Lots has been written about Dropbox's referral program, yet not many people seem to talk very much about the referral program that inspired it: PayPal's.
I went trawling around the Internet looking for everything that's ever been said about PayPal's referral program- interviews with Peter Thiel, Elon Musk, David Sacks and others. Quora questions and answers from people who witnessed the whole thing.
Here's all of that information, presented in an orderly fashion for your perusal. I've listed out all the sources so you can look through them yourself! I spent hours trawling through everything so that nobody else will ever have to. :-)
The short answer is: PayPal used to literally pay people to refer their friends. They'd deposit money directly into people's PayPal's accounts, and you could literally withdraw the money and spend it if you wanted to. And that was worth the ROI for PayPal. (They reduced the incentives and made it harder over time as they
The important point to note is, of course, that PayPal raised a lot of money and were burning it at an incredible rate. As Peter Thiel said:
It felt like things were working and not working at the same time; 7 to 10% daily growth and 100 million users was good. No revenues and an exponentially growing cost structure were not. Things felt a little unstable. PayPal needed buzz so it could raise more capital and continue on. (Ultimately, this worked out. That does not mean it’s the best way to run a company. Indeed, it probably isn’t.)”