A biased account, but a mention is still a mention


Pretty similar account if you swap bitcoin into one of the generic wallets slots perhaps.

That eBay, one of the most innovative startups of all time, now finds itself positioned as a lumbering giant has some historical basis. PayPal has a legitimate claim, based on future successes, to the most entrepreneurial founding team ever. Musk (Tesla, SpaceX) was originally joined by Peter Thiel (Facebook, Palantir) and Max Levchin (Yelp, Slide), with an initial mission similar to what Bitcoin is trying to do 15 years later: create an electronic currency independent from governments and central banks. Soon to join: Reid Hoffman (LinkedIn), David Sacks (Yammer), Jeremy Stoppelman (Yelp) and Chad Hurley and Steve Chen (YouTube). It’s almost impossible to find a major startup in Silicon Valley untouched by the PayPal “mafia.”

PayPal avoid having to remit that 3% fee right back to credit-card-issuing banks. To this day, that direct link to bank accounts is an advantage that Amazon, Google and Square lack.

The challenge intrigued him. Born in Paris and raised wealthy in Geneva (his grandfather was a successful entrepreneur), Marcus was a full-fledged computer geek by the age of 8, eventually programming games on his Mac 512K. He studied at the University of Geneva, until a currency bet by Dad went horribly south after the Berlin Wall fell, putting the family in financial peril. “It was terrible at the time,” says Marcus, who dropped out of school and took a job at a bank to support the family. “But it was probably the best thing that ever happened to me.”

Most of all, Marcus has returned PayPal’s culture to its roots, snapping up nearly $1 billion worth of startups in areas he considered weak points, and stacking the division’s top ranks with career entrepreneurs–most of whom, like himself, have entered PayPal through acquisition

But there’s a glitch in this matrix. The restaurant is not running the latest program. There’s no bar code to scan before the meal and none on the check. Instead Marcus must type in a seven-digit code attached to the bottom of the check. When the check arrives the code is missing. “ The challenge,” Marcus says, trying hard to mask his frustration, “is not only scaling the technology but having people understand it on the merchant side.” Ten minutes later the waiter returns, code in hand. Marcus enters a tip, pays the bill via iPhone and sighs: “When it actually works you don’t have to wait.”

Marcus and PayPal have neither the luxury of glitches nor of waiting. Money is going mobile, and the race is on to control the flow of bits and cash across a billion smartphones and at millions of online and physical locations. Research firm Gartner estimates that mobile payments will top $720 billion a year by 2017, up from $235 billion last year. The upside remains enormous: Humans made $15 trillion worth of retail transactions in 2013. Whoever ends up with controlling interests in this new digital ecosystem will reap billions in transaction fees, collect massive amounts of consumer data and control the type of targeted advertising that makes marketers drool. Giants such as Apple AAPL -1.16%, Amazon, Google GOOG +0.15%, Visa and MasterCard all want to be your mobile digital wallet, as do several well-financed startups, including Square, founded by Twitter billionaire Jack Dorsey.

PayPal moved $180 billion in 26 currencies across 193 countries last year, and its revenue grew 20% to $6.6 billion–41% of eBay’s total revenue and 36% of its profits. In fact, it’s no longer fair to call eBay an online auction company. PayPal, purchased in 2002 for what everyone thought was an outrageous price of $1.5 billion, is now worth at least half of eBay’s $70 billion market capitalization, with many people thinking it could be worth far more.