The PayPal Mafia describes a group of former PayPal employees and founders who have since become involved with other tech companies. While most know SpaceX founder Elon Musk’s association with PayPal, the company also has links with YouTube, LinkedIn, and Yelp, among many others. In addition to founding these generation-defining companies, the members of the PayPal Mafia are some of the richest men in Silicon Valley.
Elon Musk, seen as one of the most visionary tech entrepreneurs from the Silicon Valley scene, started his “career” as an entrepreneur at an early age. After selling his first startup, Zip2, in 1999, he made $22 million, which he used to found X.com, which would later become PayPal, and sell for over a billion to eBay (Musk made $180 million from the deal). He founded other companies like Tesla (he didn’t start it but became a major investor in the early years) and SpaceX. Tesla started as an electric sports car niche player, eventually turned into a mass manufacturing electric car maker. Elon Musk has made most of his money by investing in ideas and companies he is passionate about. After eBay acquired PayPal for $1.5 billion in 2002, Musk used his personal wealth to fund his new ventures: Tesla and SpaceX. Most of Elon Musk’s wealth comes from Tesla, as he’s the major shareholder for the company. Making Elon Musk’s net worth well past the hundred billion-dollar mark.
Peter Thiel
Often referred to as the “Don” of the PayPal Mafia, Peter Thiel is one of the original co-founders of PayPal.
Thiel earned $55 million from his 3.7% stake in PayPal after it was sold to eBay, after which he created the hedge fund Clarium Capital and became the first outside investor in fledging Facebook.
Thiel is also the co-founder of Palantir Technologies, a software and data integration company with clients in the United States Government, military, intelligence, and police.
Jawed Karim
At PayPal, Karim was responsible for implementing the company’s real-time anti-fraud system.
Once his tenure ended, Karim founded YouTube with former PayPal colleagues Steve Chen and Chad Hurley.
Karim continued to act as an advisor while studying computer science at Stanford University.
Once YouTube was acquired by Google, Karim sold his shares which at the time were worth $64 million.
In 2008, Karim founded Youniversity Ventures with early PayPal investors Kevin Hartz and Keith Rabols. The company helps students and graduates develop viable business ideas.
Jeremy Stoppelman
Jeremy Stoppelman had a very early role at PayPal, joining the company as an engineer while it was still known as X.com. He eventually attained the title of Vice President of Engineering.
Stoppelman was another member of the PayPal Mafia to benefit from the eBay acquisition – at least indirectly.
He founded the online review site Yelp with former colleague Russel Simmons after contracting the flu and experiencing difficulty finding a good doctor.
Reid Hoffman
Hoffman joined PayPal as its COO in 2000, handling all external communications. At the time of the eBay acquisition in 2002, he was executive vice president.
Shortly thereafter, Hoffman co-founded LinkedIn – one of the first business-oriented online social networks.
LinkedIn is a two-sided platform running on a freemium model, where to unlock unlimited search and other features, you need to switch to a paid account. In addition, LinkedIn is the most successful B2B advertising platform. In fact, by 2022, with over 850 million members, LinkedIn generated over $6 billion in revenues through its Talent Solutions and over $5 billion through its Marketing Solutions (B2B advertising platform). Acquired by Microsoft for $27 billion in 2016, LinkedIn might now be worth anywhere between $100-150 billion.
In more recent years, Hoffman has been involved with philanthropic projects.
He currently serves on the boards of the microlending service Kiva and the social change organization Do Something.
Hoffman is also associated with Endeavor Global, which identifies and supports entrepreneurs in emerging markets.
Blitzscaling is a business concept and a book written by Reid Hoffman (LinkedIn Co-founder) and Chris Yeh. At its core, the concept of Blitzscaling is about growing at a rate that is so much faster than your competitors, that make you feel uncomfortable. In short, Blitzscaling is prioritizing speed over efficiency in the face of uncertainty.
David O. Sacks
David Sacks joined PayPal in 1999 from the management consultancy firm McKinsey & Company.
As COO before the appointment of Hoffman, Sacks was responsible for project management, design, sales and marketing, customer service, fraud operations, and human resources functions.
Sacks has arguably the most diverse resume of any PayPal Mafia member. In 2005, he produced and financed the satirical comedy Thank You for Smoking.
The following year, he founded the genealogy website Geni.com and Yammer, a social network and productivity tool for internal corporate communication.
Angel investment in technology companies is also a passion for Sacks, having been involved in the industry for two decades. Some of his investments include Airbnb, Eventbrite, Opendoor, Postmates, Scribd, Slack, and Uber.
Key takeaways:
The PayPal Mafia describes a group of former PayPal employees and founders who have since become involved with other tech companies. Elon Musk is perhaps the most well-known member.
Peter Thiel is one of the original co-founders of PayPal and is often referred to as the “Don” of the PayPal mafia. Jawed Karim, responsible for implementing PayPal’s fraud protection system, later founded YouTube with colleagues Steve Chen and Chad Hurley.
Former COO Reid Hoffman left PayPal after the eBay acquisition to found LinkedIn. David O. Sacks, also a former COO, has produced a movie and founded a corporate social network since his time at PayPal. Sacks is also a passionate angel investor.
Elon Musk is one of PayPal’s members. Indeed, Elon Musk founded X.com, which eventually would merge with Confinity to create PayPal.
Who is the richest of the PayPal Mafia?
