We Study Billionaires - The Investor’s Podcast Network - TIP417: The Incredible Story of the PayPal Mafia W/ Jimmy Soni

Starting point is 00:00:00 You're listening to TIP. Today's episode is a fun one where I sit down with author Jimmy Sony to discuss his new book, The Founders, the story of PayPal and the entrepreneurs who shaped Silicon Valley. The original team at PayPal has become known as the PayPal Mafia, because nearly all of them went on to found other multi-billion dollar companies. For example, Elon Musk went on to found Tesla and SpaceX. Peter Thiel went on to found Palantir, Reed Hoffman went on to found LinkedIn, in, Max Levchen with the firm and others, David Sacks founded Yammer. I mean, the list goes on. How on earth did

Starting point is 00:00:36 all these founders get lightning to strike more than once? It all originated with PayPal. This is a story widely understood, but hardly explored in depth. In this episode, we discuss members of the PayPal Mafia and their origin stories, how PayPal came to be, the many trials that PayPal endured, the culture at PayPal and how it developed, Jimmy's main takeaways having purpose, personally interviewed each billionaire and years of additional research and a whole lot more. This is the kind of story that would make a great movie. You'll be able to see quickly and clearly that Jimmy has done an immense amount of research and provide some amazing insights.

Starting point is 00:01:13 I hope you enjoy it. Here's my conversation with Jimmy Sony. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right, everybody, like I said at the top of the show, I'm here with Jimmy Sonny, the author of The Founders. Jimmy, welcome to the show.

Starting point is 00:01:48 Thank you so much for having me. I find the story of the PayPal Mafia just endlessly fascinating because at this point, it has all this almost myth and lure around it where it's like the Avengers story. All these folks have gone off and just created more and more billion-dollar companies. And there had to have been something in the water, right, that they were drinking in the PayPal office or something at some point. So I would love to, first of all, take a step back for those who aren't familiar and just describe who the PayPal Mafia is.

Starting point is 00:02:23 And then I want to lead into, you know, what made you want to write a book about them. The Avengers is a good metaphor. You know, I haven't used that, but I think I might borrow it. I've always been using, like, you know, the 1990 Chicago Bulls, right? Like this is last dance, but Silicon Valley, where you have all these amazing people who come together at one time. Yeah, so just to give your listeners some background, I suspect that most of the people who listen to you are familiar with the names of the alumni, certainly the better known alumni from PayPal. It includes people like Elon Musk and Peter Thiel and Max Leibchen and Reid Hoffman, David Sachs, Keith Rabeoy, among many, many, many others. There are also folks who, you know, the CEO of Ancestry.com is a PayPal alum.

Starting point is 00:03:11 Some of the senior most people at Facebook, several high-level people in government are ex-Pa PayPal. The founder of Kiva.org, a social enterprise, is an ex-Pa-Pelal. And there was this interesting thing that I had worked on. I had done a biography of a mathematician named Claude Shannon. He worked at a place called Bell Labs. And Bell Labs in the 20th century, I mean, it's like they put the Bulls dynasty to shame, right? They invent the transistor.

Starting point is 00:03:35 They invent touchtone dialing, the laser. They win six Nobel prizes. It was just an incredible powerhouse of talent. And I just started thinking about other clusters, like not sort of individual stories of success, but what are places in American life, particularly technology where you've had groups of people come together? I looked at General Magic, which is one example. There's a great documentary about General Magic. I looked at Fairchild Semiconductor, Xerox Park.

Starting point is 00:04:00 And I sort of fast forward in that history to PayPal. And I just, you know, I'd sort of like walked in as the person who maybe like asked one too many questions about why there wasn't a more comprehensive look at that period in these people's lives. Meaning you get a lot of coverage understandably of Elon and Tesla or of Max and a firm or of, you know, any of these other things. But why hadn't anyone gone back and like tried to excavate this 20 year old story? And then that was what interested me. I thought to myself, you know, it's one thing to ask them questions about what they're doing today, but what made them who they are? What were their defining experiences? And among those defining experiences was the creation of PayPal during the height of both the dot-com boom and in the middle of the dot-com bust.

Starting point is 00:04:49 And so it was this really like intense experience. And I wanted to just, I wanted to understand it. That was that was the motivation. I wanted to know what happened. And before we get into the background a little bit more, paint a picture about the research that went into this, because it was over a number of years. You seem to have had amazing access. For example, you say in the book how you had a three-hour plus interview with Elon and he was rummaging around in the attic, you know, to come up with memories of this time, which I just love that kind of visual. But talk to us about what went into the research for the book. Yeah, and just for the spirit of true sort of fact.

Starting point is 00:05:27 checking. His line about it was that I was making him rummage in the attic. He wasn't actually rummaging in the attic, but he felt like he was because, you know, here he was well into his Tesla and SpaceX years, and this guy shows up and has questions about, you know, 1997 and 1998 and 1999, which is probably something and nobody asking him about these days. I'm not a tech writer or journalist. I'm a historical, like most of my books have been historical narratives and I like that sort of work. I came at this as an outsider. To give you a sense of the process, you know, I just daisy chained one interview to the next to the next. I did 275 interviews over the course of five years. I was given access to a lot of, let's call them, momentos, memorabilia, old emails,

Starting point is 00:06:12 old notes, people kept their PayPal T-shirts. So I had a lot of access to that kind of stuff. And then I benefited from the work of the Internet Archive, which, you know, folks who have time to spend on the internet and need to go down rabbit holes. You can look at old versions of web pages, old versions of anything that was online. And so I just went, you know, I started out, I didn't think this would be that intensive project, but I was at best an uninformed person asking questions. So in order to get more informed, I had to go back and really pay attention to what they had done and said over the years, let's say, the late 1980s through 2005. And so I mean, it was funny to talk about this.

Starting point is 00:06:58 I just went on YouTube and I went on Vimeo and I went on the C-SPAN archives. And I would find every scrap or nugget I could find where someone had spoken about the company. I went and just looked at every mention of PayPal for basically like a period of 20 years. And I started to piece together a picture of what I thought had happened. And then, you know, the virtue of this book as opposed to my others is the subjects are alive. So I had the ability to email them and say, hey, I'd like to do this. this, but it'd be useful to have some of the, some of the context, some of the colors, some of the stories I don't have access to. And I will say to a person, everyone was very gracious.

Starting point is 00:07:33 These are people who have no time. I mean, no time, right? I don't know how some of these people do what they do. And they made time for this. And I think it was sort of a walk down memory lane. I had multiple discussions with Reed Hoffman. And this is a person who, I don't know how he manages this schedule he has, but he made time for lengthy substantive chats about business strategy and about his approach to business at that time and why he made the decisions he made. And on down the line, I would also say that part of my, and this is important, part of my conceit with the book was, your listeners know the bold-faced names that built some of these

Starting point is 00:08:08 companies. There are all these people who never got attention. They never got recognition. In some cases, by the way, because they didn't want it. It was not something they sought. But they made really substantive contributions to the company. So I spoke to all these folks who, in many cases. cases during my interviews, they would say, you know, no one's ever actually interviewed me about PayPal.

