WEBVTT - New Book Tells Tech Titan Origin Stories

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. What do

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<v Speaker 1>your Facebook, Tesla, Palenteer, LinkedIn a firm, SpaceX and more

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<v Speaker 1>all have in common? Well, a lot of them can

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<v Speaker 1>be traced back to a small but powerful group of

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<v Speaker 1>people that in tech circles are known as the PayPal Mafia.

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<v Speaker 1>These are the founders and earliest employees of PayPal. We're

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<v Speaker 1>talking about people like Elon Musk, Peter Til, David Sachs,

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<v Speaker 1>Reid Hoffman, and more that probably aren't household names to

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<v Speaker 1>many people out there, but before they became incredibly wealthy

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<v Speaker 1>and built some of those other companies, they weren't work

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<v Speaker 1>building PayPal. Jimmy Sony is the author of The Founders.

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<v Speaker 1>It's the story of PayPal and the entrepreneurs who shaped

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<v Speaker 1>Silicon Valley. He joins us live in the Bloomberg eleven

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<v Speaker 1>three oh studios here in New York. Jimmy, how are you.

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<v Speaker 1>I'm doing well. Thank you for having me. Yeah, well,

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<v Speaker 1>thanks for joining us. Congratulations on the book. It came

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<v Speaker 1>out just a few days ago. Um. I'm wondering at

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<v Speaker 1>what point because you've written a few books. At what

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<v Speaker 1>point did you decide that the story of the PayPal's

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<v Speaker 1>origin story was a story that you wanted to tell. Yeah,

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<v Speaker 1>you know, my m O for books is I kind

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<v Speaker 1>of looked for the empty space on the bookshelf, like

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<v Speaker 1>I'll go on Amazon and just see what I want

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<v Speaker 1>to read about, and if I can't find the topic,

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<v Speaker 1>I will add it to a Google doc. That is,

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<v Speaker 1>you just sort of titled books books someone should write,

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<v Speaker 1>and then I just keep going until I find a

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<v Speaker 1>book or someone find out someone's working on a book

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<v Speaker 1>with this one. I just thought that, given the number

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<v Speaker 1>of figures in here who have gone on to do

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<v Speaker 1>such interesting things, that like, someone was working on this,

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<v Speaker 1>and when I found out that no one was, I

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<v Speaker 1>just kind of kept knocking on doors until I started

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<v Speaker 1>doing the project and tell us a little bit about

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<v Speaker 1>this group of people, the PayPal mafia, because like Tim said,

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<v Speaker 1>there are some household names in there. I mean Elon Musk,

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<v Speaker 1>Peter Tiele, for example, But what is the common denominator

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<v Speaker 1>when you look across them. Yeah, you know, the one

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<v Speaker 1>thing I say is I wish we could retire the

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<v Speaker 1>term PayPal mafia. I know, that's the way they're known.

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<v Speaker 1>But I think PayPal diaspora is more fitting. I had

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<v Speaker 1>a couple of people tell me what for one thing like,

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<v Speaker 1>we're not as cool as a mafia, so we're just

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<v Speaker 1>a group of big, you know, sort of big lovable nerds.

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<v Speaker 1>The other is it sounds more sinister, right most of

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<v Speaker 1>these people, like the people who built YouTube, the people

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<v Speaker 1>who built LinkedIn, like these are these they they didn't

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<v Speaker 1>set out to sort of like do something like elicit

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<v Speaker 1>in the world. Um. I I would say there's several

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<v Speaker 1>common denominators. A few that stood out to me when

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<v Speaker 1>I did the research. One is unexpected, but but a

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<v Speaker 1>real love of like puzzle solving, chess playing, poker playing,

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<v Speaker 1>game playing like this kind of uh where where intelligence

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<v Speaker 1>and competitive meat at the spot in the event diagram

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<v Speaker 1>That was a big part of this. I would say.

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<v Speaker 1>The second thing is a very very very high bar

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<v Speaker 1>for intelligence, Like every person I interviewed had just was

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<v Speaker 1>like would run circles around me, right, So I was

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<v Speaker 1>like the B student writing about the A students. Um.

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<v Speaker 1>The last piece I think is is a little bit

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<v Speaker 1>harder to define, but it's this predisposition to want to

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<v Speaker 1>build a solution to a problem as opposed to like

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<v Speaker 1>go and research and figure out what the solution should be.

