Fintech
Stripe (and the fintech industry) is no longer the million-dollar factory it once was
After halving its valuation in March 2023, the payments financial technology Stripe has gradually recovered its valuation. One of its investors, Sequoia, this week offered to buy shares from other investors at a valuation of 70 billion dollarsan increase in 40% on the March 2023 low. The VC firm does not appear to be buying shares from employees, but those who have decided not to cash in during the February funding round they finally look a little richer.
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However, the gains implied by the recent valuation won’t be beneficial to everyone. If you joined Stripe from March 2021 to March 2023, your stock is still down 25.8%. $1.1 million in stock earned in 2022 would be worth just $816,000 today. A Stripe engineer reported total compensation of $1.06 million in 2022 (his first year at Stripe) with $600,000 in stock. That stock would be worth $445,000 today.
This isn’t a problem unique to Stripe by any means, which is perhaps why the prospect of joining a fintech is losing its splendorIt’s not them huge money making opportunities were when funding was plentiful. If you want the kind of equity growth that the backend engineer had, you should join an early-stage startup, and it’s a tough time to be in one of those, considering Profitability is key for potential investors.
Stripe engineers have an advantage if they joined in 2010, the earlier the better. One backend engineer in 2018 reported a stock salary of $225k, having joined two years earlier. Assuming they were making $225k annually and their stock was valued at Stripe’s 2016 and 2017 valuations ($5B and $9.2B, respectively), they would be sitting on $4.9M in stock based on those two years of salary alone.
Given that the opportunity to make money like that on Stripe seems to have passed, fintech’s new allure is its culture. Former employees say It is an excellent place for career development and does not have the bureaucracy typical of large traditional financial institutions.
The problem, however, is that as a company grows, the lack of bureaucracy can become untenable. A Stripe software developer via the Blind job forum said that fintech expansion efforts were “a mess”. Although the developer calls the Collison Brothers themselves “unquestionably sharp,” they say that the management levels below them have “too much freedom.” Because managers have more leeway to move on to other teams or create new ones, this forces the rest of the team to deal with regular changes in both management and direction.
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