Patrick Collison: Is AI Breaking the Lean Startup Playbook?

1. 0:00 – 0:07

   Intro

   1. HTHarj Taggar0:00

      [upbeat music]

2. 0:07 – 2:01

   What Should You Still Learn in the Age of AI?

   1. HTHarj Taggar0:07

      Okay, Patrick, thanks so much for being here. Welcome to Startup School.

   2. PCPatrick Collison0:11

      Great to be here.

   3. HTHarj Taggar0:12

      Cool.

   4. PCPatrick Collison0:12

      Um, Harj and I first met 20 years ago and, um, uh, he, um, we started a company together. Uh, sorry, am I giving away the introduction? [laughs]

   5. HTHarj Taggar0:22

      [laughs] Yeah, I d- I thought this was my interview, but [laughs] so keep, keep going. You're doing a great job.

   6. PCPatrick Collison0:26

      Well, as you say, we started a company together, uh, many, many years ago, and, uh, I learned a huge amount from Harj. Uh, so it's, uh, it's really fun to do this.

   7. HTHarj Taggar0:33

      Cool. All right. Let's, um... Well, actually, I mean, speaking of that, so when I think when I first met you 20 something-ish years ago, um, at the time, your most impressive achievement, uh, I would argue was Chroma, your dialect of Lisp.

   8. PCPatrick Collison0:46

      Any Lisp programmers here? Oh, wow. Okay. That was, um... I think I heard one whoop, which is more than I expected.

   9. HTHarj Taggar0:53

      [laughs]

   10. PCPatrick Collison0:53

       Um, but, uh, yeah, I, I really liked Lisp when I was in high school.

   11. HTHarj Taggar0:56

       Yeah. So what I was gonna ask is, um, a prolific 16-year-old today could presumably just, like, prompt call to write their dia- their Lisp dialect. Um, would you, would you advise them to not do that and still, still do it? Is there, is there any value in such things?

   12. PCPatrick Collison1:11

       I don't know. I wonder a lot. Um, yeah, like obviously on the one hand, uh, it used to be really fun to write all this assembly and machine code and to optimize your instructions and ma- layout and memory and everything, and now we don't have to do that anymore. Compilers do it for us. We don't mourn it too much. And so maybe in the same way we shouldn't mourn source code and we should just transcend the plane of, uh, instructions to Claudius, uh, at all. But, um, but e- emotionally, I miss it.

   13. HTHarj Taggar1:40

       Um-

   14. PCPatrick Collison1:40

       But-

   15. HTHarj Taggar1:41

       How about... I think just like as I've been hanging out here, um, uh, with these students, like, the, so, like, maybe the question behind it is, many of them are just wondering what should they be learning at college? Like, what is sort of in this sort of AI world, like how much, um, how much should they be trying to learn and derive from first principles, and how much should they just outsource to the, to the AI?

3. 2:01 – 5:12

   Knowledge Still Matters

   1. PCPatrick Collison2:01

      Right. Um, I mean, my model of this is, um, is cache, um, you know, the C-H, not an S-H, where Jeff Dean has this, uh, famous set of numbers that every programmer should know, uh, bandwidths and latencies and just kind of relevant constants you sort of reason about as you, as you build systems. And obviously, you know, thinking of building any system or distributed system or whatever, like all lookups and all, you know, relevant bandwidth between different, um, components are, are, are very different, right? Uh, and, you know, retrieving something from L1 cache is very different to retrieving from RAM is very different from retrieving across the network or whatever. And I think it's like that with knowledge, where fine, yes, you can ask the agent or something to compute something for you or to look something up for you, whatever. That's a hell of a lot slower than knowing it in cognitive L1 cache. And you can have way more round trips in your brain than you can, you know, muttering through, you know, Super Whisper or typing it out or whatever. And so I think even granting the full capabilities of the, of the models, I still, I still think there's a, a pretty... Like, I think for, for a long time to come, uh, neuronal lookups will be, will be much faster. Um, and, and then look, if you, uh, look in revealed preference, uh, at what, uh, companies themselves are doing, whether they're companies like Stripe or the labs or what have you, um, there still seems to be an enormous premium on cognitive ability. And so I wouldn't... I, I, I think, um, renouncing that before there's evidence that we've saturated, uh, those benefits would be premature.