Starting point is 00:08:26 And I was like, I was astonished, but they had some of the best stories. And so I interviewed board members. I interviewed people who worked there for a few weeks. I interviewed customer service agents on down, because I do think that sometimes we have a tendency to think that what really happens is in the boardroom, but it's not like the real substance of a company, particularly an internet product company, is in these little fine-grained decisions that happen day to day. And I just wanted to get a texture for what that was like. It was a long, process. But I had fun, every, I will say, every conversation taught me something new. You know, you don't, you sort of, I heard the same thing 200 times. I would not have had 275 conversations.

Starting point is 00:09:04 Every single person I spoke with, you revealed some new element or angle. And it was, it was, so these are some of the most enjoyable conversations I think I've ever had. Yeah, I want to talk especially about the culture there, because that also seems to be something very unique. But before we get too far into that, I want to kind of set the stage for people. You know, you just mentioned that some people weren't getting the credit their due. This first person is not that, but I'm speaking subjectively, Max Levchen is not a name that often comes up for me. So, you know, he's a well-known guy. He's very successful. Again, post-Pa-Pa-Pel even more so. But it's not a founder that is often in the headline. So I wanted to talk first about Max and what influence he had specifically at

Starting point is 00:09:50 PayPal. Yeah, and you know, you picked up around it. Chapter one of the book is Max's story. I sort of saw him as someone who people ought to know more about him. I also just found his story endlessly fascinating and interesting, and he's just an interesting guy. He is a Jewish refugee who comes to the United States when he's a teenager and had already fallen in love with computers when he lived in the Soviet Union, continued that love in the United States, and ends up. up going to college at the University of Illinois Champaign-Urbana, which at the time that he arrives is just a buzz with all things, internet, because Mark Andreessen built the Mosaic browser, then went and built Netscape and had become a huge success, and he's on the covers of magazines.

Starting point is 00:10:36 And what Max and all his collegiate friends are thinking is, well, yeah, he was in that dorm and in that quad, and he was taking that class, and he was doing all the same things we were doing. they were really, you know, he set the course for what you could do in internet business at that time. So you have Max Leibchen, go to University of Illinois Champaign-Urbana. He builds several startups that don't work out. So just some comic effect in some cases. And then he finds his way to Palo Alto and links up with a young investor who no one knows named Peter Thiel. A few people that told me, they said, you know, the story of PayPal properly told is the story of Max Levchin.

Starting point is 00:11:14 And I don't know that I would go that far because I think it's actually a story of like several hundred people. But there's a reason I wanted to have him kick off the story because there is something fundamental about the University of Illinois and that experience. And I would also say there's something about his cryptography background and his interest in mobile security that lays the foundation for the kind of company PayPal becomes. I think the other piece of it is, just to be honest, I always felt like I was like the B student talking to the A students whenever I was talking to Max. Peter or Elon, because these people are just, there's several IQ points ahead of many of us, and myself, most, you know, for sure. He's just razor smart. Some people have testified to him having a near photographic memory, and I saw that vividly. He would remember things that I would find a piece of paper that had the exact detail. And I think of him as somebody who's an engineer's engineer,

Starting point is 00:12:06 and that's how many other engineers described him. The other engineers I interviewed described him with real admiration, in part because he was not an executive. He was an engineer. And in fact, he, like many of the people who are at the top of the story, actually don't enjoy managing people. They like building things. And I found his story just really interesting. And it was a, it was helpful to also understand where some of the genesis of the early days of the company comes from, because it's really from Max and the confinity on the confinity side, this other half, his half of the company. he's really the genesis of a lot of the, you know, early thinking around mobile security and what becomes mobile payments.

Starting point is 00:12:43 Yeah, that relationship with Peter Thiel that you kind of, that you really put a lot of color around in the book is so fascinating because you're describing them sitting in bookstores, like pitching puzzles to each other, you know, for fun. This is how they spend their free time. I mean, these are not normal people. You're right? Like, this is not a normal friendship. Yeah, it's worth going into that.

Starting point is 00:13:04 The way I write it is, it's a particular kind of. person who turns math into sport. And what they would do is they would try to best each other with puzzles. You know, they were both ace chess players. They were, like, they enjoyed pushing the limits of their minds. And, you know, it's interesting. Like, I sort of think back, I'm like, you know, I don't know that I've ever gotten together with my friends and decided to solve puzzles, but I guess that's what you do if you're Peter Taylor and Max Leumpton, because their early get-togethers were this elaborate sussing out process. They were sort of, they'd toss one puzzle. Max would toss a puzzle, Peter would toss a puzzle back at Max,

Starting point is 00:13:40 and they would spend hours doing this, hours, just trading these bits of like logic games and kind of numbers games. And it is. It's kind of, I don't think they know that it is different from how the rest of us operate in the world, but I do think that there's something about it that is very particular to a specific subset of this group of founders, that there's a real passion for math and logic games.

Starting point is 00:14:03 Yeah, you can tell they have sort of this insatiable appetite for knowledge and just like expanding their mind. It's a good segue to Peter Thiel, who a lot of people do know, but similar to someone like Elon Musk, let's say, he's become mostly known for his post-Pa-Pa-Pal activities. So being the first outside investor in Facebook, for example, founding Palantir, a billion-dollar company, taking down Gawker, which maybe people are less familiar with, but I find it a fascinating story. What were some of the events that led Peter to meet Max and decide to found PayPal? You describe Peter as an investor, which I also thought was interesting because obviously he came out of school, became an attorney.

Starting point is 00:14:40 Where did he get all this money to start investing in these startups? It's interesting. I do think that like a lot of the folks who are at the heart of the story, it's sort of, you know, their contemporary activities, like suck all the oxygen out of the room, right? Like, you kind of, the way I write it is like space travel is more interesting to write about than a late 1990s payment service, right? And so it's easier to focus on these things they've done in my book. It's 1997, 1998. He had what he described to me and has described in other places as like a midlife crisis, but he was 25. It was like a quarter life crisis. And he had actually been turned down for a Supreme Court clerkship. And he's spoken about this.

Starting point is 00:15:18 You know, this is new news. He had been turned on for a Supreme Court clerkship. And it was, as he put it, like the most devastating event, you know, and it was, oh, my God, is my life over. but it actually leads to him pivoting and becoming a global macro investor. He moves back to California where he had grown up for part of his childhood. And he begins to miss as everyone does, this kind of mania for all things internet. Anything with the dot com is getting money and all of a sudden it's in public. And there's just a real gold brush. And he wants in.

Starting point is 00:15:50 And he has a passion about technology. He went to Stanford. So he's got to listen to the area. And he starts to meet people. He goes to different things and he connects with different people. And this is how they met. You know, Peter is teaching this very small class at Stanford around currency investing based on his experience doing some of that.

