April 5, 2023

Dear Stripe community:

Growing up, we only gradually came to realize that things around us weren’t just always there. Actual
people, with concrete visions, working for a long time, made them happen. That hotel, that park, that
railway. The world is a museum of passion projects.

This basic wonder is what animates us at Stripe. Things around us could be so much richer—in every
sense of that word—than they are. The dedication of doers is what makes the world a continually
improving place, and we’re keen to play a small role in helping make that happen.

We enormously appreciate the trust of the millions of businesses that rely on Stripe. As Stripe grows, we
want to make sure that anyone interested has a chance to hear what we’re up to.

Collectively, businesses built on Stripe processed more than $817 billion in total volume in 2022, up 26%
from the prior year. (Ecommerce, an imperfect but relevant comparison, grew 7% last year.) This is a
significant deceleration from the breakneck growth that we saw during 2020 and 2021. At the same time,
we are as confident as ever in the internet economy’s long-term prospects, and we’re heartened by the
steady advancement of the millions of businesses we serve in the face of banking crises, war, pestilence,
energy shocks, supply chain issues, inflation, and broader volatility.

More than 100 companies now handle more than $1 billion in payments with Stripe every year. This set
continues to grow rapidly, expanding by more than 50% each year since 2018. Some of this expansion is
about established titans, but most isn’t. Part of the joy of working at Stripe is partnering with early startups
on their way to meteoric success. Of these 100+ category leaders, more than half have grown their
revenue 10x while on Stripe, and over a quarter have grown 100x. Many now-household names, such as
Instacart, Substack, and DoorDash (originally known as “Palo Alto Delivery”) charged their customers with
us from the very beginning.

In total, the number of new businesses coming to Stripe increased by 19% in 2022, with an average of
more than 1,000 new ventures launched every day. While the US is currently our largest market, 55% of the
businesses that joined Stripe last year were based outside of the US. Stripe now supports businesses in
more than 50 countries.

Our first operating principle is “Users First.” Part of the value of serving smart customers is that just
listening to suggestions is a surprisingly effective product strategy. Last year, substantially informed by
user feedback, we shipped 244 new user-facing features and 336 API updates. We’re always eager to hear
more about what would help you—get in touch via Twitter or founders@[Link].
Our mission is to grow the GDP of the internet. We are unabashed boosters of entrepreneurship and

capitalism, and think that a more vibrant internet economy will bring broadly-felt prosperity. We try to help in

four primary ways

Increasing the rate of new business creation by lowering the cost and complexity of starting a business

Helping established enterprises adapt to the internet

Reducing impediments to payments, especially across borders, to unlock more economic activity. (There is

a surprising amount of low-hanging fruit here that we’ll get into further down.

Lowering the costs of scaling by providing simple, reliable, secure, and developer-friendly APIs and

services.

In this letter, we’ll share our progress on these four categories and touch on a handful of trends that have

caught our eye.

Startups

An important but little-reported fact is that the population-wide propensity to start a business appears to

have increased significantly and persistently since the onset of the COVID pandemic. We don’t fully

understand why (and would be keen to read further research on this question), but various data sources

depict a consistent picture. According to the US Census, the rate of business formation has increased by

44% since 2019. Delaware, similarly, saw 24% more incorporations in 2022 than in 2019. Y Combinator

reported a record number of applicants for their most recent batch. These data points match what we see:

Stripe Atlas, our service for helping startups get off the ground, saw a remarkable 155% more new

companies started in 2022 than in 2019.

We’re excited by this trend and think everyone else should be too. Entrepreneurship is the lifeblood of a

dynamic economy. For all the gloomy economic headlines, it’s important to contextualize with the fact that

more new ventures are being started today than during the market boom of 2021.

In response to this, we’ve shipped lots of improvements to Atlas. Last year, we added company name

search, a visual cap table, inline document signing, more accurate ETAs, faster EIN issuance, pre-filled

83(b) forms, and significant credits packages that help seed capital stretch further.

Despite the encouraging startup formation trends, the environment is also, in many respects, getting

harder. After a decade-long bull run, venture capital invested in startups declined by two-thirds in Q4

2022 compared to Q1 2021. While the market may have overcorrected, a correction was in order: in

describing financing conditions in 2021, few would reach for “healthy” as their first adjective.

As a consequence of tightening conditions, we are seeing startups monetize earlier and in more ways.

We’re working hard to make this easier and faster across the board.