   2. HTHarj Taggar3:41

      Um, I mean, are there, are there specific things that maybe you personally, e- either personally or as, as CEO of Stripe, um, you still, you purposefully choose to sort of do yourself and, like, retrieve from your own cache, um, even though, like, the agents would probably do a, a, a reasonably good job?

   3. PCPatrick Collison3:56

      Um, I still, I still write myself. Like, I, I, um, I, I, I don't... I, I both philosophically but also, uh, specifically, substantively, uh, dislike the writing of the models. I mean, it's very interesting, right? Because these can prove the Jacobian conjecture, you know, whatever. Uh, and so clearly they're capable of these monumental feats. Um, but somehow I still haven't read the LLM essay that I found super compelling. Now, maybe it's just very hard to, like, RL limit that domain because the, you know, the utility function or something is kinda hard to define. Um, but yeah, um, I, I think writing is a pretty... Like, interpersonal communication and writing I think are so very fundamental and sort of being able to reason sensibly in the multidimensional space of reality. And in some i- kind of indescribable way, I feel like the model is still kind of deficient at that. And so I've never... I've yet to send, you know... Every tool is now trying to prompt me with, you know, prewritten, uh, suggestions, uh, whether it's, you know, Gmail or, uh, apparently WhatsApp just rolled this out.

   4. HTHarj Taggar5:09

      [laughs]

   5. PCPatrick Collison5:09

      Um, and I think I've still sent zero of those in my life.

4. 5:12 – 9:58

   Should You Drop Out of College?

   1. HTHarj Taggar5:12

      Cool. Um, how about, so if you ta- talk about the Stripe story, uh, the early days in particular a little bit. Uh, you were at MIT, then you left to start Stripe. Uh, how did you think about that decision? And obviously we're in a stadium full of college students. How should they think about it? How do you, how do they know if it's the right decision for them to, uh, leave college early and go start a company versus stay?

   2. PCPatrick Collison5:37

      Yeah. Well, I, I think I have the slightly unusual distinction of having dropped out of college twice to start a company.

   3. HTHarj Taggar5:43

      [laughs]

   4. PCPatrick Collison5:43

      So, um, so maybe one thing to know is that it's not totally trap door. Uh, you can, uh, you can drop out and, and in fact return. Uh, so, um, uh, I dropped out after my freshman semester, um, to s- start this company, uh, uh, with, uh, with Harj. Uh, that was super fun. And then after a couple years of that, went back, did another year, uh, uh, at MIT, and, uh, and then dropped out again to, to start Stripe. Um, and- You know, I, um, when I went to college, probably like a lot of people here, uh, I, um, I had this vision, uh, of my life in- involving becoming an academic, and so I really liked physics, and I thought, you know, I'll do all this physics stuff. It's so cool. I'd read all the Feynman books, you know, uh, all of this. Um, and I guess I, um... Well, growing up in Ireland, I hadn't reali- I hadn't thought much about the possibility of startups. Uh-

   5. HTHarj Taggar6:37

      [laughs]

   6. PCPatrick Collison6:37

      ... hello to the other Irish folks here. Uh, and, um, and I mean, at, way back then in the sort of, you know, Precambrian era, startups were definitely much less, you know, well-known even on campus and so forth. You know-

   7. HTHarj Taggar6:49

      Yeah

   8. PCPatrick Collison6:49

      ... when I was dropping, dropping out, people thought it was super weird. Um, I think, um, you know, overall, um, if you enjoy college, I, I would actually... You know, I, I, I think there's no harm in, in finishing. I, I, I felt this real sense of urgency, which I think in hindsight was a bit unnecessary. Um, if you... But if you don't enjoy college, just, you know, whatever, it's not your, your thing. It's not what captivates you. You don't really wanna learn all the physics things, uh, or whatever, uh, there... You know, I think a lot of parents think that dropping out is very risky and will impugn your reputation for the rest of your life and so forth, and as far as I can tell, nobody has ever cared. So I, I both think you don't need to, but also the cost of doing so are de minimis.

