A group of hard-charging, investor-entrepreneurs who have built some of the world’s most iconic tech companies have launched a multi-pronged assault on the real estate industry. A striking number come from two groups: the so-called “PayPal mafia” and private equity behemoth Blackstone Group.
Their combined wealth, experience and commitment to mutual support should cause market incumbents to take their projects seriously, despite the long history of failed bids to fundamentally change the real estate business.
Serving as financiers, managers or a combination of the two, these Silicon Valley and private equity vets — at least four of whom are controversial libertarian billionaires — have helped reshape a number of industries, and they are determined to do the same to real estate. Tying together the fortunes and industry ambitions of many of these players are three real estate startups in particular: Opendoor, Roofstock and Bungalow.
At least five of this coterie, including Opendoor co-founder Keith Rabois and Gawker-slayer Peter Thiel, all hail from the “PayPal mafia,” a group that built the online payments giant PayPal, and later moved on to found or provide key financing to some of the world’s highest-profile tech companies, including YouTube, Tesla Motors, LinkedIn, Yelp, Facebook, Yammer and Palantir Technologies.
A number of others cut their teeth with Blackstone, the private equity behemoth that showed it was possible to buy and manage tens of thousands of single-family homes. Other worthy mentions include former Uber CEO Travis Kalanick and Silicon Valley investor titan Marc Andreessen.
The PayPal mafia
In his critical book of Silicon Valley hotshots,”The Know-It-Alls,” author Noam Cohen described the PayPal mafia as a group of “self-styled survival-of-the-fittest free-marketers commit[ed] to a strategy of collective risk and mutual support.”
To understand how the clique can turn startups into rocket ships, consider LinkedIn. The social network was founded by PayPal mafia member Reid Hoffman; got financing from members Peter Thiel and Keith Rabois; and received office space from another former PayPal colleague, Cohen wrote. Hoffman later paid this help forward to the group of PayPal vets who created YouTube with financing and office space, according to Cohen.
“My membership in a notable corporate alumni group in Silicon Valley has opened the door to a number of breakout opportunities,” Hoffman has said.
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