Patrick Collison — Why Silicon Valley's most talented should leave

31:10How do you think about the dual use possibilities of biotech? I am sympathetic with the idea that if you think of prior technology, just like Google search or even like just like computer itself, right? You could like forecast in advance, like, oh, this has all those dual use stuff. But for some reason, just like history has been kind to us and maybe we should just, I mean, Chesterson's metaphors here is like keep doing science. But with biotech, there's, I mean, we don't need to be specific, except there's specific things you can think of with this specific technology where you could imagine some of the various things.

31:41How do you think about it? Well, why not just like focus, let's say, on ameliorating the risks first or something like that? Well, I don't think that I don't think the binding constraint on harmful use of biotechnology or bioweapons today is pure biological capabilities. Like if some set of incredibly capable intelligent people wanted to, you know, cause tremendous harm with presumably with pathogens but with something biological, you know, they wouldn't necessarily to invent anything new. They would just need to apply currently known techniques in kind of a malevolently directed fashion. And I think there are some concerns and some risks there with respect to, with respect to things that don't invent new technologies but do make them more accessible.

32:34And so I think the question is,

32:41what would the effect on the world be if there was a sufficiently sophisticated LLAM that it could help anybody synthesize and disperse smallpox? I don't know that the laws of physics prohibit such an LLAM existing. I presume they don't. And would the world be fine if such an LLAM was widely distributed, maybe, but maybe not, right? So I think there is that kind of threat factor. But my point is I don't think knowledge at the frontier of biology is the relevant margin here. And if we take seriously what this is, I mean, we don't need crazy AI risks to motivate this. know where the world is perfectly capable of originating, you know, really severe pandemics and pathogens itself, plus all the other diseases that are not pathogenic.

33:32So, you know, we got other problems. But, you know, whether we care about the possible, you know, kind of dual use harms you just mentioned, or we just care about things that already exist, to emulurate both of those, we do need enhancement of our capabilities. And like we, there are There are a lot of biological problems that we don't today know how to solve. And so I think in that respect, if one were to do what you're proposing and try to advance the defensive side of this, I don't know that what one would do would necessarily be that different because there are just fundamental capabilities that we would presumably need to have that we don't today have.

34:15and by trying to solve current human diseases, I think you're probably also pursuing something pretty close to the best steps to solve the potential diseases that malicious actors could cause in the future. That makes sense. I mean, zooming out from bio -risk in particular, just like how are you thinking about AI these days? Well, I think everyone has to be sort of high perplexity in the sense that, I mean, the verdict that one might have given at the beginning, we're recording this here, pretty close to the beginning of 2024, the verdict one might have given at the beginning of 23, 22, 21, you know, back to the last eight years, those would all, I think, have looked pretty different.

35:00I mean, maybe Gwern might have scored the best from 2019 or something, onwards, but broadly speaking, it's been pretty difficult, I think, to forecast. And so I think the basic position to our first order has to be one of some degree of humility. I think as your blog post identifies, the big question right now is to what degree, to what degree scaling laws hold. And I guess if they hold, then what exactly is it that we're, Well, asymptoting is gonna be a presumptuous word, because not an asymptote, but like, what is it that we're approaching? It's not, we don't necessarily know the shape of that thing, whatever it is.

35:45And yeah, I think it's a lot of, yeah, I think how one should feel needs to be, or ought to be very sensitive to like the exact parameters of those curves and I just don't think anyone knows but the true value of those parameters actually are. So it's clearly going to be important. It is already important today, and it has a pretty central bearing on both stripe and arc. And we'll see. Yeah, I wonder if the meta lesson here, and I totally agree with that sort of general sentiment, but I wonder if the meta lesson that we got from COVID, for example, and the things like fast grants was, you obviously can predict these things in advance, but the most important thing, even in addition to these specific countermeasures for when I come up in advance, is like when the thing is happening, having competent individuals who can synthesize and organize information, and also having these like a new initial design institutions to get the right thing done.

36:48Yes, the adaptability premium is probably going to go way up for the next decade. Yeah, and with that in mind, and I know you have already a couple of day jobs. But yeah, I feel like something like fast grants, like when the time comes down to it, I don't know, it should be like, you know, you feel like one of the top people you could think of in terms of having expertise and respect in a wide range of domains and competency as a leader. I don't know, just like keep it in the back of your mind or maybe in the middle of your mind, given how far we are into the transition. Well, fast grants was three -blooded squirrels in a trench coat, or I guess Well, I was one of the squirrels, so I don't sell full of it.

37:27But it was also with Tyler Cohen, who's an amazing person, a great friend, and then my wife, who's also one of our ex co -founders. And so, you know, fastcrimes was not this giant, you know, impressive. That would qualify me for anything at all. But it isn't how to be giant, right? To have that kind of big impact. Yeah, I guess as an objective matter, that's true. I mean, look, John and I try to be very self -aware of the limits of our expertise. which are, which are, you know, which are very approximate to us. And I'm sure if, you know, something that was necessary to be, I mean, look at Operation Warp Speed.

38:06They chose a super -effective domain expert, Monset Slowy, to run that. And it was just like monstrously successful, like truly remarkable. And I don't know who the Monset Slowy of, I guess it would depend on what ever the problem in question is. But I think my recommendation would be like, figure who months F is and like go higher months F and I think is extremely unlikely. I think anybody who deemed me the months F of that thing is probably mistaken. I think you're going to humble but just staying on fast grants, you know now we have the retrospective of how effective the fast grants recipients were compared to the other grants that were given out by let's say the NIH or NSF.

38:48To your knowledge what has been the reaction of of these institutions to the discrepancy between the speed and effectiveness of fast grants. Have they analyzed their protocols and what happened during COVID? Is there any sort of retrospective there on their part? Not to my knowledge, but I don't want that to sound like an indictment. Maybe they've done a lot of reflection and I just don't know about it. I don't think I would know about it, even if it had happened. So I don't know.

39:21I mean, look, most... Well, I don't know anything about the response at CDC or FDA or NIH or NSF or any of the relevant organizations or their international equivalents. And so none of what I'm saying should be taken as like specifically, not only not critical of them, but not even a comment of them. I just don't know what they did. But in general, organizations are not awesome at self -reflection. I assume as a default prior that some of the dynamics we discussed at the beginning of this are rooted there, where none of the people who started those organizations are there today. And so, you know, what exactly are the incentives of those leaders and, you know, I haven't, yeah, it's not here to me who would have the incentive to really take stock in a fully objective and self -critical way to figure out what was done well and what was done poorly.

40:29I promise not to be too myopic about AI, but one more question. Long -term we can forecast, maybe even medium -term we can't, but near -term it looks like we might have things that look like AI agents and they might need to trade. What does a financial infrastructure for AI agents look like? Yeah, I think that's really interesting question. And I think automated or autonomous transactions, I mean, they already exist in, I mean, to some extent today. I mean, lots of services have usage -based billing, right? And a lot of the expenses being incurred are autonomously incurred. Like no human is pushing a button when Stripe does most of what it does with cloud computing and it incurs some cost with some cloud service.

