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Episode: 512 |
Jimmy Soni:
Jimmy Soni, Author, Speaker, Speechwriter:
Episode
512

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Jimmy Soni

Jimmy Soni, Author, Speaker, Speechwriter

Show Notes

Author Jimmy Soni kicks off the conversation by explaining why the PayPal mafia is more noteworthy than other large startups. Soni explains that he wrote the book to document not only the business successes, but also the personal stories of the founders. He explains that the market has been good and that people can learn a lot of new things from the book. Soni reveals that his favorite thing about the book is learning about the inventiveness and innovation PayPal had.

 

The Birth and Growth of the PayPal Mafia

Jimmy  and Will  discuss the phenomenon of the PayPal Mafia, the group of entrepreneurs who emerged from PayPal’s success and went on to found some of the most successful companies in Silicon Valley. Soni explained that the PayPal Mafia is a unique phenomenon because the founders were relatively young when PayPal was successful, they had faith that businesses on the internet could be successful,  and they supported each other’s ventures. PayPal alumni invested in and supported each other’s companies, and they hired alumni as their first employees. This mutual support and collaboration was key to the success of the PayPal Mafia, and their success has been a major factor in the success of Silicon Valley.

He shares how PayPal was able to succeed in the early 2000s due to their right timing and how important that was, the selection of very talented people, and the nurturing of their employees. They were able to take advantage of the increasing ubiquity of email addresses and the platform of eBay, which hadn’t yet sorted out its payment infrastructure. They also managed to survive the .com burst and make a successful IPO. This was due to their selection of very smart and entrepreneurial people, and their experiences of putting a company together from scratch and having it be a success. He mentions how the book The PayPal Wars by Eric M. Jackson shows how messy real companies can be and how PayPal started out as two companies, Con Finiti and X.com, that merged and began toying around with the idea of beaming money from one palm pilot to another.

 

Building a Startup

Jimmy  reflects on his experience of studying the formation of PayPal and how it taught him about Silicon Valley strategy and the messiness of how companies actually grow. He emphasizes that building a company from scratch is much harder than most people think and that things that seem inevitable can often look ridiculous at the start. He demonstrates this by using the example of the Palm Pilot that was labeled one of the 10 worst business ideas of the 1990s but that company became PayPal. He emphasizes that researching the book has made him more aware of the difficulty of creating something and has taught him to not to dismiss ideas that seem silly or take for granted the companies that occupy our lives.

The creation of PayPal was a “dogfight” that required a lot of hard work and effort. The biggest challenges in making it successful were to convince people to use the payment system and make sure that people were not taking advantage of it.  Jimmy talks about the uncertainty and anxiety that comes with being involved in a startup and the do or die moments that can arise and that there are often one or two decisions that are crucial to survival. He noted that CEOs usually only make six important decisions per year, so it’s important to go into a startup with eyes wide open and know that these moments will arise and that the company could go under at any point. He also talked about how chaos can be beneficial for a startup, as it can bring about new ideas, but also can just be chaos. His insight from the story of PayPal is that a lot of what appeared to be chaos from the outside was actually a controlled chaos that was directed towards the right problems and issues. 

 

The Elon Musk’s Pressure Cooker Leadership Style

Jimmy talks about Elon Musk’s recent acquisition of Twitter and his ability to lead a tech company. Jimmy explains that he and Musk never spoke about social networks, and that they only discussed payment networks. He noticed that Musk’s management style and that Musk used the term ‘maniacal urgency’ to describe it, and believes that Musk’s intense approach is necessary for the success of a startup. Jimmy goes on to explain that this style of management has been consistent from Musk’s first venture, Zip Two, to his current companies Tesla and SpaceX.

Elon Musk’s leadership style is one of prioritizing urgency and setting unreasonable demands for his employees. This was the case in his experience with PayPal, and is now being seen at Twitter. An engineer from X.Com shared that during this period, Elon worked longer hours than anyone else and that it was an energizing environment for engineers who wanted to build something quickly, get rapid feedback, and keep moving towards a big goal. This style is not for everyone and can be difficult to understand, but it has been successful for Musk in the past. Through his research, it became clear to Jimmy that startups need to be maniacally urgent and dedicated in order to succeed. 

He discusses the market for books about companies, including his own book The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley

The book has done well, both domestically and abroad, and Jimmy  believes that people are drawn to the book because of the famous and controversial players involved. Feedback received from professionals  in the startup world have told him that the book captures the energy and feeling of what it is like to be in a startup. He shares that the market for books about companies is big and that the Silicon Valley halo has not diminished abroad; all of these factors have contributed to the popularity of the book. His book has international appeal and what differentiates his book from others in the same genre is the inclusion of personal stories. 

 

Researching the Book 

Jimmy discusses the importance of invention and how startups are allowed to look at a problem and create something new to solve it. He shares how many inventions were developed by PayPal. 

When it came to gathering information, he struck gold when he was interviewing someone who offered him access to the company’s early records. The person sent Jimmy several gigabytes worth of emails from the time. Jimmy was able to access emails sent and received by key players in the company, giving him a better understanding of the story he was researching. To capture the widest possible story, he started with any emails sent to the company and printed them all out. He then read through every page, looking for any interesting gems that could be included in the book. He found a motivating note from Elon Musk outlining the company’s struggles and signed off with Work like hell, Elon. This note was unexpected and captured the character of Musk that is still seen today. 

When writing his book, Jimmy explained that he took a methodical approach to email research, using folders, binders, and highlighting to identify key points. He used Google Drive to store PDFs of her citations for fact-checking. This email archive was instrumental in making the book more accurate, rather than relying on hazy memories. 

Jimmy and Will discuss the secret sauce of recruiting talent. He specifically mentions Peter Thiel’s superpower. Jimmy believes that it is talent identification. Thiel has an uncanny ability to identify people who have potential and to offer them help in the form of introductions, investments or by sketching out a vision of their career that is bigger than they thought possible.  Jimmy shares what he learned about his time working at McKinsey and how that helped him as a writer, and what he is working on now, which is a co-writing project on tech history. 

