Angelina S. Gustilo

PETER THIEL By: Anj Gustilo 2017 President of Clarium Capital Chairman of Palantir Board member of Facebook Partner in Founders Fund Chairman of Valar Ventures Chair of Mithril Capital Partner in Y Combinator Net worth US$2.7 billion (2016) Everyone wants to change the world. And there are some people whose strong desire to change the world combined with sheer genius they possess plus all the effort they put in does just that – change the world. The inventor of Paypal, one of the most successful venture capitalists of world, Peter Thiel is one of those very rare breed of people. Peter Thiel, in full Peter Andreas Thiel (born October 11, 1967, Frankfurt am Main, West Germany), German American entrepreneur and business executive who helped found PayPal, an e-commerce company, and Palantir Technologies, a software firm involved in data analysis. He also invested in several notable ventures, including Facebook. When he was one year old, Thiel and his family moved from Germany to the United States. He studied philosophy at Stanford University (B.A., 1989), during which time he founded The Stanford Review, a newspaper that was critical of political correctness. He then attended Stanford’s law school, and, shortly after graduating in 1992, he published The Diversity Myth (cowritten with David Sacks), about alleged political intolerance at the university. In 1998 Thiel and several others cofounded Confinity, which was designed to handle payments between Palm Pilots. The following year it merged with Elon Musk’s X.com, and PayPal was created, with Thiel becoming its CEO and chairman. Designed to create “a new world currency,” the e-commerce company specialized in Internet money transfers. PayPal proved hugely successful, aided by its use on the online marketplace eBay. In 2002 eBay acquired PayPal for $1.5 billion. The transaction made Thiel a multimillionaire, and he subsequently invested in a number of start-ups, notably Facebook (2004), an online social networking service. He also established the hedge fund Clarium Capital Management. In 2004 Thiel cofounded Palantir Technologies, a data analytics firm. Critics questioned its subsequent involvement with the CIA and other government agencies, especially given Thiel’s libertarianism. However, he argued that Palantir’s technology allowed for focused data retrieval, preventing overreaching searches and more draconian measures. The company was also used by banks to detect fraud and handle other cybersecurity efforts. In 2005 Thiel established Founders Fund, a venture capital firm. It invested in such companies as Airbnb, Lyft, and Musk’s SpaceX. In 2007 Thiel’s personal life attracted attention when Gawker’s tech blog featured an article that claimed he was homosexual. Thiel denounced the online media company, though he subsequently announced that he was gay. In 2016 it was revealed that, after publication of the article, Thiel had begun funding various lawsuits against Gawker, most notably one involving Hulk Hogan, who successfully sued for invasion of privacy after Gawker published a sex tape featuring the professional wrestler; the settlement resulted in the sale of the media company and the closing of its flagship Web site. Thiel also garnered attention in 2016 when he became a vocal supporter of Republican presidential nominee—and eventual winner of the election—Donald Trump, donating money and speaking at the party’s convention. Early Career After graduating from the Stanford Law School, Thiel had interviews with Supreme Court justices Antonin Scalia and Anthony Kennedy. After not being hired, he instead took up a post as a judicial clerk for Judge James Larry Edmondson of the United States Court of Appeals for the 11th Circuit, but soon moved to New York to work as a securities lawyer for Sullivan & Cromwell. After seven months and three days, he left the law firm citing a lack of transcendental value in his work. He then took a job as a derivatives trader in currency options at Credit Suisse, working there from 1993 on while also operating as a speechwriter for former-United States Secretary of EducationWilliam Bennett, before again feeling as though his work lacked meaningful value and returning to California in 1996. Upon returning to the Bay Area, Thiel noticed that the development of the internet and personal computer had already altered the economic landscape and the dot-com boom was well underway. With financial support from friends and family, he was able to raise $1 million toward the establishment of Thiel Capital Management and embark on his venture capital career. Early on, he experienced a setback after investing $100,000 in his friend Luke Nosek's unsuccessful web-based calendar project. However, his luck changed when Max Levchin, a friend of Nosek's, introduced him to his cryptography-related company idea, which later became their first venture called Confinity in 