Peter Thiel's Contrarian Strategy

http://fortune.com/2014/09/04/peter-thiels-contrarian-strategy

by markmassie • 12 years ago

81 30 12 years ago

He raised $1 million from friends and family and started his own hedge fund, Thiel Capital.

Hence the major difference between him and everyone else, including Stanford Alum, Sullivan & Cromwell Lawyers...somehow he found himself $1M.

There is no way I or really most people, could go out today and from the people I know gather $1M I simply do not know people with those kinds of pockets.

bsder• 12 years ago

Exactly.

People forget, that even Bill Gates, intelligent as he is, got where he was primarily because he could get Dad to write a $50,000 check, in 1980, on short notice.

The valley isn't the engine of opportunity people think it is.

larrys• 12 years ago

While it doesn't really matter how in the end, after all he has the money and neither of us do, [1] however what got him to be "Bill Gates" was that his mother was on the board of the Red Cross with the Chairman of IBM [2] which opened that door for him. Remove that and he would still have done well no doubt but he wouldn't have become anywhere near as well known as he is.

[1] That said in all honesty in no way would I want to ever be that public or that rich personally.

[2] http://en.wikipedia.org/wiki/Mary_Maxwell_Gates

kiba• 12 years ago

The valley isn't the engine of opportunity people think it is.

Opportunity compound, people. The poor have the least luck/opportunity. The rich have the best.

It's just the way it is, and it has nothing to do with whoever deserves it.

prostoalex2• 12 years ago

What about Sergey Brin?

ryandrake• 12 years ago

Access to money is a luck multiplier. I give you a deck of cards and you pull out one card with your eyes closed. If you get the king of spades, your startup is a success. Having access to lots of money lets you draw more cards.

richard_cubano• 12 years ago

This.

poulsbohemian• 12 years ago

Ever read "The Millionaire Next Door"? You might be surprised at people around you who have more money than you think, though the challenge is getting them to admit it and harder still to get them to invest. I have several people close to me who could easily write a cheque for $1MM+, but you'd never know it to look at or talk to them - totally normal people who worked completely boring careers, didn't receive a huge inheritance, but simply worked hard, saved their money, invested well (often in real estate), and have lived long enough to see those investments grow.

But, trying to get those kinds of people to invest $1MM+ would be a serious chore - they got their by saving their money and via extreme frugality, so any investment they would make would come with serious strings attached.

lquist• 12 years ago

I think most Stanford alums/Stanford Law alums and Sullivan & Cromwell lawyers could raise $1M for a hedge fund.

AJ007• 12 years ago

If you are involved in startups, you should have other friends and acquaintances who are running startups. Some of them will be funded and you will at most be one or two steps away from a billionaire like Thiel. You should have these friends not because of money but because you need people who have similar struggles as you.

As for the $1m thing. $1m today will barely allow someone to retire above the poverty line. You may be surprised how much money exists in just a few blocks of a non-descript town. $1m was also the number Warren Buffet started investing with, raised from other friends and neighbors.

AndrewKemendo2• 12 years ago

If you are involved in startups, you should have other friends and acquaintances who are running startups. Some of them will be funded and you will at most be one or two steps away from a billionaire like Thiel. You should have these friends not because of money but because you need people who have similar struggles as you.

All very true, however that is a different context than Thiel and a few others mentioned in this thread (Gates etc...). The difference is really in the "Terms" or lack thereof and the proofs.

Yes it is true that I can reach out and touch a handful of millionaires, and in fact spoke with a few yesterday on a conference call. However they weren't "Friends and Family" like the Thiel/Gates case, they were businessmen looking at me like a potential asset/liability. The relationship and the bar for getting their money is completely different and I think not comparable.

GuiA2• 12 years ago

Not only has he found himself $1M, but he also comes from an environment where asking money from friends and family for your own interests is totally acceptable.

2 generations ago, people in my family were farmers who had to count the potatoes for dinner. They worked hard to give their kids a better standard of life than they could have ever dreamt of (my grandmother started working when she was 13, and she and my grandfather did all they could to send my mom to college).

There is no way I would be okay asking my parents for their hard earned money to fund a venture that could absolutely fail, let alone some silly "social network platform" startup.

I wish I had a good way to end this comment (life is unfair? or maybe it's useless to be upset at this sort of thing, what matters is living a happy honest life?) but I don't.

foobarqux• 12 years ago

Thiel has drawn upon his wide-ranging and idiosyncratic readings in philosophy, history, economics, anthropology, and culture to become perhaps America’s leading public intellectual today, assuming a mantle once held by the likes of Thorstein Veblen or Norman Mailer.

That's a laughably preposterous characterization. Leading public intellectual? Comparison to Veblen, author of "The Theory of the Leisure Class", a scathing critique of the wealthy?

ForHackernews• 12 years ago

Perhaps relevant: http://www.thebaffler.com/blog/mouthbreathing-machiavellis/

pbreit• 12 years ago

The comparison has nothing to do with agreement.