   9. HTHarj Taggar7:40

      But what was the urgency you were feeling?

   10. PCPatrick Collison7:42

       The urgency?

   11. HTHarj Taggar7:43

       Yeah. To, to go out and do, do something.

   12. PCPatrick Collison7:46

       I don't know. Life is short, right? Um-

   13. HTHarj Taggar7:48

       [laughs]

   14. PCPatrick Collison7:48

       ... and I, I, I al- I mean, it was a general kind of haste. Uh, I think, you know, a l- a lot of us, um, I'm, I'm sure many of the people here, y- you, you kind of get into this mode of speed running high school, and then, you know, once you get to college, it's like, obviously I'm gonna speed run that as well and do all the things. So it's a bit of that. A bit of, um... Mark Andreessen also talks about a version of this. I thought that a bunch of the opportunities, uh, in startups and in Silicon Valley and so forth were ephemeral and fleeting, and if we didn't build it then that, you know, it wouldn't be possible to do it in three or four years, and maybe all the opportunities will be gone. You know, in hindsight, I think that, um, that was a, a poor intuition. Uh, it's been pretty robustly and reliably the case, uh, over many decades that Silicon Valley has, uh, a surfeit of opportunities. Um, yeah, I think it was mainly those two things.

   15. HTHarj Taggar8:33

       Do you think it's, um... I mean, this is a very common thing that we hear when we talk to students now, is that they are, part of the reason they wanna drop out en masse, it seems at this point, is the worry that actually now is the moment, that there's sort of... I think the meme going around is that if you don't sort of, uh, drop out and start a company and make lots of money, you're gonna be trapped in the permanent underclass. So-

   16. PCPatrick Collison8:52

       Right

   17. HTHarj Taggar8:52

       ... is that, um, should everyone here be worried about being stuck in the permanent underclass, I guess, is the question. [laughs]

   18. PCPatrick Collison8:58

       Um, I think, um, humanity has always had, um, a, uh, an affinity for these millenarian sort of models of how, uh, everything is, um, you know, everything will soon come to an end, uh, and be this, uh, this sort of permanent transformation of society and so forth. Actually, there's a great book, The Winged Gospel. People thought that after the, um, the invention of aviation, that it was just w- like civilization was just enter- and humanity as a species were entering a new era-

   19. HTHarj Taggar9:29

       [laughs]

   20. PCPatrick Collison9:29

       ... and nothing is going to be the same. I mean, yeah, obviously aviation was, was a pretty big deal, but, uh, I, I, I don't think it was sort of quite the, um, the sociological rewriting, uh, that some of the, uh, uh, you know, excitable proponents at the time imagined. So, uh, I, um, uh, you know, it's, it's hard to predict anything, especially the future-

   21. HTHarj Taggar9:48

       Yeah

   22. PCPatrick Collison9:48

       ... uh, but, uh, I would, um, I would take the under on this being the last couple of years, uh, to, uh, to create a company.

   23. HTHarj Taggar9:55

       Fair enough. Um, so going back to the Stripe

5. 9:58 – 12:10

   Why Stripe Worked

   1. HTHarj Taggar9:58

      story, um, Stripe ostensibly seems like a good idea. Like even on day one, it's, you know, the internet's a big deal. Money's a big deal. Like combine those two things. Presumably, is that how it went when you went to tell people you wanted to start Stripe? Did everyone just say, "Hey, this is a great, this is a obviously a good idea"?