1998. PayPal With Confinity, Thiel realized they could develop a software to solve a gap in making online payments. Although the use of credit cards and expanding automated teller machine networks provided consumers with more available payment options, not all merchants could gain the necessary hardware to accept credit cards. Thus, consumers were often left with little choice and instead had to pay with exact cash or personal checks. Thiel wanted to create a type of digital wallet in the hopes of ensuring more consumer convenience and security by encrypting data on digital devices, and in 1999 Confinity launched PayPal. PayPal promised to open up new possibilities for handling money, and according to Eric M. Jackson's account in his book The PayPal Wars, Thiel viewed PayPal's mission as liberating people throughout the world from the erosion of the value of their currencies due to inflation. Jackson recalls an inspirational speech by Thiel in 1999: We're definitely onto something big. The need PayPal answers is monumental. Everyone in the world needs money – to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that's more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection. Of course, what we're calling 'convenient' for American users will be revolutionary for the developing world. Many of these countries' governments play fast and loose with their currencies. They use inflation and sometimes wholesale currency devaluations, like we saw in Russia and several Southeast Asian countries last year [referring to the 1998 Russian and 1997 Asian financial crisis], to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars. Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless local currency for something more secure. When PayPal launched at a successful press conference in 1999, representatives from Nokia and Deutsche Bank sent $3 million in venture funding to Thiel using PayPal on their PalmPilots. PayPal then continued to grow through mergers with Elon Musk’s financial services company, X.com, and with Pixo, a company specializing in mobile commerce, in 2000. These mergers allowed PayPal to expand into the wireless phone market, and transformed it into a safer and more user-friendly tool by enabling users to transfer money via a free online registration and email rather than by exchanging bank account information. By 2001, PayPal served over 6.5 million customers and had expanded its services to private consumers and businesses in twenty-six countries. PayPal went public on February 15, 2002 and was sold to eBay for $1.5 billion in October of that year. Thiel's 3.7% stake was worth $55 million at the time of the acquisition Clarium Capital Following PayPal's sale to eBay in 2002, Thiel devoted $10 million of his proceeds to establish Clarium Capital Management, a global macro hedge fund focusing on directional and liquid instruments in currencies, interest rates, commodities, and equities. Thiel stated that "the big, macroeconomic idea that we had at Clarium—the idée fixe—was the peak-oil theory, which was basically that the world was running out of oil, and that there were no easy alternatives." In 2003, Clarium Capital reflected a return of 65.6% as Thiel successfully bet that the United States dollar would weaken. In 2004, Thiel spoke of the dot-com bubble having migrated, in effect, into a growing bubble in the financial sector, and specified General Electric and Walmart as vulnerable. In 2005, Clarium saw a 57.1% return as Thiel predicted that the dollar would rally. This success saw Clarium honored as global macro hedge fund of the year by MARHedge and Absolute Return + Alpha. However, Clarium's faltered in 2006 with a 7.8% loss. During this time, the firm sought to profit in the long-term from its petrodollar analysis, which foresaw the impending decline in oil supplies and the unsustainable bubble growing in the U.S. housing market. Clarium's assets under management indeed, after achieving a 40.3% return in 2007, grew to over $7 billion by 2008, but plummeted as financial markets collapsed near the start of 2009. By 2011, after missing out on the economic rebound, many key investors pulled out, causing Clarium's assets to be valued at $350 million, over half of which was Thiel's own money. Palantir In May 2003, Thiel incorporated Palantir Technologies, a big data analysis company named after the Tolkien artifact, and continues to serves as its chairman as of 2016. Thiel stated that the idea for the company was based on the realization that "the approaches that PayPal had used to fight fraud could be extended into other contexts, like fighting terrorism." He also stated that, after the September 11 attacks, the debate in the United States was "will we have more security with less privacy, or less security with more privacy?" and saw Palantir as being able to provide data mining services to government intelligence agencies which were