_delirium• 12 years ago

That's true, but I find it difficult to understand where it's coming from purely descriptively as well. I think Peter Thiel is a well-known venture capitalist who is associated by the general public with Silicon Valley, but I would be very surprised if a significant fraction of the public thinks of him as a "public intellectual". If anything, I think he is often thought of (mistakenly) as mainly a technologist. I've frequently seen him referred to with the assumption that he has an Andreessen or Graham or Musk type background: a programmer/dev who got rich in the first dot-com boom, and then invested his tech winnings. It seems to be less well known that Thiel made his fortune in finance, before entering tech investment, and isn't a techie at all.

If you were to ask people who they think of as America's leading public intellectual, some people who I think would come out ahead (on the basis of quite different audiences): Noam Chomsky, Daniel Dennett, Richard Posner, Paul Krugman, Jared Diamond, Clay Shirky, David Graeber, Francis Fukuyama, Neil deGrasse Tyson, etc.

jfb• 12 years ago

The idea of a public intellectual is troublematic enough without grouping a banking goon like Thiel in with, e.g. Susan Sontag or Hannah Arendt. This is navel-gazing back-patting horseshit of the first water.

wahsd• 12 years ago

Well, I can scratch him off my list of insightful individuals. I don't know what it is with "success" but it seems to really mess with your mind. I wonder if it's that certain types of "successful" people live in a bubble where everyone is agreeing, cajoling, and otherwise brown-nosing that you start losing touch with reality and cannot think clearly.

To say that a bubble cannot be a bubble because the "broader public is not involved" is just flat out stupid. Sure, it's the last stage of a bubble, the defraud the general public stage where the crooks gather up all the money and run for the getaway car, but it's still a bubble.

prostoalex2• 12 years ago

Then we have hundreds of thousands bubbles happening on the daily basis. Tons of people invest in real estate, and when those projects miss projections, some money (or opportunity cost) is lost.

A relatively small loss or returns below expectations does not a bubble make.

viggity• 12 years ago

I think this is the first time I've heard his voice. Wow. The guy who played "Peter Gregory" in HBO's Silicon Valley nailed his voice. lol.

sayemm2• 12 years ago

Rough timeline of Peter Thiel's accomplishments:

- Started his hedge fund at age 29

- Co-founded Paypal at 31

- Paypal acquired at 35 (Thiel took home $55M)

- Angel investment in Facebook at 37, co-founded Palantir the same year

- Founder's Fund at age 38

Interesting that he's had all of his big wins starting in his 30s, that each success compounded into more successes and enabled him to go up to bat for even bigger wins, and that it's the result of 10+ years of hard work and intense focus.

inthewoods• 12 years ago

Don't forget about Clarium Capital - at it's peak $8b under management - but then he made a series of bad bets on hyper-inflation in the dollar and got crushed. Anyone know if it is still open? I think he's clearly better at the private investing side than the public investing side.

sayemm2• 12 years ago

Yeah, with his experience I bet he has way more of an edge with private investing.

Good point, several mistakes and failures throughout his tech/investing career path too, like that $100K investment in Luke Nosek's startup that failed. It goes with taking risks and playing the game, only way to learn and level-up.

gwern• 12 years ago

The article covers that:

His hedge fund did get clobbered. Thiel’s peak-oil thesis did well by Clarium until mid-2008, as the price of oil soared from about $40 a barrel in 2002 to nearly $140. During that stretch the fund swelled in value from about $10 million to more than $6 billion as stock valuations skyrocketed and new investors flocked to his door.
But by February 2009 oil prices had temporarily fallen back to almost $40 again. And though Thiel had foreseen the real estate bubble, he still underestimated it. “We didn’t fully believe our own theories about how bad things were,” he admits.
Worse, he overreacted and missed the rebound, causing Clarium to badly underperform in 2009 and 2010. Most institutional investors fled. Today Clarium—with about $200 million under management—handles just the money of Thiel, friends and family, and a few select investors.

GuiA2• 12 years ago

- Born into immense privilege at 0

iamjdg• 12 years ago

Is this excerpt from one of Peter Thiel's lectures a cheap shot at his buddy Elon and Tesla?

"Consider the automotive industry. Trying to build a car company in the 19th century was a bad idea. It was too early. But it’s far too late to build a traditional car company today. Car companies—some 300 of them, a few of which are still around—were built in 20th century. The time to build a car company was the time when car technology was being created—not before, and not after."

dragonwriter• 12 years ago

I think not, I think the restriction "traditional" in "it's far to late to build a traditional car company today" is significant.

Tesla, I think, is different because they have room to maneuver because none of the traditional car companies are willing to make an all in effort on electric (because doing so is mostly taking a risk to compete with their own established business), so the building a car company centered around new advances in electric vehicle technology that is very much not a traditional car company is still possible now.

rthomas6• 12 years ago

Has anyone read his CS183 class notes? Are they worth reading?

arjunnarayan• 12 years ago

Yes, and absolutely yes. Here you go: http://blakemasters.com/peter-thiels-cs183-startup

Peter Thiel's Contrarian Strategy

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