First Elon Musk, Peter Thiel and David Sacks upended America’s financial-services industry with an innovative Silicon Valley startup called PayPal that rocketed to dominance as the internet took hold.
Now the conservative billionaires have leveraged the power, wealth and connections that grew out of their membership in the “PayPal Mafia” into positions of tremendous influence over a federal government whose actions profoundly affect their expansive business and financial empires. Sacks, a venture capitalist, Thiel, an investor and corporate leader, and Musk, the Tesla and SpaceX CEO, are close collaborators, sharing childhood ties to South Africa and a deep interest in disruptive technologies.
“They went from scrappy guys dodging government regulation to now they are the government, in a generation,” said Steve Blank, a Silicon Valley startup guru and an adjunct professor of management science and engineering at Stanford University.
In its early days, online payment platform PayPal defied the big banks, navigated steep regulatory obstacles, and, after it was sold to San Jose e-commerce titan eBay for $1.5 billion in 2002, catapulted most of its founders and early employees — dubbed the PayPal Mafia in a 2007 Fortune magazine article — into successful careers in technology and venture capital.
Few in the group are well known outside Silicon Valley. But Musk, Thiel and Sacks have eagerly pursued political influence, and when President Donald Trump took power for the second time, their stars ascended.
Musk, 53, was already the world’s wealthiest man, with a Forbes’ estimated net worth of $306 billion, when Trump appointed him in November to overhaul federal government spending in a controversial role as head of the Department of Government Efficiency. Last month, after several months of slashing spending and employees, he said his oversight was coming to an end.
Trump and Musk this week began openly feuding about the House Republicans’ budget bill, but Musk retains immense power in Washington and this week exhorted his 220 million followers on his social media platform X to call their senators and members of Congress to get the bill killed. “I called Elon last night and he didn’t answer,” House Speaker Mike Johnson said in a news conference Wednesday after Musk came out against the bill.
Meanwhile, Sacks, also 53, jumped into Trump’s administration as an adviser for artificial intelligence and cryptocurrency, and leads the President’s Council of Advisors on Science and Technology.
President Donald Trump listens to White House adviser David Sacks as he signs an executive order regarding cryptocurrency in the Oval Office of the White House, Thursday, Jan. 23, 2025, in Washington. (AP Photo/Ben Curtis, File)
Thiel, a strong backer of Trump’s winning campaign for the presidency in the 2016 election cycle, played a key role in getting Vance — a protegé of Thiel’s — into the U.S. Senate, then the vice presidency. Palantir, the data giant Thiel co-founded and helps lead as chairman, has massive federal contracts, including about $1.6 billion from the Pentagon since May of last year, and is a major player in Trump’s efforts to remake government.
To Musk and Sacks, Thiel, 57, is like a “big brother,” said Gil Duran, former press secretary to California Gov. Jerry Brown, and a Mercury News reporter at the time of PayPal’s birth. “He’s the godfather of the PayPal mafia.”
Thiel landed in the Bay Area as a child in the mid-70s, after living with his family in South Africa and what is now Namibia, and Cleveland. After graduating from San Mateo High School in 1985, Thiel enrolled at Stanford, where he majored in philosophy and co-founded the conservative-libertarian newspaper the Stanford Review.
That publication brought Thiel together with South Africa-born Sacks, who as a Stanford economics undergraduate began writing and editing for the Review. In 1995, the pair published the book “The Diversity Myth,” a Stanford-focused attack on political correctness and multiculturalism in higher education.
The same year, Musk, also born in South Africa, co-founded Global Link Information Network in Palo Alto, a business-software startup renamed Zip2 a year later. It was sold to Compaq in 1999 for a reported $300 million. Musk took his windfall and co-founded online banking company X.com.
Coincidentally, Musk’s new startup had its office in Palo Alto next to Confinity, a venture Thiel led as CEO, that aimed at beaming money between “PalmPilot” devices. Thiel and company founder Max Levchin “envisioned a cashless mobile world,” author Jimmy Soni wrote in “The Founders,” a 2022 book about PayPal.
President-elect Donald Trump speaks next to PayPal founder Peter Thiel during a meeting with technology industry leaders at Trump Tower in New York, Wednesday, Dec. 14, 2016. (AP Photo/Evan Vucci)
Around that time, Thiel was seeking to lure Sacks — a consultant for McKinsey & Company with a University of Chicago law degree — to Confinity. Sacks told Soni he initially thought sending money between PalmPilots was “a dumb idea” good for little more than splitting a dinner tab, but he agreed to join the startup as product chief if it focused on sending money by email.
As the century turned, X.com and Confinity were “locked in a tense battle for customer growth,” Soni wrote. But internet hype was peaking, and Thiel worried — aptly, it turned out — that the bubble would burst and take Confinity with it, Soni wrote. At X.com, CEO Bill Harris fretted that competition between the two startups would destroy both before either got off the ground.
Merger talks began, and PayPal was born. It went public in 2002, and later that year, eBay bought it and the PayPal Mafia cashed in.
“We saw PayPal when they were Confinity and X,” said long-time Silicon Valley venture capitalist Tim Draper. “I think together the two entities catalyzed some of the greatest entrepreneurs.”
Many of the PayPal Mafia’s 20 or so members have continued to work together, with Musk, Thiel and Sacks collaborating especially closely.
Musk’s DOGE pushed the federal government into hiring Palantir for a lucrative contract to combine and analyze data from federal agencies, the New York Times reported.
Elon Musk attends a news conference with President Donald Trump in the Oval Office of the White House, Friday, May 30, 2025, in Washington. (AP Photo/Evan Vucci)
Thiel’s Founders Fund has invested in Musk’s SpaceX rocket company, his Fremont brain-computer interface company Neuralink, and his tunneling firm The Boring Company. It also backed social-networking startup Yammer, co-founded by Sacks and sold in 2013 to Microsoft for $1.2 billion.
Sacks, via the Silicon Valley venture capital firm Craft Ventures he co-founded in 2017, has also invested in Musk’s companies — including his Bay Area artificial intelligence startup X.ai, and in Palantir, which Thiel co-founded.
The PayPal Mafia power trio have major financial interests in companies whose success rests in large part on government contracts and federal regulations. A White House memo said Sacks and Craft, preparing for Sacks’ government roles, had divested more than $200 million in crypto-related holdings.
Democrats have raised questions about possible conflicts of interest related to Thiel and Musk but no formal proceedings have been pursued.
Trump in a social media post Thursday threatened to eliminate contracts and subsidies benefiting Musk’s companies.
Thiel’s Founders Fund has invested in federal contractors SpaceX, Palantir, and military technology firm Anduril, along with companies vulnerable to federal regulation, including Facebook, financial technology company Stripe, Neuralink, artificial intelligence giant OpenAI and payments startup Ramp, which Politico reported is angling for a share of a $700 billion federal government internal expense card program. In May, Palantir won a $795 million increase to a $480 million contract from last year with the U.S. Army, for a total value of $1.3 billion.
Sacks Craft Ventures has invested in Neuralink, SpaceX, The Boring Company, xAI, and Palantir, along with numerous companies vulnerable to federal regulation, including a cryptocurrency company and startups in AI and financial technology.
Musk’s finances are heavily dependent on federal spending and regulations, from billions in contracts for SpaceX to rules and enforcement covering Neuralink and Tesla, and regulations potentially affecting xAI.
Stanford’s Blank noted that when PayPal was becoming a company, it “was not affecting the trajectory of the United States.” But the PayPal Mafia, Blank said, “is an example of when Silicon Valley decided it actually had superpowers past the Valley.”
