Ebay bought online payment company PayPal in 2002 for $1.5 billion.
As often happens with these big deals, a lot of early PayPal employees got a nice payday.
But in a rare turn of events, a surprising number of these folks went on to even greater success.
Only a handful of other companies have spawned so many powerful investors and founders — Google, Microsoft, Oracle maybe. But those companies are massive and powerful themselves.
PayPal wasn’t. It had only about 600 employees when it filed to go public in late 2001, and had sales of about $50 million in its last quarter as a public company. So it’s surprising that so many of its employees have become such bigshots.
There’s even a term for it: the PayPal “mafia,” first coined by this 2007 Fortune article.
Since that article appeared, the group has become even more powerful. Check it out.
Peter Thiel cofounded the company that became PayPal (it was originally called Confinity) and oversaw its IPO in 2002 and sale to eBay a few months later.
He went on to form a hedge fund, Clarium, and a VC firm, Founders Fund. He was also one of the first investors in Facebook -- his angel investment of $500,000 got him a 10% stake in the company, which is now worth billions.
He's most prominent now through his work with Founders, which looks for companies and founders who are trying to change the world rather than 'me too' ideas.
Thiel likes to make big public statements, too, like giving promising college students $100,000 to drop out and form a company and pouring money into startups in New Zealand, which he has called 'utopia.' Most recently, we saw him criticise the U.S. government for being too big and too disorganized and afraid to focus on long-term goals -- he called it 'socialism without the five-year plan.'
Hoffman was on PayPal's founding board of directors and later took a role as executive vice president, where he handled most outward-facing duties.
When PayPal sold, he turned around and founded LinkedIn. That company had a few years of struggles, but eventually benefited from the recent run-up in social media. It went public earlier this year, turning Hoffman into a billionaire, even though he's no longer its CEO -- he stepped down in 2007 to become its chairman.
He is also one of the most successful angel investors in the Valley, with stakes in Zynga, Last.fm, and social network Tagged, among many others. Earlier this year, he joined Greylock Partners, one of the strongest VC firms.
A New York Times profile last weekend called him the 'king of connections.'
Musk joined PayPal when his Internet bank, X.com, merged with Confinity, which was fonded as Thiel. He took over as CEO briefly when Thiel resigned, but tried to move the company's servers off Unix and onto Microsoft's platform. He lost that fight and was ousted from the company.
Since then, he's gone on to found several big-bet companies, including SpaceX, which is trying to commercialize space flight, and Tesla, which is making electric cars. Tesla almost drove him into bankruptcy, but the company was saved by a timely IPO last year and a big loan from the Department of Energy this year. Now, it's rolling out its mid-size sedan, the Model S, which it hopes will expand Tesla from niche to mainstream.
Max Levchin was one of the cofounders of Confinity (which became PayPal) alongside Peter Thiel.
He went on to form Slide, a social gaming company in 2004. Google bought Slide for $182 million, and used some of its engineers and technology to build its would-be Facebook-killer, Google+. But Levchin was allowed to run Slide as an independent division within Google for a while.
Since then, Levchin has already started working on his next big thing. Last week, he was appointed chairman of Kaggle, a startup that helps organisations solve complicated problems involving massive amounts of data.
Botha was PayPal's CFO when it went public and later sold to eBay.
He immediately jumped to become a partner at Sequoia, which is one of Silicon Valley's top few VC firms. He stays out of the spotlight, but sits on the board of a bunch of current tech darlings, including Square and Tumblr. He was also on the board at YouTube when it sold to Google.
Stoppelman was an engineer at X.com, the online financial services and payment company started by Elon Musk. After the sale to eBay, he and fellow engineer Russel Simmons founded Yelp in 2004.
It's still going strong, despite increasingly aggressive efforts by Google to get into the local listings space. Stoppelman recently testified in Washington DC about how Google steals Yelp's content without attribution and favours its own sites.
Update: On November 17, the company filed for a $100 million IPO, which will net Stoppelman more than $200 million.
This pair worked as engineers at PayPal, then left to form YouTube in 2004 alongside fellow engineer Jawed Karim. They sold it a couple years later to Google for more than $1.6 billion.
Earlier this year, the pair returned to the spotlight when they bought social bookmarking service Delicious from Yahoo. Now they're trying to relaunch it.
Rabois has worked for and invested in a bunch of companies founded by PayPal alums, including LinkedIn, YouTube, and Slide.
Last year, he joined payments company Square as its COO. It's now in the billion-dollar club, and Rabois is sometimes named as one of the most powerful behind-the-scenes people in Silicon Valley.
David Sacks was PayPal's chief operating officer when eBay bought it.
He left to found an online genealogy service called Geni.com, but it never took off.
Then he tried again with Yammer, a social-collaboration service for businesses. It launched in 2008 and has since become the poster child for all the companies trying to become the 'Facebook of business,' including other startups like Jive Software and big companies like and Salesforce.com.
By the end of 2011, Yammer will be used by more than 4 million employees at more than 100,000 businesses.
McClure joined PayPal as its marketing director right before its IPO, then took off in 2004 to run marketing for SimplyHired for a couple years.
He wasn't named in the 2007 Fortune article, but since then he's become notorious for his straightforward opinions on startups and entrepreneurship expressed on his blog, and for his startup accelerator, 500 Startups.
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