   2. PCPatrick Collison10:13

      It was kinda funny. It was, um, it was... So something we learned from YC, um, uh, was, uh, that the importance of focusing on very concrete, easy to explain, uh, customer problems. Like it's, it's very easy to, um, to hallucinate or to, you know, imagine some customer problem that's, uh, not actually something viscerally felt by a person who would pay money. Uh, and so over the course of, uh, in part working on Auctomatic together, we sort of encountered this issue of it being really annoying to deal with, uh, the mo- movement of money or payments or whatever on the internet. Um, and on the one hand, it seemed like a, kinda an obviously good idea in the sense that nobody liked the existing ways of doing so. Um, and, uh, they were broadly extremely unpopular and kind of antiquated and legacy, and you had to like fill out all this paperwork and go to the bank in person, and the paperwork was in Latin and just like it was all bad. Um, but then the flip side is, uh, it just seemed kinda ridiculous that two kids would start a financial services business. Um, and fintech didn't exist as a sector at the time. Like the word literally didn't exist. Uh, and so it was just kind of, you know, we felt like the proverbial squirrels, you know, in a trench coat-

   3. HTHarj Taggar11:25

      [laughs]

   4. PCPatrick Collison11:26

      ... trying to masquerade as a sort of a, a real business, uh, or as, you know, serious adults, but obviously knowing nothing coming in, uh, about the, uh, about the space. And then certainly a lot of people we met and pitched or banks or partners or whatever that we talked to, I mean, you, they didn't literally laugh us out of the room, but I, you know, you kinda see them looking for the button to like call security, uh, under the desk-

   5. HTHarj Taggar11:47

      [laughs]

   6. PCPatrick Collison11:47

      ... and have them haul us out 'cause it just seemed so improbable. So anyway, I'd say it like it both seemed like an obviously good idea in that people really wanted this, but also a bad idea in that nobody took us seriously. Um, but I, I think the, I think the fact that it was, ultimately the fact that it was grounded in such a concrete, actual, real user problem saved us.

   7. HTHarj Taggar12:04

      Um, you actually, speaking of that, how did you... You had to, in order to actually build the product, you had

6. 12:10 – 17:20

   Building Stripe Before Launching

   1. HTHarj Taggar12:10

      to get a banking partner and, um-

   2. PCPatrick Collison12:12

      Yeah

   3. HTHarj Taggar12:12

      ... do things that a typical software company did not have to do.

   4. PCPatrick Collison12:14

      Yes.

   5. HTHarj Taggar12:15

      As two young founders, like how did you manage to convince a, a bank to trust you in the end?

   6. PCPatrick Collison12:20

      Yeah. Um, well, actually, this is not an answer, uh, to your question, uh, but um, Just a thing that strikes me as I sit here is the reason we decided to start Stripe, um, is because... So John and I were in college together. He was in his freshman year, and we went to Startup School, uh-

   7. HTHarj Taggar12:39

      Uh-huh

   8. PCPatrick Collison12:39

      ... in 2009, which was held in Berkeley.

   9. HTHarj Taggar12:43

      Yep.

   10. PCPatrick Collison12:43

       Uh, and we, um, we thought it was pretty cool. Um, and so we went and we got sushi afterwards in Potrero, and we were walking back from sushi and we're like, you know, we'd kind of been kicking around this idea for, um, a payments thing or, like, we'd been thinking of the space, and it was walking back that evening after Startup School, uh, that we decided to start Stripe.

   11. HTHarj Taggar13:04

       That's cool.

   12. PCPatrick Collison13:05

       Um, I remember literally where we were on the road, and I remember what we said to each other, which was, "Yeah, you know, we might as well because it probably won't be that hard."

   13. HTHarj Taggar13:12

       Okay. So moral of the story is go get sushi in Potrero tonight-

   14. PCPatrick Collison13:16

       Yes. [laughs]

   15. HTHarj Taggar13:16

       ... and you might start the next Stripe. [laughs]

   16. PCPatrick Collison13:19

       Um, and yes, be- beware of sort of these, uh, these ultimate yak shaves. We thought we could do it on the side while in college, you know, take a couple months, and that was almost 17 years ago.

   17. HTHarj Taggar13:31

       Okay. Um, at the time, I remember you were also unusual in that you took sort of longer to do a big public launch, and especially within the YC world, the motto is very much sort of launch early, launch-

   18. PCPatrick Collison13:42

       Yeah, yeah

   19. HTHarj Taggar13:42

       ... quickly, be out there and iterate. Um, could you maybe just talk us through a little bit about that?

   20. PCPatrick Collison13:46

       Yeah.

