Stripe's multimillionaire developers are having net worth issues
After halving its valuation in March 2023, payments fintech Stripe has steadily been clawing its valuation back. One of its investors, Sequoia, has been offering to buy shares from other investors this week at a valuation of $70bn, an increase of 40% on the March 2023 low. The VC firm doesn't seem to be buying stock from employees, but those who decided not to cash out during February's funding round are finally looking a little bit richer.
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However, the gains implied by the recent valuation won't benefit everyone. If you joined Stripe from March 2021 to March 2023, the value of your stock is still down 25.8%. $1.1m in stock earned during 2022 would only be worth $816k today. One Stripe engineer reported a total compensation of $1.06m in 2022 (their first year at Stripe) with $600k of stock. That stock would be worth $445k today.
This isn't a problem exclusive to Stripe by any means, and is perhaps why the prospect of joining a fintech is losing its luster. They aren't the massive moneymaking opportunities they were when funding was abundant. If you want the kind of stock growth the backend engineer had, you'd need to join an earlier stage startup, and it's a difficult time to be in one of those, considering profitability is paramount for potential investors.
Stripe engineers are best off if they joined in the 2010s, the earlier, the better. One backend engineer in 2018 reported stock pay of $225k, having joined two years before. Assuming they earned $225k each year, and their stock was priced relative to Stripe's valuations in 2016 and 2017 ($5bn and $9.2bn respectively), they would be sitting on $4.9m worth of stock based on those two years of pay alone.
Given that the opportunity to make that kind of money at Stripe seems to have passed, the fintech's new appeal has been its culture. Former employees say it's an excellent place for career development, and it lacks the bureaucracy of large incumbent financial institutions.
The problem, however, is that as a company grows, a lack of bureaucracy can be unsustainable. One Stripe software developer via jobs forum Blind said the fintech's expansion efforts have been "a mess." Although the developer calls the Collison brothers themselves "incontestably sharp," they say the management levels below them have "way too much latitude." As managers have more leeway to transition to other teams or build new ones, it forces the rest of the team to cope with regular changes in both management and direction.
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