Pay Pal Wars Economic Review

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Some time ago in the last century when I bought some items on the internet from Amazon, it was an event that occurred so strange to me that I had to write to one of my friends about my experience. These days, buying things on the internet is not a story to write to a friend, and interestingly, paying for goods and services via the internet has become a big business. In the book the PayPal wars: Battles with eBay, the Media, the Mafia, and the rest of Planet Earth, Eric Jackson vividly writes what it takes to start and grow a successful business in the new business of online trading. Throughout the whole book, the writer gives accounts of all the intrigues that PayPal employed from the very first day to fight and stay in a business. eBay, from Jacksons’ account, was the ark enemy of PayPal. Though in the end, it was as if eBay took the day, but PayPal fought on until finally, the two firms had to merge in 2002, PayPal was sold for one point five billion.

PayPal wars are one of the most outstanding accounts that have been put on paper of the trying days of dot-com from 2000 to 2001. The most striking and attractive elements in Jackson’s work that will make everyone want to read it is the humility in his voice, and the degree to which he was concerned with the fate of his colleagues working at PayPal.

Jackson was trained by Peter Theil, away under Anderson’s influence. His writings depict the ideology of someone accustomed to old ways of doing business, in every sense bureaucratic, ensuring that everyone within the organization has his or her role clearly defined, and most importantly, ensuring that organizational structure is strictly adhered to. On his day at work, Jackson discovered that none of those already working within the organization knew that he/she was employed to work with them. He recounted that it took him some time to overcome his initial fear, and get to work. After settling down to work, he soon discovered that his new job operated with different kinds of rules, and that was what was been practiced in the new economy in which he found himself. He was amazed to discover that in the new economy, everything was based on how fast one gets things done, and the ability to be flexible and flow with situations as they unfold. But most importantly, he realized that his talent was the ultimate thing if he was to succeed. His lack of training in marketing did not serve as a deterrent factor against him, he quickly adjusted and learned the ropes, and soon he was promoted to a position of eminence within the organization.

The discoveries made by Jackson were very common for anyone who worked in a new firm with such rapid growth. The customer service section, were the ones with most of the job to do as he recounted, were always doing their best to meet up with the demands of the customers, and always had more mails than they could attend to, at the same time, they had to put in their best since the organization’s priority was on growth. At the time, the company was trying its best to meet up with business challenges the site faced, challenges that were threatening the companies’ growth, instead of the top management concentrating on the challenge at hand, they were busy with creating new strategies that would bring in more customers. One interesting thing about Jacksons’ work is that, in his writing, he tried his best to balance the truth, while speaking about the strength of the management and the business in general he, at the same time, highlighted the failures of some of the poor approaches that were used in tackling challenges by top management. In a statement, he said that,

“I’ll certainly acknowledge that our company wasn’t beyond media dissection. We deserved it! We had racked up $92 million in operating losses through the first three quarters of the year against revenues of just $6 million. CNET, the red herring, and other media outlets had every right to sink their teeth into a company with such a dangerous burn rate”. (Jackson 64).

Peter Theil, proved himself a visionary, after proving that his ideal of PayPal was workable after all. What he intended to do was to help people all over the world with their financial transactions by allowing them to transfer money in foreign currencies without their home governments tasking them or reducing the value of what they were transferring through charges. Though his original ideal didn’t work the way he would have wanted it to, it was a springboard for those who finally converted it to what it is today. Another intelligent decision he took was to close down the business in 2001, to avoid being caught up by the constant slide of NASDAQ, which in turn would have made all the investors he gathered over time withdraw. It was a wise decision of him to close down the company, as would he wait any longer with the decision, the investors would have gone, and Pay Pal could have become bankrupt.

