John Collison – Growing the Internet Economy

**John Collison** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management.

**Patrick O'Shaughnessy** (0:49)
My guest today is John Collison, the co-founder of the digital payments company Stripe. Stripe's mission is to increase the GDP of the internet, a lofty and deeply interesting pursuit.
John is clearly a voracious learner across business and investing, which you'll hear instantly. He started Stripe with his brother Patrick when he was just 19 years old, and has grown it to, at last valuation, a $36 billion business.
In our conversation, we discussed conglomerates, the internet economy, the power of writing, and why board members are like Pokemon characters, each with different powers. It's a lively and wide-ranging conversation with one of the entrepreneurs I've most enjoyed speaking with. Please enjoy. So John, I think a fun place to begin this conversation would be probably unexpected to the audience, which is with industrial conglomerates. I'd love you to explain why you've been interested in industrial conglomerates in some of your research. And then I wanna talk about some of these principles applied to technology companies. But first, explain why you're so interested in this interesting niche of public companies.

**John Collison** (1:49)
Oh gosh, that's an interesting place to start. Well, I think, look, most of the technologists I know are really interested in studying the history of technology because you want to not just be a one hit wonder, you want to not just have one product that works and then passes by, but you want to be able to surf multiple waves. I think all the kind of people have been talking recently about how much of the S&P 500 is now made up of the Google's, Facebook's, Microsoft's companies like that. I think if you look at all those companies, what's impressive about them is how they've managed to surf multiple waves and have multiple successful independent lines of business. And so Facebook making the move to mobile successfully, integrating acquisition successfully, Microsoft missing the jump to the internet and kind of browsers, but initially, but now having many, I think it's six or seven independent the dollar revenue businesses. And so most of the technologists I know are really interested in this topic. What I find interesting to look at is how it tends to be different outside of technology and the different dynamics you get in conglomerates and kind of enduring businesses in other industries, because we're kind of used to the particular way in which technology likes to do it.
You talk to investors and they'll often be following successful companies like Transdime in aerospace or Danaher, the industrial conglomerate, LVMH in the luxury business, they own Louboutin and somewhere, the Champagne brand and things like that.
What I have found interesting in looking at these, first off, as you probably know from these, there are tons of really spectacularly successful companies that have grown at high rates for years and years and years outside of technology. And Domino's Pizza is another one that people like to talk about because it's actually grown more impressively than all the technology companies. And that sounds incredibly obvious to say, but sometimes you have to remind people in Silicon Valley that this is the case.
And the way they tend to do that is somewhat different to what happens in technology. And in particular, you get a lot of these, if you look at single industry conglomerates, the classic conglomerates are maybe the Berkshire Hathaway is very famous for just having so many different intellectual hobbies of Warren Buffett under one corporate structure. RJR Nabisco is probably the classic multi-industry conglomerate. It's like what is a cigarette manufacturer and literally a cookie maker of Oreos under one corporation, but if you just look for a second at the single industry conglomerates, like some of the ones I mentioned, like LVMH and Beauty or Transtime or something like that, it's actually pretty interesting. Vale Resorts might be another one actually. It owns many of the ski properties in Vale and heavenly and places like that. It's really interesting how they work, which is firstly, you have, they're very aggressive acquirers. A lot of their growth has come through selective acquisitions made at good prices.
What's interesting is that then they often give the managers of the acquired companies still a loss of latitude in how they operate and how the companies work. And so it's not the case that they're really deeply, tightly integrating them to the one platform. They're not kind of slurping up all the employees and making them work in a whole new way. They actually kind of buy these companies and then don't integrate them that tightly, but have still driven really interesting performance as a result of that. And it's interesting because in tech, it feels like we only really have one of two modes.