The Role of Elon Mask in PayPal History

Conversation in Silicon Valley:
- I built a business from scratch with my own hands and after 3 years sold it for $ 50 million
- It's okay, you don’t be discouraged, the next project may be successful ...

For us in Web-payment.ru , a project on payment systems with monitoring exchangers, it is very interesting to observe the development of Elon Mask, he is engaged in fantastic projects and especially inspires that all this is due to Mask’s early success in the field of payment systems and Internet technologies. It was this that created the conditions for him to study in a dense way what he had a passion for all his life - science, engineering and space. In March 1999, he founded X.com - one of the first services to provide functionality for selling services on the Internet, quickly becoming one of the leading financial companies on the Internet. In 2000, X.com acquired Confinity and became PayPal, the international leader in payment transfers. At PayPal, he served as president and director of production control and was his largest shareholder until Ebay bought PayPal in 2002 for $ 1.5 billion. Before joining PayPal, Musk was one of the founders of Zip2, the company that created software for Internet services.


(on the photo: Peter Thiel and Elon Musk)

1995 - Zip2

Musk and his brother Kimball founded the company Zip2, which specialized in software for news companies.

“I worked from morning till night. He lived in the same warehouse, where he rented an office, and took a shower in the locker rooms of the local stadium. But I saved on renting an apartment, and in the first two most difficult years I kept the company afloat. ”

In 1999, Zip2 was acquired by Compaq for $ 307 million. Mask received 7% of the sale amount ($ 22 million). “After Compaq acquired my offspring, it merged with Altavista,” Elon comments.

1998 - Confinity

Confinity began its operations in December 1998 as a cryptographic company for Palm (cryptography is one of the skills of Max Levchin). Max Levchin developed an application for encryption. It used infrared rays to transmit identification information from one Palm device to another.
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(in the photo: 1999, the company Confinity creates software for the PalmPilot . Peter Thiel in the second row to the left in a blue shirt, followed by glasses and a white shirt Max Levchin)

1999 - X.com

In March 1999, Elon Musk co-founded X.com

2000 - X.com buys Confinity

In 2000, the acquisition of Confinity took place, one of which offices had the name PayPal. Both systems (X.com and PayPal) were engaged in providing personal electronic money transfers via e-mail.


(on the photo: Peter Thiel and Elon Musk)

From March to October 2000, Elon Musk served as CEO of PayPal. In October, Peter Thiel became CEO.

2002 - selling eBay

In October 2002, PayPal was taken over by eBay for $ 1.5 billion.

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A few reasons why Elon Mask should be considered a full co-founder of PayPal (without minimizing the roles of Max Levchin and Peter Thiel):

1. According to LA Times David Sachs (PayPal COO, prior to its sale to eBay), it was Elon Mask who had the idea of ​​a “viral” growth mechanism.

2. The business model of charging fees only to a large seller, not to buyers or small dealers was developed by Elon Musk and other managers at X.com. By applying this model, PayPal does not lose profit.

3. A large number of valuable workers came from X.com

4. X.com (X) had more employees, user accounts, and a growth rate also exceeded Confinity’s similar figures (but it had more eBay users).

5. Elon Musk was the CEO and Chairman of the Board of Directors of X / PayPal from January 1999 to October 2000. Just over half the life of the joint venture before it was agreed to sell to eBay in June 2002. Musk was also on the board of directors during the entire existence of the company. Elon managed the joint venture from April 2000 to October 2000, that is, 7 months. It was a time when X.com/PayPal (it was called X until 2001) became the leader in the field of e-mail payments. This was facilitated by a “viral” growth model, a calculated business model, growth from 60 workers to several hundred, the emergence of a customer service and anti-fraud center, support for debit cards, support for a money market fund, and a foundation was laid for worldwide service and receiving various currencies.

6. By the time Peter Thiel became CEO of X / PayPal (this happened at the end of October 2000), by and large, the company was already exactly what it is known today.

7. When PayPal was sold to eBay, Elon Musk was its largest shareholder.

Elon Musk says: “It is worth saying that there is no significant hostility or rivalry between me and Peter Thiel and Max Levchin. The only negative point was associated with a book called "The PayPal Wars", written by a flattering fool Eric Jackson. Peter Thiel volunteered to sponsor him and helped with the publication of the book. However, in defense of Peter, it can be said that he absolutely had no idea that the book would turn out so terrible. He personally apologized to me at David Sachs' house. ”


(in the photo: 2002, Peter Thiel and Max Levchin a few seconds after the end of the auction. The initial price of the shares is $ 13, the final price is $ 20. PayPal held the initial public offering for a month and a half before selling eBay)

What now?

And Musk continues to think "what problems the world and humanity will have to solve in the future" and founds SpaceX (2002), Tesla Motors (2003), SolarCity (2006)

Host: - And you decided to create a space company. How could you even think of such a thing?
Elon Musk: - I am often asked this question. And they often joke: “Did you hear about a peasant who made a small fortune on space technologies? And he began with a large state. ” I always answer that I wanted to find the fastest way to turn a large state into a small one.

I am convinced that there is a huge gap between the fascinating fate of mankind, which conquers space, explores the stars and planets, and the fate of humanity, which has imprisoned itself on Earth and is rushing to inevitable death.