Thursday, December 27, 2007

A Post-Google Fraternity of Investors - New York Times

"It often pays to stick together in Silicon Valley. PayPal, the online payments system, spawned a bunch of serial entrepreneurs who went on to found and finance some of the hottest Web 2.0 companies, among them YouTube, LinkedIn and Slide. Many PayPal alums invest in one another’s companies. One co-founder, Peter Thiel, who now runs a $3 billion hedge fund and venture firm in San Francisco, is the godfather of what people jokingly call the PayPal Mafia."

"There are no guarantees, of course, that Google’s growing crop of alumni-investors will succeed, either individually or as a group.
“The challenge for the Google guys is to demonstrate what value they can bring, beyond making introductions to someone at Google,” said Paul Kedrosky, a senior fellow at the Kauffman Foundation, which promotes entrepreneurship. Mr. Kedrosky said that those at the center of the PayPal Mafia were founders and early employees who learned a great deal by building their start-up into an online payments powerhouse. EBay eventually bought PayPal for $1.5 billion. “They had experience at iterating strategy and making payroll,” he said of the PayPal gang."

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