   21. HTHarj Taggar13:46

       Sort of why did you do it that way?

   22. PCPatrick Collison13:47

       Yeah. So, um, we started working on Stripe, um, kind of seriously in the, uh, in the... Well, we started working the week after that Startup School, but, um, we were kind of in college, it wasn't full-time. We started working full-time the summer of 2010. We launched publicly September 2011, so almost, uh, two years after, like, the first lines of code after the repo was started. And yeah, waiting two years to launch seems... I mean, you know, if we're, uh, if we're going to YC meetings-

   23. HTHarj Taggar14:12

       [laughs]

   24. PCPatrick Collison14:12

       ... you know, every, every week, uh, I think we'd have been, you know, bludgeoned, uh, on the head.

   25. HTHarj Taggar14:16

       [laughs]

   26. PCPatrick Collison14:16

       Um, I think, um... A- a- and look, in, in many domains, that probably is the wrong thing to do. Um, in our domain, kind of to your last question, because we had to do so much stuff around security and partners and money movement and infrastructure and reliability and, you know, all the things, it just, we didn't feel like we could scale a really good self-serve experience without getting a lot of the kind of the preconditions, um, and the infrastructure in place. Um, the... I think the s- the thing that saved us, um, and meant that it wasn't a total walk in the wilderness is we had production users almost from the very beginning. So first lines of code, um, in, uh, fall of '09. We got our first live production user, uh, in, um, in January of 2010, so, like, two months into working or whatever, and it did very little. Like, it was very larval and incomplete. Uh, and, uh, our first production customer was, uh, Ross Boucher at a company called, uh, Twiddy North. Um, and all it could do was charge a card. Uh, and so, you know, Ross would charge the card, uh, and, you know, then he would ask sort of a reasonable question like, "You know, how do I, how can I look at all my charges?" Uh, and like reasonable request and so, you know, let's code up a little dashboard here. Uh, and then he'd be like, "Well, I, I want to refund a payment." And you know, all right, we'll build refund support. Uh, and then, you know, after a couple of weeks he was like, "So, you know, at some point do I get my money?"

   27. HTHarj Taggar15:41

       [laughs]

   28. PCPatrick Collison15:41

       And we're like, "Hmm, also a reasonable request-

   29. HTHarj Taggar15:43

       [laughs]

   30. PCPatrick Collison15:43

       ... so let's, uh, let's build that functionality." So it was very kind of just-in-time development. Anyway, so we, we had a, a production customer from very early, and then we did increase, it was in private beta. We increased the number of customers every single month, you know, all the way to that public launch. And so every, you know, every week we had actual customer feedback requests, new users coming in. We're learning things from reality as opposed to our own kind of hypothesized or extrapolated, uh, conception of it. And I, I, I think if you have, you know, a significant stream like that of, of, um, [lip smacks] of grounding, I think it's probably okay to not be like launch, launch.
7. 17:20 – 19:07

   Is the Lean Startup Still the Right Playbook?

   1. PCPatrick Collison17:20

      it's a good question. Um, I think probably in the era of AI, I mean, I, I don't know, and, you know, to some extent YC will, will be, I think, the expert here, but, um, you know, there's the whole kind of traditional lean startup doctrine of exactly what you say, like start out by buying the Google ads or something and, and, uh, identify this crevice or whatever and, and, and iteratively expand out from it. I think you can certainly imagine that that becomes much more competitive and much more, um, you know, aggressively tilled and it's kinda hard to find those, those little niches. The internet's a much bigger place than it was 20 years ago when some of those ideas emerged. Whereas taking these really divergent starting points where nobody else, uh, is, uh, is, uh, trying to, um, occupy that territory is, is maybe a more... Like basically may- may- maybe you have to more aggressively decorrelate, uh, in the era of AI. And I think it is interesting to think about, you know, many of the companies that are most successful over the last 10 years, so many of them are, are very anti-lean startup, right? Whether it's, you know, the labs themselves or Anduril or, um, yeah, you, you, you can go down the list. A lot of them have this characteristic. So I, um, yeah, I think may- may- maybe a better way of saying it is tw- 20 years ago, the whole lean startup thing was, uh, was almost the only thing to do because of capital available and you didn't have AI that made, I don't know, spinning up an organization with many different potentialities and capabilities so much easier. Whereas now I think you can start these much more aggressive and ambitious things up front.