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<v Speaker 1>I actually had an engineer, Eric Client say to me

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<v Speaker 1>too that even after PayPal experience, even today, his instinct

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<v Speaker 1>is to invent, not research and implement. Interesting Hey, Jimmy, UM,

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<v Speaker 1>we have a couple of minutes with you here, then

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<v Speaker 1>we're gonna do some news. Then we're gonna come back

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<v Speaker 1>and get a lot more time with you. UM. I'm

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<v Speaker 1>wondering about when it comes to the individuals, the household

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<v Speaker 1>names who we know you you're reporting on this, You

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<v Speaker 1>spoke to them, you went out and met with them. Um.

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<v Speaker 1>Was there anyone you didn't talk to that you wanted

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<v Speaker 1>to speak to because we're talking like you know, you

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<v Speaker 1>spoke to Peter till you spoke to Elon Musk. Yeah,

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<v Speaker 1>I would So I did. You do two hundred and

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<v Speaker 1>sixty interviews for this over the course of five years,

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<v Speaker 1>and I was really fortunate. I was able to talk

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<v Speaker 1>to everyone I wanted to speak to. There was one

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<v Speaker 1>person I didn't get to get in touch with, and

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<v Speaker 1>it was because of circumstances. There was a young engineer

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<v Speaker 1>named Robert Fresa. He passed away while working at PayPal,

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<v Speaker 1>and he was an exceptional mind, I mean really was

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<v Speaker 1>loved within the company. But he passed away when he

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<v Speaker 1>was just shy of twenty two years old. I tried

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<v Speaker 1>to memorialize him in the book, and I actually spoke

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<v Speaker 1>to his father, but understandably I wasn't able to speak

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<v Speaker 1>to him. But otherwise everyone was pretty open about speaking

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<v Speaker 1>to me. How did you get just in the last

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<v Speaker 1>thirty seconds that we have with you and then we're

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<v Speaker 1>gonna come back for more, how did you get everyone

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<v Speaker 1>to speak with you? Dogged persistence and a lot of

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<v Speaker 1>cold emails and a lot of luck. Um. I would

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<v Speaker 1>also say I had the fortune of writing about something

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<v Speaker 1>that happened twenty years ago. So I'm not writing about

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<v Speaker 1>Tesla or SpaceX or a firm or palatiner or anything.

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<v Speaker 1>I was writing about something that, for a lot of

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<v Speaker 1>these people is in the rear view mirror. Um, Katie,

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<v Speaker 1>I know you wanted to ask about some early PayPal employees. Well, again,

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<v Speaker 1>when we look at the roster of who's involved here,

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<v Speaker 1>I mean Elon Musk, Peter Till, I feel like we

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<v Speaker 1>talked about them every other day, but who was involved

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<v Speaker 1>that we don't talk about who isn't a household name,

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<v Speaker 1>who is important to this story. Yeah, you could argue

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<v Speaker 1>that is the most consequential people in the company are

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<v Speaker 1>not household names. Um. I was really fortunate. I would

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<v Speaker 1>often send cold emails to employ ease and I would

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<v Speaker 1>get a favorable response back, and the first thing they

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<v Speaker 1>would say to me is, no one has ever asked

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<v Speaker 1>me about my PayPal experience before. And I found this

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<v Speaker 1>like astonishing, right, just given what these people have gone

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<v Speaker 1>on to do. Um. One of the people I interviewed

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<v Speaker 1>that I found most exceptional was a woman named Amy

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<v Speaker 1>Rowe clement Um. She is very early at X dot com.

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<v Speaker 1>Ellen does his signature kind of pitch for her to join.

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<v Speaker 1>She signs up instead of explain what X dot com is. Yes,

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<v Speaker 1>X dot com is one of the predecessor companies that

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<v Speaker 1>becomes PayPal. So PayPal is really the fusion of two companies.

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<v Speaker 1>One is called X that was founded by Elon Musk.

