PayPal Mafia - The Founders Story & Their Battle w/ EBAY w/ Jimmy Soni - BRT S03 EP36 (135) 8-7-2022
Aug 10, 2022
PayPal Mafia - The Founders Story & Their Battle w/ EBAY w/ Jimmy Soni
- BRT S03 EP36 (135) 8-7-2022
What We Learned This Week
- PayPal Mafia – alumni created or involved many other co’s – Tesla, SpaceX, Palantir, Yelp, Yammer, LinkedIn, Facebook, YouTube & more
- PayPal had may contributors & a real long shot to happen during the DOTCOM Crash of 2000
- Claude Shannon – creator of Information Theory, predecessor to the modern computer age, & algorithms
- Bell Labs was a classic Tech Incubator like Fairfield Semiconductor, Xerox Parc, Menlo Park – Edison / GE, Manhattan Project, Tuxedo Park
- PayPal sold to EBAY in 2002 for $1.5 Billion, prior to this, the two companies were rivals as EBAY wanted a different payment system
Guest: Jimmy Soni, Author
https://twitter.com/jimmyasoni
https://www.linkedin.com/in/jimmysoni/
My books are passion projects. My topics come because I look for a book to buy on the subject and can’t find one. I know it’s supposed to be fancier than that, or that there must be some grand theory of my work, but there isn’t one. That said, my readers seem to enjoy what I’ve written, so maybe it’s fine?
I am inspired by my literary heroes, including Robert Caro, Laura Hillenbrand, Candice Millard, Daniel James Brown, and Barbara Tuchman, among many others. They are all rigorous researchers—but reading their books doesn’t feel like doing homework. That’s what I’m going for, and hopefully I hit the mark a few times.
For me, books are all-consuming projects, leaving little other time for the things that should populate this section like hobbies, interests, and even the ability to remain in basic touch with people. I enjoy obsessing over a subject for years, and my goal is to find as much information as possible and then make the material readable for a general audience.
When not writing or reading, I spend time with my daughter in Brooklyn, NY. If you’d like to connect, please drop me a line at hello [@] jimmysoni.com.
The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley
A definitive, deeply reported look at the origin of PayPal and its founding team, including Elon Musk, Peter Thiel, Reid Hoffman, Max Levchin, and others whose stories have never before been told.
They defined the modern
world.
This experience defined
them.
https://en.wikipedia.org/wiki/PayPal_Mafia
Paypal Mafia
Elon Musk – Tesla, Space X, Boring Co.
Peter Thiel – 1st FB Investor, AirBnB Investor, Founders Fund, Palantir
Reid Hoffman – LinkedIn (sold to Microsoft)
Max Levchin – Affirm, Investor in Yelp
David O. Sacks – Geni.com & Yammer
Chad Hurley – YouTube
Russel Simmons – Yelp
https://www.pressreader.com/india/the-hindu-business-line/20220620/281758452959411
https://twitter.com/jimmyasoni/status/1488992532268732419
A Mind at Play: How Claude Shannon Invented the Information Age
In this elegantly written, exhaustively researched biography, Soni and Goodman reveal Claude Shannon’s full story for the first time. With unique access to Shannon’s family and friends, A Mind at Play brings this singular innovator and always playful genius to life.
https://www.quantamagazine.org/how-claude-shannons-information-theory-invented-the-future-20201222/
QUANTIZED COLUMNS
How Claude Shannon Invented the Future
Today’s information age is only possible thanks to the groundbreaking work of a lone genius.
https://www.youtube.com/watch?v=M9hfWiQKhcs&t=2s
A Mind at Play | Jimmy Soni & Rob Goodman | Talks at Google
Life in Code and Digits: When Shannon met ... - ScienceOpen
Shannon is credited with the invention of signal-flow graphs, in 1942. He discovered the topological gain formula while investigating the functional operation of an analog computer. For two months early in 1943, Shannon came into contact with the leading British mathematician Alan Turing.
Ed Thorp, Claude Shannon and the World's First ... - Winton
https://www.winton.com › technology › 2018/07 › ed-t...
Jul 13, 2018 — Thorp, 85, is a former American mathematics professor and hedge fund manager, who became a New York Times bestselling author in 1962 with his ...
https://www.nytimes.com/2009/02/15/magazine/15Battier-t.html
The No-Stats All-Star
Notes:
Claude Shannon Bio – A Mind at Play (2017)
Claude Shannon – mathematician & MIT professor created Father of Information Theory –
How do you make info transferrable, & secure in wartime?
Friend of Alan Turing (British Mathematician), both worked on coding in WW2,
German code breaking scientists became celebrities in WW2 and raised funding
The science behind compressing info, digitizing info and MP3 files, transfer data
Mathematics Theory of Communication, Shannon’s paper and theory considered the Magna Carta of information age. Great paper theoretically and practically. Shannon created algorithm called sigsally.
Imitation Game – WW2 bio movie about Alan Turing
Shannon’s work used for Gun torrents on Navy ships, target projectiles
Bell Labs – math group that Shannon was a part of
Famous Groups of Genius - Menlo Park – Edison/GE, Manhattan Project – Built the A Bomb
Fairfield Semiconductor – predecessor to Intel and other Silicon Valley tech co’s
Bell Labs had money and started as R&D Dept. in Bell Telephone
Bell Telephone ran all land lines in America, had a Fed guaranteed monopoly on the phone system
Bell invented touch tone dialing, transistor, satellite tech, cell tech, communication networks
We are all affected by Bell tech and inventions, modern age owes a solid to Bell
Had big group of talent and could afford all of it, leading scientists of the time.
During WW2 many major U.S. corporations – Bell, Ford were recruited by the US Government.
