Business school fundamentals: Current state of play

Stripe, once the payments-processing disruptive darling of Silicon Valley, has dominated tech and VC-related headlines the last few months as the company recovers from a RIF, and and has successfully navigated a funky fundraising situation with its recent down-round (the TL;DR is that Stripe faced a weird perfect storm of expiring stock options, tax obligations, and a not ideal IPO environment).

Now that these two headline-grabbing events are in the rearview mirror, Stripe is buckling itself back into the drivers’ seat about their own narrative, and published their annual letter this past week. Outside analysts, of course, have been twisting themselves into quantitative pretzels assessing Stripe’s financials from the tea leaves (see: All In Podcast episode 117, associated follow ups). These analysts generally attempt to triangulate comparisons like Stripe’s would-be valuation using the only realistic competitor in the space - Adyen. For comparison, here is Adyen’s annual letter, which, as of this writing, was only mentioned a couple times on Twitter, a sharp contrast from the RT party regarding Stripe’s letter.

Buzzy is not a word frequently used to describe the Dutch payments giant.

Full disclosure: As I am a former Stripe employee who was impacted by the RIF (which I wrote about for the Chicago Tribune) and a co-founder/CEO of a payments consulting company called Yeeld with a Stripe practice, I am intertwined in multiple ways!

What story do the numbers tell?

From a pure metrics perspective, Adyen is a reasonable company to compare financials with as Adyen is publicly-traded, and on paper - has a similarish value proposition and product offering as Stripe. “Let us take care of your payments so you can take care of your business” – and I mean, that is a solid proposition. Any company would reasonably aspire to focus on doing what they actually do well, and the ability to allocate resources towards their core value is worth paying some premium to processors like Stripe and Adyen that take care of the commodity of payments. After all, a credit card swipe is a credit card swipe, right? Investors and journalists seem to see things this way, at least.

These analysts deserve respect and are worth a read - quantitative triangulation is hard, but unfortunately, in this case, wrong. Payments, it turns out, is not a commodity.