[cvboss]

If you have nothing to lose, that means you have "nothing". Having "nothing" probably doesn't give you enough resources to do anything at all, right? There are always opportunity costs anyway.

And... the article says paypal lost ~170 millions while "willing to invest millions of dollars to acquire new customers"

I wouldn't call it "nothing" ;)

[asmithmd1]

Just because they recorded a loss of $170 million doesn't mean they consumed that much cash. Every account that they credited $5 to they had to record as a "loss." But how many people cashed out that money? Not many I bet, I bought something on Ebay with mine. Paypal essentially created a new currency that they pegged to the dollar. It didn't cost them any cash to "print" new money in people's accounts

[cvboss]

I don't think it's a "loss". Every new account is an asset for them, and they paid 5 dollars to "buy" accounts without actually giving cash to account owners (as you mentioned). However, unless they have assets to cover this "deferred liability", that would be a fraud. And they had access to money to cover it. So it's not a case of desperate startup with no resources, I am afraid :)

[asmithmd1]

Sure, every account is an asset but the assets in accounts have to be recorded as liabilities - that is why they had losses way in excess of the cash they raised. The point of the article is PayPal ran risks (violating banking laws, risking a run on their cash) an established company never could have.