in arbitrarily chosen countries to transact will have enormous consequences, potentially moving macro outcome measures like the number of new technology firms started, their survival rates, and global market expansion.
Not always; many things that appear as 'bugs' (friction) are actually 'features' from the perspective of a specific constituency, and politics often involves reconciling these countervailing interests, even if the social utility loss outweighs the constituency's gain.
The rising cost of living and housing, driven by inefficient land use and collective political decisions, which leads to the displacement of non-tech workers and stifles future innovation and wealth creation for newcomers, representing a 'suffocation of future potential'.
52 Actionable Insights
1. Cultivate Influential Peer Group
Deliberately choose and invest in your peer group, recognizing that you tend to become the average of your five closest friends, making this choice massively formative for your personal development.
2. Prioritize Self-Directed Learning
Actively pursue your deep interests and self-education, even if it means diverging from conventional educational paths, as this can lead to accelerated learning and unique opportunities.
3. Embrace Unconventional Opportunities
Be open to unexpected opportunities and ideas that arise, especially if you are not bound by strong cultural expectations for traditional paths, as this can lead to significant shifts in your trajectory.
4. Test Career Hypotheses
Actively test your career hypotheses, even returning to previous paths to re-evaluate, and be willing to pivot if the reality of a field or your personal enjoyment doesn’t align with your expectations.
5. Prioritize Decision Speed
Prioritize decision speed, making more decisions with less confidence and earlier in the decision-making curve, treating fast decisions as an asset, as you can often course-correct later.
6. Categorize Decisions by Impact
Categorize decisions by their degree of reversibility and magnitude of impact; deliberate carefully over low-reversibility, high-impact decisions, but prioritize speed and flexibility for all other types.
7. Delegate Decisions, Fix Systems
As a leader, deliberately make fewer decisions by pushing others to decide, recognizing that your need to make a decision often signals an underlying organizational or institutional issue that needs fixing.
8. Uncover Underlying Model Differences
When disagreeing on a decision, don’t just discuss the decision itself; instead, dig into the underlying differences in mental models or what each party is optimizing for, to achieve deeper alignment.
9. Define Team Missions and Metrics
Have different parts of the organization explicitly write down what they are optimizing for, their mission, long-term key metrics, and customers, to ensure foundational agreement and reduce persistent friction from latent disagreements.
10. Design Robust Feedback Mechanisms
Optimize for designing robust feedback mechanisms, incentive structures, mindsets, and clear goal definitions within the organization, treating it more like a continuous, biological apparatus rather than a series of binary decisions.
11. Cultivate Thoughtful Disagreement
Cultivate a culture of thoughtful disagreement where people enjoy finding the limitations and exceptions of arguments and beliefs, rather than seeing such challenges as personal attacks, to foster deeper understanding.
12. Seek Limits of Arguments
Embrace the mindset that ’there are no knockdown arguments’ and actively seek out where heuristics, intuitions, and rules might be wrong, viewing such discoveries as enjoyable rather than stressful.
13. Prioritize Correctness Over Cohesion
Cultivate rigor and clarity of thought, prioritizing correctness over smoothness of interactions, and be willing to contemplate improbable or surprising ideas, even if it means being wrong.
14. Embrace Competitive Determination
Cultivate determination and competitiveness, finding enjoyment in pushing against difficult odds and expected failures, as this mindset is crucial for achieving significant goals, especially in challenging environments like startups.
15. Foster Interpersonal Warmth
Prioritize interpersonal warmth and a genuine desire to make others around you better, as this creates a more enjoyable and supportive environment, especially given the large fraction of life spent at work.
16. Uphold Ethics and Integrity
Uphold strong ethics and integrity in all actions and interactions, as this is a foundational expectation for any individual and organization.
17. Identify Unsolved “Strange” Problems
When considering a new venture, actively search for problems where an obvious solution for a large market should exist but doesn’t, as this non-existence can signal a significant, overlooked opportunity.
18. Investigate Hidden Constraints
Before committing to a new venture, thoroughly investigate if any unobserved constraints or ’latent forces’ (like regulatory blocks) exist that might prevent a solution from being viable, ensuring you’re not pursuing an impossible problem.
19. Build Prototypes Quickly
Build a prototype quickly to get a sense of what a solution could look like and to test initial assumptions, even if it’s more of a concept rendering than a full solution, to gauge viability.
