PayPal Mafia

Lore & Background

Originally, PayPal was a money-transfer service offered by Confinity, which merged with X.com in 1999. X.com was renamed PayPal and purchased by eBay in 2002. PayPal's employees had difficulty adjusting to eBay's more traditional corporate culture, and within four years all but 12 of the first 50 employees had left. They remained connected as social and business acquaintances, and several worked together to form new companies and venture firms. This group of PayPal alumni became so prolific that the term PayPal Mafia was coined.

Members include Peter Thiel, sometimes called the 'don' of the group; Elon Musk, co-founder of X.com; David O. Sacks, former COO; Max Levchin, founder and CTO; and Reid Hoffman, former executive vice president. Other members include Steve Chen, Chad Hurley, and Jawed Karim, who co-founded YouTube; Jeremy Stoppelman and Russel Simmons, who co-founded Yelp; and Ken Howery, who served as US ambassador to Sweden and later Denmark. The 2007 Fortune photograph did not feature all members: Musk was in Chicago receiving an award, and Hurley and Chen bowed out after their Google handler objected to the gangster motif.

Reader's Guide

The PayPal Mafia is sometimes credited with inspiring the reemergence of consumer-focused Internet companies after the dot-com bust of 2001. 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 employees, and many continued to trust and support one another after leaving. An intensely competitive environment and a shared struggle to keep the company solvent despite many setbacks contributed to strong and lasting camaraderie. The phenomenon has been compared to the founding of Intel by engineers who left Shockley Semiconductor. Some members, such as Thiel, Sacks, and Musk, later expressed libertarian and conservative political views, while Hoffman has been a top donor to Democratic campaigns. Female executives at PayPal, while not considered members of the PayPal Mafia, are considered part of the broader network called 'PayPalians'; some noted that PayPal stories often fail to mention women, and some cited unconscious bias as a factor in fundraising.