Transcript: David Senra and Jimmy Soni: 'The Founders' Book Club on the PayPal Mafia 📖

Transcript of Podcast #21

This is the transcript of this podcast:

• 🎧 Podcast 21: David Senra and Jimmy Soni: 'The Founders' Book Club on the PayPal Mafia 📖

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Liberty:

Okay, guys, before we begin this book club, I have a confession to make. I have to come clean, guys. For most of the past 20 years I didn't even like PayPal. So to me, in the '90s I started with BBSs on my father's 386 and then I went to the early web. And so at first it was totally inconceivable, as Vizzini would say, to even think about sending money online, right? It's just not a thing. But it went so fast to totally normal that I just skipped straight to just complaining about the high fees and the delays and the foreign exchange fees right here in Canada. Was a big thing on Slashdot and all these sites, people always complaining about PayPal freezing their accounts and holding their money hostage and censoring.

So to me, PayPal was always kind of like a mini Microsoft, one of the bad guys. So it's quite an achievement for your book, Jimmy, to have made me care so much and be so interested in this company. At least the early years. And David, how perfect is this book for you? You name your podcast Founders and the book is literally titled The Founders, right? And you love reading this book about a single founder and this book has a dozen of them for you. So just perfect for this book club. Welcome to the show, guys.

David Senra:

Thanks for having me.

Jimmy Soni:

That's amazing. Yeah, thank you for having us. That was amazing. What's funny is, and David doesn't know this, we haven't talked about this, is no fewer than five people While I was working on The Founders were like, "Man, that's a great title. Have you heard this Founders podcast? It's amazing." And all of them were founders, like actual founders of real companies, and all of them were total David fanboys.

David Senra:

It's funny, when you emailed me and you're like, "Hey, I'm writing this book," and then you graciously offered to send me an advanced copy, I saw the title, I was like, "Oh, this is perfect." And I think the title was good, but also I think the subtitle is just as good, The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley. We were talking right before we started recording about the fact that so many of these founders now in present day, right? So I talked to a lot of young founders and I'm kind of jealous that they have access. We talked about this, I think, previously.

There was no entrepreneurship industry, right? When I started companies when I was younger, 15, 18 years ago. And now these guys, not only they have books, they have YouTube, they have podcasts. And so I'll talk to a lot of 20, 21, 24-year-old founders and they idolize the people that you profiled in this book. And what you and I were [inaudible 00:02:16] talking about right before we started, it's the great thing about your book is that it's like if you just rewind 20 years ago, you realize they were just young guys in their 20s trying to figure it out. You had a great line, Jimmy. I don't want to butcher it. They're trying to figure out, hustle their way through or try... What's the exact wording that you used? I don't want to butcher it.

Jimmy Soni:

One thing I did say is sort of PayPal was a story of basically near failure followed by near failure, right?

David Senra:

Yes.

Jimmy Soni:

I think I described it as a four-year odyssey of near failure followed by near failure. And there's this wonderful line that Musk has that he had said, I think it was to me or to another interviewer where he said, "It wasn't hard to create PayPal. It was hard to keep it alive." Right?

David Senra:

Yeah.

Jimmy Soni:

And so you basically have this company that's always operating in the skin of its teeth, but I think that's the lesson. The lesson is there wasn't any special genius. It wasn't like somebody had a great idea and that was it. Presto, done. It was a struggle and a fight and, like you said, a hustle to get it done. Actually, it was funny. Hustlers was one of my alternative titles. I had a few alternative titles. That was one of them.

David Senra:

Hustling has a negative connotation.

Jimmy Soni:

That's right.

David Senra:

Like, hustle culture. I don't know if it's in the book or was my reaction to the book because I'm looking at the show notes of the episode I did on it. But I was like, "The book, it says it." And I'm assuming I'm talking about the book. This might be you writing, but it's like it perfectly captures when they, Musk, Thiel, Sacks, Hoffman, Levchin, Rabois, were just hustlers trying to figure it out. And I think that's what you realize, like, "Oh, the person you're looking up to," and rightfully so, "they built..." You talk about this. It's crazy how long ago the story of PayPal was, but it's also crazy how much all of the PayPal Mafia has achieved since then. It's unbelievable. But I feel like your book is the best encapsulation of the human experience of founders are young, they have an idea that they want to try to do something, they don't know how they're going to do it.

And so all the early history of not just PayPal, but every single book, and I've read almost 300 biographies of entrepreneurs for the podcast so far, it's like there's no example. It's like, "Oh, this guy woke up, had an idea of a company, executed the idea, happily ever after." That doesn't exist. It's all very similar to the story that you tell in this fantastic book, but I would argue that this is one of the most extreme stories to actually read and learn from because of also the time in history. They're literally raising money... And you could tell the story better than I can. They're literally raising money when the internet bubble is popping.

Jimmy Soni:

I couldn't have said it better myself. I wrote a whole series of stretches about that because, look, there's... I mean, look, I agree with so much of what you said, and I think there's kind of two things that emerged for me in what you just said. One, is a lot of founders who have reached out to me or people at startups who have reached out to me after reading the book have said that it has felt therapeutic to read it, and the reason it has felt... Their words. Therapeutic. Not mine. They said it's felt like therapy. And the reason is because if Max Levchin is anxious about the survival of this startup, if Peter Thiel is nervous that they might not make it three months from now, if Elon Musk doesn't know what is going to happen, then it is actually cousin to and synonymous with all of the anxieties that founders have faced for hundreds of years, right?

Or founders in any domain. Even writers face this, right? Because you're starting a project from scratch. I would think that the link... No, I know that the link between creative acts and anxiety is very strong. And when you see someone at the highest, who's today at the highest levels experience, it actually makes it okay to feel that way, right? When they don't know, it's okay for you not to know. Because they're written about today as sort of masters of the universe. They run everything, they have a ton of money, they can do whatever they want, they can go wherever they want. But when you discover that there was a period when they were uncertain, it makes uncertainty okay. And by the way, I didn't write the book with a moral message. There was no advocacy message. I was trying to tell the story of how the company was created. But what it was created, it was like this bath of anxiety, right? And you can feel it.

I felt it even when I was interviewing them, when I was reading notes, when I was seeing what was going on in the company. I would read the memories after 9/11, I would read how crazy the IPO was. And that, I think, has elicited this response from people who are in a similar situation saying, "Thanks for not running away from the anxiety of it because it's what I feel every day when I don't know if I'm going to make payroll next month or I don't know if we're going to achieve product market fit or I don't know if this thing that I have millions of dollars worth of investing, I don't know if it's going to work out." And I think in a weird way, if you can look at somebody who's as smart as David Sacks and he feels tremendous anxiety about the future of what became PayPal, like hundred billion dollar market cap, household brand name, if he's anxious about that, it makes it totally okay to be anxious about whatever you're working on, right?

So, that was one thing that stood out to me from what you said. The other thing is, I don't know about you guys, but when I read biographies, I'm most interested in the kind of early years, sort of 18 to 28, 18 to 30. And I'm interested in pre-success people because once people become successful, I just think they become actually a lot less interesting. I mean, I think there's some truth to that. By design, once you achieve that level of sort of wealth or success or fame, you kind of have to batten down the hatches and put up walls. You can't be as open. Especially today, you can't be as open. And so for me, the interesting thing about this story was thanks to them offering their time, a lot of time, I was able to ask them questions about college life and about career decisions and about things that happened when not everything had to be so manicured and perfect, right?

And they might have been talking to me in between meetings with the Pope and the President and whoever else, right? But I noticed that my conversations would go long because it was a time in their lives when they weren't under assault the way they are and they were able to sort of reflect on some of the bad decisions they made, as well as the good ones. And so I think that's an interesting thing too, is that this period in their lives, it captures when you can't just throw money at the problem or you don't have a lot of power in whatever sense, you kind of have to figure it... It's a lot more fun. That, to me, is a lot more fun than most of what, with a few exceptions, that they're working on today just because everything has to be more talking pointy and there have to be executives who make all these decisions. And it's like back then they were just making it up. And it was, as you said, in the crucible of the dot-com bubble bursting, which is one of the craziest times in internet history.

Liberty:

One thing that David was talking about before we started recording, when you say the earlier years are more interesting, once you become successful, it's very easy to try to package the early years and make a very neat story that makes you look good and that makes it seem all so obvious and you were a genius for seeing it all, right? But when you read the book about Bill Gates that was written when Bill Gates was 34, you get the real version of him at the time, right? One more interesting thing about the book, I think you write this near the beginning, is about how many of the employees that you talk to, nobody had ever talked to them about it, right? It makes me wonder how many great stories are out there and nobody's writing them, nobody's finding these people. Even companies that we associate with a single founder, how many people were in the shadows doing super important things and nobody ever told their stories?

What's interesting about PayPal is that it came so close to dying so many times and almost every time it's someone different that saved them, right? It's like you remove just one of the pieces and the whole Jenga tower falls down. And it's a very special company in that way, in that it's not like, okay, there's not that... I think you write this line somewhere. There's not a Bezos or a Gates or a Steve Jobs, right? There's this group of people. And the group dynamic is more interesting in many ways because most of us are not Gates or Bezos, but most of us can find other people to compliment our skills.

David Senra:

I do want to mention one thing that jumped out when Jimmy was just speaking that I think is unique, and actually the first time I realized this. I saw this because I read a bunch of military history. And the craziest thing is when you go back and you read these autobiographies of people that literally served in combat, they watched their friends get killed, they went through unbelievably horrible experiences, they will all say very similar things. They're like, "Oh, that's the best job I ever had. I miss the time where..." Obviously, they don't want their friends to die, they [inaudible 00:10:19] that to happen, but they look back... There's something to human nature. There's a line in your book that comes from the introduction that I actually put on my notes that I wanted to bring up, and perfectly in line what you've just said. They're looking back... I think at the very beginning of the book, you start off... I think the first word in the book is Fuck.

Jimmy Soni:

It is.

David Senra:

And it's interviewing Elon and you schedule [inaudible 00:10:41]-

Jimmy Soni:

There goes the Pulitzer, boys.

David Senra:

No, I thought it was excellent. So you started, it's like, "I had an hour scheduled. We're talking for three hours. Then he's walking out, but he's like, 'I cannot believe this was 20 years ago,' kind of looking back with fondness." And a few pages later it says, "Several said..." All that you're interviewing, a ton of people [inaudible 00:11:01]. He said, "Several said that they did their life's finest work during this period." And there's a quote from one. "I felt like I was part of something grand and I've never had that before." And I think that experience is... Obviously, combat is the most extreme environment that a human being could be in. But these intense, difficult, what at the time was very painful and uncomfortable, if you are able to work your way through it, you're going to look back at those points of your life with... You're very satisfied that your younger version of yourself actually went through and persevered and got to the other side of it.

Jimmy Soni:

Yeah, I heard that dozens of times. I mean, no joke, it was just person after person who said... It would always come in some kind of couplet. And the first part of it was, "Boy. Man, I've never worked harder." And then the second part of the couplet was, "It was also the best work I've ever done." I had people tell me... And I think I wrote this in the book. Somebody said, "It was the best team I'd ever worked with." And by the way, they're employed now, they've had other teams, right? And they're saying, "Best team I ever worked with bar none." I had somebody else say, "It set the standard for every kind of team that I worked with in the future." One guy was just like, "I just assumed everybody would be good, like next level good." And then the other part of it is someone said, "Because of how hard it was, the bonds of friendship were much stronger."

David Senra:

Almost like they went to war.

Jimmy Soni:

Yeah. There's a direct relationship between the difficulty and the strength of the bonds. Not in every case, and there are still some rivalries within this group. But the friendships that do exist, I mean they've lasted 20 years. And we're not just talking friendships like you get together for coffee every now and again. I'll tell you a story, it's not in the book. I was interviewing Luke Nosek, who was one of the early employees, early co-founder. Luke today is head of this fund called Gigafund. He's done very well. He is a very early investor and advocate for SpaceX. I believe he still serves on the board. Luke and I were talking and we had really great interviews. He's a really thoughtful guy. He's got a wide range of interests. And at one point during the interview, his phone starts to ring.

