David Sacks on the factors that contributed to the success of the PayPal Mafia

The employees of PayPal went on to build many of the companies that defined Silicon Valley in the 2000s, such as Tesla, SpaceX, LinkedIn, YouTube, Palantir, Yelp, Yammer, and more.

In the clip below, David Sacks—founding COO and product leader at PayPal—talks through the factors that he believed contributed to the success of the PayPal mafia.

The crux of his thesis is that the PayPal Mafia innovated on distribution, not just product. They leveraged viral, platform, and embed strategies to achieve explosive growth at PayPal and then took these strategies to their next companies.

“That we were innovating on not just on product but distribution as well is something that all of the PayPal Mafia companies have done.”

PayPal had ~220 employees pre-IPO and they produced 7 unicorns post-PayPal. Compare this to a company like Google that hasn’t had 7+ unicorns created by ex-Googlers despite having 100x the number of employees.

He argues that scrappiness around distribution is part of the reason for this disparity. When you work at a large company like Google, distribution is guaranteed.

Source: Draper University “David Sacks on Unicorn Ideas: What Elements Are Needed to Create a Billion Dollar Success?”