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Facebook Investor And PayPal Co-Creator Peter Thiel Believes Mark Zuckerberg's Site Is Worth $150bn

Publication Date: 
March 12, 2011
Source: 
The Telegraph
Author: 
Richard Blackden

Lecturer Peter Thiel was interviewed and quoted for an article on the founding of PayPal. The Telegraph's Richard Blackden filed the following story:

There's a good chance you're on Facebook. You may even be a recent joiner who helped catapult the world's biggest social networking site pass the 600m user mark. If so, you probably know you've helped make Facebook founder Mark Zuckerberg incredibly rich. But he's not alone.

In the summer of 2004, Zuckerberg and Sean Parker, who would briefly be president of the site, turned up at the San Francisco home of Peter Thiel on the hunt for an investment in what was then a barely known start-up. They walked away with $500,000 and left Thiel with a stake in a site that, with under 1m users, was in need of a friend. Seven years on and Thiel's stake is worth closer to $2bn.

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Entrepreneur, futurologist, hedge fund manager, philanthropist, investor and writer - in an age of ever greater specialisation, the 43-year-old is moving at increasing speed in the opposite direction. "I do think there is something to be said for being a generalist in our society," Thiel said. Reversing the ageing process, robotics, artificial intelligence and human rights are all fields that The Thiel Foundation is using his cash to pursue.

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Thiel always enjoyed going against the grain. As a student of philosophy at California's Stanford University, he co-founded The Stanford Review, a paper that railed against political correctness. Contrarians can, of course, be easily dismissed. That's less easy when some of their bets have reaped fortunes. Thiel himself is clear on the subject of money. "It would be one of the biggest mischaracterisations that we're doing this primarily as a way of making money," he says.

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While admitting that there's "not much I can say on the subject that won't sound biased", Thiel ventures that "the current valuation is about one third of Google. If you think about what it [Facebook] is doing to change the world there's a decent argument that it's worth as much as Google."

You discover that Thiel, who was born in Germany but grew up in California, doesn't much like the company that Sergy and Larry built. The world's biggest search engine was truly innovative, he says, but is now more of a bet against developing new ways of navigating the web. Ditto IBM, Dell, Microsoft and Oracle. Just because a company pioneered a fundamentally disruptive technology doesn't mean they always will.

"Facebook has been the big breakthrough technology company of the last seven to eight years," Thiel believes, before adding "that the very odd thing about Facebook is it is so singular. Its specific success is masking a general failure."

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That doesn't stop Thiel nipping at the hand that helped feed him. "I still think that Silicon Valley has more innovation than anywhere else in the world. It has not been enough to move the dial," he explains. "I do think it's odd that the internet and the mobile internet are really the only areas that people have been focused on." Even so, it remains an area of focus for Thiel. Founders Fund, a venture capital firm that he co-founded in 2005 with two ex-PayPal colleagues, has scored some significant successes investing in this area. One investment, for example, Ironport, which develops email and security software for the web, was snapped up by Cisco in 2007 for $830m. Powerset, a business fashioning new technology for search engines, was bought by Microsoft for an estimated $100m.

If Thiel is prepared to point out what he sees as the limitations of Silicon Valley, he's scornful of a lack of innovation beyond computing power and the web. "Computer technology and the internet in particular has been the one dramatic exception in the past four decades in what has otherwise been stagnation." As the upheaval in North Africa keeps oil prices above $100 a barrel and threatens to send them higher, a lack of alternatives to crude is one example he cites. "The reality is that if there were no fundamental shortages, then these tensions [in Libya] would not be so destabilising," Thiel argues. "It frequently gets misinterpreted as a political crisis not a resources one."

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... During an event at San Francisco's Palace of Fine Arts last December, Thiel admitted one reaction people have to some of the technologies he's funding is "a lot of the stuff sounds really strange".

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... Thiel says that the fund had a good record before the past two challenging years and says he doesn't plan to stop making such bets.

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"The sense we have is that we're in an emergency. We're not in a normal holding position," says Thiel. The PayPal co-founder has made millions from the disruptive technology of the internet. Whether his quest for new technologies offers matching financial rewards, will depend on whether or not his diagnosis becomes more or less relevant to the West.