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The First Few: Stripe
A new Just Go Grind series on how companies acquired their first customers
Justin Gordon
December 19, 2024
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Hey friend,
I’m launching something new, a series called The First Few.
By the way, if you have a better name, please let me know 😊
The first edition of this series, about how Stripe acquired their first customers, is free to everyone, but paid subscribers will get access on an ongoing basis to the new editions in full.
This series will be easily consumable and highly actionable, providing insights you can use to grow your business. It’s meant to be a shorter edition apart from the 4,000 - 10,000 word founder deep dives I publish.
While I’m writing this first edition, I’m also considering hiring a writer to take the lead on this series moving forward. If you’re interested, please reply to this email.
Let’s dive in.
The First Few: Stripe
Stripe, as of this writing, is valued at $70 billion, making it one of the most valuable startups in the world. In an era when payment solutions like PayPal were clunky and bloated, Stripe won over developers by making payments seamless, fast, and developer-friendly. In turn, they became their most effective marketers.
Stripe’s founders, Patrick and John Collison, had an ambitious mission: Increase the GDP of the internet. At the time they started Stripe, just 2% of all consumer spending in the world happened on the internet. That number is 10x more today.
Timeline
2009: Patrick and John Collison start working on the company, which is at the time named SlashDevSlashFinance, Inc. (Thankfully, they changed the name)
2010: Stripe’s private launch; Patrick and John start working on it full-time
2011: Stripe’s public launch on September 29th; Stripe is a team of 10 and has ~100 customers by then
2012: Stripe’s revenue chart is a hockey stick
2013: That hockey stick growth continues
2014: $40 million in revenue
2016: $450 million in revenue 😳
2017: $1 billion in revenue
2018: $1.5 billion in revenue
2019: $2 billion in revenue
2020: $7.4 billion in revenue
2021: $12 billion in revenue
2022: $14 billion
2024: Stripe valued at $70 billion 🤯
Early Growth Summary
Our sales and marketing strategy for a very long time was writing blog posts that we just thought were good and interesting, or at least, we hoped were, and building a good product and hoping that people would tell others about it. And I really don’t think that that would have worked 10 years previously.
How Stripe Acquired The First Few Customers
The first customer: A friend of the founders, Ross Boucher, who became one of Stripe’s first employees. Not surprising, given many B2B companies acquire their first few customers through the founders’ personal network.
Y Combinator companies. Stripe acquired their first 10-30 customers through Y Combinator. Stripe was backed by YC, though Patrick and John didn’t technically go through the accelerator for this company, they had been through it previously. How did they approach companies from YC? Through what YC’s co-founder, Paul Graham, described as the “Collison Installation.”
The Collison Installation. Here’s the explanation from Paul Graham’s essay, “At YC we use the term ‘Collison installation’ for the technique they invented. More diffident founders ask ‘Will you try our beta?’ and if the answer is yes, they say ‘Great, we'll send you a link.’ But the Collison brothers weren't going to wait. When anyone agreed to try Stripe they'd say ‘Right then, give me your laptop’ and set them up on the spot.” I love this. Speed is everything in startups.
Word of Mouth. What’s one way to acquire customers through word of mouth? Creating a great product. The Stripe team relentlessly focused on just that from the beginning. A big selling point was developers needing just “7 lines of code” to start collecting payments online. On the Techzing Podcast in 2012, Patrick described this: “Initially it very much spread through a word of mouth process. That was surprising to us because it’s a payment system not a social network so it’s not something you’d think would have any virality whatsoever. But it became clear that everything else was so bad and so painful to work with that people actually were selling this to their friends.”
Blog posts. People weren’t only selling Stripe to their friends by telling them about it - they were writing blog posts about this product that seemed far superior to what was around at the time. In tandem with others writing blog posts about them, which included a post on Hacker News and on the YC blog from the YC team on June 14, 2010, the Stripe team wrote their own blog posts about the company, tailored to their core audience - developers.
Community building. One way Stripe used community-building for growth early on? Capture the Flag challenges. These were “extremely elaborate security challenges that test an attacker’s ability to discover and exploit security holes.” Stripe announced the first one on their blog in February 2012. They had 10,000 entrants with 200 completions. The winners got free t-shirts. Capture the Flag 2.0 launched on August 22, 2012 and by August 27th they already had 14,000 signups with 500 people capturing the flag. I just went down a rabbit hole reading about people sharing their experience trying to solve it. It’s genius. Create a challenge. People solve it for fun. They write about it. You get goodwill and visibility.
Running ads on StackOverflow. This was the only paid channel for the first year. Stripe started running ads in April 2012, which was mentioned in this Startup Grind interview.
Key Takeaways
Create a Product Worth Sharing. Developers couldn’t help but talk about and write about Stripe because of how the product solved their pain points.
Leverage Networks for Distribution. Patrick and John didn’t need to raise money early on - they were already millionaires. Among other reasons, they raised capital for better access to networks of their customers. When they created their Capture the Flag challenge, they leveraged Stripe’s growing ecosystem to get the most value from it. How can you get access to the networks your customers are a part of?
Start Niche, Scale Broadly: Stripe focused on a small, influential audience (Y Combinator ecosystem) to create momentum and expanded from there over time.
Go Direct. Stripe built their own distribution through blogging, a powerful strategy that not only served as marketing, but positioned them as leaders in the payments space. This strategy compounds over time, costing significantly less than other marketing strategies.
Be Selective with Paid Marketing (Initially): Stripe didn’t start running ads on StackOverflow until more than two years after starting the company. The focus? Making a great product. Yes, this is specific to them, in their industry, but it proved to be the right strategy.
Final Words on Stripe’s Early Customer Acquisition
We sort of intentionally held off marketing for a long time because, it’s sort of that forcing function again, like if our users aren’t talking about Stripe, then we should make Stripe more awesome until they do.
Dive Deeper on Stripe
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Best,
Justin
Founder of Just Go Grind and Village Lane
P.S. Hiring? Check out the team at Athyna
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