In 2007, Fortune magazine publishes a strange photo: 13 men in cheap tracksuits with stripes, wearing shirts and jackets, hung with rings and gold chains pose under the headline “Meet the PayPal Mafia”. The picture shows people from the same company, whose general condition was estimated at that time in the hundreds, and today in the billions of dollars. And they are all earned honestly.
In the late 1990s, the US built a “new economy” based on the Internet. Old and new companies rushed into the World Wide Web, perceiving it as a magic pill for growth. Investors actively invested in any projects related to the Internet, and the demand for stocks was so high that the NASDAQ index doubled in less than a year. On March 10, 2001, the dotcom bubble burst, there was a hangover for investors, hundreds of companies went bankrupt, leaving no sensible product behind. It would seem that you can forget about investing in the Internet. But then PayPal Mafia appears on the scene.
This phrase was firmly established already in 2007 due to the publication in Fortune magazine with such a headline and a staged photo in which the participants of the “Mafia PayPal” were captured in the appropriate gangster outfits. These guys have nothing to do with illegal schemes and shadow business. While still young students and graduates, they created an electronic payment system, which in 2002 for $ 1.5 billion was acquired by eBay. After that, most PayPal employees automatically became millionaires.
For several years they left the company and set off on a solo voyage. But at the same time they maintained close contact with each other and more than once invested in the same projects. This is largely due to their first successful start-up, PayPal, in which many came as students in the late 1990s and in which there was a warm relationship between employees.
Nevertheless, the term “mafia” is also applicable to them in some sense, since these guys after leaving PayPal had a serious impact on the industry and, in fact, became the authors of the second Renaissance of Silicon Valley.
What did they do?
Here, for example, only a small part of the most visible “mafia”, which came out of PayPal.
Javed Karim moved to the United States from Germany in 1992 at the age of 13. He was only 23 at the time of selling PayPal. Three years later, Javed, along with Chad Hurley and Steve Chen, created YouTube. Karim can be seen in the very first video, flooded on video hosting on April 23, 2005. Later, the guy decided to continue his studies at the university and became an unofficial adviser to the service, which is why his share in YouTube at the time of purchase by Google was small. Nevertheless, he managed to earn $ 64 million from his shares, for which Youniversity Ventures fund soon launched.
Jeremy Stoppelman and Russell Simmons
Jeremy Stoppelman at PayPal rose to the position of vice president, and shortly after the takeover, he left the company. In 2003, he studied at Harvard Business School, and then invented Yelp, a popular website in the States with reviews of restaurants, hairdressers and dentists. He came up with not one, but with another come from PayPal – Russell Simmons. The third “mafia” Max Levchin invested $ 1 million in their project. In 2012, the company entered the New York Stock Exchange.
Co-founder of PayPal is a boy from Kiev Jewish family, who in 1991 at the age of 16 emigrated with his parents to the United States. There he graduated from university and launched a couple of unsuccessful startups, and in 2002 he sold his successful startup and earned $ 34 million. Later he founded Slide, which Google bought for $ 182 million in 2010 and soon closed. Some time later, he created the company Affirm, which deals with microloans. Leads it to this day. He was an early investor of Yelp and an investor of Evernote, he sat on the board of directors of these companies.
Another co-founder of PayPal earned $ 55 million on an eBay deal. For a long time no money was collected on the shelf – Peter Thiel founded the Clarium Capital fund, which early invested $ 500,000 in Facebook in exchange for 10% of the shares (later converted to $ 1 billion in revenue). He co-founded Palantir Technologies, which specializes in analyzing “big data”. Also in the early stages he invested in Airbnb, LinkedIn, Spotify, SpaceX and many other companies. According to observers from Forbes, is one of the most far-sighted businessmen.
At PayPal, this guy came from a consulting firm, and went to Hollywood, where he produced the film “Here Smoke”. Later he made a website for working with genealogical trees Geni, then he created a corporate social network Yammer, which Microsoft bought for $ 1.2 billion, included it in the package of its products and now provides it to corporate clients.
