The Tim Ferriss Show: Patrick Collison – CEO of Stripe

Check out The Tim Ferriss Show Episode Page and Show Notes

Key Takeaways

  • Don’t overweight, with a recency bias, the books published within the last year – give books a chance to fail or persist
    • Take advantage of older books, the books that have had time to fail, yet have survived
  • Be careful about doing something drastically different from the status quo when designing an organization
    • “Most of the experiments in this regard have failed. Most efforts to do something that is substantially different, to the best practice of the day, have failed”
  • To become a better thinker:
    • When you see a smart person holding a strong point of view on something, try to figure out how they’re right
    • Expose yourself to more world views
    • Never get mad or offended – The ability be able to inspect, and try to understand, and extrapolate from ideas/views which contradict your own without taking offense, is very important
  • “It’s astounding, compared to all humans who have ever lived before us, just how amazingly lucky we are”
  • Thoughts on How to Improve Your Decision Making Skills:
    • A goal to aim for – Make sure all the options you’re confronted with, are good options
      • So it’s not how best choose between option A and option B, it’s about how to make sure both options are good, lessening the importance of your decision
    • You often think you only have two options (A or B) …but look closer, there’s often an option C you haven’t thought about
    • “People can improve their decision making by simply choosing other people, and imagining what they would say, and then averaging over their responses”
    • “You don’t necessarily need to be that good at decision making if you get good at remaking the decisions when, and as necessary”
      • So instead of trying to get better at decision making, you may want to try to get better at experimenting very quickly and then undoing/redoing the decision
  • “If people around you don’t think what you’re doing is a bit strange, then maybe it’s not strange enough”

Intro

Books

  • Patrick has quite a few book recommendations on his website
  • What’s his reading process look like
    • He likes to buy a lot of books that seem interesting and of high quality, before he’s necessarily ready to read them
      • He might read the beginning, or a few chapters, and not commit to finishing them – he’ll then leave scattered all around the house
      • He’ll then let time guide him – he’ll return to these books as he pleases, or is reminded of them
  • Patrick advises to mostly ignore new books
    • Don’t overweight, with a recency bias, the books published within the last year – give books a chance to fail or persist
    • Take advantage of older books, the books that have had time to fail, yet have survived
    • “I think people should be much more biased towards older books than they are”
    • One of Patrick’s favorite older books – The Dream Machine

Look to the Past, To Look Forward

  • “The technology industry is not an industry that spends a lot of time looking to its past, in a way that is really both a strength and a weakness”
    • People try ideas that have failed many times before (and they’re oblivious to the fact that it’s failed before) – This is mostly a good thing
      • “The fact that it’s failed 5 times before, does not mean that it’s going to fail a 6th time”Drew Houston, co-founder and CEO of Dropbox, said something similar in these Podcast Notes
      • But it can also be a weakness – We’re not building on ideas that preceded us

Be Careful About Doing Something Drastically Different

  • People have tried many organizational structures and methodologies over time, but most organizational structures have remained the same
    • “Most of the experiments in this regard have failed. Most efforts to do something that is substantially different, to the best practice of the day, have failed.”
      • So when you’re designing a organization, doing something that truly might kill it, is a very risky thing to do
      • So go ahead and experiment, and hope that these experiments succeed…
        • Examples – Have fully remote organizations, or make everything fully transparent (even down to employee compensation – so everyone knows what everyone else is making)
      • “But the bias should be that any radical departure from the prevailing status quo, is probably not going to work” – Bias towards being conservative

Paul Graham and Y Combinator

What did Stripe do right in the early days? What early decisions were really important?

  • Simply building a good product, and hoping users would tell others about it
    • Many people spend far too much money on sales and marketing
    • In this day and age of the internet, good products and ideas spread
    • They focused on the tech, and let word spread
    • Don’t shove your product down the throat of others 
  • Tim says that the vast majority of successful startups he’s advised, who have done well, have focused almost to the exclusion of PR and marketing, on the product in the early days
    • He says the one’s that have done the worst, got very distracted by PR and marketing early on
    • “If your customer acquisition is reliant on paid acquisition, that makes you a sitting duck for incumbents who have larger budgets”

Software

  • “One of the strange facts about the world, is how hard it is for organizations to build good software. It sounds strange, but if you think about what a really good website or iOS application is, and feels like – it’s not easy to build a really good iOS app or website, but it’s not rocket science. Given that it’s not rocket science, why are there so few of them?”
    • “Think of any big major company, and think of their website or app. It’s probably pretty bad.”
  • “I think small companies don’t realize how much of an upper hand they have here. If they can create a product that is so much better than the status quo that they start to get organic traction – once you attach a real sales and marketing engine to that, it’s going to be really freakin’ hard for a big company to effectively compete, because being good at software, is just so profoundly hard.”

