Stripe sets one-year timetable to decide on going public | Hacker News Reader

Stripe sets one-year timetable to decide on going public

wsj.com

179 pointsamitparikh144 comments

Importantly they said within a year they will go public OR do a private market transaction to make employees liquid

That’s a LONG time (in total) for employees to wait for liquidity. Yes, they likely provided some opportunities for early employees to liquidate some of their holdings, but it’s got to suck to sit on that much funny money for so long.

They've had several options for employees to liquidate some of their holdings before now. They've generally only been open to current employees, but one a few years ago was also open to past employees.

Those offerings are only for options holders. RSUs cannot be traded; otherwise, every RSU holder has to pay taxes.

This happened to me this year with another company. They opened up the ability to sell back RSUs, and a chunk of them got sold to pay for taxes.

I assume Stripe is giving out "Double Trigger RSUs" then? https://blog.pragmaticengineer.com/equity-for-software-engin...

Otherwise people are getting taxed now anyway if they are getting RSUs at a private Stripe, right?

Correct. Stripe gave out stock options until around 2016 or 2017, then switched to double-trigger RSUs.

Noob question that I am sure is answered many times. What are the catalysts for a private company switching from options to RSUs (double trigger). In my previous role I got RSUs (double trigger), but now at a much smaller startup I have an option package. As an employee RSUs are a bit easier to make sense of, but both are equity instruments at the end of the day. When, and why does that transition happen?

Edit this is answered fairly well here: https://www.parkworth.com/blogs/pre-ipo-tech-giants-using-do.... The TLDR is SEC rules and limited perceived upside of options (although I imagine that could be solved via a lower strike price).

> What are the catalysts for a private company switching from options to RSUs (double trigger).

For employees at very early companies that are going the venture route, ISOs are a no-brainer. The company is small enough that the strike price isn't too onerous, the company is too small to hit up against the IRS limits, and they provide pretty good tax treatment under the assumption that the company will grow massively in value - like, 100,000x - which is the the optimistic case that everyone wants to optimize for.

For employees at late stage companies (e.g. last funding round before IPO), ISOs are a rough deal. The strike price is large, so the only people who can afford to exercise them before a liquidity event are people who are already independently wealthy. The tax benefits are also still present, but smaller, because the expectation is that the company might grow 10x in valuation, but not 100x or 100,000x (most $100M companies are not going to grow to $10 trillion in valuation).

RSUs avoid that problem, by requiring zero cash up-front, in exchange for less favorable tax treatment in the "company grows 100x-100,000x" case - which is fine, because that's less relevant.

Of course, the billion dollar question is where the inflection point happens - when do RSUs become a better deal than ISOs? There's no universal answer to that, and some of that depends on specifics of the company, and some of that also depends on who you ask (certain people will benefit more than others from the switch at different points, so it depends on how much the company is weighing each of those [metaphorical] stakeholders).

ISOs also have one other advantage for companies: because they have to be exercised within 90 days of departure, a large portion of ISOs that are granted will never actually be exercised (the employee will choose to leave them unexercised, either because they don't have the money to pay for the exercise price + taxes or because they don't want to). So every option granted is <1 share actually given up (in expectation), allowing the company to grant bigger compensation packages (because some portion of those will not actually be used, and can therefore be reallocated to someone else).

With RSUs, every RSU granted is 1 share actually given up (except in the case where the RSUs expire, which makes the company look bad).

Thanks for the in depth write up. Makes a lot of sense!

There's also usually a switch from ISO to NSO somewhere down the line, often fairly early. NSOs aren't capped at a 90 day post-termination exercise window. Some companies have extended the window to as much as 7 years - Pinterest comes to mind. There is a cap, but it's closer to the RSU cap than the ISO cap.

The progression is usually:

- Founders get shares with a re-purchase option for vesting. The company exercises the option if you leave before vesting ends to take back your un-vested shares.

- Next ~100 people get ISOs.

- Next ~2000 get NSOs.

- Then, double-trigger RSUs until the company goes public.

- Then, single-trigger RSUs.

I agree with your general assessment. The difference between options and RSUs usually comes down to upside potential. An option is worthless at grant time (by law, it usually has to be issued at the 409(a)) and it's just the right to buy company shares. If you're buying the shares at the current price, there's no value in that. Options only gain intrinsic value of future appreciation in the underlying equity past your grant date.

On the other hand RSUs are shares of the company, so they are worth at grant whatever a share of the company is worth.

An option with a $10 strike price to buy shares of a company whose 409(a) is $11 has an intrinsic value of $1. An RSU of a company whose 409(a) is $11 has an intrinsic value of $11.

