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Jimmy Soni: The Influential Founders of PayPal

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Jimmy Soni: The Influential Founders of PayPal

Jimmy Soni is an author and journalist who was named among Forbes Magazine’s 30 under 30 in media. His new book, The Founders, takes a look at how PayPal was a launching pad for some of the world's most impactful tech entrepreneurs. These entrepreneurs, including Elon Musk, went on to create SpaceX, Youtube, Yelp, and many other influential companies.

You can find him on Twitter and Instagram @jimmyasoni

Jimmy Soni:

When I interviewed the people around who work with Elon, they enjoyed that experience. It was the most intense working experience of their lives, but it was also super enjoyable. They felt like they were a part of something important, as part of something bigger than themselves. That can seem a little odd when you're talking about, again, a late 1990s payment services startup, but we could all work in places like that. I think most people would feel lucky if they had a place like that, that they worked in and that's what I tried to capture and I hope I did.

Ken Harbaugh:

I’m Ken Harbaugh, and this is Burn the Boats, a podcast about big decisions.

My guest today is Jimmy Soni, an author and journalist who is named one of Forbes Magazines, 30 under 30 in media. His new book, The Founders, the story of PayPal and the entrepreneurs who shaped Silicon Valley, takes a look at how PayPal was a launching pad for some of the world's most impactful tech entrepreneurs. Jimmy, welcome to Burn the Boats.

Jimmy Soni:

Thanks for having me, Ken. I really appreciate it.

Ken Harbaugh:

I thought this was going to be a typical author interview. You've got this great new book out and I want folks to buy it, but as, as part of the prep, I revisited, re-skimmed your last couple books, Rome's Last Citizen, about Cato, A Mind at Play, which I loved about Claude Shannon, would you say the inventor or the discoverer of information theory?

Jimmy Soni:

He invented it. It's actually a rare case where you can be that boastful, although, funny enough, I'm not sure he'd want us to, right? There's a part of that. It's a little weird.

Ken Harbaugh:

Yeah. You have this desire to examine figures who have changed the way we live our lives, from people whose way of thinking and approach to politics helped shape the modern world to people whose inventions and discoveries, in Claude Shannon did the same, but in this latest book, you actually have the chance to talk to this kind of person and these kind of people while they're still alive. I don't know if I'm being melodramatic. I guess it's not unusual for biographers to want to tell the stories of people who've changed the world, but as someone who has gone from Ancient Rome to the present, I think you might have some special insight in how those short lives have changed every single one of ours.

Jimmy Soni:

Yeah.

Ken Harbaugh:

What is that special ingredient that makes people like this, that ambitious?

Jimmy Soni:

Yeah, it's funny. You are one of the first to pick up and I think it's because we've known each other a while and you've read my other work, writing about dead people is much easier. Let's just get that out of the way. When they're gone, it's far easier to think about them, to write about them, to find all the things that have been written. It's interesting because I'm not sure, and I'm not sure if this is true for you or others, I'm not so sure that I set out to have a theme to my work. Does that make sense? It's not as though I'm self-consciously- “Oh I'm going to go look for people who've changed the world.” Generally, what I do is I go look for a book that hasn't been written about something and if I can't find it, I see the answer in my own question, and sometimes, that results in a book. Honestly, sometimes that just results in adding something to cart on Amazon that's going to be published later. What I would say is, in each case, I think I'm wrestling with figures who are in tension with their environment in some way, right?

In the case of Cato, there's the obvious tension of his intention with basically all of Rome's elite Republicans, right? Claude Shannon is challenging the conventional wisdom on how people have thought about information and thought about its quantifiability and its malleability and our ability to understand it. He turns it into something, he takes it, basically, from what's ethereal to something that's more concrete, right? In the case of Elon Musk and Peter Thiel and Reid Hoffman and the cluster of people who are at PayPal, but really I would also say their generation of technologists, you have people who are struggling with the tail end of the dotcom hype and then this enormous crater in the economy and coming out of that, how do you reinvigorate that sector of the economy? What do you do to make a website, not just popular but profitable? I could draw out what makes each future of those people successful, but I think, actually, one of the common themes is that they're all struggling with their environment in some way or struggling with someone else in their field. I do think that's, actually, maybe one of these Keystone things about greatness or about changing the world, not to use a cliche, but we'll go with the phrase. You know what? You are going to struggle. You're going to have bankruptcies. Hopefully, you don't meet the end that Cato met, but you're going to have detractors. Claude Shannon, for as lauded as he was, and as lauded as he is today, there were mathematicians who thought of his work as insufficiently rigorous. It took 50 years for some people to come around, but you are subject to criticism and scrutiny and being laughed at and being mocked. Certainly true in the case of the PayPal folks. PayPal was called one of the 10 worst business ideas of 1999. They got rejected for funding over a hundred times. These are the people who run Silicon Valley today. They got turned down for funding over and over and over again. I think that's a part of it, and I don't mean to start off on a negative note, but it feels like it's worth appreciating that leadership bears those scars for a reason.

