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EcommerceBytes-NewsFlash, Number 2848 - July 16, 2012 - ISSN 1539-5065    1 of 5

Cofounder Elon Musk Says PayPal Could Be Screwed

By Ina Steiner
July 16, 2012

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"If PayPal doesn't do something, it will be screwed," the company's cofounder Elon Musk told PandoDaily's Sarah Lacy, captured in this video clip on YouTube. It's a strong statement, though one should keep in mind Musk was ousted from PayPal in 2000 and is an investor in PayPal competitor Stripe.

Lacy uses the video clip as a jumping off point to criticize PayPal and to promote a startup called Stripe in this post on PandoDaily. Lacy writes that PayPal has not innovated, but she uses eBay to make her point. Here are some of her barbs:

"But Amazon has long since outdone eBay and every year eBay seems to get more stale and less relevant to younger digital natives."

"Has anyone under 30 ever bid on something on eBay?"

"Etsy is the place that you go to browse and look for cool stuff. It's taken over that serendipitous online thrift store vibe that made eBay so addictive in the early days."

In fact, PayPal had a different corporate culture than eBay under Scott Thompson, who left in January. While it's not a startup, evidence that PayPal is not stagnating can be found on the point-of-sale terminals at The Home Depot. It also opened up its platform to third-party developers so they - including startups - could use PayPal in the products they were innovating.

Lacy, who writes about Silicon Valley startups for her site PandoDaily, reveals that she recommended a startup nsfwcorp.com ditch PayPal and Braintree and use a new payments company called Stripe. "PayPal was an utter disaster and a horrible experience," she said of nsfwcorp.com's experience with PayPal, and said, "Sure enough, NSFW Corp launched its subscription offering using Stripe today, less than a week after our conversation."

Lacy says PayPal cofounder Peter Thiel is also an investor in Stripe. (Thiel is also an investor in Lacy's startup PandoDaily where she published the post.)

Aside from Lacy's clear disdain for eBay, her post is interesting in that it reveals Thiel is not only an investor but has also been "heavily involved" in Stripe and has "dusted off a lot of the original plans for PayPal - particularly his ambition to have a truly global currency for a global Web."

So what makes Stripe so compelling? Lacy doesn't go into details - Christopher Mims actually does more to explain in his take-off post on Technology Review, and writes that Stripe is "set to do to every transaction on the planet what one-click payments did to Apple's App store and Amazon.com."

Stripe is targeted at developers to help them accept credit card payments on their websites and, according to its site, charges them 2.9% plus 30 cents per successful charge, with no setup fees, no monthly fees, no minimum charges, no validation fees, and no card storage fees. There's also no charge for failed payments. Among the companies using Stripe is ecommerce platform Shopify.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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