And this hadn't happened. It wasn't blowing up all the time, but his phone starts to ring and he holds it up and it's Ken Howery, somebody that he had first connected with 20 years ago while working at PayPal. And I don't remember the exact comment he made to me, but he said something like, "See?" It was like a proof point. And he said something like, "These are still the people that I am closest to, they are still the people I work with. And I'm going to go into the other room to take this phone call now, but I wanted you to see this." Right? And it was insane to me. And then even crazier, and I don't think I've really shared this publicly before, when I ended that Musk interview... And I didn't write this in the book, but this is why people should listen to Liberty's podcast. Please listen. It's amazing.

Liberty:

Behind the scenes.

Jimmy Soni:

Behind the scene, behind the music, behind the book. I finished with Elon and I was getting up and we were just chatting and he continued to talk about PayPal. And then at some point he goes, "Huh." Because I said, "I'm..." We had spent a lot of time together. I'm like, "I'm sure you got things to do." Busy guy. I wanted to not be one of those people that just hangs around. And he goes, "Oh, here's something funny. We're having a dinner party tonight and the dinner guest is Peter Thiel." And it's on the day that I had spent four hours picking his brain about PayPal, he is still having dinner that evening, that evening with the person that he connected with all those years ago, right? And so it's this interesting thing that I think part of the reason for the endurance of those friendships and relationships is because the thing they did was really brutally hard, building this company together through the crucible of the dot-com bubble bursting.

I could go on and on about the friendships and the investments. And everybody kind of knows it because they know the PayPal Mafia. What they don't realize is that that wasn't accidental and it wasn't casual. It wasn't just random water cooler talk. It was feeling like they actually survived while all of these other dot-coms were going under and everybody felt like they had a piece of that, right? And that's really interesting to me. It was one of the things that I was like, "Wow, you guys all still stay in touch and communicate regularly." They go to weddings, they go to... People have been through highs and lows. There have been deaths, there have been random occurrences where they'll reconnect. But I think the thing that forged those relationships is this insane, basically, seven days a week for four-plus years of building this company.

Liberty:

And I think it raised the question, right? Are all those people so successful and so talented because PayPal identified them or did PayPal create them? Right? And I think the book touches on this and tries to answer it kind of in both directions because there's probably some of both. But I'm curious, what's your behind-the-scenes opinion on this, right? Do you think it was this weird process where they were asking math quizzes in the interviews? And there's a part where it talks about one of the skills that Peter Thiel had at the time, and still has probably, is he just doesn't care at all about most things about someone on the social side.

You can dress however you want, you can have weird hobbies, you can play video games until 3:00 in the morning or whatever. But all he cares about is how smart and talented you are, right? Was it that this company was able to filter people in a way that got the most talented people while other companies were filtering out these people because they didn't fit that usual profile? There's a part of the book where the company is taking advertisement in some student paper in Stanford to try to make students drop out and come work for PayPal, right? Thiel, is he still running with that with the Thiel Fellowships, right?

Jimmy Soni:

Mm-hmm.

Liberty:

So I'm curious what you think about this, making talent versus identifying it.

Jimmy Soni:

Yeah. And the answer is actually easier than you might think. I mean, there's some texture to it, and I welcome David's thoughts here too, but it's both. So it's both nature and nurture, meaning like attracts like. And so you have this kind of quality of the people that are friends with the people we just named, Keith Rabois, Elon Musk, Peter Thiel, David Sacks, et cetera, et cetera. They are all very smart people, right? So to be friends with them, the kind of prerequisite, if you're in your 20s and you're around them, is they didn't really hang around with slouches. And so like attracts like. Their friends were very, very smart. And what I would say is I had a couple moments, now that I'm thinking about it... This is why these are always fun because I get to think about the stuff that I experienced.

Max Levchin, I asked him to talk about Elon because they didn't have always the best relationship at PayPal. They actually came into loggerheads at one point. And this is in the book, he's like, "I could tell this guy was crazy, but he was also really, really smart and I love really smart people." And it was said with such sincerity, he was not BS-ing. Because let's be clear, Max Levchin's also insanely smart. And so they, I think, intuitively were always looking for people who were just that smart, right? And I will tell you that the process of doing this book was an exercise for me of being really, really, really anxious about that. And here's why. Because I always felt, and I've... Try to hold my own. I always felt like I was a B student in the room with A students constantly all the time.

These are photographic memories and chess champions and physicists and all the rest. But if you think about the friend group, I'll call that the nature part of it, like attracts like, they were around and wanted people around who were that intense and that smart. And they were, by the way, not all smart in the same ways. Sometimes smart in really different ways, but very, very, very intelligent people. So, that's sort of the nature part. And as the company grew, obviously, these filters changed. But at the beginning, if you look at the IQ points in the room... I had this experience, I don't know if I've ever shared this with you all, but when I was doing the interviews for the book, the crazy thing was how many people would say a name and say something like... Let's say it's Joe. Like, "Joe." Like, "Huh, smartest person I've ever met."

And then I would interview Joe and Joe would be like, "Max, smartest person I ever met." And it was a different name every time. It wasn't all of them were saying, "Oh, it's Elon," or, "Oh, it's Peter." It was a different name. Max himself, because Max is really smart and has a photographic memory... And I remember him saying to me, "Russ Simmons, man. Off-the-charts outlier IQ, so crazy." And it's in the book. He said, "He can solve anything you give to him in half the time it would take another person to do it." And that's Max. And so you're sort of like, "Whoa, how big must this intellect be?" Right? That happened over and over again. So there's a quality of, yes, they sort of pre-selected for these types. That said, they weren't all just sitting on a beach together.

They were trying to build a company while money was running out, fraud was running rampant, there was no more capital to raise in the US, and they had to figure it out. Figure out how to fight fraud, figure out how to keep costs down, figure out how to get the company's model built, and then bring it to profitability, have an IPO, have it sold to eBay. So the interesting thing is you have this very kind of very bright group of people and they are put through the wringer. In some ways, the ultimate Silicon Valley wringer. People forget just how bad 2000 was. 86% of the Nasdaq is wiped out. Companies that are buying Super Bowl ads are gone by the end of the year. There were physically storefront windows boarded up in Palo Alto, right? And there's this site called Fucked Company. One of the things that came up from the interview... I mean, I'd never heard about this until I did these interviews.

Somebody's like, "Have you ever heard of Fucked Company?" I was like, "What's that?" And they're like, "Oh, there's this site that was cataloging all of the problems and dot-coms that were shutting down." And this one person was like, "Yeah, we would look at Fucked Company every day and I was just waiting for PayPal. PayPal. Oh, that's it. It's over." And because they were that nervous about it. So this is a long answer to your question, but the question was, was it the people or was it the time and the setting and the place. And the right answer is it was both. And that is actually important for people to remember because they have a massively talented group of people, but they're not getting together and playing bridge. They're getting together and building a company under duress.

And then is it any wonder that YouTube comes out of this group or Yelp comes out of this group or Palantir or SpaceX or Tesla or Matterport or any of the other company... Dozens and dozens. They learned the playbook for how to build companies at this place. And I had an intuition about this at the start of the book process. I became convinced of it as I went through because the more of these people I met, again, people that don't make headlines, I said to myself, "Wow, you guys, you're exactly alike." In so many ways these people were very, very, very similar.

Liberty:

I have to share a few quick [inaudible 00:20:54] from the book because I'm sure some people are listening to this and they haven't read it yet. So, I want to make you read it. I have a few things in my notes that kind of illustrate what Jimmy's talking about, about how smart and kind of obsessive they are about what they were doing, right? There's something about how... I think it was Max Levchin got a girlfriend at some point somehow and she found him locked in the bathroom coding on his laptop, right? That that's like any moment he could find, he was just thinking about coding. Back in Soviet Russia, he was coding on paper because he didn't have enough computer time. There was a scene on the IPO day, right? They're celebrating in the parking lot and Peter Thiel is playing 10 games of speed chess at the same time, right? And he's winning all of them except one to David Sacks, I think.

And then they made him do keg stands. There's a scene where they're hiring Luke Nosek and they're like, "What's he going to do?" And like, "He's just going to do Luke things." And what is that? In any other company, you couldn't find a role for that, right? Write it out, "Oh, he's there on the org chart." But what PayPal figured out was that Luke is the guy who finds counterintuitive ideas, he find loopholes and everything. He's the guy who's just walking around and generating great ideas all the time. And PayPal was set up in such a way that it could recognize that and find a position for him, right? That's the kind of company that they were. That's not a normal company.

David Senra:

There's a couple things in the book that I notice that are just reoccurring themes in my own work as I try to document the history of entrepreneurship on Founders podcast. One is that belief comes before ability. I love the fact that you brought up Luke because one of my favorite just random paragraphs in the book is the fact that way before, none of these guys could say this [inaudible 00:22:24] at the time. There's Luke, Peter Thiel, and I forgot the other two guys. They'd meet up for breakfast, right? And they'd talk about technology, they'd talk about philosophy, investing, all the stuff they're interested, right? They're not wealthy, but they knew they'd be successful because what they called it. They called it the Billionaires Breakfast Club. This is 1997.

Jimmy Soni:

Right.

David Senra:

I think it ties into Liberty's question to you. It's like [inaudible 00:22:50] did they create the talent? Did they discover the talent? Did they just pick people correctly? It's like, well, first of all, you just said A players want to be around other A players. That's a very old idea. I remember one of my... I just did this Q&A episode, and people asked, "If you could have a board of directors from all the people you've covered, these people that are going to advise you personally to help you achieve what you want to achieve in your career, who would you choose?" And I went through all the episodes, I was trying to figure this out, and I wanted to only focus on people that are dead. And surprisingly who made the list for me was Mozart. And Mozart was interesting. One, the ability to get to talk to somebody that's literally the best in the world at what they're doing. You know how Tiger Woods started playing golf at two? Mozart started composing at two, right?

But there's all these other characteristics that Mozart shares that are interesting to me. But what's also interesting is in his biography, it's like he would go and want to talk to other people at the top of their profession, outside of his profession. Not other composers per se. Whatever it was that you did that you got to be the best in the world at. And I think that is very common. That ties together with something... I think we talked about this. I know actually. Almost positive we talked about this on our last podcast together, and we discussed Jimmy's fantastic book about Claude Shannon. And this is an idea me and Liberty, I think, have brought up a few times. We might have even talked about with Jim on Infinite Loops, is the idea that you mentioned in the introduction, [inaudible 00:24:11].

Jimmy Soni:

Yes.

David Senra:

And to me, you could define it as a collective intelligence of a group or this area that you happen to be in. To me, when I write [inaudible 00:24:20], I'm like, "Okay, it's a concept that describes why it's so important on getting yourself around other driven, ambitious people with similar interests." So you go back, and Jimmy can correct me if I'm wrong, but it's not like they are like, "Oh yeah, we're going to send money over the internet." Right? They're like, "We're interested in technology, we're interested in startups, we're interested in getting wealthy." Right? Investing, making more money. And those interests, because they're around other people with similar interests, that is what birth what eventually becomes PayPal. It's not that they had this, "Oh, we have this one big problem we have to solve no matter what." It's like, "No, no, we're just interested in all this other stuff. Let's meet together, let's have breakfast, let's give these talks." I think you mentioned in the book the first time Max met Peter Thiel at Stanford.

He's giving some kind of conference. There's almost nobody there [inaudible 00:25:07]. And he's like, "Listen, if I ever do anything, this guy may not be a programmer, but he's a nerd just like I am." And so I think this is something that appears over and over again in the biographies I read. This is something that I'm... Part of the reason I want to do Founders is, obviously, I'm interested in reading and in history and entrepreneurship and podcasts. But it's also a way for me to meet other people that are like me. And it's not like I'm sending them a message like, "Hey, I'm David. I have the same interests of you. Can we get together for coffee?" That's probably a very low probability event that that's going to happen. But if they discover the podcast or if somebody else sends it to us like, "Oh, this dude's fucking crazy just like you are. Listen to this," then it turns, instead of me having to send outbound messages, it all becomes inbound because you have a body of work to point to.

We were talking right before we recorded. It's like, "I don't know how I'm going to do it. I don't know what it's going to look like, but I do know I'm going to eventually have to build something where there's a way for the people listen to Founders to gather together in person." Because it's so important to get into your [inaudible 00:26:06] and to get into around other people that have the same interest as you because you have no idea... You discussed earlier, it's like it could lead to not only your personal friends, but they're all investing in the same companies. How many fucking PayPal Mafia invested in SpaceX? A ton of them. You know what I mean? It could lead to friendships, it could lead to investment opportunities, it could lead to co-founder relationships in the future. And you're doing yourself a disservice if you, first of all, don't figure out, "Okay, what is my [inaudible 00:26:30]?" And then two, do the work necessary so you can access it.

