1. Jackie Dutcher Jodie Raney PJ Santos Brian Schwarz

2. PayPal Service Background
Founded by Confinity in Dec. 1998
One of the first online person-to-person payment systems
Merged with X.com in March 2000
One of a suite of online financial services

3. How PayPal Works
Replaces cash, check, and money order payments that use USPS
Buyers send money from their account to sellers account
Charges Buyer’s credit cards
Sellers can:
Spend money via PayPal
Request a check
Keep the money in their account

4. Success Story Over 1.6 million PayPal users
As many as 25,000 new users per day
Most visited “Finance and Investment” site according to
Over 160,000 open auctions on accept Paypal transfers as payment

5. PayPal Buzz
“PayPal is replacing currency. This is becoming the payment service of the Internet.”
“Every new generation of computers needs a killer app…the ability to “beam” money from one device to another, or to anyone with an address, may well be the clincher.”
Lexis-Nexus reports 98 PayPal references from Jan 2000 through today

6. The Hockey Stick
Recent Traffic from

7. PayPal’s Business Model
Revenue from “float”
Future revenue streams include advertising and fees from merchants
Think /
No intention of charging users for the service

8. Customer Acquisition Establishing an account is simple
Membership and Referral bonuses
Users can send/request money from anyone with an address
Viral Distribution: Existing users attract new users to service

9. Network Effects New PayPal membership Viral Distribution
Find a Paypal event
Contact a friend

10. Common Uses Organizing a weekend ski trip with your friends
Paying your ante for the yearly NCAA Basketball pool
Parents sending money to their children away at college
Making a purchase from Amazon’s zShops

11. The Challenge for PayPal
March 1, 2000: announces Billpoint (partnered with )
is launching eMoneyMail
How can PayPal establish a leadership position in person-to-person payment?

12. Competition
High Affiliation
B2C
C2C
Low Affiliation

13. PayPal’s Indirect Competition
Person-to-Merchant (CyberCash)
Non-convertible virtual cash (Beenz)
Online payment aggregators (eCharge)

14. Strategic Opportunities
Leverage Strategic Alliances
New Alliances
International Opportunities

15. Strategic Opportunities Cont.
Customer Segmentation
Non Credit Card Customers
Wireless Devices
enabled vending machines?
Anonymous Purchasing

16. Challenges Get Big Fast Disarm the competition
Membership
Infrastructure and Support
Disarm the competition
Overcome security anxiety

17. Recommendations Build-out infrastructure
Find the synergies and partner
Target new customer segments