 

Timestamps

07:41 “The Evolution of PayPal: A Story of Near-Failure and Success” 

09:57 Exploring Contingency in the Story of PayPal’s Success 

13:33 Managing Uncertainty in a Startup Environment 

14:15 Analysis of Elon Musk’s Management Style at Twitter 

18:42 Recruiting Strategies at X.com and Confinity 

24:34 The Market for Books About Companies 

27:59 On PayPal’s Inventiveness and Innovation + Exploring the Origin Story of PayPal’s CAPTCHA Technology 

41:23 Peter Thiel’s Approach to Hiring and Recruiting 

44:42 Writing Books, Consulting, and Professional Development 

Links:

The Everything Store, Brad Stone

The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley

A Mind at Play, Jimmy Soni

https://jimmysoni.com/

 

CONTACT INFO:

LinkedIn https://www.linkedin.com/in/jimmysoni/

Twitter @jimmyasoni

 

One weekly email with bonus materials and summaries of each new episode:

 

  1. Jimmy Soni

SPEAKERS

Jimmy Soni, Will Bachman

 

Will Bachman  00:01

Hello and welcome to Unleashed. Unleashed is produced by Umbrex. You can find us@umbrex.com. I’m your host will Bachman. And I am so thrilled to be here today with Jimmy Sony, who is the author of a bunch of books, including the founders, the story of PayPal, and the entrepreneurs who shaped Silicon Valley. Jimmy, welcome to the show.

 

Jimmy Soni  00:24

Well, thank you for having me. Thank you for the very generous and kind introduction.

 

Will Bachman  00:29

So, Jimmy, why do we have the PayPal Mafia? Why is that a term? Why is it not, you know, the eBay mafia or the Google mafia or the AOL mafia? Or some other, you know, startup mafia? What is special about PayPal?

 

Jimmy Soni  00:46

Yeah, it’s, it’s a great question. It’s one of the questions that’s at the heart of the book, it was one of the questions that, frankly, led me into the story, you know, you, you have plenty of successful companies. Why is it that this company produced the alumni produced the founders of LinkedIn, YouTube, SpaceX, Tesla, et cetera, et cetera? And to get to the direct answer to the, you know, is the long answer to the question, but one of the big few of the big reasons one, most of these people were pretty young, when Pay Pal was successful. And by successful I mean, they built the company and then an IPO and then was acquired by eBay, to when they emerge from that experience, you know, that the.com bubble had just finished bursting. You know, people are only starting to renew their faith in the internet, there was still a lot of skepticism, but they had faith that you could make an internet company work and make it successful. And then three, and this is really critically important. A lot of the early companies that came out of the Pay Pal alumni group, were, you know, invested in by Pay Pal alumni were supported by other alumni. The first employees were other Pay Pal alumni, I spoke to pay pal alums who left PayPal, you know, worked at eBay, that the acquiring company for a little while, and we’ll get a call from a friend and who the friend was creating a company called YouTube. And so they want to bring you to the first money into Yelp, what became Yelp came from a Pay Pal alumnus Max Levchin, who gave the money to a fellow Pay Pal alumnus, Jeremy Stoppelman. And so you had this very dense network, where people were supporting one another after this very difficult experience of bringing Pay Pal to scale building it, bringing it to scale, and then selling it.

 

Will Bachman  02:32

So it sounds like part of it was this highly talented group that was assembled. It was also partly a little round timing, you know, Gladwell talks and one of his books about how all the big tech entrepreneurs, you know, Steve Jobs and Bill Gates and so forth, a lot of them are all kind of, of a same age where computers were just coming into the availability. And they were able to learn from that. It sounds like there was something similar at work here where they emerged with the experience of a startup and some money, and it was a good time.

 

Jimmy Soni  03:08

I think that’s right, let’s go into it a little, a little bit more deeply. Because I want to talk for a second about the timing piece. It’s interesting. You mentioned that it’s one of the big things that in the conclusion of the book, I identified because I had heard it from the people I interviewed, right, actually, it was Peter Thiel has a great quote at the end about how he says, you know, if we like a few years later, there might not have been room to create a company like PayPal, and a few years earlier, we wouldn’t have been able to create it. But something to that effect. I’m paraphrasing. But he he put one of you know, I have some sort of whatever one of the keys to success. This is where we’re part of it as we had the right timing. We were there. Right when email addresses had become more ubiquitous so that people could, you know, send money over email, they became successful on a platform eBay that hadn’t figured out its payment infrastructure. And so they had an opportunity there to like, take advantage of that. And then they managed to survive during the.com bubble bursting, make it through an IPO and sell the company, right as faith in the internet was being restored. So you had this sort of like, powerful experience. It was four years of duress. That’s part of it. I would say the other kind of two pieces you sort of hinted at one is pick house selected for really talented people, right. I mean, this is a room that contains Elon Musk and Reid Hoffman, David Sachs, Max Levchin, you know, on and on, I mean, he can go through dozens and dozens of names of really gifted people. So some of that is sort of the nature nurture thing, like they pre selected for very, very, very smart people who had a kind of entrepreneurial bent about them. And then part of it is nurture. All of these people, even if it was their first job out of college, they were seeing the experience of what it means to put a company together from scratch, and then have it be a success. It’s a cocktail, right? It’s hard to say one thing, it’s not sort of like oh, they all read this one book, and that’s why there’s help off Yeah, right. It’s actually like a mix of things and if the entirety of the experience that she This generation of entrepreneurs.

 

Will Bachman  05:02

One thing I love about this book is that it shows how messy a real company can be how they started out, con Finiti, one of the two companies that merge really was initially was fooling around with this idea of beaming money from one palm pilot to another. And in retrospect, that just seems so ridiculous that now the kind of Palm Pilots have disappeared, and that it was only, you know, email payments, were only kind of an afterthought. And what has studying this and telling the story taught you about this, you know, about strategy about the Silicon Valley kind of idea, pivoting? And about just the messiness of how companies actually grow?

