X.com / PayPal
Musk's online bank merged with Confinity to become PayPal. Sold to eBay for $1.5B in 2002.
In 1999, while most people were still dialing into AOL, Musk launched one of the first FDIC-insured banks that existed only on the internet. X.com merged with a Palm Pilot money-beaming startup called Confinity, and the resulting product — PayPal — became the financial infrastructure of the eBay economy. Musk was ousted as CEO while on his honeymoon; the company was sold to eBay three years later for $1.5 billion. His $165 million after-tax share funded SpaceX, Tesla, and SolarCity simultaneously. PayPal is the least glamorous chapter of the Musk story and also the most consequential: without it, none of the rest exists.
Founding Story
Musk founded X.com in March 1999 with $12 million of his Zip2 proceeds. The thesis was radical for 1999: a fully online FDIC-insured bank, with no branches, no paper statements, and email-based money transfers. Within a year X.com had hundreds of thousands of accounts.
In March 2000, X.com merged with Confinity — a competing payments startup founded by Peter Thiel, Max Levchin, Luke Nosek, and Ken Howery. The combined entity initially kept the X.com name, with Musk as CEO. The internal war over branding was also a war over product strategy: Musk wanted a full-service financial platform; Thiel wanted a focused payments product.
The board removed Musk as CEO in September 2000 while he was on his honeymoon in Australia. The company officially renamed to PayPal in June 2001. Musk's stake — approximately 11.7% — yielded $165 million when eBay acquired PayPal for $1.5 billion in October 2002. That $165 million is the hinge point of the entire Musk story.
- Mar 1999Founds X.com online bankInvests $12M of his Zip2 proceeds to found X.com, one of the first FDIC-insured online banks in the US, offering checking and savings accounts.
- Mar 2000X.com merges with Confinity to form PayPalX.com and Confinity (which built the PayPal payment system) merge. Musk becomes CEO of the combined entity. The internal name war between 'X.com' and 'PayPal' creates significant c…
- Sep 1, 2000Ousted as PayPal/X.com CEOThe board removes Musk as CEO while he is on his honeymoon in Australia. Peter Thiel returns to take the CEO role. Musk remains on the board as an investor but loses operational co…
- Feb 15, 2002PayPal IPO at $13/sharePayPal goes public on NASDAQ, raising $61M. Musk's stake makes him a paper billionaire for the first time. Stock rises 54% on the first day.
- Oct 3, 2002PayPal sold to eBay for $1.5BeBay acquires PayPal for $1.5 billion in stock. Musk's ~11.7% stake yields approximately $165M post-tax — the seed capital for SpaceX, Tesla, and SolarCity.
Overview
X.com was founded in March 1999 by Elon Musk, Harris Fricker, Christopher Payne, and Ed Ho as one of the first online-only banks in the US, with FDIC-insured accounts. Musk personally invested ~$12M of his Zip2 proceeds. In March 2000, X.com merged with Confinity (founded by Peter Thiel, Max Levchin, Luke Nosek, and Ken Howery) — the company behind a Palm Pilot beam-me-money product called PayPal. The combined entity initially kept the X.com name with Musk as CEO, then re-branded to PayPal in June 2001 after the board removed Musk while he was honeymooning in Australia. eBay acquired PayPal in October 2002 for $1.5B in stock. Musk's share — as the largest individual shareholder — was approximately $165M after taxes, the proceeds that funded SpaceX, Tesla, and SolarCity.
Elon's Role
Co-founders
Key Milestones
- Mar 1999founding
X.com founded
Online bank with FDIC accounts; Musk invests $12M.
- Mar 2000acquisition
X.com merges with Confinity
Combined entity initially named X.com; Musk is CEO.
- Sep 2000leadership
Musk ousted as CEO
Board removes Musk while honeymooning; Peter Thiel takes over.
- Jun 2001other
Renamed PayPal
Drops X.com brand. Domain X.com sat dormant until Musk repurchased it in 2017.
- Feb 15, 2002ipo
PayPal IPO
Priced at $13/share; raised $61M.
- Oct 3, 2002acquisition
Acquired by eBay for $1.5B
All-stock deal. Musk receives ~$165M post-tax — funds SpaceX/Tesla/SolarCity.
Predictions
I expect Twitter revenue to double within a year.
Twitter/X revenue fell significantly in 2023 due to the advertiser boycott and reduced subscription uptake.
Buying Twitter is an accelerant to creating X, the everything app. We can do banking, video, payments — it's WeChat for the West.
X launched payments features and expanded media but remains primarily a social platform as of 2025. Full 'everything app' functionality not achieved.
Subscriptions will become the primary revenue source for X, replacing advertising dependence.
