Not many people get the chance to invest in a hot Silicon Valley startup, much less a wildly successful one as PayPal, which sold for $US1.5 billion to eBay in 2002.
You need the money, connections, and expertise. Some luck too.
But the story of Sung-woo Lee, an unknown Korean investor who found a way to make former PayPal CEO Peter Thiel take his money — even after he first refused to — is a good reminder that tenacity often trumps all else in Silicon Valley.
It was in July 1999 when Lee first came across an article about PayPal, a company he’d never heard of before.
“I was absolutely blown away by the way it worked,” Lee told Business Insider.
PayPal’s service — sending money online, using emails — immediately struck him as something groundbreaking. He was so fascinated that he started writing cold emails to PayPal, asking to meet then-CEO Peter Thiel.
After several failed attempts, Lee finally heard back in early 2000: Thiel was travelling to Japan, but not South Korea.
PayPal at the time was growing very fast. It reached 100,000 users in February 2000, and hit 1 million users within the next two months.
But the growth was fuelled by a costly referral program where PayPal gave away $US10 to all new users, and another $US10 if you referred someone to sign up.
In order to keep up its crazy growth, PayPal needed more money. Thiel’s trip to Asia was part of the fund raising effort.
Lee wanted to be part of that round. He knew it would be a once-in-a-lifetime opportunity. But he also knew it would be impossible to invest without first meeting Thiel in person. His chance to meet Thiel came rather unexpectedly: for some reason, Thiel changed his plan and decided to spend a day in South Korea.
The following weekend Lee headed to Thiel’s hotel in Seoul. They met in the lobby and shared some ideas on how to bring PayPal to South Korea. Thiel said he was looking to raise $US100 million for the next round.
Lee offered to give Thiel a ride to the airport. In the car, Lee asked if he could introduce Thiel to some of his investor friends in Korea. Thiel welcomed the idea and agreed to send Lee a copy of PayPal’s shareholder’s agreement and investment contract.
At the airport, Thiel tried to repurchase his ticket back to the US (since he changed his itinerary to stop by Seoul, he needed a new ticket) but his credit card didn’t work. Lee was the only person who could help at the moment, so he paid for Thiel’s first-class ticket instead. When Thiel asked how to pay him back, Lee simply said, “Just PayPal me when you open a Korean office.”
It’s hard to tell if that helped Lee in any significant way. But it probably left a strong impression on Thiel based on how things worked out for Lee later.
Once he received the shareholder’s agreement, and found the wire-transfer information, Lee and a group of investors wired PayPal $US5 million — without any agreement or paperwork signed. In fact, the fund was already overbooked by then.
Thiel finally got on the phone and refused to take the money. But Lee and his investor group declined to take it back.
“Their opening negotiation was, ‘We’re not telling you where you can send it back. You have to take it,'” Thiel told Marc Andreessen in a recent interview about the incident. “We ended up with them as investors.”
So what exactly happened? Lee says he doesn’t know what made him get in at the last moment, when the round was already overbooked, but agrees it’s just a combination of hard work and luck.
“In life, there are moments when you just think, ‘This is really important.’ Whether it’s investing in PayPal or meeting Peter Thiel, you just have to work really hard to get there,” he said.
For Lee, his investment in PayPal — which doubled in return — meant more than just financial benefits. It inspired him to start his own mobile payment startup called YeloPay in South Korea.
But more than anything, Lee says the whole experience left a lasting memory that he will savour for the rest of his life. “It’s a feeling that not many people get to feel,” he says. “It was one of the happiest moments in my life.”