Levchin

"At one of many late-night product debates that summer, Reid Hoffman raised another critical stumbling block: What if one of these hypothetical PayPal users forgot their PalmPilot and needed to execute a transaction? Levchin proposed a workaround, suggesting the PayPal.com website be set up to send money via a user’s email address. Users had to use the website anyway to download the PayPal software for syncing their handheld devices to their computers. The site could have an email system as a backup to the PalmPilot money-beaming option. When emailing money was first suggested, few recognized it as a eureka moment. Quite the opposite: Levchin intended it to be a throwaway demo—buried in a corner of the main site for the unlucky souls who forgot their PalmPilots. To him, emailing money was a far cry from PayPal’s primary use case. This feature, if it could even be called that, was a concession to Hoffman’s critique, not a core product."

"Both Thiel and Levchin told Nosek that they’d iterate until they landed on a concept that struck sparks. More persuasive to Nosek was the team’s alchemy, which now included three members—Levchin, Pan, and Simmons—that he knew from college. “I decided to work on it because of this feeling that, together, we’re going to do something amazing,” Nosek said. “Even if they had been wanting to do something completely different, I would have wanted to work with this group.”"

"In June 1999, Confinity signed Master-McNeil to name its beaming product. Master and her team interviewed Thiel, Levchin, Nosek, and other Confinity employees. Together, the group solidified what the name should suggest: Convenient, easy, simple to set up/ use Instant, fast, instantaneous, no waiting, time-saving, quick Portable, handy, always with you Transmit, “beam,” exchange, send/ receive, give/ get Money, accounts, financial transactions, numbers, moving money around"

"In Confinity’s early days, Levchin observed that the number of people in a room correlated positively to friction in basic communication. “If you’re alone,” he explained, “you just work really hard and hope it’s enough. Since it often isn’t, people form teams. But in a team, an n-squared communications problem emerges. In a five-person team, there are something like twenty-five pairwise relationships to manage and communications to maintain.”"

"To minimize such chafe, Levchin wanted engineers who saw the world as he did. For example, when early on Levchin chose C + + as PayPal’s programming language—which even he referred to as a “kind of crappy language”—he expected the founding engineers not to complain. “Anyone that did want to argue about it,” Levchin said, “wouldn’t have fit in. Arguing would have impeded progress.”"

"But Thiel could also see the value in operating experience—time in the CEO chair could fine-tune his investor antennae. So he proposed a compromise: he would serve as Fieldlink’s “ramp-up CEO,” doing the job until the business found its footing. Then, he would depart the position, remaining an advisor and letting someone else steer the business. Levchin agreed."

"To win recruits over, the team crafted an edgy sales pitch. Years later, Levchin described the approach to a Stanford computer science class: Engineers are very cynical people. They’re trained to be. And they can afford to be, given the large number of companies that are trying to recruit them in Silicon Valley right now. Since engineers think any new idea is dumb, they will tend to think that your new idea is dumb. They get paid a lot at Google doing some pretty cool stuff. Why stop indexing the world to go do your dumb thing? So the way to compete against the giants is not with money. Google will outbid you. They have [an] oil derrick that spits out $ 30 billion in search revenue every year. To win, you need to tell a story about cogs. At Google, you’re a cog. Whereas with me, you’re an instrumental piece of this great thing that we’ll build together. Articulate the vision. Don’t even try to pay well. Meet people’s cash flow needs. Pay them so they can cover their rent and go out every once in a while. It’s not about cash. It’s about breaking through the wall of cynicism. It’s about making 1% of this new thing way more exciting than a couple hundred grand and a cubicle at Google."

"The board meeting stuck with him for another reason. In haste, he had presented the company’s cash flow incorrectly—the final line in an otherwise impeccable spreadsheet. Mike Moritz spotted the error. Botha, a perfectionist, turned red with embarrassment. Once the meeting dispersed, Botha returned to his desk and wept. Levchin, a fellow perfectionist, came over to console him."

"Frezza and Levchin’s efforts to apply this technique to patterns of fraudulent activity yielded another breakthrough: now, PayPal could match not just numbers to numbers but patterns to patterns. They augmented this with computer-generated rules that triggered an alert if one pattern resembled an earlier fradulent one. If such a fraud pattern registered frequently enough, the team could write a blanket rule in the system to prevent it from recurring again. “A simple layman’s explanation is that we started fighting patterns—more than [fighting] fraudsters,” observed engineer Santosh Janardhan. “Patterns are mathematics. Some of the folks who ended up working on this stuff were basically mathematics folks from Stanford that Max ended up hiring, and they ended up creating models that detected changes and anomalies in patterns, which was a very advanced way of looking at things at that time.”"

"The founders—especially in their capacity as investors—have had to find ways of working around this challenge. To that end, Levchin takes regular meetings with smaller student organizations at the various colleges he visits, harkening back to his ACM days. Thiel is known for taking sit-downs well outside of his immediate orbit, including the occasional high school student who reaches out with a compelling note. Hoffman forces himself to regularly ask others: “Who is the most eccentric or unorthodox person you know, and could I meet them? They might be crazy—or they might be a genius.” He’s searching, it would seem, for the less than perfectly polished founder who resembles his once less than perfectly polished colleagues, a group that turned a “hot mess” into one of the world’s largest public companies."

