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Peter Thiel

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Original author: 
Liz Gannes

A platform for investing in young people to help them pursue entrepreneurship and other opportunities is not a Google-like business. And a company called Upstart, founded by a team of former Googlers to arrange these investments, is not yet having Google-like success. (Not to set the bar high or anything.)

UpstartIn its first year, Upstart has arranged just over $1 million in funding to 83 participants from 135 backers, and repayments have already begun.

But Upstart says its ambitions, and the potential for the idea of “human capital,” are much bigger than that.

“The productive abilities of people represent all the potential of the economy. If we allow people to start investing in income potential, that’s the mother of all asset classes,” said Upstart CEO Dave Girouard in a recent interview.

(Girouard, 47, was formerly president of Google Enterprise and VP of Google Apps; and Upstart co-founder Anna Mongayt, 32, ran Google’s enterprise customer programs and Gmail Consumer Operations. A third co-founder, 22-year-old Paul Gu, was part of Peter Thiel’s 20under20 drop-out-of-college program.)

Having judged its early trials as successful, Upstart has now raised $5.9 million from new investors including Founders Fund, Khosla Ventures, Collaborative Fund, Eric Schmidt, Marc Benioff and Scott Banister, after raising $1.75 million from Kleiner Perkins Caufield & Byers, NEA, Google Ventures, First Round Capital, CrunchFund and Mark Cuban last year.

The company currently hand-reviews applications, rejecting about half of them so far, and running income-potential analysis to determine each person’s investment terms (for instance, $4,000 upfront might promise a return of 1 percent of a person’s income over the next decade). Almost everyone who made it through that process so far has raised a minimum of $10,000, according to Upstart.

So how does Upstart turbocharge its own growth? Girouard said he hopes to fund thousands of applicants within the next year, and that it would take a combination of getting the word out, product improvements like better mentorship communication, and U.S. law changes like the yet-to-be-implemented JOBS Act that would make it easier to publicly solicit investment.

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Eric Jonas

A couple of MIT PhDs have created an amazing new kind of database called Veritable.

Prior Knowledge, a startup, launched Veritable on Tuesday at the TechCrunch Disrupt conference, and while it only made it to the finals at the show, it was the real winner for us.

Veritable doesn't just store information and spit it back out at you. It uses complicated math to predict things based on the data.

"We're aware of a company called Oracle," CEO Eric Jonas said. "But their products only tell us what you already know."

A key feature of Veritable is that it doesn't require special knowledge to use, as some new database alternatives do. It is geared toward the millions of programmers, business analysts, and other users who use SQL, a specialized programming language used to tap into databases.

To give some perspective on that, Jonas said he looked up Yahoo on LinkedIn and found there were 2,500 employees at that company who know SQL. (Yahoo CEO Marissa Mayer was on stage as a judge.)

Veritable wouldn't replace existing databases from Oracle and the like. Rather, it would run alongside them, much as data-warehouse software does, and generate insights.

Companies could use Veritable to discover hidden relationships in data they already have. For instance, it can sift through a medical database to predict a public-health threat. Dating sites could predict the perfect love match.

Prior Knowledge, which launched in January, last month raised $1.4 million in seed money from Peter Thiel's Founders Fund.

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Eugene Marinelli and Quinn Slack

We don't know much about Eugene Marinelli and Quinn Slack, or their new startup, Blend Labs.

But we have heard this much: It has just raised $2.5 million from Facebook investor Peter Thiel and venture-capital firm Andreessen Horowitz, according to a source.

It makes total sense, given that Slack and Marinelli are both former software engineers at Palantir, a secretive Thiel-backed company which processes massive amounts of data for corporate clients and government agencies.

We couldn't find an SEC filing showing the investment, though there are ways for companies that want to stay stealthy to avoid such filings (by, for example, filing with state regulators).

From what we can see, Marinelli and Slack are interested in the following hot areas:

  • Big data. They just gave a presentation at Stanford about using technologies like Hadoop, HBase, and Scala to handle huge quantities of information. Or as they put it, "you have a ton of data, need to handle a lot of users, and want to perform heavy computation over the data."
  • The social graph. They posted code to GitHub, an open software repository, for "Facebook social data modeling." And their Stanford presentation shows an example of handling data about individuals including email addresses and groups they belong to.
  • Mobile platforms. Slack has contributed some code to the Play 2.0 platform, which is used for mobile applications.