41:17So it's in some kind of extremely primitive way happening today and I assume it will follow some gradient where some of those decisions are either directly or indirectly being made by NLLM or some LLM equivalent or whatever. And I think there will be some almost unnoticeably smooth continuum up to very considerable degrees of autonomy. But it's not that we're going to wake up some month and be like, oh my god, you know, suddenly the bots have been unleashed. And I think there will be interesting questions there around, I mean, this will now send very kind of perocule and kind of, and maybe getting excessively tactical or something, but I think we're very interesting questions around the legality of those in terms of like, are these treated as the responsibility of the owner or is there any degree of kind of independence granted?

42:13How does liability work? How, which rails are best suited? What kind of transaction velocities we're talking right here because if it's a billion transactions a second, then the properties of that system should look very different to, you know, one giant tiering transaction every day. And again, if we just use the analogy of the usage -based services, those tend to incur liabilities in tiny increments, but then to kind of settle, like on a monthly basis. When you pay your bill, so maybe these agent transactions will have that character. So I think there were a lot, excuse me, a lot of practical applied questions, but I think what you're saying around these autonomous transactions conceivably being an important dimension is very true and real and is one of the ways in which the one of the interesting ways in which the economy might change and expand over the next decade and I think it's possible that the crypto place in Roll here where you know, it's

43:16If we take a KYC and AML very seriously for humans, and we want to know the human, that is associated with some particular financial activity. Obviously, that's a murky question in the context of some AI agent. And, you know, if we, in some blurry sense, look at crypto as the part of financial services that is de facto exempt from AML by design, then maybe that plays a role. How long before Stripe was founded, do you think a product like Stripe could have been invented? That's a good question. Well, and depending on what exactly you define Stripe as being, I think it can seeably decades earlier in that some level PayPal is a kind of Stripe And there are many payments companies before PayPal.

44:13And you could go all the way back to cash registers or something, right? So it depends on, yeah, these definitional questions. I mean, the particular secular tailwinds that we benefited from around the rise of app stores and the on demand economy and maybe the startup boom post YC and after the financial crisis, those particular tailwinds were idiosyncratic and specific to Stripe. I guess the GFC was away from 9 and Stripe was founded in 2010. As much as you define those as being core, then not that much earlier. But mostly, my story of Stripe is one of market inefficiency. And I do wonder why much of this didn't happen sooner.

44:57Yeah, I always find it really interesting when there's these cases where it wasn't even the case that like, well, we could have been started sooner, but there was nobody in the market. There were like many people in the market. And there were just like random people. There were technology companies who had quartered in San Francisco, who were in the market. Do you have some explanation for why it didn't occur to them? I'm hesitant to generalize too much because, well, I only have maybe, you know, and equals one experience. And so I think it's dangerous to over -act operate from that. Maybe an equals two now with ARC, because I mean, a very different kind of organization, but an organization nonetheless.

45:31Or if you include all the features of Stripe, if any equals like 10, 20 or something. Yeah, so, so, yes, the linear definition, maybe there's some kind of samples out there. I guess my general view is most products and most businesses, things can just be done much better. And I think, I think, moats are typically kind of overrated. And I mean, the payments at great example of the domain where on a logical basis you would say that there are, you know, so many sources of defense ability where there's, there's, you know, the network effects of the account holders, and there's the data network effects slash economy of scale for fraud and so forth, and there are regulatory modes and barriers and end -to -end.

46:11And yeah, not only does Stripe exist, but there are lots of other, I mean, there's a whole FinTech ecosystem today, right? So yeah, I think it gets down to, kind of deep questions of what are the, what's the binding constraint and just the number of effective organizations that exist in the world, and for any given sector, why is it that number of companies, rather than twice that number of companies, and so on, I think it's about a motivation and ideas and people's willingness and determination to organize talent and so forth, but these kinds of more socio -cultural explanations, rather than...

46:47I mean, Hamilton Helmer is probably the leading scholar of some of the sources of defense Billy for businesses. He has this niche, but very well known in the niche book called Seven Powers. It tends to disaggregate all the various sources of market power in this respect. I think that is true and important in so far as it goes. Nonetheless, it's strange to me that nobody had done striped before striped. When you think about the fact that nodes are overrated and just like doing the thing is underrated, does that, like what is Stripes mode in that context? Does that make you, you know, the thing differently about Stripes mode?

47:31Yes, one. And I guess I do think that

47:41that one can have organizational and cultural modes. And maybe this contradicts what I was just saying, or maybe it's consistent with it in the sense that it's a kind of cultural explanation. And I think that in as much as we have emotes, it's because we have a very good understanding of our domain and a set of people who actually care about solving the problems and who are continually paranoid at the prospect that we might be forgetting something important instead of trying to figure out what the important thing that could supplant stripes approaches is and making sure that we build those first and so forth.

48:18I think organizations that are, I mean, you're familiar with Conquest laws and there's Conquest's third law, which is that Wunchard Model organizations as if they were run by a cabal of the enemies. Right. And obviously it's, or presumably it's Diancheek, but it's interesting to try and think out like, well, what is the kernel of truth in that and why would it be there? And I think What's going on is that I think most organizations when they start out are actually trying to achieve their stated goals Like somebody started the organization for a reason and probably it was for the state of reason But then over time, you know that person and that you know set of people who initially populated the organization Depart and Some set of new people come to you know take their place and there's the multiple versions that this generation turn over on a continuous basis But for the fifth generation, why are they there and what degree do their particular specific local incentives align with the nominal originally stated goals of the organization?

49:22I think there can be a lot of misalignment there, where they're following a local path and conceivably even the leader of the organization, not even through any like fault of their own per se necessarily. necessarily, they're a human and they have their own incentives. And again, the original kind of constitutional incentives of the organization might be quite different. And so I think this phenomenon is a fact of life. And I think these kinds of explanations for me are much more explanatory in trying to figure out some of these things either happen or don't. And to your question, like, as much as tribe has a mode, what is it?

50:04I think it's that, I mean, others can judge to what degree it's actually, you know, manifest and rooted in practice. I think it is, but, you know, I'm a biased observer, but I think it would be that people at Stripe really care about solving the problems that we say we are trying to solve. Yeah, the point about the misalignment over generations or over time is interesting. And actually, do you have examples of institutions which have for decades or hundreds of years managed to keep their original, not only mission statement, but the organizational competence, because you think of tech companies, even the oldest tech companies have not been around that long, right?

50:41And there's some of the biggest tech companies in the world. And the media nature of the corporations, like famously low, what is a good example here? I think some of the explanations around the effect of shareholder capitalism and sort of the idea that shareholder capitalism as a mechanism does, in fact, have, you know, has some consequence with respect to the incentives of organizations and their long -term fates. I think those theories have some credibility and I think it is very plausible that shareholder capitalism even attenuates the duration of these organizations. I'm not saying it's definitively true, but I find it incredible the idea that it is.

51:21It's not clear to me that that's necessarily bad, even if it is true, right? In that are we on the side of the humans or of the kind of aggregate innovation in the world or on the side of like the corporations, you know, quad legal entities and, you know, yeah, it's not to be the answer, it should be the third. At the same time, or maybe in fact, consistent with that, you know, if you look at say Europe or you know, some of their places like, you know, in Denmark, there's a, for reasons related to the text code there, a lot of organizations are either controlled by or very substantially held by non -profit foundations.