Starting point is 00:16:10 And Max Levchen is looking for air conditioning because his Palo Alto apartment doesn't have any and it's an especially hot summer. So what he does is he sort of floats around Stanford's campus. He'll find like little notices for classes that are being taught that are open or relatively open and he would go and sit in the back of those classrooms just to get some brief relief from the heat. He goes to this class that Peter Thiel is teaching. And he's heard Peter's name before through a friend, Luke No Sick. Peter had invested in Luke's startup. Max says, okay, I know his name. He's teaching a class. You know, worst case I get air conditioning, like best case I get to talk to the guy.

Starting point is 00:16:49 He goes to the class. It's a small class so he can't just hide in the back just to benefit from the air conditioning. And the way Max described it is, he said, you know, this isn't a computer scientist, but this is definitely a nerd. And he said, if I'm ever going to do anything in the financial world, I really should talk to this guy. And Max also is looking for investors, for startup ideas. And so he goes up to him and introduces himself. And basically what Peter says is, like, you know, great to meet you. You're going to start a company. We should meet. And they agree to have breakfast at Hobies. It's a very, you know, no one could have planned that. There was no grand introduction. It was Max looking for air conditioning happening upon this class,

Starting point is 00:17:28 going to it, and then introducing himself. And they meet for breakfast. And that actually starts the, that's the beginning of a very long business relationship, friendship. And I think it's one of the great kind of under-explored partnerships, you know, in business. I know your passion for Warren Buffett and Charlie Munger. And there's a way in which, you know, these business partnerships are actually almost in ways more interesting than sometimes like the solo stories, right? And I do think of the Max and Peter partnership as among the more interesting in the history of, I would say, in the history of American business, because they each do something the other can't. They're both smart enough to kind of push the other person.

Starting point is 00:18:11 But there's a very interesting kind of friend dynamic as well that's at the heart of it. But that's how they meet. And that's what starts, Peter decides that he's going to invest in Max. He gives him a $100,000 bridge loan. and thus the earliest iteration of PayPal is born. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer.

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Starting point is 00:22:37 To continue setting the stage, now enters Elon Musk. It's very hard to even contemplate this, but Elon's first success, even pre-decent, date's PayPal, and he could have even effectively retired before meeting Peter Thiel and co. Let's touch on Zip 2 and what set Elon up for this opportunity to even meet Peter in the first place. It's a great story. And I think, again, we have this challenge of he is who he is today. Today, he's hosting SNL.

Starting point is 00:23:05 And it's hard to imagine a time when he was just someone getting started. And he's applied and accepted to a Stanford graduate program in material science and engineering. And it's a prestigious program. And, you know, all sort of rational thought would suggest like you get into Stanford grad school, you go. But the internet boom is happening right around him. And he has been writing code for a long time. He was an avid video game player, avid video game engineer. He feels like, look, I've got the skills to do this.

Starting point is 00:23:32 You've got people creating companies like Yahoo and Amazon. And, you know, they're no more talented than he is. So he comes to the Bay Area. and along with his brother and a gentleman named Greg Corey, they launched Zip 2. And Zip 2 goes through several different iterations. It's originally called Global Link Information Network, a bit of a mouthful, but they adjust the name, they adjust the company's ambitions. And it's a very, it's a really, it's a wild ride.

Starting point is 00:23:58 It happens very briefly, but the company does sell for a little north of $300 million to compact computer. And it's a substantial exit, substantial enough that as you. pointed out, he could have sat on a beach for the rest of his days and been quite happy, but he decides that he wants to do another startup. And he had been interested in the financial services sector, and that's where he turns his attention. Zip 2, I think, you know, it was formative. Like I think for any of us, our experiences between the age of, let's say, 20 and 25, right, whether that's first job, military service, a startup, a band, whatever it is, it's going to leave an

Starting point is 00:24:33 imprint. Zip 2 left a powerful imprint. It taught Elon about what it means to build a company and to create something from scratch. Now, he had done some smaller entrepreneurial ventures in college. I found this old ad for a must computer consulting that was buried in the archives of some student newspaper. So he wasn't a total neophyte, but this was his first funded, you know, venture-backed company. And it's a success. However, Elon always thought of the success as a bit qualified. It was a financial success, but he had always imagined that the internet was going to be this revolutionary thing and that he felt Ziptu's ambitions that its wings had been clipped by its investors. So there was a sense in my discussions with him where he said, look,

Starting point is 00:25:16 he actually describes the internet as he thought it would be a nervous system for humanity. And he said, and I had built technology, but I hadn't seen it flourish. And so there was this sense of like business unfinished. There's real opportunities still. The internet boom is not over, right? So there's some financial interest in doing this. And he had had some insipient ideas around how the internet could change finance forever. And by the way, just to give context for your listeners, we're talking dial-up modems, right? Like inconsistent internet.

Starting point is 00:25:45 You pick up the phone in your house and the download cuts off, right? Like a lot of us suffered through those years. He believes that the internet should be used to reconfigure finance from the roots up. And he thinks he's the person to do it. And he goes and takes the vast majority of his zip two exit and puts it into his next venture. Yeah, that point right there I found fascinating because obviously he didn't have to do that. He could have raised more money. And what was interesting to me is just kind of gives you an idea of how Elon thinks, but he wanted to show people not only, I think, his conviction, but he used it as a marketing ploy to enroll people into the business and get people to, you know, get good key hires by saying, hey, I've got my own money $13 million into this thing. You know, it is something that comes up time and again. He really believes in.

Starting point is 00:26:34 putting skin in the game. And he had described this to me, but also has described it in other settings. You know, the things he told me, I always sort of see how consistent they were with things he'd said in other places. And he's a very big believer in investing your own funds in the thing you're going to do. Now, there's also some benefits here. You get to control more of the company if you put your own funding in. I had read somewhere that there were some tax benefits, but I think that was actually a marginal part of the decision making. My sense is that when he believes in something, He knows he wants to put his own capital in. And this is the first time in his life when he has this kind of capital to allocate to something.

Starting point is 00:27:06 Now, his employees, there had this really funny interaction with Ed Ho, who was a Zip2 employee who Elon recruited to Work at X.com. And Ed was like, that's nuts. That was his description. He's like, that's crazy. 13 million of your own dollars when you don't have, you know, that much. He's like, that's risk. Oh, my gosh.

Starting point is 00:27:24 But there was also a sense of admiration. Like Ed describes that he would call people engineers in a white, market for engineering, recruiting. And he'd say, oh, yeah, yeah, the founders like betting his fortune on this. So you know it's going to work because he's burned the boats, right? And there is that that sort of daring do, the risk taking, the kind of quality of betting everything you have that is a part of who he is. And again, I think there are like more practical reasons. But, you know, this is sort of funny to say out loud. Like, I'm not sure there's anything that I've worked on where I would take 95, 90% of what I own and bet it all on this one particular thing.

