The .com boom and bust, the rise of ecommerce, and a regulatory waterfall in the early 2000’s shaped PayPal’s world. Stripe was founded near the bottom of the market, just past the tail end of the Great Recession (2007-2009).
This article is part two of two in a series. If you missed part one, read it here: PayPal, Stripe, and the Mafia.
Stripe’s world was shaped by:
The post-crisis funding environment
The app economy, spurred by the iOS and Android app stores c. 2008
Cloud computing, which caused a dramatic fall in startup costs for software companies.
Dodd-Frank, whose knock-on effects heavily influenced A2A payments (Section 1033)
BNPL, which went from startups to ubiquitous in the space of a decade.
Crypto, which evolved from untested and untrusted to accepted.
The AI revolution, from LLMs c. 2022 to agentic AI today.
In the easy-money decade of the 2010s, with interest rates at nearly zero, it rode a wave of venture capital flooding the app economy and SaaS funded by investors searching for a yield.
During the first quarter of 2010, the total value of venture funding doubled to $12.8 billion from $6 billion a year before, when it was scraping the bottom of the barrel.
Then stablecoins emerged from crypto’s untested, untrusted, havens of criminals and fraudsters to accepted and legally sanctioned (the GENIUS Act). USDT is the largest dollar-pegged stablecoin, with a market cap of $183B. Circle, which issues USDC, went public in 2025.
Who wants what from PayPal
In the era of stablecoins, what does Stripe want from PayPal? PayPal has PYUSD, a nod to the times, and a nearly unrivaled two-sided marketplace for payments and commerce with a 25-year-old trusted brand. But its user growth has slowed and its strategy is floundering; Venmo has monetized customers more effectively, but checkout has stalled.
Those are the contours of a private equity target (Advent International is the PE firm in this case). A $53B private equity deal, the rough size of this proposal, is unheard of in fintech. If this deal happened, how would it work, and why?
Stripe and Advent being in on the deal together would make it easier to swallow. But PayPal as an investment for a growth company like Stripe would be bizarre. And to later break it up would almost inevitable hand Stripe technical baggage, not synergies, and a management culture that prefers cash flow to relevance.
We have embarked on a multi-year transformation….
PayPal is being ruled by spreadsheets, according to its most recent earnings call. The headline is a massive reorg designed to save $1.5B.
In lengthy paragraphs where words obscure meaning, the spreadsheet seems to say:
PayPal aims to grow payment volume and margins with existing customers while signing up more merchants; it should better monetize consumers by selling them more, more profitable products.
PayPal is being ruled by spreadsheets…the headline is a massive reorg.
That’s it for a concrete strategy from the top down. Agentic payments and digital identity get a throwaway remark (“areas where the industry will be fundamentally reshaped”).
📓 PayPal is being run like an aging giant
CEO Enrique Lores joined PayPal in March from HP Inc., which sells PCs, printers, and office supplies; he is an insider who served on PayPal’s board for five years, including as chair when it ousted the last CEO.
HP is the archetype for a spreadsheet-run technology company: Sell more; cut costs; monetize, monetize, monetize as the world slowly forgets you exist.
And yet PayPal’s community developer blog has a 1,700-word missive on Agent Payments Protocol (“...standard ways to verifiably capture user intent for both real-time fiat and crypto transactions, as well as delayed transactions that are executed by an agent…”)
Management candidly admits that PayPal is out of date, with different words. Who but a non-modern payment services provider says, “now we must win as a modern PSP?”
Agentic payments and PYUSD get a throwaway mention. Leadership is eager to tick business school boxes but not to reinvent the business for agentic payments.
Stripe could buy its way into omnichannel payments (Zettle) and gain a massive surface to reach consumers directly (I would bet anyone that PayPal checkout crushes Stripe’s Link in adoption and user trust).
It could buy more merchant relationships rather than compete for them; with a two-sided marketplace, it could use consumer relationships to sell to businesses.
Could; not should. A private equity firm would want the legacy business. Stripe wants… something else.
A private equity firm would want the legacy business. Stripe wants… something else.
Reporting says it’s consumer-facing stablecoin distribution and customer trust. With the PayPal brand comes 25 years of name recognition and the consumer trust that buys. Agentic payments are core to Stripe’s strategy as an infrastructure provider, and it has built and bought the back end:
Stripe closed on the Bridge acquisition in Q1 2025, acquiring a stablecoin onramp and settlement infrastructure, and later launched Stablecoin Financial Accounts, which lets businesses hold dollar-denominated stablecoin balances.
It announced later in the year that it would acquire Privy, which builds crypto wallets, and it incubates Tempo, a payments-focused blockchain.
If Stripe processes payments on entirely new infrastructure given merchant relationships it already owns, a natural step is to own the buyer relationship too: The entire transaction sits on Stripe’s agentic infrastructure whether or not the customer notices.
…a natural step is to own the buyer relationship so that the entire transaction sits on Stripe’s agentic infrastructure…
PayPal’s stock price peaked in 2021 and hasn’t recovered. It trades at about $59 per share, a hair below the rejected Stripe-Advent International bid, and about 30% above the price before the bid. (Source: Yahoo Finance)
PayPal rejected Stripe and Advent’s bid, reportedly claiming that it undervalued the company. Goldman Sachs and Evercore, which were advising PayPal, reportedly pushed for $70 per share. A good reason to say “no” to the $60.50 per share bid, but at the right price, “no” could be a “yes.”
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