PayPal Mafia

Based on Wikipedia: PayPal Mafia

In 2007, Fortune magazine staged one of the most memorable photoshoots in Silicon Valley history. A group of technology executives gathered in formal attire—but not the usual business suits. They wore pinstripe suits with fedoras, posed around a table with poker chips and cigars, adopting the theatrical menace of a 1930s gangster film. The joke was obvious but apt: these men had become the most powerful network in technology, and everyone knew it.

They called themselves the PayPal Mafia.

The Unlikely Origin Story

To understand how a single company produced more billionaire founders than perhaps any other in history, you need to go back to 1999, when two small startups merged under circumstances that seemed unremarkable at the time.

Confinity was building a money-transfer service—a way to beam payments between Palm Pilots, those clunky handheld computers that now seem as ancient as telegraphs. The company was founded by Max Levchin, a Ukrainian immigrant and cryptography obsessive, along with Peter Thiel, a Stanford-educated lawyer with contrarian philosophical views and a chess master's appetite for strategy.

X.com was another fintech experiment, founded by Elon Musk, who had already sold his first company, Zip2, for over three hundred million dollars. Musk wanted to build what he called a full-service internet financial institution—essentially trying to reinvent banking from scratch.

The two companies merged, clashed internally over strategy and technology choices, and eventually coalesced around the PayPal brand and Levchin's fraud-detection systems. The product found its killer application not in Palm Pilot payments but in enabling the growing army of eBay sellers to accept credit cards from buyers. Before PayPal, if you won an auction for a vintage lamp, you might have to mail a personal check to a stranger and wait weeks for it to clear.

In 2002, eBay bought PayPal for one and a half billion dollars. The PayPal employees suddenly found themselves absorbed into a much larger, more bureaucratic organization headquartered not in hip Palo Alto but in the comparatively sleepy suburbs of San Jose.

They hated it.

The Exodus

Within four years of the acquisition, all but twelve of PayPal's first fifty employees had departed. This wasn't entirely surprising—startup employees often leave after acquisitions, especially when their stock options vest and they no longer need the paycheck. But the PayPal diaspora was different.

They didn't scatter. They stayed in touch. They invested in each other's companies. They hired each other. They became a network of unusual density and loyalty, operating almost like an extended family or, yes, like a crime syndicate with legitimate business interests.

The term "PayPal Mafia" emerged organically, half-joking, to describe this phenomenon. But by the time Fortune staged that famous photoshoot, the joke had become an understatement. These former colleagues had already founded or funded an astonishing number of consequential companies.

The Companies They Built

Consider what emerged from this single group of former coworkers:

YouTube came from three PayPal alumni—Chad Hurley, Steve Chen, and Jawed Karim. Hurley had designed PayPal's logo and user interface; Chen and Karim were engineers. In 2005, they built a simple website where anyone could upload and share video clips. Google bought it eighteen months later for 1.65 billion dollars, and it has since become the second most-visited website on Earth, fundamentally changing how humans create and consume media.

LinkedIn came from Reid Hoffman, who had been PayPal's executive vice president. Launched in 2003, it became the dominant professional networking platform, essentially digitizing the concept of the business card and the Rolodex. Microsoft acquired it in 2016 for over twenty-six billion dollars.

Yelp was founded by Jeremy Stoppelman and Russel Simmons, both former PayPal engineers. They created a platform for crowdsourced business reviews that changed how people discover restaurants, dentists, and plumbers—and gave small business owners anxiety about their star ratings.

Palantir Technologies was co-founded by Peter Thiel along with several partners. Named after the seeing-stones in Tolkien's Lord of the Rings, Palantir built data analysis software initially for intelligence agencies and later for corporations. The company became controversial for its government surveillance work but also enormously valuable, with a market capitalization that has at times exceeded fifty billion dollars.

SpaceX and Tesla became Elon Musk's world-changing follow-up acts. SpaceX, founded in 2002, developed reusable rockets that dramatically reduced the cost of reaching orbit and rekindled humanity's spacefaring ambitions. Tesla, which Musk joined in 2004 and eventually took control of, proved that electric vehicles could be desirable and helped accelerate the entire automotive industry's transition away from gasoline.

Affirm, the buy-now-pay-later lending company, came from Max Levchin, who also created Slide, a social gaming company that Google acquired for over two hundred million dollars.

Yammer, an enterprise social network, was founded by David Sacks, who had been PayPal's chief operating officer. Microsoft bought it for 1.2 billion dollars.

And these are just the direct founder stories. The PayPal alumni also became prolific investors. Thiel was the first outside investor in Facebook, turning five hundred thousand dollars into over a billion. Roelof Botha, PayPal's former chief financial officer, became a partner at Sequoia Capital, one of the most prestigious venture capital firms, where he led investments in YouTube, Instagram, and many others. Reid Hoffman became a partner at Greylock Partners and an early investor in Facebook, Airbnb, and dozens of successful startups.