Jimmy Soni:

Yeah.

Liberty:

It's creating creative relationships. We have a bunch of social relationships all around us, and most of them are like we talk about the weather, we have small talk talk, we have our friends, our family. But now, especially in the connected world, people with similar interests have a way to find themselves. And these relationships are different because they create stuff. They create podcasts, they create companies, they create technologies, they create art. But creating more of these relationships is one of the best things that's happened in the modern internet world and...

Liberty:

Is one of the best things that's happened in the modern internet world. And these types of events, I'm there. Do it, David.

Jimmy Soni:

Yeah.

Liberty:

I'll make the trip, for sure.

Jimmy Soni:

I would say, let me add a couple of just additional things in support of literally every word you said. They were not all the same kind of person, right? So this is really important because there's some people are like, "Well, I'm not a programmer and I'm not some math wizard." Neither was Ken Howery, but he had a passion for business. He really liked the work that Peter was doing, wanted to work with him. And Ken would do anything.

The thing in the book that was interesting is how many people are like, "Man, Ken gets enthusiastic about any project you give him," and he'll do it with a smile on his face. And it doesn't mean that he was slouch because he wasn't, he was intellectually very, very bright. But it was not that you need to be the same person as these people.

On the point about friendship insignias, the interesting thing that I've found is, oh man, there's so much you said we could riff on. It's so fun. The friends I have who are creating things, the friendship accelerates very quickly. When I have met them, let's say in my early 30s, it did not take 20 years of going to school together to stay friends. It took maybe a coffee. And right away, I'm like, number one, you're making things in the world. Number two, you know what a struggle it is to make things in the world. Number three, you protect your time and your health in order to serve making things in the world. Number four, you get it. You get the anxieties, the fears, the challenge, the joy, all the highs, all the lows.

And it turns out that, over time, those friendships just compound better because you're not even leaning on them for favors or anything. It's just that when you're together, it is a qualitatively different relationship than it is with people who maybe you were friends with back in the day, who are just friends by virtue of your dorm rooms were side by side or something, right?

But my friends are in totally different fields. My friend who is an artist, he gets it. He just knows. He he knows the field. He sort of knows what that thing is where you wake up and you're like, "Ah, another painting." You know? And that's why I think the three of us are friends. Once you find those people, the friendships, I think they just shortcut all the BS.

Sometimes, I mean, I don't know anything about your family relationships, any of that, but we have such a strong wavelength on these things. And I think there was something about that in the water at PayPal, not for everybody, and particularly as the company expands, it's not like everybody's doing that. But I think you're right, David, that early on, these are people who are drawn together by common interest, a sense of endurance, a willingness to work hard and not a precise plan for a startup that's going to become PayPal.

More of a, we really think these other people are smart and we think they're onto something. Let's just spend time together and something will emerge from that time together. And if you think about who's around that whiteboard, it's Reid Hoffman, founder of LinkedIn, Russ Simmons, co-founder of Yelp, Max Levchin. And so, there's something about the generative capacity of a group like that that's independent of having to work in a startup together.

And I think people try to replicate these things in different ways. But your point is spot on, that at the beginning, no one could have said, "Hey, Luke is going to stay friends with this guy named Elon. And Elon's going to do this company called SpaceX. And Peter, I want you to back SpaceX and then I'll back SpaceX. And we'll all back SpaceX." You know?

They couldn't have called it if they tried, but they happened to be in that place at that time and developed these relationships. Again, independent of any kind of work context. Peter Thiel actually writes about this in Zero To One, too. He calls it a pre-history. Pre-history is important. He's often sussing out pre-history in a startup team before he invests.

How well do they know each other outside of the startup? How strong are those bonds of trust that don't exist on, "Did you get your report done?" You know?

David Senra:

His idea on that is actually really important because speed matters in business. That's a main theme in history of entrepreneurship. And his point is, if you have a strong pre-history for your co-founders, it's like you already have a web of trust and that trust allows you to work faster. And in a startup, you have to work faster.

I just re-read Peter's book, but the episode I did on it was interesting, because it's the second or third time I read it. But I just spent three weeks reading all of Paul Graham's essays. And what's fascinating is, actually, it's Patrick from Invest Like the Best made this point, when I was talking to him. He actually gave me the idea where we were talking about, I had already I think released the first episode on Paul Graham, and I would argue that the two most influential written texts for technology startups in the last 15 years is Paul Graham's essays and Zero To One. Right?

Liberty:

Yeah.

David Senra:

It's very hard to find a startup founder hasn't read both, right? And so I was like, oh, that's actually a good idea. Let me re-read Peter's book in line with what I just downloaded into my brain about Paul Graham's philosophy. And what's crazy is you get to that part in the book, the one that you just referenced, and Paul Graham had written, he's like, "The pre-history of the founding relationship is why, if you look at the application on YC, we ask about the co-founder relationship more than the idea."

So, again, this goes to the [inaudible 00:31:41] idea. This goes to the idea of, hey, make sure you're doing the work necessary to make yourself into a formidable person, so other people would actually seek you out and think that you can contribute and you're valuable.

I want to tie something else that you said earlier. I heard the same thing where you're like, "I can't tell you how many people have read the book." And they said, "This is therapeutic." That's the word you used. The feedback I get, it's like, "I find listening to your podcast comforting," and it's because you see all these really smart, really accomplished people struggle. And when I read The Founders and I'm like, "This is crazy. This is one of the best documentations, it shows the messiness of creating a new company."

You just mentioned Reid Hoffman. One of my favorite parts of the book is like, so the messiness of new companies. PayPal's got all these problems. One of them is like they're losing a ton of money. And so, Reid has this great analogy or a metaphor in the book. He's like, "Dude, we were burning so much money. It'd be like if you stood on the top of our building and threw wads of hundred dollars bills off the side," he's like, "We were burning money faster than that."

And so now they're losing money. But before that, they don't even know what product they should build. And when they do figure out what product they should build, they don't know what they should call it. They're not sure who the right people are to have in the company. And they're not sure who, when you think about how many freaking different CEOs and leaders they go through, right? Starting with X.com and Confinity, not only are they not sure who the right people on the team are supposed to be, they're not sure who the right person to lead that team is.

And out of that messy, chaotic experience comes one of the greatest startup mafias that the world has ever seen. And you make the point in the book, and I wrote in my copy that I have, nailed it. And I put in exclamation points and underlines.

And it's from this, it's like, "To skip PayPal's creation is to neglect the most interesting stuff about its founders. It is to miss the defining experience of their early professional lives. The one that defined so much that came later." That is not unique to Peter Thiel, Elon Musk, any of these people. It's everybody.

One of my favorite books and one of, I think, the greatest autobiography's ever written by an entrepreneur, if you think how many people have read it, but also how many people it inspired, people like Jeff Bezos, is Sam Walton's autobiography, Made in America. And the crazy thing is people are like, "Oh yeah. Sam was kind of old when he started Walmart. He's like 44." It's like, yeah, but you're missing out. He even says in the book, "People skip over the 15 years," when he was building a very successful retail operation. It wasn't the same idea of Walmart, right? And he's like, "They skip out," because Walmart's such a massive success. He's like, "But those lessons I learned in those 15 years."

And after 15 years, the company was only doing I think one and a half million in revenue, you know? This is a long time ago, but he wasn't getting rich off this, but he wasn't a poor, broke person. And he's like, "There's so many lessons in that 15-year period, that if I didn't go through, there is no fucking Walmart."

And I think that line that you have in the book is exactly, if they never went through this experience of PayPal, the idea that there's a Tesla, a SpaceX, a Palantir, all these other things, a founder's fund, maybe, but most likely not. And certainly, I think they would agree, not to the degree and the outside success that they have now.

Because, even Palantir, you mentioned Zero To One, he talked about the fact, and you talk about it in detail, they had a huge problem, in the book. They can't solve the fraud. Max has got to figure out, is it Igor? Am I remembering that correct?

Jimmy Soni:

Igor is the first and then there's others. But Igor is the key one.

David Senra:

They take that idea for Igor, fraud detection and massive amounts of data and everything, and he is like, "Oh, I'm going to use this combination of man and machine for Palantir." He says that explicitly. And so, I think that's a perfect reason why that sentence is so important.

And you put it right at the beginning of the book where it's like, hey, pay attention. This stuff is going to be important later. But you can't skip over the beginning part or you're not going to fundamentally understand why everything turned out the way it did.

Jimmy Soni:

And I think, normally, the way that people from the outside looking in treat the PayPal story is, oh, that's where they made a little bit of money and then turned it into bigger and bigger and bigger piles of money.

But the equity was so diluted by the time the company IPO'd. Very few people had otherworldly multi-generational wealth at the end of it, right? There were too many investors, too many people on the cap table, too much equity distributed to employees in a good way, meaning that was something that Max and Peter did pretty regularly. But it meant that nobody was, like one person put it, "We didn't make retirement money. Some of us made down payment money," right? So, it was enough to make down payment, but we still all had to work.

And so, usually, the story is construed as like, oh, PayPal is what funded Tesla and SpaceX. And it's like, no, actually PayPal was a place where many ideas about creating companies were tested, many different iterations and permutations of things you would try to achieve. Product market fit were tested and everybody involved learned those things.

Here's a perfect example, by the way, just so you don't think I'm speaking abstractly. This was literally relayed to me by one of the co-founders of YouTube. And I didn't put in the book because there wasn't room, because the book is already getting a little long. So PayPal, one of the reasons for its success is it's a button that proliferates around the internet, right? It's an embed button. It's one of the first truly successful embedding strategies around, right? The next big one, one of them, is YouTube.

So YouTube, if you think about it, YouTube can live on any website. It can live on any platform and all the views accrue back to the original video, right? But that actually was rare in that moment, that what you would do is not own the video player and make it a walled garden, that you would actually make it an embeddable widget that could go anywhere.

Widgets were still super new. The web was still super in its infancy, still a lot of people have dial-up modems. When YouTube started to try to proliferate on MySpace, they ran into the teeth of MySpace. And the MySpace people, like Tom, now famous Tom of MySpace. I don't know if it was Tom, but somebody at MySpace was like, "This is insane. We can't have this video player embed on our freaking page. We don't know what this is. We haven't approved it." All the reasons, all the objections.

So they take steps to shut YouTube down on MySpace. And what the YouTube co-founders had learned from the PayPal experience is that, if you get a platform's own users angry enough, they will revolt against the platform and force policy changes.

So, the YouTube co-founders essentially put up the customer service phone number for MySpace in as many places as they could. And they told all of MySpace, all the people saw from MySpace, "Just call and complain, jam up their phone lines." They put up the email address and they were like, "Just tell them they've got to accept YouTube videos." And what do you know? They accepted YouTube videos. And YouTube was allowed to proliferate on MySpace and then grew to other places.

That strategy, chapter and verse came from PayPal, because PayPal had the same problem with eBay. And they knew if they could become sticky enough with eBay's own users, then they could turn eBay's own users against the platform itself. And they mimic that exact playbook. I mean, word for word almost.

David Senra:

That's incredible.

Jimmy Soni:

And so, your point isn't abstract. It's not like, oh, we had some general learnings about how to do startups. No, no. Literally, the embed strategy and how to turn users into mutineers was homegrown at PayPal, and then poured it over to YouTube.

Liberty:

I wonder if PayPal, because I know Elon and a bunch of others love to study biographies and mysteries and other business people. I wonder if they learned that from John Malone. Because John Malone used to do that when they had cable negotiations, and when the channel asked for too much money, they'd do a blackout in the region. And on the screen there was like, "Please call this number to complain." And then they got the actual users, the viewers, to complain and get the problem resolved in their favor, basically.

About what you were saying earlier, about how people are like, "Oh, yeah. They made the money there and that's what allowed them to do the rest," right? We can't do it. But it would be super interesting to do a kind of alternate histories where, on one side you have the exact same people, the same group of people that have the experience of PayPal, of running it, of building it, but they don't get any money at the end. And then you look what happens.

And on the other side, you give the exact same people all of the same money that they got from PayPal, but they don't have the experience. They only get a check. And then you see what happens. And I bet that almost in any case, the first group with the experience would do so much better. Maybe Tesla, SpaceX and all these other companies would exist. Maybe it would be harder. Maybe they would've run off money or something.

