tv Jimmy Soni The Founders CSPAN August 8, 2022 4:11pm-5:13pm EDT
vulnerability on what it means to be black. potentially a killing zone and what it means for existential reality. >> to watch the full program search devon carano for the title of his book unreasonable booktv.org. ♪♪ current nonfiction book releases plus bestseller list as well as industry news and trends through insider interviews. you can find about books on c-span now, free mobile app or wherever you get your podcast. ♪♪
>> watch book tv now on sundays on c-span2 or find it online anytime booktv.org. television for serious readers. ♪♪ >> my name is catherine boyle, general partner. to welcome author jimmy sony to discuss his new book the founders the story of paypal and the entrepreneurs who shape silicon valley and it's especially wonderful to be here because i knew jimmy in my early 20s, and this book really takes place talking about a group of people who supporting each other and worked really hard together and have been lifelong friends meeting after college meeting in their early 20s, so it's very special for me as a former fellow journalist and writer to be interviewing him because because we shared that time together as well, but in the founders jimmy unpacks the long and difficult journey of paypal from a barely known startup to one of the largest tech companies in the world and a household name and it he tells us the unsung heroes extreme
competition. it and huge challenges faced by the company as it fought to implement cashless currency back when few dare to try. so we'll be covering a lot in the next hour and we encourage you to put the questions in the chat on youtube. we'd love to solicit some audience questions at the end. so we'll be getting to your questions later in the program. but for now welcome jimmy. well, thank you gary. thank you for for having me and i honestly like i couldn't i couldn't think of anyone better to do this with because we've known each other now for well over a decade and you know, it'll make it more fun and we can tell embarrassing stories as well as stories about the founders. oh, no, and what's great is you know? we first said you were to valley. so it was really sort of jumping into a subject matter that you hadn't necessarily addressed before you. you know, you're you're not someone on the west coast. you're not a tech journalist. what made you want to tell the story of paypal? yeah, it's it was it was the cutest right? so i sort of freely admit that
actually in the introduction. i kind of write that i'd like probably not the person who should be doing this i'd always sort of joke with my friends. it was like really like walter i should just hands project walter isaacson. like this is a walter book. um, my last book was about an engineer and mathematician named claude shannon and in the course of doing that book, which is called a mind of play. i looked at the place where he was we spent a big chunk of his professional life, which was bell laboratories and bell labs in the 20th century is is in today and then was renowned as this just incredible hub of innovation. they invent touch tone dialing they invent the laser they invent satellite technology communications networks and the transistor they win several nobel prizes. it's basically like the place to be innovative in the 20th century in the united states in technology and bell labs is an incredible. that's not from the mind. one person it's from a group of people.
so i started thinking like what are other groups in american history where it's been that fertile and that kind of rich and and livening and i actually i looked at other topics like i the one the roads not taken were fairchild semiconductor where you you famously have this group. somebody had written the book. there was a book about xerox park that covered that kind of cluster as well. i think the book was called where the wizards stay up late, which was i always thought one of the best titles for a book about this and then then there's general magic and general magic like i got i was excited about it. but then this incredible documentary came out and it was sort of like no asking the answer like they're gonna they own that it's so good and everyone should see it. i paypal was a i stumble they sort of went forward in the history stumbled into it and i just started asking questions. i sort of assumed that because the personalities involved elon musk read hoffman the founders of youtube peter thiel max legend david sachs, and this is
a like the avengers right? i assumed somebody had done this and then when no one had the other thing that i noticed is i asked even a few questions was that the stories were just fantastic like the untold stories were so good. and i knew there was potential there. and so that's that's how i came to it. but i most definitely came to it as an outsider, you know, because you're my friend i can like admit like i had called you with like the most basic questions right about like well, what is it was free money and like what, you know, it's like terminology, but but i will say that the virtue of actually being an outsider. i found that the same thing applied in my last book and in this book if you're an outsider who's trying to decipher something in order to make an audience understand it you have to ask really basic questions and then build it back up in the writing so that the best the place i was most excited about that is, you know, everyone thinks they know what an ipo is right like an initial public offering listing on a stock exchange, but if you really like go you have to go back to basics to understand it to play it back
to a reader. i knew like a lot of my readers were going to be in tech they were never going to take a company public. so what does it mean to take a company public stuff like that? the basic question asking actually i think is an asset not a liability for a lot of writers who go into spaces. they're not familiar with. yeah. no and that's certainly the case and a lot of the reviews and just commentary about the book. it reads like historical book like it's written by a historian. and of course historians are never part of the ecosystems that they dive into and so yeah in some ways, i think that's what it's one of these books that you know, a lot of books now are written by journalists who are actively part of the ecosystem and of course being an outsider you can take that objective lens and sort of treat it more as a moment in history. i think the other thing it's a really great thought the other the other piece of it is you can ask questions that someone who has the challenging task of reporting on these people every day, you can ask questions that they're not allowed to ask right like if you were dated i don't i don't know i admire daily journalists who have to cover like tesla and spacex and a firm their task is so much harder than mine in a way right because i was always i was always the
