fictionpage Chapter 214 Using a hen to lay eggs
Chapter 214 Using a hen to lay eggs
Chapter 214 Using a hen to lay eggs
After ending the conversation about Jack Thompson and dragging Anran into the mess, Ernst showed no sign of hanging up the phone.
This was merely a prelude, an appetizer. His real purpose in contacting Skilling was to...
ayPaI is seeking crucial funding for its next phase of development.
PayPaI is currently at a critical juncture in its market expansion. Its core strategic goal is very clear: to seize the current online payment user market with lightning speed before other banks develop their own online payment software, to cultivate the habit of using PayPaI among every user with online payment needs, and to create a powerful siphon effect, continuously bringing user resources from across the industry to the PayPaI platform.
How to promote it?
The answer is actually quite simple and straightforward: throw money at it.
By investing real money, we can carve out a path to users in the market.
"Fifty dollars per user? Ernst, are you kidding me?"
Over the phone, Ernst could almost picture Skilling sitting up in his office chair because of his exorbitant demands.
Ernst, however, remained unusually calm, showing no embarrassment whatsoever. Instead, he retorted confidently, "I think this is a very fair and reasonable price."
He then launched into a business pitch, trying to convince Skilling how worthwhile the money was.
"Think about it, if Enron's consumer users increase by one million, how much will Enron's market value increase? Spending fifty million US dollars to acquire one million users, this deal is an absolute steal for Enron. Anyone can calculate that this is a sure-fire way to make money."
PayPal now has 461 million users worldwide, and within this large user base, Google AdWords...
The GG system and the Lively gaming platform played a crucial role, bringing approximately two million users to PayPal.
The remaining 260 million people were mainly drawn by PayPal's financial services, including both Enron's own users and traffic from Wall Street.
However, the paying user rate of these financial services is pitifully low, a stark contrast to the users brought by Google and the YueDong gaming platform.
Most users who were attracted by the financial services downloaded PayPal purely out of curiosity, and then left it aside, like a group of onlookers who just watched silently from the sidelines.
After all, financial services involve significant investments, with transactions typically amounting to hundreds or thousands of dollars. It's difficult for most people to feel comfortable with a new company like PayPal.
According to internal data from PayPal, the payment rate of users brought in by Google AdWords (GG) is as high as 72%, which means that out of every 100 users who come in through this channel, 72 are willing to pay Google's GG via PayPal.
The paying user rate brought in by the YueDong gaming platform is even more astonishing, exceeding 83%. Almost every new user who joins converts into a paying user, all of whom use PayPal because they need to make a purchase.
Looking at Enron, even though it had the most users on PayPal among all financial institutions, only 107 million users actually purchased Enron futures products on PayPal. And it's unknown how many of those were Google and YueDong users.
However, these 107 million users brought Enron a huge increase in market value, with Enron's market value rising by more than 140 billion.
With a value of hundreds of millions of dollars, it instantly became the most eye-catching star stock in the stock market, attracting a large number of investors wherever it went.
To make his words more convincing, Ernst continued to do the math for Skilling: "Look, Enron has already achieved such a high increase in market value with just 107 million users. If we spend $50 million to add another million consumers to Enron, even if Enron's market value growth is cut in half and only increases by $7 billion, Enron will still make a huge profit."
After listening to Ernst's analysis about one million users, Skilling, who had been hesitant about the high price of fifty dollars per user, fell silent, clearly calculating the potential profits of the deal in his mind.
In his view, as long as it brings real user growth and market value increase, a cost of fifty dollars per user doesn't seem unacceptable.
As for whether Enron's stock price was inflated, Enron itself didn't care at all.
After all, in the capital market, as long as the stock price can rise to a high level, Enron can take advantage of the high price to raise funds in the stock market and put real money into its own pocket.
Even if the stock price falls back later, it doesn't matter, because Anran has already secured its profits and kept them firmly in its hands.
After a long while, Skilling's voice came through the phone again, but this time his tone was much calmer. "So this is the profit model you found for PayPay?"
Transaction activities on the PayPaI platform can be smoothly integrated by any enterprise as long as they pass the internal review process.
However, such a massive amount of transaction data and user base also means that PayPal needs to bear enormous network fees and equipment maintenance costs, which are a considerable expense.
At first, Skilling thought PayPaI planned to follow the market maker route, charging a fee on every transaction on the platform, which is a common profit model in the industry.
To his surprise, PayPay has been free to use since its official release, charging no fees to either enterprise or individual users.
A company that only loses money and never makes money cannot survive in the long run. So he had been secretly figuring out what kind of profit model Ernst had devised for PayPay.
It was only at this moment that he finally understood that PayPay was planning to profit from the growth of enterprise users.