   2. HTHarj Taggar19:02

      Um, within sort of YC and probably startup world at this point, you're famous for the, um,

8. 19:07 – 22:36

   The Hidden Reward of Building Stripe

   1. HTHarj Taggar19:07

      at least the Paul Graham term, schlep blindness, the Stripe, um, uh, at least on the surface was not like, you know, involved a lot of schleps, like things that presumably weren't like the, um, intellectually most interesting things to, uh, to work on. Um, and I always found that especially interesting for you because y- you just mentioned you, you had academic interest in physics and, um, are just like clearly like, you know, a deep intellectual and have very many things that you're interested in. As Stripe has sort of grown into this, in this big company, in what ways, sort of, you know, in what ways, um, are there sort of like intellectual, um-

   2. PCPatrick Collison19:39

      Yeah

   3. HTHarj Taggar19:40

      ... rewards that you've, you've given up, and which ones have you gained?

   4. PCPatrick Collison19:44

      Yeah, I, um... I mean, look, in, in any company there's a bunch of stuff that's, um, not that rewarding or in and of itself all that interesting, like set- setting up payroll. No one sort of starts a company so that, uh, you can, uh, you can set up payroll. Uh, and certainly building business financial services, there's all sorts of, you know, more arcane and extensive, uh, versions of that. Um, I think that, um, I actually feel extremely lucky with Stripe, um, and in this respect, and, uh, I think this is something, I don't know if you need to think about it that much upfront, but I think once you think about it, maybe before you raise a significant amount of money, um, you know, you always worry naturally about the possibility of failure and, you know, what'll happen if you fail, and how to mitigate and avoid failure and all those things. I think you need to ask the, uh, the sort of converse of that, uh, what if you succeed and, you know, you raise money and you have customers, and you have employees and a whole thing, like are you gonna be... Are you gonna enjoy that? Are you gonna want to work on that for 10 years, for 17 years, for 30 years? Uh, I mean, Larry Ellison at Oracle is going for, I mean, a, a, I guess it'll be a half century soon, right?

   5. HTHarj Taggar20:55

      [laughs]

   6. PCPatrick Collison20:55

      Um, so, so, you know, what if you succeed? And in the case of Stripe, I really love it because, you know, we're working with the world's most interesting and innovative companies. Uh, like we're, uh, 25% of all Delaware inc- corporations are started with Stripe, uh, via Atlas, and then we get to partner with them and work with them, and hear from them, and get their feedback, and get the requests and everything, you know, through the entirety of the journey up to being the Shopifys and the OpenAIs and the, you know, all, all the, um, uh, the, uh, the standout successes. Um, oh, and actually, so speaking of Atlas, uh, we're giving free Atlas incorporation to everybody at Startup School, so-

   7. HTHarj Taggar21:36

      Nice. Ooh. [audience applauding]

   8. PCPatrick Collison21:42

      If you are, uh, struck by the, uh, the urge to found something-

   9. HTHarj Taggar21:46

      [laughs]

   10. PCPatrick Collison21:46

       ... uh, you know, over dinner this evening as we were, uh, just email startupschool@stripe.com and we will get you your link, uh, for free Atlas. Um, but, uh, but yeah, I, I, you know, I think PG latched onto something where, yeah, there are all these kind of menial tasks, but, but in the kind of totality of Stripe, I find it so interesting. Like every business is a kind of applied theory on how some aspect of the world works or how some market works or how some, you know, h- how... If the new company with a new, um, a new model that's kind of a contrarian thesis on some counterfactual. But yeah, just like it's, it's... I've never met a Stripe customer and thought, "That's boring." Um, so, uh, so it's actually the business as a whole has been the opposite of, uh, of the schlep blindness, um, instinct.

   11. HTHarj Taggar22:32

       And, and you have a particularly unique in, um, perspective on this 'cause

9. 22:36 – 25:17

   Will AI Kill Your Startup?

