And some adjusted their sails – episode two

Change has always triumphed. So did the realists who adjusted their sails acknowledging change as the only constant in our world. While the pessimists who was whining and the optimist who expected things to revert back both perished. Continuing with my mini-series about the “Ones who didn’t lose”, this is the inspiring story about PayPal that was developed by Confinity Inc. in 1998. Their story of embracing change and redirecting the sails to stay relevant is another inspiring story.

Jessica Livingston shared an interview with PayPal founder, Max Levchin, in her book “Founders at Work”  where it was revealed that the company was initially envisioned as a cryptography company. Later on they developed a service that would allow the transfer of funds between two palm pilots.

The vision was to enable the consumers to pay their bills and make purchases digitally via their PDAs and eventually eliminate the purpose for carrying a wallet. The transition wasn’t effortless, and the company, at various points in time, deliberated the merits of the staying the course or changing business models. Market maturity for such service did not exist then and frauds almost forced them out of business.

In 2000 they decided to enable eBay payments via PayPal and this was the game changer. Within a very short period of time the revenue streams from online transactions surpassed that from Palm Pilot transfers. By the end of the year, PayPal had discontinued its Palm Pilot service entirely.

By 2001, PayPal accumulated more than a million users. They went public on the NASDAQ. In 2002, the company was purchased by eBay for $1.5 billion and continue to operate as a trusted payment gateway for eBay and other online transactions.

The flexibility proved to be the ultimate strength and despite being founded in 1998, PayPal was swift enough to change course and ride the high and lows of the digital economy.