Elizabeth Warren was recently handed yet another expensive bureaucracy to lead (although not formally so as to avoid an embarrassing Senate confirmation) in the form of the Bureau of Consumer Financial Protection. You might as well take the $500+ million this will cost the taxpayers each year, pile it up, and torch it for all the good it will ultimately do. As was the case with TARP, the Obama Stimulus that stimulated nothing productive, and a host of other costly programs, this latest bureaucratic incarnation is likely to do little for the public.
It is my contention that your humble correspondent has done vastly more to help the average consumer (at no cost to the taxpayers) than Elizabeth Warren can ever dream of doing from high atop her academic ivory tower. Yes, you read that right. Let me explain…
It was early January 2000. I had recently joined PayPal which was still a small company, unknown to most of the public. At that time PayPal was oriented towards making payments (or “beaming” as they called it) via palm pilots at restaurants. Since palm pilots were not exactly a universal piece of hardware nor were most restaurants prepared to have payments “beamed” to them, the growth of PayPal was somewhat limited.
However, they did have one important incentive to get people to join up. The same incentive that caused me to sign up initially: you would receive $10 for signing up and the person who referred you would also receive $10. This caused me to “beam” a penny to a number of friends who collected their $10 signup bonus while allowing me to collect a $10 referral fee for each of them. Unfortunately, I soon ran out of people to contact plus others felt I was spamming them with my penny “beaming.”
Since I was an avid user of eBay at the time, selling everything from T-shirts to digital cameras to books to even my own brand of hair ointment (PJ's Dry Hair Treatment), I thought that perhaps the best way to sign up new PayPal recruits would be via online auctions. I performed an eBay search and discovered that only about a dozen auctions mentioned PayPal. I thought about this briefly and quickly came up with the idea of PayPal auction banners. A seller could place such a banner on his auctions and the buyer could click it to quickly sign up with PayPal which would automatically credited the seller with the referral fee.
With dollar signs rolling around in my head from the potential auction referral fees, I sent an e-mail proposing the auction banner idea to Jack Selby who was then the PayPal Director of Marketing (now with Clarium Capital). …No reply to what I thought was a brilliant idea so a short time later I picked up the phone and called PayPal. Of course, I felt like my phone call would prove to be useless. Yeah, call up a corporation with an idea and expect them to react? Not likely but, feeling really small, I made the phone call anyways.
I was surprised to be quickly put in contact with Jack Selby himself. As I explained my idea for the PayPal auction banner, I somehow felt like there was only polite tolerance of the idea from Selby of the excitable “kook” on the other end. At the end of the phone call, I thought I had gone nowhere with my idea.
For the next day or two, the auction banner idea kept gnawing at me even though I was sure PayPal was cold to my proposal. I was so sure this was a great idea that I called up Jack Selby at PayPal again and the conversation went something like this:
“Jack, I know I sounded like some nutcase from out of the blue the other day when I told you about my idea for a PayPal Auction banner but…”
“We loved your idea!”
“Damnit, even though I might not have presented it correctly, the idea is still valid…”
“That auction banner idea was brilliant.”
“If you just give it a try on a trial basis I am sure you will find that…”
“We took up your idea and the PayPal auction banners are already up and running.”
“Listen Jack, why can't you…WHAT!? You say that you liked my idea and the banners are already online?”
So it turned out that I misjudged Selby's initial reaction to my idea. Instead of dismissing my idea as should have been expected by my overenthusiastic babbling in the first phone call promoting my auction banner idea, Selby overlooked my “nuttiness” and realized it was a good way to boost PayPal membership. The success of the auction banners can be seen in the stats. From an initial dozen auctions in January, PayPal experienced phenomenal growth to the extent that a mere month later it was listed on approximately 200,000 eBay auctions and by April of the same year it was on more than a million auctions.
And now you know why I (unintentionally) have done more for the average consumer with my small part in enabling safe, speedy online payments than Elizabeth Warren and her expensive new bureaucracy toy can ever hope to accomplish. Perhaps Elizabeth should start selling T-shirts on eBay for inspiration on ways to help the consumer.