Employees Schedule When Starting Out PayPal
PayPal, used by 286 million active users, and by 7 million businesses around the globe. PayPal was a result of two companies competing against each other, to a point where they were both about to go out of business.
Going back a little, in 1995 the brothers Elon Musk and Kimbal Musk launched a company Global Link, Global-Link was pretty much an online newspaper, this was a new concept at the time. Then in 1996, the name was changed to Zip 2, and in 1999 Compaq bought Zip 2 for $307 million. The money was split among the investors and the brothers, Elon walked away with 22 million.
With the money Elon wanted to do one more thing, he wanted to change the traditional banking industry by changing the financial sector, things like mortgages, insurance, online payment, investment services, retirement planning. The idea was to build an online platform that could essentially work like a bank. The concern for many bankers and consumers was the security in the online world, not everyone was willing to take their business online, people were barely comfortable with purchasing buying books online.
The plan for the “online bank” was already in action before the sale of Zip 2. Musk invested majority of his earnings from Zip 2 in his new company, X.com. He then started to recruit people with Harris Fricker.
X.com had its office at 394 University Avenue-in Palo Alto. Because Musk was not from a banking background, he would read books to improve his knowledge of the industry. The company had nothing to show for after 5 months, Flickers started having problems with Elon’s way of running things. One day Fricker said that he either, takes the role of CEO or he would leave and take everyone with him. Elon did not take this thread kindly and told him to do whatever he wanted. They all left, leaving Musk alone with the company. Elon started recruiting again with some financial help from an investor, Michael Moritz from Sequoia Capital. He attracted engineers, and with the vision of changing the future of online banking, they got to work.
The company secured a banking license and a mutual fund license, by November X.com small software team had created one of the world’s first online banks. Musk gave engineers $100,000 of his own money to test the website. The story goes that engineers were working18 hour days, and Elon would work 48 hours straight, making sure that things go as per plan.
Customers were signing up and receiving a $20 card, in addition, they were also getting a $10 card for every person they referred. Within few months 200,000 people signed up, but things were about to get super competitive.
About 4 blocks from their office there was another startup called Confinity working on a similar system, founded by Max Levshin and Peter Thiel. The company was founded with the idea of making global payments to anyone using a palm pilot. Because these devices were not common, they began to work on a web payment transfer service known as PayPal. Where users could send money using their email address and a credit card. They also attracted users by giving away gift cards and referring a friend. 3 months after launching they had 12,000 active users. However, their popularity grew when they integrated with eBay, users on eBay were using checks and money orders. But with PayPal, customers could send money a lot quicker. The two companies knew that whoever got bigger faster would win.
Millions were spent on promotion and for battling hackers who started to use both services for fraud. Engineers on both sides were working 18–20 hours days. They were both giving away $100,000 plus a day in gifts to new users. Then on March of 2000, X.com and Confinity decided to join forces and combine their efforts. They figured if they were to continue at the scale they were, none would survive.
For now, they decided to work under the brand X.com, they raised 100 million dollars in 3 weeks, but this was the 2000s, the markets crashed. While companies were dying, the merger allowed PayPal and X.com to go on. But this merger came with a cost, employees on both sides hated working with the other side. Elon was promoting X.com, whereas everyone else favorite PayPal. Two months after the merger Peter resigned and Levchin threatened to walk out.
Musk was left again to run PayPal, the problems kept getting worse. Once a week the website would collapse from an exploding demand of customers joining service, there were more frauds, the small fee from bank and the credit card companies was piling up, there was more competition.
A growing number of people at the company started to question Elon’s decision-making skills, a small group of employees gathered one night at a bar and brainstorm on how they can push Elon out. They decided to sell the board on the idea of Peter returning as the CEO. Musk and his wife Justine went on a trip to Sydney, Musk boarded the plane as the CEO, but landed as an advisor and an investor in the company. The board had made a decision and replaced Musk with Peter. Musk urged the board to reconsider its decision but it was clear that the board members had made their minds up.
In June of 2001, Thiel rebranded X.com as PayPal. PayPal with a revenue of $240 million per year started getting buyout offers. In July 2002, Ebay approached Paypal and offered $1.5 billion, and they accepted.
After selling PayPal to eBay, the talent that helped created PayPal went on and did their own things. These individuals are known today as the PayPal Mafia.