Okay, so that doesn't give us many clues to what Blend Labs is doing. But big-data applications for social and mobile platforms seems like it hits just about every investing buzzword.

Andreessen Horowitz, Slack, and Marinelli did not respond to emailed inquiries about the investment.

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Peter Thiel

Through notes from Peter Thiel's CS183: Startup class at Stanford University, we have a unique window into the mind of the venture capitalist and hedge fund manager. He's fascinated with human nature, and integrates what he learned from his former career as a chess master into his lectures. 

Chess is a contained universe: there are only 32 pieces on the board and 64 squares those pieces can occupy. But starting up a company takes much more than raw intellectual ability; it requires what Thiel calls "The Mechanics of Mafia," or the understanding of complex human dynamics. Linking the two worlds is Thiel's passion. Here are some of the chess concepts he highlighted in his class, thanks to notes from one of his former students, Blake Masters

Know the relative value of your pieces: 

In chess, the queen is the most valuable piece on the board. In the standard valuation system, it is given a 9, whereas the rook (5), bishop (3), knight (3), and pawn (1) are lower. In his lecture Value Systems, Thiel mentions Guy Kawasaki’s equation on how to assess the value of a company based on the types of people you have:

Pre-money valuation = ($1M x Number of Engineers) – ($500k x Number of MBAs).

So engineers are more valuable pieces than MBAs.

From his lecture If You Build It, Will They Come? Thiel points out that within any group, there is a wide range of talent. This goes for engineering as much as it goes for sales. “Engineering is transparent … It is fairly easy to evaluate how good someone is. Are they a good coder? An ubercoder? Things are different with sales. Sales isn’t very transparent at all. We are tempted to lump all salespeople in with vacuum cleaner salesmen, but really there is a whole set of gradations. There are amateurs, mediocrities, experts, masters, and even grandmasters.”

“But if you don’t believe that sales grandmasters exist, you haven’t met Elon [Musk]. He managed to get $500m in government grants for building rockets, which is SpaceX, and also for building electric cars, which is done by his other company, Tesla.”

The take-away lesson: Just like with chess pieces, people are not of equal value when it comes to your organization. You must be able to accurately assess their value. And within any field there are amateurs, mediocrities, experts, masters, and grandmasters.

Know how your pieces work best together: 

In his lecture The Mechanics of Mafia Thiel discusses two personality types: “nerds” and “athletes.”  “Engineers and STEM people tend to be highly intelligent, good at problem solving, and naturally non zero-sum. Athletes tend to be highly-motivated fighters; you only win if the other guy loses.” A company made up of only athletes will be biased toward competing. A company made up of only nerds will ignore the situations where you have to fight. “So you have to strike the right balance between nerds and athletes.”

The take-away lesson: You need some athletes to protect your nerds when it’s time to fight.

Know the phases of the game and have a plan:

In chess, there are three phases: the opening, the middle game and the end game.

From his lecture Value Systems Thiel notes: “People often talk about ‘first mover advantage.’ But focusing on that may be problematic; you might move first then fade away. The danger there is that you simply aren’t around to succeed, even if you do end up creating value. More important than being the first mover is the last mover. You have to be durable. In this one particular at least, business is like chess.  Grandmaster Jose Raul Capablanca put it very well: to succeed ‘you must study the endgame before anything else.’”

From his lecture War and Peace: “A good intermediate lesson in chess is that even a bad plan is better than no plan at all. Having no plan is chaotic. And yet people default to no plan.”

Take away lesson: Moving first isn’t always an advantage. Think about poker. If you’re the last to bet, you have the most information. The endgame is where the most decisive moves are made. Study it and make sure you’re around at the right time to make your move. Have a plan.

Talent matters; there is more to success than luck: 

In chess, talent clearly matters. In business and life, both talent and luck matter.

From his lecture You Are Not A Lottery Ticket, Thiel said that “when we know that someone successful is skilled, we tend to discount that or not talk about it. There’s always a large role for luck. No one is allowed to show how he actually controlled everything.”

In his lecture If You Build It, Will They Come? Thiel explained that "since the best people tend to make the best companies, the founders or one or two key senior people at any multimillion-dollar company should probably spend between 25 percent and 33 percent of their time identifying and attracting talent.”

Take away lesson: Some people hold more value and control more resources than you realize. Invest your time in finding those talented people for your organization.

Chess is a brutal mental game. So is life. Make your moves carefully. 