Companies generally, in my experience, give you about 3X as many options as they would shares for the same role. Give or take. Companies usually switch from options to RSUs when they think that growth in the stock price is going to slow down - [edit] (and when they're hiring people with a higher aversion to risk!)

>Some companies have extended the window to as much as 7 years

Niantic did 10 years as far back as 2015.

That's great to hear, I'll be sure to keep that in mind if I answer this question in the future.

It seemed to be popular to do for a minute there after Pinterest did it, then I didn't really hear about it again.

> except in the case where the RSUs expire, which makes the company look bad

The benefit of double-trigger RSUs over single-trigger RSUs is that they're not taxed until after a liquidity event (IPO, acquisition, etc). That's nice for the employee as they don't have to come up with extra cash to pay taxes on the RSUs as they vest but before they can sell them.

However, double-trigger RSUs have to expire within 7 years -- otherwise there's not a "substantial risk of forfeiture" and they'll be taxed immediately upon satisfying the time condition, just like single-trigger RSUs [1]. It makes sense -- there's no practical difference between a double-trigger RSU that never expires and an illiquid single-trigger RSU, so it would be a tax loophole to treat them differently.

[1] https://drsfp.com/insights/pre-ipo-rsus-single-trigger-vs-do...

it can be done (via eg waiving the 2nd exit trigger and converting to common) but is pretty complicated

As someone who only has dealt with public companies, how is that different from my having to pay taxes when my RSUs vest?

At Stripe, when your RSU vest, you still don't have the ability to buy the shares. Instead you have to wait for a liquidity event, or for 7 years to pass (making the shares worthless).

With RSUs, stock is deposited in my brokerage account that I can sell anytime I want.

I get to choose whether I want them to sell enough to cover taxes or whether I want to cover taxes some other way,

So you get absolutely nothing liquid when you get your RSUs at Stripe? What’s the point and how is that different from getting stock options?

Publicly traded stock gets deposited in your brokerage account because your employer is publicly traded. Private companies offering double trigger RSUs that don't turn into shares or cash until a liquidity event (I.e. an IPO). At that point (plus a lockup period, maybe, depending on how the company goes public) the shares, minus withholding, will get deposited into a brokerage account and be available to sell.

(Disclaimer: I am a holder of Stripe RSUs)

An IPO will be longer. With the locked out period it will be more than a year

Not necessarily if they do a direct listing.

A direct listing would be very unfair to the banks that have patiently waited years to take a multi-billion-dollar chunk of Stripe’s upside in exchange for setting the IPO price (integer between 20 and 50).

Thank you for a great chuckle

> unfair to the banks

I chuckled once more.

The level of shade is about as high as the expected ipo pop

but at least in an IPO the company would get a financing round, and the banks get to manipulate the market with a stabilizing bid indefinitely

direct listings completely rely on retail buyers for liquidity, and even in the frothiest markets that's not enough money in the face of all employees and the company dumping shares immediately

> direct listings completely rely on retail buyers for liquidity, and even in the frothiest markets that's not enough money in the face of all employees and the company dumping shares immediately

IPOs typically have a lockup period, which means that employees will always be selling to retail buyers, whether on Day 1 with a direct listing or Day 90/180/etc. when the IPO lockup expires.

for confidence games, an IPO is much better.

> for confidence games, an IPO is much better.

Better for whom? And how?

It's not clear to me that it makes a difference for employees either way. It's not like the stock price on Day 90-180 are still thinking about what mechanism the company used to go public 3-6 months ago. At that point the stock price is mostly based on the two new 10-Qs that have been filed since then, plus additional current information like market conditions, etc.

Better for the company, better for the employees, better for external speculators.

A stabilizing bid by the underwriter is effective market manipulation that pretends there is more demand than there really is. It can be retracted at any time as well. Outside of an IPO this is illegal.

They can keep the confidence game going for 90-180 days, and the other aspects of an IPO are better for the company since there would be no reason to sell even more shares since they sold a piece of the company at a highest valuation to the banks in the IPO.

Those 3rd homes in Miami aren’t going to buy themselves.

> Those 3rd homes in Miami aren’t going to buy themselves.

They will if they come with a chatGPT4 assistant as standard.

It’s honestly perplexing that so many tech companies have stayed private for such a long period of time. Especially in an era of rising interest rates and rising mortgage costs, people really want to be able to sell their stock. The difference between packages with equity you can sell and equity you can’t sell is gargantuan and there are massive benefits to having a public price that lets people fairly value that equity. Hoping to get fair value in a private market transaction is far from ideal and many employees will feel they are being forced to pay an unfair premium for liquidity.