enjoyable conversation in the day not the antagonistic conversation that right. i'm not holding their profitability statements to account. i'm asking about 20 years ago, and so for example, you know a journalist is not gonna be able to come to max. they are taking me back to the university of illinois champaign urbana. let's talk about college i could and he was more than open about it. so in some ways my task was much easier, but coming at it from an outsider i could else as an outsider. i could also just like kind of riff and you know, ask random questions that i think we're relatively engaging totally totally. no, no, you start the book out and this is one of the things that i still think even after reading the book and after thinking about it for a career. i still don't have the answer to you. so i want to get your answer, you know people look at paypal. as one of these just megawatt like the talent coming out of paypal is extraordinary like it touches every aspect of silicon valley touches every venture firm, it touches multiple companies some of the most valuable companies in the world. and of course as you said you were looking at these pockets of innovation and pockets of talent and you actually i blanket on the word that you use but
there's a word for talent growing together and sort of supporting each other and you know, what was it about paypal and what have you learned about talent magnets and how this you know how this ecosystem function to be able to yield all of these incredible new companies and and kind of new results. yeah, and the word was word. i didn't coin it. it was brian eno the music producer. he used the word senius like instead of genius. you have genius. it's like scene plus genius, but his word was senius and he was describing actually artistic clusters. so he was describing like that the era and period in place in which like rembrandt and kandinsky and others were we're doing their work and hey what he it was funny when he writes about i i riff on it in the intro. he says when he was in art school, he learned that these were like solitary geniuses, you know revolutionaries, but but really when he started studying more he realized like there were our collectors and there were people underwriting the art and there were music, you know, they were like different venues and
people and a whole cluster and an ecosystem that was supporting this particular gift. right? so senius is interesting because it actually like leads you to think about this story not as like, you know, apple equal steve jobs facebook equals mark zuckerberg microsoft. bill gates right with paypal you don't have that you have a lot of people you have at least 200 people in palo alto several hundred more in omaha when the company goes public and you have some of the brightest lights in in modern technology and so for me what i was trying to do, you know, it was sort of what one ambition was. just tell the story meaning what happened from 1998 to 2002 to create paypal. no one had really gone back and done a detailed look at that and and the hope what that was the sort of goal the hope was in doing that you might illuminate like, oh here are a few of the things that like actually made this this group that the made the group what it is later,
right? so my story, you know is gonna disappoint some people because actually stops in late 2002, so i don't i don't really write about all the things. these people are more famous for today, but i do think there were some common threads in and things in the water in those early years that we're really to me and hopefully you're striking to readers too. totally. totally now. you have some megawatt personalities in this book. very famous people peter thiel elon musk read hoffman and yet you start the story and the story does in some ways revolve around max talk to us about like why you chose to start the story there and how you sort of realize that the story in many ways even that there's many personalities that he's one of the primary protagonists. yeah, it was um, you know, authors are allowed like editorial curveballs. and that was one of the ones that i wanted to throw there's a few in the book, but that's one of them. so if you take a step back the paypal we know is the is the merger of two is created by the merger of two companies one is
called x.com and that is elon's company. another is called at first called field link, then it's called infinity creates a product called paypal that company is co-founded by peter thiel and max levchen. it's origins are and the reason chapter one kicks off with. it's origins are in cryptography actually in mobile encryption and mobile cryptography and mobile devices in college max. it developed a passion for like palm pilots and sharp wizards and casio pias. like this is what we're in the time machine now, right these low power devices, but he was trying to basically take these devices and and push them to their technical limit. like how much could you make up on pilot do right. and that is what gives rise to the company that he pitches to peter thiel. who is then an unknown investor? and he says i have this idea. we're gonna do mobile encryption libraries and people will be able to rent the libraries and i'll get money and peter's like, okay. well you seem smart. so i'll invest and we'll make a
thing of it that company is called field link that starts in late 1998 chronologically. elon doesn't start xcom until early 1999. so from the perspective of just accuracy max is sort of the kickoff bleed off hitter more personally. i found that because he was not a super well known figure there were so many things about his life and his personality that were so interesting like one of my one of my favorite writers has like this line. he says the best characters don't know that they are characters right? like they're they are intense and they come alive on the page, but if you but they don't know it they're not self-conscious about it. right and max is not household name famous and so in a way, there's not this persona like built up around him, right? and so every time i i ask a few more questions or talk to a few more people. i would discover that he had these like insane interests and like a real a kind of once-in-a-generation mind. i'll generation mind i'll give you an example. in college as a way of if i remember correctly as a way of basically getting around a
requirement to write a paper for a class. he decides that he's going to write a paper on a film and that film is course. i was seven samurai. he watches seven samurai once and writes the paper, but it kind of like gets into his head. he spends basically an entire summer. just rewatching seven samurai over and over and over and over again, but as of as of our discussion right now, i believe his number is like he's watching a hundred and ten times one movie 110 times and this is like a three and a half hour black and white japanese movie, right? so we're not we're not like this isn't like an episodic. it's not like billions, right? and so i i just found that like to him that is perfectly normal to the rest of us. that is like, whoa. what are you seeing in seven samurai the rest of us don't see right and i found moment after moment like this he had a near photographic memory and he would say something and then i would find a piece of paper later that spoke to it. i felt like he was he was a character who didn't know he was a character and it's like his life is the stuff of legend. you know, he he is 90 miles away