Starting point is 00:28:00 That is the kind of, you know, you call it whatever you'd like. That is a style in which he operates. It's a way he operates. And it evokes surprise, admiration, scorn, you know, total fear and terror. But it is how he does business. I find it remarkable for the following reason. When he came to the United States, he had very little. You know, he and his brother are living.

Starting point is 00:28:24 I mean, they're, they don't have money, right? They're showering at the YMCA. They are living and working in the same space. So he is not someone who had anything to fall back God, which is why that risk is even bigger if you think about where he started just years before this building Zip 2. It's astonishing. Like, and it's why even his employees were just so amazed. A lot of conviction and a lot of irreverence for money, it seems.

Starting point is 00:28:49 And one thing that just to get people more. context on this. He walked away from that zip two deal with a little north of 20 million. So putting in 13, I mean, that's a good chunk of the net worth that he had at the time. And then to think that he, his checking account went from $5,000 to, you know, 21 million, you know, with just this check arriving in the mail. And then to turn around and bet on it. And he's, again, in his early 20s. I mean, this just shows you a lot, I think, about how he just thinks and operates. And I just find it fascinating. So he now goes on to start X.com. He's putting this large amount of capital into it. Maybe not a lot of people are aware of this, but X.com actually merges with what is called

Starting point is 00:29:30 Confinity at the time of Peter Thiel's company. How did the merger come about? What was the main benefit? And then talk to us a little bit about how it almost collapsed. It's a great prehistory here. It's the reason that I wanted to do this project because I think, you know, we all live with PayPal today, right? We know PayPal. Fewer people know that PayPal is the sort of byproduct of two companies that came together. One was called X.com that was created by Elon and three other co-founders, and one was called Confinity, was called FieldLink, and it became Confinity. PayPal was a product that Confinity created.

Starting point is 00:30:02 X.com and Comvinity kind of arrive around the same time. They launch around the same time. And Elon's ambition for X.com is we're going to offer everything financial that you could imagine. If you want insurance, if you want a mortgage, if you want a line of credit, If you want a checkbook, if you want a savings account, a checking account, a brokerage, we're going to do it all. Oh, and we've got this feature that allows you to email money. So if I, Jimmy, wanted to send Tray 20 bucks, I can send you 20 bucks, and that's super easy,

Starting point is 00:30:30 all right? That product arrives at the same time that Confinity launches a product called PayPal. Now, what PayPal was supposed to be was if Tray had a Palm Pilot, and I had a Palm Pilot, and I paid for your lunch, if you wanted to zap me $10, you could do it through the infrared port on the Palm Pilot. As a backup, because what are the odds that you and I both have Palm Pilots and the infrared work that day, et cetera, they created an email money feature that was, again, a backup to the Palm Pilot feature called PayPal and X.com's emailing money technology take off.

Starting point is 00:31:04 And they take off at the exact same time on the auction website eBay, which is, I suspect, like, you know, most familiar to many of your users. eBay users had this problem. There was no standardized payment process. It was like, if I bought something for you, you had my choice. I could mail you a check, cash, money order, Western Union, whatever. And I could email you money using a series of different services. The two services that take off for X.com and PayPal, they take off for a variety of reasons,

Starting point is 00:31:32 not least of which is they're giving bonuses if you join the service and refer other people, right? It's a classic kind of referral incentive model. At some point, leaders on both sides of these companies recognize, look, we're just going to spend each other into oblivion. There is this week's long war where X.com and community are really duking it out. And they're staying up late and they're trying to one up each other. And it's a, you know, it's sort of classic.

Starting point is 00:31:54 Like they're just trying to fight and claw for market share. Despite different visions, you know, there's this kind of what I described in the book is like a shotgun wedding. Like they're fused together, these two companies to unite their user bases so that they can say credibly to investors, hey, there's only one game in town now. We have the most users. We beat everyone else. and we've got the volume and the volume's going to win. But that doesn't mean that like a merger is going to be happy. These companies merge and there's a lot of drama and tension.

Starting point is 00:32:23 And people don't know who's going to work with who. There's duplication of executives. The joke I wrote in the book is there's two people who handle finance and both their names are David. And so you have this merger. But the reason they merge fundamentally is the idea that if you have the biggest set of users, you'll own the market. And if you're going to raise capital, we have a compelling story to tell. And in March of 2000, the joint entities raised a $100 million round, which again, it sounds like

Starting point is 00:32:49 peanuts today compared to what you read in the news. But at the time, a nine figure round of financing in the year 2000 was a really big deal. And they close it just days before the market start to collapse in 2000. And, you know, internet stocks go bust takes the wider economy with them. And it's a really fortuitous turn of events. But that's the brief history of the pre-paypal, pre-union, which is Elon has a company who's vision. The vision is really, you know, the vision is big. And I think that's something for listeners to remember. He doesn't think small.

Starting point is 00:33:19 He's not interested in winning the person-to-person payments for. He wants to change the financial system. And when he spoke to me about it, you know, as he put it, sort of like, he like, he said something like, you know, when I talk about these things, it's like me saying the sky is blue. It just seems obvious to me. His view was banks and governments have been writing bad code on old mainframes, you know, on like cobal and like these old programming languages. given that the technology has improved so much, why haven't we improved the underlying

Starting point is 00:33:47 infrastructure of finance? And it's costing users money. There's all these people in the middle taking a fee here or a fee there. Is what if we just got rid of all of that? And all of your finances were in one place. It was called X.com. And it's a surpassing vision. It's very big and it's consistent with some things we're seeing in the world today. But to think about that in 1999 or 2000, you know, it's a, it's a visionary. in the best sense, I think. And so that's the prehistory. And then these two companies come together. And as you might imagine, you know, it's a lot of horsepower to have in one room at any given, at that given time, especially with the markets tanking. Yeah. And on that last note there,

Starting point is 00:34:29 you know, I've heard Peter talk about this. And perhaps in hindsight, it's easy to talk about in hindsight. But I tend to assign Peter and his financial aptitude responsibility for for having the foresight to close that capital when they did because, you know, Max, as even put it in the book, you know, Peter was, his horsepower was coming around the financial side of things. He wasn't the engineer in the room, but he understood markets and he understood, I think, the bubble territory that the tech boom was entering into. And I think we probably owe Peter a lot of credit. That might have been one of his biggest impacts, I think, for the company. Yeah, I think that's right. You know, to be fair, there's a lot of signs of crazy at the time, right? Valuations are out of

Starting point is 00:35:11 control. It's not just Peter. Elon gives an interview into his, actually to his alumni magazine where he talks about how, you know, he's speaking at, you know, the ripe old age of whatever, 27, 28. And he's saying, you know, there's a reckoning coming effectively. Like something's going to happen. You got to be ready for it. And so it's not just Peter, but what Peter does do that multiple people in the story told me that, you know, he does deserve credit is he was insistent that they turn promises into checks, that they turn commitments into real sort of like, get the wire transfers done because he felt that the economy was on the precipice. He wasn't the only one. There were others, but he was insistent that the company finished closing the actual round