 

Jimmy Soni  05:48

Yeah, it’s a great, it’s a great question. I’m really glad you asked it, I would say, like looking back, and having learned how this company came to be, and I would say, more importantly, having learned that, you know, people who are regarded today as like the ruling class of Silicon Valley, like the smartest people around seeing how much difficulty they had in creating something, it leads, it leads, at least in my head, like my day to day interactions, that leads me to two kind of thoughts. The first is, like building a company from scratch is much harder than people think. And that seems kind of obvious, except that we really take for granted a lot of the companies that occupy our lives, right, that actually like the exercise of doing a startup or building something new, is difficult. The second thing it makes me realize, made me realize this experience was things that seem inevitable can often look ridiculous at the start, right. So we you joked about this palm pilot, you know, beaming and just to give listeners context, one half of the company that became Pay Pal, its first consumer product, was this idea that, that you would be money between the infrared ports on palm pilots. And there’s probably a fraction of listeners that remember what a Palm Pilot is, but think of it as like a primitive iPhone, right, the first PDAs. And what happened is that that product was actually labeled like one of the 10 worst business ideas of 1999. And that is the company that became PayPal, a company that is still around today. And the last time I checked, I think its market cap is something like in excess of $100 billion. And so you have this, this thing of things that look can look silly and ludicrous at the beginning, could turn out to, you know, create teams and products that look inevitable later on. And I think what it’s led me to is just be a little bit, a little bit more humble about rushing to judgment, or about mocking something, just because it seems silly or quaint.

 

Will Bachman  07:41

It also kind of takes away or helps inform this idea that we have that it’s typically the straight line, where someone has this genius idea and then boom, like Airbnb, oh, they hosted someone on their couch, they had this idea, why don’t we do this and Airbnb boom, where were just these, they kind of went very this very circuitous route to, to the idea of sending money. And Elon Musk was trying to build this financial supercenter, where it would consolidate every single aspect of your financial life, your assets, your banking, your investment banking, and eventually they landed on, you know, payments via email.

 

Jimmy Soni  08:20

Yeah, I think that’s the circuitous is the best word for it. And if anything that, you know, sort of undersells that a little, because the way I describe the story of the creation of PayPal is basically the story of like near failure, followed by failure followed by near failure. And, and I think if you look back at the trajectory of a lot of companies, that is exactly the way it is that you sort of see a thing, it doesn’t work, you improve upon it, you improve upon it, you improve on it, and then all of a sudden, the idea has some merit to someone, right? You’re sort of adding value for someone. And, and by the way, this was like a learning experience for me, because I’m a Pay Pal customer, I go online, I type in my email address, I press send, I’m like, how hard could this possibly be? Right? But it turns out that when you build a payment system, you have to fight really hard on at least two fronts. One front is this. How do you get people to use this payment mechanism? When it has never existed before? Right? Like, what’s the reason? What’s the incentive? hot wire wire masses, millions of people going to use it? The second challenge is, how do you make sure the people using it are legitimate? And how do you make sure they don’t the frog you and so there’s sort of two halves of the company’s life. The first half is getting to enough scale to matter. And the second chat sort of like half of its life, it early life is figuring out how to make sure that people don’t take advantage of it and drive the company into bankruptcy. And I think that to me, that’s like, actually, like one of the great things about this story is that you had a company that again, its product seems so simple, almost inevitable, and it was a dogfight to create it.

 

Will Bachman  09:57

related to this topic of messiness Is this issue of contingency? So Peter Thiel secures 100 million in funding something like a week before the market crash of 2020. And then, another one is the CEO Bill Harris gives Elon Musk this ultimatum that to agree to the 50 merger between x.com and confetti, and forces Musk’s hand and no merger. You know, maybe neither company ever achieves the scale, maybe they both die in the.com Bust? What are some of your insights just around contingency? From the story?

 

Jimmy Soni  10:38

Yeah, I think I would say that part of a, a, a, sort of the startup story is, is learning to live with just sort of an unbelievable amount of anxiety and uncertainty. There, there are so many different crucible moments. And again, I only deeply dove into this particular startup. But in the course of doing this book, I studied a lot of other startup stories. And almost all of them have this kind of do or die moment where there’s a single decision or a couple of decisions that are the really, really, really consequential ones. In fact, in later speeches, I think Peter Thiel has actually said, Really, like the best CEOs only make maybe like six important decisions a year or something like that. And so I think, I think for me, you know, those moments, and they are fraught, by the way, like, there was no, there was no PowerPoint deck, really, that, you know, could have sort of gamed out perfect solution to any one of those moments. But I think that there is value in knowing, let’s say, you’re about to join a startup, let’s say a lot of your audience, you know, consultants, maybe maybe they decide they want to take, take, take a risk and join a startup, but they’re not gonna found anything necessarily, but they want to join something, it’s fast growing, and it’s ready to scale. I think if you go in eyes wide open, you have to know that there are moments when you’re gonna wake up and think the company might go under the next day. And that’s not, that’s not a comfortable feeling like, quite honestly, I’m not sure I could live with that feeling, right. And so I think, to sort of step out of the business context, a lot of that affects people personally, like a lot of the company’s lifecycle in its first four years, is having to manage and tolerate uncertainty, and respond to these fears, essentially, by creating great products and trying to just stay alive for the next day. Right. And so I it’s a little, it’s a little tough to have sort of a theory of the case of a contingency, because I’m not even sure that people who live the story would have recognized those moments as like Do or Die moments, right, where the company might not have survived if they didn’t close the 100 million dollar round. In fact, the funny thing about interviewing all these people, is that only only later in some cases did they appreciate like just how contingent everything was right. But I think what it taught them is that a lot of what can look from the outside in like chaos, like in the middle of a startup, what can look like chaos is actually like that kind of turn, you need to have new and interesting ideas springing up. And it’s not always perfect. Sometimes chaos is just chaos. But in the case of PayPal, you had this controlled chaos that was directed at the right, problems and issues. But I think that I got the bigger lesson is probably personal or psychological, which is being a startup environment, at least in as much as I have learned from doing this book is about just learning to live with wave after wave of uncertainty.