But I think it really was the experience that built it, right? The money is just extra fuel to do the next thing. But really good entrepreneurs with a good track record, they can find a fuel elsewhere if they don't have it. Elon didn't have to put 13 of his own millions into X.com, right? People would've funded him, but he is just that kind of person, right?

David Senra:

You mentioned something I was reading earlier where it's like, oh, that's another interesting lesson about human nature really. It helped with recruiting the fact that Elon had so much skin in the game.

Liberty:

Yeah.

David Senra:

Like somebody said, I think he used that exact line. He's like, "Oh, he put 13 million of his own money in there. He's not going to let this thing fail. Let me go and actually join him." That popped to mind when Liberty just mentioned that.

Jimmy Soni:

I would say that the reason that this story was easy to overlook, and that the details were sort of shrouded, is because understandably, when you're operating in the billionaire world later, pretty much everything gets colored by that. If you're doing rockets and cars, you sort of miss all these lessons and all these moments. But to me, the interesting thing is also that, when you learn to weather this kind of difficulty, you kind of assume it's going to be a part of whatever startup you do next, you know?

So here's a great example. At one point, X.com gets defrauded in a pretty public way, and there's a bunch of bad headlines, because they had made it easy for people to take money out of checking accounts, just like with a few numbers. And Elon's very worried about this. Julie Anderson, who is working at the company, was very worried about this. It was a scary moment. I mean, it was big, national publications just dumping all over X.com.

And I will say, when I went back and read all of those reports, the same people were quoted. It seemed almost more petty and personal than actually... There was a real problem, but the tone of it suggested somebody had kind of coordinated or found some way to coordinate. The interesting thing is that they take all this heat for being easy to defraud, and they have more users at the end of that process than they did at the start, right?

And so you think about what that might have taught, maybe Elon, but others, about negative press. PayPal, or Confinity, was named one of the 10 worst business ideas of 1999, right? At one point, just before the IPO of a company that, again, is still around today and worth a hundred billion dollars, they wrote that the world needs PayPal as a public company the way it needs an anthrax epidemic, right?

And so, part of what I took from this was also a series of learnings around how to deal with negativity, how to deal with fraud, how to deal with a fractious work environment. There's this amazing moment, I didn't really share, this is more Meta. I was interviewing Elon, and there's a moment very early in the story where they try to dump him as CEO, these sort of handful of people that he hires super early on. I talked to him about it, and it was a really short period in history. It was probably three, four months, early in the history.

And I remember, I'll never forget it, because I remember sitting there and he's sitting there, and he's sort of reflecting on it very briefly, so briefly. And he just waves his hand. So, almost like when Obi-Wan goes, "These aren't the droids you're looking for." He just sort of waves his hand and looks off. He doesn't even look at me and just looks off. He's like, "Eh, there's always drama in startups." And it was like this, it was a sentence that captured so much, such an emotionally fraught thing, where he was just like, "Eh, there's always drama in startups." Right?

And it was one of these things where you're sort of sitting there, like, wow, you have earned the right, based on your experiences, to say that so casually. Because the drama that you've experienced is colossal, multi-million, multi-billion dollar drama, and the bets you have placed have been so big.

But to me, part of what happened is that it took what is a neat and tidy web application that we use every day, and because, again, I worked really hard, found all these emails, et cetera. I was able to stitch together just how hard it was to do and how dramatic these settings can be. And I think that's something that's super underappreciated.

We see Elon go on SNL. We do not see the Elon who has to face one possible coup and then another actual coup, right? We see Max Levchin, the public company founder of a firm. We don't see Max almost quit PayPal because of Elon, right? I always now have a better appreciation for the blood and guts of these sorts of stories.

Liberty:

And the book goes into how all this drama, at the end of the day, the company is put above it, right? Elon, after there's coup and they oust him, some employees are on his side. And they come to him and they're like, "Do you want us to resign in mass or do something?" And Elon's like, "No, no, no."

I think you explained it with the King Solomon story, right? Two women claiming the baby is theirs and cut the baby in half. And PayPal is still Elon's baby, even after they've done all kinds of things to him, that someone else, someone [inaudible 00:44:11] or someone, I don't know, less invested in the company, would've just tried to burn the whole thing down just to get back at those people.

Also, some of the people who did this coup against him, as you were saying, they're still friends today. They're still hanging out and doing dinners, and investing in each other's companies. And so, Elon seemed to respect that the others did it because they thought it was the best decision for the company, not as a personal thing. And that's probably a hard thing on a human nature point of view. It's not an easy thing to do.

David Senra:

When you said that story, that's another line that I re-read to prepare for this podcast, where it's like, well, at the end, X.com actually has more users after the fact. It made me think of... There's a great line, I just read this book. It was recommended to me by our friend Eric Jorgenson, who wrote the fantastic book, The Almanack Of Naval, and it's called something like, I did a podcast on it. I should know the freaking title.

I titled the podcast Charlie Munger and Warren Buffett Speaking Directly To You, because that was my interpretation of the book. It's something like, tell me where I'm going to die so I never go there. It's written by this guy named Peter Bevelin, who's written a bunch of books on Charlie and Warren.

But in that book, Charlie said something that was fantastic. He's like, "Learning from history is a form of leverage." And I was like, oh, that's a freaking, you know, Charlie's gifted with words and just taking a very complex idea and putting into short amount of words so you can remember it. And I got to that part, and I had a similar thought to you, where it's like Elon is a master salesman. He's a master at getting attention.

Think about how valuable SpaceX and Tesla are and how much have they spent on advertising. Nothing, right? And we saw this, unfortunately, the idea that human nature doesn't change, that is happening over 20 years ago.

I was listening to Joe Rogan speak on another podcast. It was very interesting because he was talking about the fact that people thought, "Oh, they're going to cancel him." This thing came out where he had said the N word a bunch of times. I don't think he was saying it directly. He was referencing other people saying it, or I might be wrong about that.

But anyways, somebody had strung together him saying it a bunch of times. That video went viral, people went crazy, and they tried to get him kicked off Spotify. And Joe was like, at the end of this, this is now on the other side of that big catastrophe, because Spotify has access to the people listening, which is not normal on podcast, right? It's a closed ecosystem, so they can actually tell you how many people are actually listening as opposed to how many downloads you get on an RSS feed. He's like, "Our subscriber count went up by two million."

Liberty:

Wow.

David Senra:

And so the reason this is important is because it goes against, you mentioned the snarkiness of people, like writing, you know. Anytime somebody has a level of success, there's a percentage of humanity that are just going to discount it. They're going to make excuses for it.

I'm going to tie this back together in one second, but I had mentioned before we started recording, I found this biography, it was recommended to me by Matt, the CEO of Colossus, of Ralph Lauren that came out in 1988. And I took a picture. And I've got to figure out how to, I was going to tweet this out. I was like, oh, I don't want to start shit, though.

It's talking about, a lot of people don't know, Ralph Lauren grew up poor. He had to share a single bedroom with two older brothers. When he starts his company, he's married, he's living in a crappy apartment in New York City. They don't have any furniture. They just have a mattress on the floor, and they have the L train, that they can't sleep because it's fucking running against their... The train is right next to their apartment.

And 20 years later, Ralph Lauren is one of the wealthiest self-made people in the United States. He's built an unbelievable amount of business, that's a multi-billion dollar company, and there's a line in this book. Remember, history doesn't repeat. Human nature does. He says, "To this day, there are people walking around saying, Ralph Lauren isn't that special. I could have done it."

This is a guy that Ralph fired, and he's like, think about how crazy what I'm about to tell you. The guy that's saying this was fired by Ralph, right? He's like, "There's people who's walking around saying, Ralph isn't that special. I could have done it." It's the weirdest thing. They couldn't be more wrong. Ralph is the most special guy in the apparel business. The guy saying that about Ralph was fired by Ralph. He's like, "You're out of your mind if you think you could do that."

So I do think, one thing that I'm always amazed at is, people don't understand the power of the internet, right? Because there is a part of human nature that we just, and I think us three fight against it. I've never seen you guys tweet, talking shit about other people, right? Or we probably wouldn't be friends because those are not the people I want to hang out with.

But I always say, the world has no shortage of critics. We have a shortage of evangelists. And what people don't understand, when you tweet about something or you post about something, you make a TikTok about something you don't like, you're just getting them more fans. Because, yes, some percentage of people will see your TikTok or your tweet. You're like, "Yeah, screw that guy." But that other percent will be like, "Oh, that's interesting. I didn't know what that is. Oh, I'll start listening to that podcast," or, "I'll start watching that movie," or whatever.

So the key is you have to starve the things you don't like of oxygen, which is just attention on internet, and feed the things you do. Talk about the movies you love, the books you love, the podcast you like, the people you like. And that'll help them, more attention be drawn on them. Humans cannot do this. They're like, "Do an article. Let's take down Elon." He only gets stronger. That's not working.

Liberty:

He's like a Sith Lord.

Jimmy Soni:

It's like Obi-Wan. When Darth Vader strikes Obi-Wan down with the lightsaber, Obi-Wan is freaking everywhere after that, because he's learned that old force disappearing thing.

David Senra:

Yeah. It's like, how are we doing this? This just happened where people, and this is why I try to use these networks as distribution for my podcast, as opposed to places where I hang out. And I open up Twitter and it recommended this. People were mad because I guess Kim Kardashian took a picture in front of Harvard Business School. And so, I screwed up by reading some of the responses.

Like, "She shouldn't be there." And then other people are like, "Well, she's richer than anybody's ever graduated from there." It's just like, oh, you guys, you bought into it. She's a master at that. There's a reason why, again, how much money does she have to spend on advertising? You're giving it to her for free. And you fall right into the trap.

Liberty:

When you criticize, the people who already agree with you will still agree, right? But everybody who didn't pay attention, who didn't care, now know about it. So, that's how more attention is brought to that thing. And with the long tail now, right?

Back when there were three TV channels and a few movies, it didn't matter that much because you could easily see the field, right? But now, there's millions and millions of creators. There's a super long tails of books, and podcasts, and websites and everything out there of artists and scientists.

And so, curation matters more than ever before because someone has to find the good stuff, make the cream rise to the top, or whatever your metaphor. And so everybody that's criticizing stuff, it's just not adding anything useful. Because you can always find crap anywhere, right? Because sometimes people are right to criticize something, but it doesn't add any value. The whole 80% of everything is crap, or maybe more than 80%. I don't care, but find me that 5%, that 1%, whatever. That's all that matters. Anyway, that's my soapbox for curation.

Jimmy Soni:

Yeah. No, what I was going to say in response to what David said. One of the things I love about your work, Liberty, you are not afraid to talk about shows you love, movies you love, random YouTube videos, podcasts, articles, images, AI stuff. And what I like is that you aren't doing these sort of studious take-downs of some company, you know?

And I know there's a place for that, by the way. There is a place for, I don't know, investigating Theranos, right? We should have room in the public culture for that, because there's an important check against the worst kinds of behavior. You think about Bernie Madoff, you think about-

Liberty:

Great point.

Jimmy Soni:

... Theranos, you think about-

Liberty:

I don't think those things are the same at all.

Jimmy Soni:

No, they're not.

Liberty:

Most things are social signaling.

Jimmy Soni:

Yeah.

Liberty:

It's trying to raise your social status by lowering one of the top dogs down, right?

Jimmy Soni:

That's right.

Liberty:

You try to attach yourself to someone with more status, like Joe Rogan or Elon Musk, and then you put yourself above them by saying that they're crap. Right? That's totally different from fighting fraud.

Jimmy Soni:

That's right. And I would say, like John Carreyrou, who did the Bad Blood stuff, we're talking about a reporter who spent years of his life, put himself at risk to do that story, right? So, we're talking about something different.

But here's what I would say. What is interesting to me is that, that X.com bank fraud is to X.com, the same way the Cybertruck window breaking was to the Cybertruck, right? Think about that for a second.

Liberty:

That's a good reference.

Jimmy Soni:

He's on stage. They throw the brick, the window cracks. I think Elon said like, "Shit," or something, on stage or whatever.

Liberty:

That wasn't supposed to happen.

Jimmy Soni:

That wasn't supposed to happen. And then they did it again and it cracked even more, right? Or whatever it was. And I think, the week after, they reported that Cybertruck sales were through the roof. And no consumer, who was going to buy one, was looking at it saying, "Oh, I'm really worried about what happens when a brick goes through the window and what if it breaks?" They were just like, no, that I saw it because of the bad news. But I'm staying because the thing looks so interesting to me and I want to get it.

