Candor as User Retention Weapon

“In its communications during this period, the company let users into its thinking—on the theory that candor would help quiet discontent. We promised users that we would work to develop a policy that met several criteria: (1) it was generally fair and reasonable; (2) it was announced with two weeks’ notice before it was implemented; (3) it did not force anyone to upgrade (though it could remove costly functionality, such as the ability to accept credit card payments, from Personal Accounts); and (4) it met PayPal’s need to align the costs of credit card processing (and other expenses, such as customer service and fraud protection) with high-volume users who generate the bulk of our costs.”

“David Sacks instructed Damon Billian to take to the message boards and correct “pricing disinformation,” and asked Reid Hoffman to appeal to his eBay contacts to correct their messaging. Sacks floated other ideas as well. Was it time, Sacks wondered, to send a legal “nastygram” to eBay and a preliminary injunction for anticompetitive pricing? Could Vince Sollitto, head of PR, do anything to “win public opinion without appearing weak?” Could the customer service team create special designations for loyal PayPal users? “Suggestions are welcome from all,” Sacks added. “We’ll need lots of good ideas to beat eBay on variables other than price.””