PayPal didn't start as an anti-fraud system? It was a payment system that developed a pretty novel anti-fraud system and which was the foundation for a different company that does a ton of anti-fraud.
"Confinity Inc. is best known as the creator of PayPal. It was founded in December 1998 by Max Levchin, Peter Thiel, and Luke Nosek, initially as a Palm Pilot payments and _cryptography_ company. Confinity launched its milestone product, PayPal in late 1999."
In the book "Founders at work", there is a chapter about Paypal's founder and half his interview is about how banks told them they'd be crushed by fraud, then how fraud was probably eating up 10-30% of their transfers, then how they built such an incredible alrogithm against fraud that they had to build a room around the server to protect their trade secret.
Actually the key differentiator of PayPal, at least according to Thiel, is it wasn't an algorithm. It was a method to abstract the transactions enough to allow a fraud analyst (not a computer, or even a computer/data scientist), to interpret the patterns.
It had some cute name that I can't recall right now. Hugo or something? It was spun out into a separate company to use the same philosophy to fight terrorism. That company is Palantir and seems to be Thiel's opus magnum.
Oh wow. That's crazy how it seems never to be mentioned in the history of the "PayPal Mafia," or at least not the ones that I've read. Cool info, thanks.