Ken Harbaugh:

In the case of tech, that iconoclasm, the struggle that characterizes giants like Plato, I'm sorry, Cato or, well, I guess add Plato to it, as well.

Jimmy Soni:

Add Plato, too.

Ken Harbaugh:

That outsider streak in tech comes across as weirdness, right? There's an eccentricity that tech just amplifies in a way that other industries and walks of life don't when elevating their own giants. Why do you think that is?

Jimmy Soni:

It's a really keen observation because I do think there's an element of there's a reason that the CEO of America's most valuable automaker today, as measured by Market Cap, looks and feels so different from auto CEOs of yesterday year, right? You'd be hard pressed to find a person on the street who could name, who could tell you, actually, who the CEO of GM is. You'd have the opposite challenge of, if you say Tesla, the next word will be Elon Musk, right? I think that there's something to that. We should explore that. What I would say is one really simple reason is that you can get an enormous amount done behind a computer screen, writing code today. This is truer now than it was 10 years ago. It was truer 10 years ago than it was 10 years before that.

In a funny way, part of what happens is you really, normal social graces, the sorts of things they teach you at big consulting companies or that you learn at Ms. Porters, you need not have those in order to be successful, given the leverage of code and the leverage of technology.

What happens is that- by the way, I put myself in this category, not that I'm a technologist, but that I was somebody who part of my upbringing, maybe it's weird to admit this, was behind a computer screen playing video games. I was socially awkward and I was a little weird and maybe I had peculiar interests and I wanted to read instead of be around people, but there's a certain amount of that in the past, I think was selected against, right? Someone like that would be unsuccessful in the Mad Men era, right? I think, actually, that's a perfect case study. In the Mad Men era, you need to be Don Draper. Today, you can be Elon Musk, right? You can do a great deal through email, Twitter, behind a computer screen and you don't have to be the person who's going to crack the right joke at every party or be the most popular kid in class. One way to look at it is tech enables weirdness. Another way to think about it is tech has, actually, provided a sector of economic life where the weird can now be enormously successful.

Yeah, no, I think that's a great technical explanation and I hope I didn't come across as being judgemental of weirdness. I love it and well, in a lot of cases, and what it can give us, but I'm wondering if there's something beyond the mechanical explanation of engineers behind screens not needing social graces, making it into positions of power. If there's a more deeply psychological explanation about what is required mentally to think you can, actually, upend systems and change the world. That, I would think, demands the kind of iconoclasm bordering on eccentricity that we see in these companies. It's almost like a grandeur delusion. I think that's true and I think that the only way that some of these new technologies are brought into being is because of that delusion.

Actually, one of the ways that PayPal applies to this is that the reason the PayPal alumni are famous is not really because of what they did at PayPal, right? It's everything they did after. You have a group of people, three people who go off and decide that internet video needs a revolution, out comes YouTube. You have people who decide that restaurant reviews and that local data is insufficiently rigorous, interesting and well presented. Out comes Yelp. You have someone who says, space logistics is really run by these big corporations and they don't do a good job and they have a cost plus model in terms of contracting with the government. Out comes SpaceX. In order to make any of the things I just said, the company, I just said, bring them to life, you have to decide that the yellow pages has done it badly for years and years and years and you're going to do better, that the TV companies are terrible, or that you're going to upend them and that Boeing, Boeing, is not doing a good enough job. You do have to have delusions of grandeur. I think the other thing, though, that's a little bit more fine-grained is I found, at least, that there was a real appreciation for the leverage that technology provides and that you can do things with it that actually compound over time.

One of the things that's interesting about Silicon Valley is the understanding of things like the power law or about compounding, or about how digital businesses and network effects can grow over time, which I think is often missing in other sectors of, certainly, American business. That requires, I would say, a different way of thinking about how, if you're going to burst something into existence, and it can get a little bit of a foothold and create the right kinds of network effects, it can actually, in 10 or 20 years, beat some of the biggest industries on the planet today, right? They do think in time horizons that are, actually, probably a little bit longer. I think that's part of the ingredients. If we're looking at what the ingredients are of those sorts of world-beating businesses, it's not just chutzpah, because plenty of people in business have chutzpah, right? A lot of kids graduating from great schools have chutzpah and go to Goldman Sachs, have chutzpah there. This is, I would say, chutzpah, plus an appreciation for the leverage of technology can bring plus an understanding of what five and 10 and 20 year increments can do when something starts to take off.

