The role of Elon Mask in PayPal history

A conversation in Silicon Valley:
- I built a business from scratch with my own hands and after 3 years I sold it for $ 50 million
- It's okay, don’t lose heart, maybe the next project will be successful ...

For us at Web-payment.ru, a project on payment systems with the monitoring of exchangers, it is very interesting to observe the development of Elon Musk, he is engaged in fantastic projects and is especially inspired by all of this thanks to Musk's early success in the field of payment systems and Internet technologies. It was precisely this that created the conditions for him to take up in the dense what he had 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, which quickly turned into 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 has been its largest shareholder until until Ebay bought PayPal in 2002 for $ 1.5 billion. Before joining PayPal, Musk was one of the founders of Zip2, a company that created software for Internet services.


(pictured: Peter Thiel and Elon Musk)

1995 - Zip2

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

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

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

1998 - Confinity

Confinity began operations in December 1998 as a cryptographic company for Palm (cryptography is one of the skills of Max Levchin). Max Levchin has developed an encryption application. It used infrared rays to transmit identification information from one Palm device to another.


(pictured: 1999, Confinity creates software for PalmPilot . Peter Thiel in the second row on the left in a blue shirt, behind him in 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, one of the branches of which was called PayPal, took place. Both systems (X.com and PayPal) were engaged in providing personal electronic money transfers via e-mail.


(pictured: Peter Thiel and Elon Musk)

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

2002 - eBay for sale

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

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

1. According to LA Times David Saks (PayPal COO, before selling it to eBay), it was Elon Musk who came the idea of ​​a "viral" growth mechanism.

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

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

4. X.com (X) had more employees, user accounts, and growth rates also exceeded those of Confinity (however, 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 company before it agreed to sell eBay in June 2002. Musk was also a member of the board of directors throughout the company's existence. Elon ran the joint company from April 2000 to October 2000, that is, 7 months. This was the time when X.com/PayPal (it was called X until 2001) became a leader in the field of e-mail payments. This was facilitated by the “viral” growth model, a calculated business model, growth from 60 employees to several hundred, the emergence of a customer service and anti-fraud center, support for debit cards, support for the 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’s worth saying that there is no significant hostility or rivalry between me and Peter Thiel with Max Levchin. The only negative point was a book entitled “The PayPal Wars”, written by flattering fool Eric Jackson. Peter Thiel volunteered to sponsor him and helped with the publication of the book. However, in defense of Peter, we can say that he had absolutely no idea that the book would turn out so terrible. He personally apologized to me at David Sachs’s house. ”


(pictured: 2002, Peter Thiel and Max Levchin a few seconds after the end of the auction. The initial price of shares is $ 13, the final one is $ 20. PayPal carried out an initial public offering one and a half months before the sale of eBay)

What now?

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

Presenter: - And you decided to create a space company. How could you even think of this?
Elon Musk: - I am often asked this question. And they often joke: “Heard about a man who made a small fortune on space technology? And he began with a great fortune. ” I always answer that I wanted to find the fastest way to turn a large fortune into a small one.

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