Shocking news
It is very difficult to get up on this day of July 8. Beatrice and I just returned home after celebrating the Independence Day weekend in Los Angeles. I am terrified of joining the slow traffic jam on Route 101 later. After I came out of the shower, my thoughts floated back to the holiday fireworks and barbecue parties, as much as possible to put behind the thoughts of potential crises waiting for me in the office. Suddenly, a ringing of the phone dragged me back to reality, in which the world would be turned upside down.
“Why are you doing this?” Paul Martin asked me.
“Paul, what did I do?” I replied, and I was surprised when I heard this question, trying to figure out the whole story.
“Sell the company to eBay! I just saw the press release of this news, and this news is everywhere here.” He shouted, his voice mixed with anger and frustration.
I hesitated, unable to find a suitable answer. According to David Sachs’ instructions last week, we waited for him to speak before deploying the secret weapon. I have guessed that the company’s senior management is discussing something. But the speed and results of this negotiation left me stunned. “I don’t know, I mean, I know we are talking to them, but I don’t know what will happen.”
“In other words, you don’t even know about this?” Paul Martin asked again, but this time, he inadvertently offered me a compliment, and at the same time lowered his tone, “This is what the press release says– “EBay acquired PayPal for US$1.5 billion,” and said that eBay will close Billpoint and operate PayPal as an independent brand.”
I was stunned and walked to the kitchen table in a daze, and fell into a chair. How can this be? I asked myself. How is it possible to reach an acquisition agreement so quickly? My only knowledge of this meeting comes from last weekend. Before that, we were all speculating that Billpoint would be sold to banks willing to buy it within a few days.
As I digested the news, I instinctively tried to confirm what Paul Martin said to me. I took out the company laptop, put it on the dining table again, and told Paul that I would call him back later that afternoon. The period of waiting to be turned on and connected to the Internet is as long as a century. After connecting to the Internet, I immediately went straight to the headlines of PayPal. Sure enough, there are already a bunch of news headlines that say the same content as Paul Martin said on the phone.
The first item in the news list is a press release from a commercial media, confirming the details described by Paul Martin:
Global online shopping market leader eBay announced today that it has agreed to acquire the global payment platform PayPal, a move that will help millions of netizens make online purchases and sales. The acquisition was approved by the shareholders, government and regulatory authorities of both parties, and is expected to be completed by the end of 2002…
PayPal will continue to operate as an independent brand and is the industry’s leading online payment method. eBay’s current payment service, eBay’s Billpoint Payment, will be withdrawn after the acquisition.
PayPal will continue to provide a variety of consumer services, including its popular WebAccept product, which enables independent online merchants to accept payments directly on their website. In view of the uncertain regulatory environment in the online gaming industry, eBay plans to sell PayPal’s gaming business after the acquisition is completed. 1
This is real! Obviously, during the Independence Day weekend that just passed, they had some record-setting negotiations. The management has signed an all-share purchase agreement, and the share exchange ratios of the two companies are based on the figures agreed upon in April. Billpoint will soon become history, and eBay has already begun to develop a strategic plan, once the transaction is completed, it will begin to run PayPal.
I turned on the TV and saw the same news. The financial channel CNBC broadcasted it as the headline news. I shook my head, still unbelievable. Although the possibility of eBay’s acquisition of PayPal has been circulated for some time about 3 months ago, a series of events that have occurred since then seem to make it impossible for the two parties to achieve any reconciliation.
I am still in a state of doubt.
Confirm the acquisition
As I drove through the impenetrable road to the office, my heart beat violently. I anxiously changed the radio channel, trying to catch some new news about the transaction. Several radio stations retelled the text messages I had read on the Internet, without providing any new details. More information can only be known when I get to the office.
Those employees who have not yet heard of the news, when they came to the company’s underground parking lot in the morning, should have been able to see that something major had happened. At 8:50, the parking lot was almost full. For a Silicon Valley company that employs dozens of engineers, this is a clear signal that something extraordinary is happening.
I took the elevator upstairs together with another colleague who was shocked by this. After exchanging our shared surprise on this matter, he said with a sigh of relief that he couldn’t believe it was finally happened. It was at this moment that all the dust settled: PayPal’s competitive battle is over. The endless state of conflict we face, the state of guessing what eBay will do next to us is over, but at the same time, our independence is also over.
A few minutes later, I went to the large conference room on the first floor and joined the PayPal staff. The nickname of this conference room is “Arctic Circle” (to commemorate our previous office with a broken thermostat), and it is used for all-hands meetings. Peter Thiel was standing by the gate and was talking with some administrative staff. At the same time, many employees came in noisily. The atmosphere in the entire conference room is just like in a junior high school math class.
Peter Thiel walked slowly to the podium, wearing his unique PayPal T-shirt and jeans. “Okay, let’s get started.” He twisted the microphone, placed it in front of him, and started talking, “I guess you have all heard the news now.”
Someone in the first row was snickering and pointing to the podium. Peter Thiel leaned forward and glanced forward, and saw a temporary placard that read “Meg Whitman”, spelled out in eBay-style letters in multiple colors. “Everyone sees what I usually have to endure? This is the real reason I sold the company.” Peter Thiel joked with a big smile on his face, and everyone laughed.
