As it turns out, the man who wants to build a sovereign ocean community off the coast of California is really down to earth.
Tuesday at South by Southwest (SXSW), serial entrepreneur, venture capitalist and noted libertarian Peter Thiel took the stage to talk about… well, I wasn’t really sure. But when the guy who co-founded PayPal, got in on the ground floor of Facebook, offers kids $100,000 to skip college and wants to build a crazy offshore island society talks, I listen. And I’m glad I did.
Thiel’s presentation defined a unique insider’s view on the tech industry.
Why Facebook Said “No” To Yahoo’s $1 Billion In 2006
It seems unimaginable now, but back in 2006, Yahoo almost bought Facebook. In a meeting to discuss the possibility, Thiel describes how when he, Mark Zuckerberg and board member James Breyer entered the negotiation room, the young(er) Zuckerberg declared that the meeting wouldn’t take more than 10 minutes. When Yahoo put a $1 billion offer on the table, Zuckerberg barely humored the idea of selling.
“Full disclosure, I think that both Breyer and myself thought that we should take the money and run,” Thiel recalls. “I was a little bit worried about it. The one partial rationalization I was able to come up with for not taking the money was that I looked at the history – two other companies were offered a billion dollars [by Yahoo] and had been turned down: It was eBay and Google.”
“The argument that Zuckerberg finally came down on was that there were all these new things that we were going to build at Facebook. [Yahoo] had no definite idea about the future – they did not properly value things that did not yet exist. They were therefore undervaluing the business.”
Back then, the founder of Facebook said that he had no idea what he’d do with the money, Thiel recounts how Zuckerberg shrugged and said he’d probably just start another social networking site.
“The companies that are not profitable are actually companies that have a lot of ideas of what to do with money, ” Thiel said. “The most successful businesses are the ones that don’t sell.”
The American Dream Is Dissolving
“We’re still maybe in an Indian Summer of indeterminate optimism. In an indeterminate world, all you focus on are processes.” According to Thiel, Steve Jobs’s calculated multiyear plan after the 2007 crash is the exact flipside of an indeterminate business model – and a explanation for the success Apple still enjoys.
Thiel claims that startup culture and the investment world are locked into a “hermitically sealed loop” – but the era of suspended disbelief, of the strange safety of a bright-yet-amorphous future, can’t last. “Indeterminate optimism is unstable” says Thiel. “I want people to at least be aware that this is the [prevailing] religion.”
It’s a bubble world. It goes without saying that no one wants to talk about bubbles.
The Anti-Tony Stark?
I assumed a man so glutted with cash that he’d dedicate $1.25 million toward seasteading was just another flashy, lucky, walking embodiment of the Gatsbian dream. But Thiel is a cerebral entrepreneur steeped in Continental philosophy and urban planning practicalities – not the VC lexicon of buzzwords and bullshit. With an even meter to his speech and an uncanny way of flitting from history to philosophy, he may have just called the most gracefully executed bullshit on the tech industry… ever.
His talk itself proved to me that no, success isn’t just about luck – not all of the time, anyway. Plucking historical examples from The Reber Plan to one of No Country For Old Men’screepiest scenes (the one when sociopath Javier Bardem decides if he’ll kill a small-town Texan with a coin toss) to pop-finance read A Random Walk Down Wall Street, Thiel is a fascinating foil to the Tony Starks – and the Elon Musks – of the entrepreneurial world.
And yet his dreams are as big as Musk’s – and I’d bet they’re crazy enough to work, just the same.