from chernobyl when the reactor explodes. it curls tons of radioactive material into the sky. he is shipped on a pain away from this from the closest side of the disaster and on the way to the train a border guard with a geiger counter scans his foot and his foot sets off the geiger counter. so they think his foot is radioactive. and at one point there's some talk of whether you should have his foot amputated and i think this is mom or his grandma's like no no no take off his shoe and rescan the foot. they do the foot comes back clean. it turns out it was a rose thorn in his shoe that had set off the geiger counter chernobyl and the aftermath of snow will shape his life in powerful ways his family secures funding for a jewish refugee agency to come to the united states. he arrives as like i think a sophomore in high school. he learns english by watching different strokes, you know, and so i just found like these details that were so rich and candidly that weren't picked over like he he is not wanted
nor built a big, you know, gigantic illuminating public life for himself. i think he's still regards himself and others regard him as like an engineer. near so when you have that as a writer, you've hit pay dirt you you have somebody who can watch the same movie a hundred times and is also has a photographic memory. you're like, you're you're my young i'm kicking off with you. yeah. yeah. no and and you mentioned something else there too where he was in college and one of the things that i think if you're not familiar with the paypal story everyone thinks oh, well silicon valley stanford. this must have all happen at stanford. and of course like the university that actually matters here is university of illinois champaign urbana, and so talk to me about that. like, how did these co-founders meet there? what were they working on where they where they built like talk to me about how the university plays into it. yeah, it's one of the the things that i'm more than happy to as somebody grew up in illinois. i was more than happy to discover this and then to correct the record in this way. so stanford is a big part of the paypal story to be fair a lot of the the column the business
heavy is come from stanford, you know reid hoffman as a stanford graduate david sax is a stanford graduate peter does two degrees at stanford keith or boy on and on. i mean you go down the roster. it's sort of look at that the engineering a lot of the engineering have for the company does come from the university of illinois, and it's always kind of you know, i had luke no sick. tell me like, i'm one of my first conversations with luke. he said he was very skeptical as where they all of this project, right? and he said if you're going to do this, just please don't write the university of illinois out of this history as everyone else has and so to kind of give context in 1995 a company called netscape goes but i think was 95 netscape goes public netscapes founder was himself at the university of illinois mark and recent the person who founded your firm and for an entire generation of that of engineers, like not just the university of illinois, but in a lot of places that is like the starting gun for the internet revolution, but at the university of illinois, it's personal, right? i mean, they max and others who were there described me.
they said that that mark was just a few years. we used to see him in the bar or like we would see him on the quad and like now he's on the cover of time magazine like if he can do it, so can we and so there was a very direct link the university of illinois has an amazing history of contributions to computing some of the world's first digital computers are made there. some of the world's early a social networks are born there. they had a lot of defense department funding throughout the 20th century, so they were able to like build big labs right the national center for super competing applications is there it's called the ncsa. and you have a ton of really talented engineers who go there the first two engineers that he hires come out of the university of illinois, the the co-founders of youtube to the co-founders of youtube come out of the university of illinois and you have all of these people who like are inspired by andreessen's example and also have a places on campus where they're building things building
early prototypes building like primitive applications. so great example is luke no sick described this amazing technology called caffeine caffeine was the use of a day they put the office vending machine on the internet and you could pay using i think your mobile device right and this like obviously added time to the transaction because you could just easily go up like put a few coins in the slot, right, but you have like this excitement about putting the soda machine online right? although luke knows also emphatic that in the midwest. it's pop not soda, so i should probably correct that because i pop not soda, but you have this enthusiasm about digitizing everything creating primitive prototypes and the students are doing this right and so you have a very fertile ground for a lot of engineers at university of illinois. max legend meets luke. no, sick and scott bannister two people who become very
influential he builds several failed as you describe. it failed companies, right and then as a very small exit with the last company that he built it's enough money for him to come out west and begin the process of building. what becomes paypal and that is that is part of why i think of the university of illinois as this unheralded center for a lot of talent and it was a place that was like a perfect place to start this story because it was also hugely unexpected everyone expects a story about paypal or silicon valley to start on the west coast. not in the midwest. yeah. no, absolutely. so, you know later in the book we get to the story of elon which is a totally different trajectory, but one of the things that i think you talk about that, i didn't know anything about and i think we all think of elon as this, you know, eccentric character, but he had mentors and as mentor was was a man named dr. peter nicholson talk to me about their relationship how he helped elon get a start and sort of what you've learned there. yeah, it was. it dr. nicholson was one of the
best interviewees that i had throughout this project. and and i'll offer a bit of background. so when elon moves from south africa to canada to attend the queens queens, university, ontario. he's a he's a fresh arrival. he knows no one and so what he does is he he will read newspaper articles and contact interesting people that he finds in these articles and just sort of like find ways like connect with them. he reads an article about dr. peter nicholson who at the time is an executive at the bank of nova scotia also known it's a scotia bank, but dr. nicholson has a background in computing and in operations research and in physics, he's a big scientific brain. in fact, that's when i first spoke to elon on battery. he said he looked at me because he was a giant brain just like super smart and and i just i love that for us a giant brain superstar. and so i i said, okay. well, let me track track him down and dr. nicholson has