According to chess grandmaster Danny King's interview with 60 Minutes, “Chess is a really brutal game. I think because it’s so contained. It’s all going on in the head. And if you lose to your opponent, you feel stupid. You can call someone all the names under the sun, but if you call someone stupid, that’s the worst thing you can say to another human being. And that’s a bit what it feels like when you lose a game of chess. It’s all intellectual.”

Take away lesson: In the words of King: “You can’t take your moves back. Once you play your move you could be stepping into some horrible trap.”

© 2012 by Jonathan Wai

You can follow me on TwitterFacebook, or G+. Read my Psychology Today blog Finding the Next Einstein: Why Smart is Relative here.

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This link is to a summary of Peter Thiel's class topics written in superb essay style. It centers entirely around technology, how a new supplier (an entrepreneur) brings it to the people, and how the creative process navigates the modern world.

The words are far-reaching and truly align to the best of humanity and our future potential.

Peter Thiel "gets it"

Purpose and Preamble

We might describe our world as having retail sanity, but wholesale madness. Details are well understood; the big picture remains unclear. A fundamental challenge—in business as in life—is to integrate the micro and macro such that all things make sense.

Humanities majors may well learn a great deal about the world. But they don’t really learn career skills through their studies. Engineering majors, conversely, learn in great technical detail. But they might not learn why, how, or where they should apply their skills in the workforce. The best students, workers, and thinkers will integrate these questions into a cohesive narrative. This course aims to facilitate that process.

I. The History of Technology

For most of recent human history—from the invention of the steam engine in the late 17th century through about the late 1960’s or so— technological process has been tremendous, perhaps even relentless. In most prior human societies, people made money by taking it from others. The industrial revolution wrought a paradigm shift in which people make money through trade, not plunder.

The importance of this shift is hard to overstate. Perhaps 100 billion people have ever lived on earth. Most of them lived in essentially stagnant societies; success involved claiming value, not creating it. So the massive technological acceleration of the past few hundred years is truly incredible.

The zenith of optimism about the future of technology might have been the 1960’s. People believed in the future. They thought about the future. Many were supremely confident that the next 50 years would be a half-century of unprecedented technological progress.

But with the exception of the computer industry, it wasn’t. Per capita incomes are still rising, but that rate is starkly decelerating. Median wages have been stagnant since 1973. People find themselves in an alarming Alice-in-Wonderland-style scenario in which they must run harder and harder—that is, work longer hours—just to stay in the same place. This deceleration is complex, and wage data alone don’t explain it. But they do support the general sense that the rapid progress of the last 200 years is slowing all too quickly.

II. The Case For Computer Science

Computers have been the happy exception to recent tech deceleration. Moore’s/Kryder’s/Wirth’s laws have largely held up, and forecast continued growth. Computer tech, with ever-improving hardware and agile development, is something of a model for other industries. It’s obviously central to the Silicon Valley ecosystem and a key driver of modern technological change. So CS is the logical starting place to recapture the reins of progress.

III. The Future For Progress

A. Globalization and Tech: Horizontal vs. Vertical Progress

Progress comes in two flavors: horizontal/extensive and vertical/intensive. Horizontal or extensive progress basically means copying things that work. In one word, it means simply “globalization.” Consider what China will be like in 50 years. The safe bet is it will be a lot like the United States is now. Cities will be copied, cars will be copied, and rail systems will be copied. Maybe some steps will be skipped. But it’s copying all the same.

Vertical or intensive progress, by contrast, means doing new things. The single word for this is “technology.” Intensive progress involves going from 0 to 1 (not simply the 1 to n of globalization). We see much of our vertical progress come from places like California, and specifically Silicon Valley. But there is every reason to question whether we have enough of it. Indeed, most people seem to focus almost entirely on globalization instead of technology; speaking of “developed” versus “developing nations” is implicitly bearish about technology because it implies some convergence to the “developed” status quo. As a society, we seem to believe in a sort of technological end of history, almost by default.

It’s worth noting that globalization and technology do have some interplay; we shouldn’t falsely dichotomize them. Consider resource constraints as a 1 to n subproblem. Maybe not everyone can have a car because that would be environmentally catastrophic. If 1 to n is so blocked, only 0 to 1 solutions can help. Technological development is thus crucially important, even if all we really care about is globalization.

