The PayPal Wars

What’s it about?: An insider’s perspective on the rise of PayPal. The text details Peter Thiel, Max Levchin, and the other founders’ struggles and perseverance in launching their online payment processor that has become a staple in the lives of consumers since 1999. Author Eric M. Jackson was vice president of marketing at PayPal, so it’s safe to say he knows what he’s talking about.

My opinion: This one’s a real page turner, described by business management guru Tom Peters as “the best description of ‘business strategy’ unfolding in a world changing at warp speed.” And The PayPal Wars is exactly that: an awesome account of a company’s growth, and the challenges faced in the dot com bubble landscape of the turn of the century: Wrangling with eBay, government regulators, trial lawyers, organised crime rings, and more.

What sets The PayPal Wars apart from most business books is that this is a story told from the perspective of an employee. In many ways, Jackson was used to the way things were before the tech boom. Very strict, rigid hierarchies, clearly-defined roles within the company, laws and tax codes, all the trappings of twentieth-century capitalism. In such economies of old, software engineers were typically thought of as cogs in the machine, and little more.

Once in PayPal, and the microcosm that was Silicon Valley, Jackson found himself in a completely different culture: speed, energy, flexibility, enthusiasm, egalitarianism. Traditional notions of the resume submission and good old-fashioned experience were now an afterthought. The engineer was no longer just a cog, but a vital part of the company itself and how products were built. Plus, companies such as PayPal weren’t formed simply to make a profit. Of course, there was money to be made, but individuals deranged enough to start these companies were true visionaries: motivated by the genuine belief that they could change the world with their product.

PayPal was purchased by eBay in 2002 for USD $1.5 billion, shortly after the company’s IPO (a cool $2,604,213,451.92 today). Jackson’s account of the process deftly sums up the culture of business buyouts and acquisitions at the time. Thiel and Levchin had a vision, and PayPal was innovative to start with, but once it was bought it, it became bureaucratic, an ordinary corporation driven by ordinary thought. It strayed from Thiel and Levchin’s vision of an online payment system unfettered by standard currencies. The founding employees of PayPal went on to start more high profile companies, including LinkedIn, YouTube, Yelp, and Tesla. Thiel himself became a venture capitalist and controversial political powerbroker, backing the 2016 US presidential campaign of Donald Trump. These founders are known in the media as the “PayPal Mafia,” simply because of how prolific these people were in building companies based in Silicon Valley.

The best thing: Jackson deftly articulates the strengths and weaknesses of PayPal, so it’s not like the text is just a fluff-piece written by an insider. Take this passage:

“I’ll certainly acknowledge that our company wasn’t beyond media dissection. In fact, we deserved it! We had racked up $92 million in operating losses through the first three quarters of the year against revenues of just $6 million. CNET, The Red Herring, and other media outlets had every right to sink their teeth into a company with such a dangerous burn rate…”

And yet, it was during times of struggle that the founding employees of PayPal were at their most creative and competitive. I would have liked to know more about what Thiel and Levchin were like as people. The text kind of falls flat in that regard. However, you do get an idea of what kind of person Elon Musk was before he became the larger-than-life tech giant he is today, with SpaceX, Tesla, and his acquisition of Twitter, so there’s that.

The PayPal Wars documents a very particular time and place, a turning point in business history. It is a time capsule of sorts. Highly recommended to anyone wanting to know more about the history and culture of Silicon Valley.