52:01So Novonordisk, for example, the GLP company, but Merisk, the shipping company, I believe also LIGO, a lot of these corporations are controlled by, and again, usually have a lot of their stock held by foundations. That has the secondary effect in many cases where they actually do to embed in a legally binding constitution their mission. And so, I'm not an expert on Novodaur disk, but I was happy to get a book about it over Thanksgiving. And actually, there's also a book on the Danish Industrial Fundations, but it's enshrined in their constitution that they have to make insulin broadly available, really cheaply, or at least cheaply in Scandinavian countries.

52:44And I think they're allowed to charge market prices elsewhere. And I think that, and then the rest of their profits, they have to, they're again legally obligated to reinvest in R &D. Is that somehow causal in the fact that they then invented one of the most remarkable pharmacological discoveries of the last 20 years in these GLP1 iconists? I mean, plausibly. And so I think these questions around why it is that the median age of organizations and corporations is what it is are definitely interesting. And I suspect it's a somewhat contingent aspect of how we've chosen to organize large corporations in the U .S.

53:31today. The thing you're mentioning about this firm seems very similar to the export -led growth in Asian. You have TRFs, this one company you're tasked with making the cars, but you better make the cars good. You have no competition, but you had to invent the best car in the world. Yes, yes, yes, and I think I mean, you know, we are all fans of Smith and Ricardo and you know all these characters and and you know even they I think are sort of less dogmatically attached to free trade than perhaps you know people today interpret them as being but but I think people like you know Friedrich lists and you know those are there not quite contemporaries, but you know quasi contemporaries You know are maybe on a relative basis underrated and I do think I mean in as much as you believe the kind of sociological cultural skill, whatever, even vague alignment, not in the AI sense, but in the more interpersonal sense, in as much as you think these are important in explanatory, then yeah, I think you end up thinking about some of the things you just raised.

54:31That's really interesting to hear you say that because if you think about Stripes Mission, it's to facilitate global trade to make sure that some firm from India can compete with with any firm in Nigeria, whatever. So the room for you till I have this learning curve or you're less efficient than the global competition should be less if Stripe exists, right? Yes. Is it in Stripe the anti -less company? Well, it depends which version of the list. And to be clear, I'm not specifically endorsing these tariffs and trade barriers. I think the history associated with them is checkered at best. I think it's possible that if you have a specific sector where you have clear goals and a credible path to actually achieving some substantial degree of success there and and and probably some more kind of contrived positions, then maybe some degree of activists trade policy might be on that, the beneficial thing to do.

55:36I don't think that that describes most sectors in most countries. That's so interesting. I think there's an interesting thread here in how it relates to Stripe climate in that you're subsidizing these learning curves that these East Asian countries did for their own internal companies. You haven't picked out a specific a specific company that's going to necessarily be the key of a carbon sequestration. But yeah, how do you think about this? Well, maybe a way to unify the two points and also to go at Stripe Time in a second is that I think, I guess it's Say Uselot about demand creating supply. And inasmuch as Stripe aggregates more and more double demand, I guess part of the, it seems to self aggrandizing to call it the theory of Stripe.

56:25But some vague hunch in Stripe is that that aggregation of demand can have important expansionary effects with respect to the ensuing supply. And yes, Stripe climate is some version of this hypothesis applied in a much smaller scale than Stripe itself, but still real and well, we'll see, maybe important. And the basic idea just for folks who aren't familiar, which I assume is most of your audience. So we observed in 2018, I guess, that everyone seems to agree that carbon removal will be very important. And even if we decarbonize the economy on the kind of time scale that's optimistic people, on the most optimistic timeframes, there'll still be an accumulated stock of carbon that is a problem.

57:09It's not pretty weird. There were virtually no carbon removal companies in the world in 2018. Maybe there were two or three years or something. No companies had ever purchased from a carbon removal company. These were really science projects. And so we thought, well, you know, somebody's got a star, and it might be valuable to, you know, not only transfer some dollars, but to kind of converse some credibility on this sector, not the stripes as the world's most credible company, but, you know, it's better than nothing. And so we started contracting some of these carbon removal companies. That went pretty well, and, and, and they seemed kind of appreciative of that.

57:41And so we thought somewhat more about this. And we then in 2021 formed Frontier, which is an AMC and advanced market commitment. So inspired by the first in AMC, which was a pre -commitment to purchase vaccines for developing world countries for diseases that, I mean, well, either we're kind of market failures where former companies hadn't pursued the vaccines or were just like the profits were insufficient to pay for the program. So we had to do this for carbon removal. We raised a billion dollars stripers. The first investor, we're not actually investing, we're just buying, so the first company to commit, but then we're joined by Shopify and Alphabet and Meta and JP Morgan and a bunch of other companies.

58:27And now there's like a fairly active sector of carbon removal companies. I think Frontier has contracted with between 40 and 50 companies, the overwhelming majority of which didn't exist when we started out with this. them to what degree was the existence of Frontier somewhat causal in their company in the first place. Again, there's an anonymous survey. I think it was 74 % of the companies said that Frontier played a causal role in their signing the company. So, yeah, I think these inducements effects can be pretty significant. Yeah, that's huge. Well, what are the ideas you've come across where an AMC would be effective instrument of moving forward the tech?

59:16That's a good question. Actually, having some of that discussion internally, it's not that we plan on doing it ourselves necessarily, but just wondering, are there people we should share our technology with? It's not that it's even technology per se, but I'm sure I experienced whether something and try to help along. I mean, there's still a lot of stuff in the biomedical fields. And I mean, patents are pretty useful in so far as they go, but there's a lot of innovation that seems like it would be socially beneficial that patents don't provide a way to cover the cost of. And so there was some excitement a few years ago about Manos, which is a sugar.

1:00:12And there's one paper that, or maybe a few papers, I can't remember that suggests that maybe tumors will selectively take up manose rather than glucose, but they can't actually metabolize it properly and then they just die. And so, maybe this could be an effective, you know, unco -treatment of some sort. But Manos is like a generic sugar. It's been understood for, I guess, more than a century. And you couldn't patent it, importantly. And so it's not here who has the incentive to even fund the work to test whether or not this would actually work in practice. And this is not an endorsement of Manos, but there are things of this shape where there's something where you can clearly see why that might be very beneficial.

1:01:00But it's not totally here. How the economic structure of the market can make it possible. So I think there are still a lot of those across the biomedical landscape. I mean, look, there are still a lot of vaccines that, you know, couldn't principle exist that don't. I mean, Lyme disease. You know, there's no, there's one vaccine that was withdrawn from the market over some safety concerns that I think were misplaced, but, you know, it's still in the vaccine. I mean, it's not even that well understood, right? Like people are chronic Lyme disease. We don't know, like if it's legit or not. Exactly, yes.

1:01:31And it's a good question. Maybe some of your listeners will know, we'll have ideas for fields, we surely need an AMC. Yeah. I want to go back to stride for a second. So you're famously appreciative of craft and beauty, but also you appreciate the power of scale and growth. Is there a type of craft? Oh, interesting. But is there a type of craft that is just not amenable to speed, grow, scale, everything like a Japanese chef. He's like learning to rice for a decade and then he can move on to the sushi or something. Is that just not competitive in the modern world? Kraft, scale and speed. I don't know they're strictly necessarily intention in every case, but they're definitely frequently intentioned.

