The so-called PayPal Mafia has gotten a lot of press recently. My former colleagues have gone on to start, run, or fund an incredible roster of companies, including Yelp, Founders Fund, YouTube, LinkedIn, SpaceX, Facebook, Tesla, Palantir, Geni, Kiva, Slide, and Yammer. Clearly, something was in the water at my old company.
While I wrote about my experiences in my book The PayPal Wars, a book can only capture so much information, and that narrative only recorded my perspective. So, over the months to come, I plan to interview some of the amazing entrepreneurs whom I was fortunate enough to work alongside at PayPal. Many of them are well known, and others have been working behind the scenes, but they all have valuable insights to share. Since I’m on the strategy/product marketing end of the spectrum (as opposed to branding), I’m christening the series with the predictable yet appropriate name: “PayPal Mafia Confidential.”
My first interview is with Giacomo DiGrigoli, who served as PayPal’s first product manager for international payments, and most recently he was a product manager at Yammer. Giacomo graciously shares his lessons from working at PayPal, trends in Web 2.0 startups, and the differences in starting a company in L.A. versus Silicon Valley.
Eric: I had the pleasure of working with you at PayPal, where you were the product manager in charge of building PayPal’s international service. People may not appreciate how complex PayPal is behind the scenes, but building the international product was a massively complicated undertaking. Looking back, what lessons can be drawn from this product launch?
Giacomo: First off, the feeling is mutual — it was a pleasure working with you as well.
Building and launching PayPal’s international service, including the multiple currency platform, was indeed a complex project with many hidden moving parts: multiple countries, languages, regulations, currencies, etc. Not only did we tackle the intricacies of designing, building and marketing a new consumer-facing product, but every one of our internal and technical back-end systems also needed to be upgraded from the ground up to account for new functional requirements, including operations, analytics, chargebacks, and fraud detection. On top of that, PayPal was already a significantly popular product with millions of active users, quickly becoming the ecommerce lifeblood for much of the web. There was very little room for error.
The most valuable lesson I took from that experience was one that many startup entrepreneurs are familiar with: build small and simple, and iterate fast. We rolled out the project in small stages, building on user feedback to offer direction for next steps, and to mitigate the operational and technical risks of relaunching PayPal’s core platform to accommodate our international users. We cautiously measured each step to insure for PayPal’s longterm international success and to insure as little disruption as possible.
I learned that there’s almost no such thing as too much communication between team members, especially when handling a change as large as what we had on our hands. For months, we prepared our teams for a massive change to our systems, planned for the worst and hoped for the best. We communicated each change clearly to our entire organization, and worked closely with teammates in marketing, operations, legal, customer service, analytics, and fraud operations to constantly insure that any changes we made to the product wouldn’t create any disruption to our millions of users. We prepared for a massive onslaught of customer service issues that would backlog us for weeks. For the tremendous revenue uptick and success that the product turned out for PayPal, I’m proud to say that the multiple currency launch was one of our best received, least disruptive launches.
Lastly, I learned the importance of trusting your teammates and delegating responsibilities across an organization. At PayPal I had the pleasure of working with some of the most talented and dedicated designers, coders, marketers and business minds in the valley (and in our operations center in Omaha, NE). Without the solid dedication and extraordinary talents of those team members who welcomed the massive challenge of this project with open arms; whose leadership, sense of ownership and willingness to share in a grander vision for PayPal in their respective portions of this product launch made an immeasurable difference, this project simply would not have been possible.
Much has been said about the competitive, fraud, and legal obstacles PayPal had to overcome before it finally became profitable, IPO, and eventually be acquired by eBay. To what do you attribute PayPal’s success?
Well, much has been said and written about the extraordinary talents of PayPal’s management team (Peter Thiel, David Sacks, Max Levchin, Reid Hoffman, Roelof Botha, etc.), and the significant contributions made by PayPal’s product, design and development teams, and I would agree wholeheartedly that our spectacular leadership played a significant role in PayPal’s success, so I won’t spend much time discussing that. Instead, I’d like to focus on the team dynamics that I believe played an equally important part of PayPal’s success.
One of the things that made PayPal such a unique and uniquely successful product was our extraordinary team culture. Our team not only enjoyed the work we were doing, but genuinely enjoyed one another’s company. We trusted one another. We challenged one another as much as we challenged ourselves. We had culturally and professionally diverse points of view, sometimes completely at odds with one another, but we were always respectful of one another’s viewpoints. We shared a collegial spirit of learning and teaching one another new things, and learned from our differences. We made decisions, weathered mistakes, took on new exciting challenges and ultimately enjoyed our successes (and setbacks) together. Our management team trusted us to make decisions, and we in turn took that trust to heart with a deep respect for the opportunities we’d been handed. We were a team with clearly defined goals and responsibilities, and we took our work seriously. We were connected closely to our customers (and in some cases, we were our own customers). We cared.
Very often you hear of startup teams that are unmotivated, lack direction or inspiration, or just don’t click with one another on personal or professional levels. To me, that’s the kiss of death for a startup. If you walk into a room and it feels like a pall is sitting over that group of teammates, that no one is enjoying their work, or that people just aren’t enjoying one another, then you might as well close up shop. The odds are already stacked against a startup the moment it’s created — if your team can’t find the inspiration and joy in working with one another, it makes the rough times even harder, and the good times less pleasurable and motivating.
