The Founding of PayPal—Peter Thiel's Girardian Decision, Elon Musk's Near-Death Experience, and the making of a dynasty.

I’m giving away at least 10 signed copies of Jimmy Soni’s new book,?THE FOUNDERS , to premium subscribers of my newsletter. At the end of this interview, you'll find details on how to qualify.

Jimmy Soni is the author of the new book THE FOUNDERS . It's a riveting tale about the origin story of one of the most iconic companies of the past three decades, PayPal, involving never-before heard stories about some of the most important entrepreneurs of our time.

The author, Jimmy Soni, has become a good friend over the past couple of years. His dedication as an author is an inspiration to me, and his latest book is a masterclass in writing history.

I hope you enjoy this exclusive interview with him on the launch of this important book. Please read to the end to find out how to get your hands on one of the 10 signed copies I have ready to mail out by the end of the day.

The Interview with Jimmy Soni

Luke: One of the things that’s been said about THE FOUNDERS so far is that it’s an interesting counterpoint to the years of “tech takedown” books—whether that’s the literature on Facebook, WeWork, or Theranos. Did you set out to explicitly offer a countervailing view—the anti-mimetic choice—or was it something organic? I want to understand that, because it’s one of the things people keep talking about with respect to the book.?

Jimmy:?Truthfully, I didn’t walk into the story with a pro- or anti-tech agenda. I’m not an advocate; I’m someone who writes history. So for me, this was about coming to this subject fresh, doing a lot of fact-finding and historical spadework, and then telling the story as accurately as possible.

I didn’t have a framing per say, nor a moral point I was trying to drive home. I actually think if you’re trying to tell a story accurately, you have to keep those judgments in check—especially in historical writing. Because when you’re describing the past, you’re always writing from behind the eight ball of the present.?

It’s why I did my best to avoid reading a lot of contemporary information about the people at the heart of this story, as tough as that was. It wasn’t of value to me to see Elon on SNL or to follow Reid Hoffman’s latest investment. That would have polluted an accurate telling of what happened at PayPal from 1998 to 2002.

That said, as you pointed out, people seem to be inspired by the story. If I had to guess, what I think readers are responding to is that I dove deeply into the “what” and the “how” of building a start-up and its products. Those are acts of creation—the making of something new where there wasn’t something before. And I found real inspiration and energy in those creative moments. When a piece of code comes to life in the world, it’s thrilling, in a way that’s hard to appreciate but meaningful to the people who wrote the code. There ought to be room in the culture to celebrate those creative acts, without losing sight of the moral or ethical complexity that attends them.?

That can all sound a bit high-flown, and in fact, it’s a lot simpler for me: What I found in this story was a group of people who were building things on the internet at a time—the late 1990s—when the internet was coming into its own. They faced enormous challenges, and I was interested in how they overcame them and the context in which they did it.?

I thought of this period in the internet’s history as a particularly fecund moment, and I thought of this group as an especially fertile group of creators. And I thought there was some value in going back and just understanding how PayPal came to be, and how bringing it to life may have shaped the people that, today, are doing pioneering work in all these other industries and sectors.

Luke: One of the people at the heart of this story is Peter Thiel, who closely studied mimetic theory and the work of Rene Girard before he started PayPal. Did you find any moments or places where that intellectual tradition played out in the story itself?

Jimmy:?Here’s what’s interesting: I didn’t wade into the story specifically looking for moments of mimesis or anti-mimesis, but I found them over and over again.?

One example that really stands out, and that I write about explicitly: Peter was a big proponent for taking PayPal public after the 9/11 attacks. The context matters here: Lower Manhattan is a smoldering wreck, the stock market is shut down for days, and billions of dollars are wiped off balance sheets when trading resumes. That first month after the attacks, no companies went public, which was the longest drought in decades.

Up to that point, PayPal had hit some hiccups in going public. They had to change underwriters, and there were still open questions from industry skeptics about their business model and their dependence on third-party platforms like eBay. But in the face of all that, Peter pushes ahead and the company files for its IPO just weeks after the attacks.

For the press, it’s a head-scratching moment—but when Peter described the choice, he had this powerful line: “If you’re in a world where no one goes public, maybe paradoxically, that?is?the time to go public. Because, you know, it’s a positive counterpoint to the chaos or something.”?

Now, do I think that, back in late 2001, he was operating from a WWRGD (What Would Rene Girard Do) framework? Not really. That seems too pat, and frankly improbable, just given how much was going on in the world and at the company. But I do think that a part of his general approach is to question received wisdom, and to try to cut against what he sees as people’s tendency to operate mimetically.