The most basic way is to reduce the time to a business’s first revenue dollar. Software engineers know that
the only thing better than clean code is no code, and a growing number of companies start by sending
Payment Links (try one!) to early customers, which they can also embed as a buy or subscribe button as
soon as they have a landing page. We’ve shipped a truckload of new Payment Links functionality, and, as a
result, businesses built on Stripe created more than 10 million links in 2022.

More broadly, we’ve significantly expanded our suite of no-code products. Over the past year, we launched
automated SaaS pricing tables (supporting models including flat-rate, per-seat, and tiered pricing),
upgraded Stripe Billing’s customer portal (to allow customers to self-manage payment details, invoices,
and subscriptions), and improved our revenue recovery tools (to retain revenue that would otherwise be
lost to involuntary churn).

This represents an important product strategy shift for Stripe. In the beginning, we strictly focused on
easy-to-use payments APIs. Now, we’re seeing that we can accelerate product development for startups
by providing scaffolding and hosted UIs for managing revenue. Our goal is to eliminate all the duplicative
hassle that comes with scaling revenue for an early-stage company. It's lunacy for every company to
reimplement the same flows.

The AI revolution

A new alien technology has landed, and it goes by the name of the “large language model.” Progress is
rapid, and, in recent weeks, we’ve seen the launch of OpenAI’s GPT-4, Midjourney v5, Google Bard,
Anthropic’s API, Canva’s new creative tools, and many more releases besides.

Steampunk payment cards,


These language models will act as Heelys for cognitive tasks. A working paper recently published by a
group at MIT found that having access to an LLM cut the time to complete a variety of writing tasks by
37%, while the writing quality also rose by 18%. In a similar vein, LLM-based tools can significantly
accelerate human performance on programming tasks. As with any new technology, challenges abound
(both Google’s and Microsoft’s search demos suffered from hallucinations), but the progress is remarkable.
 This wave of innovation is happening on Stripe. We ran the numbers, and a sizable majority of the AI
startups listed in one of the most extensive trackers we could find use Stripe. Many are already building
real businesses around the new technology, including OpenAI, Anthropic, Runway, Midjourney, Cruise,
[Link], Otter, Jasper, Lambda Labs, CoreWeave, Descript, and a long list of others.

New businesses
signing up for Stripe
with .ai TLDs

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

The frenetic pace also means that AI companies are particularly keen to avoid any work that doesn’t help
them differentiate. For example, when OpenAI launched ChatGPT in November, it took them five days to
reach one million users, making it perhaps the fastest-adopted consumer tech product ever. (It took
Facebook 10 months to hit that milestone.) For its flagship products, ChatGPT Plus and DALL·E, OpenAI
uses Stripe to accept payments (offering dozens of payment method choices for global customers),
manage subscriptions, offer one-click checkout, calculate sales taxes, recognize revenue, fight fraud, and
more. Stripe enables them to scale their revenue far faster and more efficiently than would otherwise be
possible.

Internally, it’s clear that ML and AI advances will continue to improve the quality of our products and to
make them even easier to use. Alongside GPT-4’s launch, we launched GPT-4-powered Stripe Docs. Every
user can soon benefit from an AI research assistant who has devoured the whole Stripe documentation
and is available 24x7 to developers designing their integrations. We have also seen significantly improved
fraud detection performance thanks to transformer-based models that can better handle Stripe’s scale
and breadth of data.

Part of what we enjoy about the tech industry is our collective excitability. As a community of incorrigibly
inveterate optimists, we never seem to quite internalize that the Gartner hype cycle is a cycle, and
categories that captivate (scooters and e-bikes, 15-minute grocery delivery, NFTs, the metaverse...)
invariably recede from their initial peaks of excitement. Some of this will no doubt happen with AI, but we
do believe that the capabilities of LLMs and transformers will prove fundamental and enduring.
Knowledge workers will become more productive. Labor-intensive tasks, from quality assurance to
bookkeeping, will see more automation. Generative AI puts some kind of simulacrum of a good designer
in the hands of everyone with an internet connection. The world is now 8 billion people plus a quasi-infinite
number of these strange creatures, and the economics of the coming years will be interesting indeed.
 Silicon Valley is everywhere 

Since the pandemic, shifts in the dispersion of startups have been hotly debated. We decided to look at
our data on “breakout startups”: that is, new companies with unusually rapid revenue ramps. As a proxy,
this isn’t perfect: some breakout companies come out of the gate more slowly, and some companies
with rapid revenue ramps aren’t truly breakout startups. We don’t operate in every market (most notably,
China). Nonetheless, the trends we see strike us as interesting.

