The mafia that rules the tech world - Company Forensics

[Applause] do you recognize any of these spaces [Music] imagine you're in this meetup or party event and you find yourself face to face with one of them did that happen to me no and honestly it's unlikely to happen to you either these guys are unreachable untouchable these days a more realistic scenario just life if you're a tech entrepreneur knowing who these guys are is kind of like common culture an investor or maybe a fellow founder will maybe name drop them and yeah you have to know who they are this is a photo by fortune magazine on an article that coined the nickname the papal mafia in a certain way they control silicon valley if you're building a company or rather if your company reaches massive scale chances are you are going to come across and have to deal and negotiate and have an investment from one of them [Music] this man is peter thiel according to the article the don he is the best known investor in the bay area he co-founded palantir first investor on facebook enough to earn him a scene in the actual social network movie theo is a controversial figure no doubt being an open trump donor and supporter and he's one of the few outspoken republicans in this very liberal tech startup world that's all i have to say about politics by the way this is max levchin he's known as the consiglieri honestly where do they get this stuff he was relentless in developing technology to prevent fraud such as the actual captcha he was involved in the early test versions we sort of owe him the whole fire hydrant thing this is john karim and if you're watching this video it's thanks to him he's one of the co-founders of youtube the first video ever on youtube was crim at the zoo this is jeremy stopleman one of the co-founders of yelp and still the company's ceo russell simmons is also in this photo another yelp co-founder and the former cto these two guys are luck nosek and kenny howery and along with peter thiel they're the managing partners at the founders fund a firm that has invested in figma and stripe compass zocdoc airbnb facebook spotify ring any bells among others by the way i'm not saying among others just because their investment list goes on and on and on these are some of the most important tech companies in the world this guy is reid hoffman he co-founded linkedin you might have heard of that he's also invested in facebook flickr and joined the microsoft board in 2017. this guy is role of both a partner at sequoia capital these guys are investors in uber and apple airbnb robin hood nvidia doordash and what connects all these men they were all early people founders or employees and the list doesn't end there of course his calendar was already too busy to make it to the photo but the most well-known member character of this gang is no other than elon musk he built this electric car company made a lot of people a lot of money because it's stock grew like 700 percent last year you might have to thank him in a few years for putting a man on mars there's also yi shang wong was the ceo of reddit from late 2011 to 2014 then steve chen and chad hurley the other youtube co-founders i mean what happened here what secret sauce made this group the most relevant tech investors and entrepreneurs in silicon valley there isn't a secret sauce it's all pretty clear if you dive deep into the story of people and and the type of people that the founders like to recruit let's look into that let's look today into the origins of the paper mapping [Music] all right so some quick stats about paypal today there are 377 million users a total of 15.4 billion dollars in payments to the platform what i would call this is a necessary evil i've had my fair share of not so great people experiences for example if you want to buy stuff on ebay you sort of have to use paypal it's not a slick interface it's not the best customer support it's like this fraudster favorite platform but say what you will about paypal chances are you have a paypal account and market reach is even bigger in europe and in countries like germany it was peter thiel max levchin and luke nozick that started this company in 1998 and the company was originally called confinity it was going to focus on the world of digital payments that's what they said at the beginning this is 1998 this is the true beginnings of e-commerce the few small online businesses that existed had nothing close to a good platform for online transactions and well they founded the company they experimented with a few solutions and the one idea that stuck with them was this payment system that was called paypal that would allow users to transfer money digitally which would become the golden ticket the path to their success in march 2000 confinity merged with an online bank called x.com and they took their name this bank was founded by none other that elon musk who was brought in as ceo of the whole conglomerate and elon musk's coming was trouble but hold on a sec so far this sounds like the story of this regular start it's not so different from any other company forensics stories we've done why was people different what did they do differently why was everybody so successful in the end it relates to one of the reasons why elon musk didn't have an easy landing on people company culture now company culture is this marvelous thing it's one thing that founders don't necessarily pay too much attention to as of shooting this video our team at slide win is 33 people across two countries and culture for us is everything it ranges from choosing whether we micromanage or not to deciding if we have food or beer at the office we treasure culture it comes from the founders and our experience starting the company but it's reinforced by the managers every day it defines who we hire it defines how we work it defines our schedules and it defines everybody's responsibilities it's what makes your company unique in the end it's what people remember about your company when they leave it's the opportunity they have to paint the path for the company the point is who you hire defines your company and in case of paypal it defined so much more in the future for example theo despised meetings rumors say he often walked into a random meeting that he saw happening in the office and he forced them to break it if he didn't feel the discussion deserved an in-person meeting now theo had a firm belief in the value of the hiring process he said that i wanted to build a company where everybody would be really great friends and no matter what happened with the company the friendships would survive that's what he told tag republic now he he reiterated that he not only hired his friends but possible friends as well many of those friends who ended up working at paypal came from his earliest days at stanford university levchin for example was no different he hired plenty of classmates from his college days in chicago so it pays to make buddies at college right and perhaps that's the primary value of higher education i think it's one of the main reasons why you should go to college the two co-founders didn't want jocks or nbas they didn't want consultants for that matter and this believing in extends to today theo founded a fellowship which is a two-year program for young people who want to build new things that comes from their website it says feel fellows skip or drop out of college to receive a hundred thousand dollar grant and support from the theo foundation's network of founders investors and scientists essentially these guys pay you a hundred thousand dollars to drop out of college people example they didn't hire anybody who played