25 to Life
Few people understand how much the life they live and everything they have come to know up until the present day and age can change in just a few minutes, weeks or years. What you consider to be a dream life is a nightmare for many others and they are losing sleep trying to change that dream of yours into a life more befitting for them and their temperaments, whether you like it or not.
Prior to the internet, many people thought that life and innovation had peaked. We had invented the television, newspapers, the radio and used all the forms of advertising that these inventions made available to send ourselves and our families off on vacations, buy items and even court eligible bachelors and divorcees. But everything changed when the fire nation attacked, pardon my jargon, everything changed when the internet came into the forefront of the global technology space.
Many individuals sought to capitalize on this invention and build companies that would generate wealth for them and their investors. Some were fortunate, others, not so much.
Zip2, founded a year after Amazon Inc. by Kimbal and Elon Musk in a similar effort to capitalize on the internet, provided and licensed online city guide software to newspapers. After a few years of honest work in that segment of the internet, their efforts to transition humans from physical city guides to internet-based city guides proved successful and what was once a dream life to many that thrived on their knowledge of newspapers and other physical city guides became a nightmare.
In a few years, particularly a year before the height of the dot-com crash in 2000 Compaq Computer paid US$307 million to acquire Zip2. Elon and Kimbal Musk netted US$22 million and US$15 million respectively.
But their dream doesn’t end here.
Tribal Wars
Imagine being 28 years old and having $22 million to your name, not in 2024 but in 1999. I’m guessing if that was you, you would most likely do something crazy, just to show the world (or your co-founder in this case) how much money you have. Like buy a new car and crash it because you’re not thinking straight? If you’re thinking this is what Elon did with his money from Zip2, then you would be right.
He wasted it.
But even though Theil didn’t have a McLaren of his own, he had something in common with Elon, something they just couldn’t put their finger on.
A nightmare.
This nightmare was the existing state of the Financial Services industry at the time. Though it must have been a dream to those who sought to and made a profit from it before the crash, these young millionaires thought it was trash. And in a few more years, another man’s dream was going to turn into a nightmare but unlike with Zip2, things weren’t going to end so smoothly.
Would you let me take you on another ride?
Into Extremistan
Extremistan is a term coined by Nassim Nicholas Taleb to explain the randomness and deviations from the mean of most social, man-made aspects of human society. The term was popularized by Taleb’s book The Black Swan.
Events like Bankruptcy, Divorce, a stock market crash and a CEO being overthrown from his own company are grey swans to many. And although Taleb calls these people Suckers, the rest of the world calls them Geniuses. They think these events are improbable and can only happen to people who make “mistakes”, but not them because they are different and they have gotten all the answers right in life. How they have come to know this, nobody knows. But they will sooner or later find out that this is far from the truth.
Tearing down the Banks
After Elon’s internship at the Bank of Nova Scotia, he had a unique insight into the Financial Services industry that stayed with him after the sale of Zip2, now that he was far more wealthy than his days as an intern at the Bank.
According to him:
“All the bankers did was copy what everyone else did. If there was a giant pile of gold sitting in the middle of the room and nobody was picking it up, they wouldn’t pick it up either.”
This gave him confidence, so much confidence he started a company of his own that would provide similar financial services to consumers but unlike his previous company, his company would be based on the internet.
Founded in January 1999, X.com emerged as Elon’s bold bet on his ambition to tear down the “dumb” bankers all while processing the sale of Zip2. After a year of intense competition with the rest of the market, Elon thought it would be better if he merged with his biggest rival-Confinity while still being the bigger and more successful company, to end a war that was hurting both companies. Unbeknownst to Musk, the battle was just beginning for his machiavellian co-founder.
Hunting the Hunter
It’s normal for a hunter to feel on top of the world after slaying a Lion, but when the same hunter tries to hunt a snake, he will soon learn that the same tricks that worked on a large beast will not work on the animal that walks on his belly.
X.com and Confinity initially merged to become X.com leaving Elon musk as CEO of the company, but after a few of Elon’s employees left him citing is inability to inspire them toward his goal, he was left alone as the only person from the initial X.com team. Although Theil and Max Levchin, both from Confinity owned less of the company than Musk, they stood together and worked seamlessly in pursuit of their goal. They were of a different tribe than Musk, who specialized in doing hard things.
Although Musk would invent a device that could revolutionize the entire financial services industry, the market was not ready for his invention and opted instead for a simpler product made by Theil and Levchin.
When it became apparent that the market wanted what they made, Theil and Levchin both thought it would be better if they led the efforts for the products that would come out of X.com seeking to take control and leadership of the company to better implement their ideas, as it was obvious that the market wanted what they had made and not what Musk had invented.
After several talks with the board of the company, it was settled that Peter Theil would become the new CEO of a company that Elon rightfully had the largest stake. In June 2001, X.com officially changed its name to PayPal, a company that enabled users to email money to each other.
A year later, PayPal would be sold to eBay for $1.5 billion after its Initial Public Offering, an amount considered by now disgruntled and humiliated Musk to be too low for its worth. This was true because in just 10 years, PayPal's total payment volume processed was US$145 billion which accounted for 40% of eBay's revenue, amounting to US$1.37 billion in the third quarter of 2012 alone.
Imagine if Elon remained the CEO, and they had not sold till today.
Taking it to the Bank
Although many would argue that this takeover was morally wrong, it still went through. And although that would be the last time Theil would be the CEO of something that big (he’s no longer the CEO of Palantir), we cannot say the same for the individuals who stood by his side. Are they culpable as well?
I cannot say for sure, but somehow Reid Hoffman, who in his own right was a part of the PayPal mafia, managed to stay out of the tribal war and went on to found LinkedIn which became a recruiting software juggernaut while Elon and Theil went on to found Tesla and Palantir respectively.
Nobody can judge who was right or wrong, but from the passage of time, we can all observe the temperaments of these three different founders and the respective outcomes in each of their companies. Some would argue that it was never about what was right or wrong but more about what temperament was more appropriate for its respective time.
Although LinkedIn enjoyed market dominance in the recruiting technology space in the last 10 years, it’s now seeing competition from X (formerly Twitter) which has released its recruiting service: X Hiring. And Palantir Technologies, a defense technology company that has been largely under the radar for the past two decades is now coming to the forefront of the defense technology space, challenging legacy companies like Boeing and Lockheed Martin.
It’s almost like the seed that Theil’s (crazy) temperament sowed many years ago, is only starting to take root.
Here’s to the Crazy ones
Whatever the future holds, it seems more likely to favor those with similar temperaments to Theil and Levchin. Those with a slightly extra chip on their shoulder that may have seemed bad or wrong at the start but have paid their dues and are ready to take the world by storm.
Who knows? You might be one of them.