Reading between the lines. What the book "PayPal Wars" reveals.
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First I would like to thank the author, Eric Jackson, for sending me the book to me at no charge.

This book isn't an expose' of PayPal. It's an "Us against the world" book. (No surprise there.) However, there are plenty of good tidbits in the book if you know how to find them. So that's what I'm going to do here; Help you find the tidbits.

First the "World Domination Index." We are shown right from start, this company wasn't about anything other than controlling the market. In this case, the money transfers market. According to the author, PayPal had a counter that kept track of how many accounts had been opened at PayPal. And yes, it really was called the "World Domination Index". (Page 19, and many more times throughout the book.)

Equally revealing was the quote from the author of the book, "At Anderson we used tools with [different] names, but nothing so megalomaniacal as a 'World Domination Index.' This kind of swagger could at least make Confinity an interesting place to work." (Page 19) (Confinity was the name of the company that Peter Thiel originated to create PayPal.)

Here is another remarkable quote from the book. The author is describing the interior of the building they are working from. He talks about pizza boxes, water fights, games of 'Risk', and of course the shorts and T-shirts everyone wore to work. Then he says, "Could anything but chaos come out of such a setting?" (Page 24) Chaos indeed!

Here's a another insightful remark, "After all, the company's average employee was about twenty-five years old. At thirty-two Peter [Thiel] was the second oldest person, and the rest of the business side of the company was around three to six years younger." (Page 24) Sure exuberance of youth is a great motivation, but it's not known to create stable, reliable, ethical businesses.

For example, let's see how they handle a common problem: customer service complaints. "From my desk in the old ping pong room, I noticed a steady stream of irate account holders showing up in the nearby reception area, typically because they had trouble using our online form to request a check for their account balance. ... the next day we removed our address from the Website." (Page 64) Notice the problem and solution. Instead of correcting the online form, or making it easier to use, they choose to just remove their address from the site. This seemingly minor point demonstrates PayPal's solution to a problem: Don't correct the problem at it's source, just make the problem less painful to them. This is exactly the same mind set described by FormerEmployee#1, when dealing with fraud losses. Don't stop the fraud, don't go after the criminals, just make it less painful for PayPal.

Here's another point. Vince Sollitto, (who the author refers to as "fast-talking," (Page 100) and "smooth-talking" (Page 103)) made the quote I have on the front of the website: "As for the customer service, Sollitto said they intentionally make the phone number very difficult to find in order to save costs." This is confirmed in the book on page 100, "... and the company's customer service phone number was placed on an obscure site page." All to reduce the costs of customer service. Exactly as we said.

Also, from our archives we had "Whistleblower," , (A PayPal employee who made several posts on our old guest book) make the following statement:

"Two main reasons for PayPal's poor service record to date are (1) Organizational turmoil at its Omaha service center and (2) Incompetent managers and employees recruited by the dozen in Omaha, Nebraska. The Omaha service center will have new top management for the SECOND time in 2001. Sara Imbach (VP Fraud Investigations and Appeals) and Mark Sullivan (VP Business Development)are going to manage the customer service folks in Omaha. Omaha's low unemployment rate combined with PayPal's meager salaries have made it difficult for PayPal's to find experienced or talented people for management or rank and file jobs in customer service. Most PayPal customer service representatives (CSR) in Omaha were flipping burgers just a few months ago. Also, several PayPal CSR's have had severe financial problems in the past. REMEMBER - THESE GUYS HAVE ACCESS TO YOUR CREDIT CARD AND BANK ACCOUNT INFORMATION. Many PayPal managers have had no significant management experience or were rejected by other institutions."

This statement is confirmed on Page 107 when Jackson states: "Given our company's desperation to get the new center up and running, almost every applicant was hired on the spot."

Also covered was one of the first great backlashes against PayPal. PayPal was trying to force everyone to stop using credit cards to fund purchases. So to do that, they decided to put a limit on how much one could spend using their credit card to fund the account. They decided on a $1000 limit for life. In other words, once you sent $1000 funded by your credit card, you now had to upgrade your account. As he says in the book, "All hell promptly broke loose." (Page 127)

Following this "hell" came one of PayPal's infamous lies. PayPal told everyone it was a "typo" and that it was $2000 per 6 months. But we didn't believe them. We all knew the truth. It was their reneging on the "always free" promise. Jackson admits it on Page 127. Remember this:

I guess "always" doesn't mean what it used to.

In regards to the fraud problem, they pound their chests about nabbing all sorts of criminals, but "Unfortunately these notable gains didn't come without cost. PayPal's success in fighting back fraud also produced false positives that inconvenienced honest users. But as bad as the false positives experiences for the innocent users and resulting negative publicity for the company might have been, it was an acceptable cost." (Page 201-202)

Then the author complains, "The marked improvement in our relationship with our customers [?] signaled that even if the myopic media refused to provide PayPal with sympathetic coverage, users would stand by us in our battle" (Page 211). The reason the press was critical was that it has the ears and eyes of the "innocent users" feeding them their stories. So I don't know what he expects. Several times he complains about the "myopic media" without every accepting the fact that PayPal had brought this on themselves.

That covers most of the good parts of the book. Just more confirmations of PayPal's problems and who ultimately is responsible: PayPal.

So what did we learn from this book? Well just like at Enron, the "moral compass" was thrown out early on. That youthful exuberance without adult supervision is a dangerous thing. That brilliant ideas do not translate into a brilliant company in the real world. That there is no place for ego in a customer service oriented company.

Interesting Post Script: After Mr. Jackson sent me the book, we conversed a few times by email. It was pleasant. I think his purpose of sending me the book was to get us to back off being critical of PayPal. The idea being, "You have no idea how hard this is..... give them a break." Sorry, but the book did nothing of the kind, and he quit replying to my emails. In fact, the book only confirmed what I already knew about PayPal; That their philosophy is to let the customer foot the bill for their incompetence. (A fact PayPal admitted to in it's initial SEC IPO documents.) They said they had no idea what they were doing from the start and this book confirms it.

I've you'd like to discuss this review or the book, I have started a thread here.


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