Did Peter Thiel Make The Single Best Investment In History?(chrisyeh.blogspot.com)
chrisyeh.blogspot.com
Did Peter Thiel Make The Single Best Investment In History?
http://chrisyeh.blogspot.com/2010/09/did-peter-thiel-make-single-best.html
26 comments
I'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.
Still a great investment.
You're right about dilution, but it's very unlikely that he's taken money out.
Interesting - 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.
Thiel doesn't need the liquid money and has no reason not to signal that he values the stock extremely highly.
That 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).
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).
It's not the best investment in history: there are people who have won more than $100,000,000 on a single $1 lottery ticket.
Hmm, best informed investment? I think in this case there is a little more in play than just extreme luck.
What happened to the guys who bought Manhattan for beads way back? Did they make it ok?
Not quite -- they were expunged by the Brits a few years later... ;)
We 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.
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.
I think Ram Shriram's Google investment was probably better. Here is a list of some more 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.
Also, there is some debate over the $24 the dutch bought Manhattan for from the Indians. Jury is still out on that one.
Yup, 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.
Do 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.
It's not that he made one of the best investments in history.
It's that he has one of the best investment processes.
It's that he has one of the best investment processes.
How do we know that if he got very lucky or that he's very good at what he do?
because it's Peter frickin' Thiel - http://en.wikipedia.org/wiki/Peter_Thiel
Is there a Peter Thiel Facts Page, like there is for Chuck Norris? No?
There is Ron Conway facts though
http://twitter.com/ronconwayfacts
http://twitter.com/ronconwayfacts
If 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.
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.
Problem: Facebook is not worth $33 billion: http://37signals.com/svn/posts/2585-facebook-is-not-worth-33...
The 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.
You're right... but it could also be more!
Good point; thanks for opening my mind to further possibilities. Either way, it's either underly or overly sensational at the moment.
> Today ... his stake is worth between $2-3 billion
That's 2-3 billion Zuckerbucks as some banking people call 'em :)
That's 2-3 billion Zuckerbucks as some banking people call 'em :)
Time will tell. At this time... it's safe to say it wasn't the worst investment.
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".