So, I think you're a hundred percent right, that perversely negative press can rebound to somebody's benefit or a product's benefit. But I would say, logically, the more interesting thing to me has been understanding that to do this kind of work, meaning maybe startups and probably a lot of other kinds of creative work, is to be discounted, criticized, attacked, all those things.

And I know the volume's gotten louder. But my hope is that people see that even this insanely successful, multi-decade business, like it is with PayPal, began as an exercise of them being laughed out of rooms for venture capital, being called one of the 10 worst business ideas of 1999, almost going under in 2000, cycling through CEOs, having to deal with the aftermath of September 11. Just again and again, and facing it really personally.

There were a bunch of things that happened that were pretty personal, where people were attacked. I don't want to say this, but it's sort of like that. I think that, just at this point, it comes with the territory, right? It is actually one of the reasons why I think I admire entrepreneurs so much.

Because when you are an entrepreneur, you are by definition facing off against an incumbent. I mean, unless you have a truly path-breaking, brand-spanking new idea, but those are rare, you are almost always facing off against an incumbent, or the government, or some force that wants to destroy you. And they'll do anything to destroy you. Right?

Liberty:

eBay tried to destroy them, right? It's such a good point. The intelligence may be necessary, but without the persistence, it doesn't get you there. It would've been so easy to quit so many times, and there are so many people that may be as smart.

Liberty:

Quit so many times and there are so many people that may be as smart out there who tried starting a business, but they just quit long before they got any traction. I think that goes back to your point about picking-

David Senra:

They all quit. Everybody quits everything.,I told you this. Look, this is why this dude, I say this over and over again. I've told you this before Liberty. I don't know if I told Jimmy this, but listeners can't see the screen. There's a reason I'm showing them my lock screen on my cell phone. It's like, that's Ernest Shackleton. How many times do you look at your phone a day? Probably at least a hundred, right? So a hundred times, maybe more than that. 200 times a day I see Ernest, old, tired, he's got snow and ice in his beard and the only thing I think of is his family motto, "By endurance we conquer." And it's just like, "David, you're going to want to quit. Don't fucking quit. You'll just win as a..." I can win through attrition. How many podcasts are going to be around and unbroken for 20 straight years?

And what would the audience size look like if that just keeps compounding? And I do think that's a fantastic point that Liberty made is just like there's so many times when you're reading Jimmy's book, it's like, "How have they not given up? How is this possible? How could... There's another..." You're talking about platform risk. It's like 90 something percent of their business I think is coming from eBay at that point. There is no PayPal if eBay successfully eliminates PayPal. You talked about the Guerilla Marketing tactics on the MySpace and YouTube, which was an excellent story.

This is why I think you should have your own podcast too. It's from the cutting room floor. That's a great story. But I think of one of my favorite ideas in the book was when they're at that conference, eBay conference and Meg Whitman is talking and they go and they give out... Oh, I forgot, you could win cash or something like that if you put on the shirts. And so Meg Whitman gets up and Jimmy tell me if I got this wrong, she gets up and goes to the keynote and she's staring out and all she sees is PayPal shirts. That is like-

Jimmy Soni:

That's right.

David Senra:

Genius level, Delle-jitsu, guerilla marketing shit if I've ever heard it.

Liberty:

Can we talk about the other genius thing they did to not allow eBay to kill them when they were doing the IPO? Jimmy, do you want to tell the story?

David Senra:

[inaudible 00:56:07] Oh, the Reid Hoffman.

Liberty:

[inaudible 00:56:11] Oh my God, some 4D chest right there.

Jimmy Soni:

Yeah, no, the coolest part about that is so much time had passed that they actually, sometimes... It's really funny we're talking about this 'cause all these stories now are flooding back to me. Not just the stories in the book, but the way it was delivered to me in interviews. And what would happen is I had some nugget of something I knew, like how they defeated Visa and MasterCard and ran an end around them or how they ran an end around eBay. And I would say it to the person because I knew the fact, 'cause I had some piece of paper or email or something and they would laugh. They would be like, "Oh man." The way the story would start was with a chuckle. And one of the stories I heard was from Reid Hoffman and it began with a chuckle.

So just to take listeners who haven't read the book to give them the 15 seconds that'll help for context. PayPal finds success on an auction website that was pretty young back then called eBay. eBay hadn't figured out its payment system. PayPal became a perfect fix for that payment system. But the problem is PayPal isn't owned by eBay. There's some third-party payment system. The equivalent analogy would be like if you owned the cash registers at Target for some reason and Target didn't own those registers and you made money every time Target did a sale, that is PayPal, right? That's PayPal.

Liberty:

Target's not going to be out there.

David Senra:

It's so crazy that that happened.

Jimmy Soni:

It's so crazy and then it becomes a thing. But part of what happened is when they succeeded, when they captured a hundred percent, or not a hundred, but 80 plus percent of the surface area on a small website, not a but a medium size website. They could expand to the rest of the internet. All right, fast forward, eBay doesn't like this state of affairs. They have a parasite leaching away money.

Liberty:

Tapeworm.

Jimmy Soni:

And what they did was they did various things to try to shut it down and monkey with the site, throw sand in the gears of PayPal, find various things. Then, there's another strategy which was like, well, what if we just buy them? So there are all these negotiations. There's sort of four separate formal and a bunch of informal but four separate formal negotiations for eBay to acquire PayPal. And the problem is there's a lot of bad blood and there's a lot of egos involved in this and there's a lot of personal things. It's not just math. It's not just like, oh, here's your value, here's the check. It's much more complicated than that. The executives don't really like each other.

The cultures aren't a great fit. There is though this problem of PayPal in realizing that they want to go public. They also realize that if eBay comes out and says, look, their entire business is dependent on us and if they go public and we decide to flick the off switch they're done. If eBay comes out with a statement like that, PayPal's IPO becomes a big problem. And this is not a bumper crop time for IPOs. They're one of the first... They're the first to file after September 11th. They're only the second IPO after September 11th and we're coming out of two years of the .com bubble bursting. So not a great time. So what happens, and this is a genius move, is Reid Hoffman basically, as I understand it, Reid Hoffman and Peter Thiel and a few of the other executives are like, look, if we're mid negotiation with eBay to acquire us, they can't comment publicly.

They wouldn't be allowed to talk to the press because it would be breaking both the formal and informal rules of an acquisition. You're not allowed to go badmouth the person you might acquire in the press plus it'd be really stupid.

Liberty:

Try to lower their prices. Right? It will be-

Jimmy Soni:

Exactly. And so Reid begins effectively a fictitious acquisition process with eBay so that he muzzles them while the company is going public. When he described to me, he was like, yeah, I would go into these meetings and I'd sort of feign interests and play to do this thing. And then he said he's like, I did have to get assurances from our board that if they came back with a high enough offer, we would have to say yes because it would be really bad for us if we didn't. But they never got to that place and he basically would just extend the negotiating window as far as they could go up through Valentine's Day, which was the day they went public.

He was like, I accepted. And then he said, Meg Whitman called him and said, what if we offered you... And then there was a dollar figure that would've made sense and Reid had to say, we're about to go public, I'll just, we'll talk after the IPO. And what it did was it made sure that nobody from eBay, at least in public and in the press that was going to knife PayPal. And it was this unbelievable, I mean if you think about what that involved, lawyers and papers and meetings and CEOs, that was genius. It was so smart to do that. But there were a number of these kinds of guerilla tactics. That was one of my favorite ones. Cause I remember Reid got really animated, wonderfully animated while he was talking about it because I think in the end they look back at it and they're like, wow, that was the most absurd thing. We essentially created an acquisition process when we knew that all we were going to do was go public and then wait for them to acquire us later.

David Senra:

There's so many times when I was talking about the book publicly, I was like, you were reading the book. I'm like, that's just one smart thing after another. I think that is one of the greatest endorsements of actually picking up the book and reading it, not only understand the story of a very important company and that did help shape Silicon Valley just like the subtitles says, but it's like it's going to make you think it's like, do I think creatively like that when I'm solving problems? I would've never thought about, Hey, let's give people cash to wear shirts so they realize how important we are to the platform.

I wouldn't have thought of, hey, we have a giant risk. We're in our quiet period. We can't come out and defend ourselves cause we're about to IPO. How do we get to make sure the platform that we built our company on top of to not say anything to wreck this? There's just unbelievably creative, creative and intelligent ways that are just not straightforward. I think just constantly exposing yourself to this form of creative problem solving will cause you to think, wait a minute, I have a bunch of unsolved problems in my life. I haven't been able to solve them because maybe I'm thinking too straightforward or too inside the box. What would they do if they were me?

Liberty:

A cool thing in the book is that it's interesting to see what changes with these people, but some things don't change so much. There's a ton of description of Elon that's like it could be from today. They talk about how he's a great salesman. He described what he's seeing over the horizon and he's great as getting people to buy into that. And some of it is true and some of it he may describe his product as his vision is there, but the product's not quite there yet. The early days of x.com, he was describing this financial thing with everything under the sun, but the product was basically really basic.

There are parts where it talks about how Elon was constantly sleep-deprived and being really hard and driving people really hard and talking about how they have to work all the time, sleep at the office, all that stuff is, we hear these stories about Twitter today, so some things don't change about these people. It's interesting to know where that came from, where they had to do that and that's what they learn. That's how they learn what a company is. Even if Twitter isn't a startup, he kind of brought that forward the rest of his life.

Jimmy Soni:

Yeah, I would say that when people use, they make fun of the phrase maniacal urgency. Like that he used to describe Twitter. I think in some company-wide email, he had sent out a note saying, I expect people to operate with maniacal urgency or no, no, he said, I myself operate with maniacal urgency. This book is 400 pages of maniacal urgency. It is mainlining maniacal urgency. It is, I think one of the things, and David could comment more on this, I was going to say, you don't have many advantages if you're a startup, but I would say you're almost entirely disadvantaged. But one of the advantages you have is speed, the ability to move very, very quickly and to create artificial pressure, meaning your employees just sort of expect that they're going to work all the time. They expect that this is sort of life or death.

You don't know that the next quarter your shareholders are going to give you more money. There's sort of all these things that you just take for granted if you're in a bigger institution. And I think one of the things that you see in this story is, and it's something that again we miss because it's not paid attention to, engineers at this company, early x.com appreciated working for a CEO who was technical and they appreciated working for a CEO who's going to work super, super, super, super hard seven days a week. He was not the person in a suit. In fact, he sort of was the opposite of that person. He was not the person that was above playing video games. He was not the person... There was sort of this quality where I had, and this is by the way, this is not my interpretation, this is what people told me during my interviews.

They said we appreciated working for him because he put as much pressure on himself as he put on us. So yes, was it hard? Yes, but he was hard on himself too, and that mattered a great deal. And so it didn't matter, for example that he had an eight figure exit. He could have retired. It was all sorts of things that he could have done whatever he wanted, but he was in the x.com, this small crummy office making it work side by side. And I think you are right to identify that this is a character trait that has stood the test of time. I think the other thing is, as the startup world has gotten, let's call it more professionalized, there is a way in which we still have to appreciate that these underfunded entities taking on bigger Goliaths in their industry, trying to change something, trying to scale something, and it is going to be messy and around the clock and there's not a kind of normal cadence.

And PayPal obviously captures one version of that, but it's not the only one. David commented on the, it's the story of every startup, but what you identified is something interesting, which is there are certain kinds of people with a certain kind of energy that can be the battery that powers that ecosystem. Elon is one of those people, and I think it's why if you were to ask about the work environment at early Tesla, early SpaceX, and now Twitter, it's going to look a lot like these PayPal years because the only thing you have is the ability to move super quickly against Visa and against MasterCard or in the case of Tesla against Ford and against General Motors or in the case of SpaceX against Boeing and Raytheon. And so in a world in which you as a starter are always fighting incumbents, if your CEO is not going to work at a breakneck pace and really try to make the thing live, what hope would you have that the company would?

David Senra:

You did a fantastic job describing one of the main advantages that startups have, which is speed. The other one you also mentioned in your book is focus. They only thought about PayPal, eBay thought about eBay, and then also I forgot what their version of PayPal was, but you talked right in the book, it's like, Billpoint, they're developing Billpoint, but it's not the only thing they're working on every day. And so it's like if you're going to part-time something where this entire group of highly driven intelligent fanatics, that's all they're thinking about. It's like you can't possibly think that you're going to win that competition. So I think speed and focus is something that again, is one of the only advantages because it's certainly not resources, certainly not money, certainly not experience. Actually let's talk about that because you mentioned that earlier and when I'm rereading my highlights and rereading the book, before we sat down to talk, I was fascinated by the pre-history of PayPal.