B. The Problems of 0 to 1

Maybe we focus so much on going from 1 to n because that’s easier to do. There’s little doubt that going from 0 to 1 is qualitatively different, and almost always harder, than copying something n times. And even trying to achieve vertical, 0 to 1 progress presents the challenge of exceptionalism; any founder or inventor doing something new must wonder: am I sane? Or am I crazy?

Consider an analogy to politics. The United States is often thought of as an “exceptional” country. At least many Americans believe that it is. So is the U.S. sane? Or is it crazy? Everyone owns guns. No one believes in climate change. And most people weigh 600 pounds. Of course, exceptionalism may cut the other way. America is the land of opportunity. It is the frontier country. It offers new starts, meritocratic promises of riches. Regardless of which version you buy, people must grapple with the problem of exceptionalism. Some 20,000 people, believing themselves uniquely gifted, move to Los Angeles every year to become famous actors. Very few of them, of course, actually become famous actors. The startup world is probably less plagued by the challenge of exceptionalism than Hollywood is. But it probably isn’t immune to it.

C. The Educational and Narrative Challenge

Teaching vertical progress or innovation is almost a contradiction in terms. Education is fundamentally about going from 1 to n. We observe, imitate, and repeat. Infants do not invent new languages; they learn existing ones. From early on, we learn by copying what has worked before.

That is insufficient for startups. Crossing T’s and dotting I’s will get you maybe 30% of the way there. (It’s certainly necessary to get incorporation right, for instance. And one can learn how to pitch VCs.) But at some point you have to go from 0 to 1—you have to do something important and do it right—and that can’t be taught. Channeling Tolstoy’s intro to Anna Karenina, all successful companies are different; they figured out the 0 to 1 problem in different ways. But all failed companies are the same; they botched the 0 to 1 problem.

So case studies about successful businesses are of limited utility. PayPal and Facebook worked. But it’s hard to know what was necessarily path-dependent. The next great company may not be an e-payments or social network company. We mustn’t make too much of any single narrative. Thus the business school case method is more mythical than helpful.

D. Determinism vs. Indeterminism

Among the toughest questions about progress is the question of how we should assess a venture’s probability of success. In the 1 to n paradigm, it’s a statistical question. You can analyze and predict. But in the 0 to 1 paradigm, it’s not a statistical question; the standard deviation with a sample size of 1 is infinite. There can be no statistical analysis; statistically, we’re in the dark.

We tend to think very statistically about the future. And statistics tells us that it’s random. We can’t predict the future; we can only think probabilistically. If the market follows a random walk, there’s no sense trying to out-calculate it.

But there’s an alternative math metaphor we might use: calculus. The calculus metaphor asks whether and how we can figure out exactly what’s going to happen. Take NASA and the Apollo missions, for instance. You have to figure out where the moon is going to be, exactly. You have to plan whether a rocket has enough fuel to reach it. And so on. The point is that no one would want to ride in a statistically, probabilistically-informed spaceship.

Startups are like the space program in this sense. Going from 0 to 1 always has to favor determinism over indeterminism. But there is a practical problem with this. We have a word for people who claim to know the future: prophets. And in our society, all prophets are false prophets. Steve Jobs finessed his way about the line between determinism and indeterminism; people sensed he was a visionary, but he didn’t go too far. He probably cut it as close as possible (and succeeded accordingly).

The luck versus skill question is also important. Distinguishing these factors is difficult or impossible. Trying to do so invites ample opportunity for fallacious reasoning. Perhaps the best we can do for now is to flag the question, and suggest that it’s one that entrepreneurs or would-be entrepreneurs should have some handle on.

E. The Future of Intensive Growth

There are four theories about the future of intensive progress. First is convergence; starting with the industrial revolution, we saw a quick rise in progress, but technology will decelerate and growth will become asymptotic.

Second, there is the cyclical theory. Technological progress moves in cycles; advances are made, retrenchments ensue. Repeat. This has probably been true for most of human history in the past. But it’s hard to imagine it remaining true; to think that we could somehow lose all the information and know-how we’ve amassed and be doomed to have to re-discover it strains credulity.

Third is collapse/destruction. Some technological advance will do us in.

Fourth is the singularity where technological development yields some AI or intellectual event horizon.

People tend to overestimate the likelihood or explanatory power of the convergence and cyclical theories. Accordingly, they probably underestimate the destruction and singularity theories.

