Birth of Web 3.0

Hard to believe, but more than four years has passed since eBay bought PayPal. In those four years, those at PayPal, and specifically, those who decided to leave PayPal have kept busy. In the Long Island of the West, Silicon Valley, those in the tech/internet community kept track of who was doing what. It wasn’t until the middle of last year, that the rest of us started to have a clue as well. Forbes ran an article titled the "The PayPal Exodus" followed a few months later by the New York Times, "It Pays to Have Pals in Silicon Valley." Perhaps Om Malik of Business 2.0 and GigaOm fame said it best in his site’s piece penned by Liz Gannes that leads with "The PayPal Mafia."

If you read any of the articles then you know, but ex-PayPallers have gone on to start some not only amazing but highly lucrative ventures. Heard of something called YouTube? Yep, started by two guys who used to work at PayPal. The same goes for staple of the internet, certainly if you live in a major city, and next Craigslist 2.0 Yelp.com. The silly sounding user generated Yellow Pages has raised tens of millions of dollars, and has the potential to shake up the local advertising the way it has quietly started to unseat Citysearch as the de facto source for area information. And, let’s not forget $20 million wealthier Slide.com and the $12.5 million in more capital LinkedIn. Both are ventures started and led by ex-PayPal. As the New York Times piece says, "Silicon Valley was largely built by networks of people and companies whose interlocking relationships help to spawn new start-ups. But the PayPal alumni have been unusually prolific, especially given the company’s modest size compared to Internet giants like Netscape, eBay and Yahoo."

Also mentioned and worth sharing the Times’ observation that "the network of PayPal alumni is unusual in that it operates a bit like a microcosm of Silicon Valley itself, and its achievements help to explain one of the enduring paradoxes of the Internet age. Even as the global network, in theory, makes it easier for innovation to happen anywhere, most blockbuster Internet successes continue to be born and bred in Silicon Valley." It comes down to face time. You can have a great idea, but when you spend your time with a person worth hundreds of millions of dollars and others who have skill necessary to create something worth as much, the likelihood of starting something and having it garner the right attention is exponentially higher. You have an all-star team that has the talent, drive, resources, and perhaps as importantly, the trust in each other from doing it together previously. So what does all of this have to do with Web 3.0? Google.

At more than 10,000 people, Google has ten times the number of employees PayPal did. As someone remarked, you can only have so many Einstein’s trying to work together before you run into a problem. No big organization, no matter how great, can provide the same feeling of accomplishment and personal satisfaction that working for a smaller organization can. It’s not wonder Google offers such legendary perks. It helps retain by constructing a huge barrier to exit, like going from playing Augusta as your regular golf course to playing the local muni with its six hour rounds and soggy hotdogs. Sure, you might get more, say, in what you do if you go on your own, but (and insert any positive thing about being a member of the world’s biggest and best tech fraternity).

Despite the current hype and concern over our being in another bubble, that Google exists almost guarantees the next bubble, even if our current internet economy has a hiccup. If Yelp can be started because of a lunch gathering of ex-PayPal employees discussing how hard it is to find a dentist, only to have a former co-founder of PayPal commit $1 million to a site to share user reviews and another ex-coworker to help with the formal investor presentation, just imagine what some of the world’s smartest will decide to solve and how they might solve it when their time comes. Even with the perks and the soaring stock, word of success travels fast, and at a point, no amount of convenience and pampering can stand in the way of human nature and the chance to create the next YouTube.

While no billion dollar acquisitions have occurred in the direct marketing space, what has played out at PayPal has played out in our space on a smaller scale. Besides their being a decent amount of cross-pollination among companies, more than a few of some very successful startups in the performance space got their start from an ex at a Nextag, Adteractive, Quinstreet, etc. The trend will continue, and it’s potentially only a good thing. PayPal is a well run company and succeeds even after its initial team of founders and executives have left. Unlike PayPal, the Googlers who depart will most likely not have the benefit of collaborating with the founders, and many most likely did not know each other prior to joining the search behemoth. Still, with that caliber of talent, the cache of their work experience, and a pool of more than one thousand millionaires, some of those people and some of that money will go on to give the rest of us either new places to advertise and/or places to waste our time.