Naming a Company

  • Tim says many entrepreneurs spend too much time on figuring out a company name and brand
    • “The future of your company, is probably not going to hinge entirely on the first name you give it”
    • Stripe was originally named “Slash Dev Slash Finance Inc.”
    • Eventually they became “Stripe” – The domain name cost ~$10-20k

Optimism vs. Pessimism, and The Downsides of Running a Startup

  • It hasn’t all been sunshine and rainbows for Stripe:
    • “Despite things having been relatively smooth in that macro sense, it often is just extremely hard”
  • “When creating something, on the one hand you have to be very optimistic, because if you weren’t optimistic, you wouldn’t bother doing it, especially in the face of such hardship and uncertainty, but you also have to be very pessimistic, because there are tons of problems.”
    • You have to be tuned to spotting problems, so you can go fix them
    • In a way, you’re an extreme optimist, and an extreme pessimist – it’s a weird psychological state
  • As a startup founder, you’re always over-extrapolating from limited data
    • If one particular customer decides not to use you, or one particular person leaves the company – you have to be asking yourself, “Is this a trend? Has something changed? Is there something systemically broken?”
  • Because you’re always extrapolating from these bad things, while maintaining a long term optimistic view – it’s a recipe for psychological hardship, in a way
    • It”s a weird balance – “The importance of being able to remain consistently optimistic enough that you can summon the energy and doggedness to continue, while also being very good at envisioning problems, worst case scenarios, and bad outcomes so you can avert them. It’s tricky.” – Tim
    • “It’s not natural. It’s not a mindset I think most normal situations in the world train you to have” – Patrick
  • “Even if things are going well, and the company is succeeding, things will often still not feel great” 
    • “You’re always operating at the outer edge of what you can handle, because if you can spare capacity, you’ll just take on more. Therefore, inevitably, you’re always on the cusp of feeling like you’re going to fall over.”
    • “Even as we record this podcast, I feel right on the edge of what I can handle”

Any other challenging or difficult times in Patrick’s life?

  • There have been a few other periods in Patrick’s life, where he wasn’t necessarily lost, but he didn’t have a clear direction that he was going in
    • Patrick’s says his parents always supported him, even when he wanted to do some unorthodox things…
      • At 15, he took a year off school to program full time
      • He dropped out of college
      • In his late teens/early 20s, Patrick didn’t quite know what he wanted to do in life, and was lost for direction (after dropping out of college he started 1 company, went back to college, then started Stripe)
    • “I think a lot of people either don’t get the opportunity to explore multiple directions like that – either others don’t give them the opportunity, or they don’t give themselves the permission to just kind of have a few slightly lost years where the narrative isn’t super clear”
      • Those years can be hard, and it’s disorienting, but Patrick says these years gave him confidence, and good overall perspective 
      • There’s a famous saying – “Not all who wander are lost”

More About Patrick’s Parents

  • He read a lot as a kid, and his parents encouraged it
  • Both his parents worked
    • His dad ran a lakeside hotel with 24 bedrooms
    • His mom started and ran a corporate training company
      • Patrick notes – “From our stand point, starting company was not some strange, foreign thing. It was pretty normal.”
  • Three things stand out to Patrick about his parents:
    • They showed Patrick the world
      • Patrick’s parents took him to the library every day, traveling in the summers, and often included him and his siblings in interesting dinner conversations with guests
      • Every summer, Patrick’s parents would take him and his siblings camping in Europe, often for months at a time
        • On these types of long trips, Patrick would read a ton
    • They gave Patrick and his siblings freedom – they treated them like adults
    • Whenever Patrick or his siblings expressed an interest in something, they encouraged them to pursue it
      • “I never felt that I was following a track laid down by somebody else