In the three years before the pandemic, 63% of the new breakouts that we saw in the San Francisco
Bay Area were based in the city of San Francisco itself. Since 2020, only 46% have been
Around 26% of the US-based breakout companies that we see are based in California. The inverse of
this fact is important: three-quarters are not based in California. California’s share appears to have
been declining gradually, however. In 2018, for example, 31% of new breakout companies were
headquartered in the state
In order, the top startup hubs in the US are: the Bay Area, New York, Los Angeles, Miami, and Austin.
Miami’s growth has indeed been quite striking in our data: detected breakout companies are up by
89% in 2021/2022 as compared to 2016/2017
Outside the US, the top hubs in our data are (in order): London, Singapore, Paris, Tokyo, and Toronto.
(Of these, Tokyo is growing fastest on a relative basis.) French entrepreneurial dynamism particularly
stands out: the top three countries are the US, the UK, and France.

Growth in breakout 150%

startups on Stripe:
2021/2022 vs.
100%
2016/2017

50%

0
Bay Area LA Austin NYC Miami London Singapore Paris Tokyo Toronto

In our data, there are more breakout companies headquartered outside a top 20 startup hub than there
are in the Bay Area (the leading hub). This is worth bearing in mind. While Silicon Valley is frequently the
center of attention, it’s easy to underestimate the extent to which technology companies are now part of
the broad fabric of the US and of the world. The technology community has been remarkably successful at
disseminating the tacit knowledge required to build successful startups. (We’re trying to help a little with
Stripe Press.) Investment scenes outside of Silicon Valley are considerably more robust than they were
just five years ago. We look forward to supporting this continued diffusion over the coming years.
 Enterprises

The month before Stripe launched in 2011, Marc Andreessen introduced the concept of “software eating

the world” in the Wall Street Journal. He made the case that the opportunities for the deployment of

software across every crevice of the economy were being substantially underestimated. Fast-forward 12

years: seven of the world’s 15 largest businesses are technology companies, and their value is growing

faster than any other sector.

Aggregate market $10T

capitalization by sector

Technology
$7.5T

$5T

Healthcare

Financial

$2.5T
Energy

$0

2018 2019 2020 2021 2022 2023

Stripe grew up with companies in the technology sector, and we’re increasingly their platform of choice—

we power 75% of the 2022 Forbes Cloud 100 and many of the largest internet companies, from Amazon to

Zoom. Increasingly, however, some of the most august enterprises and established brands, such as the

PGA, Toyota, The Atlantic (whose founders include Ralph Waldo Emerson and Harriet Beecher Stowe),

MAN, and Maersk are turning to Stripe to technologize their businesses.

When enterprises adopt Stripe, it’s typically as part of improving their product in a fundamental way. For

example, Urban Outfitters used Stripe to launch a peer-to-peer resale fashion marketplace, taking

inspiration from the upstarts that pioneered this model. Carmakers such as BMW are selling over-the-air

software upgrades directly to consumers. Airline ANA launched a premium subscription-based loyalty

program. Reddit has expanded beyond advertising, enabling art creators in more than 100 countries to

get paid directly by fans. We worked with La Redoute (founded in 1837) to transform their customers’

buying experience.

These companies are taking advantage of the breadth of Stripe’s platform. Many use Connect, our core

technology for managing platforms and marketplaces, which now enables payouts to more than 11 6
countries (in both fiat or crypto). There are now more than 100,000 active in-person Terminal devices

worldwide, including in the Guggenheim Museum, the Royal Albert Hall, and, most importantly,
the National Gallery of Ireland. Many users are ramping in-person payments with no dedicated hardware
at all, thanks to Tap to Pay on iPhone and Android. At a time when it’s increasingly difficult for small
businesses to get a bank loan, companies like Glofox and BloomNation are providing businesses on their
platforms access to financing with Stripe Capital (with no physical paperwork required). And with Issuing,
businesses like Ramp are scaling commercial card programs in more than 20 countries.

When an established company fails to deliver an obvious improvement, it’s usually not because they don’t
have the idea. As anyone who has tried to deliver these initiatives knows, it’s often the mundane
challenges that get in the way. Will the data sync? How will we bill? Could this delay closing our books?
Such questions vex at every company, but they’re more complicated at scaled companies with
established systems.

