Why PayPal Disconnected Their Own Phones

In the early days of PayPal, they disconnected every phone in the office, and not because they went remote, but their customers were so pissed off that they were tracking down direct lines of individual employees at headquarters and they were calling them to yell at them. And instead of fixing the problem, the customer service issue, the leadership team ripped the phones out of the wall. And it might have been the smartest decision that they ever made.

Now, it's a lesson I keep coming back to, and it originally came from Reid Hoffman, who’s the founder of LinkedIn, co-founder of PayPal, and it’s one of the most important disciplines that you can develop as an operator, which is determining which fires to let burn and then letting them burn. And if you're a perfectionist or if you've got an obsessive level of attention to detail, this is going to be really brutal, but if you don't master this—letting fires burn—you will get stuck in business because in the early phases of business, maybe any phase of business, but especially in the early phases of business, there's always more problems than there are resources to solve them. There's not enough people, there's not enough money, there's not enough bandwidth—you don't have enough of any of it to fix everything at once. So, if you can't figure out which fires you're going to let burn and you actually, and actually let them burn while you work on the thing that actually matters, the business is going to tank.

Here's the full PayPal story: dot-com era and growth is the name of the game. You know, and they had to grow in order to get funded, and funding is cash—cash is oxygen, right? So, you're not going to get the VCs to write the big check to keep the business going if you're not growing. At the time, like, so that's that's the number one factor, you know, and in whether VCs were writing a check, period.

So, PayPal's growing, they're off to the races, and then they hit this problem: growth is really good, but customer service sucks. And customers know it, they're frustrated. At one point, the customers start figuring out the direct lines to employees at headquarters and calling people to bitch and complain. I think there was even a story of people showing up at the office, like physically, and trying to talk to people to get their issue fixed. And imagine, these are money problems, right? So people are pissed; it's emotional.

And leadership's got a decision to make, and there's a real debate inside the company, and one side says, "You know, we've got to fix this customer service issue. You know, we can't build a good business on this kind of reputation." Other side says, "We can't. You know, growth is the only thing that matters right now. If we don't grow, we don't get funded, we die—none of it matters anyway." And then there's this middle-ground camp that's like, "Well, let's hedge. You know, like half of our resources on growth, half on fixing customer service."

And the founders ended up making the call, and the the call was: growth is the only thing that matters. If growth determines funding and funding is what gives you the resources to fix everything else later, then you say, "Okay, that's clearly the most important problem to solve. We've got to let the customer service fire burn." And so they stepped on the gas. They kept acquiring customers even though they've got a list of pissed-off customers that are calling their office, that are showing up at the office, and it and it did, he said it got so bad they were disconnecting hardwired phones in the in the office. The phones are ringing, they're distracting people, pissing people off, and distracting them from growth, which was the actual priority.

So, you know, put yourself in their shoes. Like, that's a hard decision to make. Candidly, most people can't make it. Partly because making that decision requires understanding which problem is actually the most important one, and people want to hedge by default, and I get that; I relate to that. But also because it requires pissing off a lot of people—you know, customers obviously, but even people on your team. You know, you've got employees saying like, "Hey, this is bullshit. I don't want to work for a company that's got all these pissed-off customers." So you've got nothing but bad feedback coming to you, and the leadership team that makes this call has to make it based on knowing, understanding, that the highest leverage problem in the business is this other one.

You know, and they look at what is the primary constraint? Primary constraint: funding. Funding is the thing that solves everything else. That's the problem to solve. And if we try to solve the problem that feels most urgent today because it's the loudest, or it's the people that are most emotional, it's the people that are screaming at us, and that costs us growth, well now we've got really good operations, we've got happy people for a business that's going to run out of money.

So, they let the fire burn because if you, like, if you run out of water trying to put out the wrong fire, like you can't fight any of the others, you know, like it does you does you no good. And there's like there's three things that I pull from this:

Identify the right problem to solve first. Not the loudest one, not the most urgent-feeling one, the right one. And that is a hard decision to make—like that's a hard assessment to go through and to be honest with yourself and honest and and candid about what the real constraint is. Most of us want to hedge by default. So, identify the right problem to solve first.

Focus on solving that. Don't get distracted by the other problems. There's always a lot of them, and and many of them are very deserving. Many of them are urgent. Many of them feel like they've got to be solved right now, and by most "normal" logic (air quotes), they should be. But based on priority, based on triage, most of them are not the thing that you should be working on in the moment. Like imagine you roll into the ER and they decide they're going to try to fix your blood pressure and everything else while they're solving the bleeding neck problem at the same time, right? You've got to triage. So, identify the problem and then focus on solving that.

Having the emotional discipline to execute on that plan. Like instead of executing on whoever's yelling at you the loudest. And I I know firsthand, way easier said than done.

So when you internalize this, you like you start seeing it at every stage. You know, whether it's a half-million-dollar startup or five-million-dollar company, 100-million-dollar company, billion-dollar company, there are always going to be more problems and more opportunities than you have the resources to go after. And so you've got to prioritize those, determine which fires you're going to let burn, and then have the the emotional wherewithal to actually let them burn. Like, that is what moves the business forward faster than anything else. So, reminder for myself as well as you. Hope it helps. Adios.