You have just a few sentences here. That's way before they even merge, if I'm not mistaken with that Confinity merges with x.com and this is a Confinity side. And you wrote this effort arguably represented PayPal's earliest iteration. The company now boasted an angel investor with a closet office. That's Peter Teal now that is multi-billionaire, almost like head of state level assets, Peter Teal. Go back 25 years, he's working out a closet, guys... A closet. So he's like the company now boasts an angel investor with a closet office teal, a CTO without air conditioning, luncheon and a CEO with a 2100 mile commute. And that was Powers. And when I got to that section of the book, one of my favorite collection of writing that has been eliminated from the internet, but you can download PDF is Markus Dreesen used to be this very prolific blogger.

And so there's like this 200 page blog archive that's available on his venture capital firm's [inaudible 01:07:34] website. I think if you just Google P marker blog archive, you'll find the page. And I've read it, I've done a podcast on it. I'm going to reread it because it's like 200 pages of this guy's been... He just had a very unique set of life experiences and he writes about all the stuff he learned. And so I'm sitting here reading the pre-history of PayPal. I'm like, that's fucking crazy that this is going to turn into what it's going to turn into. And I was like, it is crazy, but it's not novel. We see this over and over again.

And so Mark has this great quote, I'm going to read you guys, and this is Mark writing. He says, I'm a firm believer that most people who do great things are doing them for the first time. And then he talks about how he chooses people he would hire for if he has a project. I'm a firm believer most people who do great things are doing that for the first time. I'd rather have someone all fired up to do something for the first time than someone who's done it before and isn't that excited to do it again. You rarely go wrong giving someone who is high potential the shot.

Liberty:

Wow. And that's PayPal's story. The bankers were freaking out that the IPO because when they published the filings, all the executive of the average age was like late twenties. And to the average investor, oh, they need more experienced people, but the reason why they succeeded is because they didn't know it couldn't be done. That's kind of like the other part is the ambition. Even at zip two, Musk was like, this is going to be the next Yahoo. They ended up making all their money from selling backend stuff to newspapers, but his ambition was much bigger. And then x.com, his ambition was to be everything about money, even stocks and indexes and trading mutual funds and checking accounts. And he always had this ambition. And even if you don't realize the full ambition, just keeping your mind open that you can go there. Well, maybe you find something that works. Well if from the start you had been holding yourself back and trying to only think of realistic things and of small things, I don't know, it seems to lower the chances that you'll hit on something that has product market fit at some point.

Jimmy Soni:

Look, it's been written about by obviously people like Mark Andreessen and others, but it's funny, you just, once you're in an industry, certain things become chivalrous like you can't question them. You have this like, oh, we've just always done it this way. And this is actually kind of a trope with startups. It's nothing we need to drill down on too much. But the point I think is when Peter Keel and Max Levchin are meeting with somebody who's a credit card industry expert, it's one of my favorite little moments. And they're asked like, Hey, so you know guys have all these users, but how are you going to deal with chargebacks? And Max and Peter, two very bright people are like, what are chargebacks? And then later they reflected and read reflected this as well. He said, if we had known how hard this was going to be and if we knew everything, we probably wouldn't have done it.

The truth is it was so hard and we were so naive about how hard it was going to be that we just never would've done it. If somebody had said, here's all the things you're going to face and here's all the things in the industry you need to know about. We've been like forget that. And by the way, I think he means that literally not metaphorically, because there's so much regulation in the financial services industry that they wouldn't necessarily have wanted to wade through a thicket of regulations to build a payment processing company. And so my thought is that part of what happens if you're trying something for the first time is you just get to dispense with a lot of that stuff. And Silicon Valley is great at that. What Silicon Valley is great at is taking an industry that everybody knows about, rockets, and saying, we're going to do this for the first time.

And if we were starting for, they call it first principles thinking, but let's use David's phrase, which is like, if you can come to this thing for the first time, look at it and say, well, this doesn't make any sense and this doesn't make any sense. And every time we use a rocket, we spend multiple millions of dollars. Why can't we just make them reusable? The laws of physics is just we can, let's figure out how to do that. In a similar way, what happened in this situation? This is actually a funny comment that somebody made to me. They said PayPal should never have existed.

Visa and MasterCard should have just gotten together and built PayPal or Visa, MasterCard, American Express, because all they needed to do was just provide base level credit card funding, like to serve as a master merchant. And they could have just built the master merchant. They could have just built PayPal, but they didn't because they thought, oh, these small dollar liberties ever going to want to send me $5, that's never going to happen. And even if he did, the reward isn't worth the risk because there's just too much potential for fraud. That was the niche that PayPal occupied. So it wasn't some sort of big sparkling insight. It was just they looked at this thing fresh and they said, well, we could manage the risk. We could figure out how to figure that out.

Liberty:

It goes back to the speed. It's like, I think Visa and MasterCard would build PayPal, but by the time they get to that point, it already exists. Someone much faster than them has seen the opportunity. I've seen the internet growing by a thousand percent a year or something, saw where it's going and then built it. And then by the time the big giants wake up, well, it already exists. So now they have to deal with it.

David Senra:

And you know it's a good idea because in present day, there's a million ways for you to send somebody money. You know, you could do Zelle, you can do CashApp, you could do Venmo, you could do this peer to peer, let's use the internet to send each other money. You look back and how the hell wasn't that built into it? I think you said in the book, or maybe it was Peter Thiel was talking about it's we knew it was a 20x improvement or a 10x improvement because it's people were sending checks. It's like, imagine selling a Beanie Baby. And they'd like, all right, send me a check 20 days from now or 10 days from now. It's like, this is so stupid. How do you know if you're actually going to get paid? And then once you have the check, there's no guarantee there's actually money in this account. Why would you do something like this?

Liberty:

I remember doing this. I sent a money order to someone to buy a stereo amp back in the day. Yeah, it was terrible. That's the thing, right? It's like all these nerds, they were early users of all these technologies. The suits at Visa, MasterCards were probably not using eBay back in those days. The internet was so not user-friendly. The early days you had to install your TCP IP protocols, the computer you bought wasn't even set up to go online out of the box. So all these people saw all of these problems that they could try to solve much, much earlier than most other people.

Jimmy Soni:

And I think the other part about it is once they had a foothold, the incumbents decided to attack and then they got their competitive juices going. So I think that's a big part of the story as well. Once you sort of establish your little part of the map, everybody's like, oh, now that's an opportunity, so let's go pounce. And that actually led to a lot of work to defeat Ebay, hold off the credit card associations, delicate dance with Wall Street. But I think that that's a part of this too, meaning in a world in which I think work life has generally improved, I think it would be a mistake to assume that hard work is not a part of building a startup. I had a venture capitalist, and I won't say his name, but a pretty prominent venture capitalist say to me, thank you for not ignoring the fact that long hours and late nights and weekends were a part of PayPal's success.

And he said, eh, it's really important because he's like, I was getting knocked on Twitter whenever I talk about the hard work that's involved, but the hard work was the difference maker in a lot of these situations. Let me give a very specific example. One of the things I did was I always tried to interview people who were not famous and not in the news. I interviewed a lot of customer service reps. So customer service reps are awesome to interview cause their stories are legendary. And so I found all these people living in Omaha, which is where PayPal's customer service outfit was, and I just tracked them down using just Google searches and I would call them, leave voicemails, send emails, and enough of them responded to me. For anybody who's going to do a project like this in the future, just make sure you don't only focus on people in the boardroom, you got to go top to bottom in a company.

Everybody, people are there for a summer, people are there for 20 years. So I find these customer service people, and one of them says to me, Palo Alto always impressed us, meaning Palo Alto like the tech and engineering people and the business people. And I said, well maam, could you tell me more about that? Why? That's a very specific thing to say. I want to learn from you. In your experience, why did Palo Alto impress you? And she said, you know what would happen? A customer would write in with a complaint and we would get on the phone at maybe 6:00 PM with Palo Alto and we would identify what the problem was and we would get an email at one or two o'clock in the morning and they had fixed it. And she said, this happened over and over again. And she said it also happened internally, meaning if we had an issue with one of our tools, one of the tools to detect fraud or something, we would say something, 24 hours later, somebody would fix it.

She said, it was amazing. We just had never seen anything like that before because at other companies you'd have a process and you'd have a plan, you'd build it in your roadmap and all these things. And they said what happened here was it fixes what happened overnight. And one of the people on the product team identified to me, they said, how do you think we won over all these eBay sellers? We won them over because the moment they complained about something, we fixed it right away, even if it meant staying up all night to do it. And so I do think of would Visa do that? Absolutely not. It's just no planet in which that's going to happen as quickly. But I think it's really important because it ties together that operational tempo you need along with a commitment to hard work because it doesn't happen magically at one o'clock in the morning.

It's teams of engineers that stay up and fix things until one or two o'clock in the morning and is the only advantage you have. And so I think there is this kind of idea that somehow this can all be, this can all happen. A zen garden, it can all happen. We can all sleep, everybody can work exactly the same. And there could be, and I think there's room for that. It's not that this culture should be the way every company works, but I think if you are at a startup and you are working hard, you should take some heart from the fact that that's actually how these lasting companies come to be. And there is simply no, in some ways there's no other way to do it.

David Senra:

Can I say something about that if you guys don't mind real quick, because it's been on my mind a lot and it's something I'm trying to do in my own work, and it's going to tie to something that Elon said in the book, but I think another asset that you could have if you're whatever, it doesn't matter what you do. I just saw this clip of Tiger Woods talking about if I'm playing, I'm here to win. He's got a level of intensity. I go back and I'm obsessed with young Jeff Bezos where I just read his shareholders for the third time, just did another episode on it. It's like you watch his videos when he's like 35, 37, 38, the very beginning of Amazon, maybe a little younger. And what he'll do is you see the manifestation of how important it's to him through his intensity. He'll like look at the interviewer, and in many cases, he'll lean his body forward, literally his eyes, we're going to be the most customer-centric company in the world.

We're going to be obsessed with customers. It's like, this guy's going to fucking kill me. He's crazy. And I'm trying to do this where I think energy, enthusiasm, intensity, I think those are very attractive to other humans. And if you can show people that you really give a shit about what you're doing, they're more liable to join you in your mission or at least help you in the way they can. And you have this great line in the book where this is before the merger between x.com and Confinity, it's an email exchange if I'm not mistaken. And they're talking about, oh, Elon, you're not like, you're too distracted or whatever. And his response is crazy. And this is how I feel about podcasting, where it's like I refuse to do work on anything else but my podcast. And he goes, I think you may have misread me a little.

My mind is always on x.com by default, even in my sleep, I am by nature obsessive compulsive. What matters to me is winning and not in a small way. So it's like that's an email from Elon. This is a video you can watch from Jeff Bezos. It's the same idea. It's like I am alive. I mentioned this, I said this on a podcast recently, and I didn't even know I was going to say it right, because it's a lot of my podcasts is improvised. I'm trying to approach life and walk around in life like a human exclamation point. And I don't even know where that came from. It just came out. I was like, oh, I kind of am doing that yeah but I kind of am doing that. It's like people, they respond to the energy and the emotion and the intensity that you have. And I do agree in the beginning of companies, and even later it talked about Sam Walton a decade into Walmart was working unbelievably long hours way after he had to financially.

Now he took a lot of breaks too. That's why I think you don't see a lot these, especially in the founders. It's like Sam's up before the sunrise, his first... He talks about some of the best thinking time he'd ever had. He'd get to the office four in the morning because nobody's there. And so he's like two hours of nobody bothering him, which I think is very important. But then also throughout the day, he's hunting with his dogs or he's bringing his tennis racket or whatever. He might have a long day, but he's got blocks in between there where he's giving himself a break. I think a lot of entrepreneurs understand you have to give time for your brain to actually think about what's going on. You can't just work, work, work, work, work from your eyes open until the time your eyes fall asleep. I also think that one, I don't think you should talk about that publicly on Twitter because that's not the right audience.