One important factor worth taking note of in the PayPal story is their business processes, with the coming of the cars to replace the horses used in the agrarian age, the mode of doing things changed. After the cars were introduced, people wanted things done faster, the economy changed, speed was the in thing, and this was because it took fewer days to accomplish a task that would have taken several days to be completed (Klein 89). The invention of the internet made transactions faster, the speed of doing business changed, and what was unimaginable a short while ago has become possible today., It was a welcomed development when PayPal introduced their products not just because it saved the people’s time, but also because the value of the customer’s money was still maintained without huge charges being deducted. Aside from the fact that the product was new, innovative, and timely, it brought the speed to match the coming of the internet, thus making transactions easy and cheap. Aside from offering fast and efficient services, the company also incorporated speed in their business processes, this also helped them in meeting the huge demand the business demanded on the employees. Fast decision-making pitched PayPal ahead of its rivals. While other firms offering similar services were still caught up in the old and bureaucratic way of operating business, PayPal was ahead and this was what set PayPal apart. They utilized speed and flexibility in everything, from thinking to decision-making. Some of the most interesting pages to read from Jacksons’ work are those on the mode of operation of PayPal’s ultimate purchaser, eBay. In his words, he stated that.:

eBay employees seemed trained to make phone calls to everyone who might have even the remotest interest in the matter and invite them to the yet-to-be-scheduled meeting. After at least two dozen invitations had been extended, a meeting time and location would be scheduled about a week in advance. The following day, like clockwork, the meeting would be rescheduled because of a calendar conflict of a peripheral stakeholder. After several rounds of schedule shuffling, attendees filing into the summit would be handed a thick set of PowerPoint slides filled with bullet points, tables, and an aphorism or two. The duration of the meeting would then be devoted to wading through the voluminous set of slides, with the usual outcome being an agreement to set up a follow-up meeting, that the issues raised by the slides could be further discussed. (Jackson 67)

The customers at this point in our discussion must be recognized in the transformation of PayPal, it was an unusual happening in the business world, usually when it came to financial transactions. Any threat can send customers packing or looking for better alternatives. What the case of PayPal tells us is that, when you are rendering services that are valuable to the customers, they will stay no matter the challenge. The demands of the customers caused the management of PayPal to be on their toes, they were constantly brainstorming on what to do next, looking at the volume of the customers, PayPal knew what they needed was strategic planning on how to convert the market into a profitable one. The idea of selling the business to eBay was the best, but the customers were the key players in determining the outcomes of the transaction. Had it been that the volume of customers was small, and the customers, in turn, were not optimistic about the services PayPal was providing, the company would have simply folded up, and the investors would have withdrawn their money. But the consistent push for service by the customers was the magic wad that propelled the transformation of PayPal. It is important to note that while PayPal was struggling with the challenge of bringing in profits, other stories were coming up, rumored stories about the operations of PayPal, one of such stories was that people sent emails and wrote in forums that PayPal accounts could be frozen without a prior notice sent to the holder of such accounts at any point in time. Stories like this added to the challenge PayPal faced that time. It is common knowledge that when an industry is facing challenges, others capitalize on that to make money to their advantage. While it is true that PayPal rivals were responsible for such publications, it is also possible that some people only wrote such things to drive traffic to their sites. The ability of PayPal to weather the storm and maintain its integrity in the face of all the challenges is the lesson to be learned from all that transpired. Jackson showed that challenges like that are common in fledging business, in his words:

Google’s stock plan got it in hot water with regulators; PayPal was banned from Louisiana by state regulators. Google has been walloped by class action and trademark litigation; PayPal had to delay its IPO because of a lawsuit.” “PayPal had few legal problems for its first three years,” continues Jackson, “and then during the week of our IPO, we were sued by a competitor, threatened by a bellicose sec regulator, and banned from operating in one state, with threats from several others. and this onslaught didn’t let up once our IPO was done — within a few months, we faced multiple class-action lawsuits and had New York’s over-zealous attorney general Eliot Spitzer breathing down our necks. (Jackson 105)

At this point, it is important to note that, after the business was sold to eBay, Jackson and some of his colleagues at PayPal left because they were unable to cope with the bureaucratic way of doing things at eBay. Jackson before now was accustomed to the old economy way of running businesses, after operating in PayPal, and noticing that the method at PayPal was the best way of running an organization, it was hard to take him back to the prison he left.

