Oct 3, 2018 · 57m · y-combinator
Running Your Company by Patrick Collison · Y Combinator
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this Y Combinator talk, Stripe co-founder and CEO Patrick Collison shares key insights on founding and scaling a tech startup, covering early onboarding tactics, co-founder dynamics, product-market fit, hiring practices, and long-term organizational strategy.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The partners as informed peer 2.9 Guest teaching 5.4 Guest disagreement 1.6 The partners pushing back 1.2
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 28:07 Dismissing the passive growth curve model
Patrick forcefully rejects the conventional curling analogy of startup growth, labeling it a pernicious and actively fallacious mental model.
Hardest push from the partners ▶ 6:46 Pressing for a structured CEO selection rubricAdora directly challenges Patrick's idiosyncratic brotherly trust narrative by asking whether a structured five-question rubric should govern choosing a startup CEO.
Biggest teaching moment ▶ 28:07 Educating founders on mapping concentric market circlesPatrick provides a masterclass deconstruction of post-PMF scaling, explaining that growth trajectories are direct functions of deliberate go-to-market org construction rather than external destiny.
The partners hold their own ▶ 1:27 Citing the institutionalization of the Collison installationAdora demonstrates deep institutional YC knowledge by citing how Paul Graham codified Patrick's manual onboarding tactics into standard startup curriculum.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| Launching Stripe and Early User Growth | 4 | 4 | 2 | 1 | Adora introduces the launch timeline and connects Patrick's early user acquisition to Paul Graham's 'Collison installation' concept. Patrick clarifies that Stripe took almost two years to officially launch due to banking partnerships and explains the dual user-research and sales purpose of in-person installs. | |
| Co-Founder Dynamics and Choosing a CEO | 3 | 4 | 1 | 2 | Adora presses Patrick on whether there is a formulaic rubric for picking a CEO among co-founders. Patrick explains that their setup is an anomaly rooted in brotherly trust and passion-based dispute resolution rather than rigid titles or consensus. | |
| Defining Product-Market Fit for Stripe | 3 | 5 | 1 | 1 | Adora asks for the concrete definition and metrics of product-market fit at Stripe. Patrick reframes PMF not as a metric threshold but as the moment when the company's bottleneck shifts from generating demand to keeping up with serving inbound demand. | |
| Pre-PMF Hyper-Attentiveness and Feedback Loops | 3 | 5 | 2 | 1 | Patrick dismisses the utility of quantitative metrics prior to product-market fit, advocating instead for hyper-attentive, high-throughput qualitative inspection of every single user error and API request. Adora agrees and highlights subjective customer love. | |
| Founder Happiness versus Fulfillment | 4 | 6 | 3 | 1 | When Adora asks how founders stay happy amidst early complaints, Patrick retorts by questioning the premise of happiness, arguing that fulfillment and meaning are better utility functions. He also challenges Silicon Valley dogma around never quitting. | |
| Early Hiring and Replacing Yourself | 2 | 5 | 1 | 1 | Adora asks about self-replacement and early hiring decisions. Patrick shares the story of early investor Jeff Ralston pushing them to hire their first business hire, Billy Alvarado, overcoming their early engineering-only bias. | |
| The Growth Curve Fallacy and Market Mapping | 2 | 7 | 3 | 1 | Patrick critiques the conventional mental model of an exogenous growth curve as pernicious and actively fallacious. He explains that post-PMF founders must map concentric market circles and build the go-to-market organization ahead of current demand. | |
| B2B versus Consumer Software Predictability | 3 | 5 | 1 | 1 | Patrick illustrates the predictability of enterprise markets by recounting Aaron Levie staying until 2 AM at a housewarming party to explain why B2B software is scrutable while consumer software is unpredictable. | |
| Speed of Iteration and Team Scaling Costs | 3 | 6 | 1 | 2 | Adora asks about identifying when team additions become net negative. Patrick references fighter pilot John Boyd's OODA loop and models the quadratic communication and onboarding taxes that can degrade iteration speed. | |
| Core Attributes of Stripe Employees | 3 | 5 | 1 | 1 | Adora cites Patrick's criteria for Stripe hires: intellectual honesty, caring, and execution. Patrick explains why rigid rubrics fail and why he screens for comfort with nuance and skepticism of unearned certainty. | |