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<v Speaker 1>The other is called Confinity, and it was founded by

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<v Speaker 1>Peter Thiel and Max Lovechin. And so she joins X

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<v Speaker 1>dot com instead of going to graduate school, and she

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<v Speaker 1>becomes one of the signature leaders in the product team

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<v Speaker 1>and the way she describes her role like really stuck

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<v Speaker 1>with me. She said, it was a mix of operator,

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<v Speaker 1>therapist and historian. Um and I found her and not

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<v Speaker 1>just myself, but my reporting. In my reporting, I found

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<v Speaker 1>many employees looked to her for leadership, moral leadership, just

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<v Speaker 1>someone who could help fix problems. She was the person

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<v Speaker 1>in the organization that basically made the whole place function

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<v Speaker 1>because you can imagine a lot of mega up personalities,

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<v Speaker 1>a lot of my que points in the room and

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<v Speaker 1>within that I had multiple people say to me, you know,

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<v Speaker 1>Amy is part of the reason this place did not

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<v Speaker 1>combust on itself, Like she really held us together. She's

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<v Speaker 1>one of the people that I think is And by

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<v Speaker 1>the way, these aren't my words, Elon Musk's words. She

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<v Speaker 1>is an unsung hero in this story, has never gotten recognition.

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<v Speaker 1>Another person. You know, they're countless people. I can go

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<v Speaker 1>on the list, but there's plenty of people like that.

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<v Speaker 1>We're gonna talk more about that in just a few

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<v Speaker 1>minutes when we come back with Jimmy Sony. He's the

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<v Speaker 1>author of The Founders, the story of PayPal and the

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<v Speaker 1>entrepreneurs who shaped Silicon Valley. You're listening to Bloomberg Radio.

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<v Speaker 1>This is Bloomberg. I want to get right back to

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<v Speaker 1>our next guest, Jimmy Sony is the author of The Founders,

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<v Speaker 1>The Story of PayPal and the Entrepreneurs who shaped Silicon Valley. Jimmy,

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<v Speaker 1>what strikes me reading this is how far ahead of

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<v Speaker 1>their time the folks who uh in the origin story

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<v Speaker 1>of PayPal were in terms of thinking about payments, in

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<v Speaker 1>terms of thinking about sending money from one person to another.

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<v Speaker 1>I mean we're talking like, you know, more than a

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<v Speaker 1>decade before ven Mel, which became a PayPal company. We're

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<v Speaker 1>talking before cryptocurrency. They're talking about cross border payments. What

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<v Speaker 1>were they onto? You know, you nailed it on the head. Like.

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<v Speaker 1>One of the things that's most impressive about this group,

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<v Speaker 1>particularly the earliest people who constituted the company, is that

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<v Speaker 1>they could almost see into the future. Right, So I'll

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<v Speaker 1>give you the best example I can give you. Elon

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<v Speaker 1>names his company X dot com. He thinks it's what

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<v Speaker 1>he calls the coolest U R L on the Internet. Well,

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<v Speaker 1>by the way, he loves X. Right, He's got the

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<v Speaker 1>Model X with Tesla, He's got his kid who's named X,

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<v Speaker 1>and he repurchased the X dot com domain a few

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<v Speaker 1>years ago from PayPal. Uh, and he thanked them for

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<v Speaker 1>letting him buy it. Here's the thing. You go a

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<v Speaker 1>level deeper and you ask him why. One of the

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<v Speaker 1>things he says is how many characters is X period

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<v Speaker 1>C O M. It's just five characters. If you're on

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<v Speaker 1>a mobile phone and you're on a browser and you're

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<v Speaker 1>trying to access your entire financial life, that's just five

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<v Speaker 1>taps of the year was this. This is talking mobile phone.

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<v Speaker 1>He's talking mobile phones and acts. Seeing your entire financial

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<v Speaker 1>life on your phone like that is a far reaching,

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<v Speaker 1>future oriented vision for finance at a time when people

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<v Speaker 1>are just getting comfortable putting credit cards onto websites Like

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<v Speaker 1>that is part of what I saw with person after

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<v Speaker 1>person in the stories. They were really thinking decades ahead.

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<v Speaker 1>And Jamie, there's so much amazing reporting in this book.

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<v Speaker 1>There's so much color. You have a whole chapter on

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<v Speaker 1>sort of the back and forth about what to actually

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<v Speaker 1>called PayPal. To describe that a little bit, Yeah, it's

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<v Speaker 1>one of my favorite stories in the book. There's Uh,

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<v Speaker 1>Max Legend and Peter Tiel name their company Confinity. Confinity,

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<v Speaker 1>which is a multiple syllables and starts with the word

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<v Speaker 1>con is not a good look for a financial company.