I'd add one more thing here which is… you identified something which is there is an outsider streak. I did find in my interviews and I interviewed over 200 people over many, many years, I did find that there was, call it a default way of disagreeing with whatever was said, even if the person who I was interviewing was the one who said it. I found this part of the way to be particularly true in interviewing Peter Thiel. I would say something and I might be repeating something that he had said 10 years ago and he would go out of his way to disagree with himself and then explain to me why I was wrong. I, actually, thought of it as, you can call it contrarianism, though, I think that word's been overused. I find that is, actually, a really interesting way to think about problems, but it's not a way that we are necessarily taught to think about problems in a traditional American mode of education.

Ken Harbaugh:

Yea, I don't think it's an accident that the people drawn to PayPal were all young. I think it was John Malloy, one of the early investors said they were all outsiders and a lot of them were immigrants. I got to find the quote, but I love this idea of the immigrant being the ultimate entrepreneur. Here it is. "Immigrating is an entrepreneurial act". This is Sacks from one of your interviews with him. "You take an affirmative step to leave your country and you frequently leave everything behind. That's the ultimate entrepreneurial act". It's no accident that it took that kind of mindset to birth something like PayPal, which then gave rise to all the other world-changing technologies you described.

Jimmy Soni:

I think that's right. If you look at the call to the masthead of this company, some of the earliest biggest names, Peter Thiel, is an immigrant. Elon Musk is an immigrant. David Sacks is an immigrant. Max Levchin is an immigrant, on and on. You'd have to run this to ground, but I had heard some amazing statistics about how half of some subset of Silicon Valley companies, call it companies that went public or whatever, half of some sort of big group of companies were founded by first-generation immigrants to the United States. I don't think it's an accident. I think there's a certain amount of risk-taking and daring due that's required to, as David Sacks put it, to leave everything behind. Also, this is going to sound a little funny, I got this feeling when I was interviewing them because I was interviewing people who today are very, very successful financially and otherwise, but weren't when they got their start. There was a certain scrappiness about their willingness to, for example, in the case of Elon, live where he worked. His first office was- there's a futon and a desk. Max Levchin, he actually shared an efficiency apartment. If I go back and look at my own notes, when he first came to Palo Alto, he was sleeping on a mattress, on a floor of a friend. Other people who rotated through PayPal would later occupy that mattress. These people who grew up with very little, didn't mind having very little when they got started in their careers. If you are at a startup, no matter how well funded, the expectation is you're going to be running lean because the point is to generate enough success that you can get more resources along the way, but you don't start out with high six figure salaries and all the rest. I think there's a certain scrappiness. I would also argue that it drew other immigrants to the company.

One of the things I noticed is the number of people that I interviewed, who were alumni from this company who still spoke English with an accent. In many other places in the United States, that might be held against them. I do admit, I speak from personal experience here, my dad was an immigrant. He still speaks English with an accent and it was definitely held against him when we were growing up in various professional settings. In Silicon Valley, that's a dime a dozen. I think there is something powerful to that. I think it is one of the places in American society that funnels and that channels that immigrant energy into something productive in economic life. I'm not saying it's perfect, by no means, but it is this rare place, again, that does that. I found that it was almost like a disregard for that sort of thing, which again, might be a knock against you if you were trying to climb the ranks in some more traditional company.

Ken Harbaugh:

How does that scrappiness affect the working culture itself? I'm thinking of the trust environment at PayPal and I think it might have been its predecessor company, and how normal business practices- they weren't just thrown out the window. They probably weren't even considered because very few of the people involved had MBAs. Can you share the story of Santosh Janardhan and this brand-new, I don't know, intern or recruit who's given the root password? That wouldn't happen at IBM.

Jimmy Soni:

Santosh is a great case study. I really appreciate you picking up on that one, in particular, and I'll share why. After I tell the story you asked for, I'll tell another one that's in some ways, even better.

Santosh Janardhan today, actually I believe oversees all of infrastructure at Meta, which is a pretty high up position. Also, he was, I believe, early at YouTube, but one of his first jobs in technology is with PayPal. The day he arrives, his boss, the systems administrator, Paul Tuckfield and the CTO, Max Levchin, essentially you say to him, "Here's the root password for the site. Go play around for a little bit and we'll get back to you and we'll have something for you". He goes, and he sits himself between a couple colleagues, fires up the computer, starts moving around on the database and something had happened to the site. All of a sudden, he sees his boss and Max Levchin started walking over to him and they say, "Santosh, did you just take the site down?" He looks at them and, pardon the French, but this is him, my reporting, what he's saying, he's like, "Fuck no". His boss and Max look at each other and then they walk away. What astonished Santosh in that moment is he said, "Imagine how much trust it took for them". He's like, "There was no witch hunt. There was no talk of oh, well you really need to show us what you did". He said, "They just trusted me when I said I did not take the site down and they walked away".