Starting point is 00:35:51 as opposed to waiting. There were people on the team who wanted to wait, who wanted to hold out for more money or a higher valuation, but he was convinced that things were about to go sideways and he was right. And I think it's a little, you know, you can't ascribe, you sort of can't go back and say, well, he was Nostradamus and all that because it could have gone any number of ways. But I heard from the people at the front lines of that financing round talked about how they had never seen him that insistent. And that did say something. You know, it wasn't, and it wasn't abstract. It was Peterwood call and say, we've got to get this done. You know, it's all dependent on this. And I had multiple people then say to me that in hindsight, that round closing enabled the

Starting point is 00:36:30 company to go through to continue to exist through a very hard period, because if they had to close that round, the money in Silicon Valley dried up. And you weren't going to close a nine-figure round in late 2000 for an internet company that's losing money. So not only did they go through a very hard time economically with the external forces at play, PayPal was what you call quote-unquote startup under siege from the very beginning. So talk to us about some of the other challenges that the company was facing in those early days. Yeah, it's remarkable that they managed to make it worked, right? Like, you know, I sort of look back and I think I, when I started, I knew there were challenges, but I didn't realize just how many things they face. Domestic fraudsters,

Starting point is 00:37:15 foreign fraudsters, drama within the team, inquiries from the Secret Service, the Better Business Bureau, concerns about Pail's use, you know, for everything from like drugs to money laundering, chargebacks, fractured relationships with credit card associations, thanks that didn't want to have anything to do with PayPal, you sort of name it. They had copycat products built by their own investors. You know, PayPal's not the only payment system that's on the block. It's everybody wants to get into payments because it's hot and because the internet's hot. And so it's not one challenge. It's challenges from all sides. And I think the biggest challenge, the one that I think probably I gave most attention to and I think probably was the biggest risk is the company was just

Starting point is 00:37:56 losing money. At one point, they're burning $12.5 million per month. They've got maybe four to five months of runway left. And their investors have said, you're not getting another $100 million round. But that was that was a once in a lifetime kind of go, once in a, let's say, once in a dot-com bust kind of go. And that is the biggest thing is that the company is just burning through the funds that had already raised. And you, you know, you sort of have this like image of an actually like a burning platform and the company is atop it. But they faced every challenge you could face. And I would also say none of these people are seasoned. operators, right? They're not who they are today. They don't command audiences. These are people

Starting point is 00:38:36 making it up as they go along. So it's not like there's some wizened Obi-Wan figure, like telling them exactly where they need to go. This is just figuring it out as you're making, as you're going along. I love this idea of all this horsepower in one room because the management team we're talking about, you paint them as being highly dysfunctional. So they were going through all these external impacts on the company, but they also had this disorganization happening internally. what were some of the best examples of the quarrel that was happening within the management team and how did they end up pulling through and working together? Obviously, people came and went was what we'll talk about.

Starting point is 00:39:12 But what were some of the biggest moments of them budding heads? I don't know that it was dysfunctional. It might have been, you know, there are parts that certainly were. I would say that it was disharmonious, right? Like there was a lot of, call it spirited debates, right? Let's say it's spirited debate among these. very big personalities with huge IQs, right? And I think any room that has Peter,

Starting point is 00:39:38 Tiel, Elon Musk, Max Levchen, David Sachs, and Reid Hoffman in one room. And let's just like there's many others who are at their level, if not surpass them. But just that, those people, having disagreements, you know, your disagreements are not going to be, you're not going to be mild, right? Like, there's going to be some real, you're bringing some real heft to those discussions and debates. And it was interesting because I actually come to the conclusion that, The intensity of the debates is part of PayPal's secret sauce from that era.

Starting point is 00:40:05 And Max Leption has a few great lines about this that are in the book. And he said, you know, it's actually dangerous if people are saying critical things, but saying it behind each other's backs. We just said the critical things to each other's faces. And it made the company better. Now, that doesn't always make for probably the nicest place to work, the friendliest environment. But, you know, I noticed this really interesting thing when I was interviewing people, let's say not the bold-based names.

Starting point is 00:40:30 I remember interviewing a few people, and I might say something, and they were very quick to, like, critique something I said if I said something wrong, meaning they had no shyness about even calling out when I was incorrect about something. And it was bracing. You know, it was like this sort of bracing quality of like, well, you're wrong. Here's why you're wrong. I'll tell you the degrees. And what these people tried to get me to understand is this is not personal. It's about the ideas. It's about rigor around the ideas and around the analysis and around how you think about business.

Starting point is 00:40:59 It is not, I don't like Trey. It's like, Trey said something, and I'm going to tell you why you're wrong, right? But imagine doing that with people, you know, and have photographic memories, are chess champions. You know, there's this story. It might be apocryphal that Elon read every book in his childhood library and, like, started reading the Encyclopedia Britannica because he ran out in the books. So even if that story is partially true, you have people at that level who are having those kinds of raucous debates. So I don't know that I would describe it as dysfunctional because it was functional. it made that, you know, they got the job done. I would say it was disharmonious, but

Starting point is 00:41:31 productively disharmonious. There was this quality of, you know, and actually Jeremy Stompleman, who was the founder of Yelp, who was another PayPal alumnist, you know, he gave me some really interesting thoughts about how that level of honesty is actually hard to achieve, that it matters that you are that honest, because it's actually out of respect for the other person. Like, you respect that person a lot and you want to tell, you want to improve, you want to help them improve. You know, do you, will they always get it right? No. Where there obviously some factions and things that were created. Sure. But I actually think the powerful lesson from it is, do we have people in our lives who are willing to do that for us, right? Like, who in our

Starting point is 00:42:06 lives cares about us or cares with equality of what we're doing enough to just call us out when we're dead wrong? And to not sugarcoat, right? Again, I'm not sure that everybody would characterize it that way, but I was looking for what these people might have taken from it. And from my perspective, that's what they took from it is, boy, it's important if you care to be that honest. And it means management meetings aren't always going to be fun, but you're going to try to fight for the right ideas. So as I mentioned, some people were kind of moving in and out. What I mean by that is, you know, Peter Thiel was running the company, then he steps down, says, hey, the company's gotten too big.

