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Elon Musk on how PayPal got its first 100,000 customers in one month

November 07, 2025

“I didn’t expect PayPal’s growth rate to be what it was, and that actually created major problems,” Elon explains. “We started PayPal on University Avenue [in Palo Alto], and after the first month or so of the website being active, we had 100,000 customers.”

As Elon explains, the key to PayPal’s viral growth was it referral program:

“We started off first by offering people $20 if they opened account and $20 if they referred anyone. Then we dropped it to $10, and then we dropped it to $5. As the network got bigger and bigger, the value of the network itself exceeded any sort of carrot that we could offer.”

He continues:

“And then we just did a bunch of things to decrease the friction. It’s like bacteria in a petri dish. What you want to do is try to have one customer generate two customers, or three customers ideally. And then you want that to happen really fast.”

Elon estimates that PayPal spent $60-70 million to fuel this growth, before the company was acquired by eBay for $1.5 billion.