He found and meditated on the idea that part of what PayPal did was it hired for that kind of trust. It was exceptionally hard to get in, but once you were in, you were trusted, such that even if, by the way, even if you did take the site down, it was okay. That was a tough set of stripes to earn, but what you earned them, you were in. He was astonished by it and others were, as well. One of the things that someone said to me is, "It was amazing how much they got out of people just by giving us a lot of rope and a lot of room to run". It was definitely unorthodox though, because again, in any other setting, you wouldn't necessarily do that.

The reason I mentioned Santosh's story is PayPal was one of four job offers that he had at the time. I didn't write this in the book. It was the lowest dollar amount job offer and he had student loans and he was married and he went back to his wife and he went home and he said, "I got to take the PayPal offer". She said, "Well, hold on. It's the lowest offer and this tech is booming. You're a talented engineer. How come we can't take any of these others?" He said, "Because every person I interviewed at this company is smarter than me, and I promise you, I'll learn more there than I will in these other places. I've got to take this offer". He did and the rest is history.

Ken Harbaugh:

Yeah. How much did luck factor into PayPal success? The idea that a corporate environment like that, at some point, didn't result in some intern accidentally deleting everything is astonishing to me.

Jimmy Soni:

Well, look, they almost did. There were a couple moments that were very, very close. As I described them, they were close shaves. I think I was riffing on what somebody else had said. I contend, and I don't think everybody who lived this experience would agree with me, but I would argue that luck played a huge factor. I would say that luck has a particular hue and that is timing, so timing matters hugely in this story. I haven't studied all of them, but I would argue the story of every great startup or venture, right? The American revolution in the late 1700s is different than if you tried to overthrow King Jordan in the late 1600s. I'm betting it wouldn't have worked out as well. In 1999 and 2000, PayPal is able to close a $100 million round of funding in early 2000, just before the bottom drops out on the market. More than one person who was in the company admitted, look without that funding, we would've been toast because we saw plenty of other startups around us that had successful user growth, but they didn't have the runway or the money to continue to refine their product and refine their business.

They managed to strike sparks on eBay, a platform that had not figured out its payment services, but if PayPal started six months earlier, or six months later, eBay might've figured it out or PayPal would've focused on something else. There's all these ways in which the timing is just right. I think, by the way, I know that there's some disagreement about luck and about the word and about what it means. Peter Thiel has famously said something like, luck is an atheistic word for God. I would just argue that it wasn't necessarily my judgment that says that luck is at the heart of the story. It was other people, including board members who said, "We had to get lucky".

Now, there was a huge amount of skill and prodigious work ethic and a lot of other things as well, but the timing, and then some of the circumstances, and by the way, even some of the people who came together in the way that they did, I would argue that it's lucky that Peter Thiel and Elon Musk didn't die in the McLaren car crash in early 2000. To what could we ascribe that to, other than luck?

Ken Harbaugh:

Yeah. Well, speaking of Elon Musk, he's certainly been touched by the gods of luck in most of his ventures. I wonder if he's missed some critical life lessons though, having not failed more dramatically in life. Can you point to instances where failure has taught him as much as his successes have, or are those lessons not there?

Jimmy Soni:

Yeah. I have a bunch of thoughts here and I was really fortunate. I, actually, had the chance to talk to him in some ways, even the Elon of 2022 is different than the Elon of 2020, is different than the Elon of 2018. I caught him in that 2018, 2019 period where he was a big name and obviously, had been successful, but he wasn't trying to acquire Twitter, which raised the stock a little bit, literally and figuratively. PayPal is his most pronounced failure. He is kicked out as CEO. What was really interesting to me, one, he was 100% open with talking to me about the failure and about what had happened. Two, is you could tell that he had really gone back and thought about each of the things that contributed to the failure and what he might have done differently, and in some cases, by the way, what he wouldn't have done differently.

I would argue that actually, if you look at the four years that I wrote about, 1998 to 2002, he is almost kicked out as CEO once, the coup attempt fails. He is successfully kicked out as CEO. He almost dies in a car accident. He contracts malaria and meningitis, and almost dies again, comes within hours of death and he loses a child to SIDS. It's not, I think, accurate when people look at him and say, "Well, he was to the manner born and all of this was ordained and he just got lucky". This is a person who, I would argue, has faced his share of personal and public or corporate failures. I think he is somebody who, at least in PayPal, since the specific place that I was speaking to him about, he was very keen and smart about the human dimensions of the challenge, as well as the technological differences that led to his ousting. I would actually argue he's got his share of things that haven't quite worked out. I also, though he's somebody who once he has a mission and once he becomes single minded about that mission, it will take a force of nature to stop him.

