Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

News: PayPal co-founder to come out of stealth mode this month with . .

Posted by Tom Foremski - October 3, 2005

. . .sliding into another winner?

By Tom Foremski for SiliconValleyWatcher

Max Levchin, the co-founder of PayPal, the internet commerce giant, is coming out of stealth mode mid-October with his next big venture:, an online photo sharing site.

Mr Levchin has funded other businesses, such as Yelp; but this is the first one, since PayPal was sold, that he is heading as CEO. Mr Levchin, 30 years old, was the former CTO of PayPal, which sold to Ebay for $1.5bn in 2002.

Mr Levchin told Silicon Valley Watcher that "is like iTunes for your photographs." It automatically finds photos on your system and organizes them. Users can share their photo albums using very simple one-or-two-click tools to publish online.

Mr Levchin is expected to announce commercial partnerships around, and further details of his strategy, later this month.

San Francisco based has many aspects that are familiar in other online services such as Flickr, and in social networking sites such as Friendster. Mr Levchin is betting on's simplicity of operation, and its combination of "social" network technologies, to attract large numbers of users. is hosting an event on October 14 celebrating the official launch of its service.

This week, San Francisco is the venue for the Web 2.0 conference, where many online services and online companies launch new products.

Foremski's Take:

There is no doubting Max Levchin's entrepreneurial skills; he could have retired at 28. He once told me, "I took a year off after Ebay bought PayPal; but I didn't do much, and I was bored...I'm much happier coding until 4am." has a good user interface' and Max knows how to grow businesses: PayPal was his fifth venture.

Such persistence to succeed will be needed for; but we have to remember that we are still in the early stages of the internet, and there is still plenty of time to build a strong online brand.

The hard part

And that is the hard part, not the software coding. Building an online brand takes time, and a consistent, unflagging effort to build up the user community.

These days, such brand building efforts cannot be done by throwing money around in a big advertising/promotional campaign [as during internet 1.0...]; it has to be done in a much more grass-roots fashion, with subtle marketing; and that is not easy.

Another PayPal?

Max has built up large PayPal communities, [and these are essentially "social networks"] so he could do the same with, and grow communities in a similar, viral way.

PayPal's success, however, depended on its ability to guard against fraud far better than the credit card companies; and this enabled it to offer a smaller retail transaction fee.

For small merchants, PayPal's low-cost of transaction became an extremely valuable service and one that they encouraged customers to use--and the PayPal network grew by leaps and bounds.

In a similar way, will have to demonstrate it offers an extremely valuable service in order for its users to evangelize it in their communities, and for it to spread in a viral fashion. It can be done, but it can't be forced.

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