You're going to have a lot of... You're going to have a lot of blow back just like your investor friend was saying. But what I would say is, in many cases though, I think when people listen to it's like, oh, we're not glorifying this behavior. Because in many cases, when you read these biographies of people that accomplish great things, it's like they optimized for that one thing in their life and it's going to be the detriment. You cannot have a relationship with other humans, right? I am super into my podcast. I work seven days a week on it. I spend a lot of time on it, but I'm married. I'm going to be a good husband, I'm going to be a good dad. I'm going to take care of my health. I am going to have fun. So it's like, it's not that I work on the podcast a hundred hours a week, but I am super into it when I am working on it.

But I understand partly because I've read so many of these biographies like, oh, I want to be as good as I can at my work, but I also want to be a complete human. And in many cases, if you're just going to be working from the time your eyes open to the time your eyes close, you're not going to be a complete human. You're going to be most likely wealthy, most likely, very financially successful. But I think you're going to get to the end of your life unless you're psychopath and be like, damn I should have built better relationships with other humans cause I think we are instinctively... Even somebody-

David Senra:

... should have built better relationships with other humans, because even somebody as introverted as me, and introverted as Liberty, you instinctively need human relationships, whether it's your marriage, or your kids. One of my favorite things in the book that I wrote down was what you said, I loved the letter you wrote your daughter at the very end of the book.

Jimmy Soni:

Oh yeah, that's great.

David Senra:

I told you it made my wife cry.

Jimmy Soni:

Right.

David Senra:

When I got to that point, I go, "Read this, honey," and she started crying, and that's how you know you're a good writer, Jimmy. I think you already know you're a good writer, but I just want to-

Jimmy Soni:

Well, thank you.

David Senra:

This popped into my mind, I wasn't expecting to talk about it, but one of my favorite things that you said in the book, you told the story earlier, it's like they went on to build companies together, they went to each other's marriages, they're having dinner parties, all this other stuff. But you're giving advice to your daughter, who's really young at the time. And you said, "Your life will be shaped by the things that you create and the people you make them with."

And I think that you're speaking to what makes us human, and that's the relationships with other humans that, no matter what, are very, very important to getting to the end of your life and actually saying, "Damn... I have one shot at my life and I enjoyed it, because not only through my creative outlet, through my work, but because of the relationships I've made with other people."

Liberty:

I've heard you say this, David, I don't know where, but when you talk about how only founders really understand other founders, right? This intensity. And I guess we can coin a term, I think we have to look for the Ed Thorp balance, because it's possible to go too far, but even someone like Ed Thorp, I think he went really far, he just made some trade-offs to optimize also for family and all that. But even at that level, I think this kind of intensity is also a filter. And so, it helps with... When I meet people like you guys, I feel we understand each other on many levels.

But even in a company like PayPal, you read in the book the stories of people, like they just go to visit there, and sometimes it was an interview, sometimes they didn't know it was an interview, but it turned into one, and they visit there, and it's so intense, and it's so like a math puzzle, and they're seeing people sleeping on the floor, and people knew what they were getting into, mostly, maybe some didn't, but I think a bunch of people who are not looking for this type of life, it was clear that this wasn't for them.

But some people seek that stuff out, some people seek out intensity. You read about these... David Goggins, or some people, they'll jump out of planes to be firefighters in the middle of nowhere, and the Navy Seals, and some people like that type of intensity and get rewards from it, not just financial, but what we were talking about, right?

This intensity that's near combat, where you make the Band-Of-Brothers type of friends, and the stories that you tell for the rest of your life. It's kind of like the equivalent of high school for some people, where they always try to relive that, and they stay friends with the same people forever and they retell the same stories.

Well, PayPal was kind of a founder, entrepreneur, high-school type of situation. I don't know where I'm going with the metaphor, but it feels like it's a filter on both sides, and as long as you keep it very clear what type of company you're running, I think you're going to attract the right type of people, and the people who wouldn't fit there will naturally gravitate towards... Going to work for McKinsey or Microsoft, or some big bank, or something. Elon had a lot to say about big banks not being able to innovate, and move fast, and all that type of stuff, this type of huge difference in speed, and ambition, and innovation. And they talk about how, when there's a problem, they don't look for an existing solution, they learn to invent a new one. This type of mindset isn't common elsewhere and it must be very, very attractive for the right kind of people.

David Senra:

That's why I think you shouldn't talk about it on Twitter, because the point is... First of all, being an entrepreneur is like, you're crazy, just go get a job at a big company, like "Why are you doing this?"

So it's a tiny percentage of the population in general, and then, inside of entrepreneurship, you have even a smaller subset that work like Elon does. And so it's like then you're broadcasting this message out to 99% of people that don't fit into who you're targeting, and it's not like you have to tell those people that are going to do this, to do it, they already know if they're going to do it or not.

No one had to tell Elon, "Hey, you should work really hard, you should sleep at Zip2's office."

There's no point in engaging this, and I see this over and over again on Twitter specifically, where it's like people argue, every few weeks things go viral, "Let's argue about how much we should be working."

Who cares? Just do whatever you want to do. I don't ask people, have I ever emailed or texted you guys, "Hey guys, how many hours should I work this week?"

It's like, "What the fuck are you talking about?"

Jimmy Soni:

Right.

David Senra:

These discussions are stupid. It's a waste of time. Just do whatever you want to do. And if you need to read other people's opinions on the way you should be working, then just know that you're most likely not the personality type to be an entrepreneur to begin with.

Jimmy Soni:

The one amendment I would add to that though, sometimes I often think I'm writing books like Founders, for somebody who is at the precipice of their decision making, maybe they're just about to leave college, or they're just transitioning from high school to college, or they've just left college and they're in a job that doesn't make them particularly happy. And what I don't like is when we look at people... Let's take Steve Jobs because this would be a funny thing, but it would be ludicrous to be like, "Man, I really wish Steve Jobs would've had more work/life balance."

What are you talking about? I'm so happy that he was insanely imbalanced, and I don't know fully what drama that caused, we know a little bit, but what drama that caused in the rest of his life, but thank goodness that he was wonderfully, totally, crazily imbalanced.

And he attracted people, even like Tim Cook, 04:00 AM every day, seven days a week. Apple, right? Jony Ive, totally obsessive designer types. Thank goodness that there are those imbalanced people. So what I also want to do, sort of like what Tyler Cowen's been doing with his book, Talent, sound a note in defense of total absorption, hard work, ingenuity and initiative and the willingness to grind, because quiet quitting shouldn't be the new normal. In fact, I think it's actually kind of sad. The fact is, work can be a vital place, it can be a place where you come, and I read this and wrote about it, it can be a place where you show up and the people around you, you're just like, "Boy, I really better step up my game game, these people are crazy."

And I think that just as, we shouldn't make people feel bad if they decide they want work-life balance, we also shouldn't make the people who are imbalanced, feel bad. If you are a founder and you are crazy obsessed, I kind of want you to feel amazing about that, because I think that energy is hard, it's hard on the best of days, and people won't get you, your friends won't understand you, you'll have challenges in your relationships.

But nobody would look at, again, Steve Jobs as a canonical example, but let's say Sara Blakely, early days of Spanx, was she working all the time? Yes. Was spanks a hugely successful consumer product in a very competitive industry, with a lot of sharks and pressures? Yes. Would I have wished upon her, "Man, you should really take more Fridays off, or Saturdays?"

No, of course not. Thank goodness someone is willing to go through what they go through to build the things they want to see in the world.

And by the way, it doesn't work for everybody, it doesn't have to work for everybody. I am not saying it's a prescription for everyone's life. What I want is for someone listening, who does live that way, to be okay with living that way, to not feel like, "Oh, the rest of the people I know go out on Friday nights, I don't really go out on Friday nights. Is that weird? Should I feel bad about that?"

No, absolutely not, because there are people like you in the world. You may need to work harder to find them, you may need to find solace and the humanity that David was talking about, you may need to find that humanity in other things or you may need to delay those kinds of human connections for a little while. But I do want to sound a note in defense of the obsessive, it's what you said, David.

You just know you were going to kill yourself to make the podcast not at the expense of your other relationships, but you're going to make your podcast so successful and you're going to do it for a long time. Any person looking from the outside in might be like, "David, you're crazy."

It irritates me when I hear that because I'm like, "From where do you think great things happen?"

Hamilton, obviously a super popular musical and everybody celebrates it, there was a video where Lin-Manuel Miranda talked about working on a single stanza, or a single lyric for a year, a year of finding the right words for one tiny section in a song. And somebody could have been like, "Dude, just put it placeholder in man, move on."

Or just find a good enough word, but do we get the magic that we get from Hamilton if somebody's willing to phone it in? I don't know, and by the way, again, I'm not advising that everyone do this, I'm simply saying that if there's somebody in your office who is there on Friday and Saturday nights, don't tell them that they should go get a life because maybe they've found their life's calling. Maybe this is the thing they want to do.

Liberty:

This is such a great point about Hamilton, because if we zoom out, we're mostly talking about business here, but this is happening everywhere. Am I glad that David Milch obsessed about Deadwood so much, right?

So there are artists out there, there are scientists, there are engineers, the guy we invented the first MRI machine, he probably wasn't working just nine to five, I don't know that story, but all kinds of discoveries, and great mathematicians, and Einstein and all these people were not necessarily the most balanced in every other normal way, but you don't get unusual success with normal lives, right? That's kind of the trade off that you have to make.

And as long as the people are doing it voluntarily and they get intrinsic reward from it, I think it's great, I think it's fine. I think the opportunity should be there. Look at how much fun was made of Elon when he talked about, "I want Twitter to have a hardcore culture."

David Senra:

Yeah.

Liberty:

Was it the best way to phrase it? I don't know, but the idea should exist, some places should be places where we want people to work really hard and we want to attract these people and it's an opt in, you have a choice to come work here... Maybe Twitter isn't the best example because it was so messy, but for a startup, when you're starting with a blank page, you can't decide these types of things, and try to attract these types of people, and I think it's great too. Yeah, I'm glad that we have a world where these outliers are creating most of the things we enjoy, from art to science, to medicine, to technology to businesses.

David Senra:

And I think, you are glad we have books like Jimmy's, where you could read this and say, "Yes, I want that!" Or you could read that, "No, I want to pick a different route."

Liberty:

Yeah, I'm glad Jimmy spent more time looking at that story than the actual time it took for the company to exist, right? You spent what, five or six years on the four-year story?

Jimmy Soni:

Yeah, six years, and part of what I want to, as we're getting to the close, is just say, it is interesting to me that part of what happens is that in that kind of culture of hard work, people who came in and maybe weren't insane hard workers also leveled up their game. This is sort of the Kobe effect or the MJ effect that you did see people there all the time, so then you were there all the time and you leveled up accordingly. And so getting back to Liberty's original question about nature versus nurture, there was a feeling in the office that a great deal depended on the individual and on the individual's decision to work hard and do well and try to make things happen. And I think that's part of what these kinds of cultures do.

I think maybe it's more common for somebody to be a superstar in a culture where everyone's kind of checked out, and then they start to check out too, because what's the incentive for doing well, if you're in a kind of whatever... But then you have this other portrait, which is a place like PayPal, where everyone is so good, you're intimidated at how good they are. And so you have to be really, really good.

I interviewed this person, this quote's not in the book, but I interviewed this guy, Ted Fong, who was on the product team, he's like, "Nothing was scarier to me than my one-on-ones with David Sacks, because I knew he had thought about the problem that I was coming in with, 20 different ways, and I had to be spot on with my analysis, my data, everything else."

But he said, at the end of that little meditation, that fear was really good, "I was a little bit afraid, and so I had to come in and be really excellent at what I was doing."

And I heard that again and again in different dimensions of the company, that they prized that kind of excellence, and because the place celebrated excellence, people became better. And I want that for other people because I think it actually forces you to really... When I write books now, I'm thinking to myself, "Man, I'm writing for David and Liberty, this shit better be good, because David's read everything..."

And I better be saying something new, my standard is high because my friends have high standards in other areas of their life.

David Senra:

And I think a great documentary that illustrates the point that you just described, is the Last Dance on Michael Jordan, because he talks about this, even Scotty Pippen say's this, Pippen was good, he's like, "Playing with Michael Jordan, two things is going to happen, you're going to get better or you're going to get kicked off the team."

Jimmy Soni:

And he had no patience, he would throw punches, he would call people out... It was crazy... That was one of the things that's most remarkable, I recommend a documentary to everybody.

Liberty:

Yeah, it's great. I don't even like sports.

