PayPal Business Model PayPal makes money primarily by processing customer transactions on the Payments Platform and from other value-added services.
Google bought it for $182 million in 2010) Keith Rabois (held senior positions at LinkedIn, Slide).Peter Thiel (created hedge fund Clarium Capital and The Founders Firm).David Sacks (produced “Thank You for Smoking”).Premal Shah (non-profit organization Kiva).Andrew McCormack (partner at venture capital firm Valar Ventures).Jeremy Stoppelman (founded Yelp with Russel Simmons).The founding members of PayPal would go on to build many other valuable companies and found the next wave of the Internet, what we now call Web 2.0 or Web2. That is why PayPal’s history is so instrumental to the commercial Internet. Today we give for granted, but it didn’t exist at the time.Īnd entire business disciplines are based on growth marketing, network effects, and more. Where both startups understood the path to growth, leveraged on virality to get there, and eventually decided to merge to tackle the market.ĭuring this process, a new business playbook has been developed. They also figured that their tools had become extremely relevant on eBay. While both companies had some grandiose visions, the market also turned out in a direction none had foreseen.Įnabling email payments which were supposed to be a “side feature,” became the killer commercial application for both companies. They also had different philosophies regarding the underlying technological infrastructure they had developed (X.com leveraged the Microsoft stack, whereas Confinity leveraged Linux, an open-source software).Įventually, those two companies ended up merging to become one, PayPal.
Those two companies not only had a fundamentally different visions. X.com wanted to be a financial institution. Yet, while they were neighbors, they also recognized how different was each other’s vision.Ĭonfinity had started to build a valuable company by looking at a narrow application (enabling payments through the PalmPilot). Two startups (Confinity and X.com) were two startups operating in the internet payment industry. The story of PayPal has so many events that seem improbable. The story of PayPal is so interesting for a few reasons that we can summarize below. This is PayPal’s board of directors in 2022:īelow is the compensation mix as per PayPal’s financials: History of PayPal In 2022, PayPal generated over $27.5 billion in revenues and over $2.4 billion in net profits. Thus, the revenue streams are divided into transaction revenues based on the volume of activity or total payments volume-and value-added services, such as interest and fees earned on loans and interest receivable. PayPal makes money primarily by processing customer transactions on the Payments Platform and from other value-added services. In September 2022, PayPal had a market cap of over $100 billion, whereas eBay had a market cap of over $20 billion. Interestingly, over time, PayPal was born as a side feature within eBay, and after it, was purchased by eBay, PayPal became more valuable than eBay. For instance, in 2021, on an $87 billion worth of gross merchandise value sold on eBay, the company generated $9.77 billion in transaction revenues at an 11.19% take rate (fee). In short, eBay primarily makes money by charging fees on successfully closed transactions. Immediately following the distribution, PayPal will be an independent, publicly traded company and will be listed on the NASDAQ Stock Market under the ticker “PYPL.” eBay will continue to trade on the NASDAQ Stock Market under the ticker “EBAY.” eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. PayPal will not issue fractional shares of its common stock in the distribution. Subject to the satisfaction of the conditions to the distribution, the distribution of PayPal common stock is expected to occur on July 17, 2015. common stock held as of the close of business on July 8, 2015, the record date for the distribution. stockholders will receive one share of PayPal common stock for each share of eBay Inc. The spin-off from eBay The official spin-off of PayPal from eBay, as announced on eBay’s website (Source: eBay News).
PayPal’s top individual shareholders in 2022 comprise people like Daniel Schulman, John Rainey, Mark Britto, Lousie Pentald, and Jonathan Auerbach. Top institutional investors comprise mutual funds, like The Vanguard Group, owning 8.01% of PayPal. Today PayPal has become an empire in the fintech space. Digital Business Models Podcast by FourWeekMBA.Business Strategy Book Bundle By FourWeekMBA.An Entire MBA In Four Weeks By FourWeekMBA.100+ Business Models Book By FourWeekMBA.
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