Imagine starting a company to change the world of finance right before an epic stock market crash.

Elon Musk famously said that PayPal wasn’t a hard company to create. It was a hard company to keep alive.

In 1999, three future titans of technology—Max Levchin, Peter Thiel, and Elon Musk—charge straight into the blaze to bring payments and finance into the internet age. This is the story of how a handful of brilliant founders and their team navigate from crisis to crisis, face constant near-failure, and create the first successful internet payments solution. From the wreckage of the dot com bubble, they emerged refined—the founders, investors, and builders who would go on to shape the next two decades of Silicon Valley—and a lot of the world we live in today.

Chapters

(01:20) Mr. Buffett on the Stock Market

(02:17) The stock market in 1999

(05:21) Intro to Max and Peter

(09:49) Intro to Elon

(15:45) Why they choose to do startups this late in the cycle

(20:51) Insight of eBay as a perfect market for p2p payments

(22:51) Competition between Confinity and X

(26:55) Confinity and X merge

(34:09) Novel business model & technology innovation

(37:29) The stock market crash dynamics

(43:25) How PayPal navigates post-9/11 slump with an IPO

(48:42) The PayPal Mafia

(50:40) Nature vs. nurture

(54:02) Takeaways on market timing

(55:24) The internet delivered on its promise

References

The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley by Jimmy Soni (Link)

The PayPal Wars: Battles with Ebay, the Media, the Mafia, and the Rest of Planet Earth by Eric M. Jackson (Link)

PayPal S-1 Filing in 2002 (Link)

Mr. Buffett on the Stock Market, Nov. 22nd 1999 (Link)

Technology waves are easy to see in hindsight, but often hard to see before they arrive. It’s even harder to build enough conviction to take a risk, ride the wave, and build something great.

Jeff Bezos did just that. And while the Amazon story has been told many times, it’s fascinating to think about what he saw that gave him the confidence to leave his comfortable Wall Street job to start Amazon.

How did he see the wave before most people, and what gave him the conviction to go for it? We cover his key relationship with David Shaw, his market research, and his regret minimization framework.

Famously, Amazon focused on books and grew like a rocket ship. How did they navigate the hype cycle and the dot com mania? Was their approach to investing during the boom the right approach? What can we learn from how they navigated the crest at the height of the bubble?

Finally, we ask maybe the most important question of all—how did Amazon survive? What were the market conditions they had to navigate? Did they do anything specific to position themselves or did they just get lucky?

Chapters

(01:20) Increasing return games

(05:38) Jeff Bezos’s background

(10:27) Market backdrop in the late 1980s, early 1990s

(13:54) Jeff Bezos meets David Shaw

(16:47) How Jeff Bezos sees the wave and builds conviction

(32:22) How Amazon navigates the wave

(35:25) Joy Covey hired as CFO

(36:27) Amazon’s investment philosophy during the boom

(42:40) How Amazon survives the crash

(44:25) Amazon’s financings

(49:41) The market crash and Amazon’s reaction

(52:50) Why did Amazon survive?

(57:50) See the wave, ride the crest, survive the crash

References

The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

Invent & Wander: The Collected Writings of Jeff Bezos

Amazon SEC filings & shareholder letters from 1996-2002

“Riding the Perilous Waters of Amazon.com” by Peter de Jonge, New York Times Magazine, published on March 14, 1999 (link)

Increasing Returns and the New World of Business by W. Brian Arthur (link)

2,300x web growth from ‘93-’94, John Quartermann, Matrix News, Vol. 4, No. 2 (link)

Acquired Episodes (History, Tom Alberg)

In the late 1990s, the internet grew exponentially to become an enormous engine for technological progress and economic disruption.

The existing telecommunications infrastructure was designed to carry voice and television signals—not data packets. The system needed billions of dollars in fiber and copper to support the tidal wave. Telecom entrepreneurs, incumbent executives and capital markets were eager to invest capital and ride the boom.

In this episode, we tell the parallel rise (and unraveling) of two giants who tried to wire the future from opposite ends of the network.

On one side: John Malone, the genius capital allocator behind TCI, stitching together last-mile cable systems and striking the blockbuster sale to AT&T in 1999 as the industry chased an “integrated provider” vision after the ’96 Telecom Act.

On the other: Bernie Ebbers of WorldCom, an acquisition machine that vaulted from discount long-distance reseller to national carrier—fueled by a once-accurate-later-obsolete statistic implying “internet traffic doubles every 100 days,” a meme born at UUNet and soon echoed by CEOs, analysts, and even the U.S. Commerce Department.

We follow the capex arms race, Williams’ ingenious move to pull fiber through abandoned pipelines, the strategic missteps at AT&T, and the line-cost KPIs that nudged WorldCom across the line from pressure to fraud.

Along the way, we draw out lessons for investors and operators that resonate in today’s AI boom.

Chapters

(01:15) The meme that sparked the boom

(04:00) Market structure for telecom in the 1990s

(10:01) Huge capital expenses

(11:16) Opportunity space for entrepreneurs

(12:59) Introducing Bernie Ebbers and John Malone

(18:02) The invention of EBITDA

(20:18) Everything changes in ‘95 and ‘96

(26:50) LDDS becomes WorldCom—a top long-distance carrier

(31:20) TCI becomes a top cable company

(35:14) Prices down in long-distance telephone & last-mile assets become very valuable

(37:24) TCI acquired by AT&T

(39:10) Contrasting dot com vs telecom financing

(43:23) AT&T-TCI merger challenges & WorldCom earnings down

(52:02) Aftermath for John Malone and Bernie Ebbers

(55:53) Lessons learned and applications to today

References

Cable Cowboy: John Malone and the Rise of the Modern Cable Business (link)

Born to Be Wired: Lessons from a Lifetime Transforming Television, Wiring America for the Internet, and Growing Formula One, Discovery, Sirius XM, and the Atlanta Braves by John Malone (link)

Extraordinary Circumstances: The Journey of a Corporate Whistleblower by Cynthia Cooper (link)

Boom and Bust in Telecommunications by the Federal Reserve Bank of Richmond (link)