I saw this not just in the IPO filing, but also a bit in his approach to hiring. There were times when the board challenged a choice: Reid Hoffman as early Confinity COO, or Roelof Botha as the CFO who would shepherd the company’s public filing. In both cases, the board members offered some version of, “This isn’t how these things are usually done”—by which they meant, you don’t put people that young and inexperienced in those roles. But Peter is insistent—and ultimately, he’s right. In fact, it was a board member, John Malloy, who admitted that one of his regrets from the PayPal years is not having more faith that Roelof Botha would thrive as the company’s CFO.

It oversimplifies these decisions to say that Peter applied the Girardian playbook. In fact, I think it’s far more interesting than that: There’s an enormous amount of pressure in business and in life to do the conventional, the tried-and-true, the time-honored, the what-everyone-else-is-doing. And it takes a mix of tools to cut against that. And included in that mix for Peter is, among other thinkers, Rene Girard. And I suppose what that literature offers for him (and others) is a framework for a gut check: What if everyone is just copying everyone else? And what if they’re wrong?

Luke: There’s an incredible moment of what might be called “mimetic breakdown” at the heart of the story. Basically, you have this company, X.com, founded by Elon, and this other company, Confinity, founded by Peter Thiel and Max Levchin. And they begin an epic process of imitation—as they’re fighting for market share. It’s what Musk called “the widget wars” in your interview with him. Can you say more about that period, and maybe what it tells us about mimesis??

Jimmy: It’s one of my absolute favorite moments in the book, because it’s when the two companies are locked into this unusual and unusually ferocious battle for payments market share on eBay. And they are imitating each other manically—for weeks, at a pace that boggles the mind.?

When I interviewed people who were at the two companies during this period, the memories were among the most vivid they could recall. Because, essentially, you have a competitor just blocks away who is imitating everything you are doing—so the goal is both to imitate them (meaning, make sure you didn't miss some great feature they built) but also to?not?imitate them so you can grow faster than them.

I suppose one takeaway might be: Imitation can become the sincerest form of insanity. Because, in Musk’s words, “we went mental” trying to defeat each other. At Confinity, they actually celebrate one engineer’s birthday with “DIE X.COM” written in frosting on a birthday cake. The battle really goes beyond what anyone could have predicted just weeks earlier, when these companies’ products are just launching.

Interestingly, what both Musk and Levchin identified—even at a two-decade remove—is something that each of them rarely found: Someone who could imitate and create just as quickly and effectively. Musk and Levchin are frequently in a league of their own—they just don’t meet people who work as much, or as adroitly, or as intensely. And so what I also found in interviewing them was this mix of frustration that the competition down the road was good combined with a healthy respect because, well, the competition down the road was?good.?

Luke: Among the surprises in the book is the company’s battle with fraudsters. And to me, one of the things that stood out was this fascinating insight about how fraudsters basically copy-catted each other—and so if you could thwart one of them, you sort of thwart the whole batch—and you’d end up actually strengthening the company’s defenses. Can you say more about that??

Jimmy: There’s that great Girard line: “Everywhere and always, when human beings either cannot or dare not take their anger out on the thing that has caused it, they unconsciously search for substitutes, and more often than not they find them.” I tried to work that into the fraud sections of the book, but it didn’t quite take. That said, I think it’s a decent encapsulation of what happens with the fraudsters.?

In brief, PayPal faces a series of fraudsters who are using its service to defraud end users. That can take small forms: Someone once designed a copy-cat paypai.com website—which has an i on the end instead of an l—and it basically dupes people into sharing their financial information. Then you have more sophisticated fraud rings, often run from abroad, and people will do everything from steal credit cards and then run them through PayPal, or create phony auctions and then use the buying and selling process to move money around.

It’s really the biggest, gravest threat to the company’s future and success, and I would argue that fighting it is one of their signature achievements. But what was interesting to me was that, basically, every time PayPal scored a victory, it sent all the fraudsters scurrying to slower-moving payment companies. Or if the company managed to get someone arrested, word spread among fraudsters, particularly domestic ones in the US.?

So there’s this powerful thing happening in these fraud chatrooms and hacker forums, and you can see people copying each other’s fraud behavior—but that actually is one of the things that allows PayPal to defeat fraud, because they start to look for patterns instead of one-off instances of wrongdoing.

The positive counterpoint to this, by the way: It’s also in the eBay forums where Confinity’s PayPal and X.com’s payment products are introduced and really take off. So in that instance, people imitating one another produced sought-after critical mass and network effects—not international crime.

Luke: Let’s talk process. You spent a ridiculous amount of time on this book, and people have remarked about how the endnotes are basically a fifth of the total page count of the book itself. Walk me through the?how?of the book itself, and maybe some of the surprising things you learned about the writing process.

