THE STORY of Silicon Valley cannot be told without PayPal bridging the gap between the 1990s and the 2000s.
The PayPal saga is one of the most epic stories of a company inventing its own industry, warding off competitors and regulators, coming out on top, and turning dozens of people into tech legends.
The “PayPal Mafia” is an elite group of engineers, investors, and visionaries who continue to shape Silicon Valley and the world today.
Engineers who got their start at PayPal would go on to have illustrious careers as entrepreneurs, and several former PayPal mobsters are billionaires — all are, at least, multi-millionaires.
PayPal was born from the meeting of two online payment companies: X.com and Confinity.
The two offered free cash bonuses to try and rob each other’s users and nearly spent each other into oblivion – they would eventually join forces in a bittersweet merger, with the X.com and Confinity alum getting together. competing for leadership positions.
The company has invented complex security tools, revolutionized digital payments, and survived startup cardiac arrest on multiple occasions. But PayPal was just the beginning for these tech titans.
Elon Musk founded X.com with the windfall from the sale of his first company, Zip2 – he was already rich, but not mega-rich, and he risked a slice of $10 million of what he had at the time to launch X.com .
He envisioned X.com as the epicenter of digital finance, riding the wave of transition from analog to digital.
Although he was still the largest shareholder after the X.com-Confinity merger, he was gutted by the 50-50 power arrangement. He fired the CEO who oversaw the merger and took his place.
Selling PayPal to eBay made Musk immensely wealthy, giving him the funds to get SpaceX and Tesla moving, but it didn’t happen without a Shakespearian betrayal.
There was controversy over which direction Musk was running the company. There was a lingering pettiness over whether the company should be called X.com or PayPal.
Musk was eventually removed as CEO on his honeymoon – the other executives conspired behind his back to get him out when he couldn’t defend himself.
Musk is able to laugh at his ousting from PayPal. “Maybe they thought I would come back and convince the board of my initial strategy and then fire them,” he told Jimmy Soni, author of a PayPal biography titled The Founders.
Today, Musk owns the X.com URL on sentimental value. He also owns a space travel company, the world’s first electric car brand, and if the ink dries on the paperwork, he will own Twitter.
While many Silicon Valley stars could be called “successful nerds,” Peter Thiel has more of a rage against him.
Recent headlines about Thiel relate to his political funding of pro-Trump candidates JD Vance and Blake Masters. He saw to the destruction of the Gawker media by using a Hulk Hogan sex tape as foil in a confrontation worthy of an HBO miniseries.
But once upon a time, Thiel was an early investor in Confinity, when their flagship product was the ability to transfer funds from one Palm Pilot to another.
During the PayPal race, Thiel was nearly killed in a car accident when Elon Musk totaled the million dollar McLaren sports car they were riding in.
As chairman of the board, Thiel sanctioned the blow to Musk and stepped into the role of CEO himself.
Later, Thiel would become Facebook’s first outside investor. He bought 10% of Facebook for $500,000 and sold it for $1 billion.
Reid Hoffman brokered the sale of PayPal to eBay – in the process, he turned millionaires into billionaires and business knights into industry kings.
According to Soni’s book, Hoffman told eBay’s board, “I have a mandate to sell the company for a billion dollars.”
And he got it.
During his commencement speech at Vanderbilt University, Hoffman explained how PayPal’s brutal schedule prompted him to plan a year of travel and rest – those plans were scrapped when the idea of a professional networking crystallized in his mind.
Instead of going on vacation, Hoffman founded LinkedIn, the networking site that has become the cornerstone of modern employment and connection.
at Hoffman motto of life is well loaded with business terminology befitting a Valley-er: “To change the world for the better, on a grand scale.”
PayPal’s executives were ultra-sophisticated people whose next move after PayPal would be a guaranteed draw for investors.
But the company’s juniors also had great ideas.
Jeremy Stoppelman was a trusted young engineer at PayPal who accompanied the company through its acquisition. When Musk was ousted as CEO of PayPal, a 23-year-old Stoppelman let Thiel have him in a screaming fit detailed in Soni’s book.
Stoppelman then received a million dollar investment from PayPal co-founder and chief technology officer Max Levchin to start his own company.
He turned Levchin’s million dollars into Yelp, the $2 billion local magazine company – adding to his legendary status, Stoppelman turned down Google’s offer to buy Yelp, which cost him earned praise from Steve Jobs.
The reach of PayPal alumni goes somewhat deeper than space travel, electric cars, local reviews and social media.
Chad Hurley, Stephen Chen and Jawed Karim served honorably as young PayPal employees before founding YouTube in 2005.
Karim uploaded the first-ever YouTube video titled “Me at the Zoo” – the video has had over 230,000,000 views.
When the company was acquired by Google a year later for $1.65 billion, the three received large portfolios of Google stock.
eBay created PayPal as a separate entity in 2015 and then discontinued using PayPal as a payment option on its site in 2021.
PayPal’s role in fintech engineering, fraud prevention, and e-commerce has left its mark on Silicon Valley, and the entrepreneurs who have been part of PayPal’s rise have tattooed their mark on the world.