Starting point is 00:42:37 Elon Musk is running the company. Then he steps down and says, company's too big. At some point, Reed Hoffman, who's been sitting here in the wings, this whole conversation enters the picture. He's been sitting on the board of PayPal for a while, and he comes in as C-O-O. Talk to us about the impact that that had on PayPal. Yeah, you know, if there weren't enough bold-faced names in the story already, you have Reid Hoffman, who, you know, today is famous for various things. There is his founding of LinkedIn, his service on the Microsoft board, the various books he's written, podcasts, his kind of engagement with various nonprofit and political causes he's

Starting point is 00:43:14 a part of. Back in 1998 and 1999, he is the not quite thrilled co-founder of a startup called Social Net. It isn't working. And it's an early social network before social networks became cool. And he's deciding what to do next. And he speaks to a college friend, Peter Thiel, and they go, what part of what's happening is they're going to these long walks around the dish loop trail near Stanford. And he's having this kind of interesting engagement where he's downloading everything that's

Starting point is 00:43:47 happening. He's giving him like the rundown of here's what startup life is like. And Peter says to Reed, hey, you're figuring out what you do next. We are running like a hot mess. You should come in and help us like kind of organize this thing and package it all up for a sale. And Reed says like, you know, I didn't necessarily want to do this. But what Peter said to him is just come in. You'll like work for a little while and then you can leave and will be good.

Starting point is 00:44:12 That turned into a longer stretch. It was a, you'll see, he joins in January of 2000 to COO. So, you know, roughly two and a half, three years of service there. he becomes, you know, what I would sort of think of as like an emissary. He's a diplomat. He's the person that they send into rooms when there are sensitive issues, when there are fires, you know, going. And he goes and like, figures out how to get people to, you know, come to some decision, come to some conclusion, figure out how to negotiate with the company. You know, he's an interesting character because he's hugely empathetic. I had multiple employees talked to me about how, you know,

Starting point is 00:44:50 Reed was among the people there who really cared about people and really cared about how they got along. But he's also no slouch. I mean, this is somebody who is a razor sharp mind, grew up playing strategy board games, like Love's strategy was a great strategist himself. And he helps navigate the company in and out of things like it's tussles with eBay. So one of my favorite sort of moments is, you know, he's working with his counterpart at eBay to keep eBay from shutting PayPal down. His sort of role is kind of emissary in chief and firefell. in chief. I think Peter's called him the firefighter in chief in different instances. But if there's

Starting point is 00:45:24 a significant thing happening in the government, it's, you know, you turn to read. He is someone who has the ability to go and kind of see the other person's point of view and find a way to kind of bring them into the fold, again, which is not a quality all of these people have necessarily. But I think that's, that's Reed's great contribution. I would say the other, you know, the other piece of it is he already had a startup experience at social net and had to do all of these things that neither Peter nor Max had to do, like deal with investors and deal with kind of like some of the even some of the product decisions. So there's a way in which, you know, he's not older than these folks, but he's had this one extra experience. So it's almost like he's like an elder statesman,

Starting point is 00:46:01 but not really elder. Peter, when he was reflecting with me, he said, you know, one of the tough things is that all of a sudden, read my friend became read my employee. Those aren't his exact words, but he did reflect on the fact that sometimes there can be an adjustment if you're doing business now with someone who was your friend, that you actually can reconfigure the relationship a bit. And I found that interesting. But at the same time, they were sparring partners intellectually. They knew the other person had the same chops. And Reed becomes this sort of ace diplomat.

Starting point is 00:46:32 You send him into any situation and help find a way in and out. Well, they certainly needed it, it sounds like. So that brings up another point I really want to explore digging in on the secret sauce. And that seemed to be this culture that they had. These guys, as you put it earlier, you know, they're engineers mostly. They're not managers. And somehow they managed a ton of people to become very productive. And I think partly from what I took away in the book is this sort of lead by example sort of approach. And it was reminding me of, you know, the Shackleton effect, so to speak. So for those who aren't familiar, or if you are familiar,

Starting point is 00:47:09 bear with me. But, you know, 1907, Sir Ernest Shackleton puts up this ad about going to the Antarctic. And the ad says, men wanted for hazardous journey, small wages, bitter cold, long months of complete darkness, safe return doubtful. And you would think like who would want to sign up for this expedition? And yet, you know, according to myth, there were 5,000 people that showed up, you know, according to the myth. So I don't know that story is true. But to me, it's like a good anecdote for what maybe happened here at PayPal because it seems like these guys were running this machine like in the trenches with everybody else. They were sleeping under their desk. They were working days on end, you know, working into long hours of the night.

Starting point is 00:47:49 And I wonder, part of that is just startup culture. It's been chalked up to nowadays. Part of me wonders if that was a moment in time. Like if startups still operate that way or could get away with that, you know, and 20 years later. What's your take on the culture that they actually developed there and how effective it was? You hit a lot of the right notes. And I would offer a few insights. It's, you know, I think it's, I try to get as close to answering that question, right?

Starting point is 00:48:16 The question in the introduction is, what was in the water, right? Like, what made this place tick? I'll offer one assessment that I'm not sure readers maybe expect, but it's worth sharing. We've spent a lot of time talking about the folks who are at the very top of the organization, and I would say at the top in some ways of technological life today, right? The folks everyone knows. One of the most interesting people I interviewed, one of the most compelling and dynamic, was a woman named Amy Roe Clement.

Starting point is 00:48:44 I didn't write this explicitly, but I sort of think like, just like all cars need oil, you know, all cars with internal combustion engine need oil to kind of make sure that the engine doesn't seize up. PayPal needed Amy Roe Clement. She was a hugely important, hugely inspiring leader. And part of what she did was actually interface with almost every part of the organization and find a way to make sure that everyone kind of connected to the other person. She was on the product team. She was a lieutenant of David Sacks, who was the head of product.

Starting point is 00:49:14 She had joined X.com, had interviewed with Elon, was really motivated by his vision, was deciding between grad school and startup life and chose startup life. And she's someone who, somebody had described it as a thing. You know, if you had a problem with the product, you went to Amy. And if you had a problem with the people, you went to Amy. She was this person who made the organization with all of these hot house personalities really work. And she had a kind of co-conspirator in a head of design named Sky. Lee, right, who did some of the same sort of thing. They kept the place on an even keel.

Starting point is 00:49:45 They kept the organization moving forward in spite of all of these sort of convulsions. So part of it is we think of the story as a few people. It's a lot of people. And there are all these people in the organization who are keeping it going, keeping the momentum moving forward, taking visionary ideas and this is good, this is bad. We're going to do this. And here's how we resource and support that, right? Part of it is, I'll tell a story. Someone mentioned this to me. And I won't say who it is, but it was a great story. And he said it, you know, with some endearment in his voice. He said, you know, I was once out to lunch with Max and my, his wife, the person who was telling the story. His wife was with him. And they sat down and Max had a book. And it was a book about physics. The wife said to Max, what are you reading? And he goes, oh, this is my physicist of the moment. And at some point, Max goes to the bathroom and this person, the wife leans over and says, who is a physicist of the moment? But to be kidding. But to be Like, PayPal was the kind of place where people had physicists of the moment, right? It was every week in the company newsletter, they'd put a puzzle out for the, for the organization to solve.