I think one of the things that Peter Thiel said to me that was most evocative as a big lesson I've learned is, "Don't compete against Elon Musk". He was an early investor in SpaceX, Peter Thiel, even after having some differences of opinion with Elon and PayPal. He said a big part of the reason is "You just don't bet against him". I would argue that there's some ways in which the PayPal experience was actually, of the failure he's had, it was the one, most obviously, it was work related and it's the one that he seemed to have gained the most from along the way.

I would also say part of what he appreciates and I hope this comes across in the book, is startups are basically an exercise in ongoing failure. There's a way in which the entire industry is premised on the idea that you are going to fail, but that you, hopefully, won't fail into oblivion, that you'll fail just enough to learn something and then improve. I think that's actually a useful way of thinking about the lives of some of these individuals, as well.

Ken Harbaugh:

Yeah. There's a lot of wistful 90s nostalgia in the book, but you also talk about, and this is in some of your other interviews, but you talk about the rise of a more combative politics in that time and the dotcom bust and other financial crises. How do you think the political moment we're living in now is connected to, I'll call it the tech utopianism of that era that you describe?

Jimmy Soni:

It's a good question. I'll be candid in saying, I'm not sure that I'm not sure I'm necessarily the best observer or the best person to comment on 2022 politics, necessarily. Unlike you, I have the good fortune of being able to keep some of it at arm's length. Not all of us run for Congress, so there's that piece of it. I think there's no denying the effect of some of the success of some of these individuals on politics. They have big megaphones, but if you look at two of the leading figures in this group, Peter Thiel and Reid Hoffman, you have two people who are massive contributors to rival parties, right? In a funny way, what I found was it was actually hard for me to pin down anyone's politics. I, actually, had to sometimes listen, extra carefully if I was trying to pin it down. I do think there is coming out of this cluster of people, but also just generally, a libertarianism that finds its way into the water in both parties. I think you have libertarian leaning Democrats, even if they wouldn't admit it and libertarian leaning Republicans, even if they wouldn't admit it. Then, I think you have a tension within each party to struggle with that keep the government out of my business type of thinking.

I would also submit that for the people I interviewed, politics occupies a relatively small amount of their mind share and it occupies a huge amount of the mind share of the media, so there's a great deal of coverage, for example, on Peter's politics, but I don't know this for fact, but I would venture to guess that if you took his Google calendar and looked at it, politics is probably 5% or 1% of his time. The same would be true of Reid Hoffman. They're investors and advisors to tech companies, helping younger versions of themselves scale firms and doing up various other things that they do.

The one thing I would say is this, we had this moment, which was quite friendly from a regulatory perspective for technology in the 90s, like the Clinton years, which again, I don't want to cover with gauzy nostalgia, but there's a fair amount of leeway and latitude that was given to the internet by both parties. Then you had the dotcom bust, but you didn't see a big regulatory reaction to the dotcom bust. It was understood as part of what happens when shaky firms are built on shaky foundations and they crater. There wasn't some big, “Oh, we need to do this and that and the other thing to fix the system.” You had a regulatory grace period in the aftermath when the next generation of web companies come to rise.

I think we're seeing a different strain of our politics today as regards to tech. Again, I'm not the most sophisticated observer of the rightness or wrongness of that. I just think it is different. To build a tech company in 2022, if you are engaged in financial services, it is very different than what PayPal was doing in 1999, when they could, literally, get meetings in DC with people who didn't know what the internet was and they could just do the Obi-Wan Kenobi, these aren't the droids you're looking for. It's like these aren't the financial services firms you're looking to regulate, right? They could run a little bit of an end around, but politics is caught up. It's more sophisticated. I think it's more challenging now to do the kinds of things that PayPal was doing back then. One of the things that I think I learned from the book is these firms find a way. They find a way in and out in the same way that Uber and Airbnb and others have found a way in and out of various regulatory frameworks that have been imposed on them.

Ken Harbaugh:

You're talking mostly about the impact of politics on these firms. Surely, you've got opinions about the impact of these firms and the technologies they have birthed on politics itself from FinTech and its democratization of political giving, to Facebook and its impact on the media landscape. I wonder if Elon and his buddies, folks in his orbit, had any idea of what was about to be unleashed, in terms of the effect of tech on the political landscape.

