Nathan Lustig

The Paypal Wars

Category : Books
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I just finished reading The PayPal Wars by Eric M. Jackson who was the former head of marketing at PayPal.  This book is a must read for anyone who is thinking about starting a company or has started a company.

It tells the inside story of PayPal from when it was startup called Confinity all the way to its sale to Ebay.
There were three main themes that I really enjoyed from the book.  
PayPal did not hesitate to hire smart people, even if they did not have a job in mind.  During the author’s first two days on the job, he has to find a place for himself to work in the company.  PayPal’s management team did not mind moving smart people around the company, even if they had no previous experience in the area.
PayPal also had a philosophy of meeting its customers’ needs.  Whenever there was a problem on the business side, the management team looked for solutions that were product driven.  For example, when PayPal was loosing millions of dollars per month on free transactions, instead of forcing users into paying accounts, risking user loyalty, they designed new features to funnel users into paying accounts.
The most important aspect of the book, not to mention PayPal’s success, was its open, entrepreneurial culture.  This meant that anyone in the organization could bring ideas to the table and have them taken seriously.  If they were good ideas, they would be implemented.  It did not matter if the idea came from a recent hire or the CEO.  By empowering everyone in the company to think about all issues, it forced everyone to always be thinking about the big picture and way to improve the company.
Its also amazing how many of the people who worked on PayPal started new, incredibly successful companies.  The PayPal Mafia has founded YouTube, Yelp, LinkedIN, Slide, WorldNetDaily, Digg and others and has funded Facebook.
  
There are some great stories of obstacles that the PayPal team had to overcome, along with power struggles and disagreements.  This book is a must read.

Creative Destruction and Congress

Category : Political Science & Economics
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A company invents a lotion that absorbs and neutralizes chemical weapons “seven times better” than the current solution.  The military wants to buy it to help save lives, instead of continuing to buy the inferior product.  Makes sense, right?

Well, in the real world, what really happens after the military decides that it wants to buy the better product?
Companies who make the inferior solution make campaign contributions to Senators who represent the states that produce the inferior product and tell them to issue earmarks forcing the military to buy the inferior product, of course.
That’s what really happened over the last two years when Senators Clinton D(NY), Schumer D(NY)and Spector R(PA) sought out $7.6 million in earmarks, forcing the military to buy the inferior product.  They also received a total of just under 100k in campaign contributions.
This type of government intervention is not only sleazy because it risks American lives, but also prevents the creative destruction that is vital to US competitiveness and creating an entrepreneurial culture.

What’s the Difference Between Bookies and Finance?

Category : Business & Advertising
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I’ve always wondered why it was ok for a person to make a “bet” in the form of a put or a call in financial markets, but not ok for someone to bet on a similar event from a private service. Freaknomics blogged about this same issue the other day.

It will be interesting to see if there is any backlash against financial “gambling” if the economy continues to struggle.

In Trouble with the Law? Delete Your Facebook Profile

Category : Technology
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Shana Madoff, the niece of Bernie Madoff, the now infamous hedge fund fraudster, has deleted her Facebook profile to try to get out of the public eye.  Will this be a trend that others continue when they run afoul of the law, or is this a special case?

Imagine the political fallout of the discovery of Obama or McCain photos of the caliber of the average college student. These pictures will be commonplace in the future for any person coming of age now.
It’s going to be interesting to see whether politicians and others of high status of the social networking generation are going to be punished for photos of them engaging in behavior that would be frowned upon by today’s politicians.   Will people in their 20s now be more forgiving of drunken pictures or off color halloween costumes than would people in their 50s?
We will find out.