By Robert Miller | Portfolio Manager at NAOS Asset Management
BOOK REVIEW | THE FOUNDERS | THE STORY OF PAYPAL & THE ENTREPRENEURS WHO SHAPED SILICON VALLEY BY JIMMY SONI
If it wasn’t for PayPal then you would not have seen the birth of companies such as Tesla, SpaceX, LinkedIn and YouTube… just to name a few. The simple thesis for this book by Jimmy Soni was that so many of the PayPal alumni (also known as the “PayPal Mafia”) have gone onto to do incredible things, so let’s go back to the start of where it all began.
PayPal, the ubiquitous online payments system with a now ~A$100bn market cap, was born through the year 2000 merger of two competing (X.com and Confinity) silicon valley companies who were forging the concept of user-friendly payments via email. This concept saw substantial uptake among eBay users. It went public through an IPO in 2002 and was subsequently purchased by eBay in what is regarded as one of the greatest acquisitions in corporate history.
This book recounts the early years of PayPal with fantastic detail. We learn about the individuals who were instrumental in building the company, their backgrounds, recollections and opinions of the events that transpired. It was a high tempo journey with plenty of action including boardroom coups, big egos, fraudulent occurrences, technology issues, corporate activity, competitor agitation, and… a very lucky Elon Musk & Peter Theil who had a very serious car crash one day. PayPal almost came unstuck on many occasions, even before you consider the Dotcom bubble busting in 2000.
Amidst the chaos was a hardworking and innovative culture that did not break. Reading this book, you can get a sense of how the PayPal Mafia became destined for greatness. An entertaining read but one in which investors can also gain a sense of what it takes to create a truly outstanding business. We at NAOS have the mindset that companies are living, breathing things, and investing requires an understanding of that concept. This is even true for the most successful of companies led by the most outstanding minds. The PayPal story epitomises that.
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