maximally unintrusive and traceable. At first, Palantir's only backers was the Central Intelligence Agency's venture capital arm In-Q-Tel, but the company steadily grew and in 2015 was valued at $20 billion, with Thiel being the company's largest shareholder. Facebook In August 2004, Thiel made a $500,000 angel investment in Facebook for a 10.2% stake in the company and joined Facebook's board. This was the first outside investment in Facebook, and put the valuation of the company at $4.9 million. As a board member, Thiel was not actively involved in Facebook's day-to-day running. However, he did provide help with timing the various rounds of funding and Zuckerberg credited Thiel with helping him time Facebook's 2007 Series D to close before the 2008 financial crisis. In his book The Facebook Effect, David Kirkpatrick outlines how Thiel came to make this investment: Napster co-founder Sean Parker, who at the time had assumed the title of "President" of Facebook, was seeking investors for Facebook. Parker approached Reid Hoffman, the CEO of work-based social network LinkedIn. Hoffman liked Facebook but declined to be the lead investor because of the potential for conflict of interest with his duties as LinkedIn CEO. Thus, Hoffman directed Parker to Thiel, whom he knew from their PayPal days. Thiel met Parker and Mark Zuckerberg, the Harvard student who had founded Facebook. Thiel and Zuckerberg got along well and Thiel agreed to lead Facebook's seed round with $500,000 for 10.2% of the company. The investment was originally in the form of a convertible note, to be converted to equity if Facebook reached 1.5 million users by the end of 2004. Although Facebook narrowly missed the target, Thiel allowed the loan to be converted to equity anyway. Thiel said of his investment: “I was comfortable with them pursuing their original vision. And it was a very reasonable valuation. I thought it was going to be a pretty safe investment. “ In September 2010, Thiel, while expressing skepticism about the potential for growth in the consumer Internet sector, argued that relative to other Internet companies, Facebook (which then had a secondary market valuation of $30 billion) was comparatively undervalued. Facebook's initial public offering was in May 2012, with a market cap of nearly $100 billion ($38 a share), at which time Thiel sold 16.8 million shares for $638 million.  In August 2012, immediately upon the conclusion of the early investor lock out period, Thiel sold almost all of his remaining stake for between $19.27 and $20.69 per share, or $395.8 million, for a total of more than $1 billion.  He still retained 5 million shares (worth approximately $600 million as of December 2016) and a seat on the board of directors. Valar Ventures Through Valar Ventures, an internationally focused venture firm he cofounded with Andrew McCormack and James Fitzgerald, Thiel was also an early investor in Xero, a software firm headquartered in New Zealand. Mithril Capital In June 2012, Peter Thiel launched Mithril Capital Management, named after the fictitious metal in The Lord of the Rings, with Jim O'Neill and Ajay Royan. Unlike Clarium Capital, Mithril Capital, a fund with $402 million at the time of launch, targets companies that are beyond the startup stage and ready to scale up. Y Combinator In March 2015, it was announced that Thiel joined Y Combinator as one of 10 part-time partners. Thiel Foundation Thiel concentrates the bulk of his philanthropic efforts on what he sees as potential breakthrough technologies. In November 2010, Thiel organized a Breakthrough Philanthropy conference that showcased eight nonprofits that he believed were working on radical new ideas in technology, government, and human affairs. A similar conference was organized in December 2011 with the name "Fast Forward" The Thiel Foundation has three main internal projects: the Thiel Fellowship, Imitatio, and Breakout Labs. Thiel Fellowship The Thiel Fellowship (originally named 20 under 20) is intended for young visionaries under the age of 20 and offers them a total of $100,000 over two years as well as guidance and other resources to drop out of school and pursue other work, which could involve scientific research, creating a startup, or working on a social movement. Selection for the fellowship is through a competitive annual process, with about 20-25 fellows selected annually. Peter Thiel announced the fellowship at TechCrunch Disrupt in September 2010. The first round of fellows, based on applications made at the end of 2010, was announced in May 2011. Imitatio Imitiatio is a project funded by the Thiel Foundation that aims to understand the world through the lens of Rene Girard's mimetic theory. Breakout Labs Breakout Labs is a grant-making body operating as part of the Thiel Foundation (a philanthropic organization created by Peter Thiel). Breakout Labs gives grants for early-stage scientific research that is too speculative or long-term to interest the for-profit sector (such as angel investors and venture capitalists) but may be unsuitable for traditional sources of funding for scientific research due to its radical or offbeat nature.