Sunday, July 3, 2022

POWER BROKERS Silicon Valley’s greatest titans all started in the same place – meet the “PayPal Mafia” that still shapes the world today

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THE HISTORY of Silicon Valley cannot be told without PayPal bridging the gap between the 1990s and 2000s.

The PayPal saga is one of the most epic tales of a company that invents its own industry, parries competitors and regulators, rises to the top and transforms dozens of people into tech legends.

The “PayPal Mafia” is an elite group of engineers, investors and visionaries who shape Silicon Valley and the world to this day.

The engineers who started at PayPal went on to have glamorous entrepreneurial careers, and several PayPal Mafia alumni are billionaires — all of them are at least multimillionaires.

PayPal was formed from the collision of two online payment companies: X.com and Confinity.

Both offered free cash rewards to try and steal each other’s users, and wasted each other almost to oblivion – they would eventually join forces in a bittersweet merger that saw X.com and the Confinity alum vied for leadership positions.

The company invented complex security tools, revolutionized digital payment transactions and survived multiple cardiac arrests. But PayPal was just the beginning for these tech titans.

Elon Musk founded X.com with the windfall of selling his first company, Zip2 – he was already rich, but not mega-rich, and he risked some $10 million of what he had then to launch X.com .

He envisioned X.com as the epicenter of digital finance, bridging the wave of analog-to-digital transformation.

Although he was still the largest shareholder after the X.com-Confinity merger, he was disappointed with the 50-50 power split. He fired the CEO overseeing the merger and took his place.

Selling PayPal to eBay made Musk immensely wealthy and gave him the funds to get SpaceX and Tesla up and running, but it didn’t come without a Shakespearean betrayal.

There has been controversy over the direction Musk is taking the company. There was an ongoing pettiness about whether the company should be called X.com or PayPal.

Musk was eventually ousted as CEO during his honeymoon — the other executives conspired behind his back to oust him when he couldn’t defend himself.

Musk can laugh at his fall from PayPal. “Maybe they thought I was going to come back and convince the board of my original strategy and then just fire them,” he told Jimmy Soni, author of a PayPal biography titled The Founders.

Today, Musk owns the X.com URL sentimental value. He also owns a space company, the world’s leading electric car brand, and when the ink dries on the paperwork, he will own Twitter.

While many Silicon Valley All-Stars could be dubbed the “nerd who made it,” Peter Thiel has more anger at himself.

Recent headlines about Thiel relate to his political funding of pro-Trump candidates JD Vance and Blake Masters. He wreaked havoc on the Gawker news outlet by using a Hulk Hogan sextape as the foil in an HBO miniseries-worthy showdown.

But once upon a time, Thiel was an early investor in Confinity when their flagship product was the ability to beam funds from one Palm Pilot to another.

During the PayPal run, Thiel nearly died in a car accident when Elon Musk crashed the $1 million McLaren sports car they were driving.

As CEO, Thiel endorsed the strike against Musk and stepped into the CEO role himself.

Thiel later became the first outside investor in Facebook. He bought 10% of Facebook for $500,000 and sold it for $1 billion.

Reid Hoffman brokered the sale of PayPal to eBay – turning millionaires into billionaires and business knights into industry kings.

According to Soni’s book, Hoffman told eBay’s board of directors, “I have a mandate to sell the company for $1 billion.”

And he got it.

While delivering the commencement address at Vanderbilt University, Hoffman explained how PayPal’s brutal schedule led him to plan a year of travel and rest — those plans were scrapped when the idea of ​​a professional networking site began to form in his mind .

Instead of taking vacations, Hoffman founded LinkedIn, the networking site that has become the lifeblood of modern employment and connections.



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