We think those limitations are fixable, and should be fixed. We’re increasingly helping to do so in the realm
of revenue and finance automation. Last year, we launched Stripe Data Pipeline, so users like Lime and
Zoom can sync their Stripe data with Amazon Redshift and Snowflake Data Cloud. We improved Revenue
Recognition to give businesses like Notion and Shipt a fully-automated, real-time view of their revenue. To
help enterprises (as well as users of all sizes) move faster, we built the Stripe App Marketplace, introduced
new connectors to integrate Stripe Billing directly with Netsuite and Salesforce, and launched the Stripe
Partner Ecosystem program with more than 1,800 Stripe-vetted partners including Salesforce, Accenture,
WPP, Slalom, and Thoughtworks.

Payments

Transacting online is still not a solved problem. This is, in our view, surprising. Several decades into the
internet’s history, we take for granted that so many aspects of it now work so well. Internet connections are
always-on. An entire class of security problems has been eliminated by the new default toward all web
connections being SSL-encrypted. For developers, IE6 compatibility is no longer required, and,
somewhere along the way, centering divs ceased to be a Hard Problem.

And yet most of what you encounter in payments is still shockingly deficient. Checkout pages across the
internet are riddled with needless friction. 10% of payments still fail for no good reason when transacting
online. (Imagine if your car didn’t start one in ten times?)

At Stripe, we obsess over fixing this. We focus on two key metrics: conversion rate (the fraction of user
sessions that complete a purchase) and authorization rate (the fraction of attempted transactions that
actually succeed).

Checkout conversion

In 2022, we reviewed thousands of checkout flows from businesses around the world. We found that 95%
contained five or more unforced errors—barriers like asking customers to painstakingly scroll through
dates to input card expiry. (Our tests show that this is worse than enabling them to type the date directly.)
Individually, errors like these might be only mild irritants, but, strung together, they impede checkout
completion and lead to measurably lower revenue.
Last year, more than 100,000 Stripe businesses upgraded to our new, highly-optimized checkout
products: Checkout (where Stripe manages the whole checkout page for you) and the Payment Element
(where you have your own webpage and Stripe manages the payment form). In a controlled study,
businesses that adopted the Payment Element saw a 7% average increase in revenue compared to those
that did not. Some of what made this possible:

We drastically reduced how long it takes for a buyer to complete checkout, thanks to dozens of UI
tweaks and cross-device optimizations
We updated Stripe’s “Remember Me” functionality (now known as Link). Link-enabled buyers complete
their checkouts in less than six seconds, on average, and businesses see meaningfully higher
conversion rates
We added support for a range of local payment methods and wallets, including Konbini in Japan, Blik in
Poland, and Cartes Bancaires for businesses outside its native France
We implemented a recommendation engine that dynamically presents the right payment methods to
buyers based on their country
We built the Address Element, so that any business can offer typeahead search for billing and shipping
addresses
We introduced delegated authentication, which safely avoids superfluous Strong Customer
Authentication redirects for European cardholders.

While these might sound individually prosaic, we want to re-emphasize just how significant—7% more
revenue!—the headline findings are. (In an industry obsessed with basis points, it’s rare to see integer
percentages.) We’re sometimes tempted to warn businesses that aren’t using Stripe’s hosted checkout
surfaces that they are operating in “low-revenue mode.” In principle, any of our customers could
implement all of the above themselves, but, in practice, nobody has the time. By using Stripe, any
business can tap into the optimization efforts of 7,000 of the world’s best payments experts, and our
experiments show consistently that the revenue effects are large.

Authorization

An attempted payment could be declined for any number of reasons, including incorrectly entered
credentials, card expiration, or suspected fraud. Last year we improved Adaptive Acceptance, network
tokens, and card account updater, and launched our Enhanced Issuer Network, all with the goal of
boosting authorization rates. Generally, Stripe users don’t need to do any integration work to see the
benefits from these advances

