Kara Visits Founders Fund’s Peter Thiel
by Kara Swisher
Posted on November 1, 2007 at 10:29 AM PT
What can we say about investor Peter Thiel, when it is much better to listen to him talk?
Here’s a longish video I made at Thiel’s office on San Francisco’s Presidio (no Sand Hill Road mundanity for Peter!) yesterday with the man who has become Silicon Valley’s most interesting venture capitalist and all-around great character of late.
Now running the VC firm called the Founders Fund, as well as a hedge fund called Clarium Capital Management, Thiel has a lot to say about everything from the painfully slow decline of old media (likening them to train companies in a plane world!) to the underhyping of Web 2.0 companies like Facebook (a 10-times-10 valuation from its current $15 billion if the hot social network, in which he was the first investor, keeps up its torrid pace of growth!) to the state of venture capital (needs a shake-up!).
My favorite quote from the interview comes from Thiel right at the end: “There’s absolutely no bubble in technology.”
This is Thiel’s Web 2.0 version of the infamous quote from Web 1.0 uber-VC John Doerr, who said at the height of the last bubble that the Internet was then “underhyped” (which turned out to be pretty accurate overall, except to investors who lost their shirts in the bust).
The Stanford undergraduate and law school grad is in many ways a breath of fresh air for Silicon Valley–an entrepreneur (he was co-founder and CEO of PayPal, which he flipped to eBay in 2002 for $1.5 billion and personally pocketed $55 million in the transaction), a center square of a new kind of VC keiretsu (ex-PayPalers have their mitts in everything from Facebook to YouTube to Slide and more) and, best of all, someone willing to say deliciously wild things (he’s essentially John Doerr unplugged).
Such as this year when, in a widely read interview with the Deal in July, Thiel floated a massive figure for the valuation of Facebook, on whose three-person board he serves with founder Mark Zuckerberg and Accel Partners’ Jim Breyer.
“If we got an offer from someone for $10 billion, we probably would listen to them,” said Thiel to the Deal’s David Shabelman. “I don’t think we’re going to get that offer, and we’re not going to solicit it.”
It was a stunningly brash statement at the time, given that Thiel had initially invested $500,000 in 2004 in the company, which was followed by two more rounds, for a total of about $32 million overall by Founders Fund, Accel and others.
The last one was more than a year ago for $25 million, giving Facebook a $525 million pre-money valuation.
Except that changed last week when software giant Microsoft forked over an investment that put Facebook’s number at $15 billion and made Founders Fund’s 5% stake worth $750 million, at least on paper. (One has to wonder, of course, how Thiel is now hedging his bet to lock in that obscene gain.)
In any case, that deal is just the kind of capitalist development a political libertarian like Thiel would savor. And he clearly does.
Comments
With all due respect to Peter (who is actually a nice guy) PayPal was originally funded with hundreds-of-millions and the concept was to ‘beam money’ using your Palm. Likewise Elon was x.com an internet bank.
Quite some time before PayPal changed course and got into the eBAY payment world, both Billpoint (which eBAY bought) and BidPay had long established relationships with eBAY and were offering ewallet type payments.
PayPal was the late bloomer to the game and ‘claimed’ for themselves the title of ‘orignal online payment service’. Using what was left of that massive investment for BEAMING MONEY they sent $10 to anybody who would sign up for a PayPal account and the original service was extremely cash flow negative with major operational problems.
So Facebook, being the what 50th social networking site to come along now becomes ‘original’.
Like I said, he’s a nice guy and quite good at what he does but a does of reality never hurt anybody either.
Posted by Marek Bradbury at November 2nd, 2007 at 1:32 am[disclosure: i used to work at PayPal from 2001-2004]
@Marek: you’ve got a few errors there, and you’re also missing the point.
PayPal & X.com merged, and while Elon certainly brought a lot of capital to the table, PayPal also had many assets as well (i believe the deal was a 55-45 almost merger of equals, with X getting the slightly larger stake). In hindsight, PayPal’s business model & payments infrastructure were likely the more beneficial factor to the company’s later success, rather than X.com’s banking model, Elon’s other contributions notwithstanding.
Furthermore, given the many payment companies in the space, don’t you think more credit should be given to the company that survived, made money, & eventually dominated the space over any of the earlier entrants? As they say, excellence is all about 2% inspiration & 98% perspiration.
I think the does of reality goes more like this: PayPal was both innovative & practical, and changed its business model several times to eventually become the leader in the space. Other companies failed to match them, and fell by the wayside. Peter along with others at PayPal deserves a hell of lot of credit for guiding the company to its eventual IPO & acquisition.
- dave mcclure
Posted by dave mcclure at November 3rd, 2007 at 8:36 ampretty good interview Kara.
Although may I offer some constructive criticism?
You (and many other interviewers) have any annoying habit of interrupting your subjects responses, cutting them off mid-sentence, showing a little lack of respect for your subjects point of view.
I know, starbux and tight deadlines, make for a need to keep things moving forward, but harried and interruptive, does not make for a good interview(er)
While your information is always great, topical and right on target…sometimes your (mid-response) commentary moves us (the audience) alway from your subject and topic (our interests) and onto your personal opinions, and sometimes that message gets muddled.
Otherwise its a pleasure to read your articles.
Posted by dax mar at November 6th, 2007 at 12:31 pmFWIW
Seems like it would be cool to implement a biometric credit card that would store encrypted card data on your cell phone. Leave all those cards at home, or better yet, get rid of them entirely.
Store multiple cards on your phone, encrypted, so no one who find your phone could decipher the data. Maybe create a PGP like authentication or encryption to enable security via Internet and phone/data lines. Couple this with a fingerprint reader, that sends the print data to the card issuer verifing it in their data base for authorization. this would be a boon for debit cards, eliminating the pin. How about it, Google?!? 
Posted by rod sandcones at November 6th, 2007 at 3:57 pmI watched this video on WSJ.com and found myself compelled to find a place to post a comment because your interview style is the most irritating I have encountered in a long while. Peter Thiel is an incredibly smart guy trying to make some very thoughtful points, yet you keep cutting him off. Who cares about what you think! Your job is to get the most out of Peter in a way that draws as little attention to yourself as possible.
Posted by John Mikal at November 6th, 2007 at 6:09 pmI watched the video via the Wall Street Journal. The interviewing style was extremely annoying. It was so annoying I took the time to register to make these comments.
The constant “right … right … Myspace …. right” did not add to but rather subtracted from the interview.
Peter Thiel was intersting to hear. Unfortunately, in addition to the background track of “right, right,” he was interrupted several times to respond to snarky observations which were mostly off target.
Posted by Dan Jester at November 6th, 2007 at 7:22 pmDax, John, Dan:
Sorry I annoy you, but that’s how I roll in these videos and am sticking to it. It is meant to be a conversation and I am sorry you don’t like my style.
But I will try to stop saying “right” as it is a bad habit.
Posted by Kara Swisher at November 7th, 2007 at 1:50 am