Jimmy Soni:

Yeah, I don't sit around and watch live sports, but I watch documentaries about sports figures.

David Senra:

It's the same people. When I did a three part series on Larry Ellison, I read three biographies on him and I go, "Oh, if Michael Jordan sold enterprise software, he'd be Larry Ellison."

It's like the same person, they're super competitive. They have to win at all costs, they make up fake enemies in their minds to motivate them, they burn the boats, that's like the same person. I collect funny Michael Jordan stories and I just heard a new one that Stephen Jackson said on a podcast, which is fantastic.

I think a lot of people know that Michael Jordan owns an NBA team, and he was so disgusted with how his team was playing... They all wear Jordan brand, his clothes, his shoes. He went to the practice, made them take off all their Jordan brand clothes. Then he took a bunch of people off the bench, put them on his team, he played the starters, and he waxed the starters with the bench, and he was 50. He literally, first of all, he comes to practice, "Take off my clothes, and then get on the court, I'm going to kick your ass with the bench."

Liberty:

Wow.

David Senra:

Yes, I've heard a lot of Michael Jordan stories. I've never heard that one before. I was like, "Oh my God..."

Jimmy Soni:

That is amazing. The thing I would say, because a lot of people, when they're listening to podcasts, it's like, "Well, what can I take away from something like that?"

And here's what I would say, this applies to me personally, but I think it probably applies for the two of you too. Sometimes, during the depths of my totally crazy, beautiful mind existence, when I was writing The Founders, one of the things I would say is, "What if Kobe Bryant was writing the Founders?"

Or I would think, "What if Michael Jordan was writing the Founders?"

I would ask myself this, it sounds like a ridiculous question, but I would often adopt a pose, where I would say to myself, "I'm the black mamba, I'm just doing biography." And it became a real vivid thing in my head, I've never actually spoken about it to anyone, and you're the only two people in the world, frankly, who I could even talk about this with and not get self-conscious.

But I would ask myself, "What would Kobe Bryant do?" And what he would do, is he would get up every day at four o'clock in the morning and he would just continue to turn pages in these emails and he would go through everything. What would Kobe Bryant do? He would email customer service reps in Omaha, who nobody had ever spoken to. What would Kobe Bryant do? He'd pay $10,000 to a fact-checker. Why? Because I want the facts in this book to be buttoned up. You can adopt the mannerisms or habits or the way someone works, and just apply it into your life with a little bit of seasoning and it will actually shift how you work. There were definitely Saturdays and Sundays where I was saying to myself, I could literally talk to myself, "It's a beautiful Saturday, it's spring in New York, all my friends are having fun and doing things... No, Kobe Bryant would be in the gym, and this is your gym."

Your gym is these old PayPal emails and you need to get through them, and you just have to keep going, and every rep matters, every thought matters. And again, that's a useful tool, to ask yourself, pick a person who's the best at something, and say "How would they approach it?"

And then even create a little mantra in your head about it, say to yourself, how would they attack this? And then you can actually visualize, I could literally could see, "Well, if Michael Jordan had this kind of access and these tools, here's how he would do this, and he'd be a crazy person about it."

I was like, "That's just how I should do it, I should just do what he would do if he was in my situation."

David Senra:

That's the role biographies play, and also it could be fiction too, because in the book... I watched the movie, because Max Levchin had watched that crazy movie by [inaudible 01:36:56] or whatever his name is-

Liberty:

Seven Samurai.

Jimmy Soni:

Seven Samurai.

David Senra:

Yeah, where he is just like, "I watched it a hundred times..."

And this is the roles that podcasts play for me, obviously some of my friends biographies do too, but he said, "What would Shamada do?" I understand how this guy thinks, I've studied how he thinks. Now I'm presented with a difficult decision, I'm running it through my own calculus, but to enhance that, let me ask what would Shamada do in this situation?"

This is exactly what you're describing. It's like I'm running it through my own calculus, but I'm asking: If Michael Jordan was writing this biography, if Kobe was writing this biography, I like how you tied this all together, it's like, "What can you get out of this podcast? What can you get out of this book?"

You're going to develop these models of these people that you admire and you're going to be able to understand how they make decisions, and then once you do that, now you have a tool, they're on your shoulder anytime that you need to make a decision in your own life. That is why one of my favorite lines in [inaudible 01:37:42], because he's like, "There are ideas worth billions in a $30 history book."

Because you're able to think like a Steve Jobs, doesn't mean you have to... You're not building the next Apple, this is an idea I stole from Kobe Bryant who you just mentioned, you don't copy the what, you copy the how. It is how he played basketball, not that I'm trying to make it to the NBA! And I think that is universally applicable, no matter what you're doing.

Jimmy Soni:

Oh man, this is our favorite thing to riff on, right? But it's actually the case, that what's nice is you can learn these models without having to spend a lot of money, and do them on the side while working, and apply them pretty quickly and in a low cost way. So let's take a practical example, you're somebody that's in sales and you do X number of cold calls or emails or phone meetings every week. If you ask yourself, "What would Kobe Bryant do?

Well, he would just do one more every day than he had done that day or something, and it doesn't have to be some big stark dramatic change. It can be anything and you can apply it pretty flexibly, but the other cool thing is that you don't have to buy a book or a course or training.

If you just go on YouTube and watch interviews, you can learn about the models that they studied, you can look at the things that inspired them and then can as a result of that, I would have Last Dance playing in the background when I wrote Founders, no joke, I thought about that a lot. And why? For me it was a practical thing, there's a teamwork dynamic in Last Dance that's very cousin to PayPal, lot of superstars, Dennis Rodman, Michael Jordan, Scottie Pippen, David Sacks, Peter Thiel, Max Levchin... It's like there's a superstar dynamic, so I always was thinking to myself, "Huh, that's really interesting, a team of real heavy hitters, and they have this other team of real heavy hitters, how do I make sure that the energy of that comes to life on the page?"

That's what I was trying to think about, so I would have it on all the time. But more personally, I was always thinking about, "Okay, if I were writing a book for the ages, a dynasty level book, what would that look like?"

And I was like, okay, this is what I think it could be, and it was inspiring, you don't have to have it every day, you're not going to feel it every day, but I do think that it is useful to adopt the "how", not the "what", and look at a process and say, "Hmm, I could do this, and I could do it the way that MJ would, if MJ had a podcast."

Which he might, I don't know.

Liberty:

Everybody gets to pick a standard for themselves, and people who don't do it, that's still picking a standard. Refusing to choose is still choosing. And how David said, it's not about the specific steps, but you pick a North star, and you just decide, "I want to go in that direction."

And Jimmy, when you talk about doing more for your book, right? Wanting to do more, I know you're not doing it to try to impress other people. It's probably more impressive to other people to have a more normal life, and have a more normal interest, or pick a more normal career path or whatever. You're doing it for yourself because you enjoy it, you enjoy the process, you enjoy the results. And ultimately it's all about: People need to "Know thy self."

Figure out what you like about this creative process and then pick what's right for you, and we have somewhat similar personalities, so we're talking about this, someone listening may have a very different personality and I'm not telling them to do the same kind of thing, but there is something for them out there. Don't just go with the flow and do what everybody else is doing in your neighborhood, or your family or whatever, figure out, is there a very different path that you could take that would make you more fulfilled, or achieve more of your potential?

I don't know, it it sounds all very "self-helpy" and all that, but it's true, once you decide to take more control of your life, to have more agency about all that stuff, it just becomes more fun. That stuff is fun. It's fun to learn, it's fun to explore, it's fun to meet people doing the same kind of stuff. I guess this is just my plea to the listener to take this stuff seriously, right?

It's not because we use names of people that seem unattainable, Michael Jordan. No, you don't have to be Michael Jordan, you just have to be the best version of you, the little mini Michael Jordan that you can be, in your own little world you can be a better person than you are now. And by using these people as examples and models and motivation, I think it just gets you closer to there.

David Senra:

I think it's a fantastic place to close.

Liberty:

Yes, any closing words? I think we'll have to figure out the next book club, we can't wait for Jimmy's next book, so we'll have to pick something by someone else, maybe, Becoming Steve Jobs or something like that. I'm partial to that book, but we'll have to figure something out guys, this was too much fun.

Jimmy Soni:

No, it's always a blast, and honestly, I come out of this conversation, I'm like, "I got to go work!"

I am ready to go eat my Wheaties and do it. I think what I would say, this is one of the things I admire about both of you that you do very well, but it was what I would encourage listeners to do as well, which is: You two are super broad-minded and read just across an array of things. In the course of this conversation, we have talked about financiers, space... Michael Jordan, all the other things... It's a whole thing, I don't know how you guys grew up, but I grew up really nerdy. I loved computers when I was a kid and you sort of get picked on and things happen to you and people make fun of you. And there's a time in your life I think, where you look at your "nerditude" or your sort of capacity for nerdiness, and you're like, "Man, I don't know, this is not going to help me meet girls..."

And you sort of look down on it. I think there's less of this today, by the way, because I think Reddit exists, and I'm very happy that it does. But what I would say is that one of the things I admire for both of you is that you give me permission to be a bigger nerd, which is really cool. It's really cool. It's the coolest thing to have friends, where if I said to you right now, "Guys, I have this crazy idea, it's a random thing, I'm going to go read 20 books on it."

You'd be like, "Go man! We want to hear what happens at the end! Enjoy the cave, we'll see you on the other side!"

That is not a normal way most kids grow up. And what I would say is to the listener, don't run away from that, because especially when you're younger, people will give you grief for it.

But remember that one of the moments in the book that reminds me most of David, is when this person walks into Elon's bedroom, this is just around the Zip2 years, and this person has come from Canada, he's kind of sussing out whether he is going to join this guy, Elon Musk that nobody knows, at this company, Zip2, that nobody knows... Or actually this is X.com, and so he is trying to figure out if he's going to leave Canada and come to Silicon Valley.

And he walks into Elon's room and it is piled high with books, and he remembered, he played back to me, there were a bunch of business and entrepreneurship books, on the top was of biography or something of Richard Branson, and he said, "I could sort of tell, looking around the room, Elon is in training, he is getting himself ready for this kind of life."

And I remember hearing that and I was blown away for the next three days, and I knew that was going to be in the book, that specific scene because this isn't accidental. It isn't accidental that he's studying from this and really going deep on these subjects. So my only... It's not a call to action, it's more of just a pat on the back, is if you have something like that that you were super into, and everyone around you thinks you're like a little nuts, just don't listen to those people. Don't listen to those people.

David Senra:

That's probably a good sign that's what you should be doing for work, because we live in the age of infinite leverage, being at the extreme end of your art is very important. That's a quote from Naval Ravikant, and so if people are telling you, "Oh, this is abnormal."

That you're genuinely or intensely interested in it, that's what you should be doing for work. You've already lessened the amount of competition you have because people are telling you, "Hey, this is abnormal."

Therefore, that's another way of saying, "Hey, you have a differentiated product here, just figure out what that product is."

Liberty:

[inaudible 01:44:58] to work, and you're just playing at it, right? You're enjoying it. So I think this is a good place to leave it, I'm going to have a couple calls to action. First of all, go buy Jimmy's book, maybe buy a few copies for your friends and then after you've done that, buy his previous book on Claude Shannon, and go listen to our book club podcast on that because that was a really fun one, and Claude Shannon is still... This should be a household name that everybody should know, like Einstein, right? I'm the Claude Shannon booster, I want him to get much better known and Jimmy has the best book on it. Next thing is, go subscribe to David's podcast, you're probably already doing it, everybody's subscribed to David podcast by now, but if you aren't, he's going to make you a better person and he's going to save you so much time.

Because as much as I try to read, David is a machine, and the great thing is that David is not summarizing books, he is giving you enough and connecting enough with other books and other things that you can decide, "Is this a book I want to read because I want to go deeper into that life, or have I gotten a lot of the value just from David, and I can move on to something else?"

And all these podcasts add together to a much bigger sum because they're all connected. When I'm reading by myself, "Okay, I'm going to make some connections."

But I haven't read all the books that David has read, and he's making the connection, so this is great value add, so do these two things please and have a great day guys.

David Senra:

Thanks for the opportunity to talk to Liberty, appreciate it.

Jimmy Soni:

Thank you, Liberty.

Liberty:

Bye-bye.

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Sorry if the formatting isn’t as nice on this transcript, I ran out of time to tidy it up. It’ll have to do ¯\_(ツ)_/¯