Confinity

"Wallace, a mild-mannered personality, also felt a “comfort level” speaking up at Confinity. “If I had been walking into somewhere where I didn’t know anybody, I wouldn’t have been talking that way.”"

"In June 1999, Confinity signed Master-McNeil to name its beaming product. Master and her team interviewed Thiel, Levchin, Nosek, and other Confinity employees. Together, the group solidified what the name should suggest: Convenient, easy, simple to set up/ use Instant, fast, instantaneous, no waiting, time-saving, quick Portable, handy, always with you Transmit, “beam,” exchange, send/ receive, give/ get Money, accounts, financial transactions, numbers, moving money around"

"In Confinity’s early days, Levchin observed that the number of people in a room correlated positively to friction in basic communication. “If you’re alone,” he explained, “you just work really hard and hope it’s enough. Since it often isn’t, people form teams. But in a team, an n-squared communications problem emerges. In a five-person team, there are something like twenty-five pairwise relationships to manage and communications to maintain.”"

"As a blueprint for the mobile future, Confinity’s February 1999 business plan holds up surprisingly well. The company planned on riding the growth of the handheld computer and electronic finance markets. “Today’s handheld computer market shares certain characteristics with the Internet of 1995 and the home computer market of 1980,” the plan stated. “New applications and lower costs are shifting demand from a core group of technologists toward the general public.” In theory, the expanding number of handheld devices would grow Mobile Wallet usage, and users would install the Mobile Wallet because their friends and family already had one. The business plan anticipated the obvious question: “How will the Confinity network ever come into being if its value to each particular customer depends on the prior existence of the whole network?” The team developed two approaches to addressing this tautology: top-down and bottom-up. From the top down, Confinity would find and target prime business and market candidates. The bottom-up approach would see users inviting members of their own networks. “Confinity,” its founders wrote, “will combine these two approaches, albeit with the major initial emphasis on the second, grassroots model.”"

"“We are living in the heaven of PalmPilots,” observed Reid Hoffman, a Stanford friend of Thiel’s and early Confinity board member, “and we could walk into every single restaurant and go to each table and ask how many people have PalmPilots.” He guessed the answer was between zero and one per restaurant. “And that means your use case can only be used between zero and one times, per restaurant, per meal cycle! You’re hosed! It’s over on this idea.”"

"Additionally, Confinity’s leaders mandated that all prospects meet with every single member of the team. Once the lengthy round-robin of interviews was completed, the team discussed the candidate as a group, asking whether they passed the so-called “aura test.”"

"Several early X.com employees observed the marked contrast between Confinity’s mostly male, twenty-something initial hires and X.com’s far more varied roster, which included parents, women, and experienced hires with decades in the financial services trenches. Deborah Bezona had seen her share of companies as a benefits consultant, and when she signed X.com on as a client, she remarked that it “was the most diverse company I had ever worked with. That was notable to me.”"

"Even Musk, for all his boasts, was clear that X.com and Confinity represented evolutions, rather than revolutions, on the era’s payment technology. “It wasn’t even that we invented money transfer. We just made it useful,” Musk said. “Other companies had the idea of doing payments before Confinity or X.com, they just didn’t do it right.” He pointed to Accept.com and Billpoint as two sites rendering similar services."

"Earlier than many of his colleagues, Thiel saw X.com as an existential threat. “Peter likes to confront things. He likes to know if he’s wrong,” Nosek said. “He’s actively looking for how things could break, how things could fail—constantly. Much more so, and much more proactively, than a lot of entrepreneurs I know.” Thiel determined that X.com could simply spend Confinity out of existence. “Peter was good to recognize that they were a real threat,” Malloy said."

"Thiel didn’t like to lose. “Show me a good loser,” Thiel once said to a Confinity employee, “and I’ll show you a loser.”"

"David Sacks also told the members of the product team to purchase items on the eBay website. Confinity’s newly minted eBay shoppers met to dissect every single step of the buying—and, specifically, the paying—experience. “We had to become the users,” recalled Denise Aptekar, who purchased a landline phone, which, unfortunately, came “caked in cigarette smoke.”"

"Given a teetering market and a take-no-prisoners competitor, Thiel and others in the company began considering an alternative course. “A lot of us came to the conclusion that this would be a winner-take-all market, and that this should be a single company,” Confinity cofounder Ken Howery said. “Or both of us would spend ourselves into oblivion.”"