probably like the widest set of interests i've ever met i've ever seen another human being even today. he's like his passions are like square dancing and like financial stuff and computers and the history of technology, but for for a young 19 year old, i think 19 year old elon musk. he is he is peter nicholson is one of elon's only bosses ever. and what happens is elon contacts him and elon and his brother kimball go have lunch with dr. nicholson and dr. nicholson, basically i've one internship. milan decides to take it and elon joins scotia bank as an intern and what happens is is he's joined a bank, but he's joined like the right part of the bank, which is this team run by this gigantic brain and the team is essentially like a little unit within the bank the reports directly to the ceo and the ceo has an interesting problem. he will toss it to dr. nicholson and that team will get to work because it's a small team dr. nicholson and elon develop a very close relationship and a
friendship and i there's still friends to this day right and he said to me so, you know, even then he's like first love was space. they would sit and trade math problems and math puzzles. they would talk about space exploration. they would talk about physics. they talked about whether elon should start a company go to grad school or join a company all the the quite basic problems that exist for the rest of us actually did exist for the for elon at one point his life and he had this mentor that was helping him think through them and one of the things that happens with dark nicholson is that he notices right away. he's like this kid's very precocious. so he gives him more challenging assignments more demanding assignments, and it was it was revealing to see that you've been then some of this big first principles thinking that elon applies in places like automotive, engineering or space logistics were evident back then and dr. nicholson, you know use he's a serious. he's a serious person and he said he's like, you know, it's quite clear even back then that there's a precacity about him that you just don't see in in many people, but it was one of
my favorite interviews because he also he was thoughtful enough to to see how those early experiences may have shaped and and you know. enabled some of elon's later successes and one of the biggest ways is after a summer of working at a bank. elon is very skeptical about bank leadership and innovation. i i was gonna say it's funny to picture elon as an investment banking intern but everybody had that experience now now one of the things that like people probably don't know is that you know, paypal was too companies and they had some what different ambitions so talk to us about the difference between xcom and confinity and sort of how they merged. yeah. so because we were on elon we can start with elon which is in early 1999. elon is fresh off and exit. he's created a company called zip2 he's sold it and he's thinking about what comes next. based in part on the banking experience. he sees an opportunity in finance what he wants xcom to do
is everything under the financial sun like xcom is going to be they're gonna be your mortgage broker your stock broker. they're gonna do your checking accounts. they're gonna do transferring money if you want to wire transfer, you're gonna go to them if you want to take out a line of credit, you're gonna go to that is the word as you put it. he's an xcom was supposed to be the global financial center, right? and this is but just context again 1999 dial-up internet most of us like most of the people who've been using the internet aren't using it for transactions people still nervous about entering credit cards in but even then milan says listen like we have this technology now that can help to upgrade bank mainframes and government mainframe which are generally written on pretty old code and cut out all the fees. that's xcom a revolution in finance on the other side of the paypal ledger you have infinity and infinity is at the time. in mid 1999 focused on making a successful product out of palm
pilot money beaming so when the latest iteration of the palm pilot came out in 1999, it had a little infrared port in the corner and i i just to understand it. i went back and i read palm pilot for dummies so that i could like really get into these devices and it's really funny because even in palm pilot for dummies they say if you hold the infrared ports too far away. you can't that i still communicate if you hold them to close they can't communicate you have this like goldilocks distance to get it just right, but then they can communicate. nobody had come up with a use case for these infrared ports there was you couldn't use it as a remote control you were supposed to do with it infinity's answer is that you and i would be at lunch and you know, you would need to send me $10 and we would take out our palm pilots and go through the excruciating process of being each other money and money being was gonna be a thing. so community who is focused on money beaming in the summer of 1999 that product in become like transmission over email and that is where paypal is born and that is also where the name paypal
was born. yeah. yeah, no and talk to us about the name because that's one of the yeah. how they came up with the name and and sort of who liked it who didn't yeah, so, you know, there's like places in when you're writing books where you feel really sure-footed and then there's places where you feel like you're totally at sea and so i was like an outsider to the world of code, right and so for me like like i read a lot of papers about mobile encryption just to understand it. i read the academic papers that max leptin was looking at there's a really great paper by this researcher named neil daswani, but even if i read those papers, like i wasn't really on, you know a solid ground or i could be on solid ground was with words. and so i wanted to find out like where did this name paypal come from? luke? no, sick had shared with me that they recognize that like infinity which is like you too many syllables and has con at the beginning is not like the right name for financial services company. he went into his browser and typed in naming.com and it pulled up the website for a company called master mcneil master mcneil was founded by sv
master. and as we masters the firm they contract with to come up with the name paypal and what's the espy's one of my favorite characters in the book just like i i like because she's a word person but also just because she's so thoughtful about naming so she has a whole long process that when she contracts with the company to create like a product or a service she goes through hundreds of names. she interviews the team members to understand like the history of the company and like some of her claims to fame. the trackpad that's on your laptop. she named the trackpad for apple. she named touchstone pictures. she named weston hotels. so she's got and i think you know whatever for fondest memories is naming paypal. her finalists, you know just to show you right what history might have been. we're cachet momo emoney beam zapios. zapio got it was on the list, but i was really fortunate as be had actually kept in her files the slides that advocated for paypal and i i had that information and included it in
