Name: Internet Mafia - How Billionaires Make Money
Uploaded: 2020-07-30T10:12:59.000Z
Duration: 11 min 20 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

What does Tesla, LinkedIn, and youtube have in common?

Besides all of them being tech companies, they were all founded by the PayPal Mafia.

Adverbs of degree

In fact, if you just take a look at the silicon valley, you will find out that the PayPal

mafia was involved in almost every major company, starting from Facebook, Instagram to Uber,

Lyft, Airbnb and even Reddit.  This small talented group of people literally

And in this video, we are going to take a look at how on earth did so many super talented

people ended up working together? How did they all end up becoming billionaires? How

powerful is this mafia today? and why every single one has left Paypal?

When we talk about Mafia, we usually mean, a violent gang, usually when few families

join forces and take control over some illegal businesses.

First of all, there isn't much competition because its illegal and not everyone can do

that and secondly, even if there will be competition, you don't get rid of your competitor by improving

your product or service rather, you get rid of them in a straight and literal meaning.

However, as the new century was about to begin that brought with it an innovation that had

the potential to complete reshape humanity, a small group of people took advantage of

In the late 1990s when the internet was booming, when investors were throwing money at any

company that had .com in its name, Elon Musk dropped out and moved to the United States

to start Zip2 with his brother Kimbal, with the money he successfully raised from a small

group of angel investors.  Although the company was quite successful

and went to obtain contracts with giants such as the New York Times, The board turned down

Musk to become the CEO of the company so he left with 22 million dollars when it was acquired

by Compaq to start X.com in 1999, an online financial service company.

He was so much into this company that he paid a million dollars just to obtain the name x.com.

However, he wasn't the only one with this brilliant idea to start online banking. It's

the late 1990s, everybody was trying to turn any service online and make a fortune.

A year before that (1998), Peter Thiel together with Max Levchin who moved to the US right

after the fall of the soviet union founded Confinity.

The goal was to make money transfers simple and easy online.

The prime target were the PDA users, it was basically the iPhone of that time, a little

digital assistant. However, later on, they realized that they could sync the software

with Email and the Web, so with or without a PDA, the user could transfer money. And

Transferring money today seems such a basic idea, however, in the 1990s, that wasn't

the case, the ability for anyone to transfer money around the globe was something revolutionary.

The rivalry between the 2 companies was fierce (Confinity vs x.com). To boost up their user

numbers, Confinity started offering 10$ bonus signup and a 10 dollar referral bonus for

It might seem like X.com would offer exactly the same to stay competitive, however, they

raised that number and offered a 20 dollars bonus for each signup and 10 dollars for each

went for both companies. They were bleeding cash and it was only a matter of time before

But regardless, it was a brilliant idea, because no one would mind free money, so the number

of users grew dramatically. In the next 3 months, PayPal had already attracted 12 thousand

However, what really made PayPal so successful was eBay. It was kicked off a few years earlier

and already was at the top of the internet at that time.

Despite its dramatic growth, the only way to pay for things was through checks, which

were extremely inconvenient. that's why they chose to integrate Paypal into their

system which made Paypal even more popular.

On the other side, Musk was in a little trouble with X.com because his key partner Harris

Fricker resigned and many important engineers left with him.

Unlike Confinity who only focused on transferring money online, X.com was an actual bank with

an appropriate license, but of course one of their major services was transferring money

to one another which made the two companies fierce competitors.

The two companies fought to gain eBay users but at some point, they realized that this

competition will hurt them both, On one side PayPal was much more popular than x.com,

but it was bleeding cash while x.com had plenty of cash around which pushed the two

companies to merge under the name Paypal.

This decision later came to be extremely crucial. For the last 5 years, investors were blindly

throwing money at every company that added .com in their name, so next year, in 2001,

the bubble burst and most internet companies literally went bankrupt one after another.

and if it wasn't for that merger, Paypal or x.com individually wouldn't survive

the crises.  Paypal was already struggling before the crises,

the two teams couldn't work together efficiently and the future of the company was quite blurred.

Bill Harris was the first CEO, then he was replaced by Musk, then when Musk was on a

vacation, he was replaced by Peter Thiel. The company was going through a lot of instability.

Despite the struggles, in 2002, PayPal went public and generated 61 million dollars.

Shortly after the IPO, eBay made them an offer they couldn't refuse, 1.5 billion dollars

for the entire company in July of the same year since PayPal became the payment method

But eBay changed PayPal to its core to the point where all the founders left, but they

didn't just leave but founded some of the innovative companies in the world.

Steve Chen, Chud Hurley and Jawed Karim who kick-started Confinity with Peter Thiel

went to start an online video sharing company that they named YouTube in 2005.

The service took off incredibly fast and by 2006 google made them an offer they could

not refuse and purchased Youtube for 1.65 billion dollars.

Reid Hoffman who was on the board of directors of Paypal and the executive vice president

started Linked in 2002, the first business-oriented online social network.

Today LinkedIn has almost 600 million users and operates all over the globe. and in June

of 2016, Microsoft proposed to acquire LinkedIn for $26.2 billion in cash, an offer they couldn't

refuse, that also put Hoffman on Microsoft's board and made him a billionaire.

And then there is Elon Musk, who doesn't need an introduction. Since he was the biggest

shareholder, he earned 250 million dollars from this deal, but was only left with 180

million dollars after taxes.  His ambitions were beyond this world, anyone

else would start maybe a company and leave the rest on an investment fund, but not musk,

he started a rocket manufacturing and space transportation company with a hundred million

dollars right after exiting PayPal to colonize Mars and make humanity multi-planetary species.

He Invested another 70 million dollars in tesla, an electric car company. And the last

10 million dollars he invested in Solar city, to improve solar energy technology.

Despite that SpaceX and Tesla almost went bankrupt, today they are at the top of the

He also launched Neuralink, a neurotechnology company that develops implantable brain-machine

interfaces. And the boring company, to dig tunnels underground to reduce traffic. In

fact, he started the company because he couldn't take the LA traffic any more.

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Internet Mafia - How Billionaires Make Money

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