

Why did so many successful startups come out of PayPal? Answered by Insiders - vincentchan
http://primitus.com/blog/why-did-so-many-successful-entrepreneurs-and-startups-come-out-of-paypal-answered-by-insiders/

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spolsky
A lot of early PayPal founders probably cashed out to the tune of a million or
two bucks.

That's not enough money to retire, but it is enough money to take a risk on
your own startup.

~~~
Aegean
I read the paypal story on Founders at Work. It was one of the difficult ones.
If the Russian founder cashed out with 1-2 million IMHO it would be too little
for all he's been through in that story.

~~~
nailer
Even if I knew Paypal would become a success when it started, I still wouldn't
believe it.

They've gotten all the abilities of a bank without any of the
responsibilities, and I still think the possibility of changing laws still
hangs over them like the sword of Damocles.

~~~
adammichaelc
_They've gotten all the abilities of a bank without any of the
responsibilities_

Last I checked, they can't do fractional-reserve banking (ie they can't loan
out more money than they have on-hand or as some people like to say, "print
money"). To me, this is the biggest power that a bank has, and what separates
a bank from every other institution. What exactly did you mean by your
statement? What "abilities" are you referring to?

~~~
wisty
As I understand it, fractional reserves doesn't mean that banks "loan out more
money than they have on-hand". They loan out most of the money that they have
on hand, and keep a small fraction in reserve. However, they end up "printing
money" because the people who receive the money from those loans immediately
put it back in the bank, thus the total credit and debits grows to something
like 1/fr, where fr is the fraction that gets held in reserve.

I doubt Paypal invests their deposits (or if they do, they only put it in
cash-equivalents), unlike banks which have the privilege of taking on short-
term liabilities while they only hold long-term assets and a small amount of
cash.

~~~
loewenskind
>fractional reserves doesn't mean that banks "loan out more money than they
have on-hand".

That's exactly what it means. When you go to the bank and ask for e.g. $100k
to buy a house they make an account entry to first _create_ this money
(assuming doing so wouldn't put them past their reserve threshold) and then
give it to you. The money only exists because you've promised to pay it back.

Put another way, the loan money they're giving you is like they went into the
future, took all the money you paid into the loan account, deducted their
fees, etc. came back to today and gave you what was left over.

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wallflower
The Magic of Believing

> But the executive team made up for nonmastery of details with unwavering
> vision, which inspired the troops. At his San Bruno, Calif., office, YouTube
> CEO Hurley remembers his PayPal days as an education in business. When he
> arrived in California with a degree in art from Indiana University of
> Pennsylvania, building a successful company seemed like something other
> people did.

"You never think it could happen to you," says Hurley. "But seeing Peter and
Max and the guys come up with ideas and seeing how to make things work gave me
a lot of insight. You may not have a business degree, but you see how to put
the process into effect. The experience helped me realize the payoff of being
involved in a startup."

[http://money.cnn.com/2007/11/13/magazines/fortune/paypal_maf...](http://money.cnn.com/2007/11/13/magazines/fortune/paypal_mafia.fortune/index3.htm)

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jdrock
I find it more impressive they were able to manage a culture full of alpha
dogs and make a productive business out of it. I wouldn't consider this type
of culture as one to implement in my own company.

~~~
nostrademons
That's what the data-driven culture is for.

Google is similarly filled with smart, opinionated people, though Google
culture seems far more team-oriented than PayPal does. The way we manage
differing opinions is to run an experiment. Instead of saying "Okay, we're
doing it this way," and letting the office politics determine what "this way"
means, we say "Okay, what experiment could we run that would indicate whether
this is a good idea?" Then we go off and run the experiment, and usually the
data is clear enough that even the idea's most opinionated proponents and
detractors end up being convinced.

"Strong opinions, loosely held" is a pretty good mantra for a productive team.
A culture full of alpha dogs isn't necessarily a bad thing as long as they all
respect the data.

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kevinskii
"Go to work each day willing to be fired" was a great line. I've noticed that
many really successful engineers seem to have that attitude where putting out
a quality product is their primary focus, where others may tend to be more
worried about consensus and goodwill.

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dasil003
The success of PayPal itself is pretty phenomenal when you consider what they
were going up against in the traditional credit card industry.

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lowkey
For those curious souls looking for a deeper dive on the early days of Paypal,
check out the fantastic Robert Cringely interview with Max Levchin on NerdTV
(See episode #2 near the bottom) <http://www.pbs.org/cringely/nerdtv/shows/>

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aditya
Interestingly the second quora link he quotes is explicitly marked "Not for
reproduction": [http://www.quora.com/What-strong-beliefs-on-culture-for-
entr...](http://www.quora.com/What-strong-beliefs-on-culture-for-
entrepreneurialism-did-Peter-Max-David-have-at-PayPal/answer/Keith-Rabois)

That being said, building a culture like that requires quite a lot of insight
and Paypal must've been an exciting place to be back then...

~~~
brown9-2
This entire blogpost is a regurgitation of what is in those quora links. Is
there even anything original here?

~~~
aditya
_shrug_ Aggregation isn't bad in and of itself, especially since Quora just
opened to the public, but he probably shouldn't reproduce something explicitly
marked otherwise.

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vinhboy
I love this part the most -- "you’d do your homework first and then come to
the table with - 35% of our [insert some key metric here] are caused by the
lack of X functionality…"

Meetings would be so much more productive if everyone operated like this.

~~~
studer
On the other hand,

"When a company is filled with engineers, it turns to engineering to solve
problems. Reduce each decision to a simple logic problem. Remove all
subjectivity and just look at the data. Data in your favor? Ok, launch it.
Data shows negative effects? Back to the drawing board. And that data
eventually becomes a crutch for every decision, paralyzing the company and
preventing it from making any daring design decisions."

<http://stopdesign.com/archive/2009/03/20/goodbye-google.html>

~~~
Retric
I think that complaint work where much better if focused on a less successful
company. Do you know of any large but failing companies that use this
approach?

~~~
btilly
Read _The Innovator's Dilemma_ for a number of examples of how following the
data lead companies off of nasty cliffs. (The follow-up, _The Innovator's
Solution_ , had a lot more useful detail.)

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robgough
Sounds like a fascinating way of working, if not high-stress. It doesn't say
how many hours/week their staff were working.

"but either individual heroes or small, high-trust teams more often than not
found ways to deliver projects on-time."

I'm not sure to read that as if they are finding ways "out of hours" and on
their own time.

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bluethunder
I think the crucial reason is only that most people in paypal made tons of
cash and they generally hired smart people.

Everything else this post mentions is probably reading too much between the
lines and is more similar to the over-romanticising commonly associated with
fluff journalism pieces.

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johnohara
"If you want to make an apple pie from scratch, you must first create the
universe." -- Carl Sagan

Imagine John DeLorean meeting with PayPal instead of the FBI.

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aswanson
So many? isn't youtube the only one with a successful exit? I know linked in
probably will, but the rest are unproven.

~~~
vincentchan
I guess what I mean by success is not only about profitability. I consider
that changing the world positively in a large scale is a success. So I think
kiva, spacex, yelp and yammer are all successful startups/organizations.

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rdl
I think this is the best content on Quora to date.

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mrbgty
Some interesting ideas here but wouldn't want to post it up on the wall as the
road map to success.