the book the sort of six or seven reasons why paypal was the best possible name for this company and they're very specific. again. this is not a asb has a view that a lot of companies will come up with names as what she calls like a purely creative process. throw it up against a wall and see what sticks she says. no a name is actually a crucial business decision. and what's amazing but as we had a harvard mba and she had like a background in literature and so she had this like nice spot on the venn diagram. we're like words and business meet. with paypal, it's memorable. it's friendly sounding and as you put it she's like your pal is more than your friend like your pal. has your their arm around you right? it's a warmer relationship. it's a warmer definition and and warmer image in your mind. she says the the peas create plosives so you have to like stop the air in your throat, which leads you to like. remember the name for a halfbeat longer. there's some pretty decent linguistics research on this and you you have this change later,
but you have the capital p and the lowercase l which create ascenders and you have the lowercase p and the lowercase y or sorry the lowercase wine lowercase p which create descenders that's like visually very symmetrical now the interesting thing and we never could find the origin is that at some point they capitalize the middle p and and she went under great. i'm very grateful. she went into her files and she came back and said jimmy. the only thing i can find is this little note that i have that says chose paypal with a capital p and i don't know who she couldn't recall it's origins, but that's where paypal was born. it was the work of sv master and her team at master mcneil really thinking through very diligently. like, how are you gonna make this process of even like beaming money between palm pilots more inviting to people and certainly more inviting. a company that starts with the word con. yeah. yeah, very true and with so interesting is i've heard peter thiel many times talk about how the name of startups is so important to him as an investor and if you look at say paypal's
friendly even though it's a you know, a financial a fintech business, but something like an uber does not have it has a menacing tone. it has a you know, it's a name that means things and other languages that aren't necessarily, you know equated with goodness. and so it's you know in some ways. it's like it's interesting to see that that story may have carried on through a lot of the investors since many of the people in this book go on to be great outstanding us. he actually, you know in other settings, but also to me mentioned that he said, you know, we always thought paypal was friendlier the next calm and he said i believe like facebook was more genial than my space which felt a little bit more selfish uber sounds a little medicine relative to lift which has a sort of like, you know quality of sort of uplifting quality. i think of the you i i like the etymology of how things come to be and so for me understanding where the name came from was was interesting. i think it's also interesting that in spite of all of the
talent in this room at the time right some of the leading technologists of our day. they were so backwards on the other names, you know as we had to advocate for paypal the team did not warm to it initially you would people in the room saying this a terrible idea no one's gonna trust your money with a paypal years later actually even one year later but years later especially to a person they said, you know, we were we were she was right we were wrong like actually held it on the head. yeah. no and it's nice that elon did end up getting his ex with spacex. so everything comes full circle everything. yes, and he owns he now owns the url again. he purchased it from paypal corporate some years ago. and and it was a it's the end of one of the final scenes in the book is is him reacquiring the x.com domain. it was restored to it's it's rightful owner. yeah. yeah. so one of the things that you've gotten so much praise for is the fact that you taught you you talk to so many people who worked at the company. it wasn't just talking to the famous names or the the people who've gone on to be very successful, but that you talk to
many of the employees you were able to get troves of emails because you know, a lot of the people who worked at paypal were packrats talk to us about some of the lesser-known figures and how they impacted both your understanding of the story and also just the story itself. yeah, it's it's a really good question. and i'm glad people have picked up on it. i had a view that the most interesting stuff in companies tends not to happen in the boardroom or in the c-suite. you know, it's it's really in in the like kind of microcreations and ideas that happen among employees that you're going to get the richest like material and reflections and stories that are never told i also had had just personally at when i started at the of this story. you know, it's easy to get seduced with the idea that it's the the megawatt personalities like they're really well known people that drove the company forward but time and again, what would happen is those people
would play back to me and say oh you should really talk to david gausebec because he was responsible for helping to create the captcha or you should really talk to amy real clement because she basically like ran this product team. you should really talk to sky lee because she's the designer that made these things were so i've just hear names and then i would just do cold emails or you know, and and reach out and i kind of consciously wanted to tie all of these threads together because in some cases these people had never been spoken to about the paypal experience like no one it was so easy to reach out to people who are accustomed to press for someone who's never been contacted by by a writer, you know to be a little bit of a discomforting experience i can they can have their have their guard up. i tried to win trust it took years with some people i had to fill out questionnaires. i'd be like do all sorts of things. i take red eye. lights just to make schedules work, but but part of what happened is that i found a series of characters who like max i like novelistic, but they don't know that they are and
that was the best and no one had actually really gone into their lives. i think the canonic one of the canonical examples for me. it's a gentleman whose name is sanjay. barghava. sanjay is not someone who's you know household name? elon hires sanjay very early on at xcom and sanjay is a brilliant mind who has worked in financial services for a long time at that point. he had had a failed startup and joinsax.com one of the signature contributions he makes is something that almost all of us listening and watching have used before if you've had to register your bank account with another institution, you've probably gone through the experience of like they'll have to send you like a little bit of change right? they'll send you like three cents and 25 cents. and your code is zero three two, five that was invented by sanjay berghava at paypal and the reason was because he needed to the company needed to find a way
