Jimmy Soni - Peter Thiel, Elon Musk, and the Paypal Mafia

Dwarkesh Patel opens by contrasting the two settings Jimmy Soni has written about. Bell Labs, home of Claude Shannon, had a government-granted monopoly, so its scientists had time and freedom and no competitive pressure, and it produced six Nobel prizes, the transistor, the laser, Unix and C. PayPal, by contrast, was constantly close to going under, with long hours and heavy pressure, yet it also produced a great deal of innovation. Patel asks how such different places promote innovation.

Soni first defers on Bell Labs itself, saying the right person to answer is John Gertner, author of The Idea Factory, since Soni studied only one person from that era, Shannon. His claim is that Shannon's information theory did not depend on Bell Labs. Shannon treated it as a side hustle, so he would probably have worked on it in off hours wherever he was employed. Bell Labs still gave him four things: constant exposure to communication networks, cryptographic work, smart colleagues, and the Bell Systems Technical Journal as a place to publish his findings, which circulated widely in academia.

The more important point is about motivation. Soni describes Shannon as a self-starter who did research and wrote papers purely for the thrill of discovery. There was no payoff: as Soni puts it, you can't IPO an academic paper, Shannon was not going to get rich, and even after he became famous he declined the lecture circuit and late-night television. Soni judges that very few people are like this, for reasons he says we need not get into.

PayPal ran on different incentives. The profit motive was a large part of what made such places succeed. The internet boom had produced a generation of web founders, starting with Netscape, who went public and ended up on magazine covers with large fortunes, and Soni says it would be dishonest to deny that this was part of the motivation. On top of that, PayPal closed a very large fundraising round in March 2000, just as the dot-com bubble started to burst, which created a panic about survival and a need to innovate in order to survive.

Soni does not deny that other Shannons exist, but he thinks they are fewer than the people who can be brought together by circumstances, forced to build a startup, and learn innovation that way. He also separates the kinds of innovation. PayPal's, he argues, was a sequence of micro-developments strung end to end over four years to build the company, whereas Shannon wrote a technical paper in 1948 that set principles and founded a field. He admits the comparison is not apples to apples, and he likes thinking in terms of character types: many more people would start a startup for more self-interested reasons than for public-spirited or academic ones. He adds that he sees nothing wrong with that.

Patel offers a reading of all three of Soni's books: each is about "scenius," a group of people who get together and boost each other's productivity. He sees it at Bell Labs, in the PayPal Mafia, and in the book on Cato, where the leading politicians of an era, such as Pompey, Crassus, Cato, Cicero and Caesar, are still household names two thousand years later. He doubts that people will remember Nancy Pelosi or Mitch McConnell that long, and only half-seriously allows that Donald Trump might be remembered.

Soni adds another example: the United States in the late 1700s, an era so studied that a musical can be made about men in powdered wigs and tricornered hats. He recommends Founding Brothers, which describes relationships such as the one between Thomas Jefferson and John Adams, who went from competitive to friendly to estranged, with plenty of drama. He had not noticed the shared thread across his own books until Patel pointed it out, and he says he likes interviews because he always learns something new.

Patel asks how Peter Thiel's ideas about René Girard were shaped by PayPal, noting the obvious mimetic competition between X.com and Confinity, the company that was originally PayPal. He asks what other Girardian elements the story contains. Soni says they are threaded through the book in subtle ways, and that while revising and editing he noticed several small moments of mimesis and antimimesis. He has discussed these at length with his friend Luke Burgis, author of Wanting, including where such readings hold and where they do not.

Soni cautions against reading the history as theory applied in real time. His view is that the actual experience of building PayPal was not Thiel stepping back to ask "what would Girard do," and he gives two reasons. Thiel never told him it worked that way, even though Soni interviewed him at great length about PayPal. And in a company built in a crucible, it is hard for theory to match the exigencies of the moment.

His case study is the period after 9/11. PayPal had been preparing to go public but had hit hiccups with the bankers who were to underwrite the offering. Then the attacks destroyed the financial district, shocked the economy and shut the stock market for days. Leadership had to ask how a company goes public in that world and what it even means to file. Thiel, looking back twenty years later, told Soni that perhaps because no one else was going public, that was exactly the time to do it, since the company would be running against the herd. Soni sees an echo of Girard here: opposing mimetic desire, when everyone zigs and you zag, can lead to very valuable decisions.