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Where Do Business Mafias Come From?
The PayPal Mafia has produced SpaceX, Palantir, Tesla, LinkedIn, YouTube, and others far exceeding PayPal’s value. How did Elon Musk and Co. do it?
“The PayPal Mafia” is rightfully famous for producing a slew of valuable companies — SpaceX ($33 billion), Palantir ($26 billion), Tesla ($42 billion market cap plus or minus a few billion dollars depending on the most recent press releases and late-night CEO tweets), LinkedIn (acquired for $26 billion), YouTube (acquired for $1.65 billion and worth as much as 100 times that).
Collectively, these companies are worth over 100 times PayPal’s $1.5 billion acquisition price.
Why aren’t there other similarly successful mafias? There are plenty of former Google and Facebook employees who have gone on to start successful companies, but the network isn’t as dense. In fact, most PayPal-sized exits don’t produce anything remotely like the PayPal Mafia. What’s going on?
The best way to look at this is to consider the closest analogy to the PayPal Mafia: the Tiger Cubs. Coatue, Tiger Global, Lone Pine, Maverick, Samlyn, Steadfast, and Viking — once again, the companies founded by former Tiger employees manage vastly more money than Tiger did at its peak.