“As you know, we announced today an agreement to sell the company to eBay. This transaction will be carried out entirely through a stock conversion-0.39 eBay shares are exchanged for 1 PayPal stock, which may take about 6 months to complete. A formal acquisition. Until then, everything will remain the same, and the two companies will continue to operate independently. After the sale is completed, PayPal will be an independent unit of eBay and retain the existing management team intact. So, don’t worry about it. , This does not mean that someone will lose their job. There is no overlapping of functions between the two companies. Our major is payment, while eBay’s major is auction, so no positions will be axed, except for Billpoint Once the transaction is completed, Billpoint will be closed and PayPal will be integrated into eBay’s website.” Laughter and applause broke out in the conference room.
“This makes a lot of sense, because we have a lot of common customers.” Peter Thiel continued. He reminded everyone that before this, our relationship with eBay has been a war and a war. This has caused us to waste a lot of energy and constantly worry about what eBay will do next. He said that this kind of worry prevents us from focusing. To build new tools and services for our users.
“They gave us a pretty good offer, which gave us an 18% premium to the current stock price.” He said this in response to comments on the purchase price. “People always question whether this type of transaction makes sense. , But given that we get a good valuation and remove a huge risk for the company, I think it’s worth it.”
After the meeting, the employees filed out of the meeting room and walked back to their desks. I convened a meeting with my marketing colleagues in the work area on the second floor.
“I think we won, didn’t we?” one of them said, “Although we were acquired, it doesn’t feel like it.” I nodded in agreement. After fighting on the forefront of corporate warfare for so long, it turns out that it is difficult for people to regard their former enemies as new allies because they are not shooting anymore. Moreover, in the situation we are facing, the former opponents not only become partners, but also become the new owners of PayPal.
Meg Whitman’s speech
At noon, Meg Whitman walked slowly to the podium where Peter Thiel had stood three hours ago. Contrary to Peter Thiel’s casual outfit, she was dressed in Silicon Valley standard formal wear, standing next to Peter Thiel, Max Levchin, David Sachs, and Jeff Jordan, the head of eBay’s US website.
“Welcome everyone, I’m Meg Whitman, the CEO of eBay.” She said that is totally unnecessary, because most PayPal employees already know who she is, maybe she realized that she needed to pass some settlement. Information, she wore a PayPal hat and threw a few eBay T-shirts into the crowd. “It’s great to be here,” she continued. “By the way, how many people here have ever bought and sold things on eBay?” Most of the employees in the room raised their hands. “That’s great! Now, how many people have received more than 100 feedback?” Joanne Rockauer and several other colleagues raised their hands. Meg Whitman smiled: “You know, we had a meeting in the eBay office this morning. I asked our employees how many people have used PayPal. 98% of them raised their hands. “
After the warm-up, Meg Whitman enthusiastically showed us a slide that summarized the situation on eBay. We have already seen most of the information in the “eBayLive” event a few weeks ago. On eBay, a computer is sold every two minutes, and a collection-worthy car is successfully traded every half an hour. She also pointed out a little gloatingly that eBay’s sales in the book, movie, and TV categories had increased by more than 50% over the same period last year. In contrast, in Seattle, “the increase was only 9%”—everyone. Know that she is referring to Amazon.
Meg Whitman ended the slide show, and then talked to a PayPal employee with compliments. She said: “You should be proud of the company you have participated in, although we sometimes set up some obstacles for you.” I couldn’t help but secretly laughed, thinking that the so-called obstacles she called have many for our young company. It is a crisis of life and death.
Having said that, Meg Whitman stopped and began to thank David Sachs and Jeff Jordan. She said that these two people were the promoters behind the agreement between the two companies and were the first to recover after “eBayLive”. She said that this event helped both parties fully understand the interdependence of the two companies. Our mutual customers are those who hope this transaction can be realized. She said that she saw thousands of people wearing PayPal T-shirts and asked us to reconcile. She thought it was their wishes that made things come to this point.
Meg Whitman also smiled and pointed out that despite the fact that the CEOs of the two companies were on vacation, the transaction was completed. During this time she went to southern California, and Peter went to Hawaii for vacation. I later discovered that her description of this incredible acquisition was accurate. Just a week ago, David Sachs called Jeff Jordan in private when rumors of a Billpoint sale were rampant. The two parties believe that when Billpoint is sold, an agreement will be signed to ensure that Billpoint has priority integration rights on eBay. This will indicate that eBay will never look back, and it will not be able to reach any compromise with PayPal in the future. If the sale of Billpoint is to be blocked, this is the last chance.
When David Sachs told Peter Thiel of this information, Peter Thiel instructed him, along with CFO Lulov Botta and our investment bankers, to take the lead in drafting an agreement. Since the two companies have completed an in-depth and rigorous evaluation only two months ago, the agreement is mainly around the issue of mutually acceptable conditions between the two parties. Peter Thiel feared that he was too outspoken in the previous miscarriage acquisition discussions that might bring distrust to eBay executives, so he jumped on the plane angrily and went on vacation in Hawaii, and in the next few days Doesn’t answer phone calls from investment bankers at all. His gambling freely worked.
