Confinity

Hello, this is John Powers.  Here is a short history of Confinity, the mobile payment security company that evolved into PayPal.  I founded Integrated Communications, MyPilot, Monkeymail and Fieldlink, all of which were interesting and occasionally successful businesses. 

Family Tree

Mixed up project with JD Edwards at Chicago Bridge and Iron
begat
Integrated Communications
begat
MyPilot, Monkeymail, and Fieldlink
begat
Confinity
begat
PayPal
became a part of
EBay

I worked at JD Edwards, a enterprise software company in Oakbrook Illinois, that is now part of Oracle.  In 1995 JDE had a local client in Plainfield, 20 miles south of Oakbrook named Chicago Bridge and Iron, or CBI.  I managed the Field Service Software implementation for JDE.  CBI did large metal projects, such as pipelines and water towers, keeping teams of 20-50 field workers working outside of the office on large budget building projects.  CBI needed a way to keep accounting records up to date, and wanted to implement the very latest in Client-Server Technology, on the AS 400 platform, with field based laptops to keep inventory and accounting records up to date.  Of course it didn't work as planned, as there wasn't really a way to synch up records from the field onto the AS400.  So accounting and inventory were always off, and generally not recorded until weeks or months after task completion.

A rather bizarre idea hit our team one day, after watching the movie Jumanji, which imagined a nifty wireless data system that could keep database records up to date, real-time in the field.  We tried a few links with Motorola's analog data kit (CTM 2000 or something) and the PCSI Cirrus Logic CDPD phone, neither of which worked well enough (nor did the networks) to implement.   JDE dropped the field service side of the project, as it was not really implementable.

I asked my boss Dan Condon for a leave, and if I could take the work we had done on CBI with me.  After conferring with HQ (it'll never work, was the response) I left the company and started Integrated Communications, which was to specialize in database access and accounting over wireless for field service workers.  I had some contacts at Hyster the forklift manufacturer in Danville, Illinois and made an attempt to sell them my time for implementing a field service solution which included clearing customer payments for repairs at customer sites.

At about this same time (95-96), Jeff Hawkins was selling his small computer company to US Robotics, coming up with the Pilot 1000, or better known as the  Palm Pilot.  This was sort of a Apple Newton like device, which if wireless would be Motorola Marco (or Envoy if it used the MagicCap operating system).

Hawkins was giving a seminar at the sparse Inland Center in Oakbrook, which was sponsored by Motorola and Psion (Jamie Pyper, who was to become a friend, was working the booth for Psion at that time), and of course USR.  I was interested in utilizing a Marco as a field service computer with real time inventory and accounting updates and as a key to later busines accepting customer payments.  The Motorola Booth was a shambles; no one their knew how to operate the Marco (or Envoy) which really didn't matter, as the boothmonkeys were seriously intoxicated, at 1pm on a Saturday, if I recall the time.  I happened to be standing   at the booth about 6 years before U of I student Max Levchin became Technology Review's Innovator of the Year, but even then Max had a lot of confidence, and corrected the Motorola guys when they spouted out some wrong information about how wireless technology works.

I took note that Max sounded intelligent (I was later to find out, he actually was intelligent).  We had a coffee and listened to a good presentation by Jeff Hawkins on user centered design, and I took down Levchin's number to follow up on the project I had in the works with Hyster.   Danville, Illinois is an hour or so from Champaign Urbana, so after a meeting with Hyster to layout the field accounting program, I stopped at Max's not very plush office in Huntington Towers, and laid out a plan to send accounting information from the field to a central server via HTTP or Email.  This is 1996, and that is basically PayPal.  Max wrote a demo for Hyster.  They paid us for our time, and never used the product.  I am claiming that around November of 1996, we were sucessfully sending payment information via email notification (with http links), which is about 2 years before Billpoint thinks they started doing this.

At about this time, my neighbor Tom Kelly, was working on a plan at Avon cosmetics to improve field productivity for the sales force.  I proposed a payment system where after receiving an order from a customer money was sent via email notification (or http posting) to a customer account vs. an individual salesperson.  Again, Max wrote a decent demo for Avon, which was actually put into a field trial of some 100 users or so.  (The Compaq IPAQ or Cassiopeia was the platform). 