 

Will Bachman  13:33

Elon Musk, some people recently, I’ve talked about Elon Musk buying Twitter. And I’ve seen comments online like, Oh, he’s great at building, you know, Tesla and SpaceX and physical world companies with actual atoms and products. But he’s out of his element dealing with a tech company, which is kind of hilarious, because he built and sold two very successful tech companies, you know, PayPal, and before that, zip two, what’s your take? You know, having met Elon Musk and studied his management style, got to know him a bit, and studied some of the changes that he’s making it Twitter and what you what you see is what’s what’s, what’s your take?

 

Jimmy Soni  14:15

Yeah, you know, an important disclaimer on this is that I never spoke to him about social networks. We only ever spoke about payment networks and Pay Pal and that early experience, right. And so I never had, you know, it’s not been a subject of conversation between us. I don’t think the word Twitter ever came up once in my, in my discussions with him. What I would say is, though, taking a step back, you know, I’ll give you an example that made sense to me, that might not have made sense from the outside looking in if you didn’t have all this time sort of traipsing around this world. You know, he used this expression when he was emailing or sending a note to some Twitter employees and it got reported on because somebody liked it. And it was this phrase maniacal urgency. You know, he said, I operate with maniacal urgency, and I expect everybody else to do the same. And I think, you know, the way he was interpreted by some people was, Wow, isn’t this guy sort of being too intense, or he’s demanding too much of people. But what I saw was precisely the style of management and case that characterized every startup he’s ever done from from zip two, which was his first effort, which is sort of a yellow pages for the internet, the bad description of it, because he had bigger ambitions, but it became kind of like a yellow pages for the Internet, all the way through to Tesla and SpaceX. And what you see it at PayPal, and I think what you’re starting to see at Twitter is this idea that like, the point is to set unreasonable demands to try to hit those demands, and to move just so much more quickly than a traditional large company could now the challenge, I think, at Twitter is, it was it was a traditional large public company, right? So 1000s of employees, lots of different processes and structures. But he is brought with the same energy that I saw in the Pay Pal story. I’ll tell you a quick anecdote from the book that sort of illustrates the point. I had, I interviewed a lot of early engineers from x.com. And these are people who had never been interviewed about their experience here before I was sometimes the first person to ever ask them about the period in our lives, which by the way, like, left me gobsmacked, I was like, why wouldn’t more people reach out to these people, but it turns out, they’re kind of hard to find, and you have to earn their trust before they talk to you. But to an engineer, one of the things that they said is that they enjoyed this period edx.com as maniacally urgent as it was, and here’s why they said for two reasons, one, they said, I did more work, and some of the best work during that period than I ever thought possible, like I did more in three months than I ever thought I could. The second is they said, Elon never just issued an order and then walked away or went home, he was there longer working longer hours than all of us were. And I think that’s really important the way he leads, and it’s been true Twitter is he will be there at all hours, he will be putting more pressure on himself, and he will put on other people. And I know that there’s, you know, there’s criticisms this way, and that about what he’s doing. But I can tell you just as an observer, this is exactly what I saw, or learned about the x.com experience was that he intends to work night and day to make it successful, and that the pace will be very, very, very fast. And this has been true at SpaceX and Tesla. And so I think, you know, we sort of act like oh, like that’s, you know, how can he do it, or he can’t pull it, you know, but I would be hard pressed to bet against him. You know, it’s an incredible track record of doing these things. But I think one of the things that he does is he creates a pressure cooker. And that’s not for everybody. It’s not the ideal work environment for every human being on the planet. But for a particular kind of engineer who wants to build something, build it quickly, get rapid feedback, keep moving toward a big goal, that can be a very energizing thing. Right? I mean, that is that is an elite sports team to take the analogy into a different domain. It’s the difference between, you know, playing in the major leagues and playing peewee baseball. And I think that’s like sometimes lost in the discussion about Twitter. I think part of it honestly, is that people are so attached to the product they have, and they have some preconceptions about who he is. And they don’t quite get his humor. But I would say more than anything. What I learned from the Pay Pal experience is that startups have to be maniacally urgent, because they are generally fighting very powerful, very well capitalized incumbents. So the only thing you have is speed and ridiculous audacious goals. And again, for a certain kind of person, that is the best work environment they can imagine for a period of their careers.

 

Will Bachman  18:42

Tyler Cowen and Daniel gross came out with a book last year called talent. And Tyler has been a guest on the show talking about that book. You mentioned talent before and how they were exceptionally good about attracting talent to both x.com and confetti. Tell me a bit about what they did to recruit, interview. Convinced to join that company? Why was it such a pool of exceptional talent?

 

