By Jimmy Soni (2022)
Pages: 496, Final verdict: Great-read
PayPal's impact transcends the company. I heard this a few times before picking up Soni's latest book, and for good reason. Yes, Paypal is - at the time I'm writing this in May '23 - worth +$80B, and boasts almost 500 million active accounts. But more importantly, PayPal is the company of Elon Musk, Peter Thiel, Reid Hoffman and the future founders Youtube, Yelp, Affirm, Kiva and many others. Ebay snatched the company less than 4 years after is founding. But in that short period, the company pioneered (and embodied) a lot of what became the culture of Silicon Valley over the next 2 decades.
Now, PayPal finally has a book that makes it's story justice. It was written by Jimmy Soni, a former McKinsey consultant turned best-selling author after his breakout book about. Released in 2022, The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley follows the journey of PayPal crew as they create, battled over and won the online payments market.
“It is ought to remember that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.” - Niccolo Machiavelli, The Prince
Startup = Drama
“There’s always drama in startups”. As Jimmy recounts his interview with Elon Musk in preparation for the book, one sentence illustrates the PayPal story more than any other. The drama. In 2 years the company went through a merger, 2 CEO changes, the dot-com crash, and an acquisition by their partner and foe.
But the story that sticks out the most is PayPal's relentless battle against fraud. In the words of Levchin, "Russian genius" and co-founder and CTO or Paypal, 2000 was not the year of the merger, or the year of CEO coup. It was "the year of fraud". At one point losing more than $10 million per month, fraud was the problem that almost buried Paypal into the dot-com startup cemetery. That's until IGOR - Paypal's secretive fraud detection system and Levchin's brain child - came to life and became not only the payments startup lifeline, but an central piece of the Paypal-FBI tag team agains fraud.
“In large part, PayPal succeeded because it could deal with fraud—and its competitors couldn't.” - Max Levchin
Stories like these made The Founders was one my favorite books of 2022. It's a fast paced, riveting in-depth look at the rise of this iconic company and the people behind it. In under 500 pages, it packs an insane amount of extraordinary, unusual, and intense stories, like:
- The process behind the “PayPal” name.
- The lead up to the dot-com crash and Thiel's foresight and timely fundraising efforts.
- PayPal's symbiotic but contentions relationship with eBay.
- Over the top anecdotes of late hours, tight deadlines and people sleeping in the office.
- Building up PayPal's dream team. Or how future PayPal's COO David Sacks put it: "we had to recruit our friends because no one else would work of us."
- How unplanned it all was, how they stumbled onto the eBay opportunity and seize it.
And then there are the personalities behind PayPal. The diplomatic aura of Reid Hoffman, the pragmatism of David Sacks, the intensity and grace of Levchin. Chief among them, of course, is Elon Musk. In Soni's profile of the serial founder we read what Elon Musk was like before being Elon Musk. It turns out, not very different. Of his time at Zip2 - the company he built and sold to Compaq for $307 Million before PayPal - Soni retells how “he was pone to setting unreasonable deadlines, chewing out other executives and colleagues in the open, and retooling code written by other people without asking first.” That sounds like the Elon we know and love-hate.
Trough it all Soni does an excellent job of meshing together the company, the people, and craziness of it all.
I like to think that Silicon Valley is the story of very resilient people working in an exploding market. PayPal is that story. It is the ultimate story of Product Market fit. Of a company that changed its product 3 or 4 times, hit gold in of the fastest growing market of a generation, and fought their way into success.
The Founders is a must-read for anyone in tech, or anyone who loves a great business story.
- Max Levchin's 2 part podcast with Guy Raz for How I Built this