PayPal is a giant fintech firm and people from around the world use PayPal to send money to friends and family and make payments for goods and services. But there are critical lessons for crypto entrepreneurs to learn from PayPal as they launch startups to solve problems present in society today.
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Lesson One: Confinity incubated PayPal
Most people may not know that PayPal started as an entity inside Confinity. Confinity was an American software firm that focused on cryptographic systems and Palm Pilot payments. The founding team, comprised of Peter Thiel, Max Levchin, and Luke Nosek, would work to launch PayPal in late 1999.
The initial firm already captured funding from Nokia, Deutsche Bank, and angel investors.
Not all startups are standalone and great ones may have initial incubation from the same team.
For crypto entrepreneurs: The team may be directionally right on the idea but may take some time to refine it even further. Look into your team objectively. Have they gotten you as far as they can go? What talent do you need to acquire to move ahead?
Lesson Two: PayPal grew with the web
PayPal used the new technology of the Internet and the World Wide Web to create bring about a solution that added value to people all around the world. PayPal made a lot of sense in those days. It wasn’t easy to send money to friends and family pre-PayPal; you had to use outdated mediums with high fees and make an extra effort to do so. PayPal gave you simplicity in that aspect of your life.
At the same time, what seems like an obvious idea now is not evident to everyone at the time.
Further, PayPal was able to ride the wave, and it grew with the rise of the other applications based on the world wide web. Remember that one of the best options was to integrate PayPal into another company to have the best results. That company was eBay. eBay was a fast-growing auction and peer to peer marketplace.
eBay enabled people to sell most items to each other, and PayPal made it easier to process payments and store funds. PayPal fit into a much larger picture and had an immediate use case that wasn’t stretch of the imagination.
This is a vital lesson for crypto entrepreneurs. Do something that has demand in the marketplace. People and business need solutions to their pain points. Address them.
Lesson Three: Minimal competition
PayPal would compete with Elon Musk’s X.com at the very start but would later merge with the company to reach the long-term goals. The merger was a great move. It allowed the combined company, called PayPal, to IPO shortly after that. Remember that there were a few other competitors in the sector, but PayPal and X.com were the fiercest.
They each had active skill-sets to bring to the team and create substantial value for all parties involved within the company.
Crypto entrepreneurs often make the mistake of diving into already saturated fields. For the best chance of success, you have to focus on solving pain points, yes, but if there is minimal competition in how you spin your project, it’s a building block for success.
Questions to Ask
The blockchain and cryptocurrency sector brings about many different opportunities, but what are the most pressing problems that one can solve in society with this technology? Remember that adoption for decentralized applications may not be fast, but other use cases within fields such as finance are present. Ask yourself what problems are out there and how can blockchain technology or crypto-economics help to minimize friction or current issues in a process in life.
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