From 0 to $98B =========== (first steps of PayPal)

Currently, PayPal is worth $98 billion.


How did they move at first?


  1. Confinity, a security software company, created PayPal as a side project in 1999 to address their own issue with online money transfers.


  1. Confinity merged with an Elon Musk-founded internet banking business in 2000 and raised some money.


  1. The creators attempted advertising, but the costs were prohibitive. Business alliances also failed to succeed.


  1. They then attempted to offer $10 to each new user and an additional $10 for inviting a new user. It ended up being less expensive to give away money than to purchase advertisements. The referral scheme also helped them become widely known. By the way, Dropbox used the same strategy after this study was published many years ago, but they gave away space instead of money. 😉


  1. Within a month of its public debut, PayPal had amassed 100,000 users.


  1. Ultimately, they reduced the reward to $5.


  1. As the network grew, the value of the network itself outweighed whatever type of carrot they might have provided. However, they had already made an investment of almost $70 million in their referral scheme before they reached this critical mass. Comparing this investment to PayPal’s current valuation of $98 billion, it seems insignificant.



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