Roelof Botha describes PayPal's brush with failure in 2000. After raising $100 million at a $500 million valuation, the company had seven months of cash left. The pressure forced them to solve fraud, get users to link bank accounts, and cut transaction costs between June and September, changes Botha says a longer runway would have delayed indefinitely.
'PayPal raised $100 million at a $500 million valuation in March of 2000 with no revenue.' And he really rung our clock and woke us up to the reality. And we had 7 months of runway left at that point. 7 months. And boy, we got religion. And so the same team that today is praised for having figured out how to build a successful business, we were Duncan Taylors, you know, not doing a good job back in the first half of 2000 running the company. We'd gotten product-market fit, but boy, did we need to get religion quick, and we did. And I'd say that the key innovations that enabled PayPal to go public and to be a fabulous business, all of those ideas came in the window between June of 2000 and September of 2000. We figured out how to fix fraud. We figured out how to get people to add bank accounts so we could route transactions from bank account for our credit cards to lower our costs. But there was just a dramatic period of innovation because we had no choice. And I'm pretty sure that if we had 12 months of runway at that point, or 18 months, we would just kick the can down the road.
