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The PayPal Wars - Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth is the exciting true tale of a startup that went from a blue-sky idea to a public valuation of over $1 billion in under three years. Written by the marketing manager for PayPal during its startup days, Eric Jackson, it is a consuming, fast read.

Jackson was a disillusioned staff consultant at Arthur Andersen who jumped ship to gain nonexistent stock options. He met PayPal’s CEO Peter Thiel at Stanford while earning an economics degree. Thiel had transformed a student newspaper, the “Stanford Review,” into a campus institution. He and a “Review” cohort wrote The Diversity Myth, a book that criticizes changes in Stanford’s curriculum. Eric had helped with some research for the book.

Thiel, an attorney who is today a venture capitalist, worked for a Wall St. law firm and Credit Suisse in Boston before returning to the San Francisco area in 1998 to set up his own hedge fund. After delivering a guest lecture at Stanford on the link between market globalization and political freedom, he was approached by Max Levchin, a young man whose prospects for opportunity and education had suffered until his family emigrated from the USSR to the US in 1991. During his brief time in the USA he had already developed automated marketing tools and sold them to Microsoft.

Peter, 32 years old, and Max, in his 20s, were idealists who wanted PayPal to become a way for ordinary people in the developing economies of the world to control their own money, depriving corrupt governments from stealing wealth from their people through currency devaluations and inflation. PayPal users could switch to dollars or Yen, dumping their local currency before it became worthless.

There would be a long yet brief journey to ramp up the offering.

A “digital wallet”

PayPal was the creature of Confinity, a startup that merged “confidence” and “infinity” to describe a company that would change the way all global citizens paid for– everything– and got paid. “In the 21st century, people need a form of money that’s more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection,” stated Peter.

He also maintained that creating a successful payments service could only happen if something called a “network effect” was achieved. “An interactive, inter-connected system… could only exist if it conferred value on the people who voluntarily chose to join it. The more people participating in it, the more beneficial the network would become since all members could interact together. Hence a large, established network is very valuable to enter and very costly to leave… it locks in its members and prevents would-be competitors from getting off the ground.” Jackson notes on page 30. “A good example of a network is telephones. The benefits of having one increased exponentially as the number of people and companies that could be reached using it also grew. Similarly, the advantage of participating in a payments service increases as the number of other users goes up. Robert Metcalf, the inventor of Ethernet claimed that the value of a network equals the square of its users, or a network with twice as many users as a competitor is four times as valuable.”

Scaling up quickly was key. Jackson was given the task of spending $1M in short order to get more customers! Based on a hunch, he targeted eBay’s auction users. Referral bonuses were part of the plan as well. Soon, eBay auctioneers began to put PayPal logos on their sites to advertise this easy way to pay. They were advertising PayPal! A symbiotic relationship had been accomplished, but eBay’s owners were not in tow.

The network effect was at work, venture capital was flowing, and competitors were massing. Standing up to the assaults was accomplished in various ways. The new economy emphasis on shared goals, clear priorities and encouragement from management for the staff to suggest new ideas was a way of life. As well, new products and the immense talent of the software writers outpaced the competitors.

From mid-1999, PayPal went from several talented employees, a few board members, and $3M in venture funding to:

• Loads of employees, including 500+ at a call center in Omaha
• MANY, many millions in financing; the burn rate was $10M a month in mid 2000
• A focus on payments between friends to targeting online auction transactions by latching onto eBay’s online community.

Trench warfare

Combatting competitors from all quarters including an eBay acquisition, “Billpoint,” threw PayPal into trench warfare. Dealing with fraud was a major problem with one mafia costing the company $5.7M over a four month period in mid-2000. However, buying and selling patterns were noted and the Feds busted organized crime rings in Chicago, Houston and Nigeria, thanks to PayPal’s help.

PayPal decreased its dependency on eBay by linking with the gaming industry, merged with its major competitor, x.com, closed a finance round of $100M, and developed a working business model in short order.

THEN, regulators and other attackers such as attorneys for class action suits and even the American Banking Association nearly derailed the IPO, but fate smiled on the backers and PayPal became the first public offering after “9/11,” opening at $13 a share on February 15, 2002, and closing at $20.09, a 55% one-day increase.

The entire story is an unbelievable series of leaps from one stepping stone to the next as each morphed into an alligator until PayPal succeeded, only to be bought by eBay.

Jackson feels that PayPal could have developed further and perhaps realized its ultimate dream had there not been so many challengers––not the expected competitors, but the unexpected hits from so many major players. He is now CEO of World Ahead Media– the stock options paid off!

Visit paypal.com for a free guide on how to grow your e-business.

No, this is not a political blog.

I'm referring to the power spikes and surges that can ruin equipment that uses microprocessors. Even electrical "noise" will take a toll on sensitive equipment and on software programs and data files.

Whence comes this dirt? Lightning, yes, but also unnatural causes such as utility switching, high-powered electrical motors, radio transmitters, industrial equipment and more can dish up dirty power.

I would not mind having Ceramatec's wonder battery to power my office/home because the last spike that shot through my lines nearly killed one of my PCs that was protected by a dying surge protector. The spike finally killed that protector, so I got a new one.

Do you know how to figure out if a surge protector is adequate for your computer protection?