| Communication and Non-Consensus Decision-Making | 3 | 6 | 2 | 2 | Adora brings up asymmetric communication and interpretation challenges at scale. Patrick reflects on Stripe's past mistake of remaining overly consensus-driven past 10 employees and makes the case for necessary symmetry-breaking hierarchy. | |
| Fostering Innovation via the Crazy Ideas Process | 2 | 6 | 1 | 1 | Adora asks how Stripe avoids the slowdown typical of scaling corporations. Patrick reveals their 'Crazy Ideas' company-wide process, which explicitly requires submissions to appear 'probably bad' to eliminate self-censorship. | |
| Decentralizing Engineering into Global Hubs | 2 | 6 | 2 | 1 | Asked about past convictions he has reversed, Patrick details Stripe's break from Silicon Valley's monolithic single-HQ model by establishing four co-equal de novo product engineering hubs globally. |
Statements from this episode (27)
Patrick Collison: Waiting Two Years to Launch Is Not a Good Idea
“It was, I think one year and 11 months from sort of first line of code to public launch. Which to be clear, I don't recommend, ah, that is not a good idea, ah, it's just we had to, because we had to kind of get all these other things in place”
Patrick Collison: Stripe Had Around 100 Users Before Publicly Launching
“We got our first user, like first production user, just kind of three months in, ah, and then kind of every month we tried to add at least kind of a handful of users, ah, and so by the time we publicly launched, ah, we did have, You know, about a hundred users…”
Collison: In-person user onboarding creates 'why now' urgency in early sales
“Us going and sort of accosting them in person sort of helped, you know you know, people talk about in sales, it's always like a, you know, a why you, and a why this, and a why now, and these kinds of questions and going in person kind of created a why now mome…”
Collison: Stripe founders never showed up unannounced for early API installs
“I don't think we ever actually just showed up. Although, you know, perhaps we should have, but no, we tried to be kind of at least semi invited.”
Collison: Stripe Dispute Resolution Is Based on Who Cares More, Not Titles
“Sort of our kind of dispute resolution framework is kind of much more around which of us cares more than kind of which of us holds this title or that.”
Collison: Most Successful Co-Founding Teams Disagree With Dispassion
“I think that you know, something that we're kind of lucky about that I think is very, well, exactly to your point, I think he's definitely present in sort of the most successful co-founding relationships that I've seen is some degree of sort of dispassion in d…”
Collison: Stripe rebuilt its dashboard three times and API multiple times before public launch
“When we launched publicly in September of 2011 you know, we kind of rebuilt significant components of Stripe kind of multiple times in response to user feedback, like we're kind of on the third version of our dashboard, and the second or third account major ve…”
Collison: Product-market fit is when you bottleneck on serving demand
“And when we launched we were basically immediately bottlenecked on sort of being able to serve user demand rather than generating user demand. And I think sort of directionally that's kind of the sort of the inversion that happens where sort of, you know, in t…”
Collison: Stripe handled 22 payments in an hour on launch day
“On the day we launched, we handled sort of, 22 payments in the previous hour, which again sort of seemed huge to us back then.”
Collison: Quantitative metrics are actively unhelpful before achieving product-market fit
“Generally speaking, I think that sort of pre product market fit metrics are actually relatively unhelpful. I think you sort of, you really want to bias very strongly towards kind of as much sort of inspection and kind of high throughput qualitative feedback as…”
Collison: Fulfillment is a better optimization metric for founders than happiness
“And so I think, and you know, language is squishy and it's not, you know, completely specifically defined, but I think kind of generally speaking, kind of a better utility function and kind of gradient to try to climb is that of fulfillment.”
Collison: Startup culture's 'never quit' dogma is wrong; sometimes you should
“In, in startup time we really extol and sort of uphold the virtues of, sort of, you know, determination at all costs, you know, never quit and so on. And, you know, that's clearly not the right answer in that, like, sometimes you should quit.”
