Stripe co-founder says high interest rates flushed out Silicon Valley’s ‘wackiest’ ideas
John Collison, president and co-founder of Stripe.
Christophe Morin | IP3 | Getty Images
Rising interest rates crushed technology valuations and had a chilling effect on Silicon Valley. Stripe’s co-founder says it was needed.
“Broadly speaking, the effects of higher rates have been quite good,” John Collison, president of the online payments company, told CNBC in an interview at the company’s annual conference Wednesday. “The period where money was free was not a healthy time in Silicon Valley.”
Collison founded Stripe with his brother Patrick in 2010. The company took off, becoming a startup darling and racing to a valuation of $95 billion in 2021, making it one of the world’s most valuable venture-backed businesses, behind Elon Musk’s SpaceX.
Stripe had to take a major haircut along with the rest of the industry as soaring inflation and rising interest rates, starting in 2022, pushed investors out of the riskiest assets, lifted borrowing costs and forced startups to tighten their belts.
Stripe slashed its valuation to $50 billion in a 2023 financing round. Its recent employee tender offer valued the company at closer to $65 billion, The Wall Street Journal reported.
“Valuations are a product of interest rates,” Collison said. Still, he said, “Stripe’s business is the healthiest it’s ever been.” Regarding the drop in valuation, he added, “We’re not losing sleep over it.”
Stripe processed $1 trillion last year, up 25% from 2023, the company said in its annual letter.
While many tech companies took a hit in 2022 and 2023, Collison said the rising interest rate environment succeeded in flushing out the “wackiest” startup ideas, leaving the best ones to get funded.
He pointed to an “overfunding” of marginally good ideas, and “zombie companies” taking too long to go bust.
“That’s not good for dynamic capital allocation in the broader economy,” Collison said. “You want people to be working on the most valuable ideas, and not on the marginal ideas.
Following an extended stretch of rock-bottom borrowing costs, the Federal Reserve started lifting rates in 2022, and hiked its benchmark rate last year to the highest since 2001. Rates have held steady since, and recent statements by Fed Chair Jerome Powell and other policymakers have cemented the notion that cuts aren’t coming in the next several months.
Federal Reserve Bank Chair Jerome Powell speaks during a news conference at the bank’s William McChesney Martin building on March 20, 2024 in Washington, DC.
Chip Somodevilla | Getty Images News | Getty Images
Collison said there’s more pain coming.
The “point of high rates is that they should hurt, and they haven’t hurt enough yet,” he said. “We should just assume that the hurt takes a bit longer to arrive.”
One part of the tech market that’s powering through the higher rate environment is artificial intelligence, where there “seems to be a new AI funding round every week,” Collison said.
This week, Perplexity announced a $63 million funding round that pushed its valuation above $1 billion. SoftBank and Jeff Bezos are among its backers.
Stripe is benefiting in its own way from the euphoria. OpenAI, Anthropic and Hugging Face are among the AI startups using the company’s payment processing technology.
“I can’t remember a time in Silicon Valley where it has felt like there was as much interest in tech advances taking place,” Collison said of the AI boom. “It’s just a fun time to be in tech, broadly.”
As for Stripe’s future, an eventual IPO has been a source of speculation for years given the company’s lofty valuation and its roster of high-profile backers thirsting for a return on their investment. Collison said Stripe is in “no rush,” and that executives are focused on providing liquidity to employees through secondary share sales.
“We have no timeline that we’re announcing on being a public company,” he said. “The thing that we were quite focused on is making sure that there is good liquidity for employees.”
CEO of Palantir Technologies Alex Karp attends the Pennsylvania Energy and Innovation Summit, at Carnegie Mellon University in Pittsburgh, Pennsylvania, U.S., July 15, 2025.
Nathan Howard | Reuters
It’s been a tough November for Palantir.
Shares of the software analytics provider dropped 16% for their worst month since August 2023 as investors dumped AI stocks due to valuation fears. Meanwhile, famed investor Michael Burry doubled down on the artificial intelligence trade and bet against the company.
Palantir started November off on a high note.
The Denver-based company topped Wall Street’s third-quarter earnings and revenue expectations. Palantir also posted its second-straight $1 billion revenue quarter, but high valuation concerns contributed to a post-print selloff.
In a note to clients, Jefferies analysts called Palantir’s valuation “extreme” and argued investors would find better risk-reward in AI names such as Microsoft and Snowflake. Analysts at RBC Capital Markets raised concerns about the company’s “increasingly concentrated growth profile,” while Deutsche Bank called the valuation “very difficult to wrap our heads around.”
Adding fuel to the post-earnings selloff was the revelation that Burry is betting against Palantir and AI chipmaker Nvidia. Burry, who is widely known for predicting the housing crisis that occurred in 2008 and the portrayal of him in the film “The Big Short,” later accused hyperscalers of artificially boosting earnings.
Palantir CEO Alex Karp vocally hit the front lines, appearing twice in one week on CNBC, where he accused Burry of “market manipulation” and called the investor’s actions “egregious.”
“The idea that chips and ontology is what you want to short is bats— crazy,” Karp told CNBC’s “Squawk Box.”
Despite the vicious selloff, Palantir has notched some deal wins this month. That included a multiyear contract with consulting firm PwC to speed up AI adoption in the U.K. and a deal with aircraft engine maintenance company FTAI.
But those announcements did little to shake off valuation worries that have haunted all AI-tied companies in November.
Across the board, investors have viciously ditched the high-priced group, citing fears of stretched valuations and a bubble.
In November, Nvidia pulled back more than 12%, while Microsoft and Amazon dropped about 5% each. Quantum computing names such as Rigetti Computing and D-Wave Quantum have shed more than a third of their value.
Apple and Alphabet were the only Magnificent 7 stocks to end the month with gains.
Sill, questions linger over Palantir’s valuation, and those worries aren’t a new concern.
Even after its steep price drop, the company’s stock trades at 233 times forward earnings. By comparison, Nvidia and Alphabet traded at about 38 times and 30 times, respectively, at Friday’s close.
Karp, who has long defended the company, didn’t miss an opportunity to clap back at his critics, arguing in a letter to shareholders that the company is making it feasible for everyday investors to attain rates of return once “limited to the most successful venture capitalists in Palo Alto.”
“Please turn on the conventional television and see how unhappy those that didn’t invest in us are,” Karp said during an earnings call. “Enjoy, get some popcorn. They’re crying. We are every day making this company better, and we’re doing it for this nation, for allied countries.”
Palantir declined to comment for this story.
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