Jimmy Soni:

Yeah. I wish I was a more sophisticated observer of those trends and I had this habit of when I do a book, I bury myself from 1998 to 2002. I read news clips from 1998 to 2002 and I watch videos from that era and I try to understand who is playing in the super bowl and what happened? What was Y2K? Why were people so panicked about Y2K? You remember that? Planes were going to fall out of the sky and ATMs were going to spit out money as soon as 1999 rolled into 2000. I think one of the things it does a lot, it affords me a certain amount of blissful ignorance about some of what's happened, as regards like text effect on politics.

The best as I can tell is that the megaphones on both sides have gotten louder and more shrill and, arguably, more dangerous. Again, I'm not the most sophisticated observer. I think that, like almost all tools, technology, in the positive case, it gave people who were participating in politics lone voices, the ability to build audiences that they wouldn't have otherwise been able to build, to fundraise, to get a message out into the world they couldn't have gotten out before, right? If you're a Congressman 20, 30 years ago, you issue a press release. Today, you issue a tweet. There's good that comes with that. There's also a lot of downside that comes with that. I think the same is true of Facebook, but I'm not sure, I think we have a tendency to overestimate whether it reconfigured American public life or whether it just accelerated trends that were already going on.

If you look at the history of the 90s and you look at the rise of Newt Gingrich and you look at the Clinton, Gingrich wars and you look at the tenor of politics then, back then, we said it was the worst it was ever going to get. You and I came of age in that milieu where you have government shutdowns and all of the rest. Did Twitter and Facebook accelerate some of those trends, certainly, but I would argue that there is not and there hasn't been, necessarily, a wholesale reconfiguration. Both sides have an equivalent number of angry tweets they volley at each other.

Again, I'm also not well versed enough in the literature to know. It strikes me that it's like if you were to do the scales analysis on it, the scales would balance out. They probably balance out as a wave, like for the will of the Republic, but I think we tend to overestimate these massive changes when the changes were already in the water in the 90s.

Ken Harbaugh:

Yeah.

Jimmy Soni:

You could disagree with everything I just said, by the way. You lived it as a candidate.

Ken Harbaugh:

No, I'm not going to disagree with you here, because I want to talk about the book, but I think we're going to have Dan Pfeiffer, either right before or after you and he's going to provide the counterpoint, so we'll leave it at that. There are a lot of strong feelings on both sides.

This one's out of left field, but I know a lot of my audience will appreciate it. Is there a military fetish in tech? You have Elon Musk comparing one of his first companies to an F35 fighter, Reid Hoffman saying the early PayPal days were like Band of Brothers, a CTO describing the early team as "Like veterans of an intense military campaign". The one that aggravated me most was the term the staff came up with to describe the stress of working there, PayPal PTSD. That got a big eye roll. I wonder if there's something more interesting going on? Is there a fantastical element at play here? Are they imagining themselves on some field they're not really on?

Jimmy Soni:

It's funny. I hadn't really picked up on it until you strung all the metaphors together. Obviously, that would've jumped out at you. Two or three thoughts:

The first is, I think American business, in particular, has always had an inclination toward Marshall metaphors, the hostile takeover. There's a tendency even in, call it the most buttoned up, most humdrum, stodgy businesses to see an opponent and to want to fight to the death and to really want to win. I think that those metaphors exist in other places. I do think you're picking up on something. I wouldn't call it a fetish. That's probably going a little too far, but there were a number of Marshall metaphors, the ones that you referenced, as well as others that people mentioned to me. The one that came up most was the feeling that this group was like a band of gorilla fighters. That was a word that came up again and again, and the reason is all startups feel that way. They all feel like they're small, underfunded, besieged and beset on all sides by enemies and foes and opponents that they have to fight back against. There's a feeling that they are small and that they are taking on something big. Now is that Marshall? Sure, but there's also a biblical quality to it. It is the story of David versus Goliath. That metaphor, I actually think, is the feeling internally. I would argue that, sure, there's some parts of it that probably aren't great, but what it did for the team, I noticed a bond in this team, a sense that teammates actually valued each other. They might have been fighting like cats and dogs, but there was a real ethic.

There was a gentleman, Jeremy Roybal, who was supposed to be an ESL teacher and found his way to customer service at PayPal and then found his way to fraud operations at PayPal. One of the first things he said to me is, "To this day, I still bleed PayPal blue". That's a heck of a thing to say about a payment services startup that you worked at, but there was an intensity of devotion to the team that I found consonant with some people who speak about their military experience. That's one reason is, they felt like they were guerrilla fighters. The other is there was an intensity of the experience itself. It was not uncommon for these people to work seven days a week for several years. In fact, that was very common, was that this was not a normal nine to five that went Monday through Friday. That, in fact, it bled over into all parts of your life and I've never been on a deployment, but I imagine, Ken, that is probably true of being on a deployment. You don't clock out at 5 o'clock on a Friday. You're, still wherever you are on Saturday and Sunday. There was the intensity of the experience.

