In The PayPal Wars, Eric M. Jackson explores the development and growth of PayPal, Inc., from its launch in 1998 to its sale to eBay in 2002. Jackson focuses mainly on the struggles between the founders of PayPal—Peter Thiel, Ken Howery, Luke Nosek, Max Levchin and Elon Musk—to establish the company as a formidable player in the then-nascent digital payments market.
The story of PayPal began with the vision of Thiel, an ambitious Stanford graduate student. Thiel believed that he could create a new kind of online payment system that would enable users to pay for goods and services without the need for physical money. What set PayPal apart from other digital payment companies was the fact that it did not rely on a credit card or bank transfer, but instead operated on a new system called decentralized money exchange. This system allowed users to transfer money directly from one PayPal account to another, bypassing the traditional banking system.
In order to realize Thiel’s vision, Howery, Nosek, Levchin and Musk, each with their expertise in computer science and finance, formed a team to develop the company. This team would go on to become some of the most important players in the modern Paypal Wars. After several rounds of venture capital financing, the team launched PayPal in 1998.
Though the launch was successful, the PayPal Wars were just beginning. Thiel and Musk, who had always been the strong driving force behind the venture, continually clashed over a variety of issues, such as how to structure management, how much control each founder would have over the company, and how to generate revenue.
The internal conflict was compounded by external pressures. In 2000, First Data Corporation (FDC) launched its own online payment system, causing PayPal’s sales to take a sharp decline. In the same year, Citibank launched a similar product, and PayPal faced stiff competition from other digital payment companies. By 2001, PayPal was on the brink of bankruptcy, and many of its senior executives had resigned or been fired.
Faced with the threat of extinction, the founders of PayPal continued their fight for survival. In April of 2002, eBay purchased PayPal for $1.5 billion dollars. The sale allowed PayPal to remain the dominant player in the digital payments space and settle the PayPal Wars.
Since its sale to eBay, PayPal has flourished. The company now processes more than $1 billion dollars in transactions every quarter and is credited with revolutionizing the digital payments industry.
The PayPal Wars is a definitive account of the struggles and successes of PayPal, Inc., and its founders. Through extensive research and interviews, Jackson examines how the company evolved, developed and ultimately succeeded against all odds. The book is a must-read for entrepreneurs, businesspeople, and those interested in the history of the digital payments industry.
