PayPal - The Beamers Didn't Come - Commoncog

PayPal is famous for being one of the few dotcom successes that survived the 1999 bubble. It is also famous for the ‘PayPal Mafia’ — the founding group of individuals who left PayPal in the wake of their 2002 eBay acquisition and then spread out to start multiple successful companies in Silicon Valley over the subsequent decade.


This is a companion discussion topic for the original entry at https://commoncog.com/case/paypal-idea-maze/

Reading this, it felt like PayPal succeeded mainly by luck, because money beaming using PalmPilots doesn’t sound like a good idea, and the part of their product that did succeed was something they’d dismissed as unimportant. In contrast, TikTok and Amazon succeeded because they’d persisted with decisions that seemed unwise at that time but later paid off. The other examples like Instagram and Microsoft also felt more intentional.

This surprised me because being known for the “PayPal Mafia” suggests that that the employees must be skilled in some way for them to achieve such consistent success. Perhaps part of it is a willingness to entertain unusual ideas, but General Magic was very willing to experiment and yet they’d failed.

In an Acquired podcast, PayPal alumni were described as outstanding for their willingness and ability to iterate quickly – they are willing to release products that aren’t quite ready yet, so they can iterate according to the actual market feedback. It seems then that being right isn’t as important as being able to seek and respond to feedback. Their initial ideas did not work out, but they managed to get there by iterating, unlike General Magic which stubbornly clung to the same idea.

PayPal succeeded because of luck, but only because they were willing to give different ideas a chance. They may not have been good at identifying winning ideas, but they were good at changing their minds and exploring further so they could iterate towards one.

Now, the one thing I’m wondering is this: the problems with PalmPilot that Hoffman highlighted seem very valid. Did the others not do anything to address his concerns?

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This is a great call-out.

My understanding from The Founders is that no, half the company was so fixated on the PalmPilot idea that they just ignored it. Not entirely, of course — Levchin implemented the initial email service as a result of Hoffman’s prodding, but it really does seem like changing your mind is a difficult thing, especially since you’ve already spent months of all-nighters getting the PalmPilot software to work.