Industry Framing
Max Levchin used to describe PayPal as "a security company pretending to be a financial company." They judged the risk of a transaction and decided which risks to take on. Having this gave them a competitive advantage. They realized fraud would be their biggest issue and came up with ways to attack it on their own. Startups failed because they viewed themselves as payment processors. The fraud became too much for them to handle. Banks failed to compete because they didn’t have the same framing on fraud too. PayPal’s approach was “fraud is going to kill us. What can we do to save ourselves?” While banks fumbled with fraud and said “How can we build this and not let fraud in?” The banks’ framing limited their views, while PayPal’s forced innovation.