May 1, 2023
Author Jimmy Soni kicks off the conversation by explaining why the PayPal mafia is more noteworthy than other large startups. Soni explains that he wrote the book to document not only the business successes, but also the personal stories of the founders. He explains that the market has been good and that people can learn a lot of new things from the book. Soni reveals that his favorite thing about the book is learning about the inventiveness and innovation PayPal had.
The Birth and Growth of the PayPal Mafia
Jimmy and Will discuss the phenomenon of the PayPal Mafia, the group of entrepreneurs who emerged from PayPal's success and went on to found some of the most successful companies in Silicon Valley. Soni explains that the PayPal Mafia is a unique phenomenon because the founders were relatively young when PayPal was successful, they had faith that businesses on the internet could be successful, and they supported each other's ventures. PayPal alumni invested in and supported each other's companies, and they hired alumni as their first employees. This mutual support and collaboration was key to the success of the PayPal Mafia, and their success has been a major factor in the success of Silicon Valley.
He shares how PayPal was able to succeed in the early 2000s due to their right timing and how important that was, the selection of very talented people, and the nurturing of their employees. They were able to take advantage of the increasing ubiquity of email addresses and the platform of eBay, which hadn't yet sorted out its payment infrastructure. They also managed to survive the .com burst and make a successful IPO. This was due to their selection of very smart and entrepreneurial people, and their experiences of putting a company together from scratch and having it be a success. He mentions how the book The PayPal Wars by Eric M. Jackson shows how messy real companies can be and how PayPal started out as two companies, Con Finiti and X.com, that merged and began toying around with the idea of beaming money from one palm pilot to another.
Building a Startup
Jimmy reflects on his experience of studying the formation of PayPal and how it taught him about Silicon Valley strategy and the messiness of how companies actually grow. He emphasizes that building a company from scratch is much harder than most people think and that things that seem inevitable can often look ridiculous at the start. He demonstrates this by using the example of the Palm Pilot that was labeled one of the 10 worst business ideas of the 1990s but that company became PayPal. He emphasizes that researching the book has made him more aware of the difficulty of creating something and has taught him to not to dismiss ideas that seem silly or take for granted the companies that occupy our lives.
The creation of PayPal was a “dogfight” that required a lot of hard work and effort. The biggest challenges in making it successful were to convince people to use the payment system and make sure that people were not taking advantage of it. Jimmy talks about the uncertainty and anxiety that comes with being involved in a startup and the do or die moments that can arise and that there are often one or two decisions that are crucial to survival. He noted that CEOs usually only make six important decisions per year, so it's important to go into a startup with eyes wide open and know that these moments will arise and that the company could go under at any point. He also talked about how chaos can be beneficial for a startup, as it can bring about new ideas, but also can just be chaos. His insight from the story of PayPal is that a lot of what appeared to be chaos from the outside was actually a controlled chaos that was directed towards the right problems and issues.
The Elon Musk’s Pressure Cooker Leadership Style
Will and Jimmy discuss Elon Musk's recent acquisition of Twitter and his ability to lead a tech company. Jimmy explains that he and Musk never spoke about social networks, and that they only discussed payment networks. He noticed that Musk's management style and that Musk used the term ‘maniacal urgency’ to describe it, and believes that Musk's intense approach is necessary for the success of a startup. Jimmy goes on to explain that this style of management has been consistent from Musk's first venture, Zip Two, to his current companies Tesla and SpaceX.
Elon Musk's leadership style is one of prioritizing urgency and setting unreasonable demands for his employees. This was the case in his experience with PayPal, and is now being seen at Twitter. An engineer from X.Com shared that during this period, Elon worked longer hours than anyone else and that it was an energizing environment for engineers who wanted to build something quickly, get rapid feedback, and keep moving towards a big goal. This style is not for everyone and can be difficult to understand, but it has been successful for Musk in the past. Through his research, it became clear to Jimmy that startups need to be maniacally urgent and dedicated in order to succeed.
He discusses the market for books about companies, including his own book The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley
The book has done well, both domestically and abroad, and Jimmy believes that people are drawn to the book because of the famous and controversial players involved. Feedback received from professionals in the startup world have told him that the book captures the energy and feeling of what it is like to be in a startup. Soni shares that the market for books about companies is big and that the Silicon Valley halo has not diminished abroad; all of these factors have contributed to the popularity of the book. His book has international appeal and what differentiates his book from others in the same genre is the inclusion of personal stories.
Researching the Book
He talks about the importance of invention and how startups are allowed to look at a problem and create something new to solve it. He shares how many inventions were developed by PayPal.
When it came to gathering information, he struck gold when he was interviewing someone who offered him access to the company's early records. The person sent Jimmy several gigabytes worth of emails from the time. Jimmy was able to access emails sent and received by key players in the company, giving him a better understanding of the story he was researching. To capture the widest possible story, he started with any emails sent to the company and printed them all out. He then read through every page, looking for any interesting gems that could be included in the book. He found a motivating note from Elon Musk outlining the company's struggles and signed off with Work like hell, Elon. This note was unexpected and captured the character of Musk that is still seen today.
When writing his book, Jimmy explained that he took a methodical approach to email research, using folders, binders, and highlighting to identify key points. He used Google Drive to store PDFs of her citations for fact-checking. This email archive was instrumental in making the book more accurate, rather than relying on hazy memories.
Jimmy talks about the secret sauce of recruiting talent. He specifically mentions Peter Thiel's superpower. Jimmy believes that it is talent identification. Thiel has an uncanny ability to identify people who have potential and to offer them help in the form of introductions, investments or by sketching out a vision of their career that is bigger than they thought possible. Jimmy shares what he learned about his time working at McKinsey and how that helped him as a writer, and what he is working on now, which is a co-writing project on tech history.
07:41 "The Evolution of PayPal: A Story of Near-Failure and Success"
09:57 Exploring Contingency in the Story of PayPal's Success
13:33 Managing Uncertainty in a Startup Environment
14:15 Analysis of Elon Musk's Management Style at Twitter
18:42 Recruiting Strategies at X.com and Confinity
24:34 The Market for Books About Companies
27:59 On PayPal's Inventiveness and Innovation + Exploring the Origin Story of PayPal's CAPTCHA Technology
38:10 Analysis of Peter Thiel's Superpower: Talent Identification
41:23 Peter Thiel's Approach to Hiring and Recruiting
44:42 Writing Books, Consulting, and Professional Development
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