Holmes takes the strongest case in Platform Revolution, by Parker, Van Alstyne and Choudary: chapter five, PayPal in 1999, burning $10 million a month with no users. Advertising failed, bank deals failed, so they gave people money: $10 to sign up, $10 per referral, about $20 a customer. A hundred thousand users became a million in three months. Mark this: the gift had to be spent, so sign-ups became users. Lestrade asks who paid. eBay did, $1.4 billion in 2002.
The strongest case in Platform Revolution is chapter five's PayPal launch: in 1999 the company was spending some $10 million a month with neither buyers nor sellers, advertising was too expensive and bank deals went nowhere, so it gave people money, $10 to sign up and $10 per referral, about $20 a customer; growth went exponential, users went from 100,000 to a million in three months, and the authors' lesson is that the gift was designed to be spent, so commitment mattered more than acquisition; eBay bought PayPal for $1.4 billion in stock in October 2002.
On the book: Platform Revolution by Geoffrey Parker, Marshall Van Alstyne, Sangeet Paul Choudary
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Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You
W. W. Norton · Jan 1, 2016
