“So what can this factor do?” enterprise capitalist Peter Thiel requested from the passenger seat of the glossy, 627-horsepower McLaren F1.
“Watch this,” Elon Musk replied.
It was March 2000, one 12 months after the 28-year-old Musk bought his first start-up for $22 million. He’d dropped $1 million of it on the silver sports activities automotive, then pumped a lot of the relaxation right into a grandiose enterprise scheme: X.com, an internet-based megabank that aimed to remake the worldwide monetary system.
However his plans had been blocked by Confinity, an organization led by Thiel. The 2 have been about to debate a “shotgun marriage” merger to finish their damaging competitors. Musk, pulling rank, had provided Thiel a raise. “I didn’t actually know the right way to drive the automotive,” he tells creator Jimmy Soni in “The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley” (Simon & Schuster), out now.
Musk gunned the McLaren’s gold-plated engine. The drive was greater than he may deal with. The automotive spun out on the busy Silicon Valley highway, hit an embankment, went airborne and smashed on the roadside. Glass shattered, tires burst and the car’s suspension snapped.
The crash may have killed each males and in addition destroyed PayPal — the corporate that revolutionized e-commerce and gave rise to YouTube, LinkedIn, Yelp, Tesla and SpaceX — earlier than it even started.
However miraculously, Thiel and Musk have been unharmed. They dusted themselves off, caught out their thumbs and hitchhiked off to vary web historical past.
In “The Founders,” Soni tells the story of PayPal from its beginnings as a easy bill-splitting app meant for the now-forgotten PalmPilot machine adored by pre-smartphone Silicon Valley. The app was the brainchild of Max Levchin, a 24-year-old laptop programmer who had befriended Thiel, then 32, by means of a sequence of what Levchin calls “ultra-nerd dates,” bookstore conferences the place they spent hours one-upping one another with mind teasers and math issues.
When the financier and the engineer launched Confinity, the geek crowd swooned over Levchin’s PayPal app, which let PalmPilot customers beam cash to every different — if their units have been in the identical room.
It was spectacular tech for the time, however restricted. Then Levchin added an afterthought bonus characteristic to PayPal’s web site: email-based funds.
Patrons and sellers on eBay immediately latched on. Inside six months of PayPal’s November 1999 launch, the corporate had greater than one million customers.
Nonetheless, Musk’s deep-pocketed X.com was focusing on eBay customers, too, attractive them with hefty sign-on bonuses that Confinity struggled to match. “It was form of a race to see who may run out of cash the quickest,” Musk stated.
After the automotive crash, within the spring of 2000, the exhausted combatants agreed to merge beneath the X.com banner. However the merger proved rocky. Musk, nonetheless aiming for his final aim of world monetary domination, noticed PayPal as merely a way to that finish.
As CEO of the blended firm, Musk insisted on the primacy of the X.com model — regardless that prospects hated it, focus teams discovered. “Time and again, the theme of ‘Oh God, I wouldn’t belief this,’” recalled Vivien Go, a PayPal advertising and marketing exec. “‘It’s an grownup web site.’” Irrespective of: Musk ordered PayPal to be rebranded as “X-PayPal.”
Then Musk decreed PayPal’s code to be scrapped in favor of a model new codebase meshing with X.com’s structure. That was a blow to Levchin, whose PayPal code was stuffed with quirks bearing his fingerprints — traces identified to all as “Max code.”
“This … is simply destroying my will to reside,” Levchin remembers considering in despair.
“I didn’t totally respect the emotional component,” Musk later admitted.
The livid Levchin staged a coup. When Musk headed to Australia for a long-delayed honeymoon, Levchin mobilized Thiel and other allies on the X.com board of administrators and ousted Musk from his CEO place.
“Sneaky backstabbing bastards,” Musk stated in 2019 — humorously, Soni writes. “Too scared to stab me within the entrance.”
Musk retained his stake, profiting handsomely when PayPal went public in 2002. The capital he realized from the corporate’s billion-dollar IPO helped launch SpaceX.
In the present day, Thiel and Musk are on good phrases, with Thiel even joking in regards to the automotive crash that preceded their success.
“I’d achieved liftoff with Elon,” Thiel instructed the creator, “however not in a rocket.”