YC's Geoff Ralston offered to personally cover Stripe's first business hire
“And so, Jeff told us that we should hire Billy, and if it didn't work, Or for the first few months or whatever, that if it didn't work out, Jeff would sort of go back and pay his salary, so it was kind of a zero risk move for us.”
Collison: Hiring Billy Alvarado for banking partnerships changed Stripe's trajectory
“We hired Billy and that was sort of an immediately trajectory changing event where, you know, previously when we'd gone and talked to a bank, I mean, I don't know if they were literally doing this, but it certainly felt They were kind of pushing the security b…”
Collison: Stripe could have accelerated by a year or two with better discipline
“Yeah, so I don't think I did it especially well, and I think it kind of, you know, fortunately, sort of, you know, it worked out, but I think if I was doing it all over again, I think we could have sort of accelerated ourselves by a year or two if we'd sort of…”
Collison: Startup growth curves are under founder control, not cosmic trajectories
“And the, kind of, the growth curve or adoption curve is just, kind of, a function of that go to market apparatus. But basically, it's not some, kind of, cosmic trajectory. It's something, kind of, very much of your creation and under your control.”
Collison: Repeat founders build organizations ahead of current demand post-PMF
“You see that kind of when repeat founders go and start companies, they almost invariably are willing to kind of build the organization You know, post product market fit, though it's invariably willing to kind of build the organization ahead of where things are…”
Stripe founders ignored Aaron Levie's early investment offer on Facebook
“Aaron Levy had Facebook messaged John and we'd never heard of him, and we hadn't heard of most people in Silicon Valley but he'd Facebook messaged us, like, very early on asking to invest in Stripe and I think John didn't know who's this random guy and so we n…”
Collison: B2B software is far more predictable to build than consumer software
“I still remember, kind of, sitting in our front room telling us how much better it was to be building B to B software than consumer software for this reason, ah, where, sort of, consumer software, it's so hard to predict, sort of, What people want. They don't …”
Collison: Lack of iteration speed is the primary pre-PMF startup failure
“The main thing that I think companies screw up at the pre-product market fit stage is sort of speed of iteration.”
Collison: Optimal pre-product-market fit team size is between 2 and 10
“As an empirical matter, it seems that somewhere between kind of, you know, two and 10 depending on exactly what you're building is kind of the optimally responsive size.”
Collison: Certainty on complex questions signals a lack of intellectual honesty
“It's oddly hard to fake being intellectually honest and sort of the characteristic of kind of being able to see multiple sides of a debate or an argument. Like, there are so many kind of complicated questions where sort of the only thing that I'm really skepti…”
Collison: Stripe was too consensus-oriented between 5 and 50 employees
“Between say, five and 50 people. I think we are much too consensus-oriented. We, of course, weren't completely consensus-oriented. I mean, we couldn't have gotten anything done if we were, but I think we kind of biased too much in that direction. And again, I …”
Collison: Startups hitting 10 employees must adopt non-consensus, hierarchical decision-making
“When you hit a certain size, again, maybe, I'm just gonna say 10 people for the sake of simplicity, Maybe it's a bit before, maybe it's a bit after. I think you need to kind of adjust more, more deliberately to this kind of explicit communication model of sort…”
Collison: Requiring ideas be 'probably bad' overcomes organizational self-censorship
“And so, people, like, really self-censor a lot in most organizations because they don't want to look stupid, and they don't want to be sort of associated with just having all these, like, wacky, bad ideas and so on, and so we try to be fairly firm that if you …”
Patrick Collison: Stripe Atlas and Stellar originated from Stripe's Crazy Ideas process
“And actually a lot of cool things that we've subsequently gone on and done first came from that process Stripe Atlas you know, being one of them and also we sort of helped Stellar get off the ground this sort of cryptocurrency back a few years ago, and sort of…”
Collison in 2018: Over 80% of US adults bought from Stripe merchants
“So in the last 12 months more than 80% of American adults have bought something from a Stripe business. At least one thing from a Stripe business. Which is cool, and you know, it's not just the case in the US, like in Singapore, where it was last week, you kno…”