The weight of knowledge of most of the people who worked at PayPal can be seen in what most of them did subsequently in their lives. Peter Theil after selling the business, became a voice to be reckoned with so far as the internet was concerned, he was instrumental to the development of FaceBook, which at the time was still young and growing

  • Reid Hoffman, after PayPal’s page, was closed went to LinkedIn where he took over the management of the firm and recorded huge success in IPO.
  • Chad Hurley and Steve Chen together went and started YouTube which was later sold to Google.
  • Others who started successful ventures after leaving PayPal, when it was sold to eBay, were Jeremy Stopple-man and Russell Simmons who made a huge success with a yelp.
  • Other on the list of ex PayPal staff who established businesses were, Premal Shah, who founded kiva, and finally Dave McClure the founder of simply-hired.

The individual and collective successes made by most of the ex-workers at PayPal are a clear indication that they wouldn’t have been able to work at PayPal after it was bought by eBay. Though Jackson and some of his colleagues could not cope with the way of doing things at eBay, which was different from what they had at PayPal before it was sold. The decision of selling the company was a decision that stood PayPal out from other businesses that offered similar services. The business was there in terms of customers, but the profits were not rolling in, others in the industry still held to their business, they still wanted ownership, many did not think of the sustainability of their business, they were mostly concerned with immediate gratification and, as such, had to wind up. Another strategy PayPal used in weathering the storm was the ability of the customer service sections to manage their customers effectively, what they were doing was not just doing business with the customers, but they were also getting personal with them. At times offering them great insight and knowledge, while they concentrated on some of the things other businesses felt were intangible, business flowed in (Kenneth 48).

Another compelling revelation in Jackson’s work, that will thrill any reader is his infusion of political positions that will cause anyone reading the work to share his side of reasoning. Without being emotional in his writing, he perceived the approval of two men in his work, Milton Freidman and Bernie Goldberg, and, on the other hand, outright rejection from regulatory agencies. It tells the reader, who understands that Jackson is coming from the viewpoint of someone who has worked in a company that is concerned with rapid growth as a major priority. About the rapid growth and penetration of Google which in every sense is a threat to eBay and PayPal, Jackson writes that “Google’s management appears to be overwhelmingly left-wing”(Jackson 35) Though a great tone of politics can be deducted from his voice, the revelations encapsulate in his work cannot be overemphasized, especially during the challenging days in the industry.

At this point, it is important to acknowledge the innovativeness of the founders of PayPal. What they did was simply utilize emails which ordinarily were used for messaging, and advertisement by companies to fund transfers. The only thing customers needed to do is to create an account (an email address) converting it to an item of financial transaction, as compared to the requirements needed to operate an account in traditional banking systems or other financial fund transfers which require time and energy.


The writing of the PayPal wars is an eye-opener to business organizations and those that are intending to go into business. The challenges faced by PayPal, from the inception of the firm to the subsequent meager and the successes it is still recording are typical of most start-up firms. Some of the strategies used by PayPal will help any business to succeed. Most importantly is the ability to go where others have not gone. Being pioneers in the industry they had no one to look up how they were able to overcome all the challenges that came in the course of their operations, it was strictly due to the ability of the top management to think and come up with ideas. Jacksons works show us that, firms that succeeded in this generation were adopting the new way of doing business, which is speed, flexibility, and rapid self-development.

A key to the success of PayPal was the ability of the firm to fight head-on and complain less, had been the company wasted some of its time in complaining of who is against its success the company wouldn’t have been around today. The ability of the management to remain focused was a great strategy. Finally, the subsequent success registered by some of the staff who was originally at PayPal, showed that the firm had an impact on the lives of its workers. The retirements to these workers from eBay showed they were progressives. eBay was interested in papers, they were more concerned with people with MBA’s and not in result-oriented minds. The success of the PayPal staff in other ventures and is a clear indication that what matters in business is success and not paper qualifications.

Works Cited

Jackson, Eric. The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth.Los Angeles: World Ahead Publishing, 2004.Print.

Kenneth, Arrow. Limits of Organization. New York: W. W. Norton, 1974.Print.

Klein, Peter. Capitalist and the Entrepreneur. Ludwig von Mises Institute: Auburn Alabama,2010.Print.

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BusinessEssay. "Pay Pal Wars Economic Review." December 14, 2022.