How Elon Musk changed online banking with X.COM and PayPal

Inventho has discussed a lot about Elon Musk’s journey of becoming “The Real-Life Tony Stark”. This is the fourth chapter on the series discussing his childhood, university life, and his first startup, Zip2. So here we go. After Elon Musk sold Zip2 to Compaq for $307 million, Elon received $22 million for his stake in the company. In 1999, the same year, Elon Musk founded X.com with Greg Kouri. X.com was an online banking business and its deposits were insured by FDIC.

Funding of X.COM

Elon Musk invested more than $10 million of his money in business. His brother Kimbal Musk also invested in them as usual like in Elon’s other businesses. Nokia Ventures LP, Goldman Sachs, Deutsche Bank Alex. Brown, Qualcomm Inc., Lab Morgan, Idealab Capital Partners, and The French bank funded on X.com lately. It helped them to broaden their borders internationally.

Services and Operations of the X.COM

X.com offered person to person, B2B, and C2B payments. And they also offered banking accounts online. They gained 4,000 accounts daily even in early 2000. “Our long-term goal is to process one trillion transactions,” Elon Musk once stated about his vision for the company in 2000.

At the early stage, banks and other financial organizations were afraid to work with X.com because they saw the newly formed online banking company as a threat. But eventually, they were able to partner with prominent financial institutions like Barclays Bank, Bank One, and Wells Fargo.

At the time X.com had a trusted customer base, tremendous cross-selling capabilities, a solid payment system, and marketing savvy. According to James Van Dyke at Jupiter Communications, Elon Musk was a brilliant strategic marketer. Elon Musk graduated with an Economics degree from Wharton college besides having a Physics degree. Furthermore, he had an internship in a Canadian bank. So, he had some banking experience also. Those things helped Elon to succeed in X.com.

Merge with Confinity and became PayPal

X.com merged with Confinity in 2000, one of X.com’s biggest rivals. The newly merged company was named X.com and Musk was appointed as CEO. But he only served in the position for a year until he was expelled from the CEO position in 2000 because of his disagreements with other executives. He wanted to change its Unix based infrastructure to Microsoft. So, the company appointed Pieter Thiel as the new CEO. Besides declined from the CEO position, Elon remained as a board member and he was the largest shareholder also.

Before the merge, Confinity had a money transferring service, PayPal. In 2001, the company changed its focus to that service, and X.com was renamed PayPal.

In 2002, PayPal was acquired by American E-commerce company eBay for $1.5 billion and Musk gained $165 million from it. With the sale of PayPal to eBay, the domain name, X.com also had been owned by eBay. But in July of 2017, Elon purchased back domain name X.com from PayPal for an undisclosed fee. ‘Thanks, PayPal for allowing me to buy back X.com! No plans right now, but it has great sentimental value to me”, Elon tweeted about the purchase.

Now when we talk about online money transfers, we couldn’t forgo the name PayPal. They ranked 182 on the 2020 Fortune 500 of the largest United States corporations by revenue.

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