   1. HTHarj Taggar22:36

      you work with the big model, um, providers or big lab companies, and you work with all of the fast-growing-

   2. PCPatrick Collison22:41

      Yeah

   3. HTHarj Taggar22:41

      ... AI startups on the ground. Uh, something that came up a lot here yesterday, uh, honestly it comes up within the batches too, is people are just worried about, um, is my idea gonna get sort of trampled by the, the big-

   4. PCPatrick Collison22:53

      Yeah

   5. HTHarj Taggar22:53

      ... lab providers. And I'm s- given your perspective, I'm just curious, like how, how should people think about that?

   6. PCPatrick Collison22:58

      Yeah. Um, yeah, a- again, predictions are hard and certainly the labs are very competent, capable organizations. Um, it... And, and maybe if you separate a little bit, will rapidly improving AI capabilities do this, or will the labs specifically themselves do this? Um, I think in general, the track record of... Like no organization, s- if we go back 20 years, you know, there was some of this sense with Google. Like, you know, when we were doing Automattic-

   7. HTHarj Taggar23:32

      Yeah

   8. PCPatrick Collison23:32

      ... the question was always for our company and every other company, you know, what if Google does this? And Google seemed kind of omnipotent and had this, uh, immense number of incredibly talented people and essentially infinite access to capital and server and just all the things. And just human organizations are complicated and it's very hard to have, um, to manage to aggressively prosecute 100 different priorities and to deal with all the issues and interference that arises among them and so forth. And so, you know, Google has done incredibly well in a bunch of specific places, but it's not like Google has done all the things, even if in some kind of basic material sense, uh, Google maybe, you know, had that ability. So I'd say that the kind of the track record of that, of that is, um, is, uh, is checkered and, and in general I think that fear has been overstated. Now, I think there is a more specific thing of just like models themselves. Forget the labs. Even, even if the labs aren't spec- particularly ambitious about expanding their scope, maybe just like literally LLMs, uh, will, will obviate a, a, a bunch of, uh, or agentic capabilities will obviate a bunch of, uh, of, you know, specific verticals or tasks or something. You know, hard to say, obviously contingent on one's forecasts of the model capabilities themselves. Uh, but you know, in, in certain cases I'm sure that will happen and, you know, in certain domains it has already happened. Looking at the Stripe data, one thing I will say that I think is germane to people here, um- There are many more businesses getting started now than there were a year ago, like as little as a year ago. Um, way, way more than were getting started, you know, five years ago. Uh, and actually the relative change between last year and this year is pretty much the largest relative change we've seen in any given year. So for example, from 19- from 2019 to 2020,

10. 25:17 – 29:23

    Why It's Never Been a Better Time to Start a Company

    1. PCPatrick Collison25:17

       we saw a big jump, you know, understandable during COVID. So, you know, um, February to April of 2020 or whatever, uh, you know, I th- I, I think the growth rate inflected to maybe 50% or thereabout, uh, year over year in terms of new businesses getting started. Um, as I speak, the number of new businesses starting on Stripe is up around... It's a bit under, but around two X year over year. Um, which again, is the largest relative jump, uh, we've seen. Um, and you might think, okay, fine, you know, there's way more vibe-coded kind of lightweight slop, you know, whatever. Like maybe fine, there's more things, but like, are they actually succeeding? Um, but actually the median business, uh, is doing better this year than a year ago. Um, and so, a- and then if we kind of, um, stratify it and look at the probability that any given business will reach some revenue threshold, a million dollars, $5 million, $10 million, whatever, um, those all seem to be getting better. Uh, businesses are, uh, the time to revenue for new companies incorporated with Atlas is declining. And so by all the kind of objective metrics we can look at, uh, it seems to be a better time than ever to start a business. Now again, things can change. I don't know what the world's gonna look like in five years, but, you know, speaking today on July 26th or whatever it is, uh, of, uh, of '26, um, I think it, uh, it, the Stripe data would suggest it's, there's never been a better time.

