eBay

"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.”"

"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."

"The document pushed a familiar refrain about time to market. “Speed is of the essence for three reasons,” the spec noted: The product’s inherent network effects meant the first mover will have a tremendous advantage. Every day we have the market to ourselves is an irreplaceable chance to build an insuperable lead. The company needs to demonstrate a revenue track record going back at least 6 months for the IPO. X-Click could provide immediate revenues. Competitors such as Yahoo, eBay, and Amazon are hot on our heels in terms of matching basic P2P functionality. X-Click is needed to counter their superior distribution and ability to integrate."

"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."

"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.”"

"eBay now stood a real chance of reclaiming payments and each change it made sent executives—particularly Thiel and Sacks—into paroxysms of anger. “David and Peter would get totally hysterical and say things like They can’t do this! and How dare they?” an executive observed. “And we’re like, ‘It’s their platform. They can do whatever they damn well want.’"

"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.”"

"Giacomo DiGrigoli never forgot David Sacks’s stark response. “David took one look at it and was like, ‘No. It needs to be this simple. Like, a human being is trying to buy something on eBay. And they need to send that person eighty euros. You should have a drop down that says eighty and the number of the currency. And then on the permission screen, you can put all this other bullshit that needs to be here... Make it this simple, please.’"

"In sharing eBay’s “declaration of war,” Sacks observed that these encroachments arrived at a precarious time. “Unfortunately because of the forced upgrade scheduled to begin on Monday,” he explained, “we are at our most vulnerable point. It is critical that we respond swiftly and creatively in the next week to give ourselves the maximum chance of success (survival?) over the next month.” Worryingly, this would be the first time in the Billpoint-PayPal saga in which Billpoint had undercut PayPal on price. “... this will be a critical test,” Sacks wrote in his email to the group, which he dubbed “the Ebay [sic] Response Team.” He included the company’s top performers across a range of functions: its entire executive team, the producers of auction products, its head of PR, the stewards of its Visa/ Mastercard relationships, its general counsel, data experts, and others he felt could help."

"As eBay expanded abroad, PayPal saw an opening for itself—auction sellers abroad needed payment services, too. “If you were a collector,” noted Bora Chung, “you would not just look at the US. You would look at the UK, you would look at Germany, for collectors’ items.” The company began to see users sending money to foreign IP addresses. “David [Sacks] had sort of suspected and... was looking at the data and was like, ‘People are hacking our system, because they just need to send money to Canada, or to the UK, or in English-speaking languages. We’ve just got to figure out how to make this happen,’ ” Giacomo DiGrigoli recalled."

"With the quiet period hovering over much of early 2002, PayPal could say little to defend itself publicly, so Hoffman and the executive team came up with another way of muzzling eBay. If they’re in negotiations to buy us, Hoffman remembered thinking, if they say anything to the public market, it’s breaking fiduciary responsibility. PayPal, the executive team and its board decided, would enter another round of acquisition negotiations with eBay—to silence it."

"Max Levchin stayed on as CTO longer than many had anticipated, but he struggled at eBay. He grew frustrated by big company life and found himself lacking a specific portfolio of responsibilities. John Malloy took his experience as a lesson for working with founders. “Because of Max... I’m so much more sensitive to the fact that, when my companies exit, I stay in touch with all my founders... because there’s a loss,” he said. “It’s akin to depression... you have this thing fill your life every day and it’s gone. You have to reinvent yourself.”"

"Even its tussles with eBay, alumni observed, evinced a fighting spirit. The team would have to build, release, iterate, and repeat as eBay challenged PayPal’s use on the auction giant’s home turf. “The thing that brought us really close together was battling eBay,” Skye Lee noted, “because nothing brings a company together like having a mortal enemy.”"

"Let’s look at a few other surprises. How many McKinseyites routinely go to flea-markets or car-boot sales? Very few, I think it’s fair to assert. And yet the employees of large consulting firms are massive users of eBay. Once again, the medium is the product."

"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."

"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."

"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.”"

"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.”"

"The document pushed a familiar refrain about time to market. “Speed is of the essence for three reasons,” the spec noted: The product’s inherent network effects meant the first mover will have a tremendous advantage. Every day we have the market to ourselves is an irreplaceable chance to build an insuperable lead. The company needs to demonstrate a revenue track record going back at least 6 months for the IPO. X-Click could provide immediate revenues. Competitors such as Yahoo, eBay, and Amazon are hot on our heels in terms of matching basic P2P functionality. X-Click is needed to counter their superior distribution and ability to integrate."

"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.”"

"In sharing eBay’s “declaration of war,” Sacks observed that these encroachments arrived at a precarious time. “Unfortunately because of the forced upgrade scheduled to begin on Monday,” he explained, “we are at our most vulnerable point. It is critical that we respond swiftly and creatively in the next week to give ourselves the maximum chance of success (survival?) over the next month.” Worryingly, this would be the first time in the Billpoint-PayPal saga in which Billpoint had undercut PayPal on price. “… this will be a critical test,” Sacks wrote in his email to the group, which he dubbed “the Ebay [sic] Response Team.” He included the company’s top performers across a range of functions: its entire executive team, the producers of auction products, its head of PR, the stewards of its Visa/Mastercard relationships, its general counsel, data experts, and others he felt could help."

"As eBay expanded abroad, PayPal saw an opening for itself—auction sellers abroad needed payment services, too. “If you were a collector,” noted Bora Chung, “you would not just look at the US. You would look at the UK, you would look at Germany, for collectors’ items.” The company began to see users sending money to foreign IP addresses. “David [Sacks] had sort of suspected and… was looking at the data and was like, ‘People are hacking our system, because they just need to send money to Canada, or to the UK, or in English-speaking languages. We’ve just got to figure out how to make this happen,’ ” Giacomo DiGrigoli recalled."

