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Did Peter Thiel Make The Single Best Investment In History?
- riffer 16y agoIt's not that he made one of the best investments in history. It's that he has one of the best investment processes.
- kiba 16y agoHow do we know that if he got very lucky or that he's very good at what he do?
- bl4k 16y agobecause it's Peter frickin' Thiel - http://en.wikipedia.org/wiki/Peter_Thiel http://en.wikipedia.org/wiki/Peter_Thiel
- patrickgzill 16y agoIs there a Peter Thiel Facts Page, like there is for Chuck Norris? No?
- deltapoint 16y agoThere is Ron Conway facts though http://twitter.com/ronconwayfacts http://twitter.com/ronconwayfacts
- 1va 16y ago> That's a 6,000x return on his capital in 5 years. > I'll put it this way--if you made a $250 IRA contribution in 2005, it would have to be worth $1,500,000 today to match that return. If you invested one penny that investment would now need to be worth $60 to match that return. Maybe it is just me, but $250 to $1.5M doesn't help me visualize a 6000x return at all. This analogy reminds me of an old Dennis Miller bit from Saturday Night Live where to illustrate the size of the national debt he takes out a dollar bill and says "it would take stack of these 3 trillion high to pay it back".
- rmorrison 16y agoIt's not the best investment in history: there are people who have won more than $100,000,000 on a single $1 lottery ticket.
- robryan 16y agoHmm, best informed investment? I think in this case there is a little more in play than just extreme luck.
- gojomo 16y agoWe can be sure, mathematically, that a lottery ticket is a bad investment overall even if it pays off. For example, repeating it 100,000,000 times is nearly certain to leave you with less than you started. Plausibly, the decision to invest in Facebook (and similar opportunities when they present themselves) had a positive expected return at the time. Even knowing Facebook is an outlier result -- like a winning lottery ticket -- its payoff actually gives us a hint that the original decision was positive-expectation, and its magnitude. (The fact that a lottery ticket happens to win changes our idea of the original expectation not at all.) Also of note: Thiel didn't just invest money, he invested his expertise and network. That, which almost certainly helped Zuckerberg aim higher and avoid pitfalls/compromises that took down other companies, was one of the best non-monetary investments ever.
- ww520 16y agoWhat happened to the guys who bought Manhattan for beads way back? Did they make it ok?
- BerislavLopac 16y agoNot quite -- they were expunged by the Brits a few years later... ;)
- aberkowitz 16y agoThe keyword here is "estimated value". It is very likely that Peter Thiel did very well, but a 2-3 billion dollar return is not guaranteed.
- gojomo 16y agoYou're right... but it could also be more!
- aberkowitz 16y agoGood point; thanks for opening my mind to further possibilities. Either way, it's either underly or overly sensational at the moment.
- ghshephard 16y agoI'll point out the blindingly obvious that nobody else can bring themselves to point out - future rounds have likely reduced that original 10% to a somewhat smaller number. There is also a pretty good chance that Thiel has taken some off the table, further reducing his stake. Still a great investment.
- staunch 16y agoYou're right about dilution, but it's very unlikely that he's taken money out.
- ghshephard 16y agoInteresting - Facebook has had a pretty active secondary market - I've had a couple opportunities to invest, but couldn't afford the minimum buy in. What's your information that he hasn't taken some off the table? Seems like a reasonable move once it went north of $10 Billion.
- rms 16y agoThiel doesn't need the liquid money and has no reason not to signal that he values the stock extremely highly.
- bl4k 16y agoThat is not the issue with him obviously, but a few reasons why he would sell: a) bring liquidity to the secondary market b) realize some of his gains and book them for his funds figures for this year c) hedge against facebook being at its peak. so eg. if he believes that there is a 10% chance facebook is at its peak now, he can then work out what % to sell to realize max gains based on risk assessment (Thiel is after all a hedge fund manager).
- aseem 16y agoDo people really believe that if Facebook goes public that it will be worth more than Google when it went public? I want to know the details of how people (i.e. Forbes Magazine) came up with the $33B valuation.
- wyclif 16y agoProblem: Facebook is not worth $33 billion: http://37signals.com/svn/posts/2585-facebook-is-not-worth-33000000000 http://37signals.com/svn/posts/2585-facebook-is-not-worth-33...
- ankimal 16y agoI think Ram Shriram's Google investment was probably better. Here is a list of some more http://www.suite101.com/content/greatest-venture-capital-investments-ever-electricity-and-google-a257793 http://www.suite101.com/content/greatest-venture-capital-inv.... Also, there is some debate over the $24 the dutch bought Manhattan for from the Indians. Jury is still out on that one.
- rms 16y agoYup, as article commenters point out, this blog post is wrong for comparing Google VCs to a Facebook angel investor instead of comparing the Google angel investors.
- bretthellman 16y agoTime will tell. At this time... it's safe to say it wasn't the worst investment.
- btucker 16y agoIf I had $500K lying around in Fall '04 I would have been chasing down Mark Zuckerberg trying to get him to take it for whatever tiny piece of the company I could get. Being at one of the first set of "facebook schools" it was very clear where things were headed. The amount of mindshare facebook had on campus within the first couple weeks of the semester was absolutely staggering.
- huhtenberg 16y ago> Today ... his stake is worth between $2-3 billion That's 2-3 billion Zuckerbucks as some banking people call 'em :)