Even if there is any lingering tension between Peter Thiel and Meg Whitman, it is not felt at all in Meg Whitman’s understatement. Later, she called on everyone to ask their own questions, and the first question you can guess: “What will happen to Billpoint?”
“Billpoint will be closed, but we will try our best to arrange jobs for those people in the company.” She replied, “Except for Janet Crane (CEO of Billpoint), no one at Billpoint knew about this before this morning. Things.” She added, intending to emphasize how difficult it was when she told them the news. “Everyone at Billpoint works hard. They only have 50 people, but they are trying to do what you 500 people do, just paying It’s not our core competence.” But in fact, she did not compare the staff accurately because Billpoint had outsourced both customer service and anti-fraud functions, but no one was going to correct her at this moment.
Meg Whitman praised PayPal’s achievements and emphasized that eBay is an incredible company and it will be a strong partner. Her decent performance, both praises PayPal and optimistic about the future, is exactly what employees need to hear. Her way of speaking reminds everyone of Peter Thiel’s unforgettable speech after the leadership change of our company in October 2000. Whitman also conveyed her excitement and looked forward to the prospect of adding first-class payment services to the leading online market.
Meg Whitman’s speech gave most of PayPal’s employees reassurance that the acquisition will be a smooth process. At the end of her speech, everyone gave her warm applause. When the meeting ended, many people grabbed eBay T-shirts from a box near the exit.
And my own reaction is more sober. Even if the conflict between PayPal and eBay is coming to an end, most of my colleagues’ worries have eased, but there is still something that makes my instinct tell me to pay attention to it. Of course, this has nothing to do with Meg Whitman’s speech-she is right, but I just have a lingering feeling that great changes are about to show up in front of young companies. A few years ago, I and When Peter was walking on the beach in San Francisco, the entrepreneurial adventure I naively decided to join is now coming to an end. I walked out the back door of the conference room without touching my T-shirt.
David Sachs’ explanation
At 3 o’clock, this day’s marathon meeting continued in David Sachs’ office. Marketing, design and international teams, a total of more than 20 people, all squeezed in.
As soon as David Sachs opened the scene, he laughed nervously, then chatted for a few words, and finally explained the reasons why he was behind the resumption of negotiations with eBay, describing it as a response to the company’s internal feedback. the response to. He said: “After the “eBayLive” event, many employees talked to me in private and encouraged me to discuss new solutions with eBay because they saw eBay as a vibrant community and market.”
“We must break this vicious circle.” He said. He believes that it is very important to reach this deal now instead of continuing the line of struggle of the previous two years. He emphasized that our product and marketing campaigns, coupled with our behind-the-scenes political lobbying, will soon lead the two sides on a road of no return, making it impossible for any compromise or compromise in the future.
“We can’t endure the war-like environment forever. The merger makes us no longer have to face the next impact. However, there are still some questions, that is, do we mean to give up our own interests?” He added, “Actually, I think, in the end It is not clear who wins and who loses. In this case, if the wins and losses are so clear, there is usually no deal. The winners don’t want to be acquired because they know they will win and the losers will not be able to convince anyone. To buy them.”
He also quickly explained the agreed valuation. He said that regarding eBay’s abandonment of payment services, he had seen eBay’s internal evaluation: “We have got the highest bid they can make.”
The conversation has always been informal, and he also solicited everyone’s opinions. I asked him why this round of talks was successful after all other talks failed, and what happened in the middle? He replied: “In the past, the two sides were reluctant to make such a transaction, but when the two sides went all out and reached the edge of a corporate war, it is imperative to reassess the situation.”
When answering questions about employment security, David Sachs said calmly: “If they want to move everyone, they must first pass Peter Thiel, then me, and finally your leadership, so don’t worry about work. . It’s in their interest to make everyone happy and keep all our employees in the company. They just paid $1.5 billion to acquire our company, and our company is us.”
David Sachs is confident and vowed, which shows that PayPal will remain the same after being acquired. But I still doubt it-even if the executive team does not intend to go anywhere, there is no guarantee that eBay will allow PayPal to continue to exist as an independent entity, but I also realize that I can’t manage this matter at all.
Daily work seems trivial, so I decided to go home early that night. Since dotBank and X.com appeared and challenged Confiniti, this is the first time I can walk out of the office without worrying about the actions of competitors. No matter what the road ahead of PayPal, at least the days of our competition with eBay are over.