Why go public when until 9-12 months ago you could raise IPO level cash ($100-300mil) in a Series D/E/F/G and with none of the SEC scrutiny. It's better for founders to remain private as long as possible. It's better for employees for companies to go public as soon as possible. For VCs it depends on what stage they are at in capital allocation (companies funded in the earlier stage of a fund will have more leeway cuz VCs don't need to pay back their investors, but companies funded at a later stage will be pushed to exit faster cuz you gotta make the investors whole)

The Collision brothers and the Hindawis (Tanium founders) have both been very vocal about this point.

After the last 6 months (to say nothing of the last few centuries of capitalism) you still believe companies care about what employees want?

Executives/Founders get loans against their illiquid but enormous equity, everyone else can go to hell as far as the decision makers are concerned.

What's perplexing for me is that, yesterday on HN I've seen crowd with pitchforks demanding CEOs of publicly traded companies to be laid off, along with the employees for giving up to the pressure of shareholders.

Today I'm seeing ton of comments about how company has to go public, because otherwise employees (who have excellent compensation apart from stock) will have to wait a few months to liquidate their assets.

Seems like certain altitude doesn't come with MBA title, like some want to believe :-)

TIL Stripe have lowered their internal valuation from $95bn to $63bn since mid 2022.

Considering so many public, profitable tech companies saw their valuations go down by 50-70% in that same period, that still seems too little of a cut.

This assumes Stripe is not outperforming expectations. .which seeing the Amazon deal....

It’s unclear that the Amazon deal is outperforming expectations versus a quid pro quo on AWS hosting.

Either is an upside. That’s a huge contract that any payment processor would kill for.

Public companies have more external influences on their valuation. It's not like they literally lost 50-70% of their intrinsic value, only what the market with the associated psychology says they are worth. Private companies can stick closer to that intrinsic value.

> Private companies can stick closer to that intrinsic value

It's normally the opposite. Public markets are a lot better at judging intrinsic value than a handful of VCs. Every single private company out there is either wildly over or under-valued, more so at earlier stages.

Not to mention, VC valuations have all sorts of hidden stipulations such as liquidity preferences which skew headline private valuation numbers unnecessarily high. Public markets have a full view of the cap table and can better evaluate price w/o hidden tricks.

Plus, all VC investors have every incentive to juice the valuation after they have bought in.

They don't have short sellers seeking out reasons to tank it like the public markets do.

Intrinsic value involves discounting future cash flows. With rates up that should punish Stripe similar to the rest of the market.

I see the term "intrinsic value" frequently used incorrectly. Mostly, it is used in finance to describe the value of an option when "in the money" (underlying is above/below strike price for call/put). Perhaps they means book value, which the value of the company if all assets and liabilities were sold at market prices. For most pure services companies, it is very low (perhaps negative due to liabilities), as the accounting rules for book value are very strict.

Warren Buffett disagrees with you.

https://www.valueresearchonline.com/stories/23354/intrinsic-...

The use I’ve seen in the vernacular is “what are the cash flows worth on their own?” (Discounting back the future ones adjusted for risk) Sometimes people state they know it with confidence, but it’s subjective too (the science on discount rates and predicting growth is a lot weaker than Physics).

It leaves out things like “what might the IP be worth to someone else?” and “What could the company do with better management?”

To your point, it’s frequently less than what the company trades at. Sometimes the opposite is true, and the company trades for less than the cash value of its assets minus liabilities.

Stock has very little to do with “intrinsic value”. The share price is what an investor is willing to bet on the future of the company improving.

This is why companies with lousy future outlooks will sell for a lower price than their assets - debts.

There is no intrinsic value that private companies can stick to. They just have the power of controlling sales so they take sellers out of the market until they get the price they want at a volume they are comfortable with.

Stripe isn’t “intrinsically” worth anything that anyone will agree on. To one person it would be the cash in the bank minus liabilities. To someone else it would be a hefty multiple on that because they believe in the business.

Yes, this is important. Stock price reflects future earnings growth potential. That's a mouthful(!), but consider if Google announced 0% growth in earnings, but still same profits. Their stock price would be crushed. This essentially happened to all major investment banks after 2008 crisis. When 30:1 leverage on balance sheet was no longer an option, forwarding looking earnings growth looked tiny compared to 2007.

It's interesting that there is so much technology and third party business involved in the process of moving value.