Elon Musk is the wealthiest of PayPal’s members, with a net worth, which in 2022 ranged between $180-230 billion. Elon Musk ownsTesla, SpaceX, Twitter, The Boring Company, and Neuralink.
Why is it called PayPal Mafia?
The founding team of PayPal created many companies that defined Silicon Valley after the 2000s. Companies like Tesla, SpaceX, LinkedIn, YouTube, Palantir, and many others came from PayPal’s founding team. That is how they got the title of “PayPal Mafia.”
Why did PayPal remove Elon?
In an internal war in the year 2000, as Elon Musk flew to enjoy his honeymoon, he was ousted as the company’s CEO from the team who led the coupe (Levchin and Sachs primarily, as they wanted to bring back Peter Thiel as CEO of the company). Eventually, as Musk was on his plane back to California, he could not fight back and got ousted as CEO. Musk, with the money from PayPal, exists, as it got sold to eBay, founded SpaceX, and invested in Tesla in the very early days.
Acorns is a fintech platform providing services related to Robo-investing and micro-investing. The company makes money primarily through three subscription tiers: Lite – ($1/month), which gives users access to Acorns Invest, Personal ($3/month) that includes Invest plus the Later (retirement) and Spend (personal checking account) suite of products, Family ($5/month) with features from both the Lite and Personal plans with the addition of Early.
Starting as a pay-later solution integrated into merchants’ checkouts, Affirm makes money from merchants’ fees as consumers pick up the pay-later solution. Affirm also makes money through interest earned from the consumer loans when those are repurchased from the originating bank. In 2020 Affirm made 50% of its revenues from merchants’ fees, about 37% from interests, and the remaining from virtual cards and servicing fees.
Alipay is a Chinese mobile and online payment platform created in 2004 by entrepreneur Jack Ma as the payment arm of Taobao, a major Chinese eCommerce site. Alipay, therefore, is the B2C component of Alibaba Group. Alipay makes money via escrow transaction fees, various value-added ancillary services, and its Credit Pay Instalment fees.
Betterment is an American financial advisory company founded in 2008 by MBA graduate Jon Stein and lawyer Eli Broverman. Betterment makes money via investment plans, financial advice packages, betterment for advisors, betterment for business, cash reserve, and checking accounts.
Chime is an American neobank (internet-only bank) company, providing fee-free financial services through its mobile banking app, thus providing personal finance services free of charge while making the majority of its money via interchange fees (paid by merchants when consumers use their debit cards) and ATM fees.
Coinbase is among the most popular platforms for trading and storing crypto-assets, whose mission is “to create an open financial system for the world” by enabling customers to trade cryptocurrencies. Its platform serves both as a search and discovery engine for crypto assets. The company makes money primarily through fees earned for the transactions processed through the platform, custodial services offered, interest, and subscriptions.
Compass is a licensed American real-estate broker incorporating online real estate technology as a marketing medium. The company makes money via sales commissions (collected whenever a sale is facilitated or tenants are found for a rental property) and bridge loans (a service allowing the seller to purchase a home before the revenue from the sale of their previous home is available).
Dosh is a Fintech platform that enables automatic cash backs for consumers. Its business model connects major card providers with online and offline local businesses to develop automatic cash back programs. The company makes money by earning an affiliate commission on each eligible sale from consumers.
E-Trade is a trading platform allowing investors to trade common and preferred stocks, exchange-traded funds (ETFs), options, bonds, mutual funds, and futures contracts; acquired by Morgan Stanley in 2020 for $13 billion. E-Trade makes money through interest income, order flow, margin interests, options, future and bonds trading, and other fees and service charges.
Klarna is a financial technology company allowing consumers to shop with a temporary Visa card. Thus it then performs a soft credit check and pays the merchant. Klarna makes money by charging merchants. Klarna also earns a percentage of interchange fees as a commission and for interests earned on customers’ accounts.
Lemonade is an insurance tech company using behavioral economics and artificial intelligence to process claims efficiently. The company leverages technology to streamline onboarding customers while also applying a financial model to reduce conflicts of interest with customers (perhaps by donating the variable premiums to charity). The company makes money by selling its core insurance products, and via its tech platform, it tries to enhance its sales.
NerdWallet is an online platform providing tools and tips on all matters related to personal finance. The company gained traction as a simple web application comparing credit cards. NerdWallet makes money via affiliate commissions determined according to the affiliate agreements.
Robinhood is an app that helps to invest in stocks, ETFs, options, and cryptocurrencies, all commission-free. Robinhood earns money by offering: Robinhood Gold, a margin trading service, which starts at $6 a month, earns interests from customer cash and stocks, and rebates from market makers and trading venues.
SoFi is an online lending platform that provides affordable education loans to students, and it expanded into financial services, including loans, credit cards, investment services, and insurance. It makes money primarily via payment processing fees and loan securitization.
Stash is a FinTech platform offering a suite of financial tools for young investors, personalized investment advice, and life insurance. The company primarily makes money via subscriptions, cashback, payment for order flows, and interest for cash sitting on members’ accounts.
Wealthfront is an automated Fintech investment platform providing investment, retirement, and cashmanagement products to retail investors, mostly making money on the annual 0.25% advisory fee the company charges for assets under management. It also makes money via a line of credits and interests on the cash accounts.
Zelle is a peer-to-peer payment network that indirectly benefits the banks’ consortium that backs it. Zelle also enables users to pay businesses for goods and services free for users. Merchants pay a 1% fee to Visa or Mastercard, who share it with the bank that issued the card.
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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