How is it that so many seemingly incredible people come out of PayPal, and PayPal still sucks so much?
The all-star list is insane, it keeps growing, and yet PayPal still that can't seem to do anything new.
The all-star list is insane, it keeps growing, and yet PayPal still that can't seem to do anything new.
PayPal's fat margins aren't justified by the service they provide, only by the lack of alternatives. But new alternatives are launching much faster than eBay can respond.
Square has become a well-run, genuine alternative. BitPay / Coinbase are still very small, but the cryptocurrency wildcard at least shines a light on what money transfer should cost.
Amazon is quietly expanding their payments footprint. The famous Bezos quote seems appropriate here: "Your margins are my opportunity."
Apple exposing their Touch ID API will level the playing field, exposing PayPal to more competition and margin pressure. Look out if Apple starts using their billion-credit-card database to get into payments themselves.
If Facebook/Whatsapp can payment-enable messaging and do it at a lower cost, PayPal's raison d'etre starts looking pretty questionable.
And now eBay leaking personally-identifiable information on 150 million customers isn't helping maintain trust or brand image. The breach couldn't have happened at a worse time.
We could be looking at the Blockbusterization of eBay and PayPal. The stock price is starting to reflect this reality, so look for more key people to leave in coming months.
There won't be one grand disruption (except maybe Amazon or Alibaba), but there will be many small vertical disruptions, like Etsy.
The real question is why Facebook is poaching from EBay and not vice versa.
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I think they will die from not one big dog taking over, but a bunch of smaller companies each taking bites out of their market share.
How would the valuation to user actually function?
Would one allot some % of their transactions to Square (above both fee and margins) into the pool. Then they earn various mechanisms to increase their pool share (including buy some/debting some from square) and then be able to use all of it as in-system credit? Where goods and services were exempt from taxation due to there being no "actual US currency transacted"?
It would be very interesting to see if such a system results in the truth that labor-resource is the true vector of tax - not money. Unless that is already established and I am just ignorant....
PayPal's raison d'etre is not in Peer to Peer money exchange. Its more on strong merchant integrations, partnerships, and relationships. In fact PayPal draws a small loss on p2p products. If you want to compete with PayPal its through strong merchant integrations which many startups have not succeeded in doing. When braintree made inroads into a segment of b2b products, PayPal acquired Braintree.
P2P is more or less a adoption hack/growth hack for a payments company. Merchant integrations and risk models are where its at.
If I call in with a problem, give me someone that can both answer my questions and put fingers on the keyboard and fix said problem.
Not really that hard. No more indian call centers, no more useless CS, no more hiding need-to-know information behind the all-consuming veil of "fraud protection" (something its competitors don't seem to have that much of an issue with).
That's 90% of your problems fixed right there. The other 10% would be the inconsistent enforcement of rules.
Think about the order of magnitude:
(1) An average 2.5% transaction fee on a $100 dollar e-bay transaction is US$2.50 in revenue.
(2) The cost of sending someone a "paper bill" in the mail (fully amortized) is approximately US$2.00, or 80% of the revenue from a $100 sale.
(3) at $8.50/hour, a minimum wage worker would expend >80% of revenue by spending 15 minutes to help you.
(4) A "quick fix" with a paper-trail (2+3 above)quickly turns the transaction negative ($2+2=$4>$2.50) at the margin.
(5) Since every fix is an instant loss, profit maximization implies "fix minimization"--at least as one component of strategy.
(Disclaimer: This is all made up math.)
Combating fraud is hard, at scale with half the worlds petty criminals seeing you as the obstacle between them and their victims you're in for a rough ride.
I wouldn't judge them too harshly. (Even if I personally will never use them ever again I do appreciate the kind of issues they have to deal with.)
PayPal is changing now, a LOT. After David Marcus and Bill Scott, things are now in motion for the better! I'm sure in an year or two, we'll see PayPal in a much different way than what it is now.
I'm sure there's some little things they could dabble in but realistically the only things people want from Paypal are less fees, less account closures/theft from account holders, faster transfers and overall better customer support.
Paypal doesn't need to innovate, they need to fix the obvious issues that relegate their service to a "barely workable until the instant someone better comes along" paradigm.
dude, how can you say this this year.
How much new can they do as Paypal? The company has a horrific public image (due to the reasons I listed) and has arguably been getting outmaneuvered innovation-wise in the payment processing business for many years now. The company is a giant just waiting to be toppeled.
Disclaimer: I may very well look back in 10 years and feel like a fool for the above opinion, but my current experiences have me pretty self-assured.
The amount of friction within a company like Paypal I would imagine is quite high. Not even those at the top of companies like these can change things at the flick of a switch. Things move very slowly in large companies, this is why smaller startups are able to come along and shake things up so easily before being acquired. It is how it is.
I wonder what ended up happening inside PayPal since this post.
Now that DM is gone, I am very bearish on PayPal. Good news is he can now openly mentor and advice entrepreneurs in the space.
Shower thoughts: Maybe I should write a full blog post with all the spicy stuff! (with GOT memes)
As for Bill Scott, its a 2 edged sword. I think he runs a good ship, and great guy if you are part of his team or enjoy his patronage or benefit his goals/vision. Him and his team understand technology, appreciate doing what they do. They are one of the forward looking tech teams at PP. But, it comes with usual red herrings though.
I know, but why couldn't he fix it? That is the real question.
the smartest move will be to move out, create a different world, and show them how its done. (Refer: Exit, voice, & Loyalty by Albert O. Hirschman). Hence I believe going to a better shore is in line with this spirit of california. Hope that helps.