Peter Thiel’s motivation for selling
Most PayPal employees seem to be relieved, but our most important supporters, our customers, have mixed feelings. Some people look forward to the integration of PayPal and eBay’s sites, but there are also concerns that eBay will turn PayPal out of recognition. Many customers leave messages on the OTWA message board, complaining that many functions, such as debit cards, will be slowly cancelled after the transaction is completed. The netizen “dblumenfeld” said cautiously: “After the merger, certain functions of PayPal will not make much sense, such as the “PayPal preferred” project. Of course, there is also the question of whether PayPal will change its name. If it does not change its name, then the name PayPal. How long will it last?” 2 netizens named “ShelbyBoy” also expressed similar views on TheMotleyFool’s website: “PayPal can introduce new features that are easy to understand and easy to use, and the addition of these features will not irritate many users. . And eBay cannot always implement these new features. My concern is that eBay’s culture will prevail after the acquisition, which will ruin the good thing PayPal.”3
Media reports have always been of little value and no new ideas, and they criticized us every time. This time for various reasons, the media began to publicly criticize the transaction. Although this is not the first time the media has criticized PayPal, this time media experts inferred that eBay’s transaction with PayPal has something else hidden. The online version of the “Wall Street Journal” published a report titled “eBay bidding for PayPal, there are many articles behind it.” 4 The report quoted a securities analyst who had predicted PYPL’s stock price at $32: “To be fair, many of us believe that PYPL’s stock price has more room to rise.” Another analyst whose view was quoted Said: “Selling PayPal to eBay is perhaps the easiest way out.” Reuters in a report entitled “PayPal and its founders revel in 1999” alluding to Peter Thiel and Max Levchin Did not withstand the temptation of eBay’s $111 million stock and decided to sell PayPal. 5 A column of “CBS Market Watch” (CBS MarketWatch) stated that eBay’s acquisition of PayPal means that “only a few people will get rich, that is, early investors, management and investment bankers.” 6
At the same time, minority shareholders filed a class action lawsuit in an attempt to prevent the company from selling to eBay. They said that the purchase price was too low and that the board of directors’ acceptance of eBay’s purchase proposal violated the principles of good faith and responsibility. 7 The day before the company announced the acquisition, PYPL’s stock price was US$20, while eBay’s price was US$60.54. This means that eBay’s acquisition of PayPal has an 18% premium, but these shareholders said that eBay should pay the company more premium.
I myself was full of emotions, trying to understand why Peter Thiel would accept this latest proposal from eBay. At lunch one day later, I asked him what motivated him to finally accept the deal. He replied, “I feel that this protracted state of war is exhausting everyone.” He said that the conflict between the company and eBay, coupled with our already volatile stock prices, may cause employees to leave due to overwork or due to the decline in stock prices. However, he hurriedly said that joining eBay can also create value.
“We want PayPal to become the currency on the Internet,” he said. “To do this, the most important factor is the number of PayPal users, and eBay has 46 million users. Such a large customer base gives us huge room for growth. . Once we thrive on eBay, our business outside eBay will also expand. Whether it is inside or outside eBay, I do think that doing so will put us in the best position to rule the world.”
Obviously, we have a great advantage in ending the fight with Billpoint. In the past few years, PayPal has achieved so many vested interests, the company has made many enemies. We have had conflicts with credit card organizations, bank lobby groups, state regulators, foreign mafia members, and lawyers who take pleasure in litigation. We are tired enough and we have to worry about whether we will be rejected in our main Outside the market. After our IPO, these conflicts intensified, and our original intention was to consolidate the company’s position, which is really counterproductive. These enemies combined pose a greater threat to our business than Billpoint. The risks on eBay’s side were resolved, and Peter Thiel greatly reduced the risks faced by PayPal and its shareholders.
An event after the transaction quickly confirmed this. New York State’s Attorney General Eliot Spitzer always made headlines in the media. He appeared again and brought a subpoena to PayPal. In 2002, Eliot Spitzer spent a lot of time on the US Securities and Exchange Commission and took the lead in prosecuting a group of listed companies suspected of accounting scandals, and now he is eyeing a high-profile company. He asked us to provide PayPal with information about the use of the online gaming industry, which implies that our business may violate New York State’s gaming laws, and that day was the day when we publicly announced the acquisition of PayPal by eBay. 8
Our lawyers believe that Elliott Spitzer’s interpretation of New York State’s gaming laws lacks a legal basis. Fortunately, eBay’s decision to acquire PayPal and slowly withdraw from the online gaming industry made his question meaningless. However, in Peter Thiel’s view, if the company is not sold to eBay, this investigation by Eliot Spitzer may make our stock price plummet. The gaming industry accounts for 8% of PayPal’s total payments and continues to grow rapidly. If Eliot Spitzer finally finds a court with the same opinion as him, then PayPal must abandon one of the most successful non-auction businesses, which may be an investment The people frightened away and stopped buying our stocks.
Eliot Spitzer was the first person to formally investigate us, but not the last. A few months later, a lawyer in the Eastern District of Missouri claimed that our gaming business violated the Patriot Act (PATRIOTAct), which is a federal anti-terrorism law issued by New York and Washington after the terrorist attacks. 9Although Congress passed this bill not to manage PayPal’s gaming business-Congressman Jim Leach’s bill on this issue has never been passed by Congress-but the U.S. Attorney’s Office doesn’t think so, according to the Office of the Attorney. The bill’s prohibition on transferring money to terrorists also applies to the online gambling industry.
Regardless of whether the U.S. Attorney’s Office has a legal basis or not, when we consider their accusations and Eliot Spitzer’s subpoena, it’s clear that more and more regulators want to intervene in this issue, despite the fact that online The laws of gambling are ambiguous. This problem will become more and more serious like a snowball, and it may cause Louisiana and other states to reconsider whether to grant PayPal a transfer permit.