Jimmy Soni  19:14

Yeah, no, I’m glad you brought up Tyler Tyler was a big he was he was one of the first people to read the book when it was finished. he blogged about it. He’s been wonderful throughout. And I cannot recommend talent, his book more. I mean, it’s just, it’s just exceptional. He is somebody who spends a lot of time around talented people. And he and Daniel Britton, like what I think is basically like the User’s Guide for talent, right. I mean, it’s amazing. One of the things that I would say it to more directly answer your question. This was a place that you know, it had some peculiar recruiting mechanisms. Let’s let’s start with the sort of obvious one, which is the earliest employees were mostly on the Infinity side, certainly Friends of the founders. Now, there’s some fair criticism of that that could be made, except for the following. When Ken FINITY is getting started, the demand for talent in Silicon Valley is at its peak, this is before the.com bubble bursting. And so they have a hard time recruiting against companies that are offering a lot more money, a lot more equity. And so who do they have to recruit the friends? Why? Because as David tacks but our friends are the only people who would come to work trust. It turned out though, that these people had friends who were massively talented. And I think it actually gives. There’s a section in the book where I talked about there’s a person he’s not he’s not one of the sort of boldface names name is David Wallace. And David says, If I had joined a company where I didn’t know, these people were they weren’t my friends, I would have had more difficulty speaking up. But one of the things that made Pay Pal special was that I could speak up, because I had known these people for so long. And other a couple of other people identified that they said, you know, that trust actually produce this kind of speed. Like, because they trusted one another, they could move more quickly. And a lot of what would call like throat clearing, or like preamble, you didn’t need a lot of that, because you could just move more quickly and you trusted that this person had your back. That’s kind of one, one thing. The second thing is they, they looked at they they hired for people who and again, there’s some ways that they knew what they were doing and some ways that they didn’t, but they hired for people. Max Levchin is great Lyons is the best person in any job is the person that believes that this will be their last time they work for someone else. And so they’re almost sort of reluctantly joining you, because they’re gonna go off and build their own thing after they take advantage of you for a little while. And you might think that that’s like, questionable loyalty to a company. But I think what Max and Peter in this team recognized is that they weren’t looking for loyalists, they weren’t looking for people who saw this as like a lifetime job or a lifelong goal, they were looking for real are essentially going to come in, use Pay Pal on that experience, to like, do something consequential, and then move on and start their own thing. And surprise, surprise, a lot of them did, actually, one of my funnier interview experiences was I was interviewing John Wood cream, who later went on to found a profile on YouTube. With, with Steve Chen and, and Chad Hurley and Joe Woods, you know, even when I was at PayPal, I was sort of Moonlighting, like building my own other thing on the side, right. And I had numerous of these kinds of interactions. Are you talking to me? Like, yeah, I would do pick all during the day, and I was doing, you know, a graduate degree at night or something. And this is an intense startup. So you sort of had people who they had a kind of an ability to question authority, even when they got in the door, and their mode of questioning authority was, I’m gonna be here, I’m not gonna be here forever. I’m gonna help you build this thing. And then I want out right there almost reluctant employees, and it sort of one expression of the of it would be one way to express it. I think the final thing I would say is, and this is particular to the engineering group, and I’m not sure that this practice is always the best. And I’m not sure that there’s not better ways to interview people now. But at the time, one of the things that the engineers did, is they would do a lot of elaborate puzzle solving, right? So you would get asked all these elaborate puzzles. And, and I think there’s been some fair criticism of this practice, and I know investment banking gets all the companies do this, too. But one of the things that when I when I dug into it more, Max Levchin identified, he said, you know, you look at one of these puzzles, like a math problem. And he said, what it really is, is a is an elemental computer science problem. Because I don’t I don’t, I want you to get the right answer. It’s important you get the right answer. But I care a great deal more about how you get to it. And if you get to it through this sort of meandering long, you know, inventing your own calculus to do it, you’re probably not going to be great for what we need, because what we need is efficiency. We need you to be right, and we need you to get there super quickly. Right. And he said, you have to sort of recognize that most of these puzzles, there’s some kind of trick, some kind of hack. And ultimately, what we’re looking for are people who can identify those hacks, you know, within a morass of computer science code, right. And so there was some method to the mayhem of asking puzzles, but it also what happened is that they did they had this candidate come in, for example, with a PhD in mathematics. And he like, did the long, you know, winding answer, and he got the right answer. But Max right away, said, this isn’t somebody I can hire, because what he’s going to do is slow us down. And again, I don’t think that any of this is perfect. We also have to add the caveat that all these people were basically in their like, early to mid 20s, when they were building PayPal, so none of this was something they were sort of applying from years and years of experience. But I hope that gives a flavor to some of the hiring and some of why they were able to amass this quantity of talent.

 

Will Bachman  24:34

The world should have more books like this, that talk about a company and go through several years of its history, and do all the players. I’d like to hear from you as an author. What do you see as the market for books like this? Is it is it a tough sell? I mean, Pay Pal is such a big company, but is it a tough sell selling a book about a company as opposed to one charismatic, you know superhero, Jeff Bezos or some concept, what’s the market for books about a company?

 

Jimmy Soni  25:07

Yeah, it’s great. I’m sort of smiling a little bit while you ask the question, because, you know, I’m like any author, I wish the market was with many orders of magnitude bigger, obviously. But I look, thank you for helping you expand that market in your own way, by having me on your podcast. That’s great. Here’s what here’s what I would offer, though. So I had I have the following things going, the book has done well. And it’s also done well abroad. And I think, you know, the reason is sort of self evident, which is I’m writing about people who today are in many, in some cases, billionaires, and famous and controversial and in the news all the time, I understand why people are drawn to the book for those reasons. But what I would say is, I also have gotten the response from people who are in startups, that it, it actually captures to call it the energy of a startup, right, or the feeling of what it’s like to be in a startup. And that’s the feedback I love to hear most. Because those people don’t have any reason to tell me that they’re being they’re being honest. But a lot of them work in startups, and they get the same sensation or vibe that they get where they’re working from the book, you ask the question like, what’s the market? The nice thing about businesses business has been around a long time was this activity be around a long time, and their business books that have done very, very well, where they are the story of an individual company? One really good example and a really good book for somebody that needs something else to read is The Everything Store by Brad stone. It’s an exceptional look at the earliest days of Amazon and of who Jeff Bezos is and how he operates. So I would say the market for a book like this is big. It is. It is also big. To my surprise, it’s bigger. In some ways. It’s bigger abroad. Right? So I’ve had the book is like I try not to get in a library in Katmandu, right, like it’s on all these places I didn’t expect. There’s a whole group of people who are in Africa reading the book, it looks taken off in India, Germany, Singapore. And I think part of the reason is Silicon Valley, Silicon Valley’s Halo may have diminished a little bit in the United States, but it has not diminished at all abroad. Other people look up to our country’s tech success, and they want to replicate it. So I’m pleased with how the book has been received. And of course, like, everybody wants to be at Harry Potter levels, right? Like, of course, I wish the founders was like Harry Potter. It, maybe we’ll get there. Maybe it won’t. But I think the nice thing about this particular story is there’s a lot more in it than just business. You know, I think, in reading it, I hope, what struck you was also some of the personal stories, some of the gems, some of villans kind of near death experiences, some of just the personal challenges that people face when they’re working in a company like this, you know, this group went through 911 together, and I document that emotional effect that that had on the company. And so it’s a long way to answer your question. But thankfully, the market has been good. These people continue to be in the news. And I think people are learning things from the book that maybe they didn’t know before about these people.

