Last week Stripe released Atlas, their new solution for international startups seeking to incorporate a business in the U.S. The announcement raised a hoopla on Twitter, and for good reason. Stripe Atlas is a service that seeks to 1) reduce government bureaucracy and 2) help foreign businesses establish an international presence. It’s a good idea, a good product (assuming Stripe executes as they have in the past,) and a good story.
For $500, Stripe Atlas enables international companies to incorporate their companies as a standard Delaware C corporation, giving them a U.S. financial presence and the added payment channels that come with it. There are additional services included with the invite-only Stripe Atlas beta. A business account with Silicon Valley Bank, a $15,000 free credit with AWS, tax and legal guidance from Orrick and PwC, and a payments account with Stripe (duh.) All of this makes Stripe Atlas a sort of starter kit for businesses.
It’s easier with a starter kit.
I especially enjoyed this Atlas endorsement from George Grellas, a well-known lawyer in tech.
I can't tell you how often in my many years of working with startups I have had foreign founders reach out to me in bewilderment over how to solve even the most basic problems as they sought to grow internationally and to gain a U.S. presence. It is not that the challenges are daunting or insurmountable. Many companies have dealt with them before. But they have had to do so in the context of having to grope around in the dark until they could figure things out. This cost them time. It cost them money. And it often meant they made mistakes that could set them back. With a platform such as Atlas, they will now have a turnkey solution to this traditional problem.
All of this being said, Stripe Atlas is very exciting news. But there is a counter argument to highlight here.
With Atlas, Stripe is entering a new type of business that won’t see the same operations scalability as the core payments products that first earned them success.
With Checkout, Subscriptions, Relay, and Connect, Stripe took existing payments technology and improved it with a usable, compact API. Stripe’s selling point, for many users, was that it was a payments API with an easier, more flexible configuration process than PayPal. As with any (efficient, well-run) software company, once Stripe had developed their product, it was an advantage that scaled.
The challenge Atlas looks to solve is a different beast. With Atlas, Stripe isn’t automating the manual process of incorporating a business in Delaware, they are bearing it on behalf of their customers. The customer fills out a web form on Stripe, and someone at Stripe does the rest.
This type of service, though beneficial for the customer, will pose new challenges of scale for the team at Stripe.
First, they’ll need operations resources to appropriately ramp with the demand of international companies that want to incorporate in Delaware. Hence the initial ceiling on Stripe Atlas customers -- from the Atlas site: “Stripe Atlas is starting out with an invite-only private beta. We want to make Atlas available to as many people as possible as quickly as we can, but we can only accept a limited number of entrepreneurs to start.”
Second, because there’s only so much you can automate when it comes to working with the government (on anything,) there will always be a human operations element to Stripe Atlas. This means lower margins. (Note: Stripe might be breaking ground here with the good people of Delaware by building an integration into whatever back-end systems manage business incorporation in the U.S. If this is the case case, I stand corrected, though from the documentation on Stripe’s website, it sounds like this is a back-office process.)
I’m reminded of Zenefits, a company that offers the value prop of shouldering a laborious bureaucratic process on behalf of its customers. In the browser client, the customer sees an elegant web form. On the back-end, an operations employee handles the paperwork. As we know, this caused operations scale issues at Zenefits. To poorly quote Bismarck, “sometimes, it’s better not to see how the sausage is made inside the sausage factory.”
The Johnsonville mild Italian party pack.
This isn’t to say Stripe is doomed (nor is it to say that Zenefits is, they are going through growing pains but still remain a big success.) Stripe’s play with Atlas isn’t their tentpole, it’s their wedge into a new market. With Atlas, Stripe doesn’t need to make big margins, or even a profit. Every international customer they bring in through Atlas (and you know they’re getting their pick of the best through the Atlas Network) is an instant customer of Stripe’s core payment products. As long as Stripe makes enough from their core offering, they can continue to invest in the operations required to run Atlas. Stripe brings more international customers into its payments platform, and more international startups gain access to U.S. incorporation.
For the time being, it’s a win-win. What remains to be seen is how other countries react to Stripe’s “bring it all back to the ol’ U-S-of-A” play. There’s already been some tension between American tech companies moving into foreign markets (India and Facebook Free Basics; China and everything,) so we’ll have to wait and see how Stripe Atlas is received. In the meantime, a hefty bravo to the team at Stripe.