1:02:17So just yes, I think is kind of one true answer to that. At the same time, A lot of the most successful companies are those that I think are distinguished by the extent to which they exhibit appreciation for and skill in realizing craft and beauty. And so LVMH is one of the largest companies in the world and that's literally their business. I think Tesla is pretty good at this. I mean, they're good at many things, but including this, obviously there's Apple. I mean, TSMC is a kind of, you know, it's not the Japanese sushi chef you mentioned, but it is the TSMC chip sushi chef in Taiwan. And so much, again, tacit knowledge and difficult to transfer skills.

1:03:12So I think it might be the case that craft and the pursuit of it is as important as it's ever been.

1:03:27And certainly as Stripe has gotten larger, I think we ourselves have come to greater conviction in this, where I think part of what's interesting about these aesthetic qualities is they're generally speaking unquantifiable. I don't know if they're intrinsically unquantifiable, maybe you could train a model to do so or something, but today they're broadly speaking unquantifiable and yet they are actually, they influence people in significant ways. People very demonstrably care about aesthetics and they care about, if they're a company, they care about the aesthetic characteristics of the products that they produce, just like on an intuitive level.

1:04:08People know that that's true, but it's difficult to manage that at an organizational level where there isn't a P &L associated with it, and if you're screwing it up, you don't see a neat time series decline. But over the 14 years of stripe, we have, I guess, through a kind of not exactly trial and error, but just by studying cases where things worked well at stripe and cases where things worked less well and what customers responded well to and so on. It really seems clear to us that even in a domain like ours, where we are selling primarily to businesses, that this is something that's truly important.

1:04:49And also that in as much as, you know, getting back to where we were discussing previously, you want in as much as the the sociology and the kind of cultural explanations of defensibility are real, the best people, consider themselves craft people in their domain, and they really above almost all else want to work with the best other people. And so I think it may almost be true that even if from a customer facing standpoint, craft was not valued by the market, you actually might still want to build an organization that index is very heavily on this, because you just want the best people for other reasons.

1:05:31As it happens, I think customers do in fact value it, and I think the evidence is broadly consistent with that. But yeah, I think it's a very hard assemble groups of the best people if you don't take the practice of the work super -seriously. What kind of beauty or craft or simplicity is more important? Interface or implementation? There's famously that I say that UNIX is successful because the implementation is simple and not the interface. Yeah, I guess the interface is kind of simple, but there's a lot of like asterisks and caveats and edge cases that I guess Unix doesn't handle for you. What Stripe does, right?

1:06:10I mean, presumably it depends what you're building, right? For TikTok, it's probably more important that they're interfaces simple and you know, if there are implementations of mess, that's probably okay. Nothing at it, so I have no idea. Whereas for Stripe, Yeah, people are, people are, on some of them, purchasing our architecture or purchasing their ability to do certain things and some set of things rather than some different set of things. Because of what our architecture makes easy and makes possible now, I don't think, I mean, if by interface you mean the visual, gooey interface, then maybe we can draw some separation there, but I guess we don't really draw that distinction.

1:06:47Like we think of the interface to stripe as being the architecture. Right. We're selling, no one else seems to agree with me, but I often think of Stripe as similar to Mathematica where we're selling kind of a self -contained universe to model whatever it is of interest to you and that you care about it. We're providing some primitives and some, yes, kind of interfaces and tools and so forth to enable your modeling, but fundamentally we're helping you do something in your own terms. And in that sense, I don't think the architecture and the interface are necessarily that separable. That's really interesting analogy.

1:07:33Although, I mean, if you think of Mathematica, the entry that's giving you to is just the Plotonic Objects of Math. Whereas for you guys, it's like the entry is like Visa -era -codes, right? right, right, right. The end object is not the, you know, the platonic. That's true though. In both cases, yeah, I think yes. So the algae falls down in, in a few respects. But, but look, I mean, the idea of a transaction is pretty fundamental and is, you know, roughly as old as, you know, the quadratic equation or something, I guess the transaction is older. And, and mathematic, especially today, excuse me, today now supports all kinds of, I mean, to a very impressive extent, supports all kinds of like crazy arcane stuff.

1:08:19Like if you go through the more obscure packages in Mathematica, you can definitely find things that are, I think, much less broadly employed and understood, even than visa error codes. But yeah, look, these are not the same. It's more today. I find it to be an interesting source of intuition. And I think what Wolfram has done with Mathematica is pretty amazing. Yeah. Another way in which I'm curious how you think about this. One way in which Mathematica maybe differs is if they had to make a change in Mathematica, like big deal, somebody has to learn new syntax. If you make a change, it's like billions of dollars of transactions don't happen.

1:08:54Like, how does that change the way you think about the initial architecture and just the stakes? Yeah. It's a good question. Well, actually, first of all, I'm just beauty with respect to architecture, then I'll answer that one. So just as a side note, I guess, I think it's interesting that API design in general doesn't get more study as a discipline and as a practice. I think it plays a significant role in the fate of platforms or can, not saying it's always the determinant of thing. If you get it right, there can be compounding positive benefits and the converse. I think it's really striking that with mobile app development, which was one of the most dynamic and fast -moving ecosystems of the past 10 or 15 years that so many of the objects and the classes say in iOS development are prefixed with NS, less so now it's wafts, but for much of the iPhone's history, and the NS of course refers to the next step, back from next in the 90s, but when you get API design and architecture right, it can be so enduring over literally multiple decades, and even the face of what are otherwise kind of frenzied evolutions in everything around it.

1:10:18And Unix, of course, has another example of this, where yes, Unix has tons of shortcomings, but the architecture has basically worked for now more than half a century. And so, you know, we talk, we're also going to impress upon people at Stripe the importance of multi -decadele abstractions. And I think people sometimes respond to that thinking that that's some insanely lofty kind of implausibly ambitious, I don't know, hyperbola. But no, I think that's actually just what happens when you get this stuff right. And if in fact you get a rise, you can just reap these, or really the people building on your platform can reap these incredible benefits for a very, very long time.

1:11:07To the Mathematica point, they, I know, take backwards compatibility really seriously, where you can run programs written 20 years ago unchanged in today's Mathematica that really raises the stakes in API design for sort of obvious reasons. And we have that same problem ourselves where when we think I'd introduce something new, it's not just does this like exigenently address the particular need that motivating it today, but do we think we can stand behind this in 2044? And how do we think the world might evolve around us such that it all remains coherent? And we certainly don't always get that right, but that's on some level what we're trying to do.

1:11:50is visa and an example of this. And one might even say that one of the downsides of being able to use in publication for many decades in the future is even if it's self -sustainable and you have this ecosystem and equilibrium set around it, if you can't modify it, just because of people's locates and incentives, you get stuck in this equilibrium that's worse than it could be otherwise. I see. I see. I think the card networks generally, Visa and MasterCard, and are pretty good at equilibrium, where it's easy to judge today with the world that exists in 2024, but I think you have to look at the world as it was when they started out and the particular problems that they're solving.

