Adjacent Conquest Over Revolutionary Leap

“David Sacks outlined his thinking about breaking into new payments markets. “As a practical matter, PayPal can only pursue a very limited number of markets, because payment products need to be specifically tailored to the needs of different kinds of customers,” he wrote. Sacks estimated that it took the company three months of pre-launch preparation and an aggressive post-launch sales and marketing effort to conquer a new market. Thus, whenever possible, PayPal would explore markets that “( 1) are relatively proximate to our existing territory in terms of functionality and (2) have a strong need for our service because they are under-served by existing options.””

“That criteria led to a culling of possible expansion targets—as when Sacks rejected one employee’s proposition that Pizza Hut or Amazon were ripe for the taking. For Sacks, offline retailers were “a revolutionary (rather than evolutionary) step from where [PayPal was] today, and it’s also not clear that PayPal adds much over existing options.” He also considered expansion to Amazon and similar sites a nonstarter: The team understood all too well the frustration and friction of burrowing into eBay’s payment process. Established sites, he wrote, “are loathe to outsource their checkout line to PayPal.””