"“The very best employee at any job at any level of responsibility is the person who generally believes that this is their last job working for someone. The next thing they’ll start will be their own,” Levchin said. “Having as many people like that as possible is what made the difference in the company, and it’s what made it such a fertile ground for entrepreneurs later on.”"

"Both Thiel and Levchin told Nosek that they’d iterate until they landed on a concept that struck sparks. More persuasive to Nosek was the team’s alchemy, which now included three members—Levchin, Pan, and Simmons—that he knew from college. “I decided to work on it because of this feeling that, together, we’re going to do something amazing,” Nosek said. “Even if they had been wanting to do something completely different, I would have wanted to work with this group.”"

"To win recruits over, the team crafted an edgy sales pitch. Years later, Levchin described the approach to a Stanford computer science class: Engineers are very cynical people. They’re trained to be. And they can afford to be, given the large number of companies that are trying to recruit them in Silicon Valley right now. Since engineers think any new idea is dumb, they will tend to think that your new idea is dumb. They get paid a lot at Google doing some pretty cool stuff. Why stop indexing the world to go do your dumb thing? So the way to compete against the giants is not with money. Google will outbid you. They have [an] oil derrick that spits out $30 billion in search revenue every year. To win, you need to tell a story about cogs. At Google, you’re a cog. Whereas with me, you’re an instrumental piece of this great thing that we’ll build together. Articulate the vision. Don’t even try to pay well. Meet people’s cash flow needs. Pay them so they can cover their rent and go out every once in a while. It’s not about cash. It’s about breaking through the wall of cynicism. It’s about making 1% of this new thing way more exciting than a couple hundred grand and a cubicle at Google."

"To minimize such chafe, Levchin wanted engineers who saw the world as he did. For example, when early on Levchin chose C++ as PayPal’s programming language—which even he referred to as a “kind of crappy language”—he expected the founding engineers not to complain. “Anyone that did want to argue about it,” Levchin said, “wouldn’t have fit in. Arguing would have impeded progress.”"

"In June 1999, Confinity signed Master-McNeil to name its beaming product. Master and her team interviewed Thiel, Levchin, Nosek, and other Confinity employees. Together, the group solidified what the name should suggest: Convenient, easy, simple to set up/use Instant, fast, instantaneous, no waiting, time-saving, quick Portable, handy, always with you Transmit, “beam,” exchange, send/receive, give/get Money, accounts, financial transactions, numbers, moving money around"

"But Thiel could also see the value in operating experience—time in the CEO chair could fine-tune his investor antennae. So he proposed a compromise: he would serve as Fieldlink’s “ramp-up CEO,” doing the job until the business found its footing. Then, he would depart the position, remaining an advisor and letting someone else steer the business. Levchin agreed."

"At one of many late-night product debates that summer, Reid Hoffman raised another critical stumbling block: What if one of these hypothetical PayPal users forgot their PalmPilot and needed to execute a transaction? Levchin proposed a workaround, suggesting the PayPal.com website be set up to send money via a user’s email address. Users had to use the website anyway to download the PayPal software for syncing their handheld devices to their computers. The site could have an email system as a backup to the PalmPilot money-beaming option. When emailing money was first suggested, few recognized it as a eureka moment. Quite the opposite: Levchin intended it to be a throwaway demo—buried in a corner of the main site for the unlucky souls who forgot their PalmPilots. To him, emailing money was a far cry from PayPal’s primary use case. This feature, if it could even be called that, was a concession to Hoffman’s critique, not a core product."

"In Confinity’s early days, Levchin observed that the number of people in a room correlated positively to friction in basic communication. “If you’re alone,” he explained, “you just work really hard and hope it’s enough. Since it often isn’t, people form teams. But in a team, an n-squared communications problem emerges. In a five-person team, there are something like twenty-five pairwise relationships to manage and communications to maintain.”"

"The board meeting stuck with him for another reason. In haste, he had presented the company’s cash flow incorrectly—the final line in an otherwise impeccable spreadsheet. Mike Moritz spotted the error. Botha, a perfectionist, turned red with embarrassment. Once the meeting dispersed, Botha returned to his desk and wept. Levchin, a fellow perfectionist, came over to console him."

"The founders—especially in their capacity as investors—have had to find ways of working around this challenge. To that end, Levchin takes regular meetings with smaller student organizations at the various colleges he visits, harkening back to his ACM days. Thiel is known for taking sit-downs well outside of his immediate orbit, including the occasional high school student who reaches out with a compelling note. Hoffman forces himself to regularly ask others: “Who is the most eccentric or unorthodox person you know, and could I meet them? They might be crazy—or they might be a genius.” He’s searching, it would seem, for the less than perfectly…"

"“The very best employee at any job at any level of responsibility is the person who generally believes that this is their last job working for someone. The next thing they’ll start will be their own,” Levchin said. “Having as many people like that as possible is what made the difference in the…"