Jimmy:?You and I have traded thoughts for a while about the value of books as a chance to sink your teeth into a subject—that, in some fundamental way, you can do with a book what you can’t do with a tweet or a blog post. It allows you to marinate on ideas and to take disparate threads and weave them together for the reader.

I see books that way for sure, and part of this project is an unabashed attempt to imitate my literary heroes: Barbara Tuchman, Robert Caro, Candice Millard, and others. I think history can be brought to life in the way they do, and I think you can mix rigorous research with readable text. I can’t claim to do it as well as the Millards and Tuchmans of the world—I will always feel a bit like I’m at the kid’s table, and they’re the adults—but they’re a useful model for me as an author.

In my case, I probably went overboard a bit on the research, but that’s because I was an outsider to the tech industry. I knew I could do books—but I also didn’t know the lingo of this field or much about the key players in it.?

What that led to was basically an endurance exercise: Before I’d sit down with any of the people I interviewed, I’d read, watch, or listen to almost everything they’d said in public from the late 1980s through to the mid-2000s. I needed to address the gaps in my knowledge and my unfamiliarity with this field—and the only way I could think to do that was to go through?every?source possible.

It was nuts, and I became the least interesting friend of my group. But I will also freely admit: That intensity of research was the most enjoyable part of doing the book. I watched ancient videos on YouTube, some with only a few dozen views; went back through years of college newspapers; and even had the chance to dive into a several gigabyte archive of emails and records. When you find the board minutes for the very day that the board is voting on an acquisition, it’s exciting (or, at least, it’s exciting to a history nerd like me.)?

I don’t know that I have any grand insights from all that, but maybe the most powerful observation I come away with: It’s utterly incredible what we’ve managed to preserve on the internet through tools like archive.org. I was able to go back and see the development of web pages as they came to life, and I layer that into the story. I’m glad to be done with the book—but I will miss those rabbit holes.

Luke: I’d be derelict in not asking the question that’s on a lot of minds: What did you leave out? What did you find but choose not to include? Any nuggets that you can share?

Jimmy:?Honest answer: I wrote about 450,000 words in draft material. The book clocks in at 160,000 or thereabouts. So there’s a?lot?on the cutting room floor.?

And that makes sense: This book isn’t about one life. It’s about hundreds of lives in one company. And so the enormity of the output reflects me trying to piece a ton of stories together—including and especially the stories of people who often get written out of these narratives. People may come to the book for this or that bold-faced name—but I really hope they draw something from the stories of the late Robert Frezza, S.B. Master, Sanjay Bhargarva, Amy Rowe Klement, among many others. These people are remarkable and deserve recognition.

But the sheer volume of material also forced me to make a series of devil’s choice decisions. Honestly, part of me wishes I could go back and unpublish the book, make it 50,000 words longer, and republish it. (And candidly, I am exploring expanding a subsequent paperback edition, because why not?)

There is one moment that stayed with me but never made it into the book. I had the extraordinary privilege of diving into this part of Elon’s life, and I walk away from my research with real admiration for his endurance. I choose that word specifically: You can’t understand his triumphs today without appreciating his trials from 1999 to 2002. During that period, he nearly died twice, was ousted as CEO, and lost a child. And yet, in the face of all that, he still picked himself up and began building SpaceX.

I don’t think most people really appreciate what he’s overcome, because it’s obscured today by a focus on this or that controversy. And it’s a shame. By the way, one of the things I noticed even in the last few weeks, as I’ve emerged from my little 1990s historical bunker: There’s all of this debate about whether he does or doesn’t live in a $50,000 house. But there’s been so little written about his recent?election ?as a member of the National Academy of Engineering—a list that is like the Mt. Olympus of science and engineering and is considered a huge professional honor.?

You don’t get on that list because you’re famous or rich—you earn a spot on it because your scientific peers have determined that your work is impressive. It just seems wild to me that we’d ignore these virtues or overlook his engineering achievements—particularly at a time when we’re trying to get young people jazzed about STEM fields.

We’ve missed some of the salient, important features of his life—and one of those moments fell into the period I was examining. It was a near-death experience, a nail-biting bout with malaria and meningitis. There’s been a bit written about this in the past—in Ashlee Vance’s book, for instance, which captures a lot of the details—but I had the view from the PayPal team, which was fresh and enlightening.

I wrote a draft of it—but then didn’t include it in the book, for reasons of chronology. But here it is, in case people want to understand that moment a bit better:?

Following his ouster, Musk organized a two-week international excursion in December 2000 with his then-wife, Justine, to Brazil and South Africa. The latter stop would take them to a game reserve near the border of Mozambique. For Musk, it would be an actual vacation, his first such respite in years. There would be no fundraising this time, and no catastrophic work calls.