 

Will Bachman  27:59

One of the fun things for me about the book is learning how a few things that you think would just kind of have existed forever or just came out of the, the earth or something were invented largely or at least popularized by, by PayPal, like the thing where when you set up a new bank account, and then they do like a deposit this random two numbers under $1. And then you have to report it, they invented that and the captcha, they didn’t invent it, but they kind of popularized it as a way to reduce fraud. Tell me a little bit about how you know what you were surprised about when you were learning about PayPal and the kind of inventiveness and innovation that they had there?

 

Jimmy Soni  28:43

Yeah, no, I’m, like, my favorite. If there’s one sort of favorite thing I have about the book. It is it is discovering exactly what you just described. You know, it’s like, it’s cool to study the people who are in the news every day, certainly, and it’s great to get time with them and talk to them. But the best part for me about studying this story was discovering how many things that kind of dot the internet landscape today were invented or popularized at PayPal, and I would say like more and more importantly, like how random to some degree that invention can be and how like chaotic it can be. Like you identified one example, which is the CAPTCHA so everybody everybody listening has gone through the experience of looking up to find some fire hydrants or stoplights or something within a bunch of big images. That structure is known as the captcha and Pay Pal on its own, not knowing that there was a version of this available to Carnegie Mellon and worked on on its own. There were two people Max Levchin and David Yazbek, who create what’s called the Gauss avec legend test. And it’s a way of distinguishing a computer from a human and why do you want to distinguish it up from human well, because when Pay Pal was suffering fraud, a lot of times that fraud was coming by way of bots, automated services that we’re creating fake accounts because those fake accounts would capitalize on the bonuses the Pay Pal was giving away to grow. And so they had to figure out like, is this account real? Is Joe Smith real? Or is Joe Smith, a computer based in Russia that’s trying to create a fake accounts and they can take $10 In order to do that, Max Levchin and David Gaza back build this thing where they discovered that at the time, computers are not good at like looking at text that’s behind other text or behind some other images. And yet in time, in order to sign up for PayPal, you have to be able to do that. So you the human being would have to confirm that you are a human being. I like I didn’t know where that came from. None of us do. It’s not like we look around and think like, Oh, these are things happen in origin story. But it turns out the origin story is is hilarious and amazing. And it’s designed to solve a real problem. I would say that to take a step back your question, Is it really you phrased your question exactly right, because there’s actually a great quote, meditation in the book about this is engineering and Eric Klein, and he said, you know, at PayPal, I learned to, to invent, not sort of research and then create a research and then develop, and he said, you there’s a difference. He said, if you look at a problem, and you try to invent your way out of it, you’re actually asking a different set of questions than if you see a problem, go to Google, try to find the answer, and then solve it and apply the answer you find meaning. And so it’s an entry. He said, it’s an interesting distinction, he says, because you might burn a lot of time on the invention stuff, you know, you might end up actually going down a bunch of blind alleys. But you might also, you know, create the captcha, there was no off the shelf solution for fraud for a lot of the fraud that they fell face, they had to invent a lot of these fixes. And I think that for me, where the magic of the book is, or the the magical moments in the book, are in the moments where somebody just has an invention or something they create. And there’s, you know, a bunch of different roads to that creation. But I think of that inventive energy is like, actually one of the things that startups are allowed to do, because startups have permission to look at something and say, well, like, what’s the invention that could get us out of this. And actually, one of the way that meditation on invention concludes from our client, that he says, I still do that to this day, I will ask myself, what is some invention that could get us out of the situation. And so it stuck with him ever since then he’s done other things in technology since then. And I think of it as like actually a word that’s underutilized when we talk about these companies. But there is something distinct and something different about inventing versus researching and implementing.

 

Will Bachman  32:35

Tell me a bit about the how so clearly, you interviewed many, many of these key players. But then you also mentioned in the book how you had access to some of the early company records. Can you say a bit more about that? Like, did you kind of read every email that reed Hoffman received or sent or just a sample of those, like, what was your archival research? Like?

 