Starting point is 00:50:49 And people were crazy about trying to be the fastest, the first, sending in the right answer. There were all night video game sessions. There were, I remember one person, you know, sometimes people would just come in and sort of like throw out a puzzle. Who could solve it first? And there was a kind of quality of like, if you were the best, you know how to solve it. There was a high bar for intellect. So I do think that's a part of the culture. And look, maybe you can't repeat that.

Starting point is 00:51:11 Maybe that's just something that's peculiar to the time or peculiar to the fact that it's, you know, people like Elon and Peter and Max doing the recruiting. But I had this funny experience, Trey, when I was doing the interviews, every person, not every person. Many people would point to someone and say that person's a genius. And it was very rare that they, that two people ever said the same name. So it was this really interesting thing. I had Max Lovchen telling me, Russ Simmons is a genius. And then I had, you know, so and so, you know, I had actually, Sarah Inbox said, you know, Sanjay Bargava is a genius. She said, I'm going to the effect of watching Sanjay Bargava navigate the financial system.

Starting point is 00:51:47 It's like watching a conductor, conduct a symphony. And I had experience after experience where someone who I was interviewing would say, oh, my goodness, you really need to talk to Joe Smith because Joe is a genius. And it turned out that this just happened over and over again. And I kept hearing this phrase, this word, and this kind of praise. Like, it wasn't that they all point to Max and said, boy, Max is really a genius. It was that they would point to someone who I had never heard of and say, this person's brilliant, right? I do think there was a high bar for intellect. The last thing I would say, and this is going to be a little counterintuitive, they had enemies and they were running out of money.

Starting point is 00:52:25 There was pressure, a huge amount of external pressure. And I interviewed this gentleman. He said to me, you know, the value of having fights that you're fighting that are external is that you minimize the number of fights you have that are internal. So he said, you know, one of the things that never happened about titles. Like, yeah, there was a little bit of that. And there was a little bit at the margins. But we had so many enemies externally and so many things we were trying to do. And it was so hard.

Starting point is 00:52:51 And the money was running out. And everything was crazy. We didn't have time to fight over who was the VP of marketing and who was the chief marketing officer. Like, there were fights that took a backseat because the fights we were fighting were so in our face. It doesn't mean that there weren't internal divisions and rancor and some back, you know, all of that was there. There was some politicking as there is in all organizations. But Sky Lee and George Is he said, you know, it really, nothing brings a team is as Sky Lee's line. It's nothing brings a team together like having a mortal enemy.

Starting point is 00:53:22 Right. And so there's a way in which like actually external pressure was a part of the culture too. And you don't want to make too much of it, but how many companies today spend so much time sort of focused on on themselves? Because there's not this gripping fear, right, from the outside world of who they're fighting. PayPal had good reason to be afraid. Fraudsters were defrauding them into millions. Credit card companies were on the march and were really concerned about PayPal. The market was drying up. And eBay wanted to crush PayPal. And so externally, they were facing these difficulties. And in a way, it's sort of like,

Starting point is 00:53:56 shaped a culture, a group of people who they always feel like they're a little bit on edge. Like, oh my God, the world's, you know, they're sort of all chicken little. And again, I don't want to make too much of that, but it was repeated to me enough times that I do think of it as a part of the culture. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform.

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Starting point is 00:57:39 Max Levchin, David Sacks, goes on and on. And again, just baffling. What were some of your biggest revelations or takeaways after researching these billionaires and founders and culture that they've developed? What were some of the biggest surprises or takeaways? I'll start with, again, something a little unexpected. I had, in my interview and my correspondence with Amy Clement, you know, she said that one of her big takeaways was that a company takes many different kinds of personalities, right? So the way I would reframe that or think about it is I'm not sure this team would have succeeded if there were 200, people like Elon Musk. I'm not sure this team would have succeeded if it was 200 people like

Starting point is 00:58:17 Peter Thiel and on and on. I do think the interesting thing about this company is it needed every one of these people, both the names you recognize and the names people will, well, hopefully learn when they read the book. It's this peculiar thing of there are particular kinds of personalities and you don't want uniformity in those personalities. You know, you don't want a team that's all diplomats. You do need some team. You do need someone like David Sachs and the description of David It's from multiple employees was he was, he pushed us. He was there as a propellant. He would make us think about the product more rigorously.

Starting point is 00:58:50 And it was tough because he was very smart and he, you know, he suffered no fools and he would call people to account. But you need that in an organization, right? At the same time, you need somebody who, when they interface with government, isn't going to, you know, necessarily push. They're going to find a way to push end pole and be diplomatic, right? You need somebody like Sanjay Bargava, who his contribution. is the creation of this technology random deposit, which allows you to authenticate bank accounts.

Starting point is 00:59:17 And if he hadn't spent 22 years or whatever in the two decades in the trenches of the financial system, possible PayPal wouldn't have had the knowledge or the kind of thought process to do that sort of work. So there's a way, her lesson was it takes all of these different personalities. And I think, you know, it's a useful thing to think about. Like, this is a company that warehoused all of those people. And it's not a cult of personality around any one of them, right? Apple's a little different. Like the Apple story is always told through the eyes of Steve Jobs.

Starting point is 00:59:45 Amazon's always told to the eyes of Jeff Bezos. This is not that. And I think there is something powerful here about the mixture of these people. It's not always, again, it's not always harmonious, but it is interesting to think about it if you're building and assembling a team, right? I think my second big takeaway is everyone in this story that I interviewed had a very quirky love of learning. And again, I suspect like the people who listen to you have this probably more than others.

Starting point is 01:00:11 But, you know, it's the who has a physicist of the moment. It's the passion for space. Elon's passion for space starts when he's a teenager. And he's talking to his mentor at a bank about space and about what it could mean to go to space. It's volumes of books that are traded. It's the team reads Cryptonomicon, right? And Neil Stevenson, there's a desire to learn and a desire to learn and to push one's thinking that I think is something to be emulated and admirable. And honestly, like, it makes you, when you talk to them, you're like, they don't just learn in a utilitarian way.

