Stripe closes $1.1 billion Bridge deal, prepares for aggressive stablecoin push
Patrick Collison, CEO and co-founder of Stripe, speaking at 2022’s Italian Tech Week in Turin, Italy.
Giuliano Berti | Bloomberg | Getty Images
SAN FRANCISCO — What started as a casual roundtable at Stripe’s headquarters to discuss issues facing fintech companies turned into a billion-dollar acquisition that could become a defining moment for the industry.
Last summer, Stripe hosted Wally Adeyemo, who was then deputy secretary of the Treasury Department, for a chat with a number of financial services providers. Among the attendees were Stripe CEO Patrick Collison and Bridge co-founder Zach Abrams. The two entrepreneurs had never met.
Abrams, whose startup specialized in stablecoin infrastructure, said the session surprised him, as it quickly morphed into a conversation specific to his company.
“It was shocking to me,” Abrams told CNBC this week, recalling the event. The group “spent 90-plus percent of the meeting talking about stablecoins — even though we were the only stablecoin company” in the room, he said.
By the end, Bridge was firmly on Stripe’s radar. Months later, that initial meeting led to Stripe’s biggest acquisition to date, a $1.1 billion purchase of Bridge. The deal, which closed Tuesday after clearing regulatory hurdles, gives Stripe a firm foothold in crypto, a market where it previously struggled to gain traction.
“In the course of us spending time together, he probably developed more of an understanding of our business,” said Abrams, who co-founded Bridge in 2022. “And I think there was a growing excitement around the ways that our business can grow, and probably the ways our business could help support and grow the Stripe ecosystem.”
Bridge’s roughly 60-person team convened in San Francisco on Tuesday for the official onboarding. The newcomers were introduced to Stripe’s culture with a crash course on how to write like a Stripe employee and an intro to the business from Collison.
It’s all part of Stripe’s standard fintech boot camp, a program that runs every two weeks for new hires.
Bridge focuses on making it easier for businesses to accept stablecoin payments without having to directly deal in digital tokens. Stablecoins are a type of cryptocurrency whose value is pegged to the value of a real-world asset, such as the U.S. dollar. Customers include Coinbase and SpaceX.
Companies across the financial services landscape, from legacy banks to startup payment providers, are adopting stablecoins or exploring launching their own because they make it easier and cheaper to switch between currencies and to move money digitally. Standard Chartered predicted in a recent report that stablecoins could grow to become about 10% of foreign exchange transactions, up from 1% today.
Prior to Abrams’ first interaction with Collison at the roundtable, Bridge had been aggressively courting Stripe as a customer, hoping to integrate its technology into the payment giant’s ecosystem. As the two CEOs spent more time together in the weeks that followed, Collison’s interest in Bridge deepened.
Previous failure
Stripe had already taken a shot at crypto — and failed. It was one of the first major fintech firms to support bitcoin payments in 2014, but pulled the plug in 2018, citing scalability issues and high transaction fees. Still, the company insisted at the time that it remained “very optimistic about cryptocurrencies overall.”
Stablecoins would be Stripe’s next foray. At its flagship Sessions conference in April, the company said it would enable merchants to accept stablecoins for online purchases. In its first week of the offering, Stripe saw more stablecoin volume than in its entire history of offering bitcoin transactions.
However, Stripe was still missing a key component to make it all work. It needed a way to seamlessly handle cross-border transactions.
That’s precisely what Bridge offered, said Neetika Bansal, Stripe’s head of money movement products.
“If you think about Stripe and what we’ve focused on for the past seven years — what I personally have focused on — it’s been about breaking down the barriers for global commerce,” Bansal told CNBC in an interview at Stripe’s office. “We’ve done it, to a large part, on traditional financial rails.”
Stripe’s approach to global payments for years involved navigating the complex regulatory and operational challenges in each market it entered. Bridge had developed “a super elegant solution to cross-border use cases” and had “meaningful traction with companies of all sizes,” Bansal said. “It just felt almost like a no-brainer to go and acquire them.”
Stripe paid a hefty price for a two-year old company, an amount that was about three times higher than Bridge’s valuation in a funding round in August.
Bansal framed the acquisition as a strategic step toward modernizing Stripe’s global money movement capabilities.
“We are working very closely together to figure out the right opportunities, where we should power our products with Bridge and, in fact, where we should do new product development on Bridge infrastructure,” she said. “That’s what the next few weeks look like.”
Stripe processes millions of cross-border transactions daily, a segment that’s growing 50% annually. Bansal said stablecoins could meaningfully reduce costs and streamline transactions compared to traditional financial networks.
Bansal used as an example a company in the U.S. paying a contractor in the Philippines, which she called “a common use case as company workforces are going global.”
Stripe has partnered with Remote.com, a global human resources and contractor platform, to process payouts using stablecoin infrastructure in more than 70 countries. Bansal said she sees stablecoins playing a growing role in foreign exchange and treasury management for large enterprises.
For now, Bridge will continue running its existing products, but the teams are working together to determine the best integrations and explore new products that can be built on Bridge’s technology.
“They’re clearly a leader in the space,” Bansal said about Bridge. “A lot of our conversations are about absorbing what Bridge has learned about stablecoins.”
WATCH: Fintechs soar after election
The latest hybrid telehandler from New Holland packs a range-extending combustion engine to boost its battery power during longer shifts – but it doesn’t run on gas or diesel. Instead, this farm-friendly machine is built to run on METHANE.