IV. Why Companies?

If we want technological development, why look to companies to do it? It’s possible, after all, to imagine a society in which everyone works for the government. Or, conversely, one in which everyone is an independent contractor. Why have some intermediate version consisting of at least two people but less than everyone on the planet?

The answer is straightforward application of the Coase Theorem. Companies exist because they optimally address internal and external coordination costs. In general, as an entity grows, so do its internal coordination costs. But its external coordination costs fall. Totalitarian government is entity writ large; external coordination is easy, since those costs are zero. But internal coordination, as Hayek and the Austrians showed, is hard and costly; central planning doesn’t work.

The flipside is that internal coordination costs for independent contractors are zero, but external coordination costs (uniquely contracting with absolutely everybody one deals with) are very high, possibly paralyzingly so. Optimality—firm size—is a matter of finding the right combination.

V. Why Startups?

A. Costs Matter

Size and internal vs. external coordination costs matter a lot. North of 100 people in a company, employees don’t all know each other. Politics become important. Incentives change. Signaling that work is being done may become more important than actually doing work. These costs are almost always underestimated. Yet they are so prevalent that professional investors should and do seriously reconsider before investing in companies that have more than one office. Severe coordination problems may stem from something as seemingly trivial or innocuous as a company having a multi-floor office. Hiring consultants and trying to outsource key development projects are, for similar reasons, serious red flags. While there’s surely been some lessening of these coordination costs in the last 40 years—and that explains the shift to somewhat smaller companies—the tendency is still to underestimate them. Since they remain fairly high, they’re worth thinking hard about.

Path’s limiting its users to 150 “friends” is illustrative of this point. And ancient tribes apparently had a natural size limit that didn’t much exceed that number. Startups are important because they are small; if the size and complexity of a business is something like the square of the number of people in it, then startups are in a unique position to lower interpersonal or internal costs and thus to get stuff done.

The familiar Austrian critique dovetails here as well. Even if a computer could model all the narrowly economic problems a company faces (and, to be clear, none can), it wouldn’t be enough. To model all costs, it would have to model human irrationalities, emotions, feelings, and interactions. Computers help, but we still don’t have all the info. And if we did, we wouldn’t know what to do with it. So, in practice, we end up having companies of a certain size.

B. Why Do a Startup?

The easiest answer to “why startups?” is negative: because you can’t develop new technology in existing entities. There’s something wrong with big companies, governments, and non-profits. Perhaps they can’t recognize financial needs; the federal government, hamstrung by its own bureaucracy, obviously overcompensates some while grossly undercompensating others in its employ. Or maybe these entities can’t handle personal needs; you can’t always get recognition, respect, or fame from a huge bureaucracy. Anyone on a mission tends to want to go from 0 to 1. You can only do that if you’re surrounded by others to want to go from 0 to 1. That happens in startups, not huge companies or government.

Doing startups for the money is not a great idea. Research shows that people get happier as they make more and more money, but only up to about $70,000 per year. After that, marginal improvements brought by higher income are more or less offset by other factors (stress, more hours, etc. Plus there is obviously diminishing marginal utility of money even absent offsetting factors).

Perhaps doing startups to be remembered or become famous is a better motive. Perhaps not. Whether being famous or infamous should be as important as most people seem to think it is highly questionable. A better motive still would be a desire to change the world. The U.S. in 1776-79 was a startup of sorts. What were the Founders motivations? There is a large cultural component to the motivation question, too. In Japan, entrepreneurs are seen as reckless risk-takers. The respectable thing to do is become a lifelong employee somewhere. The literary version of this sentiment is “behind every fortune lies a great crime.” Were the Founding Fathers criminals? Are all founders criminals of one sort or another?

C. The Costs of Failure

Startups pay less than bigger companies. So founding or joining one involves some financial loss. These losses are generally thought to be high. In reality, they aren’t that high.

The nonfinancial costs are actually higher. If you do a failed startup, you may not have learned anything useful. You may actually have learned how to fail again. You may become more risk-averse. You aren’t a lottery ticket, so you shouldn’t think of failure as just 1 of n times that you’re going to start a company. The stakes are a bit bigger than that.

A 0 to 1 startup involves low financial costs but low non-financial costs too. You’ll at least learn a lot and probably will be better for the effort. A 1 to n startup, though, has especially low financial costs, but higher non-financial costs. If you try to do Groupon for Madagascar and it fails, it’s not clear where exactly you are. But it’s not good.