[10] Grants are made through a competitive application and selection process.[11] Breakout Labs announced its first batch of grantees on April 17, 2012,[12] and its second batch of grantees on August 15, 2012. Peter Thiel tips $1 million into Spaceship, a super fund aimed at Australian millennials Peter Thiel is among a new group of investors in Australian superannuation provider Spaceship. An entity controlled by Thiel, who was a co-founder of PayPal alongside Tesla chief executive Elon Musk and an early investor in Facebook, has tipped A$1 million (NZ$1.04 million) into Spaceship as part of a recent funding round.  The fresh funding paves the way for Spaceship, which has been criticised by sections of Australia's financial services community for relatively high fees and low return targets despite its heavy weighting to high-growth tech stocks, to make significant product changes.   Spaceship raised A$19.5m, on top of a A$1.5m seed round last year. As previously flagged by the Financial Review, US venture capital fund New Enterprise Associates, which counts Australia's sovereign wealth fund the Future Fund among its investors, the regional office of Sequoia Capital, and Horizons Ventures, the start-up investment vehicle for Hong Kong billionaire Li-Ka Shing, all invested in the business. Australia's biggest venture capital fund AirTree Ventures – where Spaceship CEO Paul Bennetts previously worked – also subscribed to the notes.  Atlassian co-founder Mike Cannon-Brookes, who this week expressed concerns about inexperienced individual investors putting money in early stage tech companies, and about the rising number of consultants circling start-ups, has also invested in Spaceship through his family office Grok Ventures.  In an update recently circulated to its investors, Spaceship signalled that the funding would allow it to make product changes, including significant fee reductions to its main product, and a cheaper, passive investment option. It said it had "not quite" reached a publicly announced target to amass A$100m in funds under management. The company expects its cash burn, forecast at A$200,000 in May, to increase over the next 12 months as it scales up its operations, but then decline.  The company told smaller investors it would no longer share information with them, citing recent leaks to the media.  NEW ZEALAND CITIZENSHIP AND VENTURES Peter Thiel, famous for making billions off Facebook, says that he’s finally found “utopia” – New Zealand.Thiel has been investing heavily in the country. He’s already made two noteworthy venture investments there in the space of a few months. In October 2010, he invested $3 million in online accounting firm Xero, which is based (and publicly traded) in New Zealand. Then he invested $4 million in Pacific fibre, an ambitious company that is building a fibre-optic cable from Australia to New Zealand to the US and is raising $300-400 million more to do so. These investments aren’t just one-offs. Thiel has set up a local venture firm called Valar Ventures. Valar Ventures LP was registered in New Zealand in July 2009, more than a year before Thiel’s first known New Zealand investment, and is managed by Valar Capital Management LLC, based in San Francisco, according to official records. Valar Ventures LP’s offices are at prominent New Zealand law firm Bell Gully, which suggests it doesn’t have full time staff yet. Peter Thiel founded two other companies in New Zealand: Second Star Limited, where he is sole shareholder, and Silverarc Advisors. The people associated with these New Zealand companies, all of them close associates of Thiel at his hedge fund Clarium Capital, show how serious Thiel is about New Zealand. Valar Capital Management is managed by Nathan Linn, VP of Finance at Clarium. On the boards of Thiel’s New Zealand companies are Matt Danzeisen, Principal at Clarium, James Fitzgerald, COO and General Counsel at Clarium, and Andrew McCormack, VP Corporate Development at Clarium and previously Thiel’s assistant at PayPal. Investing in a huge undersea fibre optic cable is typically a safe, low-return investment, which isn’t the kind of investments Thiel goes after. But bringing high speed internet into New Zealand would be a first step to turning the country into a new Silicon Valley. The name of Thiel’s firm Valar Ventures comes from J.R.R. Tolkien’s Lord of the Rings universe. Thiel is a huge Tolkien fan and the Lord of the Rings movies were filmed in New Zealand. In Tolkien’s legendarium, the Valar are deities who created the world of Middle-Earth (portrayed by New Zealand in the movies) and then descended on it to help nurture its infancy and development.