- Visa has a market cap of $463B

- Mastercard $362B

- PayPal $90B

- Block $48B

Could it theoretically all be automated?

No. (Channels patio11) As a society we have decided to delegate a bunch of responsibilities to the companies that move money. The most notable one is fraud protection. The companies that make this much money do so by pretending that a transfer of money is a clean, simple, and absolute thing. In reality it is messy, reversible, and fraud-prone. Being able to transfer $1B dollars as easily as you are able to transfer $1 would be a failure of the system, not a feature.

I have been paying and being paid for decades now, and I have never involved a payment processor in a dispute I had with the other side.

If arbitration is the reason these companies exists, it seems like bad deal.

Maybe they sell an illusion?

Maybe your credit card number was stolen without your knowledge and they took care of it for you without you even being aware

That would be whoever made the cards fault. We don't give credit for cleaning up your own mess, that's the minimum standard for engaging in a beneficial relationship.

It's not a value proposition from gmail that you can't access my inbox just from knowing my address.

I can't believe you can be a $400B company and the value comes from stopping fraud that you enabled by your own product design.

Much of the fraud is merchants defrauding their customers.

Nah.

They took care of it for themselves, when someone commits fraud it isn't your problem because they used your name to do it.

Imagine if you were defrauded for a few hundred bucks by someone claiming to be a big celebrity. You probably wouldn't even be able to get into contact with the actual person, let alone have them jump through a bunch of hoops, spend time on hold with your staff or go to the post office to send you copies of documents. They wouldn't bother to respond to you, they have no obligation to, whatever happened had nothing to do with them.

Countering your own anecdata with my own, I have. To the tune of $5,000+.

I've used banks and cards to help resolve fraud. Rarely, but I love it.

And now the bank pushed me to use Zelle - which has zero protection.

To be fair, the trade-off is that there aren't any fees and it's nearly instantaneous. For the type of transaction similar to handing someone you know a wad of cash, it seems pretty good.

> [...] bank pushed me to use Zelle - which has zero protection.

Also channeling patio11 [1]: This is actually a pretty interesting ongoing experiment as to whether banks can opt out of Regulation E.

[1] https://twitter.com/patio11/status/1500993875627761666

No kidding. Zelle looks so dangerous from consumer point of view. It is so easy to get scammed and almost impossible to be made whole. I am fine with Zelle if banking regulators require Reg E. The best part of Reg E: Since banks are almost completely responsible for fraud in their customers named, they take it very seriously!

"I have never been owned by another person, so there is no need for a law against slavery."

The world is full of services, valuable, difficult to provide services, that a given person will never consume. Doesn't mean no one else does.

> I have been paying and being paid for decades now, and I have never involved a payment processor in a dispute I had with the other side.

Have you considered that the possibility of disputes and the existence of a framework for resolving them is part of the reason for that?

But is paying 2-3% on each transaction worth it for that?

Dispute resolution is not where the 2-3% go (as evidenced by disputes also existing on US debit cards, where it's 0.05%, and EU credit and debit cards, where it's 0.3% and 0.2% respectively).

Some of it is spent by the issuer on fraud expenses that they are assigned liability for, but given the same reasoning as above, if that was more than 0.05%, there wouldn't be any profitable debit issuers left in the US (and similarly for the EU, although the regulator is changing the fraud calculus there significantly by enforcing strong cardholder authentication, so it's not an apples to apples comparison).

In other words, if there was political will to get rid of credit card points in the US, we could have all of this for much cheaper. (We might need to look into scheme fees too while we're at it, e.g. by finding a market solution that creates actual competition there.)

You might be surprised how often those disputes are used (and abused), then.

That was a pretty good patio11!

I don't think visa is doing it by hand and pencil and paper though, and the value in those companies is that they're taking bioff the top of every transaction that runs on their rails. so it's already automated too a huge degree, it's just that automation is what gives those companies that market cap

But what is the value they provide, which justifies their earnings and therefore market cap?

by being the digital rails. without visa/mc, all you have in your wallet is a piece of useless plastic. there's huge value in the convenience of not having to use cash, and then the rewards programs on top of that.

Sure but that's not why Visa/MC are worth that much. They're worth that much because they're a duopoly that can dictate prices.

> that can dictate prices

Prices that are capped by the government:

The Fed’s 2011 rules capped fees at 21 cents plus five basis points of each transaction, and also allowed an additional one cent fee per transaction for fraud prevention, where applicable.[0]

[0] - https://news.bloomberglaw.com/antitrust/biden-takes-on-visa-...

