The PayPal Wars by Eric M. Jackson

Author:Eric M. Jackson [Jackson, Eric M.]
Language: eng
Format: mobi
Publisher: Midpoint Trade Books
Published: 2004-04-09T07:00:00+00:00

C2it’s shaky launch and the media’s grousing were just background noise in David Sacks’s department; we kept our focus on the actions of PayPal’s primary competitor. Billpoint’s integration into Buy It Now and re-branding strategy posed the first real danger to PayPal’s lead in the marketplace, especially when coupled with the Free Visa promotion. Our strategic response was threefold—we directly countered eBay on both its BIN and re-branding initiatives, while at the same time moved faster to roll out a new set of product features for PayPal’s Web site.

With little leverage but a long list of blustery threats, Reid Hoffman lobbed a formal complaint to Rob Chestnut in eBay’s legal department over Billpoint’s Buy It Now advantage. Chestnut, by all accounts an even-keeled man who was far removed from the original BIN decision, heard Reid out and reviewed the matter. Following a few exchanges of screenshots and hyperlinks, Chestnut agreed that the “continue” link that led buyers to Billpoint was inappropriate and prevailed on eBay’s product team to make the Billpoint link clearly labeled. While the bigger problem of eBay granting preferential treatment to Billpoint remained unresolved, Reid’s assertive behind-the-scenes negotiations with eBay nipped this specific manifestation in the bud.

The “eBay Payments” re-branding issue was another matter. Blurring the distinction between eBay and Billpoint promised to give the payments service a competitive boost. But knowing that a goofy, skating dollar bill couldn’t pull off a re-branding overnight, I positioned our marketing campaigns to continue referring to our competitor as Billpoint by using unflattering comparisons in our e-mails and Web pages. Since the name that a customer first calls a service is not easily unlearned—as witnessed by the PayPal brand’s resilience during the months when we operated under Elon’s dual brand strategy—I used our communications to help make sure that the Billpoint name wouldn’t fade from view anytime soon.

On the product front, several new features bolstered PayPal’s competitive standing. International accounts took PayPal one step closer to Peter’s original vision for radical currency liberation. For the first time citizens from thirty countries could open PayPal accounts, and although this initial version only allowed for transactions in U.S. dollars, it still provided many international consumers with their first opportunity to send and receive online payments.

The producers also unveiled a money market feature for our U.S. customers. While nothing like the X.com plans for a financial supermarket, this optional service enabled users to earn interest on the balance in their PayPal accounts. Although called the PayPal Money Market Fund, the fund was owned and managed by Barclays Bank, an arrangement which allowed our company to again steer clear of activities that could land us with a commercial bank classification. Sacks hoped that providing our users with an interest-bearing incentive to keep cash in PayPal would decrease their reliance on expensive credit cards to fund payments.

The one-two punch of international accounts and the money market fund didn’t completely repair all the damage that our brand sustained during the upgrade campaign, but it went a

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