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To understand Musk's renewed obsession with X and focus on financial services, you REALLY need to understand the X/Confinity merger that became PayPal.
And, particularly, the Peter Thiel-led coup that kicked Musk out as CEO/Chief Strategist.
Here's how that happened. 1/
#history #technology
In early 1999 Zip2, the newspaper online directory service Musk had co-founded, was sold to Compaq for $300m. Elon's share of this was about $20m.
Elon begins hitting up old connections from his time at ScotiaBank.
He says he wants to launch "A Financial Superstore" /2
Having drummed up support, he founds a new company to take this forward. He immediately buys the x.com domain off Pittsburgh PowerComputer for 1.5 MILLION shares of A-Stock in his new company, X.
Advisors express concern over X as a brand. Elon loves it. /3
He describes x.com as "the coolest URL on the internet". X, he says, marks the spot for treasure. That's how people will see it he insists.
He invests $12.5m of his own cash into X and begins trying to build an 'online bank'. /4
Musk's obsession with speed and disdain for regulation means X developers love him, but causes worry with the financial expert side.
First Western, the banking partner, discover that accounts are being opened under fake names.
The finance peeps try (but fail) to coup Elon out. /5
In early 2000, X hits the news for a vulnerability that allows money to be moved between accounts with just account details. This is fixed, but spooks investors.
Elon agrees with investor Mike Moritz from Sequoia to become CTO while Bill Harris (ex-Intuit) becomes CEO. /6
Meanwhile, over the road (literally), a startup called Confinity is making waves. It's funded by Peter Thiel, who is also its CEO, but is the brainchild of Ukrainian Max Levchin its CTO.
Backed by Nokia, Confinity is making a way to 'beam' money between PalmPilots by infrared. /7
Need to skip A LOT here. But jump forward a bit and both X and Confinity ACCIDENTALLY create the same killer product as an offshoot of their main one:
The ability to exchange money via email.
Confinity pivot to this exclusively. X don't. Musk's goal is financial superstore. /8
The strength and focus that HAS gone on X's email payment processor has mostly been due to David Sacks, one of Elon's hires who he trusts and who spotted the huge potential.
He keeps Musk grounded with eyes on this while Elon is ALSO pushing into riskier financial service stuff. /9
But Harris (X CEO) sees Confinity and X are BOTH in a death spiral. They are BLEEDING cash fighting. He speaks to Thiel. Thiel suggests a merger.
Musk fights this. But ahead of another funding round, Harris threatens to quit, spooking investors
Elon: "He held a gun to my head." /10
The firms merge. Harris and Thiel insist the new firm (X) focus on email payments, ideally on Confinity's PayPal platform.
Elon INSISTS financial superstore is the future. When Thiel and Harris fall out over strategy, Elon persuades Thiel to help coup Harris out. Elon is now CEO /11
Thiel, and Levchin, are initially fine with this. Musk has promised to focus on email payments, and to improve PayPal first. Financial superstore a "future thing".
But over months Levchin realises that Elon has become obsessed with porting PayPal ENTIRELY to Microsoft not Linux. /12
Months of dev time, with X burning $12m a month, is lost to Musk's obsession with PayPal V2. A complete rework on Microsoft. It's BEYOND a bad plan. Microsoft servers and MSSQL CANNOT scale enough at the time. But Elon decrees it. He even decrees a launch with no rollback option. /13
Elon also orders the killing off the PayPal brand. He orders paypal.com routed to x.com. Logos phased out. Decrees it should now be referred to as X-PayPal and described as part of the X family of financial services. He's not letting the dream go. /14
This obsession with X as a brand causes enormous concern as it CONTINUALLY goes down terribly with consumers.
Vivien Go on focus group testing:
"Again and again, the theme of 'Oh God, I wouldn't trust this website. It's an adult website' and 'I just wouldn't trust that" /15
Meanwhile, Thiel finds out via X's financial wizard, Roelof Botha, that the financial superstore side stuff is WORSE than Musk has let on. X is offering credit on almost no identity checks.
Combined with the V2 fiasco, Thiel and others realise X is on the verge of failing. /16
Thiel and others approach Elon and BEG him to abandon Paypal V2, and his strategy of trying to become a one-stop global financial service. Thiel points out they only have $65m left in the bank.
Musk refuses.
They have to go for "the grand prize" he insists. /17
Thiel, Levchin, Botha and Sacks now cross the rubicon. They decide to coup Elon. They quietly gather the signatures of a lot of the Confinity loyalists on a mass-quit threat.
