AIB Featured Business Leader – Peter Thiel
Peter Thiel, the tech billionaire who has been in the headlines for everything from his entrepreneurial projects to his iconoclastic politics, is one of Silicon Valley’s best known personalities. As one of PayPal’s founders and the first outside investor in Facebook, he’s worth around $2.7 billion. He’s a libertarian who threw his support behind Donald Trump in the 2016 US election, a practicing Christian who is openly gay, and he believes that technology holds the key to immortality. Recent headlines have centered on his bankrolling of a lawsuit that saw Gawker Media file for bankruptcy, which he considers a ‘philanthropic act’, but it’s neither the first nor the last time that the outspoken billionaire has used his wealth to further his ideological beliefs. Thiel is a relentlessly energetic, curious and driven man, whose entire career has taken into account the big picture while making him money along the way.
Thiel was born in Germany in 1967, but moved to the United States when he was just one year old. Growing up, he was a recluse, but was unquestionably brilliant with it. An avid chess player, he started playing at six years old, and by 12 was ranked seventh in the US under-13s category. Thiel went on to study philosophy at Stanford University, and then to Stanford Law School, from which he graduated in 1992. By his sophomore year, Thiel was already an avowed libertarian, and founded the Stanford Review with some friends. The group were to stay close throughout their college years, and later many of those Stanford Review contributors were to join Thiel at PayPal.
Following university, Thiel found employment first at a New York law firm and then as a derivatives trader, neither of which met his ambitious standards. Four years out of law school, in 1996, Thiel raised $1 million from friends and family and founded his own multi strategy fund, Thiel Capital Management.
In 1998, Thiel set his sights on developing PayPal, which was originally established as Confinity – a service which developed security software for handheld devices. A year later, it was launched as a money transferring service with the intervention of John Malloy from BlueRun Ventures. Confinity then merged with X.com, an online banking company founded by Elon Musk, and the company dropped its other banking services to focus on the money service. It became PayPal officially in 2001, going public in 2002 with an initial IPO of $61 million. Shortly afterwards, the entire company was acquired by eBay for $1.5B, and Thiel walked away with $55 million.
In 2004, he invested $500,000 in the then-startup Facebook as an outside angel investor: that sum bought him just over 10% of the stock. He sold most of it after the company’s 2012 IPO, netting over $1 billion in cash to date, but remains on the board of directors with a $20 million stake. Thiel has also invested in a number of other successful Silicon Valley startups, many of them commanded by the same group with whom he started PayPal, known as the ‘PayPal Mafia’. His numerous investments include early stage stakes in Yelp, LinkedIn, Quora and Asana, as well as Elon Musk’s rocket-ship company, Space-X.
Also in 2004, Thiel founded a new startup, Palantir Technologies. Palantir is a data mining software company whose first big clients were branches of the US government, and has since expanded to service private healthcare and insurance companies. It seems an odd fit for a man who has been loyally liberal since his teens, but Thiel insists that there’s no contradiction. His view is that government agencies are going to attempt to gather information in either case, and advanced technologies offer “more security with fewer privacy violations”. The company was valued at $9 billion in 2014, and remains privately owned with Thiel as the largest stakeholder.
Ever the disruptor, Thiel has focused much of his post-PayPal philanthropy towards new technologies and new ways of doing things. Those include a program through his Thiel Foundation which awards 20 young people $100,000 each over two years to focus on starting their own businesses. The Thiel Foundation also furthers Thiel’s other passion – the science of longevity. One of its earliest recipients was Aubrey de Grey, a biogerontologist trying to develop regenerative therapies that can postpone ageing indefinitely.
But Thiel doesn’t always practice what he preaches. His 2015 funding of a lawsuit against Gawker Media, in which he bankrolled Terry Bollea (aka Hulk Hogan) to sue Gawker for publishing a sex tape, has been unusual in its approach and ramifications. Firstly, it was carefully structured so that Gawker was unable to utilise its insurance coverage, and secondly it appears to have been an opportunistic suit, encouraged by Thiel as part of a long strategy to bring down Gawker due to a personal grudge. That grudge may be understandable – Thiel blames Gawker’s Valleywag for outing him as gay before he was comfortable making that fact public. The lawsuit sent Gawker into bankruptcy, an extreme result to be sought for by a man who’s donated to the Committee to Protect Journalists and spoken out in defence of free speech. But just like with his data mining company, Thiel is ready to defend his actions, claiming that the press is better served when ‘clickbait’ sites aren’t part of the profession.
What about his willingness to publicly support Donald Trump? One could speculate that Thiel is attracted to Trump’s own willingness to ignore the rules and disrupt orthodoxy, or that Trump’s policies are likely to benefit Thiel’s portfolio of companies. Or perhaps, this man who’s already achieved far more than most people would think possible has his eye on a very, very long game.
This article was written by Tanya Ashworth-Keppel on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources were used to compile this article: The Telegraph, Forbes, New York Times, Investopedia, Techworld, Fortune, Inc, The Atlantic and Bloomberg.