Reid Hoffman On PayPal's Pivoted Path To Success

Reid Hoffman, cofounder of LinkedIn, explains the five pivots of PayPal.

PayPal pivoted not once, not twice, but at least five times before finding the innovative business model that led to its success.

Today, PayPal is a global online money changer. But its original founders, Max Levchin and Peter Thiel, had more modest aspirations. The two met at a lecture Thiel gave at Stanford in the summer of 1998 on the dangers of concentrated governmental power. The following week, Levchin pitched him ideas for startups; the one Thiel liked best involved cryptography for handheld devices, and "Fieldlink" was born.

After more than a year of getting nowhere fast, they renamed the company Confinity (that's a photo of the original team up top) and altered their strategy to beam IOUs from Palm Pilot to Palm Pilot. This didn't work either so they once again changed course. This time they created a payment system—they called it PayPal—specifically for the web so a person could email money to someone else. Then eBay-ers discovered PayPal and Confinity once again pivoted to take advantage of the explosion in e-commerce. In March 2000 Confinity merged with X.com, an online bank launched by Elon Musk.

Dizzy? Let Reid Hoffman, cofounder of LinkedIn and former executive vice president of PayPal, sort it out for you in the video above.

[Photo by Max Levchin]

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2 Comments

  • Ezana Berhane

    I wished that more universities (especially those with tech classes) would give their students opportunities to conduct experiments like this in a university environment. We always talk about failing fast and learning fast. Why should people have to fail and adjust in the real world only? I think experiences like this in a university context would better equip students for the real world.