Moreover, Skilling knew very well that PayPay would never actually spend all fifty dollars on every single user; it would be quite generous of them to allocate half of the money to user acquisition.
When faced with Skilling's question, Ernst did not deny it directly, but simply replied, "I suppose so."
Will a handling fee be charged?
This approach will only make businesses feel that PayPay is taking advantage of them, no different from shopping malls charging exorbitant booth fees.
Once the mall's foot traffic declines and businesses are affected, who would be willing to invest all their profits in high booth fees?
At that time, companies may flock to the PayPai platform, which would be a losing proposition.
Membership model?
Charging users an entrance fee is even more impossible. If you go shopping in a mall and are asked to pay an entrance fee before even entering, and the prices and styles of the goods inside are exactly the same as those in other ordinary malls, would you still be willing to go in and shop?
The answer is obviously no.
That's why he ultimately decided to adopt the shopping guide intermediary model. Although the cost for businesses under this model is still not low, they can obtain a continuous stream of user resources through PayPay.
With these consumers tied to them, no company would be willing to easily withdraw.
After all, no one wants to give up such a large user base.
In this model, businesses fund the promotion of PayPay, PayPal shares some of its profits with consumers to attract them to use the platform, and PayPay itself takes the majority of the profits, creating a win-win situation for all three parties.
Of course, this is just one of PayPay's profit models.
Ernst has a longer-term vision. He plans to launch a bidding-based GG slot model once PayPay completely unifies the online payment market and becomes the industry leader.
Space on a platform page is limited, while the variety of products on the platform is increasing. So, which products should be placed in the most prominent positions to be seen by more users?
This is where businesses need to use money to their advantage. Whoever is willing to pay higher Google Ads (GG) fees will get a better display position for their product, thereby attracting more user attention and purchases.
Skilling quickly realized the benefits after figuring out PayPaI's profit model.
He didn't immediately agree to all the conditions, but instead made his own request: "I need to sign an agreement to ensure that Enron's user acquisition costs are kept to a minimum."
Ernst accepted Skilling's request without hesitation, saying, "Yes."
Enron, as the first company to partner with PayPal, not only made a fortune by increasing its user base, but also inadvertently gave other companies the opportunity to profit from it.
Because PayPa| will gain a large number of users, these users will inevitably pay attention to the products of other financial institutions while choosing Enron products.
After all, Enron primarily focused on futures trading in the energy sector and did not engage in other types of financial products.
However, other financial institutions will surely follow suit after Enron spends heavily to acquire users.
To some extent, Skilling's agreement is a form of retaliation against other companies' previous freeloading practices, and it also raises the entry costs for future competitors.
Seeing Enron's market capitalization soar and its stock price surge, other energy companies and market makers couldn't help but feel envious.
Driven by profit, more and more companies will join this field, wanting a piece of the pie and raising money in the capital market.
The United States has a large number of energy companies, and the number of companies engaged in energy-related businesses worldwide is countless.
PayPay now offers these companies a brand new way to play and development opportunities, which they cannot ignore and will definitely participate actively.
"I hope to see results quickly." Skilling was eager to know how much change his $50 million investment would bring to Enron.
After hearing this, Ernst leaned back comfortably on the sofa, a confident smile on his lips, and said with a smile, "As you wish, just wait and see Enron's stock price soar again."
After hanging up the phone, Ernst turned to Peter Thiel, who was standing beside him with an expectant look on his face, and excitedly announced, "It's settled! They agreed to fifty dollars per customer. Next, I'm going to plaster PayPay's logo all over the streets of America, so that every American knows PayPay exists."
To be honest, Enron's PayPal money wouldn't end up in their pockets; they'd even have to pay for it out of their own pockets.
Because it requires a lot of investment in advertising, from TV advertising and newspaper advertising to outdoor advertising billboards, each of these requires huge financial support.
However, Ernst didn't care. He believed that you can't catch a wolf without risking your cub. His current investment was all for a greater return in the future.
Ernst's real purpose was to use Enron as a model, and by driving up Enron's stock price, to demonstrate PayPay's strength and value to financial institutions around the world.
He wants all financial institutions to see the huge benefits that partnering with PayPal can bring to businesses, thereby attracting more financial institutions to actively cooperate with PayPal, and ultimately achieving PayPal's monopoly in the online payment market.
This is a core strategy that other Wall Street giants, even if they develop their own online payment software, cannot integrate.
Upon hearing Ernst's words, Peter Thiel rubbed his hands together excitedly. "Great! In that case, PayPay won't have to worry about funding anymore."
PayPai has been facing financial pressure due to its continued free policy and huge operating costs. Now, with Enron's investment and future funding from more companies, PayPai can finally get rid of its financial difficulties and fully promote the development and expansion of the platform.