"eBay now stood a real chance of reclaiming payments and each change it made sent executives—particularly Thiel and Sacks—into paroxysms of anger. “David and Peter would get totally hysterical and say things like They can’t do this! and How dare they?” an executive observed. “And we’re like, ‘It’s their platform. They can do whatever they damn well want.’ ”"

"Giacomo DiGrigoli never forgot David Sacks’s stark response. “David took one look at it and was like, ‘No. It needs to be this simple. Like, a human being is trying to buy something on eBay. And they need to send that person eighty euros. You should have a drop down that says eighty and the number of the currency. And then on the permission screen, you can put all this other bullshit that needs to be here… Make it this simple, please.’ ”"

"In a 2002 talk at Stanford, a questioner asked Thiel what advice he had for PayPal. “The larger market is off eBay,” he said, “and they should develop a lot of product features and functionalities that enable point-to-point payments in a non-eBay context.”"

"With the quiet period hovering over much of early 2002, PayPal could say little to defend itself publicly, so Hoffman and the executive team came up with another way of muzzling eBay. If they’re in negotiations to buy us, Hoffman remembered thinking, if they say anything to the public market, it’s breaking fiduciary responsibility. PayPal, the executive team and its board decided, would enter another round of acquisition negotiations with eBay—to silence it."

"Max Levchin stayed on as CTO longer than many had anticipated, but he struggled at eBay. He grew frustrated by big company life and found himself lacking a specific portfolio of responsibilities. John Malloy took his experience as a lesson for working with founders. “Because of Max… I’m so much more sensitive to the fact that, when my companies exit, I stay in touch with all my founders… because there’s a loss,” he said. “It’s akin to depression… you have this thing fill your life every day and it’s gone. You have to reinvent yourself.”"

"Even its tussles with eBay, alumni observed, evinced a fighting spirit. The team would have to build, release, iterate, and repeat as eBay challenged PayPal’s use on the auction giant’s home turf. “The thing that brought us really close together was battling eBay,” Skye Lee noted, “because nothing brings a company together like having a mortal enemy.”"

"holder, the billionaire Bernard Arnault, was passionate about the internet. On his frequent trips to the US, he had seen at first hand the impact this new medium was having on traditional retailers. Like us, he knew it was only a matter of time before the e-tailing craze hit Europe. For almost a year now he had been making small, but lucrative investments in US dot.coms like eBay and Webvan. Helping him scout for deals was Jean-Bernard Tellio, a suave, fast- talking, former curator of the famed Centre Pompidou in Paris. We"

"The first team that I built has become known in Silicon Valley as the “PayPal Mafia” because so many of my former colleagues have gone on to help each other start and invest in successful tech companies. We sold PayPal to eBay for $1.5 billion in 2002. Since then, Elon Musk has founded SpaceX and co-founded Tesla Motors; Reid Hoffman co-founded LinkedIn; Steve Chen, Chad Hurley, and Jawed Karim together founded YouTube; Jeremy Stoppelman and Russel Simmons founded Yelp; David Sacks co-founded Yammer; and I co-founded Palantir. Today all seven of those companies are worth more than $1 billion each. PayPal’s office amenities never got much press, but the team has done extraordinarily well, both together and individually: the culture was strong enough to transcend the original company."

"“Fifteen years ago, 50% of internet users were Americans. Asians were 19%. However, five years from now, Americans will be 12% of the internet population, and Asians will be 50%. (ellipsis) Until now, you could not become the number one internet company without being an American company. Companies like Google, Amazon, Yahoo US, and eBay—all American companies. In other words, if 50% of users were American, naturally, it would evolve into an English website with a business model suited to American lifestyles. So, Americans had the advantage of location. But from now on, Asians will become 50% of the internet population. In just five years. Already, Chinese internet users have surpassed Americans. 50% will be centered on China and Asia, with Americans becoming 12%. In this sense, we precisely gained the advantage of location. If we obtain the opportuneness of Heaven and the advantage of location, we must act.”"

"“Fifteen years ago, Americans comprised 50% of the internet population. Asians made up 19% back then. (Omitted) Until now, only American companies could be number one on the internet. Google, Amazon, Yahoo US, eBay, etc., all those were American companies, right? Since 50% of the customers, the users, were Americans, naturally, the website would be in English, with a business model suited to American lifestyles. Hence, Americans had the advantage of the land.”"

"One of my major mistakes was that I was in too much of a hurry to try other ventures and didn’t pay enough attention to Iceland’s problems. I was trying to lay as many bets as I could while the plentiful supply of surplus capital lasted. But I had lost focus and was involved in too many things. I sold Bulgarian telecoms group BTC but then, before I had finished a project with Finnish telecoms firm Elisa, I was engrossed in the Actavis leveraged buy-out. Before completing my ill-fated investment in Amer Sports, I made a derivative bet on Allianz, with an even worse outcome. And I also negotiated a complex deal to come to the rescue of the beleaguered Polish owners of QXL, an early online auction competitor to eBay that had run into trouble. The company then recovered, with its shares rising a staggering 1,260 per cent in 2005, making it the year’s best performing stock on the London Stock Exchange. We then sold it to Naspers, a subsidiary of a South African media group. The problem was that I couldn’t handle the pitch or the speed because there were so many things going on. My focus was always on doing the next deal, restructuring and rejigging something I already had, and not so much on the oversight, which is an important check and balance. I was not good at that. I’m always more interested in creating something new. I had lost my ability to focus, something that had served me so well in Russia, and which is essential for an investor looking after his money."