Peter Thiel may be best known for being an early investor in Facebook, though his investments look like a Who’s Who of hot (and once-hot) companies in latter-day Internet startups: Yelp, LinkedIn, Powerset, Friendster, Slide, and many more. The president of the hedge fund Clarium Capital, Thiel is speaking in a fireside chat with my onetime colleague Sarah Lacy at TechCrunch Disrupt this morning in San Francisco.
Q: Is Silicon Valley still the center of innovation? Thiel: Silicon Valley is still the center for a lot of technology innovation. But incredible stagnation in U.S. economy. One of the questions being asked about Silicon Valley is how are we actually doing things to make the country and the world better? Lately there’s not that much to move the dial, outside the Internet. We need to be spending a lot more time on breakthrough vs. incremental things (paraphrasing).
Q: A lot of people say it’s not up to VCs here to do basic science–an obstacle to cleantech development. Thiel: Says that’s true. (But) you want to be focused on some of the harder-tech companies.
Q: What’s the most far-out investment you’ve done? Space-X, Elon Musk’s rocket company. The economics are not terrible–people generally pay in advance for launches. It’s just the kind of thing that’s not in people’s mental framework to look at. We should go back to the 1950s and 1960s and look at the classic science fiction things that were supposed to happen–biotech, AI, …
Q: Back in 2006, you said we’re not in another Internet bubble? Were we, or are we now given even higher valuations? Thiel: I don’t think that we are at a crazy valuation point. I suspect Facebook is still among the most undervalued company in the Internet, even at $30 billion. If you had a choice between Google and Facebook, you should be long Facebook.
Q: Would you fund Facebook today? Thiel: We would not be categorically against it. But I think the angel/early VC thing feels very crowded. You have to be very careful. It’s not as contrarian as it was three or four years ago.
Q: Are we at the point with Internet companies like where auto industry was in 1950s? Thiel: More like 1940s. But it’s a lot harder to make incremental progress. So we’re more focused on breakthrough technology areas.
Q: Has Google joined the Microsoft category of companies that are not fundamentally innovators anymore? Thiel: Maybe not quite yet, but possibly. Apple still very innovative. By definition what is technology, what is disruptive, changes.
Q: What about Facebook–still innovative? Thiel: Yes–if Zuckerberg stays in charge.
Q: Is Zuckerberg an evil genius like the movie indicates? Thiel: I would beg to disagree. Hollywood is this nasty zero-sum game where everyone is trying to stomp on each other. I.e., not like Silicon Valley. If this movie encourages people to go create companies in Silicon Valley, that will be a good impact.
Q: What kind of investing do you like among all you do (venture, angel, hedge fund)? Thiel: I like them all. We haven’t invested in any cleantech companies. The challenge is to create something that’s cheaper than oil. To the extent it’s more expensive, it’s not going to work.
Apparently Thiel has an announcement: We’re offering 20 kids under 20 money to create something great. One of the big problems with the (higher) education system is just that it costs so much more. It’s a lot harder to take big risks. You can apply for the two-year program individually or with up to four partners, and get up to $100,000 to start companies.