Hearing what Peter Thiel said, and looking at what Elliott Spitzer did, even me, a marketer who supports the growth of the payment market, knows that PayPal now faces many challenges outside the payment market. The acumen of entrepreneurs may help us survive the company’s internal turmoil after the merger with X.com and the fierce competition from Billpoint, but addressing these new threats requires a completely different approach. After PayPal is owned by eBay, we can avoid stock market turmoil, and we can spend more energy to solve these problems. Although there is no guarantee that all our management problems will be solved, this acquisition does mean that our company will better solve the existing regulatory risks in the business.
PayPal Meditation
At the end of July, company employees gathered at the winery at the foot of the Santa Cruz Mountains. PayPal’s annual outing meditation meeting is held there. The golden mountains stretch from the west of Silicon Valley to this place. The executive team chose this place to discuss major business issues in this leisure place away from the busy office.
This is a very suitable place for Internet companies with good performance like ours. PayPal withstood the Nasdaq crash, thwarted countless competitors, stumbled all the way to profit, and had millions of registered customers, becoming the first Internet company to successfully IPO after the “9.11” incident, and , We just reached a heavyweight deal with a well-known company. In all respects, PayPal has reached the pinnacle of success in Silicon Valley. Now that we pause to celebrate our achievements, it is time to think about what the company should do next.
Max Levchin, Lulov Botha and David Sachs made several reports on the business situation, after which the employees went outside to enjoy wine, taste cold dishes, and play sumo. The sumo wrestling field is like an enlarged version of an inflatable shallow pool for children, and the thick, head-to-toe tights look like a cartoon version of a sumo wrestler. Many small employees also put on clothes and want to imitate a sumo match, but once they are knocked down, it is difficult to stand up. After drinking, coupled with our coaxing, Peter, Max, Sax and Lulov put on heavy “Sumo” suits and entered the arena and began a free melee. Max turned his head forward, arched Peter to the ground, and the employees cheered.
Finally, everyone enjoyed a buffet in the courtyard on the side of the Santa Cruz Mountains. The staff of the winery began to bring us after-dinner coffee. Peter Thiel took up the microphone and gave a concluding speech. He expressed his gratitude to everyone in the scramble, thanking everyone for their hard work, and then he contributed to our excellent performance in the second quarter. And applaud. However, when it came to the issue of acquisitions, he suddenly changed the subject:
“We have already said that sometimes it feels like the whole world is against us.” He paused, waiting for everyone’s reaction, and then said, “Yes, it is indeed against us! First of all, many people think that banks Karma would push us out. Seeing that this scene did not happen, they said that our customers would no longer use our services. This scene did not happen, so they encouraged people from all over the world to oppose us together.”
“Here, please allow me to read an article in February 2001 entitled “People are disappointed with PayPal.” He took out a newspaper, “The article said, “Fraud, customer attacks, new competitors, and The industry’s continued failures have highlighted the precarious position of PayPal’s dominance and the need to provide more protection to customers”. 10 And this “From the Earth to Palo Alto” said, “This company has just been established for 3 years. The company, which has never made a profit, is on the road to a loss of 250 million US dollars. The company recently applied to the Securities and Exchange Commission for listing, which means that the company’s services may be used for money laundering and financial corruption. For such a company, What would you do?』」11
At this time, most of the colleagues laughed, and Peter Thiel nodded in satisfaction. He said that these experts are not trying to attack PayPal, they are just too short-sighted to understand what we are doing. PayPal’s mission has always been to change the way people transfer money, and he said that this significant goal should be considered in the context of the times.
“There are two major trends in the 21st century. The first is economic globalization. Economic growth is becoming more and more international, and people around the world are getting closer and closer. One billion people leave their hometowns to live elsewhere. The second is the pursuit of safety. In this world In a globalized and decentralized world, violence and terrorism are widespread and difficult to control. Terrorism has spread all over the world and is difficult to contain. The challenge we face is to find a way to combat violence in such an open global economy. In the past. I went to Washington many times in 6 months and met with many regulators and politicians. I tried to convince them not to impose new regulations on our company. After these meetings, I was convinced that they did not know how to deal with these critical issues.
“Most conservatives in Washington don’t understand that we are in a rapidly changing world. The world is becoming more and more complex and people are getting more connected. But those liberals are worse-they always want Relying on supervision to make everything better. Neither conservatives nor liberals have grasped the urgent needs of today.
“At PayPal, we have been meeting today’s needs in our own way. We have been building a system that allows everyone to conduct international trade, and we have been fighting against those who are disadvantageous to us and our users. This is a gradual approach. , Iterative process, in this process we have made many mistakes, but we continue to move in the right direction to solve these major problems that have been ignored by the whole world.
