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

**Dwarkesh Patel** (0:00)
Okay, I'm super excited about this one. Today, I'm interviewing Jimmy Soni. He's the author of Rome's Last Citizen, A Biography of Cato, A Mind at Play, A Biography of Claude Shannon, and most recently, he's the author of The Founders, The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley. So Jimmy, let's just jump into it. So your previous book was about Claude Shannon, and he comes up with information theory while he's working at Bell Labs.
This is a place that's famously comfortable. They have a monopoly from the government.
And then so the scientists, they have time, they have freedom. They're not pressured by competition. And on the other hand, you have, obviously, as you talk about, six Nobel Prizes, transistor, laser, Unix, C. On the other hand, you have PayPal. They're constantly on the verge of going under incredible pressure, long hours, and this is also a place that produces tremendous amounts of innovation. How do these different places promote innovation?

**Jimmy Soni** (1:04)
Yeah, it's a great question, and it is interesting to think about just how different they are.
It's a great question, and actually, it's a very big question. Because in some ways, the right person to answer the Bell Labs question is probably John Gertner, who did sort of the quintessential book on Bell Labs. It's called The Idea Factory.
I was looking at one person in that kind of stew, right, in that era, and that was Shannon.
Here's what I would say about Shannon's innovations. So Shannon worked on information theory not because he was working at Bell Labs. He actually was working at Bell Labs and was kind of tooling with information theory as a side hustle, right? Like he didn't call it a side hustle because we didn't have that lingo, but we have it now. So it's a side hustle for him, so he's sort of doing it on the side. Which is to say, it's quite possible that no matter where he worked, he would have been working on information theory in the off hours. The advantage of working at Bell Labs is, one, he's around communication networks all the time. Two, he's doing cryptography and cryptographic analysis, so he's thinking a lot about that. And then three, he sort of is around smart and intelligent people. And maybe the fourth thing is he has the Bell Systems Technical Journal where he can publish his findings originally. And they're a private sector organization that has a technical journal that gets distributed pretty widely throughout academia. But I suspect that if you were working, I don't know, wherever, he would have actually been working on information theory on the side anyway, because this was stuff he was just interested in broadly. So think about what that means.
He's a self-starter who's willing to do academic research just on the side and write papers about it just for kind of the sheer thrill of discovery. The number of people that that's true of, I think, in society is very, very small, meaning he didn't think he was going to I you can't IPO an academic paper, right? He's not going to get rich, right? He's not he's kind of not seeking fame because even when he becomes famous, he actually decides he's not going to go on like the lecture circuit or go on late night TV or anything like that. Right? So that the population of people who are like that is very, very small, right? For a variety of reasons, we don't have to get into it, but just sort of self-evident that that number, the number of people would want to do that as small. Paypal is a different story. Profit motive is a big part of what makes places like that successful. The Internet boom is going on. There's an entire generation of people who have built web companies, right? Starting with like Netscape who are IPOing and all of a sudden they're on the covers of magazines and they have huge amounts of wealth. So it would be it would be dishonest to say that that's not part of the motivation there.
There's that combined with this pressure of they close a very Paypal closes a very big round of fundraising in March of 2000, just as the.com bubble starts to burst. And so there is a kind of panic about surviving and about having to innovate your way to survival.
And so I think that, you know, I'm not saying that like there aren't other Claude Shannon's out there. I just think that they're smaller in number than maybe a constellation of people who are brought together by forces and are forced to survive and are forced to build a startup and then like can learn innovation that way. And the other thing I would say is I think the innovations are very different, right? So Paypal's innovations are, I would argue, are a sequence of kind of micro developments and creations, strong kind of end to end over the period of four years. It helps to build the company and there's a lot of like we can get into that obviously. And Shannon is writing a technical paper in 1948 and it sets certain principles and establishes the field of information theory. So I'm not sure it's like an apples to apples comparison, but I do like the idea of like thinking characterologically and saying, okay, there are probably some Shannon's in the world, but they're probably far outnumbered by the number of people who would want to create a startup and have, by the way, I don't think there's anything wrong with that. Like more self-interested reasons as opposed to public-spirited reasons or academic reasons.