War effort created urgency – math used to shoot down the enemy.
The Founders – story of PayPal (2022)
Dot Com burst created urgency to Pay Pal, bleeding money, had to survive.
Dotcom crash – companies started 1 day, & BK out of business next day.
Rise like a rocket and crash in 2 years
Next Gen of Genius Teams - Xerox Parc, Microsoft, Apple
Music Producer – Brian Eno coined the term “scenious”
Scene meets genius - Clusters of talent
American Revolution – Hamilton, Jefferson, Washington, Adams, Franklin all together for 1 cause
Inklings, Fugitive Poets, 1960’s British Music scene, Bill Walsh 49ers Coaching staff of the 1980s
Paypal is the story of many – Elon Musk, Peter Thiel, Max Levchin, Reed Hoffman
Alumni of Fairchild Semi led to Intel, Atari and Xerox Parc led to Apple.
Post WW2 Bell Labs pressure decreased compared to PayPal.
Bell Labs allowed free wheeling, could work on a project for 10 years.
PayPal “mafia” Alumni – Yammer, YouTube, Slide, Yelp, Palantir, Tesla, Space X, LinkedIn, investers in FB
Ghostbusters – safe jobs at universities vs real world, they want ‘results’
Pet.com star of 2000, went BK end of 2000 with Superbowl Ad
David Sachs – Palo Alto was “Killing Fields” of tech co’s when, Dot coms go bust
NASDAQ lost 80% of value in 2000 crash, Crypto Winter of 2022 is analogy
Dotcom bust forced PayPal to create a real business and profitable transfer user to paying clients
This in a time of infant internet, AOL mailed internet CD to potential customers
PayPal doing credit card payments online 20 years ago with dial up internet
MB recap of PayPal, 100 to 1 odds. Four year crazy time for PayPal and internet companies.
Paypal survives, goes public IPO (2001) and is acquired by EBAY for $1.5 billion 2002.
Still top payment system 20 years later, even owns Venmo, another big payment platform
Spun off from EBAY (2015) as of 2022 - EBAY market cap $26 billion, PayPal market cap $112 billion
Paypal grew email payments and reconcile payments, EBAY did not want to handle payments, clunky.
Meg Whitman, (of HP) was running EBAY in 2002. Paypal lived in fear of her.
No playbook to build Paypal or EBAY
Raising funding, running business, recruiting talent is all hard, start business from scratch.
Online payments was revolutionary
Reid Hoffman – Dad and firefighter of PayPal had to broker EBAY / PayPal deal
Max Levchin – engineer of PayPal – heart of company. Classic immigrant story – ambition and interest.
Have to determine appropriate balance of user growth and fraud to keep business going
David Sachs – cop, person who brings discipline to product design, Dr. No, must add value.
Peter Thiel is a biz guy, raised money and ran PayPal
Really smart people in the room, how to settle conflict when they disagree, often happened at PayPal
Sales vs legal battle is a classic fued in business
Internet was ‘wild west’ in 2002, five years old with Section 230
David Sachs was the user ally, user experience ‘conscious’ of PayPal
Sachs appreciated the user experience and design just like Steve Jobs of Apple
Elon Musk ran for X.com – was merged with Confinity (Thiel / Levchin) to be called PayPal (2000), both
were trying to create online payments. PayPal was a product of Confinity.
Reid Hoffman “Dad/Fireman’ of PayPal, had to be the adult and fix problems
Book process for Jimmy - 270 interviews over 6 ½ years to create and write book on PayPal.
Lesson – Email a ton of people, many will respond
So many people made significant contributions to PayPal. Huge cast of characters at the water cooler. Book is about business, tech, personalities.
Sign up for EBAY, set up bank account, get 2 small deposits of 2 cents and code.
Called Random Deposit system, micro deposits, created by Sanjay Bhargava
Julie Anderson – X.com alum, came with Musk. Created Omaha customer service hub for PayPal, she
was from Omaha, NE. PayPal still a large employer in NE
Jack Selby – raised financing worldwide from Europe, Japan etc.
Jack Malloy – early investor and VC in PayPal.
Thiel raised $100 million right before DOTCOM bubble burst.
PayPal paying money people to use PayPal and get users, cash burn rate
Amy Kleiment – unsung hero of PayPal, she understands the Full Picture - resolves conflicts – saw how design went with Ops – Amy was Part Ops – historian – therapist
Analogy of Shane Battier – Michael Lewis article (No Stats All Star) on former Duke player, whatever NBA Team he goes to, they win, Battier is the glue of the team.
Big strategic decisions matter and that’s what is written about. The Interesting problem solving and
execution to start and grow a company is often not done by CEO (who gets credit), but by unsung hero no one knows about. Lots of people are involved to build a business.
Jimmy does not have tech background. Wrote a history of PayPal and the stories
Greg Kouri created Zip2 with Elon Musk and his brother Kimbal Musk, their first company sold for $307
million in 1999 to Compaq database/software company. Musk reinvested the $ in X.com
Epilogue – PayPal Mafia affected and inspired tech startups worldwide
Chris Wilson taught PayPal story in prison with Stephen Edwards in prison for murder in Baltimore, MD
(think The Wire). They taught inspirational story of the entrepreneur. No ceiling on success, past does matter if you add value to others.
Tech Topic:
https://brt-show.libsyn.com/category/Tech-Startup-VC-Cybersecurity-Energy-Science
Best of Tech:
https://brt-show.libsyn.com/size/5/?search=best+of+tech
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https://brt-show.libsyn.com/category/Investing-Stocks-Bonds-Retirement
‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT
Legal Topic: https://brt-show.libsyn.com/category/Legal-Asset+Protection-Estate+Planning
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