Maria Lourdes C. Capilitan                                                         

SysAnal (O0A)

May 27, 2008

Case Study

“Paypal”

            Paypal was founded last December 1998. It is a security company made-up to be financial services company. Lastly, it is an example of start-up.

            Max Levchin a co founder of Paypal. At first, the company focuses in the idea of developing a software hand held device and security. Max wrote an emulator for a piece of Palm Pilot. From that concept they think that it is a good business. They started to built it yet they have difficulties which is difficulties in implementing a cryptographic algorithm on Palm Pilot. Max Levchin decided to have lots of features. He want to add a wallet application. A palm pilot also has its limitations, the tendency that might crash this start-up. To avoid this they have a palm pilot on sending and receiving. After getting some funds they had collected 300 additional users a day but in their website 1.2-1.5 Million users. Lately they discover Fraud, it is like a virus. After encountering it they create IGOR tool, a solution to Fraud. They say that it is a creation, a combination of humans and software. Igor was not showed to anyone, it is a top secret. If ever someone is interested they can see it by inviting them into a room, they can use it and leave. Users cannot print it. There was no other copies available at all.  People criticize Paypal that will be out of business due to Fraud like other Financial Institution.

            Paypal built is sort of a commodity. To be able to have a successful start-up, Max Levchin advices, first, you should have a good co-founder, second, support your partner, third, you should have a good team, lastly, you should have experiences. The transactional growth of Paypal is exponential they have 20,000 new active users everyday. The best thing about Max experienced is there was nonstop learning.  They also said that running a start-up have different segments that taught different things.