One of the oldest and most successful members of PayPal Mafia. In 2002, he founded LinkedIn, and in 2011, his share in the company after entering the stock exchange was estimated at $ 2.43 billion. But this is only part of Hoffman’s fortune. He also invested at the initial stage in Facebook, Zynga, Flickr and other start-ups, introduced Zuckerberg to Peter Thiel, after which the latter invested $ 0.5 million into the social network.
Ilon Musk earned more than the rest on sales of PayPal – $ 165 million. It makes no sense to imagine him for long: SpaceX founder, investor and head of Tesla, investor of SolarCity Add to this the initiatives OpenAI, Neuralink and The Boring Company. Musk is one of the most public and extravagant people from PayPal, but is missing from the original Fortune image. He joined the company after the merger of PayPal and X.com. Whereas the original “mafia” created the backbone of PayPal from acquaintances, friends and classmates.
And this is only a small part of the most successful people who created multibillion-dollar companies and are credited to PayPal Mafia. Peter Thiel himself suggested that about 220 people could be included in this family. While immigrants from Google (tens of thousands of people worked in the company), who were able to create a “unicorn” company (with a capitalization of more than $ 1 billion), can be counted on the fingers of one hand. Probably, this strong entrepreneurial spirit and willingness to lend was tempered by the stresses that PayPal went through during its formation: problems with the laws, tense struggle with competitors, fraud and hacking by hackers
It is noteworthy that Silicon Valley and to the successful history of the guys from PayPal knew a similar situation. We are talking about the distant 1950s and the Treacherous G8 from Fairchild Semiconductor, a company that was one of the founders of the same Silicon Valley that we know today.
This story happened at the dawn of a semiconductor boom. It is today in Mountain View in California located offices of Google, Microsoft, Samsung, Symantec and other major technology companies. And in the 50s of the last century, it was an inconspicuous agrarian town in which about 7 thousand people lived (as of 2017, more than 80 thousand people are registered there).
In 1956, the American scientist and soon the Nobel laureate in physics, William Shockley, assembled a team of theorists and practitioners, with whom he founded the Shockley Semiconductor Laboratory in Mountain View. He was a terrible paranoid and technocrat, did not know how to listen to the opinions of others, and over time and completely flowed his head when he hit eugenics and racist theories. Nevertheless, this man had a hand in the most important invention of the 20th century – the transistor.
But no matter how outstanding the scientist Shockley was, he did not know how to lead people. Therefore, it is not surprising that very soon the company organized a group of specialists, which the press later dubbed the “Treacherous Eight.” Oh, these Americans love to dramatize everything. Eight talented scientists created their own company Fairchild Semiconductor. Thanks to the creation of an integrated circuit suitable for mass production, in a couple of years the brainchild of the Treacherous Eight has become one of the key residents of Silicon Valley. The last company founders turned the technological incubator into the world famous. Just admire what they have done.
Gordon Moore (yes, that of Moore’s Law) and Robert Noyce founded Intel, into which six other “perfidious” also invested. Julius Blank created the financial company Xicor, which invested in innovative start-ups. Jean Ernie founded the company Intersil, which developed bespoke chips, including for the Japanese watch manufacturer Seiko. Gene Kleiner opened a venture fund, which at various stages of work invested in Amazon, Google, Netscape, Symantec, Sun Microsystems, etc. The Treacherous Eight had an indirect effect on AMD, LSI Logic, Xilinx and Steve Jobs. Mr. Neuss of Intel is called the mentor of the co-founder of Apple.
“Bob Noyce took me under his wing.” I was young, I was in my twenties. He was a little over fifty. He tried to tell me what was what, he showed me a perspective, which I understood only partially. “You cannot understand what is happening now until you understand what happened before, ” said Steve Jobs.
Following the advice of the co-founder of Apple, we briefly looked into the past to make sure: the story is cyclical, and the success of one person generates the success of a dozen. This is how the economy of the digital age works.