It's interesting, and I hadn't really thought about it until now, but there are a number of veterans that do join the PayPal team. There was one Navy veteran who ended up actually joining, I think it was an assistant administrator role. Then, there was one of my favorite characters in the book was in fraud operations. His name is John Catonic and he was a Marine and he spoke like a Marine and he looked like a Marine and he rode motorcycles and he was, to the team, anyway, one of the more endearing figures and saw in his work fighting bad actors, this same sense of mission that he had when he was a Marine. He became one of PayPal's chief fraud fighters, and he had this great line in the book. He says, "Wild horses couldn't have drug me out of that profession". Today, he leads the investigation team at Coinbase, so what he has said proved true. He has not been able to get out of this profession, his belief in the rightness of fighting fraud online and the desire to work with law enforcement to understand that was a good and evil struggle happening, that if you were defrauding somebody using PayPal, you were a bad guy and we need to go after you.

It's not hard to see where some of that vocabulary is drawn from his military experience. I think Silicon Valley has it, but what part of American business doesn't? Jack Welch was talking about this back when, and probably his acolytes still are, but I would identify those things, esprit de corps, as well as the sense that they are a beleaguered team, small, underfunded, trying to battle these giants.

Ken Harbaugh:

Yeah. I think the difference between the typical business metaphor and what I picked up on in your descriptions of PayPal is how the Marshall rhetoric described the relationships within the company, not just the oppositional business competition, but it described how they felt about each other in a way that a lot of businesses or most businesses don't. To that point, there's this banner that you describe hanging in the early PayPal office with the words, memento mori, which is Latin for remember that you will die. I think the interpretation of that, for the staff, was you got to work your ass off here or die trying. That's how they were supposed to read it, right?

Jimmy Soni:

Yes. Again, it shows you, I think, how nutty you can get when you are fighting in the early 90s, late 90s internet battle, but PayPal properly understood, as really the fusion of these two companies. One is called Confinity and it's started by Max Levchin and Peter Thiel and one is called X.com and it was started by Elon Musk. At one point, in a quirk of history, call it, they're basically fighting each other over market share on eBay, payments market share on eBay. It's an intense battle. If I had one moment where there were more Marshall metaphors per minute than any other, this was the moment. When I'd interview people, I talk about this, it's when all of the competitiveness came out.

One of the things that the Confinity does is they see an Elon, a true competitor, somebody who could outgun them, somebody who moves just as quickly as them and this is a strange experience for Max, who's pretty competitive himself. What happens is what Elon refers to as the widget wars, so one website would put up something that day, an update, really designed for win more market share, and a few hours later, the other website would've copied the same effort or initiative and on and on, it went for several weeks. In the thick of that fight, somebody in the company had put up memento mori, remember that you must die. What memento mori was, was for Confinity, it was a reminder that X.com, which was just a few blocks away in Palo Alto, was always there and they were always going to be up late and they were always going to be updating. The point was, we need to stay one step ahead of them. It's actually this really interesting moment in the story. These are enormous minds that have a lot of confidence in Elon and Max, self-confidence. Both of them in recounting this period, both of them said to me, Elon's line was, "It was a really worthy opponent here with these PayPal people if you can keep up". He said, at one point, he's like, "If you can keep up with me, respect". Max said, "This guy, Elon, is brilliant. I may be competing against him and we don't like each other very much right now, but I recognize he's really, really smart". There was this recognition, and this is again, a rare thing for people who are generally in most rooms, they're in, the smartest or second smartest person in the room. They both had this and out of that emerges memento mori. By the way, the other thing that emerges from that is there's a engineer who is celebrating a birthday and instead of putting happy birthday Upan on his birthday, which is what one would do, they put die X.com die. This competition gets ferocious and it seems in congress to all of us, but at the time, just to again, put context around it, both companies thought that if they did not win, they would run out of funding and they would have to either go raise more money, which was going to be harder as the dotcom bubble started to burst, or they were just going to have to let everybody go and go find other jobs.

We can laugh at it, I think in hindsight, and I did, by the way, I wrote it with some comedy and levity, hopefully in the book, but to them, it was a serious competitor that was trying to defeat them and they were going to do everything they could to win.