After two sort of sucesses with Hyster and Avon, I met with an investment banker William (Graham) Graham.  He made the key suggestion that we make this sort of communication of payment information a product rather than a project, and suggested the name Fieldlink.  About this time, I also go to know another neighbor (he shared the same telephone exchange 845-615-xxxx with my office by chance) who was in Palm OS Software development named Olivier Meiraeghe, who was the US Manager for Smartcode Software, a French provider of email software.  Olivier suggested that we make secured email on the Palm and start with making security tokens as a good example.  Max wrote a token emulator, and we had over 10,000 downloads on Palmgear for the sample product, which was (sort of) showing secured transactions on small devices.  I called Brian Hall, from Markspace Software (another Palm OS developer) and secured a working agreement with both Smartcode and Markspace that we could integrate with their email systems to send accounting (I am not sure it was sending money, neither then nor now) infomation back and forth via the Palm Platform.

We wrote longwinded business plan about using multiple devices to send money and accounting information back and forth, and how we could secure (somewhat overconfidently) those transactions.  We were sold on the Palm platform.  I had a small distribution company named MyPilot that sold Palm Pilots and wireless connectivity accessories, and we established the market size as 10 Million possible users.  Why we did not look at PC's rather than Palms?  Good question.  It seemed more fun to work on Palms.  There was less competition.  I liked the fact that families had more than 1 mobile phone per household in Europe, and thought (rightly) that the market size was larger for smaller cheaper devices than for PC's (though programmability was a major issue, Levchin could solve that).

At one count, we had met with 65 VC types in Chicago trying to get investors interested in small device transactions for sending payments (and inventory/enterprise information) back and forth.  We did not get any investors in Chicago.  This went on for quite a long time.   Max  had described our business proposition to Luke Nosek, another guy at U of I, who had moved to Silicon Valley.  Luke understood it very well, and was coming off a mixed up start up, where he had worked with Peter Thiel.  Luke, wisely, suggested moving the business to the Valley, and Max was ready for a bit more high action than Champaign was providing. 

We had many, many meetings with Palm Computing, Oracle, Netscape, and other Silicon Valley  types trying to boost our product.  I was flying to Palo Alto (alright Oakland, then driving to Palo Alto) every 2 weeks to help drum up investors.  After a meeting with Oracle, they released a white paper on mobile computing that Max had written, and forgot to give him credit for developing their (our) mobile strategy (which they also forgot to implement).  Palm engaged us in many pleasant, but ultimately failed, plans for using small devices in the enterprise.  (The MyPilot operation did get a lot of sales out of this, but it was treading water, and very complicated to make larger.)  At wits end, we went back to Luke, who recommended working with Peter Thiel to make a better business plan.  Great advice, as Peter was an effective leader and had some seed capital to get us moving.  As Peter has said, no one has been to more VC meetings and come out empty handed than he has (I would give him a run for the money), but Peter also has walked out of VC meetings with some of the largest investments in Valley history (from a Chicago company, no less).

I had just gotten married, my wife still in grad school, and had (and have) very little interest in moving west of Route 51 (Rockford via Wapella to New Orleans).  Max and Peter renamed the business Confinity (I registered it, but they named it), and I separated from the day to day executive operations, while remaining an investor in the business.  I also owned the most brilliant business MonkeyMail, which placed formatted email on your mobile device (about 2 years before RIMM), that we introduced to Nokia Ventures.  Nokia thought that it needed something to be successful (yes-investors), but kept in contact.  I introduced Max and Peter to Nokia Ventures John Malloy, who invested $3 Million via the Palm Beaming system in Confinity, soon to renamed PayPal. The company grew large, and wildly as PayPal, and was ultimately sold succesfully to EBay.   I often wonder if Nokia ever noticed that they were reading different sections of the same business plan when they were considering Confinity vs. MonkeyMail, or that Confinity worked much better with a zippy name, like PayPal than it ever did with Fieldlink.