Who Owns PayPal?

PayPal was first founded in 1998; it was called Confinity (among its founders was Peter Thiel); later, it merged with X.com, its major competitor, founded by Elon Musk (which would become known for other companies like Tesla and SpaceX). From this merger, PayPal was born. In 2002, PayPal was bought by eBay for $1.5 billion. eBay spun off PayPal in 2015, which would be listed as an independent entity. Today PayPal owns brands like Braintree, Venmo, Xoom, and iZettle.

Table of Contents

PayPal major shareholders

Today PayPal has become an empire in the fintech space.

Top institutional investors comprise mutual funds, like The Vanguard Group, owning 8.01% of PayPal. And BlackRock, owning 6.5$ of PayPal.

PayPal’s top individual shareholders in 2022 comprise people like Daniel Schulman, John Rainey, Mark Britto, Lousie Pentald, and Jonathan Auerbach.

The spin-off from eBay

The official spin-off of PayPal from eBay, as announced on eBay’s website (Source: eBay News).

As announced at the time:

In the distribution, eBay Inc. stockholders will receive one share of PayPal common stock for each share of eBay Inc. common stock held as of the close of business on July 8, 2015, the record date for the distribution. Subject to the satisfaction of the conditions to the distribution, the distribution of PayPal common stock is expected to occur on July 17, 2015. PayPal will not issue fractional shares of its common stock in the distribution. Immediately following the distribution, PayPal will be an independent, publicly traded company and will be listed on the NASDAQ Stock Market under the ticker “PYPL.” eBay will continue to trade on the NASDAQ Stock Market under the ticker “EBAY.”

ebay-business-model — eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2021, on an $87 billion worth of gross merchandise value sold on eBay, the company generated $9.77 billion in transaction revenues at an 11.19% take rate (fee).

Interestingly, over time, PayPal was born as a side feature within eBay, and after it, was purchased by eBay, PayPal became more valuable than eBay.

In September 2022, PayPal had a market cap of over $100 billion, whereas eBay had a market cap of over $20 billion.

how-does-paypal-make-money — PayPal makes money primarily by processing customer transactions on the Payments Platform and from other value-added services. Thus, the revenue streams are divided into transaction revenues based on the volume of activity or total payments volume—and value-added services, such as interest and fees earned on loans and interest receivable. In 2022, PayPal generated over $27.5 billion in revenues and over $2.4 billion in net profits.

This is PayPal’s board of directors in 2022:

Below is the compensation mix as per PayPal’s financials:

History of PayPal

The story of PayPal is so interesting for a few reasons that we can summarize below.

The story of PayPal has so many events that seem improbable.

Two startups (Confinity and X.com) were two startups operating in the internet payment industry. Yet, while they were neighbors, they also recognized how different was each other’s vision.

Confinity had started to build a valuable company by looking at a narrow application (enabling payments through the PalmPilot).

X.com wanted to be a financial institution.

Those two companies not only had a fundamentally different visions.

They also had different philosophies regarding the underlying technological infrastructure they had developed (X.com leveraged the Microsoft stack, whereas Confinity leveraged Linux, an open-source software).

Eventually, those two companies ended up merging to become one, PayPal.

While both companies had some grandiose visions, the market also turned out in a direction none had foreseen.

Enabling email payments which were supposed to be a “side feature,” became the killer commercial application for both companies.

They also figured that their tools had become extremely relevant on eBay. This triggered an irreversible journey. Where both startups understood the path to growth, leveraged on virality to get there, and eventually decided to merge to tackle the market.

During this process, a new business playbook has been developed.

Today we give for granted, but it didn’t exist at the time.

This playbook comprised concepts like:

And entire business disciplines are based on growth marketing, network effects, and more.

That is why PayPal’s history is so instrumental to the commercial Internet.

The founding members of PayPal would go on to build many other valuable companies and found the next wave of the Internet, what we now call Web 2.0 or Web2.

Key Highlights

Foundation and Merger: Founded in 1998 as Confinity, later merged with X.com to become PayPal.
Acquisition by eBay: Acquired by eBay in 2002 for $1.5 billion, integrated into eBay’s marketplace.
Spin-off from eBay: eBay spun off PayPal in 2015, making it an independent entity.
Top Institutional Investors: Top institutional investors like The Vanguard Group and BlackRock own significant portions of PayPal’s stocks.
Key Individual Shareholders: Key individual shareholders include Daniel Schulman, John Rainey, and Mark Britto.
Revenue Sources: Revenue generated through customer transactions on the Payments Platform and value-added services.
Financial Performance: In 2022, PayPal recorded over $27.5 billion in revenues and $2.4 billion in net profits.
Merger and Growth: Merger of Confinity, focused on PalmPilot payments, and X.com, aspiring to be a financial institution.
Killer Application: Email payments became the killer application, driving PayPal’s growth.
Pioneering Strategies: PayPal’s history introduced key strategies like freemium, agile development, blitzscaling, and viral growth.
Growth Concepts: Pioneered concepts for growth marketing and network effects.
Founders’ Success: PayPal’s founders, including Peter Thiel, Elon Musk, Reid Hoffman, and Max Levchin, went on to build other successful ventures.
Startupland: Contributed to the growth of companies like Yelp, LinkedIn, Slide, Kiva, and SpaceX.