This Week in Startups
00:34:24 · Lon Harris
[00:34:24] S0: Yeah. Of course, as as, as we sort of tease, Stripe and Advent International made a joint offer to acquire PayPal for about $60.50 a share. That would have valued it at about $53,000,000,000, a little bit more. But, you know, that it did it did not, that that was for mid July. We so far don't have an update from PayPal. It looks like maybe that particular deal has sort of stalled out. Just, you know, in in retrospect, funny, nine years after these comments that they sort of came back around to each other. The other thing I think that is so fascinating is not only has PayPal remained, like, sort of consistently valued in in all of that time, a very long time in the technology world, but it's so fundamentally the same offering. I mean, it just it's like PayPal always stayed PayPal. They didn't... All these other fintech revolutions have happened. I've now got... You know, I had the PayPal app on my phone this whole time. Now I've got Kalshi next to it. Now I've got Zelle next to it. Now I've got Venmo next to it. Now I've got Robinhood next to it. And it's like, why didn't PayPal become any of those other things? It's sort of a fascinating question.
00:35:30 · Alex Wilhelm, Jason Calacanis, Lon Harris
[00:35:30] S3: I mean, I think you're describing what... Like, the entire opportunity for startups. Because what does a startup do? They go into a market where the incumbent is lacking, say... Or they invent a new market. In this case, I think what startup did was a bit of both, attacking incumbents and creating something that was new. You saw Patrick in that clip talk about how some companies want to be like the AWS for payments, but they don't have the actual tech for it. So clearly, they were improving the tech, but also doing something that we've seen before much better. And the market will respond. So if you look at the most recent results, Lon, if you look at PayPal's second quarter results from this year, revenues were up 5% year over year, which is essentially zero after inflation, if you want [00:36:09] S2: do it that way. [00:36:09] S0: As well be nothing. Yeah. [00:36:10] S3: Might as well be nothing. I think this is just the risk. Know, we... A large company spends more time defending its cash flows than it does innovating. And sometimes you can see an incumbent that was built as a disruptor originally fall prey to the same foibles that caught up their previous generation's competitors. Another example of this recently, I would say, Amazon blocking Muse and Instinct and other agents for being able to interact with its website because it wants to charge ad dollars against human eyeballs, not facilitate machine transactions. Mistake. Fundamental mistake that will bite them in the backside.
00:36:10 · Alex Wilhelm, Lon Harris
[00:36:10] S3: Might as well be nothing. I think this is just the risk. Know, we... A large company spends more time defending its cash flows than it does innovating. And sometimes you can see an incumbent that was built as a disruptor originally fall prey to the same foibles that caught up their previous generation's competitors. Another example of this recently, I would say, Amazon blocking Muse and Instinct and other agents for being able to interact with its website because it wants to charge ad dollars against human eyeballs, not facilitate machine transactions. Mistake. Fundamental mistake that will bite them in the backside. [00:36:42] S0: Yeah. We said that on the show. There was, like, a... There was a clip going around that we put on social about Jason. I think it was with me talking about this. And people got so mad. They were like, it obviously makes sense that Amazon would like, why would you guys even expect Amazon to, like, play along? Like, they want you to use their own agent. And it's like, it doesn't... It it doesn't... The moment you try to do it and then you can't buy something off of Amazon with your agent and you get frustrated, that's the moment it becomes a mistake. Like, it's... They should be facilitating any way you wanna buy things. They're Amazon. That's what they do. They sell you things in an easy direct fashion. That's like the whole big They should
00:36:42 · Lon Harris, Alex Wilhelm
[00:36:42] S0: Yeah. We said that on the show. There was, like, a... There was a clip going around that we put on social about Jason. I think it was with me talking about this. And people got so mad. They were like, it obviously makes sense that Amazon would like, why would you guys even expect Amazon to, like, play along? Like, they want you to use their own agent. And it's like, it doesn't... It it doesn't... The moment you try to do it and then you can't buy something off of Amazon with your agent and you get frustrated, that's the moment it becomes a mistake. Like, it's... They should be facilitating any way you wanna buy things. They're Amazon. That's what they do. They sell you things in an easy direct fashion. That's like the whole big They should [00:37:17] S3: have the world's biggest hook outside for my agents to hook onto. They should accept any possible type of payment that I want. Yeah. They should have an intelligent way to handle my permissions. And you know what company would support that? Stripe. Stripe. [00:37:28] S0: Who had... [00:37:28] S3: Who was working on agenda payment. I think it is. Exactly. So it's it's it's fun to see people that were right stay right, and I'm I'm really glad that they didn't buy PayBucks. I think that deal looked really dumb from the outside. I'm sure there was more logic to it, but I'd rather have Stripe unencumbered than Stripe dragging PayPal behind it like the alien in, Independence Day.
00:37:28 · Alex Wilhelm, Lon Harris
[00:37:28] S3: Who was working on agenda payment. I think it is. Exactly. So it's it's it's fun to see people that were right stay right, and I'm I'm really glad that they didn't buy PayBucks. I think that deal looked really dumb from the outside. I'm sure there was more logic to it, but I'd rather have Stripe unencumbered than Stripe dragging PayPal behind it like the alien in, Independence Day. [00:37:49] S0: Okay. There you go. Took a second, but I got there. Let's move on to our next clip. This is we promised up top. I don't like to promise things at the top of YouTube videos that we're not gonna deliver, folks. So we are about to deliver. This is, I think, a really good piece of tactical and practical advice for founders coming from arguably one of the great founders of the modern technology era. Hard to make that argument. Let's take a look, Zach, at this next clip about how good ideas don't always seem intuitively great when you first have them.
00:38:21 · Patrick Collison
[00:38:21] S4: Over the course of that summer, basically... And and again, I think there's kind of maybe a lesson here where, you know, I think a lot of really good ideas really don't seem particularly great or big upfront. Again, certainly speaking from personal Stripe did not. But over the course of working on it that summer, sort of thinking about it and so on, we kind of came to shift from sort of thinking about it merely as this nice little tool for developers that kind of makes their lives easier initially, which is kind of what we started out with, to kind of realizing that, well, when you sort of survey the broader landscape, it's not just that it sort of sucks for developers to have to sort of integrate payments initially into their website or service or whatever, but that like the whole edifice is broken, right? I mean, 2% at the time, 2% of all consumer spending took place on the internet, and it's like, why is it so low? Why is it so insanely difficult for any company to do anything that touches online transactions? When we went, we talked to a mid sized company or a large company. It's like, what's your experience of just dealing with business and the internet? And they would, you know, they would spend half an hour telling us about sort of the markets they couldn't serve and their fraud challenges and the things they couldn't integrate in, and just, you know, we came to appreciate that sort of what we thought was kind of a, know, this little pond was actually kind of this much larger ocean. And so we see that summer we kind of made two decisions, to drop out of school, or you know, as our mom used to, prefer we call it, to take a leave of absence. And then secondly, we had to go raise some initial money from Sam Altman, and and Peter Thiel and and Sequoia and a couple of others.