to authenticate bank accounts if you say you own your bank account. how do i really know unless you can access it if i just have your checking account routing numbers anybody anybody with avoided check could do that? sanjay figures out. what if we did what's called random deposit we send you two random numbers and you then can authenticate and verify that you are who you say you are. it was a breakthrough innovation. it helps the company shift its cost curve and dependency on credit cards and it's something that even today is ubiquitous and i found him to just be the most amazing character. i had somebody say to me watching sanjay navigate the financial system was watching a conduct was like watching a conductor conducted a symphony, right which is like the most amazing thing to say about the fight about what is like a stick the sterile this sterility of the financial so you don't often hear the word symphony attached to it. yeah, but i found him to be uncommonly thoughtful and and to have had this breakthrough innovation. i went searching for those i want searching for the person who is closest to the action. not the person whose name is in
the paper, and i i, you know, you never know if these things are gonna work, but i will say that paypal story is packed to the brim with those kinds of people right? it's not an accident. actually that all these people have gone on to do many amazing things in their index sort of post paypal life because person after person may be sorts of contributions and they were hugely consequential which actually why i write like you can't tell the story of paypal's a story of one or two or even three people. yeah. no, definitely. yeah. now one of the going back to the talent question, you know, there's there's so many people in this book who are just known in the valley is just being like the best judges of character of talent they can acquire talent very well. they recruit for their companies, you know, it's one of the differentiators of a good ceo and a great ceo is just how great they are recruiting and one of the things that struck me or surprise me in the book is, you know, we don't talk about elon as a great recruiter, but a lot of the people in this book we're recruited by elon, so i'd love to hear what was his approach to recruiting talent. like is it was it surprising to
you that that he was the one that was recruiting a lot of a lot of the great characters? yeah, i'm glad you mentioned it because it's one of the things that's been written out of the history. he has like a few of the others in the story, but putting the spotlight on him. he has an incredible eye for engineering talent product talent and business talent. and and it it he recruits. any real clement he recruits sanjay barghava sandy. blal roll off both the who today kind of be a run sequoia capital elon tries, not once but twice to bring him aboard and and roll off actually rejects him both times until this third time when roll off is having a personal financial crisis and is like hey, can i come in turn for you? right and he has this keen eye for the best people around. here's the other thing that that makes him. i think a particularly effective recruiter is he's basically relentless and who was very very quickly until he closes somebody who is interested or somebody he
wants so the to go back to the example sanjay. sanjay was connected elon through email and he says, okay great when i'm next in the valley, he's living. yeah, i'll come down. i'll come and see you and elon says no. no, i'll buy you a plane ticket. you have to come tonight. so he flies they're supposed to have 10 minutes of dinner at some at a hamburger joint. they start at 8. they don't stop talking until four o'clock in the morning and at four o'clock in the morning elon looks at him and says, can you come in at seven and get your offer letter? i'd like to make you an offer. so again, and again he would make offers on the spot. he could he could sense this this quality of somebody who is gonna be a good fit for his team, but just a good person to have on the team in general and i would say that one of the one of the things i hope that the book corrects is, you know, the community side of the team peter and max like get a lot of credit for the people they recruit. i don't think elon's gotten equal credit for the folks he recruited but there's some of the people who make the place tick and frankly make it successful and so it was part of what i noticed was just his very
keen eye for talent and i don't think it's something that's written enough, you know, because there's so many like when you're hosting snl, that's probably like a dry subject right now. that's one of the things that definitely came through in the paypal stories. just how many people who just other part is he paint and inspiring portrait of what x.com can be and that rec. and that also encourages these people to join to sign up. absolutely. yeah, so let's talk about fraud a huge portion of the paypal story. you devote a number of chapters of it in the book. why does it matter? and then how did you approach the book? yeah, so it's it's the it's one of the many what i would think of is is i wouldn't say untold but let's sort of like undercooked stories, right that's been in the culture paypal is not the only payment system on the block in 1999. there are many others. there are early cryptocurrencies. there are digital coins. there are mobile wallets. they're they're digital banks.
and so one of the things you have to ask yourself if you're writing this from that from coming as an outsider is well, why did they succeed where everyone else fails? one of the big reasons is that paypal was able to successfully defeat digital and online fraud at a time when digital and online fraud was like it was just starting and it was sort of the wild west there wasn't established case law on how you deal with these things. so what happens is you have a successful payments platform and paypal millions of people start to use the platform including bad actors. some of these are just like college students who are like using paypal to get bonus you bonus incentives to get beer money that's like fraud you can manage but more sophisticated broadsters do come from, you know. from a broad from like ex-soviet satellite states you have hacking groups that are based both in the united states and abroad that are using paypal you have there's a fraudster who created a website. that was paypal.com p a y p a i
because on your keyboard the i and l key are so close to each other. he created a copycat site that looked exactly the same and would duke users into giving away their personal financial information your fraud of all kinds. yeah in 2000. fraud is burning up. the company's balance sheet. they have 1.60 million dollars in the bank and they're burning through between some estimate type of between 11 and 13 million dollars a month. so roughly like five months of runway left. they have to figure out how to fix this. it isn't one fix. it's multiple fixes. it involves human beings who are fraud fighters many of whom are interviewed who are just most amazing characters, right? they're like star wars figures. they're incredible. it's digital fixes paypal is where the captcha is invented. so all of you who are annoyed by like finding fire hydrants and stuff like you have them to thank it's also working with law enforcement to educate us attorneys district attorneys and others about what what is online fraud even look like after 9/11 the government turns to paypal to help understand is their