"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."

"In June 1999, Confinity signed Master-McNeil to name its beaming product. Master and her team interviewed Thiel, Levchin, Nosek, and other Confinity employees. Together, the group solidified what the name should suggest: Convenient, easy, simple to set up/use Instant, fast, instantaneous, no waiting, time-saving, quick Portable, handy, always with you Transmit, “beam,” exchange, send/receive, give/get Money, accounts, financial transactions, numbers, moving money around"

"Wallace, a mild-mannered personality, also felt a “comfort level” speaking up at Confinity. “If I had been walking into somewhere where I didn’t know anybody, I wouldn’t have been talking that way.”"

"As a blueprint for the mobile future, Confinity’s February 1999 business plan holds up surprisingly well. The company planned on riding the growth of the handheld computer and electronic finance markets. “Today’s handheld computer market shares certain characteristics with the Internet of 1995 and the home computer market of 1980,” the plan stated. “New applications and lower costs are shifting demand from a core group of technologists toward the general public.” In theory, the expanding number of handheld devices would grow Mobile Wallet usage, and users would install the Mobile Wallet because their friends and family already had one. The business plan anticipated the obvious question: “How will the Confinity network ever come into being if its value to each particular customer depends on the prior existence of the whole network?” The team developed two approaches to addressing this tautology: top-down and bottom-up. From the top down, Confinity would find and target prime business and market candidates. The bottom-up approach would see users inviting members of their own networks. “Confinity,” its founders wrote, “will combine these two approaches, albeit with the major initial emphasis on the second, grassroots model.”"

"“We are living in the heaven of PalmPilots,” observed Reid Hoffman, a Stanford friend of Thiel’s and early Confinity board member, “and we could walk into every single restaurant and go to each table and ask how many people have PalmPilots.” He guessed the answer was between zero and one per restaurant. “And that means your use case can only be used between zero and one times, per restaurant, per meal cycle! You’re hosed! It’s over on this idea.”"

"In Confinity’s early days, Levchin observed that the number of people in a room correlated positively to friction in basic communication. “If you’re alone,” he explained, “you just work really hard and hope it’s enough. Since it often isn’t, people form teams. But in a team, an n-squared communications problem emerges. In a five-person team, there are something like twenty-five pairwise relationships to manage and communications to maintain.”"

"Additionally, Confinity’s leaders mandated that all prospects meet with every single member of the team. Once the lengthy round-robin of interviews was completed, the team discussed the candidate as a group, asking whether they passed the so-called “aura test.”"

"Several early X.com employees observed the marked contrast between Confinity’s mostly male, twenty-something initial hires and X.com’s far more varied roster, which included parents, women, and experienced hires with decades in the financial services trenches. Deborah Bezona had seen her share of companies as a benefits consultant, and when she signed X.com on as a client, she remarked that it “was the most diverse company I had ever worked with. That was notable to me.”"

"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."

"Even Musk, for all his boasts, was clear that X.com and Confinity represented evolutions, rather than revolutions, on the era’s payment technology. “It wasn’t even that we invented money transfer. We just made it useful,” Musk said. “Other companies had the idea of doing payments before Confinity or X.com, they just didn’t do it right.” He pointed to Accept.com and Billpoint as two sites rendering similar services."

"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."

"Earlier than many of his colleagues, Thiel saw X.com as an existential threat. “Peter likes to confront things. He likes to know if he’s wrong,” Nosek said. “He’s actively looking for how things could break, how things could fail—constantly. Much more so, and much more proactively, than a lot of entrepreneurs I know.” Thiel determined that X.com could simply spend Confinity out of existence. “Peter was good to recognize that they were a real threat,” Malloy said."

"David Sacks also told the members of the product team to purchase items on the eBay website. Confinity’s newly minted eBay shoppers met to dissect every single step of the buying—and, specifically, the paying—experience. “We had to become the users,” recalled Denise Aptekar, who purchased a landline phone, which, unfortunately, came “caked in cigarette smoke.”"

"Given a teetering market and a take-no-prisoners competitor, Thiel and others in the company began considering an alternative course. “A lot of us came to the conclusion that this would be a winner-take-all market, and that this should be a single company,” Confinity cofounder Ken Howery said. “Or both of us would spend ourselves into oblivion.”"

"Thiel didn’t like to lose. “Show me a good loser,” Thiel once said to a Confinity employee, “and I’ll show you a loser.”"