Did not know, so invent it…
The default of how you do these things is very powerful, if you’ve been in the industry for a long time. So we were sort of beneficiaries of our naïveté. We thought, “We don’t know how to do this; let’s just invent it.”
Lower barrier to entry
“I want to pay you with PayPal,” and sellers would be like, “I don’t accept PayPal.” And buyers would say, “That’s OK. I’ll just send you $10, and you can sign up.” So the seller would get infected, and the seller would say, “Oh, this is really simple, so I only accept PayPal.”
It was all surprising. Nonstop learning of things that I didn’t really know before.
And that’s the reason why, when there used to be 25 search engines, only 2 or 3 have survived. The others have died because they made their front pages look like Las Vegas casinos as opposed to preserving that simple, clean interface that Google has. I think the strategy that Google took was far better. They earned the trust of the end consumer.
Ethics and building
First of all, try to have the highest of ethics and to be open and truthful about things, not hiding. If you have to hide something for company reasons, at least explain what you’re doing. Don’t mislead people.
Always seek excellence: make your product better than the average person would.
What pulls people
I think you needed something stronger than greed pulling people together at that moment when greed alone would have caused huge fractures in redistributing.
Recruiting is a classic example. I don’t even hear the first “no” that somebody says. When they say, “No, I’m not interested,” I think, “Now it’s a real challenge. Now’s when the tough part begins.” It’s hard to identify talent, but great people don’t look for jobs, great people are sold on jobs. And if they’re sold they’re going to say no at first. You have to win them over.
People rising to the occassion
I’m surprised really pleasantly by the ability of people when challenged to rise to the occasion. So I guess the last lesson is that people make all the difference in the world. Everybody says that people matter most, but boy, I’ve never worked with a finer group of people. They just were inspired.
that they’d rather fund a great team than a great idea. The reason is that if they have a bad idea, great teams can figure out a better one. Mediocre people even with a great idea can screw it up in its execution. Or if they have a bad idea, then they aren’t going to be in a position to think about how to change it. They’re just going to pursue it blindly.
Friends and founders
The other advantage of the two of us being friends, and not just business associates, was that a lot of the structure of our deals together was based on friendship and not on other things. The friendship was stronger than a lot of the business stuff.
“How do I make it easy to learn to use? How do I make it minimum keystrokes for everything? How do I make it natural, so, if you’re doing this repeatedly, it’s the natural thing to do?” Day one I wasn’t thinking computer-like. The whole idea was not to think computer-like.
The art of argument
By arguing with others about it, that’s how you learn. And, if somebody can’t take the arguing with it, then maybe they don’t really believe in what they’re talking about and they don’t understand it well enough. We’d argue and then we’d go out to lunch together, because it wasn’t based on animosity. We had enough problems with people outside.
The role of patent…
I didn’t really want to patent it because, for one, I don’t like software patents, and, two, if you patent it, you make it public.
The hard work
Livingston: What did you do that your competitors couldn’t? Levchin: The really complicated part is figuring out the risk. The financial industry people understood the risk, but they weren’t willing to do the sort of stuff we did, where they would basically say, “Bad guys over here. Let’s get all the bad guys out.”
My thinking was always, in making something possible, you’ve got to get it down to a reasonable cost, but I needed 4K bytes of RAM minimum. The first dynamic RAMs got introduced that year, 1975—the first 4K dynamic RAMs.
didn’t think that this was going to be a real big market. They thought it was going to be a little hobby thing, like home robots or ham radios, that a few techie people would get into and really it wasn’t going to go to the masses.
Doing something hard really well
With technology, there’s no such thing as a sustainable advantage, but you can get a good running start if you concentrate on doing something hard really well.
Core function of a company…
So the company’s core expertise, by definition, has to be in this ability to judge risk—to be able to say, “Is this the kind of transaction I really want to take on or is this something I should steer away from because you people look like thieves?” I think that’s the security part.
Advantages of remaining public
The other part, I think, is that a lot of them are public companies. We didn’t go public until we had the fraud thing figured out. Somebody like Citibank or anyone with a substantial public visibility announcing that they are suddenly bleeding out $10 million a month in fraud would send serious shocks through the investor base.
“We have x systems now; let’s 2x the systems and get twice the amount of hardware and see if it can scale.” But, it doesn’t work that way because, by the time you are done testing 2x, the real system is 3x because the growth is so fast. We were getting 20,000 new active users every day.
Disadvantages of big companies
young to realize that existing companies’ biggest problem is legacy. Period. They can’t focus on new businesses because they’ve got to manage their old ones. And
Livingston: What was most surprising to you? Kraus: That opportunity creates opportunity.
It’s always interesting to read/browse through interview series. Next in the list to read is Coders at Work.