terrorist financing moving to these networks. all of this is the thing that in some ways like ought to have killed the company in the year 2000. it is also the thing that is their signature breakthrough like full stop. it is the reason that the company survive or others failed and one person who who ken miller who's one of the people on who is responsible for some of these technologies and some of the organizational ballast. he said to me he's like, you know fraudsters he said to me they are kind of lazy. they would move through competitors and they would claim them up. they were just competing. >> incredible. one of the things going back to how much detail is in the book, as going back to the library, you have to hunt down people who still have e-mails willing to
open up, i want to hear about your process, how are you able to get this level of detail and convince the characters in the s in the company that may or may not look people look favorable? >> there's a few answers, the one thing i benefited from, the story is 20 years old so paypal goes' public, the 20th anniversary, when two decades have passed, these people are not involved, they are more open about war stories and reminiscing and not pushing ashe far to get answers. how many of them made funny of this topic, they would give me grief for being interested in something that happened 20 years ago and if you said all you think of the future, thinking
about the past. that was part of it, 20 years had passed but i would say two other pieces were helpful, they did have good fortune of having a number of people who shared e-mails, i don't know why they kept these but they did and this could be helpful. it gaveha me the ability this te but they were acting in the moment so i hope immediacy of salt and pepper being played across the speakers, they could hesee jokes in the 1990s because when i have these notes and documents. the last thing v is, i could try
to contact several hundred people over the course of five and a half years so i add a color coding system try everyone a couple of times and made my way through. people i interviewed for two weeks and somebody i interviewed who was there for three months and there were other people there for the entirety of the. from 1998, 2002. these were board members. a lot of this was to the other, the belief that baby someone will respond and i had enough of those respond and eager to talk and share memories so part of it was work and some was timing. i was living all too well in the 1990s five and a half years and i woke up in the 1990s andt
i thought this is great, everybody just caught up to where i was. >> for we have an, i hope you're okay ending here because it's moving part of the book, i want to make you tell the story but i do want you to because it moving and impactful. you end the book with ending in a prison and maybe you could tell us how you found these people in this story how it ends this way. >> it's the most surprising thing to me looking back. i struggled with how to end this book, this is the thing that kept me up at night because you could float into the paypal stuff which is a name given to a handful of these people in 2007.
a cover story called paypal mafia dressed up in mafia but it felt like it was something there and find andoa have seen it and have started looking abroad and was like okay, what else can i find it? and the term meant something different and when the company had success in kenya, the founders right about wanting now after their success, the paypal mafia of east africa. in canada it was ukraine. there were tons of references. i have that and that could be interesting, what group could emerge this technology? then i learned a young man named chris, a friend of mine study
and thought about the paypal mafia while incarcerated for murder in the institution maryland. i knew chris because i had been cupping him on the book he had written, i have no idea and it went way beyond, i thought maybe he knew aut little bit about thm but he taught effectively the book i was writing, he taught the paypal story prison in a series of workshops. he and his cellmate managed to get a copy of that magazine article and it became activated captivated by it. but they started to do was any business publication that came in, they would find articles and assemble a packet and photocopy the packet and teach workshops inside this maximum security facility. it blew my mind and at first i
thought it was maybe just know. when i interviewed them, i realized it took all of these lessons and learnings from the story and astonishing both of them managed to earn their freedom. they both run f businesses. ... chris wilson, you know, his book debuted on trevor noah, and he's a globetrotting artist and he lives in he said built real estate businesses and now builds it has a very successful. he's a very successful artist and he's doing all kinds of kinds of other things and they founds inspiration in this. it was the place where their thoughts about it frankly went way beyond even what i this thought about it. what they drew from the story in prison was interesting to me and so, you know, i'd hoped it would be interested to readers. >> yeah, it's a remarkable story and shows just the, you know, we really talk alaskaa the impact f
the paypal mafia on technology but really on kind of normal people's lives too and it's really, really powerful story. i want to turn to audience questions. we have one -- oh, are any of the founders still involved in any way in the company? jimmy: you know, i can't speak 20 whether or not they're o shareholders of the company but none off the original founders are involved operationally withh paypal. people have i a very different company now than it was in the first. achieving the scale that the founders had hoped. it's funny that the question leading to the after lifee of te company is in 2002 they go public and acquired by ebay and in 2015 they go public again and today paypal is many times larger thane bay,n the place where it first found success but so far as i know, none of them are -- in fact, none of them are actively involved at all with the company itself. whether they're shareholders or
not, i can't speak thomas to th. it didn't come up in conversation. in the same way they gave me grief for being interested, paypal is a distant part of their past. in my first conversation with him, hee started off in a not great way looking to spend time with him and getting to know him.e, i don't want to be just a person who created paypal 15 years ago, that can't be my legacy. i think in a way, they also are all trying to escape in some way. >> makes sense. all of us want to forget who we were in college. that point in climate so unmatchful. any question, are the founders friendly with each other now? jimmy: it depends on how you define founders and friendly.fa i'll say so far as i know, there's not -- i found that everyonery was actually somewhat
still in loose touch with each other. they've done a few reunions and let me add one little thing on this, my definition of founders in this book is broader than named cofounders on this document and looking at book cover and there's faces and names they've never seen and probably people they've never heard of and i want to expand founders of anybody at this very intense period of founding a company and that might not be like legally the definition of founders d and i would defend tt editorial choice because these people went through the very bruising and difficult experience together and poured blood,to sweat and tears into te company and some credit david sachs for the founds and there's certain questions that matured and developed more differently than others.