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<v Speaker 1>So they look for a branding firm to help them,

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<v Speaker 1>and they find the firm Master McNeil. It's run by

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<v Speaker 1>a woman named Esby. Master Esby has a mix of

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<v Speaker 1>a Harvard m b. A and a background in like

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<v Speaker 1>literature and poetry and a real love of language, so

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<v Speaker 1>she blends the humanities and it's very sort of rigor

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<v Speaker 1>for business. She is the person who comes up at

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<v Speaker 1>the PayPal name, and it's not a quick process. She

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<v Speaker 1>goes through hot She and her team go through hundreds

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<v Speaker 1>of names. They pare them down. Among the finalists were

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<v Speaker 1>Momo cash, a E money Beam and and PayPal money Beam.

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<v Speaker 1>And what she and I walked through, her thinking on it,

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<v Speaker 1>her explanation of it, the the alliteration of pay and pal.

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<v Speaker 1>The interesting thing is the edit. PayPal was originally supposed

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<v Speaker 1>to have a lower case P in the middle, and

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<v Speaker 1>the reason is because of visual symmetry. If you have

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<v Speaker 1>an upper case P at the beginning and at lower

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<v Speaker 1>case L, you got two ascenders. If you have two

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<v Speaker 1>lower case letters in the middle, you have two descenders.

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<v Speaker 1>Someone and we looked in the files, someone capitalized the

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<v Speaker 1>middle P, and in her files it just says, chose

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<v Speaker 1>PayPal with a capitalized middle P, and that's stuck for

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<v Speaker 1>the next twenty years. And visually it worked. It worked,

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<v Speaker 1>I mean, I think it works anyway. People seemed to

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<v Speaker 1>warm to the name. They really liked it was friendly,

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<v Speaker 1>It had what she called to plosives, meaning the ps

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<v Speaker 1>or plosives you stop the air, so it helps you

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<v Speaker 1>remember the name. And mostly I think everyone on the

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<v Speaker 1>team was just grateful that the company wasn't called Confinity anymore.

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<v Speaker 1>How did they battle fraud early on? Yeah, so they

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<v Speaker 1>build a payment system without expecting anybody to use it.

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<v Speaker 1>But what happens if you throw a party and literally

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<v Speaker 1>the entire world comes and starts to take things from

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<v Speaker 1>your house, which is essentially what happened. They use a

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<v Speaker 1>mix of human fraud fighters, who are some of the

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<v Speaker 1>most interesting people I interviewed, because they were like, you know,

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<v Speaker 1>talking to lawyers and talking to secret service agents and

0:10:26.559 --> 0:10:29.400
<v Speaker 1>talking to the government, as well as analytic and big

0:10:29.480 --> 0:10:33.120
<v Speaker 1>data tools that PayPal builds to find bad actors and

0:10:33.160 --> 0:10:35.120
<v Speaker 1>then figure out how to bring them to bring them

0:10:35.160 --> 0:10:37.680
<v Speaker 1>to justice. Uh. It's I think some of the earliest

0:10:37.679 --> 0:10:39.880
<v Speaker 1>application of that technology and some of the most interesting

0:10:39.920 --> 0:10:42.240
<v Speaker 1>stuff that I had a chance to dive into. And

0:10:42.280 --> 0:10:44.360
<v Speaker 1>I mean one of the choices about having you in

0:10:44.480 --> 0:10:47.040
<v Speaker 1>studio with us is a You're very charming b is

0:10:47.080 --> 0:10:49.160
<v Speaker 1>that we were chatting a little bit about the date

0:10:49.240 --> 0:10:55.080
<v Speaker 1>that you published February two thousand, twenty two. Why that date, Well,

0:10:55.800 --> 0:10:58.520
<v Speaker 1>it's one week after the company the anniversary of the

0:10:58.559 --> 0:11:03.600
<v Speaker 1>company's I p O U, which was February two thousand two.