“So, I want to convey the voice from Palo Alto to the earth. We can change a lot of your ways of doing things. Come to Palo Alto to see and learn some new things. I think you will see that this place is better than the earth. Many places here are much better.”
cultural conflict
Peter Thiel’s speech at the winery was originally a farewell speech. 32 months ago, he delivered a “ruling the world” speech to Confiniti employees, and now his speech at the winery is about “ruling the world” Finally speak. After reaching an agreement with eBay, he made fewer and fewer appearances in the office and asked David Sachs to deal with the integration of PayPal’s products with eBay’s website. Employees began to speculate that after the acquisition was completed, Peter Thiel would leave and return to the hedge fund industry—before he met Max Levchin, hedge funds were his old business.
Although he denied the rumors of leaving, we knew him before joining PayPal, and we knew that was not the case. Under his leadership, PayPal has survived many crises, but he seems to be better at handling financial affairs. Many people’s lifelong goal is to become the CEO of a listed company, but he only sees this as a brief episode in his investment career. Moreover, to be honest, once PayPal becomes a subsidiary of eBay, PayPal will no longer need his talent in advanced strategic business and the ability to deal with financial markets.
And David Sachs seems to remain in the company. Peter Thiel put him in charge of the integration of PayPal products and eBay website, in fact, the chief operating officer as his successor. Before going overseas to meet with PayPal’s big investors, Peter Thiel made an internal announcement, announcing that when he was on a business trip, the executives would report to David Sachs, which obviously wanted to express his expectations to employees. As a candidate for CEO, David Sachs seems handy. He has established close working relationships with Max Levchin and Rulov Botha, so that the company will not have the same phenomenon of discord among the executives during the change of power. When the company is acquired by a previous competitor, David Sachs’s power can give people a sense of continuity.
What happened at the end of August made the formal acquisition transaction time tighter, so we accelerated the pace and prepared for the acquisition. The Department of Justice surprised everyone involved because it did not make any comment after the deadline for the second time for the two companies to submit information passed, indicating that the federal government will not initiate an investigation to hinder mergers and acquisitions. 12 PayPal previously protested to the government that eBay had taken a series of explicit measures and preferred Billpoint. The government did not complicate our acquisition because of PayPal’s protest. The legal teams of the two companies were relieved after learning this news. The Bush administration generally supports the free market, which obviously affects the Ministry of Justice, and prevents the Ministry of Justice from interfering in our previous protests against eBay and now our decision to sell the company to eBay.
After this obstacle was removed, PYPL’s stock began to trade at an exchange ratio of nearly 0.39, because the stock market believed that eBay’s acquisition of PayPal was a certainty. PayPal’s board of directors set a date when shareholders voted on the acquisition proposal in October, and employees of the two companies were frantically preparing for the integration of the two websites.
I am responsible for handling PayPal’s acquisition-related marketing affairs. I have participated in many face-to-face meetings and conference calls with my future colleagues. In the early stages of this intense process, the cultural differences between PayPal and eBay became more and more obvious. On the PayPal side, decision-making is very democratic and fast. You can usually understand the views of key colleagues on a certain issue through an email. If an employee makes a suggestion but does not reach a consensus, then everyone has the opportunity to state their reasons, and then the relevant decision makers then formulate a course of action. This process is usually a little messy, but it can encourage employees to come up with bold ideas. If this idea passes the review of colleagues, then we can quickly put it into practice. As the company matures, our decision-making process inevitably slows down, but PayPal’s nearly 800 employees still enjoy a lot of power in a flexible system, and the company encourages them to act like entrepreneurs.
But eBay is different. Within this auction giant, everything seems to have to be resolved face-to-face meetings. If you are unlucky, you may have to hold several meetings. And a meeting is more than just sending a “meeting invitation” schedule email and then sitting down and talking with the people involved in the meeting. EBay employees seem to be accustomed to calling everyone and inviting them to meetings that have not yet been determined, even if this person is unable to get along with the things to be discussed in the meeting. After sending out meeting invitations to at least two dozen people, eBay will determine the time and location of the meeting one week in advance. On the second day, the meeting may be rescheduled because an insignificant shareholder’s schedule conflicts with the meeting— —This is how eBay works. After several rounds of rescheduling, attendees will get a thick stack of PPT handouts, which contain various key points and tables. The cover of the handout is neatly printed with a saying or two, and on the cover is the eBay mascot-one The cartoon apple man with a mustache is very similar to Mr. Potato. The whole meeting is the difficulty of looking at a large number of slides, and the result is generally that everyone agrees to arrange a follow-up meeting so that the issues raised by the slides can be discussed further.
This revolving meeting mode quickly angered PayPal employees. Our company’s email-centric culture allows us to spend a lot of unplanned time to reply to emails. During the meeting, we only put forward new ideas or solve the imminent problems. Problem; and eBay’s meeting invitation quickly filled our schedule. We had to drive half an hour from PayPal’s office to eBay’s office (luckily, there was a news from eBay that the PayPal office The small kitchen can provide free snacks, so more and more eBay employees agree to come to us for meetings).
The cultural differences between the two companies are not limited to eBay’s intricate meeting model. EBay’s employees are generally two or three years older than PayPal’s employees, and they generally have business school degrees. Although eBay employees have a higher level of education and more experience, even executive-level employees in their company seem to be reluctant to make decisions. No matter how trivial things are, they have to hold lightning meetings or at least consult their bosses. agree. Once, our marketing delegation suggested to send a simple email to users to let them know that the two companies are going to merge. The eBay marketing delegation was very nervous, thinking that this was not in line with the company’s marketing practices and insisted on letting them We are postponing sending emails, and they need to consult with the higher-level decision. In the end, our marketing team gave up this small plan angrily.
