PayPal Mafia is an informal term for the community of American businesspeople and investors centered in Silicon Valley, who were early employees of e-commerce service PayPal before founding a series of other technology companies. Paypal was founded by Max Levchin and Peter Thiel in 1998 and was aquired by eBay for $1.5 billion in 2002. The PayPal Mafia are often credited with inspiring Web 2.0, and for the re-emergence of consumer-focused Internet companies after the dot com bust of 2001.
It is not uncommon for a company’s employees to leave and start successful new companies of their own after their old company is acquired. However, the PayPal alumni are considered singularly prolific. PayPal’s acquisition price was relatively small compared to other technology company acquisitions, yet with less buyout money than other companies PayPal’s former employees launched more successful companies in a shorter time than almost any other company in history.
Their success has been attributed to a number of factors: their youth (many had never been in unsuccessful companies before starting PayPal, and were not interested in retiring on their company stock gains); the physical, cultural, and economic infrastructure of Silicon Valley, which facilitates rapid company formation and expansion; and the diversity of skill-sets among the former employees (which ensured that the social group has a full range of financiers, engineers, designers, operations experts, marketers and others available to help each other start new companies.
Other aspects of PayPal’s pre-eBay corporate culture were also unique. It was allowed and even encouraged for low level employees to criticize executive decisions and lobby for their own positions. All employees, not just managers, were made aware in detail of company finances and performance. It intentionally looked for a specific personality profile in its early hires. It hired workaholic engineers, often graduate school dropouts with anti-establishment leanings, and avoided hiring MBAs, consultants, or people they considered ‘frat boys’ or ‘jocks’.
Many employees were multilingual. Recruited from the American Midwest, most were not intitially interested in the San Francisco Bay Area’s many social distractions. The company was male-dominated and nearly all employees were young men. An intensely competitive environment and a shared struggle to keep the company solvent despite many setbacks, contributed to a strong and lasting camaraderie. All of these have been cited as contributing to the group work ethic that has lead to success for so many of their newer start-up companies
The Daily Omnivore 
Leave a comment