1:12:32I think when you compare the financial landscape in the US or in the Western world to those and other places, it certainly not clear to me that the US has gotten a bad hand, so to speak or is somehow stuck in any meaningful way. So the cardinworks do a couple of things. They originally designed to replace a store credit. And to, I mean, it was a credit card originally, not a debit card, right? And that was important. And the availability of structured consumer credit, I think, is actually a pretty big deal and pretty beneficial, and especially beneficial, typically for lower in -compete people.

1:13:15And then with the adventagos of jet travel and mass market tourism and so forth, then they helped supply and travelers checks and various worse alternatives like carrying cash around in your door bag. And then with the internet, they were substantially involved in enabling online transactions. And I think that the fact that they got the architecture so right that so much of this, so many of these different use cases were able to be addressed by their core design is just really impressive. And like the guy who designed all this, D -Hawk, I think is, I mean, he was just a remarkable person. And even people complain about interchange.

1:13:56And I mean, last I sound like a defender of the card ecosystem. Stripe is on the, well, depends, you look at multiple ways. but many people would be able to restrict you on the wrong side of the interchange cost equation in a sense that we're giving away the interchange revenue to other companies. And so I don't think I'm structurally biased in favor of interchange. And yes, I will say I think it's pretty interesting what interchange made possible, where it's a distribution incentive fee, where you're paying other entities to go on like do the work of recruiting these customers and convincing them to get a card and, you know, getting them to maintain the card and to pay it off at the end of the month and like all the stuff.

1:14:42So you're paying for that. Just the pure distribution. Like there's a person at the end of the flight telling you, hey, sign up for the United credit card. I'm like, you know, that's what you're doing. That's what you're doing. That's what you're doing. You're not going to get to it. You're not going to get to it. You're not going to get to it. Well, we'll get to the kind of factuals in a second. So there's that. There's, you know, paying for the actual credit issuance itself. and then there's the customer support and all the auxiliary things around the dispute handling and so forth. And then I think it is interesting to look at the cases where for whatever contingent reason, the card networks didn't arise, so Germany is one of the classic ones.

1:15:15And dealing with the, I mean, from our vantage point of view, dealing with the online economy in Germany, as compared to the US, is so much worse. Like if strike could push a button and have really broadly adopted cards in Germany, ally the US, we would like push the hell out of that button, right? You can look at China, which on the one hand does have Alipay and WePay or WeChat payments are really ubiquitous. In that sense, they're very digitally enabled from a transaction standpoint. But those products don't tend to be as sophisticated with consumer credit. And so, yes, the transaction fees for transferring money that you in fact already have are that's super cheap.

1:15:58but I think you need to look at on a fully loaded basis where, okay, but what about the cost of actually getting the credit to make the purchase in the first place, you know, as a credit card would enable? And I think as you look at these other counterfactuals and other places, one feels a kind of gratitude for what it is that D -hoc and Visa and MasterCard in the Card Networks made possible. And look, I'm not saying they're perfect or anything, but I think that I'm most interested in critiques. I'm not saying again, that we can't make them, but just I'm most interested in critiques from people who've really studied the ecosystems of other countries because I think it's easy to underestimate what we got in their invention.

1:16:39Maybe there's a sort of test -tune fence kind of thing going on here. If you had to design payments from first -room stores now, does it make sense that all these things you mentioned taking on credit risk, the chance of fraud, disputed adjudication? There should that cost like two, three percent of each transaction that happens in the economy. What would payments look like if you had to design that from a first -minute spools? Well, we're seeing a live version of this experiment play out for the first time in many years in a number of countries today, where central banks are becoming more active in designing national all payment schemes.

1:17:15And so, PICS in Brazil launched in late 2020, I think. But it's a, I mean, I'm sure you've heard of, you know, UPI, the central bank. The UPI was kind of the, the, the instigator here where it's the central bank payment system in India. And it was, you know, tied up with ad hire and their national identity system and so on. But that inspired a lot of central bankers and other countries to go and build their own UPIs. And so, yeah, PICS in Brazil launched in 2020 and now a significant majority of all Brazilian adults are weekly active users of PECS. Again, even though it was launched in 2020, so it just had this incredibly rapid adoption curve.

1:17:54You have Swedish and Sweden.

1:17:58Across East Asia, Japan, Thailand, Switzerland, central bank, after central bank, are deciding, hey, we should have our version of this. And so this is a kind of at reinvention of the payment system from scratch. For kind of hard to understand reasons, yeah, things typically seem like once you layer in the customer support and the consumer protection and the fraud prevention and the anti -money laundering controls and the credit, you know, the thing just for some weird reasons seemed asymptote around, you know, two or three percent. It's important to also note that a lot of the two or three percent, you know, beyond just covering the costs, much of the surplus ends up getting remitted to consumers in the form of rewards, not in every country, but in many countries.

1:18:46And if you look at the public reports from various banks in the US, their interchange revenue, where they're getting these delicious fees on every transaction, as you put it, a lot of that is going straight back out the door to the consumers themselves and so on. So, I mean, it's not clear how exactly when you think about the economics, like if it's going back to the consumer, should you include that as a transaction tax or is it just like a weird sort of weird circular relationship? I've not seen any evidence to suggest that the 2 % or thereabouts is massively inefficient in the scheme of things.

1:19:23Not saying it's the optimal level, maybe 1 % would be better, but within some range of 1 to 3%, it's probably reasonable. I mean, as we We think about some of these advalorum fees and figures. I think the place where there's even more change at the moment that we find ourselves thinking more about is actually the changing structure of global tax, where the idea of There's been a reason amount of innovation, I guess, in the tax domain over the last century where income taxes got pretty high, then we value added taxes and so on. Like the new thing, at least in the online context, is jurisdictions remitting or, excuse me, imposing sales taxes on businesses that don't have any kind of locus in the jurisdiction and questions.

1:20:28So you're a, you know, you're a podcaster in the Bay Area and, you know, the door cache merch store, you know, we'll have to pay, you know, the town of Uppsala in Sweden will have a special tax on baseball caps. And, you know, you will need to know about that particular tax on baseball caps and any baseball caps that you are selling to the Uppslands, you know, you'll have to collect that amount from the buyer and report to Opsilat. And then eventually figure out how you're going to get that money to Opsilat. Obviously, it's this like combinatoric problem of buyer jurisdictions and product types and then all the different jurisdictions that you have to remit the money to.

1:21:14And those amounts, we're not talking three basis points. The taxes in question and roughly 5 % or 10 % or something. So it's not trivial. And so just as I think about sort of the funds flows on the internet and how all that's evolving and unfolding, I think changes in tax law are actually a much bigger deal than anything about the transactional economics. Yeah, yeah. But by the way, it's not the work that's podcasted with the Lunar Society podcast LLC. We're just done sort of at least. Is there any merchandise I sell in the future? And all of this rival could take care of that. Yes. OK, well, does everybody else try to convince me?

1:21:49Yeah. That's right. It's been super usual, honestly. It would have been much more difficult to get business operations going. Do you think, sorry, I know you're supposed to be interviewing me. No, we're not. But did Stripe play any, like, even on the margins, counterfactual role in you charging for anything? This is the thing we're always interested in. Like, when we talk about sort of growing the GDP of the internet, it's not like, get the existing GDP onto our rails. It's sort of, you know, where on the margin can we cause there to be economic activity that isn't already occurring. So yeah, like you did in fact, as it started to start the podcast, you know, before incorporating, but where were we in, you know, cause of any fashion and like the merch, or anything of that nature?

