Review of THE FOUNDERS
How PayPal changed our tech lives
Sending money on our phones is such a banal experience today that we may forget that the technology only emerged a little over 20 years ago. And the dominant market player, PayPal, almost died so many times that it’s somewhat remarkable it even exists today. And without it, who knows if we would have had YouTube, LinkedIn, or SpaceX.
How did PayPal go from a money guzzling startup to a $300 billion company integrated seamlessly into our online shopping lives? Through a lot of hard work. In The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley, Jimmy Soni tells the story that you may never have heard.
PayPal originated during the dotcom boom of the late 90s as a startup called Confinity founded by Max Levchin, Peter Thiel, and Luke Nosek whose main product was beaming money between Palm Pilots. They quickly discovered and pivoted to email based payments – the PayPal we know and use today. But another successful Valley entrepreneur, Elon Musk, also discovered email payments as part of his new startup, X.com, that aimed to be the financial center of the world. Both startups were in direct competition over market share in the email payments space. Eventually they merged to avoid destroying each other, and over the course of the next three years, grew PayPal into a billion-dollar public company.
Of course, a great deal of drama and innovation occurred in that span of time! The above is the most simplistic narrative one could tell of the company’s origin – which is why Soni wrote an entire 400-page book on it, which you should definitely read.
The drama centered at first on the competing visions of the PayPal founders and X.com founder Musk. Although Musk is largely forgotten about in many respects with the origins of PayPal, it is unlikely PayPal would have existed without him. Before the two companies merged, PayPal was rapidly running out of financial runway, but Musk’s company was flush with cash, millions of Musk’s own money from his previous startup he sold. Without X.com, PayPal would likely have died. Without PayPal, X.com would likely have died, too, just a longer more expensive death.
Ultimately, the company we see today is much more of the original PayPal than the original X.com, becoming a mega company and a centralized feature in our technological lives today. Although the company’s product, which is largely a button to allow for a quick online payment, seems simple, PayPal is a leading innovator in fraud detection technology. Because so much fraud was occurring on the site, they had more data than anyone to build AI-human hybrid systems to significantly reduce fraud. They also were the first commercial application of CAPTCHA technology we are all so familiar with today.
The story of PayPal is riveting and Soni does a superb job at telling it. This is one of those books where my review does no justice to the details and story of how this historic company came to be. You’ll have to read it for yourself to see why I couldn’t put this book down after starting it.
Published: February 2022
Format: Hardcover
If you think this sounds interesting, bookmark these other great reads:
The Code: Silicon Valley and the Remaking of America by Margaret O’Mara (2019)
We Are The Nerds: The Birth and Tumultuous Life of Reddit, the Internet's Culture Laboratory by Christine Lagorio-Chafkin (2018)
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