VI. Where to Start?

The path from 0 to 1 might start with asking and answering three questions. First, what is valuable? Second, what can I do? And third, what is nobody else doing?

The questions themselves are straightforward. Question one illustrates the difference between business and academia; in academia, the number one sin is plagiarism, not triviality. So much of the innovation is esoteric and not at all useful. No one cares about a firm’s eccentric, non-valuable output. The second question ensures that you can actually execute on a problem; if not, talk is just that. Finally, and often overlooked, is the importance of being novel. Forget that and we’re just copying.

The intellectual rephrasing of these questions is: What important truth do very few people agree with you on?

The business version is: What valuable company is nobody building?

These are tough questions. But you can test your answers; if, as so many people do, one says something like “our educational system is broken and urgently requires repair,” you know that that answer is wrong (it may be a truth, but lots of people agree with it). This may explain why we see so many education non-profits and startups. But query whether most of those are operating in technology mode or globalization mode. You know you’re on the right track when your answer takes the following form:

“Most people believe in X. But the truth is !X.”

Make no mistake; it’s a hard question. Knowing what 0 to 1 endeavor is worth pursuing is incredibly rare, unique, and tricky. But the process, if not the result, can also be richly rewarding.

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This is only the first of 11 sections generously written by Blake Masters, the site's creator.

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mark zuckerberg dustin moskovitz

SAN FRANCISCO -- All eyes are on Facebook Inc., which is on the verge of a $100-billion initial public stock offering.

But the people to watch are an elite group of former company insiders. Already loaded, or soon to be, thanks to the looming Wall Street payday, these Facebook pals are furiously building the next generation of Silicon Valley companies.

And they're doing it together.

Facebook co-founder Dustin Moskovitz, the world's youngest billionaire at 27, has teamed with Facebook alumnus Justin Rosenstein on Asana, which makes online software that helps people work together more effectively.

Adam D'Angelo, Facebook's first chief technology officer, is working with Facebook pal Charlie Cheever on Quora, a website whose aim is to connect people to information.

Former Facebook executive Matt Cohler is now a venture capitalist bankrolling his old co-workers, including Dave Morin, who runs a mobile social network called Path.

"Very few people get to change the world with their friends. Now we are setting out to do it again," said Kevin Colleran, 31, Facebook's first ad sales guy, who's now an investor handing out money and advice.

Whether these Facebook friends, most still in their 20s, can deliver on these youthful ambitions remains to be seen. Silicon Valley is littered with the wreckage of onetime meteors that burned through all their hype and cash.

What's clear is that it pays to have friends like these in Silicon Valley, where it's all about whom you know and whom you work with.

Innovation, researchers have found, is an inherently social act, owing as much to these tightknit networks as the garage tinkering of individual entrepreneurs.

"The basic unit of innovation in Silicon Valley is the team," Silicon Valley futurist Paul Saffo said. "Innovation is an irrational act, and the only way to get through that irrationality is to surround yourself with other people as crazy and obsessed with changing the world as you are."

For decades, these networks have seeded Silicon Valley with breakthrough ideas and ventures. It all began with Frederick Terman, who, as a young Stanford faculty member in the 1930s, encouraged his engineering students William Hewlett and David Packard to start a company. Terman brought together young entrepreneurs and local industry, giving rise to a powerful and wealthy high-tech community to rival the East Coast.

Interlocking social networks were forged in cubicles across Silicon Valley. In the 1960s the "traitorous eight" defected from Shockley Semiconductor Laboratory to start a competing company. Fairchild Semiconductor quickly surpassed Shockley and became a training ground for engineers. When it began to stumble, the original eight founders moved on to new ventures. Eugene Kleiner became one of the region's most important venture capitalists. Gordon Moore and Robert Noyce co-foundedIntel Corp.

The most famous social network is the "PayPal mafia," a high-profile band of executives who sold the payments company to EBay Inc. They then built and backed some of the hottest companies in Silicon Valley, including Yelp, YouTube and Facebook. Facebook's first Silicon Valley investor was Peter Thiel of Founders Fund, who was PayPal's chief executive and co-founder.

Now it's the Facebook pals' turn. With social networking wired into their brains, who better to out-friend the PayPal mafia?

"We have all been through the experience of building something that had a massive, massive impact on the world. Going out a second time and starting a new company, nothing short of that is very interesting," Moskovitz said in an interview in Asana's San Francisco headquarters. "Everyone is mission-oriented. They want to do something that will touch everyone on Earth."