Not Caring What Others Think 

  • Patrick has the following posted on his website, under the advice section:
    • “More broadly, nobody is going to teach you to think for yourself. A large fraction of what people around you believe is mistaken. Internalize this and practice coming up with your own worldview. The correlation between it and those around you shouldn’t be too strong unless you think you were especially lucky in your initial conditions.”
  • What resources does Patrick recommend for people looking to better think for themselves?
    • When you see a smart person holding a strong point of view on something, try to figure out how they’re right
      • Ask – “Why would they believe this?”
    • Expose yourself to more world views
      • Deliberately surround yourself with people who contradict your opinions on life
      • Patrick follows several people on Twitter who have smart, thoughtful, and different perspectives on important matters
        • Check out some of the people he follows here
        • Patrick also has a public Twitter list, called Reading, which includes many independent thinkers
    • Just don’t get mad or offended
      • Anger and outrage is sometimes useful, but Patrick says they’re over utilized
        • “They’re not useful as often as they are invoked”
      • The ability be able to inspect, and try to understand, and extrapolate from ideas/views which contradict your own without taking offense, is very important
        • Just like you run a computer program for bugs, do the same with a new idea in your head

Patrick’s Interest in Economics

  • “Arguably the single most important thing about our lives, compared to lives lived before us, is that we have the immense good fortune to have been born in wealthy societies, and that has had so many consequences on our lives”
    • It means…
      • Our parents/siblings are far more likely to live longer
      • We get to do work that excites us
      • And so much more…
    • “It’s astounding, compared to all humans who have ever lived, just how amazingly lucky we are”
      • That luck  – is that we were born into a wealthy society
  • So one of the most urgent moral questions for Patrick – “Why doesn’t everyone get to do that, and how can we change the world such that more people do?”
    • Patrick has spent a good amount of time in some African countries (Senegal, Ethiopia, Rwanda), and has noticed – how less wealthy these countries are, how much less opportunity their citizens have, and how much more uncomfortable their lives are
    • “I see economics as being a kind of moral anthropology, and cultural analysis, of how we solve this centrally, and foundational question”
    • Tim has also spent time in Kenya and Ethiopia
      • One thing that struck him – how much people smiled
      • People commonly told Tim – “People are really happy, until they get access to TV”
        • Why? – Comparison, being able to see how well off the rest of the world is

Happiness

  • “The happiness you have with your level of wealth, is a function of the wealth of those around you”
  • There are certainly some things that are absolute inputs into happiness:
    • Your health, chronic pain, and the health of your family 
    • Ethiopia does rank in the bottom of of global happiness surveys, probably due to this input
    • Broadly speaking – there is a correlation between income and happiness

Decision Making – How has Patrick cultivated the ability to make faster decisions?

  • “I think decision making is kind of overrated as an area of study”
    • For investors, their decisions are binary 
    • In our lives, most of our decisions are not binary
  • A goal to aim for – Make sure all the options you’re confronted with, are good options
    • So it’s not how best choose between option A and option B, it’s about how to make sure both options are good, lessening the importance of your decision
  • “It’s less about how to make a decision, and more about how you jolt yourself out of the particular mental models that you have, and realize the possibility space of the world, is just so much bigger than perhaps people are thinking about”
    • Often our horizons narrow, and we get stuck in our existing mental models – pull yourself out of this
  • Another good point:
    • You often think you only have two options (A or B) …but look closer, there’s often an option C you haven’t thought about
    • Surround yourself with people who think divergently – the returns are really high
    • Tim recommends these books as good resources for how to think more divergently:
  • “People can improve their decision making by simply choosing other people, and imagining what they would say, and then averaging over their responses”
    • Tim likes to ask himself – “What would Matt Mullenweg say?”
      • He calls him “one of the calmest people, on average, that I’ve ever met” – Particularly when he’s going through tough circumstances or encountering business/personal situations that would elicit a really strong emotional response from almost everyone
  • You can also make decisions quickly, and then re-make your decision if you have to
    • The remade decision will often be a better decision, because you’ll have additional information
    • “You don’t necessarily need to be that good at decision making if you get good at remaking the decisions when, and as necessary”
    • Good books that Patrick recommends that might help decisional course correction
    • So instead of trying to get better at decision making, you may want to try to get better at experimenting very quickly and then undoing/redoing the decision

Wrapping Up

  • “If people around you don’t think what you’re doing is a bit strange, then maybe it’s not strange enough”
    • Do more strange things in service, or pursuit, of real long term economic and technological process
  • We’re still so early in the podcasting space
    • If you plan to start one, it’s not too late at all
    • “The ship hasn’t even been built” – Tim (as opposed to sailed)
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