Why This Company?

The obvious question is: why PayPal? Plenty of startups have had talented people. Plenty have gone through intense struggles. What made this particular company a factory for future moguls?

Journalist Sarah Lacy, who wrote a book called "Once You're Lucky, Twice You're Good" that examined the PayPal Mafia phenomenon, argued that the selection process and technical training mattered, but the crucial ingredient was confidence. These people had survived what should have been a fatal experience—building a company through the dot-com bust, fighting fraud that threatened to bankrupt them monthly, navigating an internal power struggle, and ultimately selling for over a billion dollars. They emerged believing they could do anything.

There are other theories. Some point to youth—many of these founders were in their twenties, with the energy and risk tolerance that entails. Others emphasize the physical, cultural, and economic infrastructure of Silicon Valley itself, which makes it easier to start companies than almost anywhere else on Earth. Still others note the diversity of skills in the group: engineers like Levchin and Chen, product designers like Hurley, business strategists like Thiel and Hoffman, operators like Sacks.

The PayPal culture itself seems to have played a role. The company encouraged tight social bonds among employees. The early team faced near-death experiences repeatedly—fraud schemes that could have drained the company, regulatory threats, the broader tech crash of 2000-2001. Shared struggle creates lasting camaraderie. Former soldiers often stay close for life; so, apparently, do former PayPal employees.

There's also a comparison to an earlier Silicon Valley diaspora. In the late 1960s, a group of engineers left Shockley Semiconductor—frustrated with their brilliant but difficult founder, William Shockley—and started Fairchild Semiconductor. From Fairchild came Intel, Advanced Micro Devices, and dozens of other companies. These defectors became known as the "Traitorous Eight," and their legacy shaped the entire semiconductor industry. The PayPal Mafia is, in some ways, the internet-era equivalent.

The Don and His Circle

If the PayPal Mafia had a godfather, it was Peter Thiel. The metaphor stuck: journalists often referred to him as the "don" of the group.

Thiel was unusual even among unusual people. A chess prodigy who became a lawyer, then quit law after seven months to become a derivatives trader, then quit trading to start a hedge fund, then quit that to co-found PayPal, he seemed constitutionally incapable of following a conventional path. His philosophical influences ranged from libertarianism to the French literary theorist René Girard, whose ideas about mimetic desire—the notion that humans want things primarily because other humans want them—shaped Thiel's contrarian investment strategy.

After PayPal, Thiel founded Clarium Capital, a hedge fund, and Founders Fund, a venture capital firm with an unusual mandate: invest in "transformational" companies that most investors considered too risky or too weird. The Founders Fund bet on SpaceX when most people thought private rocket companies were insane. They backed Palantir, which Thiel co-founded. Their thesis was that the biggest returns come from ideas that seem crazy until they work.

Thiel also became known for his philanthropy and his provocations. He funded anti-aging research, seasteading projects (floating libertarian cities), and the Thiel Fellowship, which paid talented young people to drop out of college and start companies—a direct challenge to conventional wisdom about education.

His political evolution drew more attention over time. Once a conventional libertarian in the Silicon Valley mold, Thiel became increasingly heterodox, eventually supporting Donald Trump's 2016 presidential campaign when most tech figures were appalled. His speech at the Republican National Convention that year—in which he declared "I am proud to be gay" while endorsing a party that had historically opposed gay rights—captured his talent for confounding expectations.

The Richest Person on Earth

Elon Musk's story after PayPal became arguably the most dramatic of any in the group, though his relationship to the Mafia is complicated. He was pushed out as CEO of PayPal before the eBay acquisition, replaced by Thiel in an internal coup while Musk was on his honeymoon. Still, he retained his shares and walked away with around 180 million dollars after taxes.

What he did with that money defied conventional startup wisdom. Rather than investing it in other people's companies or starting something sensible, he bet almost everything on two of the most capital-intensive and failure-prone industries imaginable: space rockets and electric cars.

SpaceX nearly failed three times—the first three rocket launches all exploded. Musk was down to his last rockets and his last money. The fourth launch succeeded, and NASA awarded SpaceX a contract that saved the company. Tesla came even closer to death during the 2008 financial crisis, surviving by days.

By 2025, Musk had become the wealthiest person on Earth, with a net worth around five hundred billion dollars. SpaceX had made reusable rockets routine and was building Starship, intended to carry humans to Mars. Tesla had forced every major automaker to develop electric vehicles. Musk had also acquired Twitter (rebranding it as X), founded Neuralink to build brain-computer interfaces, started The Boring Company to dig tunnels for transportation, and co-founded OpenAI, the artificial intelligence research company, though he later departed from its board amid disagreements about its direction.