That's for debit cards only. Which Visa/MC have knee capped with their monopoly power so it doesn't really matter. Actually helps as a distraction

Also capped in Europe https://www.adyen.com/en_GB/blog/all-you-need-to-know-about-... (credit and debit). But I see that as acknowledgement the companies are too large and duopoly.

Yes, with Bitcoin.

And by using Bitcoin to automate all these transactions you get a bunch of very cool features such as constantly being at risk of losing your life savings due to phishing, scamming, hacking, etc., etc., etc. unless you store a hard wallet in your intestines and memorize the recovery words (better hope you don't forget any or your life savings is gone!). The cool thing about all of this is that it's a feature of Bitcoin to be able to irreversibly lose your life savings, without any ability to recoup your losses.

All of this to say that Bitcoin is obviously the way forward for global transactions, despite the fact it processes transactions as slow as molasses and the only way to make it faster (Lightning Network) is to sacrifice the checks and balances that maxis praise as the hallmark of Bitcoin lol

> And by using Bitcoin to automate all these transactions you get a bunch of very cool features such as constantly being at risk of losing your life savings due to phishing, scamming, hacking, etc., etc.

All lies.

> unless you store a hard wallet in your intestines and memorize the recovery words (better hope you don't forget any or your life savings is gone!)

Lies. Just write them down and store them securely. You can memorize them if you like. It's also wise to store multiple physical copies in various locations to avoid this exact scenario.

> The cool thing about all of this is that it's a feature of Bitcoin to be able to irreversibly lose your life savings, without any ability to recoup your losses.

Yes, you can't be utterly careless (and I'm not sure what the argument is for wanting to be).

> the only way to make it faster (Lightning Network) is to sacrifice the checks and balances that maxis praise as the hallmark of Bitcoin

Yes, which makes sense for small transactions between trusted parties. Large transactions can and should be done on-chain (also with trusted parties).

I'll continue to listen to the signal [1], not the noise. What makes me happiest is that the people who deserve to win the most will win over the people who deserve it the least. It will be the greatest wealth transfer humanity has ever seen and it won't require any violence or coercion.

[1] https://twitter.com/LightningTipB0t/status/16150147987979919...

This sort of vague handwaving of valid concerns is the definition of noise.

Almost like handwaving is the only way to disregard any of the real concerns people bring up about Bitcoin or crypto because there's not really any good way to dispel them with much logical proof.

I responded directly to what was said. There's no handwaving, you just don't like my response. Read my other responses in this thread, too.

"All lies" is not a response.

That was only part of the response.

> All lies.

Doesn't bother to point out what part of it was a lie (because it isn't a lie)

> Lies. Just write them down and store them securely.

Welcome to the future of finance, make sure you don't lose your seed phrases written down on paper (it's the future, trust me bro)

> Yes, you can't be utterly careless

Contradicts saying that I was lying that you can lose your life savings due to phishing, scamming, or hacking, and that if you lose your seed phrases and can't access the wallet then your digital doubloons are gone forever

etc.

> Doesn't bother to point out what part of it was a lie (because it isn't a lie)

This "constantly being at risk of losing your life savings due to phishing, scamming, hacking, etc." is a lie. There is no inherent property of Bitcoin that makes you vulnerable to these. Any vulnerability in those regards is an individual issue, just like with the current system. You could mitigate those away with paid services under a Bitcoin standard (which is great because you could actually pick the vendor you thought could do the job best).

> Welcome to the future of finance, make sure you don't lose your seed phrases written down on paper (it's the future, trust me bro)

Perhaps you prefer steel? https://www.amazon.com/Safe-Seed-Stainless-Recovery-Passphra...

> Contradicts saying that I was lying that you can lose your life savings due to phishing, scamming, or hacking, and that if you lose your seed phrases and can't access the wallet then your digital doubloons are gone forever

Fair enough. This is where an exchange comes in. You still have the option to trust a third-party to hold your Bitcoin if you wish. But of course, that comes with its own risks, just like trusting a bank (which can only ever guarantee up to $250K worth of your money under FDIC).

I'm pretty favourable towards crypto, but it is absolutely an inherent property of blockchains.

The whole point is that it's immutable and transactions are not reversible. That means users are susceptible to losing their money with no recourse.

Seed phrases are also a pain in the ass. No one wants to deal with that, and average consumers would absolutely lose/forget/misplace them and lose access to their wallets.

The risk of ruin in crypto is ridiculously high compared to traditional finance.

> It will be the greatest wealth transfer humanity has ever seen and it won't require any violence or coercion.