By collecting pig, cow, or poultry waste (poop), silage waste (corn husks and grass clippings), and food waste from composting and putting into a manure digester, farmers can generate valuable biogas – a renewable, low-carbon fuel that can be burned for heat, electricity, or used as fuel. And because large farming operations can produce huge amounts of biogas at an incredibly low cost compared to conventional grid and fuel costs, any machine that can run on biogas is going to have a real total cost of ownership (TCO) advantage.
Biogas generator
CASE and New Holland (collectively, CNH) understands its customers’ desire to put that biogas to good use. They also understand that nothing is quite as efficient as battery-electric power, though; but big farms have weird duty cycles: 4-6 hour shifts most of the year, then critical, un-skippable, non-negotiable round-the-clock running during harvest.
That need to run 24 hour shifts limits the appeal of pure electric machines, and has led to companies like ZQUIP developing power-agnostic modules that swap-out, power tool-style, to keep the machines going. With its new methane hybrid, New Holland is going a more recognizable EREV and hybrid route.
“With this prototype, New Holland shows its continuous commitment to the ‘Clean Energy Leader‘ strategy, building on our leadership in alternative fuel machines,” says Marco Gerbi, New Holland T4 and T5 tractor, loader and telehandler product management. “Our aim is to help our customers boost farm productivity and profitability by broadening our range of alternative fuel machines that do not compromise efficiency or productivity yet help to minimize agriculture’s carbon footprint.”
Primarily driven by a 70 kWh lithium-ion battery, the telehandler uses a methane-fueled version of Fiat Powertrain’s four-cylinder F28 engine as a range-extending backup whenever jobs demand more uptime. On the energy stored in the battery alone, New Holland says the machine can handle a full day’s worth of typical farm work — roughly a “350-day duty cycle,” and it can recharge from the grid, a biogas generator, or even rooftop (barntop?) solar.
It’s still just a prototype, but New Holland claims the hybrid setup cuts fuel use by up to 70% compared to a conventional diesel telehandler while delivering 30% better performance and uptime for its operators.
No word yet on availability and pricing.
New Holland methane hybrid gallery
SOURCE | IMAGES: CNH, via Equipment World.
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Environment
Elon Musk’s Boring Company has work crew in Nashville walk off job over unpaid bills and safety
The Boring Company, Elon Musk’s tunneling startup, is reportedly facing significant issues with its new project in Nashville, Tennessee. A key subcontractor has walked off the job, alleging that the company has failed to pay for work completed on the “Music City Loop,” claiming they have received only 5% of what they are owed.
We have been following The Boring Company’s expansion efforts closely.
After the relative success of the Las Vegas Loop and several projects that failed to materialize, it looked like the company was winding down until a new proposal in Nashville gained some momentum.
However, a new report from the Nashville Banner indicates that the project is hitting a major wall.
Shane Trucking and Excavating, a local contractor hired to handle preliminary work for the tunnel project, pulled its workers off the site this Monday. William Shane, the owner of the company, told the Banner that The Boring Company has “ghosted” them and failed to pay invoices totaling in the six figures.
According to Shane, the payment terms were initially set for every 15 days, then unilaterally switched to 60 days. Now, he claims it has been over 120 days since they broke ground, and his company has received only a fraction of the payment due.
“We were really skeptical from the beginning, and then since then, things pretty much just went downhill,” Shane said.
The contractor was reportedly responsible for preparing the launch pad for “Prufrock,” The Boring Company’s proprietary tunnel boring machine (TBM). We previously reported on Prufrock’s capabilities, with the company claiming it can dig tunnels significantly faster than conventional machines, supposedly porpoising directly from the surface to avoid digging expensive launch pits.
If the launch pad isn’t finished because the excavator wasn’t paid, Prufrock isn’t digging anywhere.
This isn’t the first time we’ve heard of payment issues involving Musk-led companies. Tesla has been known to not pay its bills, leading to small companies going bankrupt.
As The Boring Company was stiffing Shane on the bills, the company tried to poach workers from its own contractor and lied about it:
“One of their head guys texts two of my welders, offering them a job for $45 an hour from his work phone,” Shane described, noting that the same TBC employee denied sending the texts when confronted with screenshots. “That’s actually a breach of contract.”
On top of the missed payments, Shane alleges serious safety concerns. They made several official complaints to OSHA:
“Where we’re digging, we’re so far down, there should be concrete and different structures like that to hold the slope back from falling on you while you’re working. Where most people use concrete, they currently have — I’m not even kidding — they currently have wood. They had us install wood 2x12s.”
The Boring Company Vice President David Buss blamed missed payments on “invoicing errors” in a statement to the Banner:
“It does look like we had some invoicing errors on that. It was, you know, unfortunately, too common of a thing, but I assured them that we are going to make sure that invoices are wired tomorrow.”
He also said that he would look into the poaching allegations, but added that he is not aware of any OSHA complaints.
The “Music City Loop” was pitched as a solution to connect downtown Nashville to the airport, a route that is notoriously congested.
The Boring Company claims it can complete the project without public money, but there are some obvious issues with its financing.
Electrek’s Take
I’ve been willing to give them the benefit of the doubt on the “Loop” concept. While it falls short of the original “autonomous pods” vision or the “Hyperloop” speed dreams, the system in Las Vegas does work to move people, even if it is just Teslas in tunnels driven by humans.
There’s just no evidence that it would be more efficient than any other public transit system.
When Musk launched The Boring Company’s first test tunnel in LA, I asked him if he had any simulations showing his “loop” system to be more efficient. He said that they were working on that. That was 7 years ago.
Therefore, while The Boring Company appears to have achieved marginal improvements in tunnel boring, mainly when it comes to smaller tunnels; it has yet to show clear evidence that its Loop system is a better solution than any other public transit system.
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