Embed in the Host, Then Become the Host

“Confinity took strategic steps to leverage and grow its eBay network. The team scraped eBay webpages and built tools specifically designed for auction buyers and sellers. Confinity’s feature set now included a logo resizing tool, as well as a feature that auto-completed the eBay payment page (with PayPal preselected as the payment option). A feature dubbed “auto-link” made PayPal the default payment option for any eBay seller who had transacted with PayPal even once. “That increased the delta by an insane amount,” Yu Pan said, referring to PayPal’s adoption on eBay.”

“When Confinity had first spotted eBay users’ enthusiasm for its products, designer Ryan Donahue worked with David Sacks to improve the auction payment mechanism. An early incarnation consisted of two steps: First, the user would press the PayPal button; next, they’d enter the dollar value of the transaction and click Pay. It occurred to Donahue to simply fold the second step into the first: if users entered the dollar amount and pressed the button, the next page could pre-populate the total and confirm payment. The change seemed quaint, obvious, even trivial—but it shaved precious seconds from transactions. And in the view of David Sacks, every moment of friction was fat to be cut. Small, time-saving improvements, he believed, led to stickier products—and instant gratification won over impatient users. Those improvements to the payment design produced a corollary insight: What if buttons were the core product? What if these slices of pixels could help PayPal become the web’s default payment system? The team began to brainstorm a “whole suite of embeddable buttons that, if someone was on your website, they could click to pay you,” explained Sacks. Buttons? The idea sounded laughable, but its implications were significant. Strategically, a focus on buttons catapulted the company into a space with few rivals. Sure, copycats could marry money to email. They could lavish bonuses on would-be users. And they could fight for auction territory. But it would be a while before they obsessed over buttons.”