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The thing that kept us going in the early days was the fact that Peter and I always knew that both of us would not be in a funk together. When I was like, "This fraud thing is going to kill us," Peter said, "No, I've seen the numbers. You are doing fine. Just keep at it. You'll get it." On the flip…

Levchin: It was actually sort of a side effect. We had this merger with a company called X.com. It was a bit of a tough merger because the companies were really competitive—we were two large competitors in the same market. For a while, Peter took some time off. The guy who ran X.com became the CEO,…

Levchin: It was actually sort of a side effect. We had this merger with a company called X.com. It was a bit of a tough merger because the companies were really competitive—we were two large competitors in the same market. For a while, Peter took some time off. The guy who ran X.com became the CEO,…

Then we had the famous Buck's beaming—at Buck's restaurant in Woodside, which is sort of the home away from home for many VCs. Our first round of financing was actually transferred to us via Palm Pilot. Our VCs showed up with a $4.5 million preloaded Palm Pilot, and they beamed it to us.

PayPal was started during the Internet Bubble, but it was in no sense a Bubble startup. Its success was a direct reflection of the intelligence of the people who built it. PayPal won because they built a better mousetrap.