This is a supplement to my talk at our team meeting. Yes, every week we pick a success story… an innovation which has huge business value and which is on way to change the world!
The Art of Innovation is Viral… if you are dedicated to real/hardcore innovation as a small team today, chances are you will inevitable end up doing it most of your life!
I was following Peter Theil for a while and that’s when I came across this article from NYT It Pays to Have Pals in Silicon Valley:
“Every now and then, a group of former PayPal employees get together to catch up on life and work. It might be at a backyard barbecue, a birthday celebration at a classy San Francisco restaurant or a simple late-night reunion at someone’s house. Almost inevitably, the conversation turns to business, and soon enough, a new start-up is born or has found a financial backer”
A good number of high-profile companies have been started and funded by former PayPal employees.
- LinkedIn, the largest business-oriented social networking site, was foundd by Reid Hoffman, former PayPal VP
- Facebook received its first angel investment from Peter Thiel.
- Clarium Capital Management which has grown from $11 million in assets to more than $2.3 billion in four years, is a hedge fund run by Peter Thiel. Principal partners at Clarium include Ken Howery and Luke Nosek, both of whom were among the earliest employees at PayPal.
- Palantir Technologies was founded by Nathan Gettings, who developed PayPal’s anti-fraud models. Palantir received funding from Peter Thiel.
- Slide a company started by Max Levchin, a PayPal co-founder, that makes it easy to publish, find and view slide shows on the Web.
- Yelp was founded by Jeremy Stoppelmann, former VP of Engineering at PayPal, and Russ Simmons, one of the first employees at PayPal. Yelp is funded by Max Levchin.
- YouTube (now owned by Google, a $1.65B deal) was founded by Chad Hurley, Steve Chen, and Jawed Karim, all of whom were early employees at PayPal. YouTube is funded by Sequoia Capital. Roelof Botha, the former CFO of PayPal, is a partner of Sequoia Capital who sits on YouTube’s board of directors.
- Room 9 Entertainment was founded by David O. Sacks, who founded PayPal’s Product Group and later served as Chief Operating Officer (COO). Mr. Sacks is also in the process of starting a new Internet company.
- SpaceX was founded by Elon Musk, who founded X.com and served as the CEO following its merger with PayPal. that is developing relatively low-cost rockets and is backed with $100 million of his own money.
Inspired, I go on to dig on how PayPal was born. Here is the story in Peter’s words:
Some of you may be familiar with the PayPal product. Some of you may not. But the basic idea was to link money and e-mail. It was a very simple idea. It was basically the idea that you could send money to anybody with an e-mail address, and it seemed like a pure product that was designed for the pure Internet world of 1999.
The company was started, by myself and another friend of mine. We recruited a number of our college friends—to the point where I was the only person of the founding team who was over 23-years old… because we weren’t old enough, nobody else would take us seriously, so we had to figure out a way to launch the product without working with big companies, without working with banks, or telephone operators, or anything like that. And so we had to somehow get a grassroots adoption of the product to start.
The product was launched in October of 1999. At the time, the company had 24 people. And we basically started with those people e-mailing money to their friends, to their acquaintances. And then it started to grow with this very smooth exponential curve, where the user numbers—at first it was a very small number, but it was basically compounding at about 5 percent to 7 percent per day. And if you do the math, [laughter] it grows pretty quickly.
And so it was by mid-November, we were up to a thousand people. By December 31st of 1999, it was up to 12,000. By February 2nd of 2000, it was up to 100,000. By mid-April of 2000, it was up to a million. It was a smooth, quasi-exponential curve.
In 2005 the total payment value on PayPal was 27.5 billion dollars according to the corporate presentations on eBay’s website.
Every second PayPal processes an average of $1,128 in total payment volume
PayPal operates in 55 markets (including China) and it manages over 105 million accounts
In October 2002 PayPal was acquired by eBay, after PayPal successfully brought down its rival eBay’s BillPoint. Even though eBay has BillPoint as there official payment channel… so PayPal won the game!
References: http://www.nytimes.com/2006/10/17/technology/17paypal.html?ex=1318737600&en=943bf3f552d09fb2&ei=5088&partner=rssnyt&emc=rss
http://www.independent.org/events/transcript.asp?eventID=91#2
http://en.wikipedia.org/wiki/PayPal#Entrepreneurship_by_former_employees