basketball left chin told cnn because everybody i knew in college who liked to play hoops was an idiot this is a quote by the way now other practices that are famous they wanted to hire people who live and breathe numbers and who speak multiple languages i'm gonna speak it into mine he let everybody from managers to grunts see all the data including traffic revenue burn rate this is a quote from them by the way they wanted to make decisions based on facts and arguments not on experience which again is so far so good but some other practices were more complex they only wanted to recruit people from the midwest one of the objectives was to foster a competitive hyper-masculine work environment without jocks they said it was better to compete on the ping pong table instead of a basketball court whatever that means they forced out anybody who disagreed with their values and if you leave [Music] you have to stay in touch with the inner circle and you should invest in their startups this created a complicated culture in paypal in his interview for the fortune article elon musk called the culture an intellectual pissing contest apparently some disagreements translated into wrestling matches in the early days of the company this very much mafia environment was of course not very welcoming towards women fortune mentioned a case of a female engineer who wasn't good at ping pong so they almost passed on hiring her because she lacked competitive fire i'm quoting that you can also judge by the number of women in that mafia picture many of the x.com employees that came with musk after the merger they left soon the problem with elon musk wasn't only cultural elon did want to make some significant changes in the software and the structure of the product and this made everything harder for him in the fall of 2000 while elon musk was on his way to australia for apparently the first vacation he had taken in years theo orchestrated a coup with the board and they got him fired and this didn't stop paypal by any means in 2001 the company had 10.2 million users by february 2002 four years after the initial idea just months after renaming itself finally as paypal the company went public in this ipo the company's stock went from thirteen dollars to a closing value of twenty dollars on the first day of trading now paypal is a dot-com survivor no doubt and if you haven't watched our video on the dot-com bubble go watch it as well finally in july 2002 ebay acquired people for 1.5 billion dollars all of the early employees walked out millionaires and after the acquisition many of them quit ebay just because of the compatibility problems with the ebay culture leave the gun take the can only i mean so so what happened why why is this papal mafia so successful today why people an obvious question here is do these guys run silicon valley like a mafia no the truth is they don't but they're extremely relevant investors and entrepreneurs and if you kind of want to belong in the valley you sort of have to understand who they are the chances are you'll be connecting with them in your in your entrepreneurial journey by that measure we are a part of the mafia as well we are a 500 startups company 500 stars was founded by dave mcclure and one of the reasons he's been famous is because he's an ex-people so he's part of the mafia i guess not famous enough to be included in the photo but that makes us part of the mafia and i think that's that's a bit of the point if you are a tech company you're inevitably gonna come across some of these guys [Music] the point of all this is that the magic combination these guys had in their hands the group's attitude has drawn heavy criticism it laid the grounds for a white male under 50 domination of silicon valley yes it works for this demographic and some have criticized the lack of opportunity for women and people of diverse races and different backgrounds experts believe it's now hard to change this behavior within the valley thanks mainly to the mafia's strong influence and their track of success we can't deny that the papal mafia has changed how we see the tech world how people outside the tech world see it especially silicon valley for better or worse and while many want to emulate this culture and this philosophy it's not that easy experience with a successful startup from the earliest stage experience with acquisitions highly technical and analytical people a very competitive mindset and network of other people like them who are well connected in the valley and last but not least money what better combination of attributes do you want for a successful person in the startup world or in the bay area this is a group of people who have an incredible truly incredible mix of variables to position themselves to be successful in the startup world either to start these companies or to invest in them that's the power of having a network we've talked about this many times and also the power of money will schroeder one of my favorite ceos out there has this cool podcast episode on how to sell your company and how selling your company even if it's for a small amount can truly change your life for someone like me who doesn't come for money and for most founders at that imagine getting 500 000 when you're 32. you pay out your debt you pay out your mortgage and you create a bucket of money that you can use to invest you certainly have to keep a day job but suddenly it's not so crazy to quit that day job and start a new company because you have savings not everybody has access to that flexibility and the people who do have the opportunity to start more companies they have something to fall back on suddenly it's not crazy to be willing to spend a year without a salary because you can you can start a new idea and if you're smart and you're connected that idea has a much better chance of succeeding the paypal mafia got themselves a head start a head start all of us entrepreneurs dream to have and i think that that's why they are who they are today hey guys thanks a lot for watching uh you've probably noticed that we have drastically changed the format of our youtube videos but we've been having a lot of fun making them and we're trying to kind of invent new ideas for each new video we're doing a webinar next week on everything we've learned from youtube so far and kind of like the path that we're painting for this million subscriber goal that we've set out for ourselves so make sure to tune in for that it's a free webinar we're gonna have a recording available but it's good if you tune in live so you'll be able to ask questions we'll have a live q a make sure to tune in to our clubhouse session as well we're doing a clubhouse session just after the premiere of this video um link is gonna be in the description as always hit that subscribe button let us know what you thought about the video in the comments your guidance on what worked and what didn't really helps us guide kind of like the format for the future videos so again glad you enjoyed it if you're watching so far i guess you did so see you next week [Music]

Channel: Slidebean

Views: 208,768

Keywords: slidebean, caya slidebean, company forensics, caya, startups, paypal mafia, silicon valley, paypal mafia members, paypal mafia youtube, paypal mafia documentary, paypal mafia boss, elon musk, x.com elon musk, peter thiel, founders fund, sequoia capital, max levchin, jawed karim, jeremy stoppelman, luke nosek, kenny howery, roelof botha, steve chen, chad hurley, paypal mafia story, paypal history, confinity, paypal mafia picture, story of paypal, paypal founders

Id: wb5vXHiDJD4

Length: 16min 8sec (968 seconds)

Published: Tue Apr 13 2021