Square hires Keith Rabois, Silicon Valley veteran and investor
Keith Rabois is paying it forward.
Not only did Google land technology to help boost its social networking ambitions when it bought Slide this month, it got PayPal veteran and Internet superstar Max Levchin as well.
But San Francisco startup Square netted Slide executive Keith Rabois, a PayPal veteran who is also one of Silicon Valley’s top angel investors.
Square, which launched to great fanfare and a $40-million valuation, has suffered from problems with its hardware and with credit processing and risk. Payment systems are complex and Square’s product has been delayed even as competitors’ efforts gain steam.
In his new role as Square’s general manager, Rabois will help co-founder and CEO Jack Dorsey navigate these issues and run the company. Rabois will remain on the boards of Xoom, Yelp and Milo.
“I wanted to be an entrepreneur one more time,” Rabois said in an interview. "There is no comparison between the satisfaction derived from building a successful, thriving business and merely investing in one.”
This is a significant hire for Square, which is racing with other players, including PayPal, to help people make payments on their mobile phones rather than with cash. Square makes a small device that plugs into a smart phone to accept credit card payments. The buyer signs the screen with a finger and gets an e-mail receipt that includes photos and a map of where the digital transaction occurred. Credit cards extract a fee.
“These payment businesses tend to have difficulty initially getting traction, but if they do, they tend to become extremely valuable businesses,” said hedge-fund manager Peter Thiel, who sold PayPal to EBay for $1.5 billion in 2002 and went on to become a major investor in Silicon Valley, including as the first outsider to back Facebook. “Keith focuses on figuring out what’s going on with a company and what it will take to move a company forward. Any company that gets Keith will do extremely well. He has a long future ahead of him in Silicon Valley.”
Rabois and Dorsey, who came up with the idea for Twitter, did not know each other well. Venture capitalist and Square investor Gideon Yu played matchmaker. Dorsey and Rabois bonded over their love for the New York Yankees. Dorsey said Rabois’ insights into mobile payments will help the 30-person company. Rabois, who has been the right-hand man to Silicon Valley luminaries, among them Levchin and LinkedIn founder Reid Hoffman, will report to Dorsey.
“Keith took on some really hard and challenging problems at PayPal and solved all of them,” Dorsey said.
Onetime Wall Street lawyer Rabois fell for Internet startups right before the Internet took its first perilous plunge. In 2000, after his first company became a casualty, Rabois joined college classmate Thiel at PayPal, where the reputation of its executives as the “PayPal Mafia” was cemented. The influential set of players' interlocking relationships and talents have helped launch and fund many of Silicon Valley’s top companies.
After PayPal, Rabois worked for Thiel at his hedge fund Clarium Capital and ran one of Thiel’s portfolio companies. In 2005 he joined another PayPal veteran, Reid Hoffman, at the company he started, business networking startup LinkedIn. Just as Facebook began to reshape the Internet landscape, Rabois jumped to Slide to work with Levchin. Slide was an early star of the Facebook economy, making several top Facebook applications. One of Rabois’ projects at Slide was to develop a virtual payments product.
After Google bought Slide, Rabois weighed his options. He said he couldn’t resist Square. Neither could many of Silicon Valley's angel investors including Digg’s Kevin Rose, Foursquare’s Dennis Crowley, Twitter’s Biz Stone and Google’s Marissa Mayer.
-- Jessica Guynn