happened....
happened.
Livingston: Tell me about how you adapted the strategy.
Levchin: Initially, I wanted to do crypto libraries, since I was a freshly minted
academic. “I won’t even need to figure out how to do this commercialization
part. I’m just going to build libraries, sell it to somebody who is going to build
software, and I can just sit there and make a penny per copy and get marvelously
rich very quickly.” But no one was making the software because there
was no demand. So we said, “We’ll make the software.” We went to enterprises
and told them we were going to do this and got some positive reception, but
then the thing happened again where no one really wants the stuff. It’s really
cool, it’s mathematically complex, it’s very secure, but no one really needed it.
Max Levchin 3
By then we had built all this tech that was complicated and difficult to
understand and replicate, so we thought, “We have all these libraries that allow
you to secure anything on handheld devices. What can we secure? Maybe we
can secure some consumer stuff. So enterprises will go away, and we’ll go to
consumers. We’ll build the wallet application—something that can store all of
your private data on your handheld device. So your credit card information, this
and that.” And we did, and it was very simple because we already had all the
crypto stuff figured out. But, of course, there was no incentive to have a wallet
with all these digital items that you couldn’t apply anywhere. “What’s my credit
card number?” Pull out your wallet and look, or pull out your handheld wallet
and look? So that was really not going to happen either.
Then we started experimenting with the question: “What can we store
inside the Palm Pilot that is actually meaningful?” So the next iteration was that
we’d store things that were of value and you wouldn’t store in other ways. For
example, storing passwords in your wallet is a really bad idea. If you store them
in your Palm Pilot, you can secure it further with a secondary passphrase that
protects it. So we did that, and it was getting a little bit of attention, but it was
still very amateur.
Then finally we hit on this idea of, “Why don’t we just store money in the
handheld devices?” The next iteration was this thing that would do cryptographically
secure IOU notes. I would say, “I owe you $10,” and put in my
passphrase. It wasn’t really packaged at the user interface level as an IOU, but
that’s what it effectively was. Then I could beam it to you, using the infrared on
| ← and then thousands | a Palm Pilot, → |