- Many of PayPal's early employees, including Elon Musk, have gone on to found successful companies.
- A former employee told the Tim Ferriss Show that the way PayPal hired people may have played a part in that success.
- Jason Portnoy said Paypal focused on hiring for capability, rather than people with specific skills.
PayPal is perhaps as noteworthy for its hugely successful founders as it is for the way it transformed online money transfers.
Elon Musk, Peter Thiel and Reid Hoffman were all members of the so-called 'PayPal Mafia'. The group collectively went on to found a plethora of successful companies including Yelp, Yammer, and Youtube, alongside Musk's Tesla and SpaceX.
Speaking on a podcast this week, one early employee said that while there's no single answer as to why PayPal's founders were so successful, their collective approach to hiring may have helped.
Jason Portnoy, an entrepreneur and investor and PayPal's 34th employee, told the Tim Ferriss Show podcast that hiring for talent, rather than specific job skills, helped the company's success.
"Part of it could be the idea that there was a lot of latent talent in these individuals that had been identified by the people who were hiring them," Portnoy said. This was partly due to the fact that the company hired for capability and ability, rather than for specific skills, he added.
"As opposed to saying, 'Does this person have the very specific skills to do this very specific job,' it would be more focused on, 'Is this person just exceptional, in lots of different ways?' Because if they are, they're going to be exceptional at whatever job they have to do," Portnoy said.
Working in a startup requires people to be "good all round utility players," who can easily switch contexts and "wear different hats" while the organization scales to the point where hires can be more specialized roles, he said.
A further reason for the success of the likes of Musk is that the PayPal hired for people who to a large degree had little specific experience in the online payments industry at the time — something that sounds counter intuitive, Portnoy said.
"PayPal merged with X.com, and X.com had a lot of former financial industry people. And over time, gradually, the executives from the PayPal team, who had no prior experience in the financial services industry, wound up ascending in the corporate culture and hierarchy, and I think possibly because they weren't weighed down by legacy ideas of how things should be done," he said.
Portnoy appeared on the podcast to discuss his memoir, 'Silicon Valley Porn Star,' which details his early career in Silicon Valley as well as his descent into and recovery from a porn addiction. He was vice president of finance at PayPal for three years.
He said he was hired in 1999 by co-founder Thiel, then the CEO of the startup Confinity, because the pair bonded over a list of books he'd read while traveling around Europe.
Portnoy later joined Thiel at his hedge fund Clarium capital and the big data firm Palantir founded after PayPal was acquired in 2002. More recently Thiel has drawn criticism for his political lobbying, which included a high profile endorsement of Donald Trump.
Portnoy said that one of his biggest learnings from working with the likes of Thiel and Musk was that they're never only doing one thing at a time, which means they benefit from being exposed to different ideas and people.