The PayPal Mafia: How One Startup's Alumni Built the Modern Web

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In 2007, Fortune magazine photographed a group of former PayPal employees in pinstripe suits around a restaurant table, styled like movie gangsters. The image crowned them the PayPal Mafia. The name stuck because the facts behind it were hard to ignore: a few dozen people from one chaotic payments startup went on to found or fund YouTube, LinkedIn, Yelp, Yammer, Palantir, SpaceX, and Tesla, and to place the first outside money in Facebook.

This episode traces how that network formed and why it held. PayPal began as a merger of two rivals, Confinity and Elon Musk's X.com, that were paying people $10 each to sign up. The combined company fought fraud rings and regulators, went public, and sold to eBay for one and a half billion dollars in 2002. The culture clash that followed sent most early employees out the door, and they kept backing one another. The story also covers who the mafia label leaves out and how the group's money and influence reached the federal government.

• Within four years of the eBay acquisition, 38 of the first 50 PayPal employees had left, and instead of scattering they funded and advised each other's next companies.
• YouTube's founders, Steve Chen, Chad Hurley, and Jawed Karim, took their pitch to Roelof Botha, PayPal's former chief financial officer, who had become a partner at Sequoia Capital.
• Elon Musk missed the Fortune shoot because he was in Chicago accepting an award, and the YouTube founders stayed away after Google's PR handlers objected to the gangster theme.
• Sanjay Bhargava invented the random deposit method, the two tiny deposits used to verify a bank account, yet his name rarely appears in the legend.
• David Sacks was named the White House AI and crypto czar, Musk gave over $250 million to the 2024 Trump campaign, and Reid Hoffman became a top donor to Democratic campaigns.