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The PayPal Mafia: How a Tight-Knit Group of Innovators Went on to Shape Silicon Valley

Hi there! Have you heard of the "PayPal Mafia"? It‘s an informal name given to a group of former PayPal employees and founders who went on to start or invest in many of the most influential tech companies in Silicon Valley and beyond.

In this post, I‘ll provide an in-depth look at the origins and key figures of the PayPal Mafia, their impact on the tech industry, and what we can learn from their unrelenting innovative spirit. Let‘s get started!

PayPal‘s Humble Beginnings

First, some quick background. PayPal was founded in 1998 as Confinity by Peter Thiel and Max Levchin. It allowed users to transfer funds via Palm Pilots, the popular personal digital assistants of the time.

In 1999, a company called founded by Elon Musk emerged offering similar email-based payments. The two rivals merged in 2000, with Musk becoming the biggest shareholder.

PayPal gained traction quickly by offering free peer-to-peer payments funded by investors. According to Levchin, this free service helped PayPal acquire over 25 million users by 2001. That‘s impressive growth!

But it faced stiff competition from eBay‘s Billpoint service. PayPal eventually won out and eBay acquired it in 2002 for a cool $1.5 billion.

Who Exactly Was the "PayPal Mafia"?

OK, so who made up this so-called mafia? The term originated from PayPal‘s close-knit, loyal culture. Most members were young friends recruited from Stanford or University of Illinois.

As Levchin describes, "We just hired our friends and they were all super smart. It was a really cool group."

The most influential members included:

  • Peter Thiel: Co-founder and first CEO. Made $55 million from the eBay deal.
  • Elon Musk: Largest shareholder after merger. Earned ~$165 million after sale.
  • Reid Hoffman: Early executive vice president. Later founded LinkedIn.
  • Max Levchin: Co-founder and CTO. Developed key anti-fraud tech.
  • David O. Sacks: First COO. Co-founded Yammer acquired by Microsoft.
  • Ken Howery: Early CFO. Co-founded Founders Fund with Thiel.
  • Others: Russel Simmons, Jeremy Stoppelman, Steve Chen, Roelof Botha, and more!

But what did this unlikely gang of innovators go on to do? Read on to find out…

World-Changing Companies Born from the PayPal Mafia

After PayPal‘s sale, many top employees left between 2000-2006 to pursue new ventures. But they remained connected through personal relationships and investments.

Their subsequent companies dominate many facets of the technology landscape today:

Elon Musk

  • Tesla (2004): Has helped make electric vehicles mainstream with over 1 million cars produced so far. Valuation today is over $600 billion.

  • SpaceX (2002): The first private company to launch reusable orbital rockets. Valued at $100 billion.

  • Neuralink (2016): Developing brain-machine interfaces to connect humans and computers.

Peter Thiel

  • Palantir (2004): Controversial big data analytics company supporting government security agencies. Valued at $22 billion.

  • Founders Fund (2005): VC firm managing over $3 billion in assets. Early investor in SpaceX, Airbnb, Facebook.

  • Clarium Capital (2002): Global macro hedge fund managing $5 billion at its peak.

Max Levchin

  • Affirm (2012): Provides buy now, pay later financing for ecommerce purchases. IPO in 2021 valued Affirm at $46 billion.

  • Slide (2004): Created tools for sharing photos and other media. Sold to Google for $182 million in 2010.

Reid Hoffman

  • LinkedIn (2002): The world‘s largest professional networking platform with over 810 million users. Acquired by Microsoft for $26.2 billion.


  • Yelp (2004): Local business reviews. Valuation of $2.7 billion.

  • YouTube (2005): Pioneered user generated video. Acquired by Google for $1.65 billion.

That‘s just a sampling of the huge impact PayPal alumni have made. Not bad for a bunch of young upstarts!

Clearly the PayPal Mafia has been astonishingly successful. But why have they been so influential?

Unique Values and Traits of the PayPal Mafia

There‘s no one simple explanation for the runaway success enjoyed by many PayPal Mafia members. But some consistent themes and traits do emerge:

  • Product-first thinking: Even early on, the PayPal team was intensely product- and engineering-focused. They prized technical skills over business credentials.

  • Appetite for risk: The Mafia built a culture that encouraged big, bold risks in pursuit of innovation. Failure was an acceptable outcome.

  • Flat, non-hierarchical structure: As David O. Sacks described, "It was an egalitarian kind of company that emphasized technical ability over experience." This enabled rapid decision making.

  • Move fast and break things: The Mafia tended to favor speedy experimentation over long-term planning. This let them rapidly iterate.