The Political Turn

The PayPal Mafia's influence eventually extended beyond business into politics, and this evolution surprised many observers.

Silicon Valley had long been associated with a particular political flavor: socially liberal, economically libertarian, optimistic about technology's ability to solve problems, and generally aligned with the Democratic Party on most issues. Reid Hoffman exemplified this tendency, becoming one of the most prolific donors to Democratic campaigns and causes. He funded efforts to combat misinformation, supported voting rights organizations, and wrote checks for mainstream Democratic candidates.

But other Mafia members moved in a different direction.

Thiel's support for Trump was the most visible break, but David Sacks also became an outspoken critic of what he saw as excessive progressivism in technology and media. Musk's politics became increasingly difficult to categorize—supporting Democrats on climate change while attacking what he called the "woke mind virus" in progressive culture.

By the time of the 2024 presidential election, several Mafia members had become key Trump supporters. Musk donated over two hundred fifty million dollars to Trump's campaign and became head of a new body called the Department of Government Efficiency, abbreviated DOGE—a reference to the cryptocurrency Dogecoin that Musk had championed. The department's stated mission was to cut government spending and regulations.

David Sacks was named as Trump's advisor on artificial intelligence and cryptocurrency policy, effectively becoming the czar of two of the most consequential emerging technology sectors.

Ken Howery, who had been PayPal's chief financial officer and later a partner at Founders Fund, had served as ambassador to Sweden during Trump's first term and was named ambassador to Denmark in the second.

And JD Vance, who was not a PayPal employee but was a Thiel protégé—Thiel had helped launch his political career with substantial campaign donations—became Vice President of the United States.

The Economist wrote that the PayPal Mafia would "take over America's government." This was hyperbole, but only slightly.

A Full Roster

The complete list of acknowledged Mafia members extends well beyond the biggest names:

Max Levchin, the cryptography genius and co-founder, went on to lead Affirm as CEO, building it into a publicly traded company worth tens of billions at its peak.

Roelof Botha, the South African-born CFO who joined at age twenty-eight, became one of the most successful venture capitalists in history at Sequoia Capital.

Keith Rabois worked at PayPal, then LinkedIn, then Square, then Khosla Ventures, then Founders Fund, becoming known as one of the savviest operators in technology.

Premal Shah became founding president of Kiva, the microfinance nonprofit that pioneered peer-to-peer lending to entrepreneurs in developing countries.

Dave McClure founded 500 Global (originally 500 Startups), one of the most prolific early-stage investment firms in the world, backing thousands of companies across dozens of countries.

Jawed Karim, in addition to co-founding YouTube, made what might be the most consequential creative decision of the internet era: he uploaded the first video ever posted to the platform, a nineteen-second clip of himself at the San Diego Zoo titled "Me at the zoo."

Eric M. Jackson wrote "The PayPal Wars," an insider account that remains one of the best books about the startup experience and the source for much of what we know about the company's early chaos.

Luke Nosek, a co-founder and early marketing executive, became a partner at Founders Fund alongside Thiel.

Yu Pan, who helped design PayPal's user experience, later co-founded Kiwi Crate, the children's craft subscription service.

Yishan Wong, an engineering manager at PayPal, went on to work at Facebook, became CEO of Reddit, and later founded Terraformation, a company focused on large-scale reforestation to combat climate change.

The Enduring Mystery

More than two decades after PayPal's sale to eBay, the Mafia's influence continues to compound. The companies they founded employ hundreds of thousands of people. The companies they funded employ millions more. The technologies they built or backed—from online video to electric vehicles to social networking to space travel—have reshaped daily life for billions of humans.

And still, no one has fully replicated the phenomenon. Despite endless attempts to identify the "next PayPal Mafia" among alumni of Google, Facebook, Uber, or other consequential companies, nothing quite matches the original's density of successful founders and impact.

Perhaps the circumstances were unreproducible: the particular moment of the dot-com bust, when survival itself required intensity and ingenuity; the specific combination of personalities and skills; the early internet's greenfield opportunities, when entire massive markets remained unconquered.

Or perhaps we simply haven't waited long enough. The PayPal Mafia's influence wasn't fully visible until years after they scattered. Somewhere, the alumni of some company founded in 2015 or 2020 might be building the next great cluster of transformative ventures, and we won't know until the future reveals it.

What we do know is that one small payments company in Palo Alto, with a few hundred employees at its peak, produced the founding DNA for a remarkable share of the modern technology industry—and, increasingly, for the structures of American government itself.

The joke about them being a mafia doesn't seem quite as funny anymore.