First, what are the devices that must be protected? Any peripheral that plugs into the computer will need protection, including the cable modem, because lightning can enter a computer network by cable as well as by phone line.

Next, how many watts will the protector need to handle? I did an online search for my computer's wattage.

You also need a surge protector with battery backup that remains on long enough for you or a computer program to safely shut down the pc or network in the event of a power failure. Typically you would want your monitor and computer to be on battery backup.

Many years ago a bright computer repair man who restored a hard disc for me explained that most of the computers he fixed had been damaged by electrical noise over months or years from dirty power supply.

At the time I used surge protectors but not line conditioners. After the repair I got a UPS (uninterruptible power supply) with an AVR (automatic voltage regulator) which ensures consistent power for computer systems.

And speaking of power solutions, don't forget to vote next election!

Future Shock. The Third Wave. Power Shift. And now, Revolutionary Wealth. Having read the first three of Alvin Toffler's bestsellers on how life is changing and why, I searched for his fourth major work in 2000. His series clarified for laypeople the evolution from a "first wave" agrarian-based economy to a "second-wave" industrial to the knowledge-based "third-wave" economy, and his prognostications were very useful. I needed the one I was sure would be out in 2000, but it wasn't there.

Future Shock, published in 1970, prepared us for the information age; The Third Wave, published in 1980, further interpreted the movement toward electronic empowerment; Power Shift, published 1990, prophesied a change in the very nature of power. Then, the Tofflers, as Alvin included his wife Heidi, stated they would not publish a book in 2000. The turn of the millennium was not a good time --too many uncertainties. Finally, in 2006, Revolutionary Wealth joined the line up of hallmark achievements for these very special authors.

What's in their book for you? A mind-blowing discourse on what goes on in the first decade of the 21st Century and what to look for; an expansive digest of world trends and events that are churning up the "third wave." A reader might be lucky enough to amass revolutionary wealth by keying into one of the featured trends of the knowledge economy. For example: "The new wealth system demands a complete shake-up in the way increasingly temporary skill sets are organized for increasingly temporary purposes throughout the economy." This prediction may lead you to challenge your staff to find ways of meeting American customer desires by supporting their new and changing family configurations.

Or, you may be the powerful player who pushes legislative change to keep pace with societal need. The Tofflers note that while business and nongovernmental organizations (NGOs) are moving at speeds of 100 or 90 mph, labor unions, education and legal institutions are lagging at speeds of 30 to only 1 mph. This is an amazing dilemma if your law suit is never settled until your actual business need ceases to exist.

Knowledge Described
Taking a bird's eye-- or more like a satellite-view of production and human labor over history, one sees a bright future despite the glaring hardships besetting nations, economies and workers at the present. A glance at the facts of knowledge reveals why the knowledge-based economy holds immense potential for people relative to the agrarian and industrial epochs… Knowledge...

• is inherently non-rival - the greater the number of people who use it, the more likely it is that someone will generate more knowledge from the same bit of it.
• is intangible
• is non-linear - tiny insights can yield huge outputs
• is relational - a unique piece attains meaning only in context with other bits
• mates with other knowledge - the more there is, the more possible combinations there are
• is more portable than any other product - can be distributed instantaneously to the next cubicle or to ten million in Hong Kong at the same near-zero price
• can be compressed into symbols or abstractions - unlike tangibles
• can be stored in smaller and smaller spaces - coming soon is storage nano scale
• can be explicit or implicit - shared or not
• is hard to bottle up - it spreads.

(The above list is an edited version of the ten features on pp. 100-101 of RW.)

Can you now understand why more job creation is simply a matter of exercising our collective imaginations? Factories exported to Mexico? So what. China manufacturing more and more: Big deal. America, you are the giant of the knowledge economy! Realize your prowess!

Other messages are not so fun: Desynchronization between the deep fundamentals like time and space and our major institutions is a serious dilemma. MUCH more troubling: Our educational system is not preparing students to work in the new economy that is striving to get in sync with the deep fundamentals.

The Tofflers put stock in science. If the trends and realities of this accelerated day and time are shocking and unwieldy, apply scientific method and planning. This, in their view, is an effective salve for the human condition.

Prediction: In an age of NGOs becoming past-masters at negotiations and missions accomplished, we can expect human cloning and such other possibilities to occur. One NGO will fight against particular agendas; another will successfully advocate. The clout of NGOs will eclipse that of nations.

Insights for the US
RW is not blithely proglobal. It does not turn a blind eye to China's military budget "estimated to have shot up at least sixfold between 1991 and 2004" (p. 322) and its theft of intellectual property (p. 377).

RW sees that the great powers including America are less and less great. And in the current climate of anti-American sentiment worldwide, where is the appreciation for her contributions? Winston Churchill's statement about the U.S. Marshall Plan under which the WWII-torn nations were rebuilt as "the most unsordid act in history" is quoted.

As you can see, the book runs the gamut from reasons to regard your prospects with amazement to woeful potential turns of fate for the red-white-and-blue.

From the "24 hour street" in Curitiba, Brazil, to "obsoledge" in the internet, to the unpaid work of prosumers, to the rise of para-money, to sensor technology that is emerging as one of the most important industries of the future, you will like Revolutionary Wealth, if you enjoy roller coaster rides.

Revolutionary Wealth, by Alvin and Heidi Toffler. Published by Alfred A. Knopf, New York, 2006.