Jimmy Soni  33:02

Yeah, it was crazy. Allah, this is worth a an explanation for how I even got these records. You know, this wasn’t, I didn’t break in anywhere and swipe a bunch of paper. I was doing an interview with somebody. And at the end of the interview, he said, Listen, I you know, I have this like, big archive all the females like cap, I’m sure it’s in some folder somewhere, some zip drive or something, you know, would you want that and I had to kind of act nonchalant, you know, I had to sort of pretend like this wasn’t a big deal, when in fact, it was a huge deal. I said, sure. Yeah, you know, why not? If you get fined time, I send him a thank you note after the interview. And he replies and he sends me a bunch of Dropbox links. And the dropbox links contain several gigabytes worth of his email from the time and then some, like ancient outlook format, and I quickly downloaded them. And I haven’t, you know, I worked to convert them into sort of contemporary file formats, some software that could actually open them up. And it was pay dirt. It gave me every email that the company sent all of its employees over a four year period, I the company newsletter, I had Elon his resignation note after he left the company, I had Peters note announcing the resignation, I had the notes after September 11, all of these different things that brought the company to life for me. And what I did is I would I would where I really started. And this is interesting, you asked this question, I’m just reflecting on it. Now. Where I started was anything that was sent to all x.com or all@paypal.com, or like any kind of broadcast message that was broadcast online, because I wasn’t just trying to write the book from one person’s perspective right? This wasn’t a book about Elon or a book about Max. I was trying to capture the widest possible story I could so what’s the way you do that? You look at the emails that went to everybody right? Because that would have been the information that all those people heard and saw. So I would start with those and what I did actually just didn’t keep myself sane, and probably kill a few trees in the process is I printed everything out so I these big document folders, like mine After like multiple hundreds of 1000s 1000s beige material, and I would get them round at FedEx. And I just would go, I mean, honestly, you asked the question, here’s the boring answer, I went through every page, I would go and just wake up in the morning, and I’ll do another 100 pages, and then another 100, and another 100, another 100. And this went on for years and years and years, because I didn’t want to miss anything, I was a little neurotic about it. And I also found that like, the more I read, the more I learned, and the more I read, the more valuable my interviews became, because I could point to specific moments or instances, or remind somebody of a fact. And then, like, totally bring that section to life. Right. And, and I also find gems like, I remember, I remember finding this gem about, there’s this, there’s this moment where the company is going through a crisis in summer 2000. And Elon is trying to motivate everybody to work harder. And he sent out this note that sort of outlines, like what the company is up against, and what he’s gonna do, and then his sign off, and it’s like, work like hell coma, Elon, and I remember including that in the middle of the book, you know, that note and the sign off just because it was so, you know, it’s so consistent with his character today. And it’s sort of like it was just so off the like, I just didn’t expect that, you know, you sort of don’t expect to see that. So I was able to take things like that and incorporate it into the book. But the answer to your question is I would go through as many I went through as many pages as I possibly could, I tried to make sure, you know, personal stuff stayed personal. But I tried to look at emails that were sent to everyone for the most part, and drawn them to illustrate the picture, we’re gonna walk through it, well, I’m just slowly protecting people’s privacy and protecting different things that I thought were just important to protect. But that’s how I approached it. And I had these big folders and binders. And I would just turn every single page and I had a robust system of highlighting and tabbing these pages so that I can make sure they were used well. And then I went back later, when I was doing the fact checking. And I would download PDFs, of anything that I thought where I cited something and make sure that the person I was working with on factchecking saw that I didn’t just make up the quote that it wasn’t I didn’t pull this out of thin air. And I would stick those into Google Drive. And they could go back and make sure that I had appropriately and accurately drawn those quotes in. But that email archive is the difference between this book being written, depending on hazy memories, and being able to look directly at what Peter tells the company after 911 and see what he says and then understand the impact of that. So I hope that that addresses the question.

 

Will Bachman  37:33

It does. Peter Thiel incredibly successful investor, in the book you talk about you show how he was a reluctant CEO, didn’t really want to manage people kept looking for time to get out of that role. He you present him as an excellent chess player of superb judge of talent, is he’s like insights on the macro economy and manages to secure funding right before the.com. Bust starts. What having met him and studied him, what would you say is his superpower?

 

Jimmy Soni  38:10

It’s talent identification. At least that’s my opinion of his superpower. Because time and time again, throughout his career, he has an uncanny ability to find somebody that that ends up doing amazing things. But the difference in their life comes when Peter is in front of them and offers help. And I would say help can come in many forms. Sometimes it’s the help of an introduction. Sometimes it’s the help of him investing in somebody. And I would say that multiple employees told me that the thing that that he did that change their lives was just sketching out a vision of their career that was bigger than what they thought it could be. And I don’t think this is something that’s talked about enough. I think Tyler Cowen talks about it in talent. But the biggest thing that that, you know, sets Peter apart, and I’m not sure by the way that I have a good answer as to where this skill comes from. But it is the skill is seeing people who have this outside talent and then just finding a way to make help them be successful. And this is Max Levchin. It’s Mark Zuckerberg. It is dozens of PayPal employees. It is you know, the founding team of Palantir. It’s the people who work at Founders Fund. And I think of it as a real gift. And I think it’s something that, you know, he may it may be intuition for him Tyler Tyler has spoken particular about how some of it must be intuitive. But that is the secret and it’s one of the things that I would say if somebody were to take something away from the book, one of the things I’ve taken away from book and from Peters method of hiring and recruiting is the following. He would often cut against type when it came to selecting somebody for a position. A great example is that he names Roelof Botha as CEO CFO of the company when it’s about to go public. Now roll off is all of like, I think 25 For 26 years old, when he’s given that title, and some other, some of the board members push back on Peter, and they say, Listen, like you’re, you’re gonna, you’re gonna put somebody in this job, he’s 2520, and he just finished Business School, Wall Street’s gonna eat him alive. And Peter, to his credit, says, No roll off and don’t want to build the model for the company. He knows our numbers inside and out. And we trust that he actually knows how this business runs and works. And then he can present it quite capably. And of course, today Rohloff both of the head of Sequoia Capital, right? It all, it all worked out in the IPO worked out well, and Peter was right. But part of what he had to do in that situation is push back against the board that at a certain kind of colored cut from Central Casting way of thinking about hiring, and about recruiting. And their moment after moment, you know, there’s a lawyer, Rebecca Eisenberg, who’s just been fired from a job. She’s very political. She’s in the public eye. And, you know, Peter hires her, and she helps to shepherd the IPO. And she even admitted to me later, she’s like, you know, I wasn’t probably the person that somebody would put at the top of the list to do something like that. But Peter believes in me. And so there’s this way in which it’s like sometimes I think the important thing that I’ve taken away is to just suspend my judgment about somebody based on background history, the way they look, the way they talk. I think Peter does that instinctively. And I saw it in this story and heard it from the employees directly.

 

Will Bachman  41:23

Now, you spent time at McKinsey earlier in your career, a lot of listeners of the show are consultants. Tell us a bit about your experience there and maybe how it’s informed your career as an author?