1:22:30Um, I like to the extent that like, sub -stack would not be like a convenient place to get paid as from to begin with. That's a different thing. And also, you know, if you wouldn't charge for the newsletter if sub -stack hadn't made it super easy. Yeah. And also if I do like an ad or something, I wouldn't even know how to begin with getting the money if I didn't already have an LLC through Stripe that with the dissociative bank account that I'm going to get the money through. So yeah, probably kind of fractured responsible for a lot of the monetization. That's cool. Yeah, yeah. Appreciate it. So what are some unexpected compliments to payment processing you see in the future?

1:23:10So, you know, all this stuff, Atlas, Identity Fraud, Detection, you know, in retrospect, it might not have been obvious. The back then, that was a good complement. Now it does seem that way. What would be like this in 5 -10 years? Honestly, our problem ends up being that

1:23:31too many things, more things that we can possibly pursue, looked like compliments, right? In that, that every business almost by definition has revenue. And so we obviously want to help them generate and accept and manage and orchestrate everything pertaining to that revenue. But once you're in that flow, and you kind of just go through the steps of running a business, yeah, a lot else looks relevant and somehow connects quite directly. really, you know, we're not, I mean, when Stripes started out, Stripes seemed like it definitely wasn't cool. It was sort of the opposite for just a couple of us and we thought that we could make this the superior payments API.

1:24:20And for the vast majority of its history, Stripes, I think attracted people who are drawn to unglomerious infrastructure challenges and problems. And we're not a company that specializes in making beautiful cars. We make roads. And I bring all of that up because I think it's relevant to this kind of compliment question where in our discussions internally, a lot of it and by the same day, if you get a majority of it, is still about, okay, where are their actual practical shortcomings and limitations in even our core bread and butter? And payment processing might be a slightly too limited term to use for it.

1:25:09Maybe it's more about just global programmable money orchestration, which yes is consumer to business payments. The sort of we were just discussing in the context of your sub -stack, but it's also business to business payments. It's also payments with this credit or lending involved. It's also how you hold money. It's how you convert money between different currencies. It's how you represent money that's held by different legal entities and how we make it possible for even individuals or small businesses to act as kind of micro multinationals and all this kind of stuff. But those problems that we just skimmed over are all, even though they all directly pertain to the movement of money, they're not small.

1:25:55And if we could just solve those really, really effectively, then, you know, Stripe will be a very consequential organization and I think force in the world. And, you know, I think the counterfactual importance of building some of this stuff as we go to newer markets that are on a relative basis more poorly served is actually increasing rather than shrinking. In the US, there were payments companies before Stripe, and maybe if Stripe had never done its thing, eventually you'd have found some way to monetize a newsletter or something like that. But if you're in Albania, the set of options available to you is far more restricted.

1:26:39So I think that the marginal impact as we expand globally increases quite bit. So that's all to say that even though we are interested in and due today pursue some of these directed jacencies, I think that the core problem of global sort of money orchestration remains really big and unsolved problem. Does that look like being a better interface for all these complexities and glossing them over under the seven lines of code? Or does that look like actually replacing the rails and the infrastructure to make all this more efficient and effective. The former, the former. It's just not that useful to build financial ecosystems that are self -contained, right?

1:27:22A financial island is not that helpful. It's much more valuable to build a financial, this is mixing metaphors, but a financial of AIR network or something, but I think we would much prefer that Stripe plugged into every existing system in rail and domestic organization rather than we tried to come along and supply them. This has been Stripe strategy very deliberately from the beginning, where there were lots of companies when Stripe started out, they were trying to do their own thing and go their in a way, whereas our belief was you got these, I mean, it's classic, I guess, Metcalf -Lost stuff, you know, by enhancing the capabilities of an existing ecosystem, you create quite a bit more value.

1:28:15Okay, let's go back to Stripe. Is Stripe a writing culture for the benefit of the writer or the reader? It can be both. But which one's the more so? I think there are really considerable benefits on both sides, because for the reader, it's It's not just that it's maybe more efficient to communicate stuff through tech, so in many cases it is, but also this inter -temporal benefit where future readers can try to understand the through line and the thought process that led us to this point. And I think that's very considerable. But it's also true that I write things in lots of other things in order to organize one's own thoughts.

1:28:54And if that kind of ability was taken away from me, I think I'd be immediately less effective. So, how exactly those bounce out is hard to say? Maybe the... I mean, they're not actually separable. That's my answer. Like, literate cultures are just a different thing. I don't mean literate in some kind of faux intellectual way. I just mean, it made textual cultures is a better term here, where Bruno Latour spoke about how he thinks part of how the printing revolution, like Gutenberg's, caused the scientific revolution, was by making knowledge more rigid. Where before, if some observation didn't match you know some claim, you can always kind I'm struggling with like, well, I guess the person who transcribed that thing, you know, just like made a mistake or whatever.

1:29:56And so by making things more rigid, it's easier to break them. And then you can notice discrepancies between, I guess, the theory or the claim or whatever, and the actual reality. And I think there's some version that organizationally where, I mean, I'm not trying like that precise parallel, but there are analogous dynamics where the nature of oral cultures and textual cultures are just quite different. And so the kinds of collaboration that are possible and the kinds of consistency that can be achieved, it is just fundamentally different. And is the front or rear wheel of the bicycle more valuable?

1:30:39I guess theoretically you can view Unicycle, but as a practical matter you do just need both. I know I said no more AI questions, but on this particular point, it actually seems very legitimate to me that you might expect firms that have a lot of writing to be the first to experience the productivity gains of AI because there's all this context that the model doesn't have available readily. I don't know if that's something you anticipate. I think that's probably true. Yeah. I don't know. And if the model is really good, maybe you should be able to pick stuff up quickly, but I think most organizations are not recording all of their meetings for a variety of reasons.

1:31:15And if they're not, then yeah, there is this question of, what is the corpus? How do you get a speed? So yeah, my guess is that'll be true. We'll tell you about the internal LLM you built. Oh, and it's, we didn't build the internal LLM. We built an internal LLM tool for making it very easy for people to integrate LLMs into production services. but also into their regular workflows as humans. So the ability to work directly with the LLM, as a standard chat agent, lots of people have built, but then also to integrate that with some of our tools for querying and accessing data, or maybe most interestingly with sharing prompts across different people.

1:32:05And so somebody might discover, I mean, one of my favorite examples actually is somebody put together a prompt for optimizing SQL queries and, you know, it doesn't always work. But sometimes it does. And like, it's very cheap to ask it. You know, it got any ideas for optimizing the SQL query and, you know, sometimes it can come up with some good stuff. And so, yeah, the collaborative abilities there have proven, have proven surprisingly kind of high return. And then having just, I mean, lots of organizations have this. We're not claiming that it's very novel or anything, but having kind of a central bus through which to route all access to these LLMs, such that we can experiment with different models and have some degree of observability into the respective performance trends and the usage of different cases and so forth like that.