20. Validate Broad Market Need
Validate that the problems you perceive for a niche segment are also shared by larger entities or represent a much broader market, indicating a significant ‘ocean’ of opportunity rather than just a small ’lake’.
21. Anticipate Constant Problem Influx
Recognize that in scaling a business, problems will materialize at an uncontrolled rate across all levels and magnitudes of the organization, requiring constant adaptation and problem-solving efforts.
22. Manage Emotional Scaling Challenges
Practice emotional self-management to deal with the psychological difficulty of facing a constant, often unreasonable, swathe of problems that materialize daily in a scaling organization.
23. Decide Under Time-Constrained Uncertainty
Learn to make consequential decisions under uncertainty, balancing the desire to obtain more information with time constraints, recognizing that you often won’t have time to fully mitigate uncertainty.
24. Balance Exploration and Exploitation
Continuously balance exploration (figuring out new things) and exploitation (optimizing existing systems), allocating resources (e.g., 70-80% to optimization, 20% to speculative bets) to ensure both stability and future growth.
25. Rapidly Acquire Leadership Skills
Be self-aware of your managerial and leadership inadequacies relative to the demands of a rapidly growing company, and actively figure out strategies to acquire necessary skills as rapidly as possible.
26. Allocate Resources with Heuristics
Allocate resources using heuristics, such as devoting 70-80% to optimizing existing operations and 20% to speculative projects, but remain flexible to revisit or make exceptions for particularly promising opportunities.
27. Tailor Team Focus (Explore/Exploit)
As an organization grows, permit heterogeneity in the balance of exploration and exploitation across different teams, allowing some to focus more on new ventures and others on optimization to avoid diseconomies of scale.
28. Prioritize Low-Downside Bets
When considering speculative projects, prioritize those where the downside cost is not excessively large or fatal to the organization, even if the potential upside is significant, to manage risk.
29. Reconcile Diverse Organizational Mindsets
Actively reconcile the mindsets of those optimizing existing systems with those exploring fundamentally new ideas, ensuring they can collaborate and feel like they are on the same team despite their structural disagreements.
30. Seek Strong, Defined Cultures
Seek to build or join organizations with strong, well-defined cultures that members can articulate at length, including what they dislike, as this indicates a clear identity rather than a ‘milk toast averaging’.
31. Cultivate Culture of Perfection
Cultivate a culture of perfection with extraordinarily high standards and a primacy of work, where the work speaks for itself, sometimes with anonymity of the creator, demonstrating a deep belief in quality.
32. Study Sustained Organizational Success
Study organizations with longevity and sustained success over decades, looking beyond single drivers of success to understand the underlying institutional characteristics that enable continuous compounding and adaptation.
33. Prioritize Epistemology for Clarity
Prioritize epistemology, structuring doubt, and accounting for biases to achieve clarity of thinking, drawing inspiration from successful multi-decadal institutions like Berkshire Hathaway and Koch Industries.
34. Foster Reading Through Limitations
If raising children, consider how limitations (like poor internet access) can foster a love for reading and self-directed exploration, allowing children to burrow through books and follow their own interests.
35. Support Interests, Don’t Choose
When guiding others, push from behind by supporting their interests rather than pulling in front by choosing them, fostering intrinsic motivation and self-directed exploration.
36. Read for Essential Knowledge
Treat reading as something you ‘ought to do’ because there’s so much important knowledge to acquire, even if it’s not always a blissful experience, to alleviate the stress of not knowing.
37. Ruthlessly Filter Reading Material
Filter reading material ruthlessly: prioritize books that are both ‘really worth reading’ and ‘really enjoyable to read,’ discarding those that don’t meet both criteria, as there are more such books than you can read in a lifetime.
38. Be an Active Book Consumer
Be an active consumer of books: skim, skip, backtrack, discard, and annotate wildly, recognizing that you are not subject to the book but rather the book is there for your utility.
39. Follow Influences of Admirers
Don’t just follow the people you admire; instead, follow what they admired, trying to disentangle the obscure influences and upstream sources that shaped their ideas and work.
40. Read While Walking
Optimize ‘dead’ time by reading while walking, as your peripheral vision allows for functional reading, making use of time you already spend in motion.
41. Test Books Mid-Read
When starting a new book, jump midway through and read a few pages to see if you ‘would like to have ended up here,’ and if so, backtrack to the start to read more seriously.