Of course, wealth transfer from the poor rubes to the rich fools.

It's a different kind of cash (like banknotes). It has different security tradeoffs because the owner is the custodian and you aren't paying a chain of intermediaries.

It's not a feature of cash that it can be stolen, every object can be stolen. The distinctive attribute is transactions are public and immutable.

A car can be driven by its owner anywhere they like. If someone described a car to you as a suicide box you can crash and die in - you might say yes, the fact that cars can be driven freely by their owners means you might drive into someone else. But that's a consequence of the feature, not the feature itself.

The difference of course between all of the rubbish that crypto/Bitcoin is (since they are, at the end of the day, in the same boat), is that by entrusting central parties to handle financial transactions in our traditional financial systems we have methods by which we can reverse transactions, whereas in any blockchain system there is no real authority, by design, so any stolen assets are lost forever. There aren't security "tradeoffs", because there is not a way in which any blockchain based currency is any more secure than current finances, outside of the fact that no bank or government entity could take your digital beanie babies because they don't have the token, which isn't an issue in traditional banks either unless you're a criminal for the most part. And in order to get this "advantage" of blockchain, you have to completely remove its ability to be used as a currency since for any amount of crypto or Bitcoin to be useful in the real world it almost always has to be converted back into fiat, once again centralizing it. The whole concept is extremely flawed, hasn't really gained any ground outside of FOMO'ers, and will likely die out again soon, thankfully.

- you can use an escrow account to reverse the transaction if needed - having full ownership of your money and it being censorship resistant (depending on the crypto) is certainly a plus if you don't fully trust your government. - the conversion to fiat is depending on adoption: the more adoption there is, the less necessary that would be. - you can decide to wire your money 24/7, internationally, instantly and with no fees (with the right crypto)

Overall you get more control of your money. If you think of money as just another kind of information, it's normal to expect it to evolve in the digital age we are living in.

This reply was excellent. This part really made me laugh:

    unless you store a hard wallet in your intestines and memorize the recovery words (better hope you don't forget any or your life savings is gone!)

To continue the "lulz", South American drug traffickers will soon be cutting those people open to extract their hard wallet!

Enough with the jokes! Real question: Sometimes you read about FBI chasing down ransomware groups and recovering Bitcoins. How do they do it? If they can identify the wallet, how do they lay claim? Do they find where the wallet is hosted and force exchange to transfer wallet to FBI?

Please don't read this post as an attempt to defend Bitcoin, nor say that FBI is a good way for me to reverse a fraudulent Bitcoin transaction!

Does Bitcoin support dispute resolution (i.e. chargebacks) yet?

It doesn't need to. Transact with vendors you actually trust who have a track record you can verify (which necessitates people being trustworthy to earn business—unlike our current economic order).

And on the vendor side? Are you suggesting that either all sellers know a) the credit worthiness of their customers or b) don’t extend any credit?

Either one seems like a major downside for the seller.

> Are you suggesting that either all sellers know a) the credit worthiness of their customers or b) don’t extend any credit?

That's up to the business owner, but considering the utter destruction its done to the world I would say most businesses should not extend any credit.

The nice thing about Bitcoin is it's a transaction layer and people can build services on top of it. Someone could start a guarantor business that other businesses pay to verify creditworthiness. They do that already now, the difference being that it's a completely dark system controlled by people with no incentive to fairly or accurately represent your worthiness.

> Bitcoin is it's a transaction layer and people can build services on top of it

The transaction layer is arguably the least interesting service the credit card and other incumbent transaction/payment networks provide.

Deciding whether to move money, and possibly whether to move it back, is where the value is created.

> The transaction layer is arguably the least interesting service the credit card and other incumbent transaction/payment networks provide.

It isn't until you can't transact over it because your government blocked it or received an international sanction that prevents you, an innocent citizen from transacting. Or, if you reside in a country where that network does not exist.

> Deciding whether to move money, and possibly whether to move it back, is where the value is created.

Incorrect. The ability, not the decision, is where the value resides. I can decide all I want that I'd like the bank to send $20K to someone overseas for me, but that likely means jumping through several hoops to do it. With Bitcoin, I can just do it.

How would that not lead to the inevitable concentration of economic activity in a few trusted platforms?

Today, I can shop at pretty much any merchant on the web, under the reasonable expectation that my bank will file a dispute for me if the merchant makes a run for it and I never receive any goods or services. Even in case of merchant bankruptcy, I'm not exposed to any risk.

In a world of non-reversible payments, I'd probably stick to Amazon exclusively. That seems pretty bad for small/new/independent merchants.