Starting point is 01:00:48 There's a kind of genuine love of new things. Max Levton once said, like, his idea of a vacation is a book of math puzzles at the beach. And I think there's something about this idea of pushing your mind that all of these people shared. And I think it's something that, you know, we can all find in our own sort of ways. And I would also add, it's not that they had one particular passion. It's not like they were studying just X or Y or Z. It's a broad-based love of learning that I found in person after person that I interviewed. I think, you know, the other thing I take away is I found that there was this line in the book

Starting point is 01:01:19 that someone had said attributed to Max. And it was, you know, A's, higher A's, B's, higher C's. So the first B you hire takes the company down. You know, the sort of charitable, let's go through the charitable assessment of that, right? The less sort of like get rid of your B players assessment, which is you, we should want to find places that are populated with these kinds of people for ourselves, right? You should want to find a company or an entity or a group of friends or an organization where someone's saying to you, I need you to bring your a game. I need you to step it up. I need you to, you know, be better. It was a remarkable place to

Starting point is 01:01:55 work because it demanded that you bring your best. And I think that, you know, maybe that has something to do with the wealth that's been created and the people and the companies and all that. I suspect that it does. Now, the question is whether it's nature or nurture, right? Like, did these people get selected for this or did they learn this while they're there? I think it's a bit of both. It's interesting to see the development of, say, an engineer like Jeremy Stoppelman, who arrives a little later in the story, but, you know, he's there and he's shaped in this way. And could he have been the Jeremy Stopperman who founded Yelp in some other place? Sure, certainly. But I think there's something very particular about this place that pushed him and that all of these people

Starting point is 01:02:33 sort of pushed each other in that way, I'm sure there are people, in fact, I know there are people who had negative experiences related to that, but the majority, the majority, but I would say, the majority of people said, you know, I have been looking for a team like that the rest of my career. And the best moments were when I found teams like that, right? And it's this curious mix of like innovation and bracing honesty and also external pressure and a whole heterodox group of people. You know, they're all over the place. They come from all corners. I think that's one of the big takeaways.

Starting point is 01:03:06 And most of I would say the most self-aware people in the story acknowledge they were super lucky, right? And it's not that they didn't work hard, right? And it's not that they didn't win fights against this and that and design the right product and all the rest. But, you know, I had one of the people I interviewed at length was a board member who saw this story from the beginning to the end. His name was John Malloy.

Starting point is 01:03:26 And if there is an Obi-Wan figure in this story, it's John Malloy. And he said, you know, we tend to speak. in these narratives, the idea that there was like a predestiny or that this was going to happen. And he said, that's just, it's not true. Like, there's a lot of luck that's based in the stories. And the way you know that he's, that it's more accurate than not is there are so many startups from that era that aren't around today. Right. So like any one of these people at another startup would have had an experience where they failed instead of succeeded. And one of the things that Peter said, and you know, I'm not sure he would, you would sort of ascribe things to luck. I think he's

Starting point is 01:04:00 taken strong anti-luck positions in the past. In the sense that word for him, I think, is not quite accurate. But he said, what people took in this experience was that startups were hard but doable. It wasn't that it was like easy and we succeeded. It was hard and we succeeded, which meant it gave people a certain cast of mind as they did future things. That's a lot. And there's endless other tiny little lessons and things baked into the process. But for me, It made me rethink whether I have the right people in my life kind of like saying, you know, I need you to be better. I need you to do more.

Starting point is 01:04:38 I want you to bring your A game. If there's one big thing, I discovered it's that. It's that those people are rare and it's hard to get to that level of honesty. Yeah, you know, Warren Buffett has this metaphor about, you know, studying value investors. And he describes, you know, this gymnasium, I think, full of monkeys flipping quarters. And, you know, if you do that, you'll see that the average comes out to 50%. It's like, what if we, what if you found out that the, I'm paraphrasing here terribly, but what if you found out that the 10% that flipped the most quarters all came from the

Starting point is 01:05:10 same town or all, you know, lived in the same, ate the same food, whatever it might be. And what you're talking about, I agree with, you know, getting lucky, having the right people in the room. But there is this element of something else, I think. And you describe it very early on in the book about what. what's in the water, as you said, because it's not like lightning struck once for these guys. And it would be enough for these guys to get together and build this multi-billion dollar company. I mean, that's a once-in-a-lifetime achievement and for very few people, you know.

Starting point is 01:05:41 But then to go on and create Palantir and Tesla and SpaceX and LinkedIn and on and on, it reminds me a little bit of the recent Beatles. This might be a generic proxy, but it reminds me of this recent Beatles documentary, you know, where they're just in a room together for quite a while. And you think about what made them a great band, but they all went on to do individual music that was all pretty great. Some of my favorite were George Harrison's records, you know, and stuff. So it's something like, it certainly shaped these founders to go on and found other

Starting point is 01:06:12 billion dollar companies. And I think that is just truly remarkable. And I hope someone takes your book and makes a movie about it. Because certainly if they could make a movie about Zuckerberg, they can make a movie about these four or five founders all in the same. Yeah. And again, and it's not, they're not done, by the way. So the crazy thing about this book, right, is I can't actually do the afterlife without another 500 pages. Like I did 1998 to 2002. But if you think about the fact that most of these people are in their late 40s and early 50s,

Starting point is 01:06:46 and there are the startups that get coverage. But, you know, one of the startups that a founder from this group is creating is a startup called TerraFormation. Terraformation's ambition is to reforest three billion acres of forest ecosystem. There are people in this group who are building all kinds of technologies big and small. So they're not done. That's the other astonishing thing, is they're so far from finished. I do, you know, I take your point. And in some ways, your point is a pushback, which is you can't ignore what they've done in the afterlife, right, in the aftermath of PayPal. Here was my challenge. The aftermath got so much attention. I kind of had to duck it a little bit just to focus on the PayPal years because I felt like they got short

Starting point is 01:07:28 drift and nobody really went back and did a deep dive. These folks learned how to build a company. They did it when they were many and many of them, relatively young. And, you know, they, in many cases, they did invest with one another. They backed each other's ventures. Some of the earliest money into each of these startups comes from another person in this particular network. But it's also, this was a formative experience that showed that you could build a technology company from scratch and be successful. And it gave them a template for doing it over and over and over again in different sectors of American life as well.

Starting point is 01:08:01 And they're not done. And there's like going to be another 10 or 20, 30 years of this kind of creation and ambition. You're tapping into something, which is this created a framework for them. It created a way of thinking about the world. Yeah, and it didn't change Elon's approach to money because I think he took his earnings and put half into Tesla and half into SpaceX and was broken. again for a long time. So, I mean, what a story. The book is fantastic, really well done. Jimmy,

Starting point is 01:08:30 before I let you go, I want to make sure you have the opportunity to hand off to our audience where they can learn more about you and the book and any other resources you want to share. I really appreciate that. And I appreciate your sort of close read of it. And I think you're somebody who has a lot of business context. So this was a really fun conversation because, you know, we can compare these things to other, others, you know, what are called seniors, like other, like the Beatles or the Bulls or, you know, that's sort of. So I, so I, so I. I appreciated the chance to talk about this at some length. I have a website, jimisone.com.

Starting point is 01:08:59 I'm infrequently on Twitter at Jimmy A-Soney. The book is called The Founders. I hope people will check it out if they've used on 22-22. And it was a lot of fun to do. And I think I hopefully captured some of the lightning in a bottle that was there. I'm just Jimmy A-Soney on Twitter. Fantastic. Well, Jimmy, best of luck with the book.

Starting point is 01:09:18 I highly encourage everyone to check it out. And let's do this again sometime soon. I really appreciate it. Great. I appreciate it. Thank you. All right, everybody, I hope you enjoy that one as much as I did. Jimmy and I originally connected on Twitter, you can find me there as well at Trey Lockerby.

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