Joining the Mafia 105
cause both companies were interested in the eBay users. In
1999, the two companies merged with each other. Almost
all employees were surprised. First they worked all day
trying to kill each other, and now they would cooperate
with each other? X.com was the larger company because
they had other services like money markets, index funds,
and debit cards, but Confinity had a larger market share
on eBay.
One of the reasons to why the companies merged was
because both spent huge amounts of money on acquiring
new users. If they combined their users, the combined
company would become, according to Metcalfe’s Law,
four times as valuable. The second reason was that Thiel
thought only one company involved in payments on the
Internet could become a public company. Of the two com-
panies, Thiel thought X.com would beat Confinity in the
race to the stock market because X.com had more resources.
If X.com became a public company, they would get enough
resources to crush the competition. Therefore, Confinity
didn’t have any other choice than to merge with X.com.^189
The strategy of the new company was that after users
began using PayPal, X.com could sell to them their super-
market of financial services. Harris became the CEO, Thiel
took a sabbatical year and came back to run the finance and
investor divisions, and Levchin became the CTO. “I think
this is going to go very well,” Thiel said. “This combined
company will just blow everyone else away.” Elon thought
the new company could become larger than the online
grocery service Webvan, which had a market value of $7.9