  • Skepticism of authority: Team members were willing to buck traditional norms and processes if they got in the way of problem-solving.

  • Camaraderie and loyalty: The early shared struggles forged tight bonds between many members that lasted for decades.

This unique DNA empowered the PayPal Mafia to thrive in uncertainty and build disruptive, world-changing products like Tesla and SpaceX.

Next let‘s look at some of the specific ways they‘ve continued to shape Silicon Valley.

Lasting Impact on Silicon Valley and Tech

While the success of their own companies is impressive, PayPal Mafia members have also:

  • Invested early and often in promising startups: Their angel investments have accelerated the growth of companies like Facebook, Airbnb, Stripe, and many more. Here are some notable examples:
Company Paypal Mafia Investors
Facebook Peter Thiel, Reid Hoffman
LinkedIn Reid Hoffman, Keith Rabois
Yelp Max Levchin, Keith Rabois
SpaceX Peter Thiel, Luke Nosek, Elon Musk
  • Spread unique culture and values: The Mafia‘s emphasis on innovation, risk-taking, and ambition has infused Silicon Valley.

  • Shared knowledge and expertise: Many PayPal alumni actively mentor and advise the next generation of entrepreneurs.

  • Launched and worked at top VC firms: Firms like Founders Fund and 500 Startups provide vital early funding for startups.

So beyond direct financial returns, they‘ve enriched the Valley‘s ecosystem with expertise, capital, and cultural values.

Former PayPal COO David Sacks argues that the Mafia "has done a great deal to spread the PayPal DNA to the technology industry." Based on their collective impact, I‘d say that‘s a fair assessment!

Next let‘s dive deeper on a few of the most prominent members.

Notable Members and What They‘re up to Now

While there are too many influential members to cover fully, here is a look at what a few key PayPal Mafia alumni are working on today:

Elon Musk

Of course, Elon Musk has been making waves recently with controversies at Twitter after acquiring it for $44 billion in October 2022.

But before Twitter, he built Tesla and SpaceX into two of the most valuable private companies on earth, collectively worth over $700 billion.

He continues to serve as CEO of both companies, pushing ambitious visions for electric, self-driving vehicles and establishing colonies on Mars.

Musk is estimated by Forbes to be the second wealthiest person alive, with a current net worth of around $182 billion.

Peter Thiel

After earning $55 million from PayPal‘s sale, Peter Thiel co-founded the big data analytics firm Palantir and storied VC firm Founders Fund.

Thiel has continued investing through Founders Fund in companies like SpaceX and Airbnb.

He‘s also nurtured contrarian political views, and provided early funding for organizations like Facebook and the Seasteading Institute.

Thiel currently serves on the board of Meta (formerly Facebook). His net worth is estimated at $2.6 billion.

Reid Hoffman

As PayPal‘s executive vice president, Reid Hoffman helped drive growth initiatives at the company.

He went on to co-found LinkedIn in 2002, and define new models for social networking. LinkedIn sold for $26 billion in 2016.

Hoffman remains Chairman of LinkedIn and is a prolific angel investor. He‘s also a partner at VC firm Greylock Partners.

Forbes pegs Hoffman‘s current net worth around $2 billion. Not too shabby!

Max Levchin

PayPal co-founder Max Levchin made vital contributions like developing its fraud prevention systems.

Since PayPal, Levchin co-founded Slide and Affirm, the buy-now-pay-later financing company.

He helped Affirm raise nearly $1.3 billion through its 2021 IPO. Levchin also chairs financial tech company Block (formerly Square) and serves on the board of directors for Yahoo and Evernote.

His estimated net worth is around $1 billion currently.

Key Takeaways from the PayPal Mafia‘s Success

While there‘s much more that could be said, let‘s recap some top learnings from this elite group:

  • Great teams trump individual genius: The Mafia valued collaboration and diversity of thought over raw brainpower.

  • Values and culture matter: PayPal‘s informal, anti-authoritarian culture empowered employees to take risks.

  • Speed enables innovation: The Mafia pushed products out quickly and iterated based on user feedback.

  • Stay hungry: Even after huge successes, they remain ambitious and willing to fail fast.

  • Build relationships: The bonds forged early on provided support during difficult times.

  • Embrace controversy: Many members cultivated controversial opinions, but weren‘t afraid to ruffle feathers.

The PayPal Mafia serves as an inspiration for what a small group of determined, hungry entrepreneurs can achieve. Their legacy is sure to influence many generations of innovators to come!

Hope you enjoyed this deep dive into one of the most legendary—and disruptive—groups in Silicon Valley history. Let me know if you have any other thoughts on the PayPal Mafia‘s lasting impact!