Lessons from the PayPal Mafia

I used to think failure was a way of progressing. Moving forward towards your aim. No plan survives first contact and all that jazz. Peter Thiel changed my mind.

Enter the PayPal Mafia, as the fourteen alumnus are now famously called. The name stems from a 2007 Fortune Magazine shoot with thirteen of the fourteen Mafioso. Elon Musk was notably absent. Maybe he was out getting his hair done?

This PayPal Mafia went on to form dozens of other companies worth billions. So what was in the DNA at PayPal? In a conversation with James Altucher, Peter Thiel weighed in on what made PayPal a breeding ground for future successes.

Peter notes it’s hard to say exactly what was in the DNA and acknowledges that with the exception of Fairchild Semiconductor, PayPal is probably the single Silicon Valley company that produced the most follow-on entrepreneurs and startups.

PayPal had a lot of strong personalities and still found a way for it to work. Peter says PayPal was a tough business with a lot of competition and regulatory challenges. The team always found ways to overcome them.

And the lesson of PayPal, according to Peter, is you can build a great company; it’s hard, but it’s not impossible.

Peter says when people come from super successful companies like Google or Microsoft, they’ve experienced business as too easy. And when they come from companies that have completely blown up and failed, people lower their expectations.

These lower expectations are the poverty of failure. Peter thinks failure is somewhat overrated in our society; it actually damages people. His thoughts on failure resonated with me; we shouldn’t fear failure, but we shouldn’t glorify it either.

Peter views PayPal as an intermediate case on the start up scene. People learned it was hard but possible to build great businesses.