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Stripe’s Billionaire Founders Learn to Let Go
The Irish entrepreneurs are delegating more responsibility to key deputies.
If you bought something online in the last year, the odds are pretty good that the transaction was processed by a San Francisco startup called Stripe Inc. Some of the most popular apps in the U.S., including Lyft, OpenTable and Target, have adopted the service. As Stripe raced to keep up with rapid growth last year, the company interviewed thousands of potential recruits, increasing headcount more than 70 percent to about 600. But before they could get a job offer, most serious candidates were asked to meet with one of the two Irish brothers who started the company.
John and Patrick Collison, the twenty-something founders, liked having a say in who got hired because they said it maintained consistency. They would each spend as much as 15 hours a week on job interviews, but finding time on their calendars was a frequent source of frustration for recruiters. A similar practice was made famous by Larry Page, who said he signed off on every Google hire after he returned as CEO in 2011. But the Collisons found the limit of this exercise in January, when they agreed to hand off the responsibility.
The solution was to create a team dedicated to interviewing job candidates. Each recruit must meet with someone from that group or a senior executive before getting hired. Because the interviewer is purposefully not from the same department as the applicant, the system is designed to prevent the company from lowering its standards to fill a desperately needed role. The team has four employees now, and the company expects to have as many as 16 by the end of the year. Similar programs exist at Uber Technologies Inc. and Amazon.com Inc., which calls the interviewers “bar raisers.” John Collison, Stripe’s 26-year-old president, said: “It’s going to save me and Patrick from interviewing an ungodly number of people.”
In seven years, the Collison brothers built Stripe into a global company valued at $9.2 billion, now with 750 employees. But they continued to run some aspects of the business as if it were still a tiny startup. The downside: Not only did their over-involvement eat into their own schedules, but it also sometimes delayed decision-making company-wide, contributed to breakdowns in communication and bogged down staffers.
In recent years, the brothers learned it’s often best to let go. While the young college dropouts remain the public faces of Stripe and will host an onstage event Thursday for customers in San Francisco, they’ve been delegating more of their duties to a small group of lieutenants. A key deputy is Claire Hughes Johnson, the company’s chief operating officer and the one who first proposed the bar-raiser program. In addition to recruiting, the duo has started to step back from customer relations, fundraising meetings, geographic expansion and product development.
Many entrepreneurs hear stories about an effective business leader who labors over every detail, and they try to emulate it in the hopes of creating the next Snapchat or Uber, said Rob Siegel, a lecturer of entrepreneurship at Stanford University’s business school. However, micromanagement can thwart a company’s growth, he said. “We read about the mythical founder-entrepreneur who’s on top of details and works 24/7,” Siegel said. “But as a leader, you should understand that your only job is to set the vision, hire a great team and don’t run out of money. Otherwise, you’re probably not spending your time wisely.”
When one of the Collisons got obsessed with something in the past, it could turn into a major time-suck for the entire company. As Stripe was rapidly adding customers in 2014, it became inundated with unanswered support requests. The response from Patrick Collison, the chief executive officer, was to get directly involved, according to people who worked there at the time. Patrick and John devoted hours to answering support tickets. The CEO told staff at an all-hands meeting that they were expected to pitch in. Employees from software engineering, legal and other departments spent evenings and weekends responding to customer inquiries and participating in support-ticket “hackathons.” They put their regular work on hold for weeks, devoting several hours a day to the task.
Going all hands on deck was effective in the short-term but unsustainable, said Michael Schade, an early member of the support team who’s now a software engineer at Stripe. “Having everyone huddled around with Patrick and John, answering support emails together, is now thankfully a distant memory,” he said. Eventually, the Collisons agreed to hire support vendors and open offices in other time zones. The suggestion came from Johnson, who experienced a similar challenge at Google before she joined Stripe.
The founders’ attention tends to gravitate toward their interests. The CEO loves to code, so he had the entire software engineering team reporting directly to him until 2015, when the number reached about two dozen, said Raylene Yung, a senior engineer. The setup was a slog, with projects hanging in limbo awaiting Patrick’s feedback or signoff, she said. Yung and another manager eventually took over and are now the only two under Patrick from that department.
Customers faced a similar problem. A main avenue for giving feedback to the company was by contacting the founders through email, Twitter or Hacker News messages. But the Collisons frequently forgot to pass along the notes or follow up with customers, said Vicki Lin, head of sales and account management for the U.S. and Canada. Again, it was Johnson who helped the company build out a more mature system, where each of Stripe’s biggest customers is assigned a dedicated liaison. “We were too much of a bottleneck of feedback getting to our product team,” John said.
When the brothers aren’t involved in every part of the business, things move faster. “Two years ago, when Patrick and I were closely involved, we could only do one hard product at once, like launching in the U.K.,” John said. “Now I see things come along where I’m like, ‘Whoa, I didn’t realize that was ready to launch.’”
Patrick said he and his brother have been able to scale back their involvement thanks to an executive team that’s earned their trust. A fundraising effort late last year was the first that wasn’t led by a Collison. Chief Financial Officer Will Gaybrick oversaw negotiations for a $150 million investment that nearly doubled the company’s valuation. Gaybrick also handles preparations for board meetings, another former Collison duty. Chief Business Officer Billy Alvarado leads the company’s biggest partnerships and its international expansion. “Not only are John and I not the primary forces behind so much of what’s significant that Stripe does, we might be 20th or 50th or even absent on the list of people driving some of the most important things we do,” Patrick said.
Despite handing off many of their old responsibilities, the Collisons profess to being busier than ever. But having spent almost all of their adult lives working on Stripe, the brothers, who still live together in an apartment in San Francisco, entertain thoughts of what they would do if they had fewer demands on their time. “I’m sure I’d be some kind of infrastructure developer, and I’m pretty sure John would be a fundamentals-oriented public market investor,” Patrick said. “Last week, I came home, and he was like, ‘You’ll never guess what’s in their 10-K.’ It was for some satellite company. I once caught him listening to the NetSuite earnings call in bed. He was calling out quotes to me.”
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