After selling Zip2, Musk co-founded the online finance company X.com in 1999. It merged in 2000 with Confinity, which ran PayPal, and in September that year the board is reported to have removed Musk as CEO in favor of Peter Thiel. The company was renamed PayPal in 2001, and on July 8, 2002, it was announced that eBay would acquire it for about $1.5 billion.
Being pushed out of the top job at a company you built yourself.
For an entrepreneur, that is a major event. Elon Musk is reported to have gone through exactly that at the company he built after selling Zip2. And that company would later be sold for $1.5 billion.
This article follows about three and a half years: from the birth of X.com, to its becoming PayPal, to its purchase by eBay.
1999: a "bank" on the internet
In 1999, the year he sold Zip2, Musk moved straight on to his next company: X.com.
It was based in Palo Alto, California, and is said to have been founded in March 1999 (the month is not sufficiently confirmed). X.com aimed to offer financial services such as bank accounts, insurance, mortgages and investments all in one place on the internet.
Handling money over the internet is commonplace now, but at the time it was still a novel idea. An encyclopedia entry says about $25 million was put in at the start (not sufficiently confirmed).
2000: a merger with a rival
Around then, there was another company in the same town: Confinity. It ran a payment service called PayPal.
X.com and Confinity were rivals. But around March 2000, the two companies merged (the month comes from an encyclopedia). The merged company is said to have kept the name X.com at first.
The reported reasoning is that two competitors becoming one would grow bigger than wearing each other down in competition. But we could not confirm the content of the merger talks (when they began and who decided) in this article.
September 2000: the change of CEO
Now, the event from the opening.
About six months after the merger, in September 2000, press reports say that conflict arose among the merged company's executives, and the board removed Musk as CEO and put Peter Thiel in his place. It is also reported that Thiel and Max Levchin led the change (mainly a reconstruction based on later biographies).
Musk is said to have been on vacation at the time. But this is based on later biographies and could not be confirmed in records from the time.
Losing the helm of a company you built yourself. It is worth keeping in the back of your mind when you think about how, at Tesla and SpaceX later, Musk insisted on "continuing to serve as CEO himself." But whether there is a causal link cannot be determined.
2001: becoming PayPal
After that, the company is reported to have changed its name to "PayPal" in 2001 (the month is not confirmed).
From "X.com," the name Musk came up with, to "PayPal," a name already known as a payment service. The company name was aligned with the name of the product actually in use.
2002: eBay announces the acquisition
Then, in 2002.
On July 8, eBay, the auction-site giant, announced that it would acquire PayPal. The terms: 0.39 shares of eBay stock for each share of PayPal stock, in a stock swap. The deal was worth about $1.5 billion. This can be confirmed in eBay's official announcement filed with the SEC (the U.S. Securities and Exchange Commission).
And on October 3, 2002, eBay announced that the acquisition of PayPal was complete. PayPal's shareholders approved the deal, and PayPal was to be run as an independent brand.
About three and a half years after launching X.com in 1999, the PayPal story reaches a turning point here, in the form of a sale to a large company.
As for what Musk received in the deal, it is reported that he got eBay stock worth about $165 million (newspaper reports). But this amount could not be confirmed in SEC documents and the like.
One thing to notice here
The founding of SpaceX, covered in the next article, is said to be June 2002 (the date is unconfirmed). That is before the announcement of the eBay acquisition (July 8) and its completion (October 3). So Musk may have started running a rocket company before the PayPal sale was complete. But since the founding date itself is not confirmed, we limit this to pointing out the order of events.
FAQ
Is Musk a founder of PayPal?
He is a co-founder of X.com. PayPal was originally a service of a different company (Confinity), and became the company's name after the 2000 merger.
Is it true that Musk was removed as CEO?
There are reports. But they are mainly reconstructions based on later biographies, and could not be confirmed in records from the time.
How much did Musk receive from the sale of PayPal?
It is reported to be eBay stock worth about $165 million, but it is not confirmed in primary sources.
Summary
- March 1999: X.com founded (month unconfirmed). It aimed at financial services on the internet.
- Around March 2000: merged with Confinity (which ran PayPal).
- September 2000: amid conflict among executives, the board removed Musk as CEO and Peter Thiel succeeded him (based on later reports and biographies).
- 2001: the company was renamed PayPal (month unconfirmed).
- July 8, 2002: eBay announced the acquisition for about $1.5 billion (official announcement filed with the SEC). Completed on October 3.
Next: After letting go of PayPal, Musk headed to Russia. To buy a rocket.
Sources (checked 2026-10-11)
- Encyclopedia entry "X.com" (overview of founding and merger): https://www.encyclopedia.com/economics/encyclopedias-almanacs-transcripts-and-maps/xcom (secondary source; months and amounts not sufficiently confirmed)
- Washington Post, "Elon Musk, PayPal, Twitter, X rebrand" (July 25, 2023; on the 2000 change of CEO and the 2001 rename): https://www.washingtonpost.com/history/2023/07/25/elon-musk-paypal-twitter-x-rebrand/ (a later report, mainly based on biographies)
- eBay official announcement (filed with the SEC; the July 8, 2002 announcement of the acquisition and its October 3 completion): https://www.sec.gov/Archives/edgar/data/1103415/000091205702037693/a2090698zex-99_1.htm
- SFGate, "eBay's Friendly Takeover" (2002, report on the acquisition): https://www.sfgate.com/business/article/EBay-s-friendly-takeover-Online-auctioneer-2799050.php
This article is for learning about science, technology and corporate history, and is not investment advice. Facts and the author's interpretation are kept separate. Figures are AI-generated illustrations.