Quotable (#23)

Connor Forrest on the ‘Paypal Mafia’:

The PayPal Mafia — a term that’s used with affection and awe in Silicon Valley — is defined as the Mountain View PayPal team either pre-IPO or pre-acquisition, depending on which founding member you ask. While those may seem like vastly different stages in a company’s life, it’s more like splitting hairs as PayPal’s IPO happened only a few months before it was acquired. Former PayPal CEO Peter Thiel estimates the PayPal Mafia to be around 220 people. The PayPal Mafia does not include 700 person customer service operation that was running in Omaha, Nebraska at the time.

That group of 220 people went on to create seven distinct “unicorn” companies. Unicorns are companies with a valuation of more than $1 billion. Two of those seven companies were valued at north of $10 billion. Those companies are:

1. Tesla Motors – $27.5 billion market cap
2. LinkedIn – $20.4 billion market cap
3. Palantir – $9 billion value (private company, estimate)
4. SpaceX – $7 billion value (private company, estimate)
5. Yelp – $5.26 billion market cap
6. YouTube – $1.65 billion acquisition
7. Yammer – $1.2 billion acquisition

For comparison’s sake, the Google employee equivalent number would be around 20,000 or 30,000. Of those Google employees, the number of unicorn companies is harder to pinpoint. Thiel estimates that only one to three unicorn companies have been produced, with none close to a $10 billion valuation.

If Google’s unicorn companies are estimated at two, that means that PayPal got 3.5 times the result with 1/100 of the people. In other words, PayPal’s success rate relative to billion-dollar companies is 350x that of Google.

So, what was in the water at PayPal?

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