Unfortunately, we soon discovered that the differences between the two companies are not only reflected in middle managers and ordinary employees, but also in senior management. PayPal executives are informal and willing to delegate power to their subordinates, while the eBay executives on the other side are different. Their style is very similar to the manner in which Meg Whitman spoke on the day the acquisition was announced. Although Meg Whitman is a morale booster and has no condescending attitude, compared with the easy-going and approachable Peter Thiel, she looks very formal, almost serious.
The generation gap is part of the reason for this gap. The top executives of eBay, including Meg Whitman, 45, CTO Maynard Weber, 46, and Geoff Jordan was born in the late baby boom era, on average 15 years older than their peers Peter Thiel, Max Levchin and David Sachs.
As the baby boom generation (referring to those born in early 1946 to the end of 1964 after the end of World War II), eBay’s executives will of course control the company’s culture, and their X-generation (referring to those born in the 60s and 70s) employees are managed. Stubbornly. It is often difficult for baby boomers and X generations to co-exist in the modern workplace. Opinion surveys show that a large part of the baby boomers believe that their younger counterparts are not worth trusting and are not as knowledgeable as they are. 13 Opposition between people in different eras is not a new phenomenon, but in the business world, it can lead to selfishness. When the baby boomer generation finally replaces their parents to the highest position in the company, they will look down on the younger generation who are proficient in technology. Of course, whether the eBay managers of the baby boomer generation managed the company this way is just a guess, but the generation gap between the two companies is a problem that no one can ignore. We can only hope that it will not cause it in the future. conflict.
eBay playing with your wrist
As the merger process progressed, everyone besides me became aware of the cultural differences between PayPal and eBay. Colleagues at PayPal must have realized it, and many colleagues at eBay also commented on this. Even Meg Whitman himself later publicly admitted that it is not easy to integrate two companies with different cultures. 14 Meg Whitman is well aware of the importance of culture, and I am not surprised—just think about eBay’s rejection of Yahoo’s acquisition offer in early 2000 due to cultural differences.
In this difference, the two sides are still struggling to move forward. Eliot Spitzer can no longer hinder us. PayPal wants to reach a deal with eBay. Our management team firmly believes that we will also enjoy a lot of autonomy after the acquisition is completed. Before Yahoo proposed to acquire eBay, eBay is very concerned about cultural differences, but this time eBay does not seem to care so much about this issue (of course, this time eBay is the acquirer rather than the acquiree).
In general, after learning about eBay’s internal operations, we understand why Billpoint has not been able to match PayPal in terms of innovation for many years-we are faster, and we encourage talented employees to boldly voice their opinions. This has become our company’s competitive advantage. These characteristics are reflected in our shorter product development cycle and more synchronized promotion activities.
Although eBay’s culture hinders eBay’s ability to compete with PayPal, if you adhere to the guidance of Pierre Omidyar, eBay will obviously be a more efficient and entrepreneurial place. When Meg Whitman took office, she hired an MBA and former government consultant, so eBay began to change. 15 EBay’s early written records convinced me of this speculation, and my conversations with many eBay colleagues confirmed it. Whether this is right or not, Pierre Omidyar’s wonderful online service has benefited from its rapid action, and continues to accelerate development like a snowball, without paying attention to the company’s management while advancing the company’s development. Increasingly bureaucratic.
eBay has the unique advantage of a monopolist, that is, no longer relying on innovation to promote growth-eBay’s external acquisitions have extended the company’s tentacles to all parts of the world, but the domestic business in the United States is in a state of laissez-faire freedom. Therefore, when PayPal unexpectedly appeared, eBay’s plan to build its own payment service on the platform designed by Omidyar was disrupted, and eBay found it difficult to cope with the competition with PayPal. eBay did not work hard to learn from PayPal’s speed and agility, nor did it focus on functional development. The auction giant just used its market-dominant advantages to achieve the same goal at every turn.
A few years ago eBay was still a decentralized and entrepreneurial company. So, will PayPal gradually become eBay? This acquisition will make this possible, but as my understanding of new eBay colleagues deepens, I understand that if we let PayPal manage ourselves, we would not become like eBay. With further development, PayPal has become more corporate and more process-driven. Although it has reached the point of driving free-spirited innovators like Luke Nosek and Paul Martin, our company has not abandoned the core. culture. The company still maintains the spirit of ownership and is willing to encourage employees to argue. The procedural red tape may slow down our pace of innovation, but we are different from eBay in that our decision-making has not become “one word”, and our employees have not felt compelled to be respectful to the management. It seems that time has less influence on the culture of a company than the influence of company leaders.
