Elon Musk developed viral marketing techniques for X.com, Walter Isaacson explains (in his biography of Elon), including bounties for users who signed up friends, and he had a vision of making X.com both a banking service and a social network:
Like Steve Jobs, he had a passion for simplicity when it came to designing user interface screens. “I honed the user interface to get the fewest number of keystrokes to open an account,” he says. Originally there were long forms to fill out, including providing a social security number and home address. “Why do we need that?” Musk kept asking. “Delete!” One important little breakthrough was that customers didn’t need to have user names; their email address served that purpose.
One driver of growth was a feature that they originally thought was no big deal: the ability to send money by email. That became wildly popular, especially on the auction site eBay, where users were looking for an easy way to pay strangers for purchases.
As Musk monitored the names of new customers signing up, one caught his eye: Peter Thiel. He was one of the founders of a company named Confinity that had been located in the same building as X.com and was now just down the street. Both Thiel and his primary cofounder Max Levchin were as intense as Musk, but they were more disciplined. Like X.com, their company offered a person-to-person payment service. Confinity’s version was called PayPal.
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“It was this crazy competition where we both had insane dollar bonuses to get customers to sign up and refer friends,” says Thiel. As Musk later put it, “It was a race to see who would run out of money last.”
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Thiel asked him how he envisioned potential merger terms. “We would own ninety percent of the merged company and you would own ten percent,” Musk replied. Levchin was not quite sure what to make of Musk. Was he serious? They had roughly equal user bases. “He had an extremely serious I’m-not-joking look on his face, but underneath there seemed to be an ironic streak,” Levchin says. As Musk later conceded, “We were playing a game.”
After the PayPal team left the lunch, Levchin told Thiel, “This will never hunt, so let’s move on.” Thiel, however, was better at reading people. “This is just an opening,” he told Levchin. “You just have to be patient with a guy like Elon.”
The courtship continued through January 2000, causing Musk to postpone his honeymoon with Justine. Michael Moritz, X.com’s primary investor, arranged a meeting of the two camps in his Sand Hill Road office. Thiel got a ride with Musk in his McLaren.
“So, what can this car do?” Thiel asked.
“Watch this,” Musk replied, pulling into the fast lane and flooring the accelerator.
The rear axle broke and the car spun around, hit an embankment, and flew in the air like a flying saucer. Parts of the body shredded. Thiel, a practicing libertarian, was not wearing a seatbelt, but he emerged unscathed. He was able to hitch a ride up to the Sequoia offices. Musk, also unhurt, stayed behind for a half-hour to have his car towed away, then joined the meeting without telling Harris what had happened. Later, Musk was able to laugh and say, “At least it showed Peter I was unafraid of risks.” Says Thiel, “Yeah, I realized he was a bit crazy.”
Notably, the car was not insured.