And some adjusted their sails – episode two

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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.

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Comments

  1. Vinay NagarajuMay 7, 2019 at 10:48 AM

    I am fan of these startup journeys Suman. Paypal is indeed a very interesting pivot from security to international money transfer. They are such a giant now and a business which perhaps received one of the best payouts in business history. Such are the wonders of business I presume, once you have a customer traction, there is so much to do..

    ReplyDelete
    Replies
    1. SumandebrayMay 7, 2019 at 11:02 AM

      This is such an inspiring story. I am a regular user of their service and very happy about the ambiguity of their business processes.

      Delete

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