The incredible story of PayPal mafia

5 min readSep 3, 2022


Max Levchin, Peter Thiel, and Luke Nosek founded Confinity. Thiel and Levchin met at Stanford University after Thiel gave a guest lecture and the two began to work together on the concept of a digital wallet. The company initially focused on mobile payments sent from Palm Pilots and other PDAs, but a Confinity employee developed a way to send money transfers through email. That service became PayPal in 1999. After gaining traction and taking its first few steps on the eBay platform, Confinity merged with Elon Musk’s, taking the parent company’s name. Eventually, after proving its success as a product, the company adopted the name PayPal, Inc. Doing things in their own way paid off for the PayPal team as they were able to file for an IPO in late 2001, later completing the IPO in February 2002. Later in 2002, eBay acquired PayPal for USD 1.5 billion.

This is where it gets interesting. The original PayPal employees had difficulty adjusting to eBay’s traditional corporate culture and within four years all 220 PayPal employees had left. They remained connected as social and business acquaintances, and a number of them worked together to form new companies in subsequent years. This group of PayPal alumni became so prolific that the term PayPal Mafia was coined. The term gained even wider exposure when a 2007 article in Fortune magazine used the phrase in its headline and featured a photo of former PayPal employees in gangster attire.

Key members of PayPal Mafia:

Peter Thiel, PayPal founder and former CEO is referred as the “DON” of PayPal Mafia. He diversified his investment across different assets which include investment in Clarium Capital, Palantir Technologies, Facebook (as an angel investor), Founders Fund, Valar Ventures and Mithril Capital.

Elon Musk got fired at eBay. He went on to build numerous companies that include Tesla Inc, SpaceX, Neuralink, OpenAI, The Boring Company, and is the Chairman of SolarCity. He is the most impressive among the lot because he has done something outside of the IT space as it is harder to do things in the world of atoms.

Luke Nosek, PayPal co-founder and former vice president of marketing and strategy, became a partner at Founders Fund with Peter Thiel and Ken Howery. Luke was first investor in Elon Musk’s SpaceX.

Roelof Botha, former PayPal CFO, later became a partner of venture capital firm Sequoia Capital — the firm that focuses on technology industry. It has backed companies that now controls USD 1.4+ trillion of combined stock market value. The fund manages multiple investment funds including funds specific to India & Southeast Asia, Israel, and China.

David O. Sacks, former PayPal COO later founded Yammer, a freemium enterprise social networking service used for private communication within organisations. Eventually, Microsoft acquired Yammer for USD 1.2 billion. Currently, Yammer is included in all enterprise plan of Office 365 and Microsoft 365.

Jawed Karim, former PayPal engineer along with Steve Chen co-founded YouTube, second most popular site after Google. This venture was eventually sold to Google for USD 1.65 billion. It has since evolved from a small video streaming platform to a large service influencing popular culture, internet trends, and creating multimillionaire celebrities. As on date, YouTube content creators upload over 500 hours of content per minute.

Reid Hoffman, former executive vice president went on to create LinkedIn, world’s largest professional networking site with over 750+ million users from 200 countries. Also, he was an early investor in Facebook, Aviary, Friendster and few other companies.

Yishan Wong, an engineering manager at Paypal went on to become the CEO of Reddit. As of February 2021, Reddit ranks as the 18th most visited website in the world and 7th most visited website in the US, according to Alexa Internet.

Russel Simmons, former PayPal engineer co-founded Yelp Inc along with Jeremy Stoppelman. As of June 2021, the site has 43 million unique visitors to its desktop webpage and 52 million unique visitors to its mobile site.

Dave Mcclure, former PayPal marketing director, a super angel investor for startup companies and founder of 500 Startups which has 500+ investments till date.

Sarah Lacy in her book Once You’re Lucky, Twice You’re Good did mention that the selection process and technical learning at PayPal played a vital role, but the main factor behind PayPal Mafia’s future success was the confidence they gained there. Their success has been attributed to their youth; the physical, cultural, and economic infrastructure of Silicon Valley; and the diversity of their skill-sets. PayPal’s founders encouraged tight social bonds among its employees, and many of them continued to trust and support one another after leaving PayPal. An intensely competitive environment and a shared struggle to keep the company solvent despite many setbacks also contributed to a strong and lasting camaraderie amongst former employees.

Some non-PayPal examples who made a fortune because of people they hanged out with.

Eric Schmidt — In 2001, Larry Page and Sergey Brin were looking to hire a CEO. They picked Eric because they all hung out at a place called Burning Man. Schmidt’d package: USD 250,000 (base) + USD 300,000 (bonus) + 6% of Google. He’s now worth USD 25 billion.

Steve Ballmer — Bill Gates convinced Ballmer to drop out of college and join his start up “Microsoft”. Ballmer was offered the role of Business Manager with a base salary of USD 50,000 (base) + 10% (share in profits). Ballmer had zero equity when he joined, but after restructuring his 10% profit share was replaced with 8% of Microsoft shares. He’s now worth USD 75 billion.

List is endless. But the message that I intend to communicate is, once you are in their inner circle, apart from giving you additional business or a job, they guide you and help you develop capabilities. Even if you don’t know certain thing, it won’t be a roadblock in your way. At this level, who you know is more important than what you know. Because they like you, trust you, believe that you share their passion and vision. They believe you can execute.

It’s not what you know, it’s who you party with matters the most.

― Anonymous





Entrepreneur. A bibliophile with passion to write inspirational stories on selfmade millionaires.