1:33:04We have found building a fairly significant amount of production infrastructure around LLNs to be valuable. Now, given the proliferation of LLNs themselves with all of the obvious contenders, this is proving quite valuable because we're able to try to figure out for different use cases which models, self -reutter models, who knows are are almost effective. And we, I don't know what the total number of invocations is, but I think we're making millions of invocations per day now. There are just dozens of dozens of actual production use cases across tribe and in all sorts of really, I mean, the financial services ecosystem is in some way a giant analog to digital exercise because humans are analog and intentions and identities and all these things have, you know, there's almost seven degree of kind of uncertainty around them and some noise, but then transactions are digital, right?

1:34:08And we often find in these, yeah, analog to digital conversions that LLAMs can be a surprisingly interesting augmenting tool. And actually, on that point about the, I don't know, the flexibility and the edge cases in the human's interact with these systems. I mean, in some sense, Stripe is like a really high stakes bug bounty program, right? If somebody hacks it, not only the financial services, obviously like money's in play, but if there's like reliability issues, not just because of hack, but because you deployed the wrong way, a significant percentage of world GDP would grind to a halt, at least while it's down.

1:34:50What, I mean, how do you deal with that kind of responsibility? Like, how do you keep the uptime and keep the reliability while deploying fast? Yeah, this is one of the things we've spent the most time on. And I mean, back to this point about wanting to be the place with the best people. And if you, and the value of focusing on craft so that you can have the best people, in the context of software development, one of the things that developers really hate is actually two things that developers hate. Slow development cycles and it'll ship in the next release in a month and that kind of thinking.

1:35:29Developers also hate being paged at 2am for incidents. And so given the criticality of the businesses that we serve, which is in rough terms, 1 % of the global economy. I mean, it's not totally clear how to measure this because we're not measuring. G .P. is defined as final goods, and Stripe is not only selling final goods, and so in theory, there could be a bit of double counting. But Stripe is mostly selling final goods. We're not used by and large for giant supply change shipments. I think maybe there's a mismasagement of 10 or 20 % or something, but a long story short, I think it works out to about 1 % of global GDP.

1:36:18It's about a trillion dollars a year. And as you say, that then makes us really terrified of outages. And so we work so hard to enable fast iteration and development cycles without having outages. And just to kind of put some numbers on it, we deploy production services that are in the core charge flow around a thousand times a day. Most of these services are automatically deployed, so when anybody makes any production ready change, it just goes into production, and it's meticulously and carefully orchestrated so that it first is just running some small flipper of traffic and then incrementing more traffic until it's everything.

1:37:03So about a thousand employees per day at roughly or someone in excess of 5 .5, 9 .99 .95 % reliability, which works out to about, I think, about two and a half minutes of unavailability per year. It's not that we obviously have two and a half continuous minutes of unavailability, but that's what it approximates. Even though it tends to happen, it was background radiation throughout the year. And getting to that point, it just takes a huge amount of investment in, and then there's security properties that are less readily measured, but analogous to those figures.

1:37:49Silicon Valley doesn't tend to, maybe I'm probably being now unfair and kind of attributing things to Silicon Valley, but maybe a lot of the tech industry doesn't place a lot of value on process and operational excellence. we kind of culturally value the spontaneous and the creative and the iconoplastic and the path -breaking, but building mechanisms that can enable really reliable,

1:38:18enable the very reliable provision of important services at scale and removing the the sources of variability that can really cause a bad day for a very large number of people. I don't think they get quite as much cultural credit. But yeah, we've found that, in other words, adopted all sorts of, you know, for example, we found that, you know, this kind of a core feedback loop around, you know, none of this sounds like rocket science, but defining what is the we care about it and then like building automated measuring systems to measure what to be, it's actually happening in practice, and then to sort of try to figure out if well in the cases where we're not living up to that, like what is the reason, and then to actually intervene and to improve the system so that that's not happening.

1:39:10And then importantly, to build secondary controls that detect instances of deviation long before, they actually cause a production problem or anything, but just where we understand the behavior of the system in sufficient detail that we can instrument it in some upstream way. Most of the price I think was well understood by production engineers in 1930. So again, I'm not claiming that it's any kind of radical breakthrough, but we have found that the adoption of these practices in like really kind of tenacious, like, multi -year form is, yeah, it just yields really high returns. and there may be other organizations that both ship at that rate and maintain that sort of developer velocity at this kind of combination of scale and reliably and security, but I don't think there were that many.

1:40:07I think it's real testament to the remarkable folks that Stripe who made it happen. Last day at point, but actually the fact that you have this huge internal tooling and testing is like once you get the AI engineer, as they can just push the commits, and you have the infrastructure set up that it can readily evaluate it. Yeah. Across the board, I think so much comes back to what has to be true for us actually to be able to build and to kind of take seriously this goal of building, you know, the best software. And it's easy to say that as some, you know, lofty vague, you know, hand -wavy aspirational statement, but if you sort of take that seriously as a goal, and if you think, well, what would you have to measure if you know, you're actually going to, you know, pursue it in earnest, and part of the characteristics of organizations that do produce it, I mean, you get down to, well, you know, customers have to really like your stuff.

1:41:08And so, okay, well, how can we measure that? And how can we systematize the process of making sure that there aren't repressions there? And so we have this concept of experienced journeys, which are sort of pathways through stride that we really care are always implemented at a really high -quality level. And it has to be true that developers can iterate very quickly and we're just gonna just gonna speak about how to make that happen. And so I feel like maybe a kind of a theme through everything we've talked about is actually taking the goal seriously. And I feel like a lot of what we do at Stripe is, again, I dislaim any genius in it.

1:41:46I think it's just the very earnest, repeated, serious and long -term application of taking the goal seriously. A few more Stripe questions. One person of global GPs is such a staggering number. When you think about where further growth for Stripe comes from, does it come from the internet economy expanding, or does it come from Stripe becoming a larger share of the internet economy? And to the extent that Stripe is growing faster than the internet, if we consider that the beta in your case, where is that awful coming from? That's a good question.

1:42:25Well, the customers that Stripe serves are outgrowing the internet economy as a whole, like, an aggregate. Now, at some point, those have to converge for kind of obvious mathematical reasons, but you know, we're 14 years in, they haven't converged yet. So I think there's, I think there's a lot of headroom there. And, you know, say Stripe is handing around a trillion dollars a year, and when Stripe started out, the global economy was 60 to 70 trillion -ish, and the global economy is now around 100 trillion. And so we still have quite a bit of headroom before the the amount of activity that is coming out to strive is like really budding up against the ceiling of global economic growth.

1:43:06And of course there's not like, there's no ceiling on global economic growth and for all sorts of reasons. Anyway, it could be vastly higher than it is. And I don't even mean new technologies or Bay Eyes or whatever, but just obviously all the basic per capita math you can do around, and what if everybody had an income on power with the US? And I think it is. And one of the reasons I am so interested in working on Strive is I think it's the old line, the Lucas line about how when you start thinking about differential rates of development in countries, like it's hard to think about anything else.