they're also bonded. these people are always tied to this experience. they've invested in workers and others and they built yelp together and the three cofounders of youtube worked together a to build youtube anda number of people and alumni from paypal and people w that joined elon at tesla and spacex and defends on which t friendships you're talking about but for the most part, i had heard largely positive relationships and certainly very strong professional ties across this group. >> yeah, certainly on the investment side, if you tried to map all of the investments going from peter to elon to rolloff investing in a number of former colleagues, just the math would be overridden and whatever, you know, if there was any sort of non-friendliness, they invest in all of their own projects and work together on those. jimmy: i think the rivalry that
people might be interested in the most or made into something that it isn't, there's some fiction of elon and peter, you know, not liking each other. i don't know the truth of it and i never asked them about it and the day i interviewed elon, his dinner guest that night was peter teal so if you don't like somebody, i'm not sure given the pick of the litter who you have over for dinner. i think someone needs to blow up this idea they don't get alone. they're coinvested with each other and peter is in elon's books and you don't have people over for dinner if you don't get along with them. i'll add one little kernel on this, these people operated in rare error intellectually. there's a kind of, i think, fellow feeling that emerges from havings done paypal together and it's a set of interests and passions about technology and the future and science and engineering and math that go deep. i don't, you know, i can't speak to their con semi-prayer friendships but i saw a lot
of -- contemporary friendshipsps but i saw a lot of positive interactions across the group. katherine: someone asked if you spoke with. peter teal for the book. jimmy: yeah, several times anded he was great and helped me think the book.ideas in he's not an anecdote person and he had a lengthy meditation about what it was like to hire reed hoffmann, who's his friend. what happens when your friend is your subordinate in the company. it was things like that t and we had multiple chats about this and he's basically the employee too. he's the ceo of the company and ceo that goes public. i i tried multiple interactions with him for the book. katherine: we only have a few minutes left. my last question: what did you personally learn about silicon valley? there's a lot of misconceptions
outside of silicon valley on how the ecosystems work and all the crazy people thinking about the urfuture. what did you learn about how the system works and how the ecosystem works and what surprised you most about it. jimmy: yeah, it's a great question and it's one that in five years i'll have a better answer potentially but it's junk to mind for me. one is silicon valley is unusually tolerant of people who are on the fringes or misfits in other parts of society; right. there's a high degree of openness to people who might not communicate with perfect english whowh might not dress like in a way that would be acceptable likeny the kinsey company job tt have ideas, you know, about everything from life extension to space travel. that is embraced. that level of unorthodoxed thinking iss embraced in this place. i found it -- i know there's some idea about that, but i
found it very vividly in my discussion withs these people. when those topics would come up all the time. it was perfectly normal and talking about the weather and living to be 150. it was par for the course. i don't know there's other places many american life that embrace that kind of, like, just truly like heterodocked thinking and thought someone should stir the pot for these. that's great. the second thing i found interestinga was as a writer lir time in journalism, when you can find the perfect word for a paragraph or the perfect closing sentence or something snaps together, it's a thrill. it's a complete thrill. it's not a thrill that a lot of nonwriters understand because writingnd is homework for people and we chose why to do homework for years and years and years.
writing code has a lot in common with writing meaning i found in some of the people that are engineers that same satisfactioe when the one thing fit into the other thing and it all worked, that thrilll is real. it's easy to miss it when you press a button on your phone and nsomething works or type an address in google maps and works like it's supposed to, it's very easy to miss the months of labor and satisfaction and joy that underneath those things. we have this really distant relationship. it's like it's really sweet andk ask to see it and someone had to do all that and i found it speaking to the engineers, there was a real pride of craft that n something fit right into place and the only way i knew to describe it was writers have the same joy. katherine: yeah, that makes ato ton of sense and we make the
dichotomy you're either a masked person, a coder, or engineer or a reader and writer and literary hound. althere's a lot worse synergies than i think there are jimmy: il kick off the book with a quote becausein some of her earliest computingg is literary qualitie. katherine: thank you, jimmy, for joining the conversation and the new book "the founders". and thank you to our audience for listening and participating live and visit commonwealthclub.org. have a good evening and thank you for joining. >> hear many of those conversations during the cspan2 podcast. nixon tapes part private
conversations, part deliberations and 100% unfiltered. >> nixon: it will pass and my heart goes out to those people who with the best of intenses were overzealous as i'm sure you know, i'll tell you if i could have spent a little more time being a politician last year and lot less time being president, i would have kicked their butts out. i didn't know what they were doing. >> find it on the c-span2 mobile app or whenever you get your podcast. >> if you're enjoying book tv, sign up for our newsletter using the qr code on the screen to receive the schedule of upcoming programs, discussions and more. book tv, every sunday on c-span2 or online at booktv.org, television for serious readers.
>> in the heart of washington dc is a unique place for kids, the little blue house. it's been the first love of its director, a man named carl foster. on the website of the little blue house it says they're a singer core mission to foster the vulnerable and the director of little blue house said for over 30 years lbh provided whatever service was needed by our kids to give them a chance to become self-sufficient adults. >> carl foster, director of the little blue house on this episode of book notes+. it's available on the c-span nameable app or whenever you get your podcasts. >> good evening and welcome to pnp live.