    2. HTHarj Taggar26:47

       Um, I mean, we see the exact same thing in the YC batches. Companies are just able to grow faster than ever. Um, certainly within the batch-

    3. PCPatrick Collison26:54

       Like it used when, you know, back in again, the old days when Harj and I were first starting out, like getting to a million dollars of revenue, r- like run revenue was a big deal. Like people would know about that company. They'd be like, "You know, I heard that X company got to a million dollars of revenue," and now, I mean, that is, that's-

    4. HTHarj Taggar27:11

       Yeah, that should... You should be, by your first month, it feels like [laughs] you should, um... Uh, that's an exaggeration for everyone here. Um, uh, but I mean, certainly within sort of that sort of like the YC, uh, part of the life cycle, like day zero to 90, it's really being driven by, I would say, enterprises willing to buy from startups-

    5. PCPatrick Collison27:28

       Yeah

    6. HTHarj Taggar27:28

       ... which is the new thing, so you can sign these new contracts, um, within like the batch. Um, you have the data as the companies keep growing. I'm curious, are there other factors that are driving these sort of, um, uh, inflicted growth curves from like one to 10 and 10 to 100?

    7. PCPatrick Collison27:42

       I, I, I think it's really the dynamic you just mentioned, uh, which is businesses, uh, businesses everywhere are more, um, spring loaded, uh, to adapt and to try new things, and they have a real terror of being left behind with archaic and antiquated ways of operating. And so in normal times, you're a new startup, you've, you know, some mechanism for doing whatever, and you pitch the CIO or the CTO or the whoever at some company, and they kind of don't wanna talk to you because, you know, your thing is not validated. Maybe you'll be around in two year, you know, all, all the kind of obvious objections. But now people know that, well, the risk of the status quo is actually extremely high. And so even if there's risk in doing all the new things, well, this path also looks pretty dangerous. And so I really think there's never been a better time for startups to, to sell, um, and to have their products get adopted at, you know, pretty meaningful scale right out of the gate. Uh, a lot of YC companies in recent times have demonstrated this, but, uh, I think it's a, it's a really pervasive, uh, dynamic. And there's a bit of it I think also, I mean, Stripe is not a consumer company obviously, but you know, I think there's some version of this on the consumer side where I think consumers, I mean, are also pretty... I mean, consumers have complicated views on AI, and maybe they don't want the data centers, uh, but, uh, people are very intrigued by the products and I think there is a kind of, they're kind of beguiled by them and there's a, a predisposition and an openness to experimenting with the new.

    8. HTHarj Taggar29:18

       Um, maybe just more broadly, something I'm curious about is, again, with, with this, the data you have at

11. 29:23 – 30:45

    What Stripe's Data Says About the AI Economy

    1. HTHarj Taggar29:23

       Stripe, um, has anything you've seen in that data sort of, um, changed a belief you have about AI broadly, say over the, like the last 12 months?

    2. PCPatrick Collison29:31

       I mean, there's a fear, uh, that AI is going to be this, um, hegemonic, centralizing, totalizing force where a small number of companies gobble up a very large share of the economy, and m- many companies at the forefront of AI, um, have done incredibly well and I think will continue to do, uh, incredibly well for sure. But based on what we can see at Stripe, the hunger and the intensity with which other companies are either getting started taking advantage of these new capabilities or existing companies are retooling, I don't worry about the centralization in the same way. Uh, I think there, I think there are going to be many thousands of winners. Um, and again, we try not to offer any definitive prognostications 'cause the future is not predetermined, but based on the t- the trend lines we can see, I think we are heading towards a, um, a more decentralized world and one with more broad-based prosperity.

    3. HTHarj Taggar30:41

       Good. Cool. All right. Well, I think that is all we have time for today, so,

12. 30:45 – 30:59

    Build Something People Truly Need

    1. HTHarj Taggar30:45

       um, thanks so much, Patrick, for being here.

    2. PCPatrick Collison30:47

       Thank, thank you for having me. And, um- [audience applauding] It would be remiss of me not to say that Stripe would not exist without YC.

    3. HTHarj Taggar30:56

       Oh, cool. All right. Thank you so much. [audience applauding]

Episode duration: 31:00