You can imagine that Stripe CEO Patrick Collison is asked a lot about whether his San Francisco-based payments company plans to go public any time soon. Last year, the seven-year-old company raised $150 million in a deal co-led by General Catalyst Partners and CapitalG that valued the startup at $9.2 billion, almost double the valuation it was assigned in 2015.
Altogether, it has raised $440 million, shows Crunchbase.
Still, don’t expect an IPO any time soon, Collison stated very explicitly at the Launch conference in San Francisco earlier today. While industry observers like to note the sustained and seemingly unstoppable success of gun-slinging Amazon, which went public in 1997, just three years after its founding, Collison argued that it was harder for Amazon at the outset than many seem to recall.
“If you look at the Amazon daily history [as a public company], they had an incredibly turbulent time for their first couple of years,” he told interviewer and Launch founder Jason Calacanis. “Now in 2017 . . . it all looks great. But they had a tough time at the beginning and I think this is a broader structural challenge across the industry.”
Of course, the point — that it’s far harder to take risks as a public company — has been endlessly argued for and against in recent years, by both people who think staying private as long as possible makes sense as long as capital is available, and those who argue that going public provides companies with cash to do things like acquire other companies.
It’s an argument that Collison preemptively argued, in fact, saying today that, “Being a public company certainly doesn’t stop you from taking a really long-term time horizon, but it does make it more difficult.
“From our standpoint, becoming a public company makes sense when you’ve reached some point of stability, some plateau — [when] you’ve done the stuff that you at least initially set out to. And we haven’t. We’re still very early in this trajectory that we first established. And because we work with startups, they themselves have lengthy trajectories, so this is just going to have to be — when you’re building infrastructure — long time horizons are involved.”
A remaining question for Stripe, and many other unicorn companies, is what happens to employees who may be itching to get liquid but can’t. Undoubtedly, it’s something Collison and company will also be dealing with more and more, particularly as other well-known “unicorns” test the public markets.
Here, though, Collison was a little less forthcoming onstage, acknowledging that employee liquidity is an “industry-wide” issue yet avoiding answering whether he’s in favor of secondary sales that allow them to sell a percentage of their shares.
What he said: “Part of what makes [this decision] challenging are there are so many constituencies — not just those here in Silicon Valley but the regulators and most notably the SEC and so on, right?,” he said. “I’ve spent time with people who’ve spent a very long time analyzing this and really digging into the regulatory details and I think you’re starting to see a real appetite in many places to figure out a better model because ultimately, to the extent that the public markets make it harder to really long-term time horizon around innovation, that’s really bad for the country overall. It’s bad for investors, too.”
What he didn’t say: He’s not a fan of employees cashing out early, which seems to be the case. At least, Shriram Bhashyam, co-founder of EquityZen, a platform that enables startup employees to sell their nonpublic equity compensation, says his understanding is that Stripe “has restrictions in place that require board approval for employees to transfer their shares.”
A source familiar with the company’s regime says those restrictions are toughest for newer employees to get around. According to this person, early Stripe employees were allowed to sell some shares, but the company subsequently amended its bylaws to clamp down on the practice.