He and Rosenstein are building software that breaks down communication barriers so that people can collaborate more effectively. It's a labor of love that dates back to their days at Facebook. As the company grew, it became harder for Moskovitz to keep tabs on what various teams were doing.

So he built a tool to help Facebook employees organize and discuss tasks. He and Rosenstein bonded over their shared desire to create ways to work more efficiently. In 2008, they left Facebook to concentrate on building a tool to help any group of people be more productive and stay on track.

"We are focused on building a company that will last. We expect to be a $100-billion company," said Rosenstein, 28. "We run the company with the intent and the expectation to be the next in that lineage."

D'Angelo, 27, and Cheever, 30, have similarly lofty goals. Over Chinese food in Facebook's offices in the fall of 2008, they began discussing Q&A sites that enabled users to answer one another's questions. The services were wildly popular. But the answers were often wrong or useless.

D'Angelo and Cheever decided they could do better, so they started work on Quora in 2009. They rented cramped offices over an art supply store in an old building in Palo Alto, hired programming and design prodigies, and got experts to weigh in with thoughtful, authoritative answers to hundreds of thousands of questions.

Traffic grew quickly as Quora won over fans with answers that were not only smart but entertaining:

"What's the best way to escape the police in a high-speed car chase?" A former Missouri police officer responded that it's easy if you pick a jurisdiction where authorities are bound by strict pursuit guidelines to avoid liability.

"If you injure a bug, should you kill it or let it live?" An entomologist responded that insects don't feel pain the way that vertebrates do, so there's no need to put them out of their misery.

Quora landed $11 million in funding and an $86-million valuation via Benchmark Capital's Cohler and now has 33 employees.

Like others in the Facebook network, D'Angelo and Cheever seem to read each other's thoughts and finish each other's sentences. The depth of these friendships is unusual even in Silicon Valley. These Facebook pals don't just call on one another for money and advice, start companies together and sit on each other's boards. They also hook up to celebrate life's big moments.

Ruchi Sanghvi was Facebook's first female engineer and one of the first 10 hired at the company. She and her husband, Aditya Agarwal, were Carnegie Mellon graduates who came to Facebook as a couple in 2004. In 2010 when they wed on a beach in Goa, India, dozens of their Facebook friends joined them for a weeklong family celebration. Among them was Facebook CEO Mark Zuckerberg in a long silk sherwani jacket.

"With this network, you are never lonely," said Sanghvi, who with Agarwal last month sold their start-up Cove to San Francisco's Dropbox. "It's not just a work fabric. It's our life fabric."

Each winter a couple of dozen of them pile into a house at a Colorado ski resort that belongs to the family of Facebook executive Sam Lessin. This snowy retreat hundreds of miles from Silicon Valley is the gathering place for the "Lothlorien Life Conference," or LLC for short. Named after the forest realm in "The Lord of the Rings," LLC is the event no one misses, a time for friends to slice down the mountain and swap advice.

That's where Morin, 31, decided to turn down a $125-million offer fromGoogle Inc.for Path. It was 2010, and he had just launched Path and didn't want to sell it, nor did he want to help Google take on Facebook. But he was under pressure from investors and employees.

Morin huddled in a quiet corner of the living room with Moskovitz and Founders Fund's Brian Singerman, both investors in Path. They talked late into the night and all the next day. Moskovitz reminded Morin about how Zuckerberg wrestled with the $1-billion buyout offer fromYahoo the early days of Facebook.

"I told Dave he simply didn't need to do it and, even if he subsequently failed, that would be OK," Moskovitz said. "After that it was clear that a huge weight had been lifted."

Morin said he couldn't get by without that kind of help from his friends. Path has raised a new round of funding that values the company at $250 million, and it has more than 2 million users, including Britney Spears.

"We built Facebook, and it's ingrained in how we think. I think in networks now," Morin said. "It would be hard for me to think any other way."

No one in the Facebook network has any intention of cashing in his or her chips any time soon, Colleran said. Facebook's employee No. 7 left the company in July. He just signed on to a new gig as a venture partner with General Catalyst Partners in Boston.

"I believe after Asana, after Path, after Quora, there will be another company, and then another one, and another one," Colleran said.

"If we are all going to be hanging out anyway, why not be productive and change the world? It's a whole lot better than sitting around and saying, 'Remember that time at Facebook?' We're all way too young for that."

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