1:43:42Why does Brazil have the particular income and GDP level that it does? Why does Poland have the level that it does? Why did Ireland have the trajectory that it did where we went from being the kind of the stigma of Europe to now one of the wealthiest countries there. And I feel like Stripe is some applied version of this question in practice where you're kind of building software products, but in some sense connected to or touching upon these questions of, well, why aren't there more countries? Excuse me, why aren't there more companies? And what determines the growth rate of a company? Why, you know, when you start the merch store, like, why does it have, you know, X level of buyers rather than, you know, 2X?

1:44:27And I actually think those questions, I think those remain fruitful questions. We actually haven't optimized the meta system of business to any particularly great extent for the vast majority of business, businesses have been offline, inefficient, you know, analog, everything. And it's really only over the last, you know, one to two decades that a significant share of this has been meaningfully digitized. And the prospects for efficiency gains and optimizations there are still pretty significantly under -explored. And we find incredibly basic things, like just extending capital to businesses. The reason we do that is not to generate profit from the loans, but because we find that the businesses who we extend the capital then just grow faster on a persistent subsequent basis, or trying to figure out how do the business decide which countries it sells in.

1:45:35And you'll find even the smallest business through to some of the largest businesses in the world, that these are very kind of ad hoc and not particularly deeply thought through questions. Like, you know, why don't you sell in Mexico and Brazil or wherever? I was like, well, it's you kind of complicated and we didn't quite get around to it and so forth. And so I think there's, um, these, do you, do your question about, like, you know, where, where does the growth come from? I think that there's still an awful lot of So when we think about the way in which Stripe will continue to grow in the future, in some sense it will obviously involve a lot of big businesses and you know, you've now processing a significant amount of Amazon volume that is other businesses you're doing deals with.

1:46:21First, tell me how you think, it kind of makes sense how an exponentially growing startup would contribute to exponentially growing growth for a Stripe. How does the Stripe keep growing at the STEM trajectory when it's existing big businesses that you're partnering with? And just second, also the case for why these start -ups matters, like so compelling, right? Like a new thing is coming into this world that we should really support and make sure it happens. Why is it compelling that Amazon can fulfill orders more efficiently or something? Yeah, those are very good questions.

1:46:57So on the first one, you're right. It's, you know, Stripe is doomed to eventually grow at the rate of the economy. There's just a question of, you know, how long it takes to get there. Right. Now, the good news is I think it can be a very long time because there's, as we just discussed, there's so much low -hang fruit around different optimizations and improvements that are possible. And so I think it would be many decades before that happens, but that will eventually occur. The second question about here, what's the, like, it's obviously virtuous or compelling or exciting to foster all these nascent startups and to kind of be an anti -income -bidzy force, but what's the case for supporting established businesses?

1:47:54I think we will misunderstand where a small business is typically not in every case, but at least in the cases where we denote them startups, there's usually an embedded innovation, and the innovation is kind of all that the company is, like they've a new idea, and they're going to do something better, different, or whatever. And so generally speaking, we like innovation, and so we've positive sentiments towards that startup. But there's a lot of innovation that comes from large established businesses. That's not all they do. You know, there's also just running the existing thing. And so maybe it's a smaller share, but the aggregate fraction of innovation that comes from established businesses is really large.

1:48:33And we have to be cognizant of the cognitive bias of the start of perhaps being somewhat more conspicuous and maybe on a relative basis, the improvements in turbine technology or in fab technology or in insulation technology that come from established businesses. Or choose any sector of the economy and a significant fraction of the important inventions that occurred over the last 10 or 20 years will have come from the incumbents. And so I think as a general class and Tyler of course would have booked on this, I think big business is underrated. And if you look at the survey data, people tend to have very positive sentiments, not only towards startups, but towards small business as a class, or even the negative sentiments, or relatively negative sentiments towards big business stuff, that bad on an absolute basis, but not as favorable.

1:49:32I think it's true that established businesses tend to pay better, they tend to be more efficient, more of the innovation in our economy comes from them, and they produce a lot of consumer surplus. I think the specific case for Stripe Working with them is typically they're coming to us not because they want to take the thing that they're already doing and just go to all the work of transposing a drive, but because either they want to do a new thing that they're just not doing today and so it's associated with some new business line or some new innovation or invention or whatever, or they've spotted the opportunity to, I guess, to produce a new product, but to meaningfully change how they provide an existing one in a fashion that again yields consumer surplus.

1:50:22And that sounds very abstract and theoretical, but in practice what it tends to mean is they want to take this thing they're selling in this market and sell it in many more markets. Or they've realized that they're selling it in this kind of modality and they should sell it like sell it in other more convenient ways, like they should sell it on mobile or something. And each of those, if it's successful, people actually buy it and any significant numbers, I guess we're getting this decentralized signal from the economy that there's now something of value being provided that wasn't here to for. And as I take stock of the businesses, like the enterprises that are in the process of migraine to strive or that did so for the last year, whether it's the large retailers or the large double manufacturing firms or shipping companies, things like this, it typically has one of those two patterns, new product or current product sold to people who weren't buying it before.

1:51:21Yeah, yeah. I mean, if you think about just like the big trends in the society that don't need to just sell our big problems, right? Like Moore's Law or the cost of solar or something, these are just, you have marginal improvements over many decades. that the big tech or big companies are just able to invest a lot of money into doing the R &D. We're a lot in place at a relative improvement. Yes, it's underrated. Can I ask about John for a second? Sure. So you guys recently published poor Charlie Salmonak and subsequently Charlie Munger has passed away. Did you ever did Munger ever comment on your relationship and if or whether it reminded him of of his and Buffett's.

1:51:56Not to me, but he knew John better. And so it's possible that he did to John.

1:52:05Yeah, I don't know. What have you learned about marriage from John? I mean, this sort of like, co -equal, intense lengthy partnership, it's like the closest thing that you have is marriage, right? Well, I'm relatively new to the practice of marriage. So I, you know, it's maybe in a decade, I'll be able to kind of extract the generalizable commonalities. I suppose the general thing I'd say is I think working with people you're close to is underrated. And I'm doing ARC with Patrick Sue and Salvana. Fast Grants was with Tyler and Salvana. Stripes obviously with John. and actually, John was also, I should mention, instrumentally involved in arcs, formation, like it would not have happened without John.

1:52:59And you know, could give more examples, but I feel like for all the ventures of any significance in my life, they've like not only been with others, but been with other people that I'm very close to and where I had and would like to have an enduring relationship that I would live with them. Sometimes when here's the advice that you shouldn't work with friends or maybe you shouldn't work with your partner or something like that. Look, all these things are using Cratic and there are instances of every possible permutation. But for me, it's been a really rewarding experience. I think John and I can work together for you never know life.

1:53:45but I think we'll probably work together for decades.

1:53:52For us, it's been a really... But both an important source of just meaning and again fulfillment, but also, I think there's a real complementarity. And I think that Stripe would be a less effective company without either of us, and it would be like a bandwidth standpoint or something, but I think we both bring different things to bear. Patrick, I think this is a great place to leave it. Thank you so much for coming on the podcast. Thank you. Hey, everybody. I hope you enjoyed that episode. As always, the most helpful thing you can do is to share the podcast. Then, it to people you think might enjoy it, put it in Twitter, your group chats, etc.

1:54:29It just blitzed the world. Appreciate your listening. I'll see you next time. Cheers.