On 19th Sep 2000, as Elon is taking off for Europe on his honeymoon, they make their move. /18
Thiel and Levkin are board members. The other four are Musk, Malloy (repping another major investor), Moritz and Hurd (Chair).
As Elon is in the air, Thiel asks Hurd to summon an emergency board meeting by phone. /19
Over the phone, Thiel and Levkin reveal the PayPal V2 and financial issues to Malloy, Moritz and Hurd, who had no idea about them. They're sympathetic to Elon as founder and visionary, but horrified this was all done without board approval and at the mass-resignation letter. /20
With Elon out of the country, he can't work his in person magic. He insists over the phone that the financial superstore is the big win. All this is in service of that.
It doesn't work. Malloy, Moritz and Hurd side with Thiel and Levkin. Elon is out as CEO before he can fly back /21
Musk is devastated and furious.
"Sneaky Backstabbing Bastards." He describes them as, but to his credit recognises he can't fight it and presents a public image it was a mutual decision.
Thiel becomes interim (and later permanent) CEO, orders the end of V2 and a focus on PayPal /22
Hopefully you can see the roots of this whole X pivot thing now. Musk has decided that the way to save Twitter and regain his genius status is to fall back on his unrealised vision from 1999.
Build "the world's financial nexus" as he described it then. /23
I think it's a TERRIBLE idea. The world's moved on. He's doing the tech equivalent of drunk-DMing his highschool girlfriend to tell her she's still hot.
But you can see the origins now. He thinks this is the genius idea that got away. And that this time nobody can coup him. /24
Anyway, hope that's useful context. None of what's going on is surprising if you lived through it or have studied it. You just have to get past the hagiography Silicon Valley creates around it's "great men"
If this was useful you can buy me a coffee here: ko-fi.com/garius /END
Why Not Zoidberg? 
@garius "But he's the most important human alive, a true genius "
So was Hitler.
@garius Excellent thread, but had the unintended side-effect of making me hate Thiel just a tiny bit less. I worked for 2(!) CEOs who wouldn't take the money sitting right in front of them because it would "interfere with The Big Play".
@garius Personally, I followed all this and was aware that he's trying to do what you described.
But it's an excellent summary for those trying to make sense of his attempt at self Xtermination . . .
@garius Also, amusingly, the PayPal X-fail led to him falling out of like with South Africa. He tried to claim the credit for it all in 2002 - but Thiel got the kudos.
The whole story was eclipsed by Mark Shuttleworth (of Ubuntu fame) going to the International Space Station. Musk was livid because he was starting SpaceX at the time and all the other Saffers were getting the glory. 
(We've hated him since.)
@OutOnTheMoors @garius Mind you, Shuttleworth is pretty much a national treasure while Elon is just another one of those Pretoria boys we all despise.
@mdstevens0612 @garius Yeah, I was working in Joburg media at the time and there was a lot of "that bloody Musk brat" sentiment
@garius So.... does this "financial superstore" idea have anything to do with "open banking", do you think?
@renatoram @eyrea @garius Why do I have the sneaking suspicion that were an individual to go take up with Musk's Internet magic bank and take out loans that the debt will get sold off and held valid in perpetuity even when his company dissolves?
It really pisses me off that it's pretty much always going to be the individual consumers and poorest party in the transaction left holding the bag.
Basically his villain origin story. He's still mad he got told no once.
https://www.marketwatch.com/story/elon-musk-had-a-brady-bond-trade-idea-hes-lucky-his-boss-rejected-it-2016-04-21
@garius Today's Toot worth reading.
Now, here's a question. What about FedNow? Doesn't its ability to do instant payments sunset even companies like Paypal?
@DanaBlankenhorn @garius what i want to know if Palantir/PayPal built it for the Fed 
@DanaBlankenhorn @garius whew! thanks! LOL
@garius Fascinating - thank you!
@garius Great read! Thank you.
OOC, do you have any recommended reading for stuff like this? I love this corporate espionage stuff.
@nebulos The Founders by Jimmy Soni for this particular subject.
@foresterr @CGM yup. I will admit I love a bit of creative verbing.
It's a fun way to stretch, but not break, the language.
@garius This is the first explanation of this whole fiasco that makes a lick of sense. Thanks for the excellent background!
@garius its "great men"
Who the HELL would trust this guy with their money?