> How would that not lead to the inevitable concentration of economic activity in a few trusted platforms?

Because it would force people to be honest in order to eat. Economic activity as a whole would become a lot more transparent because people will avoid hiring you or buying from you if you have a bad reputation. The inverse is also true, rewarding the business owner who invests in quality and customer service.

> if the merchant makes a run for it

Again, this is a discernment issue not a systems issue. In that particular case, you can set up an escrow transaction that only releases funds if the transaction goes through. EBay has already proven, too, that most people are honest by default so this is a non-issue.

> In a world of non-reversible payments, I'd probably stick to Amazon exclusively. That seems pretty bad for small/new/independent merchants.

That's a personal choice.

> [...] it would force people to be honest in order to eat.

But how do I detect honesty in first interaction with an unknown party?

> [...] people will avoid hiring you or buying from you if you have a bad reputation [...]

As a merchant, what if I have no reputation? How do I ever get my first customer?

> EBay has already proven, too, that most people are honest by default [...]

...on a centralized platform that can arbitrate trust!

> But how do I detect honesty in first interaction with an unknown party?

It should be obvious. The guy who shows up to your intro meeting well-dressed, prepared, etc with references is going to be preferable to the guy who shows up smelling like vodka in tattered clothes.

> As a merchant, what if I have no reputation? How do I ever get my first customer?

The same way you do under the current system. Go work for someone else to build up credentials/experience, or, offer to do stuff for free in exchange for referrals and testimonials.

> on a centralized platform that can arbitrate trust!

Can, but often doesn't need to.

> The guy who shows up to your intro meeting [...]

Do you regularly hold in-person intro meetings for ordering sub-$100 items online?

> Go work for someone else to build up credentials/experience, or, offer to do stuff for free in exchange for referrals and testimonials.

And then passport it to my own store how, exactly? "Trust me, I'm honestseller897 on Amazon/eBay"?

>> on a centralized platform that can arbitrate trust!

> Can, but often doesn't need to.

The fact that it does, when required, is the reason for rarely needing to.

> Do you regularly hold in-person intro meetings for ordering sub-$100 items online?

Of course not but you can use the same heuristic by looking at the presentation of what's being sold. Just like in-person, it will be obvious. The only exception would be if you're doing something dubious which already has risks.

> And then passport it to my own store how, exactly? "Trust me, I'm honestseller897 on Amazon/eBay"?

I don't understand what you're asking. By doing that work and building those relationships, you've established a reference to someone who can vouch for you and your work.

> The fact that it does, when required, is the reason for rarely needing to.

Great. Use a business (or start one) to mitigate that risk for you and pay with Bitcoin using escrow.

> Of course not but you can use the same heuristic by looking at the presentation of what's being sold.

Which works until the scammers begin making nice websites. They already do, not sure if you've noticed - phishing sites typically look almost identical to the target site. I've even seen known scam shopping sites look completely legitimate. Stripe lookalike checkout page, with full emulation of every behavior of the page, address look up, the whole nine yards. The reason why it's not worse than it currently is, is because CC theft is not as easy as it could be, if it were all crypto (irreversible transactions + immediate theft that can be shuffled around within seconds and hidden).

This is a legitimate concern, but there's a business to be built here.

I could see some sort of popup or embed that the actual company can put on their site that can only be validated via DNS. Then, users can look for that and have it validate the company by having the service email the user from the authentic domain, via that popup's backend. If the popup can't validate that the email sent via the vendor is from the validated domain, it rejects it and sends a warning back to the buyer that the site isn't authentic. The business being to mitigate spoof attempts on the behalf of sellers and building trust with customers.

Make it simple enough for any seller to use and you incentivize sales by being a "BlorgTron Validated Seller."

All of these problems have solutions, they just (likely) don't exist yet. We're effectively entering a "financial industrial revolution," and just like back then, new solutions will be required to move forward. That doesn't make Bitcoin bad, it just needs the missing services layered on top (identical to the existing banking system).

Arent those the companies automating it?

I assume this is in part due to the 10 year expiration of ISOs? Stripe was founded in 2010.

Interesting timing, wouldn't think it's optimal given macro conditions, but perhaps they don't want to wait however long it'll take to get back to the frothy markets

It's because the earliest RSUs they issued are expiring this year: https://www.theinformation.com/articles/stripes-early-stock-...

They’re options that are set to expire, not RSUs. Yes, the employees could exercise them to prevent them from expiring, but then Uncle Sam comes to collect his dues. And that’s where illiquidity burns you.