Musk returned in January 2001 feeling under the weather. The symptoms persisted for long enough that, in late January, he went to Stanford Hospital. There, the doctors grew concerned and performed a spinal tap. Musk was diagnosed with viral meningitis and placed in an isolation ward.

On January 25th, 2001, X.com’s head of HR, Sal Giambanco, was asked by Stanford Hospital to verify Musk’s insurance coverage, and he wrote to the executive team informing them of Musk’s illness. “I was able to speak with him and he does seem to be in good spirits,” he wrote. “I've arranged for a gift basket to be delivered to him from everyone here at the office.”

“Yikes,” Levchin wrote in response. “Meningitis can be a very nasty problem.?Given that it is an infectious disease, and Elon has been in contact with a number of people in the building (last board meeting for myself, for example) -- should we either get tested or immunized?” David Sacks got in touch with a world expert in infectious diseases to find the answer, who told the team not to worry. “Our expert indicated that there was little or no risk to anyone with whom Elon came in contact,” Giambanco wrote. If anyone on the team was feeling ill, he advised, they should go home, and if they contracted a fever, they should go to the doctor.

Several team members called and wrote to Musk during this period. By January 24th, Stanford Hospital discharged him. “I visited with Elon for a couple of hours last Friday night and spoke with him again this morning,” Giambanco reported to the executives following his release. “He's in very good spirits.” By Giambanco’s account, Musk looked healthier, though he still tired easily and had some “lingering balance/ear issues.”

But Musk’s condition soon took a dramatic turn for the worse. “I started feeling bad a few days later, and it got progressively worse,” he told Vance. “Eventually, I couldn’t walk. It was like, ‘Okay, this is even worse than the first time.’” On February 12th, Justine called a cab and took him to a general practitioner, where Musk stretched out on the floor of the office. He was so weak and so dehydrated that the physician couldn’t take his vitals. Instead, the doctor called an ambulance, which rushed Musk to Sequoia Hospital in Redwood City.

There, tests revealed that his Stanford doctors had initially misdiagnosed Musk. While he may indeed have had meningitis, Musk had also been infected by falciparum malaria. Of the four species of malaria parasite, falciparum malaria is far and away the most dangerous and accounts for the greatest share of deaths from the disease. Once symptoms set in, a patient has limited time—usually 24 hours—before declining past the point of treatment.

Musk came dangerously close to this point, and in the hospital, surrounded by family, he looked as if he would die soon. Then fortune intervened. “There happened to be a guy visiting from another hospital who had seen a lot more malaria cases,” Musk told Vance, and that doctor called for a fast, aggressive dose of the antibiotic doxycycline. Musk was taken to the intensive care unit at the hospital, where he remained for ten days. He lost weight and could not eat solid food for over a week. In recounting the events for the rest of the company, Giambanco emphasized how close Musk had come to the end. “He was actually only hours from death,” Giambanco wrote. “His doctor had treated two cases of falciparum malaria prior to treating Elon—both patients died.”

The meningitis diagnosis was likely connected to the malaria. Following the diagnosis, Musk’s doctors told him to stop the regimen of malaria pills had been prescribed before his international travel. “He probably had just a few, undetected, malaria parasites in his liver at the time of discharge which ballooned into full fledged malaria in the weeks since his discharge from Stanford,” Giambanco told the company. Because his case was so serious, Musk was also treated with quinidine, whose other purpose outside of fighting malaria is addressing irregular heartbeats. Taking the medication was a risk in itself: The doctors had to monitor Musk minute-by-minute to ensure that he did not go into cardiac arrest as a side effect.

“His whole saga seems almost surreal,” one X.com employee wrote to another. In the space of a year, Musk had almost perished—twice, once in a car accident and once from a deadly virus. His family and friends were shocked to see someone of his normally boundless energy look so frail. “He’s built like a tank,” Justine said later. “To see him laid low like that in total misery was like a visit to an alternate universe.” His recovery would take nearly half a year.

Interestingly, for Musk, nearly dying (again) provided an earthier lesson—about the dangers of time off. “I came very close to dying,” Musk quipped. “That’s my lesson for taking a vacation: vacations will kill you.”

Please consider becoming a premium subscriber to my Substack newsletter, The Fourth Wall. The cost is only $8/month, or $80/year. I promise to deliver 10x that in value every year. Every month, I'll offer educational opportunities (there is an hour-long Zoom masterclass this Thursday), giveaways, and access to the full article library...with much more on the way. If you sign-up today , you'll receive 20% off the price for being a LinkedIn subscriber.

If you're interested in qualifying for the signed book giveaway with Jimmy, simply become a premium subscriber today and complete the short Google Form at the end of this post by 11:59pm on Tuesday, Feb. 22. I’ll announce the winners on Wednesday.

Thank you, as always, for reading.