In early September, the eBay management team surprised us again, reminding us of the previous Billpoint event. Meg Whitman announced through the media that she has reorganized the company’s top management and made eBay’s president of international business Matt Bannick (Matt Bannick) the senior vice president of the global online payment industry. Matt Bannick speaks mildly. He was previously a consultant for McKinsey & Company and also served as a diplomat in the United States. The eBay media statement indicated that Matt Bannick will be responsible for closing Billpoint and working with Peter Thiel to integrate PayPal and eBay. 16
The news came, we woke up like a dream. Peter Thiel did not receive notice in advance. Apart from the public statement, it is obvious that Matt Bannick will not step down as the president of international business to supervise one that needs to be completed within 6 months and is related to two payment services. s project. Matt Bannick most likely has been in this position, and there are rumors in Silicon Valley that Matt Bannick is Jeff Jordan’s main competitor and may become Meg Whitman’s successor.
This move shocked David Sachs. He thought he could secure PayPal’s top spot, but now an unexpected opponent was halfway through, and this opponent was Meg Whitman’s right-hand man. Although Meg Whitman and Matt Bannick insisted that there were no bad intentions behind this position adjustment, everyone in our office knew that things were far from simple. Many of our managers began to figure out ways to build momentum for David Sachs, and some managers even distributed petitions at the last minute to let Meg Whitman know who they supported. But this action was too weak, and it was too late-eBay was playing tricks at the last minute, when the acquisition process had been going on for a long time, even if our management team wanted to regret it, it was too late.
This was a disaster for my friend and mentor David Sachs.
The end of the song
“Now let’s discuss a formal topic of today’s meeting. The only legitimate proposal received before this meeting is to approve and adopt the merger agreement and plan between eBay and PayPal. Now that the notice has been officially issued and the meeting has reached Quorum, so now we will vote on this proposal.” Peter Thiel said. When we had a meeting in PayPal’s old office on River Quay Road, several rows of shareholders were sitting in folding chairs, and Peter Thiel was sitting on the table in front of them.
I raised my hand and replied, “I agree.” I took the lead and then everyone voted. The history of PayPal as an independent company is over.
The day before the meeting, Vance Solito arranged me to be an insider among the attendees and act in the general meeting of shareholders. The shareholders meeting on October 3 was just a cutscene-the result of the voting was known a long time ago, because we had received proxy voting emails long before Meg Whitman announced the shocking personnel arrangements. The counter finally recorded the number of “yes” votes, 65% of the total outstanding shares, or an overwhelming 99% of the shares voted in favor. 17
When the board’s inspectors announced the results of the voting, Peter Thiel knocked the gavel and announced that PayPal no longer exists: “I hereby announce, approve and adopt the proposed merger agreement and plan.”
That afternoon, I learned of Peter Thiel’s resignation and Matt Bannick became the CEO of PayPal. Hearing the expected news, I curled my lips, unwilling to think deeply. Although I don’t want to, as the head of PayPal’s marketing integration, I will still perform my duties. I dragged a heavy foot upstairs and told the design team to delete Peter Thiel’s name from the “About Us” section of the website and insert an “eBay subsidiary” logo at the bottom of each page. I whispered this instruction carefully, and at this time our content manager was crying, and I understood how she felt.
A few days after the end of the transaction, David Sachs announced his departure. He called me to his office and told me about it. He was sitting behind his almost emptied desk, surrounded by packed boxes. David Sachs, who has always been confident, lowered his head and said a few words vaguely, encouraging me to stay in the company. We sadly recalled the good times we had in the past 3 years. I wanted him to cheer up, so I said maybe another wonderful adventure is waiting for us. He laughed, but from the look in his eyes I could tell that he didn’t think so.
David Sachs’ resignation triggered a wave of employee resignations. In just a few months, many people followed him to leave the company, the most important of which were the executive team’s Max Levchin and Lulov Bota. And Reid Hoffman. Their departure was just the beginning. The gray-haired director of personnel Vince Solito, my Stanford alumni Kenny Howell, Peter Thiel’s fundraising experts Mark Woolway and Jack Selby (Jack Selby) , Keith Labois, vice president of business development, and a dozen talented employees followed them and left eBay’s subsidiary PayPal to find better positions.
For this large-scale brain drain, eBay hardly took any measures. On the contrary, when many of our excellent employees and entrepreneurial spirits left, Matt Bannick transferred a large number of employees from eBay to fill the vacancies. After the personnel change this time, the company promulgated a series of new regulations, revised the organizational chart, and implemented eBay’s PPT culture-that is to say, we will have countless meetings and watch countless slides in the future. The whole development is like a script that has already been planned. Meg Whitman waited until the last minute of the merger before letting Matt Bannick be the head of the global payment business. She knew what she was doing, so she also knew that a small reversal could make PayPal’s culture quickly reappear. Appeared on eBay.
Seeing that the company’s previous entrepreneurial culture has become more and more like Arthur Andersen rather than Confiniti, and seeing so many outstanding talents leave, I easily made a decision. In June 2003, after serving as the interim vice president of global marketing for the new company after a period of reorganization, I left PayPal. My tenure under the new executive team was very successful, and I established a good working relationship with the lovely and kind Matt Bennick, but I gave up the position of vice president for life. Before joining PayPal, the ultimate goal of my career was to become a highly paid manager of a large company, but now I don’t think so.
Once you become an entrepreneur, there is no turning back.
