The Mafia That Controls The Tech World

The start

The story begins in 1998 when Peter Thiel and Max Levchin created Confinity. Confinity was a fintech company that allowed users to transfer money with their Palm Pilot device. The most popular segment of their business was PayPal, an online service that allowed users to send money through the internet.

eBay

The only way to purchase a product on the leading online marketplace called eBay was to send a check via mail. Many of its users were using third-party services like Confinity and X.com to transfer money digitally due to the ease.

When eBay noticed this, they started its own online payment company. This was bad news for Confinity and X.com because a vast amount of their income came from eBay. Confinity had another problem: it was unprofitable and was operating on a couple of months of cash reserves.

When Elon Musk heard that Confinity was on the verge of bankruptcy, he proposed that Confinity would merge with X.com. Both companies merged to found PayPal.

The Acquisition

During the Dot-Com bubble, PayPal continued to grow exponentially to 13 million users while many of its competitors were going bankrupt. In 2002, PayPal announced it would list on the stock market.

In the same year, eBay decided to shut down its online payment system and bought PayPal for $1,5 billion.

When the employees transferred from PayPal to eBay, many of them left because of the traditional work culture at eBay. Out of the 50 employees that were transferred to eBay, 38 left to create their own business ventures.

The acquisition was actually one of the best deals in history. At its peak in 2021, PayPal was valued at over $250 billion. The profit that eBay made due to the acquisition is enormous.

The Mafia

All of the employees that left PayPal after the acquisition went on to create revolutionary companies like Linkedin, Youtube, Tesla, Palantir, SpaceX, Yelp, Yammer, and Affirm.

Javeed Karem build PayPal’s anti-fraud system. He and two other former PayPal employees founded Youtube in 2005. He uploaded the first Youtube video “Me at the zoo” which has over 220 million views.

Jeremy Stoppelman was the vice president of engineering at PayPal. One day, he got sick and wanted to find doctor's recommendations online but couldn’t find them. So he founded Yelp.

David Sachs was the CFO of PayPal, he founded a social network called Yammer which sold to Microsoft for $1.2 billion in 2012

Peter Thiel which was the co-founder and CEO of PayPal actually invested $500K into Facebook in return for a 10,2% stake. That investment is now worth over $50 billion.

Max Levchin was the co-founder and CTO of PayPal. He went on to found a fintech company called Affirm which is listed on the stock market. He also was the largest shareholder of Yelp and made early investments in the gaming company Zynga.

And finally, we have Elon Musk, the co-founder of Tesla and SpaceX. I think you already know his story. By the way, his net worth is now over $260 billion.

In the photo, you will see a dozen people which are part of this remarkable group of individuals called the PayPal mafia. Peter Thiel estimates that this mafia contains over 220 members.

Final Thoughts

The former PayPal employees managed to create a tech empire. Each one of them learned a certain work ethic and expertise at PayPal that helped them succeed in life. They found support and capital in this social network.

WIthout a doubt, they are one of the most powerful organizations in the world. Just look at their net worths

I hope you learned something new by reading this article. Have an amazing day!