Ken Harbaugh:

I wonder if anybody in the office at the time- and this is the thought I want to wrap up with- I wonder if anybody perceived a subtext to memento mori, remember that you will die and wondered if they were living their best lives. I approach most of what I do now as a husband and father and measure my success mostly in those terms, so I guess my question is what would Cato think of all this? In the time you spent with Elon, did you get the sense that he's a happy, fulfilled guy? The, remember that you will die aphorism is also a reminder to focus on what is really important, which is the people around you.

Jimmy Soni:

Yeah, it's a great question. It's interesting because he's been more personally revealing in interviews of late. I think he's hit 50 or 51 and there's probably some element to this. There's actually a wonderful book about the early days of SpaceX and at the very end of this book, it's not giving anything away, the rocket succeeds the series, the company's still around, but at the end, Elon has this meditation that he gives to the author, Eric Berger. He says, "I probably would've been okay if every time we had come to these beaches off the coast of Hawaii, I had actually just stopped and tried to enjoy them a little bit more". Eric Berger, the author, writes there's still time. It's one of my favorite endings to a book because it's a message in a bottle in some ways. I don't think that at the time when they were in their 20s, trying to make it in the world, that these people were considering anything other than the success or failure of the company. I think memento mori meant the company was going to die, not that they ought to stop and wonder if this is a great way to live their lives. I'd push back on one thing though, which is there's public persona, Elon, which people see on Twitter and see written about in the press. Then, there is the Elon that many employees would play back to me and the Elon that I experienced when I interviewed him. This is somebody who is very, very quick with a joke and has a great sense of humor and yes, he's intense. I think he's single-minded and focused on the success of his companies. I'm not trying to psychoanalyze him. I think it goes too far when authors try to do that, but this wasn't somebody that came into the room with me in a depressive mood, despite having laid off a bunch of people at one of his companies the day before he was supposed to talk to me. This isn't somebody who it would be really hard for him to make the hosting SNL thing work if he were somebody that were just pretty naturally sad and only looking for one thing and one thing alone. I think building these companies is incredibly hard. I think it takes its toll. It's like an endless political campaign, right? You're always trying to raise money. You're always trying to figure out what sparks you are going to strike and it takes its toll, but I don't think of him, actually, as somebody who has ignored some of the bigger things in life, but more broadly, I think his he's decided what his mission is in life, which is getting humanity to Mars. Now, people can be for, or against that mission and I think people do argue about that all day, every day, but for him, that is the mission. Does being mission-driven mean that you, necessarily, exclude other things in your life? Sure. That, I think could be said of Cato, as well. Cato, like his mission was liberty in Rome and he gave his last full measure of devotion and killed himself, rather than submit to Caesar's charity. Do we look at that and think boy, there might have been a better way around that outcome? Like yeah okay, but, we also remember him as a symbol of sacrifice for the ideal of liberty.

I am careful about not casting judgment. When I write, I try to get into the heads of my subjects and use their words and use some of their ideas and try to make it entertaining and try to bring it to life. I think, when I interview the people around who work with Elon, they enjoyed that experience. It was the most intense working experience of their lives, but it was also super enjoyable. They felt like they were a part of something important, as part of something bigger than themselves. That can seem a little odd when you're talking about, again, a late 1990s payment services startup, but we could all work in places like that. I think most people would feel lucky if they had a place like that, that they worked in and that's what I tried to capture and I hope I did.

Ken Harbaugh:

No, I think you did. I think I want to end with a quote from Elon, which is really a window into his mindset. It's from when he was really young, he says, "I had an existential crisis when I was 12 or 13 and I was trying to figure out what does it all mean? Why are we here? Is it all meaningless?" I'm glad I wasn't thinking about those kinds of things when I was 13 years old, but I guess we need people in the world who do.

Jimmy Soni:

It's a heavy burden for somebody who's 12, man. I wasn't doing that when I was 12, yeah.

Ken Harbaugh:

Yeah. Thanks for joining us. This has been a lot of fun.

Jimmy Soni:

Thanks, Ken.

Ken Harbaugh:

Thanks again to Jimmy for joining me. Make sure to check out his book, The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley.

You can also find him on Twitter and Instagram @jimmyasoni

Thanks for listening to Burn the Boats. If you have any feedback, please email the team at [email protected]. We’re always looking to improve the show.

For updates and more, follow us on Twitter at @Team_Harbaugh.

And if you enjoyed this episode, don’t forget to rate and review.

Burn the Boats is a production of Evergreen Podcasts. Our producer is Declan Rohrs, and Sean Rule-Hoffman is our Audio Engineer. Special thanks to Evergreen executive producers Joan Andrews, Michael DeAloia, and David Moss.

I’m Ken Harbaugh and this is Burn the Boats, a podcast about big decisions.

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