 

Jimmy Soni  41:36

Yeah, that’s a great question. And actually, as I was thinking back on it, when you and I were speaking earlier, McKinsey, you know, I was sort of working my days in McKinsey. And then nights and weekends were spent writing my proposal for my first book, which was runs last season, which is a book about Roman history. And so it’s interesting because my author life started at McKinsey. And I’ll say two things about that. The first is, I think, part of it is like I wasn’t the happiest consultant around. And so I was sort of finding a way to moonlight on something that was more creative, that I wanted to do. And of course, it all worked out. The same thing I would say is, you know, for me, what McKinsey taught me to be was it taught me to be a very, very, very good professional, and to have high expectations for what somebody delivers to clients. And you know, you could look people can people kind of criticize consulting, if they’re in it, they’ll criticize consulting from the outside. But I think there are very few places in the world that teach you to be as detail oriented, as kind of energetic about your work to work quite as hard. You know, we were working long days and nights and things. And I learned all that from McKinsey, I think the other thing that I learned is just how to break down a problem into its component parts and how to explain it to a client and a clear and methodical way. And what is writing, right is breaking down a story into its component parts, and then explaining it back to a reader. And, and I would say clear, methodical way. And hopefully, as you get better, an entertaining way, right? You want to you don’t want this to be like during homework. And so for me, you know, I don’t I can’t say that McKinsey was like, super tied into my life as an author. But I think some of it came over by osmosis, I learned, for example, how not to just think of my books as like artistic creations, but to think of them as products and to think of myself as a CEO. Right. So if you’re a CEO of a company, and you have one product, you should just think about it a little differently than if you see yourself as an artist who produces artistic work, and then depend on other people to sell it. My books have done well, part of the reason they have done well is because I take the time to invest the time to talk about them and to share them and to do things that are going to expand the audience. Those skills were in part what I learned from consulting, which is how do you do? How do you do math to figure out what you need to sell to do do X, Y, and Z. I also will say I met some of the best and smartest people that I’ve ever worked with professionally in consulting, I would say for young people, particularly young people who are listening, like the the reason to join a consulting company, if you want to do that is really not because of the work. It’s because of relationships, like when you were like working long hours are really really, really smart people. You just have to step up your game. I just had this person I worked his name is Craig Kessler. And Craig even has gone on to have a great career. But Craig was like, like, at the time, I thought I was smart when I was coming to McKinsey. And then I met Craig. And Craig was just like head and shoulders above me in how he presented himself and how he communicated how he talked to clients. So all of that, I mean, it was basically when you’re that young, you can’t have in some of the better education, particularly if you plan to be in business or around business. I mean, it just it taught me to be a professional. I’m grateful for it.

 

Will Bachman  44:42

I’m curious to hear about your portfolio in terms of in addition to writing books, is that your sole sole focus or do you also do kind of speaking gigs paid speaking gigs or any consulting or advisory work or in anything else? Or is it kind of pure play writing your next book?

 

Jimmy Soni  45:02

No, no, no, it’s definitely not pure play. This book was written, you know, on nights and weekends with mornings and weekends. Because I’m not quite Prince Harry yet. And so I’m not getting a book book of 4000 booksale on a single day number have not yet anyway, in time, I said to become a royal first and then turn around and leaving the royal family. So, so no, the way I chunk up my time is, I would say this sort of like book life and my non book life might look like is writing books, and then paid speaking, and kind of traveling around the country and just talking to different groups. And I was just at CES, and I’m going to be Utah tech week in just a little bit and do all these other things. And that’s fun, it’s a chance to share the stories, many of the stories that don’t make it into the book are the most fun to share stories to share, right? So I’ve got a half of my roughly half my time to be a little less. And then I also, you know, sort of do my day job. Like I’m a consultant, I do a lot of speech writing and ghost writing for people. So I am engaged with companies and individuals to communicate their messages and to think about how they’re going to do it better. And that’s, that’s, that’s great work. And, you know, it’s like, it’s a nice balancing act, because I find that, at least for me with writing and writing books, there are authors who dream of spending all day writing. But if you can get three to four hours in a day, you’ll have plenty of you’ll be able to get plenty of writing work done before you go do other work. And that balance has always worked for me.

 

Will Bachman  46:30

What is coming out next, what are you working on?

 

Jimmy Soni  46:34

Yeah, it’s, um, I can’t share the idea. But I can share to share that, you know, part of the challenge of writing books is that you can get pretty lonely, like if you were in a room, like imagine, you know, imagine what the substance of the work is like, you sit by yourself. And you turn over pages of old emails for years, like your life gets pretty, pretty bland pretty fast. And so I’ve found the past the cure for that has been co writing, working on books with other authors, I admire that there was a young author, young, he’s around my age. But his friend of mine named Jeff Kane, he did a book on Samsung. And we just started talking about ideas like we’d have these calls about like, Oh, what do you want to work on? We thinking about it, we sort of landed on an idea. We’ve just finished a proposal to a topic within tech history. And we’ll see if the publisher bites I think they will. And hopefully, I’ll be back on in a few years if you’d

 

Will Bachman  47:24

open invitation. Jimmy, this has been an amazing conversation. So much fun. Where can listeners find you online? I mean, obviously, they can go buy the book at their favorite bookstore, but if they want to follow you, what’s the best place?

 

Jimmy Soni  47:41

Yeah, it’s one of two places where I’m most active one is Twitter, where I’m at Jimmy, a Sony. And the other is LinkedIn where you just look up my first and last name and find me there. And and I love I like I love hearing from and reading, engaging with readers. It’s a ton of fun. I like the back and forth a lot. And I you know, it’s one of the best parts of this whole thing is actually seeing what people make of the book, which is why your questions were great. Like you, you got me to reflect on things that I hadn’t thought about in a while. So that’s where people can find me online. I hope to hear from people.

 

Will Bachman  48:11

Thank you very much. So it’s the founders, the story of PayPal and the entrepreneurs who shaped Silicon Valley. It’s one of the Umbrex best books on technology. I love this book and amazing conversation. Go go buy the book. You should. We’ll include Jimmy’s links in the show notes. Jimmy, thank you so much for joining today.

 

Jimmy Soni  48:33

Well, thank you for having me. This was great.

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