Never were truer words spoken when thinking about the technology sector. Last week somebody asked me to name a large, publicly traded technology company which is still popular with both the public at large and the “cool kids” in the Valley and Shoreditch. The obvious answers would be Apple and Google, however both of those brands have been damaged recently by allegations of tax evasion, as well as other problems unique to each company. Apple, for instance, gets a lot of flack for its failure to cobble together decent cloud services and its zealous censorship of software running on its platforms, while Google takes a lot of heat for its collection of data and not-quite-puritanical interpretation of open source.
Other technology and software giants like Microsoft, HP, Sage, Adobe and PayPal were once the darlings of the tech press; now they are constantly maligned and mocked.
PayPal is perhaps the biggest fall from public favour I can think of. It all started so well; here’s some coverage of the PayPal launch party from Wired in July 1999 where their investment capital (from Nokia no less) was transferred to their account via their service. The company grew quickly to become the biggest online payment provider in just one year. Here’s some fawning coverage from October 2000, when the company was already processing some $6million per day.
They grew and grew, until finally PayPal was bought out by eBay for $1.4billion (that’s about $1.8billion in today’s money) in 2002. Forbes covered it here, noting by that point PayPal was processing over $16million per day.
It’s the quintessential Valley success story. Good execution, loads of favourable press, explosive growth, ending in quick buyout. So successful was the PayPal sale that it created a group known as “the PayPal mafia” – early employees and investors who cashed out big. The most notable, Elon Musk, has gone onto slightly greater things.
In 2013, however, PayPal’s reputation is in tatters. Lacklustre customer service, an apparent inability to deal with charitable giving (which, really, should be one of PayPal’s strong suits), a few high-profile financial snafus (including locking out WikiLeaks donations and freezing the account of a popular games developer), and a handful of customer horror story sites have all added up to ruin the name of this former tech wunderkind.
A bit of quickie Twitter sentiment analysis shows that around 60% of today’s tweets about PayPal have been either negative or neutral.
(Counterpoint: you could, of course, argue that PayPal remains popular purely by dint of its still-growing userbase and revenues. Q1 2013 revenue was $1.5billion and 5 million new users were registered in the period – although some of this seems to be down to eBay’s continued growth)
Perhaps the most damning indictment of PayPal’s flatlining popularity is that challenger services are cropping up to displace it (TransferWise for example – which I love – is pummelling PayPal in the value-for-money stakes on foreign currency exchange). PayPal, originally set up to replace card and cash transactions, has had to backpedal and birth an embarrassing Square clone – PayPal Here – in an attempt to grab some of the brick-and-mortar retail market.
It’s one of the many curiosities of the tech sector, I suppose. In other industries – newspapers or car manufacture for instance – the old guard are respected, if not revered. In tech, not so. Once your company reaches a certain size you appear to be destined for the scrapheap of popular opinion. At least that goes some way towards explaining why many founders cash out so early.