) method of moving and hiding $$$.....I'm sure many would take a chance.@lynnedubois @garius the Aristocrats
@garius Thanks for the thread. I hadn't known any of this.
For a long time I've thought that we'd all be better off to first order if corporate mergers were banned. (Yes, unconditionally.) This story makes for an interesting thought experiment in second order consequences of that policy — if PayPal and Xv1 *could not* merge, I'm thinking probably Musk would have run X into the ground first, leaving PP to take the market, but would Musk have found another way to believe it wasn't his fault (likely) and where would everyone be now?
@zwol tbh the opposite was more likely.
PayPal had better market share at the time in the email payment market, but Thiel knew that X had more financial runway (i.e. investor funding).
So both he and Levkin knew that X could burn cash longer than they could.
And Thiel was worried because he'd realised the dot com crash was coming and that would limit future funding options.
Hence whyt when Harris tentatively pitched the merger at him, he seized the chance.
@garius the most amazing thing I learned from that is that David Sacks isn't a complete idiot.
@matthewmuses @garius "a broken clock is right twice a day" and all that sort of thing...
@garius This was very informative. Thank you for enlightening us.
Glass Onion was so frigging relevant. Imma go watch it again.
@garius Please don't take this the wrong way! But do you have a source on this history? Honestly I don't disbelieve any of it but I'm just careful in believing anything I read online without checking sources
@rgarciairvine a smart thing to be!
If you want a really readable (or listenable) history of this period, I strongly recommend The Founders by Jimmy Soni.
His history of PayPal is really thorough and very well researched (with my historian hat on).
@garius thanks so much, will check it out! Thanks for sharing such an enlightening story
@garius love board room coup stories thanks for this!
@garius nice story, have a coffee :)
What is extremely odd is how Musk continues to do business and politics with Thiel.
Thiel has demonstrated over and over his utter lack of trustworthiness in any capacity.
Thiel made Facebook into Russia's favorite anti-democracy disinformation vehicle & got Trump into the presidency.
Musk is rapidly converting Twitter into a vehicle for a Coup 2.0.
Larry Ellison, David Sacks, Thiel and Musk are still part of an ongoing seditious conspiracy. Together.
@Npars01 because Musk is that insecure
@Npars01 While Thiel and Musk dislike each other, they're also both massive narcissists and capable of separating "personal" from "business".
They recognise each other (or at least Thiel did at the time) as useful shitheads.
Within WEEKS of couping Musk out of X/PayPal, Thiel was one of Musk's main investors in SpaceX.
@garius "incapable" in the 1st sentence?
@garius
Great thread - but what ever happened to the 1.5m shares in A stock for the Pittsburgh computer company? How much did they make?
@Richard_ogilvie a good question! certainly a good deal for them.
They'd have been diluted into B Stock when the merger happened, but if they hung onto them they'd have made an absolute KILLING still when eBay bought PayPal.
@Richard_ogilvie @garius
Who was first to register x .com?
I read somewhere (can't find the reference now) that it was Musk, in 1993, and that he sold it but bought it back a few years later.
The "1993 Owner" is not shown here:
https://en.wikipedia.org/wiki/Single-letter_second-level_domain
Only six single-letter domains existed in 1993 (under .com, .net and .org), when the original IANA (Jon Postel and Joyce K Reynolds at USC/ISI in Marina Del Rey) banned new single-letter registrations.
There were no registry fees back then.
@garius As a very casual observer, I’ve always seen the tale spun as Elon being the founder of PayPal, and that’s how he initially made his fortune. The whole Twitter saga has brought a lot to light!
@jamieb Musk is absolutely critical to it's early days, no doubt.
But as my thread hopefully shows, it gets skipped over that PayPal becomes PayPal DESPITE Musk, not because of him.
He profits from what it became, not what he was determined to make it into.
And if he'd not been couped, chances are PayPal would have been just another DotCom with a grand plan that failed when it stopped being able to raise funding.
@garius I’ve heard the same said about SpaceX and Tesla; they’re successful DESPITE Musk.
@jamieb @garius Well, after he wrote the checks I think that's true. But Tesla had given up on getting the money to start sports car production (pivoting to delivery vans) when he showed up, and space nerds had been saying we should be doing much of what Space X did, NASA wasn't going to touch it, we needed a rich person to fund it. But at some point he's become a clear liability. Those companies manage him (like letting him try no water curtain for the first Starship test) unlike Twitter.