0:11:04.120 --> 0:11:08.160
<v Speaker 1>And I found among this group of people a real

0:11:08.240 --> 0:11:12.280
<v Speaker 1>love for numbers, puzzles, little hidden things, and so my

0:11:12.520 --> 0:11:17.480
<v Speaker 1>one small homage to that was to two, which was

0:11:17.559 --> 0:11:20.640
<v Speaker 1>just like, it felt fitting that the date was something

0:11:20.640 --> 0:11:23.480
<v Speaker 1>of a palindrome, at least if you shortened the years. Uh.

0:11:23.520 --> 0:11:24.959
<v Speaker 1>And then when I was growing up to I just

0:11:25.000 --> 0:11:26.599
<v Speaker 1>like the number twenty two because EMT. Smith on the

0:11:26.640 --> 0:11:28.280
<v Speaker 1>DLAs Cowboys was twenty two, and that was like a

0:11:28.360 --> 0:11:30.560
<v Speaker 1>number I had on my my wall. So I thought

0:11:30.559 --> 0:11:32.720
<v Speaker 1>that it had all this like wonderful feeling about it,

0:11:32.960 --> 0:11:34.760
<v Speaker 1>and then you know, it just it worked because of

0:11:34.760 --> 0:11:36.880
<v Speaker 1>the love of numbers of this group of people. So

0:11:36.880 --> 0:11:38.520
<v Speaker 1>it's not the only Easter egg in the book. We

0:11:38.559 --> 0:11:39.960
<v Speaker 1>also got to talk with you during one of the

0:11:39.960 --> 0:11:42.800
<v Speaker 1>breaks about, you know, a five year labor of love

0:11:42.880 --> 0:11:45.960
<v Speaker 1>such as this. Um, what can you tell us about

0:11:46.160 --> 0:11:49.359
<v Speaker 1>the Easter eggs that you kind of distribute throughout the book. Yeah,

0:11:49.400 --> 0:11:52.600
<v Speaker 1>I'll share a couple of them. There's this thing in

0:11:52.600 --> 0:11:54.680
<v Speaker 1>books called the end papers, which are kind of the

0:11:54.720 --> 0:11:57.439
<v Speaker 1>one half adhesive one half it's not adhesive. It's like

0:11:57.480 --> 0:11:59.920
<v Speaker 1>the first physical page in the book. If you look

0:12:00.040 --> 0:12:02.760
<v Speaker 1>at it, you will see a name followed by a

0:12:02.800 --> 0:12:06.000
<v Speaker 1>company name. I tried to list as many employees as

0:12:06.040 --> 0:12:08.520
<v Speaker 1>I could who worked there, followed by a company that

0:12:08.559 --> 0:12:11.880
<v Speaker 1>was either founded in or directly invested in by one

0:12:11.920 --> 0:12:15.000
<v Speaker 1>of the people who are alumni. And it's an incredible list.

0:12:15.120 --> 0:12:16.520
<v Speaker 1>I mean, it's an amazing lists. By the way, it's

0:12:16.520 --> 0:12:19.160
<v Speaker 1>not a for profit companies. Kiva, Dotto Work, the micro

0:12:19.280 --> 0:12:22.679
<v Speaker 1>Lending micro finance website is founded by Prummel Shaw, who

0:12:22.720 --> 0:12:25.200
<v Speaker 1>is an alum from this company. H There are authors

0:12:25.200 --> 0:12:28.440
<v Speaker 1>in this company, film award winning film producers in this company,

0:12:28.559 --> 0:12:29.720
<v Speaker 1>and so I tried to do some of that. The

0:12:29.720 --> 0:12:34.040
<v Speaker 1>second Easter Egg is an elaborate, multi hundred page secret

0:12:34.040 --> 0:12:36.400
<v Speaker 1>code that I buried inside the book, which has been

0:12:36.440 --> 0:12:38.880
<v Speaker 1>it has been cracked by one person. There's one person

0:12:38.920 --> 0:12:41.000
<v Speaker 1>who has cracked the secret code, and that person is

0:12:41.040 --> 0:12:43.400
<v Speaker 1>the co founder of the company and a code cracker, extraordinary,

0:12:43.559 --> 0:12:47.120
<v Speaker 1>Max Levchin. That is incredible. I have not cracked the

0:12:47.120 --> 0:12:49.480
<v Speaker 1>code yet, had to say, but I do want to ask.