I think a large part of PayPal’s success, especially in the bumpiest parts of the road, came down to the fact that everyone who was there genuinely believed in one another, believed in our product, and enjoyed the challenges each day brought us as a team. I’d encourage startups to always remember that: you should be there because you WANT to be there, and because at the end of the day, you really love and are passionate about what you’re doing. Otherwise, it’s just not worth it.
Over the past few years, you’ve played a key role in launching a pair of Web 2.0 startups, Geni and Yammer. In what ways have starting Web 2.0 companies been different from starting their Web 1.0 predecessors?
IMO, it’s a heck of a lot easier to start a new tech company today than it was ten years ago (or maybe I’m just ten years older). First off, there’s been quite a bit of development in the enterprise space specifically geared towards helping new startups and small companies communicate, build, launch and learn about what competitors are doing than there were a while back. Whenever I have a technical issue that I think might slow down my progress, I can easily find a product that solves even the very specific niche issue I’m having and move on. I can consult tech blogs like TechCrunch, TechMeme, etc — resources that really didn’t exist in earnest a while back — to discover what’s going on, find new products, etc.
Enterprise communication has also taken off, as evidenced by products like Yammer, SocialText, Chatter, etc. It’s much easier to effectively and quickly communicate within an organization than it was when you had to email your questions back and forth. Things are much faster now.
I also think that with ease of development comes greater expectation from consumers. I’ve noticed far less tolerance for bad design from the every day consumers using language that was previously only used by designers and developers. When my 13-year-old niece complained that “Facebook’s new newsfeed UI sucks; I hate it!” I knew that consumer expectation was growing just as fast as our ability to launch new and interesting products. So, with ease of development and great new technologies like AJAX, the ubiquitous use of Flash, etc, comes greater responsibility for great products.
Yammer has really taken off, and it’s done so as one of the few social media companies with an enterprise focus. In fact, the very term “social media” seems to connote communication services for friends, as opposed to tools that can actually enhance workplace productivity. Do you think that enterprise-level development is a good business opportunity for Web 2.0 companies, or is Yammer the exception to the rule?
Absolutely. I think new enterprise products (social or otherwise) have only just begun to become commonly used in many organizations, and there’s still quite a ways to go to make these new tools as effective and ubiquitous as other tools (like email). In many ways, I think these tools are slowly supplanting the majority of the need for email, intranets, etc. But I still think there are tremendous inefficiencies within the enterprise space that still need to be solved, beyond improving communication. Areas ranging from hiring and retaining talent to payroll to investing in new technologies to corporate development still need to be mined for better solutions. I’m still shocked at how long some seemingly simple enterprise tasks take – there’s a mountain of opportunity here. Any time you’re annoyed or shocked by something while working, that’s almost always an enterprise opportunity around that.
Switching gears back to PayPal, without a doubt it’s the undisputed leading service for selling physical goods online. But as the web becomes more social and virtual goods grow in importance, do you see a role for PayPal as a Web 2.0 payments provider? Or will Facebook (or some other competitor) eat their lunch?
I recently attended the PayPal X Developer conference, and it looks like PayPal is making some significant inroads with the development community.
I think the game is still on here. Facebook has certainly made some strides with its platform, and including a full-fledged payment option would certainly be a threat to PayPal’s continued growth. But until/unless the basic platform of the web fully switches from the web to Facebook, or an OS, or a browser, I think there’s still an opportunity here.
The risk for everyone involved, of course, is the same one that PayPal faced playing on a platform owned by a 3rd party. eBay certainly didn’t make it easy to be a successful 3rd party on its platform, and certainly we’ve seen evidence of this on other platforms as well (e.g FB’s constantly changing platform, rules, distribution & emphasis on apps, etc). The argument on the flipside, of course, is the same one that lead to PayPal’s success: sometimes it takes a 3rd party to focus on complex tools (like payments) to really make them work reliably well.
I think it’s really still anyone’s game in social/Web 2.0 payments, especially in the platform/virtual goods and mobile payments space. I’d also keep an eye on innovative payments products like Jack Dorsey’s Square – there’s still a chance for something completely out of left field to surprise everyone.
I may get some flack for this answer (especially from the likes of LA cheerleaders like Jason Calacanis), but I think startups in the valley are significantly easier to put together initially than their LA counterparts. There’s no question that the opportunities available to entrepreneurs in the valley are much greater than in LA: tech meetups, conferences, VCs, finding coding talent, etc. I tell people that starting a tech company in LA is like making a movie in the valley: sure you could, but why would you want to? Everybody else who’s seriously working on tech is in the valley, and everybody seriously focused on entertainment is in LA. You’re stacking the cards against yourself. That being said, LA has certainly produced some great products as well. It’s just a little bit harder than in the valley.
Likewise, I also think that over the last few years, we’ve seen some great innovation internationally as well. Thought leaders in Europe are making new strides — people like Loic LeMeur at Seesmic (and the Le Web conferences) are creating some innovative and interesting new products/designs. So it’s not just about the valley anymore (but it’s still my favorite place to work.).
What’s next for you?
I’m working on a small digital media publishing product with my good friend Holcombe Waller. It’s really just a small garage idea at this point, but we’re enjoying our work, and thrilled about developing something fun and innovative that we enjoy using ourselves. If anyone’s interested in a demo, I’ll be more than happy to share. Stay tuned!