Besides the success of leveling up in ‘Unicorn’, stripes It has become the most valuable startup in Silicon Valley thanks to the simplicity of its payment gateway that makes it accessible to any user. Joseph David Fernandez, a business model consultant, conducted an analysis to discover the top keys to Stripe’s success, from which he draws 5 lessons that he believes are achievable for every entrepreneur. These are:
1.-Look for investors if all goes well
Last March, Stripe completed a $600 million capital raise, valuing the company at $95,000 million. The novelty of this operation is that it was carried out for a more strategic purpose than a real financial need.
“Basically, that’s because there’s no need. If you have a position that you don’t need, your negotiating skills will be strengthened. Decision-making is more effective when the company’s survival does not depend on it. Therefore, Stripe managed to get the new shareholders to contribute $600 million in exchange for 0.63% of the resulting shares,” says David Fernández.
In his opinion, decisions only need to be made when business is going well to ensure the company’s long-term competitiveness. “If they are taken when there is nothing else left, they will almost certainly be worse than the ones you would have taken in advance,” he says.
2.-Specialize in just one thing (and improve what you already had)
The tendency is to define your core very well, to specialize in it and to add value by suggesting improvements. With that in mind, Fernández’s recommendation is: “Identify where your company’s greatest strengths lie and which niche in the market makes a specialization more profitable. Stop inventing the wheel and looking for new business avenues: grab one and be the best.”
In the case of Stripe, it took over a part of the financial sector that the banks hadn’t paid much attention to, such as virtual POS terminals for online stores. He tweaked it and managed to get close to a $100 billion valuation.
3.-So easy you can do it yourself
The third lesson Fernández takes from the Stripe case is that simplicity wins. Customers and users like simple things, so keep it simple. Don’t complicate what can be easy.
“Companies need to be able to simplify their processes and if they can do it themselves without the need for third parties and their complex processes, the better. We’re talking about the ‘do it yourself’ that’s so successful in business.”
Successes like the one behind WordPress for website development and e-commerce or Stripe itself are powered by this simplicity strategy. “Installing a payment gateway on your website was no longer a problem with the advent of Stripe, as it allowed you to sell from your website with no prior programming or financial knowledge required.”
4.- Think about the future
Every company needs to know the situation and development of its industry in order to be able to make the right decisions.
To do this, it is necessary to observe and interpret the data and trends, but also to listen to intuition. Anticipate and make your own decisions. “Using Stripe as an example, they were able to see that the trend is towards “do-it-yourself” people when creating their websites. But Stripe makes it easy not only for developers, but also for freelancers. They went to the population base. Into the beginning world of creating his own website and that’s where he found his huge niche.
5.- Democratic income model
Entering a new market niche is much easier and faster when the end customer has it easy and feels like they are winning.
“In the case of Stripe, they generated a revenue stream based solely on commissions. If your customer has sold, Stripe has made money. If an online store had to pay a fixed fee, Stripe adoption would have been much slower.” In this case, Stripe’s winning model makes it easy for anyone to sell online without taking risks. “The investment and risk perception of the entrepreneur is lower.”