42. Always Read Your Best Book
At every moment, strive to be reading the ‘best book for you’ in the world; as soon as you discover something more interesting or important, immediately discard your current book in its favor to avoid reading suboptimal material.
43. Create Physical Idea Space
Leave physical books strewn everywhere (kitchen, bedroom, bed) to create an ‘idea space’ that makes productive intellectual collisions more likely, as their presence can trigger relevance or recommendations.
44. Annotate Book Margins
Annotate books by underlining or marking in the margin, rather than the text itself, so you can quickly flip through and see all the parts you’ve marked.
45. Index Key Book Pages
On the last pages or inside cover of a book, quickly note page numbers for particularly interesting points or things that jumped out, creating a list for easy future reference.
46. Summarize Books for Friends
For really good books, write a review for friends (e.g., email, Google Doc) or share snippets, as the act of summarization aids synthesis and recollection, and it can also trigger further suggestions from friends.
47. Reach Out to Admired Individuals
Reach out to people whose work you admire and tell them so; even if only half respond, the asymmetric upside of potential dialogue and connection is incredibly rewarding and costs little when they don’t.
48. Reduce Global Commerce Friction
Work to reduce fundamental friction in global commerce, such as making it easy for any two parties in arbitrarily chosen countries to transact, as this will have enormous consequences for worldwide economic development.
49. Perturb Macro Economic Systems
Think about how to perturb overall economic systems to move macro outcome measures, such as increasing the number of technology firms started, their survival rate, and their expansion, rather than just focusing on micro-level improvements.
50. Advocate Better Management Practices
Advocate for and implement better management practices, as empirical evidence shows they can lead to double-digit percentage increases in revenue and value provided, representing an incredible low-hanging fruit for economic improvement.
51. Challenge Societal Inconsistencies
Challenge societal inconsistencies where we decry a lack of innovation or poor outcomes, yet collectively implement structures (e.g., regulatory) that actively prevent improvement, recognizing the dissonance in our stated desires and collective actions.
52. Address High Cost of Living
Actively address issues like housing and cost of living in productive regions, recognizing that inefficient land use and high costs are a negative-sum game that stifles future innovation and displaces people, rather than being an unavoidable economic force.
7 Key Quotes
The default outcome is your relatively near term non-existence. Like the default outcome is that you do not survive. And to survive over the medium or even with even more difficulty over the long term, that's like an unnatural act.
Patrick Collison
I think most organizations are sort of institutionally resistant to bets, uh, in that because most people are necessarily optimizing things that already exist.
Patrick Collison
You shouldn't follow the people you most admire, but you should follow what they admired.
Patrick Collison
It never gets easier. You just go faster.
Patrick Collison
You end up the average of your five closest friends.
Patrick Collison
I think across society, I think so many of the things that look like bugs are actually features from the perspective of, um, uh, of, of somebody, uh, of, of some constituency.
Patrick Collison
Progress in physics really felt like it had sort of slowed down pretty substantially compared to the, you know, 1910s, 20s, 30s, the sort of the period in which so much of what we were learning about, you know, that's a broader period of discovery.
Patrick Collison
2 Protocols
Patrick Collison's Evolving Decision-Making Process
Patrick Collison- Place more value on decision speed, aiming to make more decisions with less confidence but in significantly less time, recognizing that course correction is often possible.
- Categorize decisions based on their degree of reversibility and magnitude of impact; deliberate more over low-reversibility, high-impact decisions, but prioritize speed for all others.
- Deliberately make fewer decisions personally, pushing others (especially domain experts) to make them, as a need for a decision from the CEO often indicates an underlying organizational issue.
- When disagreeing with a decision, focus on understanding the difference in underlying models or optimization goals between parties, rather than just the decision itself, to achieve foundational agreement.
Patrick Collison's Book Reading Approach
Patrick Collison- Jump midway through a book to start reading and assess if you would like to have ended up there; if so, backtrack to the start and read more seriously.
- Discard a book as soon as you discover something more interesting or important, always reading the 'best book for you' at any given moment.
- Leave physical books strewn in various places (kitchen, bedroom, on the bed) to create an 'idea space' that facilitates productive collisions and reminders of their relevance.
- Annotate books by underlining interesting points in the margin and noting page numbers for key insights on the last pages for easy future reference.
- For exceptionally good books, consider writing a review for friends or sharing snippets to aid in synthesis and trigger further suggestions or discussions.