> They’re options that are set to expire, not RSUs.

Both options and RSUs are required by law to have expiration dates. And it's plausible that either or both could have expiration dates within the next 12 months.

Double trigger rsu’s in private companies also expire and holders of those have no option even to eat the taxes in that case. They just lose them.

Good point. I forgot about that.

They are definitely RSUs.

Wouldn't it be good for the company to let these RSUs expire? How does it benefit the company to make sure these exercise?

Employees tend to leave when a major portion of their compensation disappears.

Equity compensation and what it's valued at is a big factor in choosing to work at Stripe. If they start letting RSUs expire, it will make ~everyone value their equity significantly less; Stripe would likely have significant difficulties finding and retaining talent.

Not to mention I think people would also find the names of those responsible and the stench would follow their names forever.

In some ways, yes, but I think if you game it out, you see how the company loses in a number of ways. First, repetitional risk. Second, it’s likely that a liquidity provider would emerge who could offer, basically, to buy call options from individual holders for enough premium to cover the taxes due on exercise. (Stripe would not want an unaffiliated 3rd party accumulating a large position)

Transfer and using them as collateral are typically prohibited explicitly in the agreement, so I'd be surprised if this could happen

Then call it a promisary note.

It's not in the company's interest to piss off employees who can't afford to exercise their options without being able to sell them.

My company recently got bought by a privately owned company. Because of the ownership structure of the purchasing company we weren't allowed to exchange our options or let new ones vest so my company's board approved cancelling and reissuing everyone's options with an acceleration clause so they'd completely vest at completion so we'd all get a full payout. They did this because they knew if they didn't that there would be an exodus of employees before the purchase went through.

Employees represent a large % of the value of the company, if they all leave you just have a bunch of tech that no one else knows how to maintain or use. Institutional investors typically have such a large proportion of the shares that it's worth it to them to not just screw over employees because the employee sticking around and keeping shares is worth more than they'd save.

If they don't let them exercise, the existing employees will rightly see it as funny money and not actual compensation. They won't be employees for much longer after that.

Especially since Stripe has steadfastly refused to go public so far...

It would be terrible for the company.

Every single competent person would leave immediately and no employee would ever trust them again.

Is there any way to buy stock from employees now?

There are secondary markets for private companies' shares (like EquityZen) but I believe you need to be an accredited investor to participate

There have always been ways. Find an employee and make them an offer. Or use one of the many private marketplaces.

EquityZen had an offer to buy last week at a $75B valuation / $32 per share.

> EquityZen had an offer to buy last week at a $75B valuation / $32 per share

That's wildly off market, like 30%+. That's high, even for a retail platform.

What do you mean by off market? Are you saying the value should be 30%+ higher or lower, and how did you get that?

Obviously the usual kind of market isn't applicable here, so I'm curious what you mean.

I think they mean it's 30% higher than 'market'. I've seen article stating that Stripe's current internal valuation is like 60B or so. That valuation might be what they're referring to.

Maybe they should have IPO'd or directly listed in 2019 at the very peak when everyone else was rushing to the exit as I said before [0]. Of course this is also not in hindsight either. [1]

Seems like they now don't want to wait anymore and just unload their shares into the market and especially onto retail investors.

[0] https://news.ycombinator.com/item?id=32567217

[1] https://news.ycombinator.com/item?id=20993919

hindsight is 20/20

you know what they say.. hindsight is 2019.. :D

Not really when the terms of private financing during the bull run were very generous for valuations and terms.

There are big downsides to being public, including all the regulatory requirements and pandering to institutional investors.

Now the bull market is over and private money is tighter, they don't really have a choice but to raise money publicly.

Good for billionaire lords not employees.

Coinbase on the other hand is very employee friendly in terms of liquidation. Their employees are rich as fuck with direct listing (no lockup) at the height of the market.

Just think about it.

Coinbase, who is ridiculed for being apolitical, treats employees better than Stripe.

Going public isn't a badge of honor: it's a last-ditch method to find external financing where private investors wouldn't bite.

Oof, there were a lot of secondaries done at some pretty ridiculous valuations, multiples of the valuation before it was just cut

Any likely consequences for Stripe’s customers if they become public?

Stripe reminds me Cisco systems in 1999. Cisco powered the Internet economy. Savvy CEO and team and amazing execution. Stock traded at $60 in 2001. Went down to $16 in just 2 years and still at $40 after 25 years.

Stripe is equally relevant.

It may not achieve the same private market valuation of $95B for some time. But we love the company, and will continue to use it as a partner, customer, and cheer leader.

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