Adaptive Acceptance uses machine learning to selectively retry payments in real time, dynamically
adjusting dozens of factors to increase the odds of acceptance before a response is returned to the
buyer. On average, on-the-fly optimizations like these generate an extra 0.7% of top-line revenue.
 Network tokens and card account updater help prevent that situation where you get a new credit or
debit card and a beloved subscription stops working. When this happens, it’s frustrating for the
consumer (who has to go update their details) and frustrating for the business (which loses revenue if
they don’t). In the last six months alone, these two technologies have yielded billions of dollars in
incremental revenue for Stripe customers. (Of course, consumers should also be able to track down
and cancel unwanted subscriptions, and we’re pleased to see many banks making that easier.
This year, we launched our Enhanced Issuer Network, the culmination of more than a decade of
partnership with issuing banks. This network feeds Stripe Radar scores directly to the card issuer
making an authorization decision, leading to fewer spurious declines and more revenue for Stripe’s
users. Our data shows authorization rate improvements of up to 2%, paired with an 8% reduction in
fraud rates for eligible transactions. This is nearly a Pareto improvement: good for businesses, good
for consumers, good for issuers, and good for Stripe. It is, however, bad for fraudsters, who are stymied
by more accurate detection.

Our customers are noticing these improvements. Hargreaves Lansdown, the UK’s largest retail investment
platform, told us that, after integrating with Stripe’s payment optimization tools, they reduced failed
payments by £540 million.

Foundations
One in ten people in the world transacted with a business powered by Stripe in 2022. When we think about
security, reliability, and our regulatory obligations, our mental model is that we need to operate Stripe in a
way that justifies the trust a large proportion of the world’s population has implicitly placed in us.

Our API reliability is now consistently in excess of 99.999%, and, during the peak week of Black Friday and
Cyber Monday, exceeded six nines (that is, 99.9999%)—the equivalent of around 600 milliseconds of
unavailability. (It takes about 300 milliseconds for a human to blink.)

We proudly publish a live tracker of our 90-day trailing API availability, measured at the individual
transaction level. (Status pages, while common for core technology infrastructure, are not yet the norm in
the payments industry.) We do this partially so users can quickly check if any issue they’re seeing might be
on the Stripe side, but it has increasingly become a key reason businesses choose Stripe. Outages or
lengthy maintenance windows are extremely disruptive for our customers and for their customers.

The biggest distributed system at Stripe is our testing system. Stripe now comprises more than 50 million
lines of code. Each change is verified within 15 minutes by running a battery of tests that would take 50
days to run on a single CPU. These automated tests detect and prevent problems much better than
humans ever could. In 2022, we deployed our core payments APIs 5,978 times (16.4 times a day on
average). 1,100 of those deploys failed to meet our acceptance criteria, and were rolled back automatically.

Cyber attacks are growing in prevalence and sophistication. For example, card testing attacks have
increased more than tenfold since 2019. (Successful attacks—those that impact our customers in any way
—have declined in absolute terms, however, thanks to improvements that we’ve made to Stripe Radar.)

We continue to invest in security at every layer of our stack: from data encryption, access controls,
ephemeral architecture, intrusion detection, and regular security audits at the infrastructure level, to real-
time monitoring of transactions. Everyone at Stripe, including support staff, works in a full zero-trust
environment, backed by hardware tokens. As attacker sophistication grows, the fixed costs of defense
continue to grow. Though we deliberately avoid describing the mechanics in any detail, we’re committed
to being a leader in this space.

Lastly, we design reliability into our financial operations. Stripe’s funds are held with systemically
important financial institutions (SIFI). We are continually monitoring the world’s financial partners and
issuers. When even a single issuer is experiencing problems (such as server downtime), automated
alerting enables our operations team to take immediate actions to minimize any customer disruption.

What comes next

We’re fundamentally optimistic about what is to come. The internet remains one of the most potent
enablers of opportunity and advancement in the history of humanity. Several billion people recently
immigrated to earth’s most vibrant city. The world should be more prosperous than it is, and, thanks to the
new possibilities afforded by software and better connectivity, virtually every facet of our existence can be
meaningfully enriched.

It seems to us a certainty that greater rates of change—often a cliché, but now an emphatic truth—will
increase the returns to agility in every pursuit. The business model flexibility and execution speed that
Stripe enables have yielded dividends for the world’s most ambitious organizations. Our hope is that these
capabilities can increasingly benefit businesses of all sizes and flavors. By helping companies avoid being
hemmed in by their existing infrastructure, we hope that they can focus more on inventing new products
and doubling down on what actually makes them special.

If the topics covered in this letter are your cup of tea, we would love to host you at Stripe Sessions, our in-
person annual conference, on Wednesday, May 3, at Pier 48 in San Francisco. You’ll hear from other
founders and industry experts on how they’re adapting, and we’ll share Stripe’s in-flight product work.
(And if you can’t join us in person, you can watch the keynote online.) You can register at
[Link].

Best,

Patrick and John