0:12:49.520 --> 0:12:53.320
<v Speaker 1>I mean, you interviewed so many former employees from PayPal,

0:12:53.400 --> 0:12:56.120
<v Speaker 1>and when we talk about companies that came about in

0:12:56.160 --> 0:12:58.719
<v Speaker 1>the late nineties, early two thousand's, uh, there were a

0:12:58.760 --> 0:13:01.280
<v Speaker 1>lot of busts. I'm curious, you know, did any of

0:13:01.280 --> 0:13:04.920
<v Speaker 1>the employees that you talked to express surprise that, you know,

0:13:04.960 --> 0:13:07.680
<v Speaker 1>PayPal is still so dominant, so prominent that it is.

0:13:09.000 --> 0:13:13.360
<v Speaker 1>You know, it's a great question. I think that there's

0:13:13.360 --> 0:13:16.960
<v Speaker 1>a handful of employees who actually predicted that the growth

0:13:17.040 --> 0:13:19.400
<v Speaker 1>and the network effects that they created in the early

0:13:19.400 --> 0:13:22.840
<v Speaker 1>two thousands would carry them forward this far. I would

0:13:22.880 --> 0:13:25.520
<v Speaker 1>actually argue that when they were living it, it was

0:13:25.600 --> 0:13:27.960
<v Speaker 1>more of a sense of relief that they survived the

0:13:27.960 --> 0:13:31.080
<v Speaker 1>crater ring of the dot com bubble, and so it

0:13:31.160 --> 0:13:33.360
<v Speaker 1>was relief in the moment, and I think there is

0:13:33.480 --> 0:13:35.800
<v Speaker 1>you know, there's appreciation that it lasted as long as

0:13:35.800 --> 0:13:38.480
<v Speaker 1>it did. But actually when they ran the analytics back then,

0:13:38.720 --> 0:13:40.480
<v Speaker 1>I had a couple of employees tell me they were like,

0:13:40.520 --> 0:13:42.560
<v Speaker 1>you know, we had spreadsheets that showed with the value

0:13:42.559 --> 0:13:47.200
<v Speaker 1>of the company would be in two Jimmy, just in

0:13:47.200 --> 0:13:49.680
<v Speaker 1>the thirty seconds that we have left with you, what

0:13:49.720 --> 0:13:51.360
<v Speaker 1>are the white spaces that you're saying that need to

0:13:51.400 --> 0:13:53.200
<v Speaker 1>be filled? Next, I know you're taking a break after

0:13:53.240 --> 0:13:55.120
<v Speaker 1>this book. It was five years in the making. But

0:13:55.240 --> 0:13:57.960
<v Speaker 1>where are your interests right now? Yeah? I've become really

0:13:58.000 --> 0:14:01.400
<v Speaker 1>interested in criminal justice reform. The concluding chapter of this

0:14:01.440 --> 0:14:04.000
<v Speaker 1>story is actually about how the PayPal mafia narrative finds

0:14:04.040 --> 0:14:06.559
<v Speaker 1>its way inside a prison involved in just outside of

0:14:06.600 --> 0:14:11.080
<v Speaker 1>Baltimore and Jessip Maryland and these two young prisoners, both

0:14:11.120 --> 0:14:13.959
<v Speaker 1>serving life sentences, were super inspired by the story, and

0:14:14.120 --> 0:14:16.040
<v Speaker 1>I just learned a lot about the prison system, and

0:14:16.040 --> 0:14:18.520
<v Speaker 1>I think that's maybe where I wanted to devote some attention. Next,

0:14:18.720 --> 0:14:21.600
<v Speaker 1>that's Jimmy Sony. He's the author of The Founders, The

0:14:21.600 --> 0:14:25.760
<v Speaker 1>Story of PayPal and the Entrepreneurs who shaped Silicon Valley.

0:14:25.880 --> 0:14:28.160
<v Speaker 1>The book just coming out in the last few days.

0:14:28.520 --> 0:14:30.760
<v Speaker 1>You can check it out at your local bookstore. This

0:14:30.880 --> 0:14:35.760
<v Speaker 1>is Bloomberg Radio. This is Bloomberg Business Week. Catch Sound

0:14:35.800 --> 0:17:34.840
<v Speaker 1>On with Joe Matthews lsssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss