Peter Thiel - effective investor and one of the creators of "PayPal Mafia"

Peter Thiel is admired for his ability to build and scale businesses. He is one of the most famous traders and investors in the United States. Według Bloomberg Billionaires Index in October 2021, his fortune is estimated at $ 6,9 billion.  However, some people criticize his views on education or the role of the state in the economy. In today's article, we will present the history of this amazing entrepreneur.

Peter Adreas Thiel was born on October 11, 1967 in Frankfurt am Main. When he was one, the family moved to Cleveland, Ohio, where his father - Klaus Thiel - worked as a chemical engineer at various companies. For this reason, the family often changed places of residence, following Klaus Thiel's new employers. For this reason, for a short while, Peter Thiel lived for a short while in South Africa and today's Namibia. Eventually the family settled on in the United States.

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Education

From childhood, young Peter showed an interest in mathematics. While attending Bowditch Middle School in Foster City, he won a state math competition. In addition to mathematics, Peter Thiel showed chess skills. As a result, he was classified in 13th place in the youth ranking of the American Chess Federation (for players under 13). During high school, he was interested in economics and politics. He liked to read Ayn Rand and admired President Ronald Reagan for his optimism and anti-communism..

Source: stanfordreview.org

He enrolled in philosophy at Stanford University. During his studies, he co-created The Stanford Reviewwho tried to propagate conservative (worldview) and libertarian (economic) ideas. From the inception of the newspaper until his graduation in 1989, Peter was its editor-in-chief. Also after graduation, Peter supported the operation of The Stanford Review, both through donation and by trying to arrange employment for the newspaper's associates.

Career

After studying law at Stanford Law School, he worked for Judge James Larry Edmondson of the United States Court of Appeal (District 11). However, he quickly grew bored with the job and began working as a securities lawyer for Sullivan & Cromwell. However, after 7 months and 3 days, he decided that his job did not provide any added value to society and decided to quit his job. In 1993, he started working as a derivatives trader (currency options) at Credit Suisse. Already in 1996, he decided that he was no longer enjoying this profession, and for this reason he quit his job again.

Peter Thiel saw great potential in the newly fledgling Internet industry. After quitting his job at Credit Suisse, he moved to the US West Coast. With the help of friends, he founded Thiel Capital Management with assets under management of $ 1 million. The beginning was unsuccessful, Peter lost $ 100 on investment in the project of his friend - Luke Nosek. It was a web calendar project. However, acquaintance with Luke allowed to meet Max Lechin. Thanks to this, Peter Thiel invested in Confinity in 1998. It was one of his best investment decisions.

PayPal

Source: imgur.com

PayPal was originally called Confinity and was in the business of developing antivirus software. However, the lack of sales success prompted the three founders of the company (Peter Thiel, Luke Nosek, Max Levchin) to change their business model and focus on creating digital wallets. In 1999, the first version of the PayPal payment system was launched. In March 2000, Confinity merged with fintech - Elon Muska - x.com. In 2001, the company changed its name to PayPal, and a year later it made its debut on the stock exchange. However, after a few months, eBay acquired PayPal for $ 1,5 billion. PayPal very quickly became one of the most popular methods of paying for purchases on eBay.

The group of people that made up PayPal is also referred to as the "PayPal Mafia". This is because many of the company's employees created great companies when they left PayPal. An example is Elon Musk (SpaceX, Tesla) or Reid Hoffman (LinkedIn). 

Clarium Capital

After leaving PayPal in 2002, he set up a fund Clarium Capital Managementwhich was a hedge fund that specialized in strategy global macro. Thiel has invested $ 10 million in this fund. Unlike many funds that operated on the 2-20 model (2% management fee and 20% performance bonus), Clarium operated on the 0-25 model (excluding management fee and 25% performance fee). Initially, the fund's performance was very good. Thiel accurately predicted the dollar's weakness. In 2005, Clarium made 57% of the profit. After a weaker 2006 (loss of 7,8%), the fund earned 2007% for its clients in 40,3. In 2005, the fund received the Absolute Return Global Macro Fund of the Year award. The good results resulted in a significant increase in the assets under management. In 2008, assets under management (AUM) exceeded $ 7 billion. The years 2008-2010 were very difficult for the fund. In 2009 and 2010, the fund lost more than 20% annually. This resulted in an outflow of assets under management. At the end of 2010, Clarium was managing only $ 681 million.

Palantir and Facebook

Source: wikimedia.org

However, Peter Thiel was not just focused on expanding the fund. He created and invested in other companies. In May 2003, he founded Palantir Technologies, which deals with big data analysis, which is to help in the fight against financial fraud and potential terrorist attacks.. The name of Palantir itself derives from the legendary of JRR Tolkien. It was a sphere that was used, inter alia, in for communication. Peter Thiel was a childhood fan of Tolkien's works (including The Lord of the Ring). The company is currently listed on the stock exchange with a market cap of more than $ 45 billion. Peter Thiel currently holds a 14,4% stake in the shareholder structure. This makes him the company's largest shareholder.

However, Peter Thiel was still looking for new potential investments. In August 2004, he invested $ 500 in Facebook by buying convertible bonds. However, when at the end of 000 the number of platform users exceeded one and a half million, Peter decided to convert bonds into shares. As a result, it became the owner of 10,2% of the company's shares. In May 2012, Facebook debuted on the stock exchange and was valued at $ 100 billion. During this time, Thiel sold 16,8 million shares for $ 638 million. In August 2012, Thiel sold the shares for $ 19-20 $, collecting less than $ 400 million from the market. In the following years, he continued the sale of Facebook shares.

Peter Thiel and his other projects

In 2005, Peter Thiel, Ken Howery and Luke Nosek created a fund (Founders Fund), which was credited with the amount of $ 50 million. A year later, one of Napster's co-founders, Sean Parker, was seated. In 2007, the fund raised an additional $ 220 million. The Founders Fund operates as a Venture Capital company that focuses on investing in companies operating, inter alia, in in sectors such as artificial intelligence, e-commerce, finance, energy, healthcare. The fund likes to invest in "dysruptors" who change the current market. The investments included companies such as Airbnb, Lyft, Spotify, Stripe, SpaceX and Twilio. Successful investments allowed to increase capital and encourage new investors to deposit funds. In 2020, assets under the management of the Founders Fund already amounted to $ 6 billion.

Another project developed by Peter Thiel is called Valar Ventures. Peter founded it together with Jemes Fitzgerald. The fund invests in projects at an early stage. Valar Ventures is looking for investments in Europe, Canada, Australia, New Zealand and the United States (except for Silicon Valley). The fund's investments include the New Zealand company Xero and the British TransferWise.

Private life, views and philanthropy

Peret Thiel is one of the most famous homosexuals. In October 2017, he married his longtime partner Matt Danzeisen in Vienna. It is also worth adding that Peter Thiel is a believer (he is a Christian). In 2011, he said: "I believe Christianity is true, but I don't feel compellingly to convince other people of it.". 

Peter Thiel has a free-market view that in many respects rubs against libertarianism. He is not an advocate of the current university system. He defined universities as "Similar to the Catholic Church around 1514"who is on the eve of the Reformation.

As libertarians, Thiel supports some wings of the Republican party. In 2007, he supported Ron Paul as a presidential candidate. After losing in the primary, he began supporting John McCain's campaign. In the elections of 2012, he also supported the republican politician Mitt Rommey in the elections. 

Like most billionaires, Peter devotes a portion of his fortune to philanthropy. Most of the projects are funded by the Thiel Foundation. One of the projects is Thil Fellowship, which offers $ 100 to 000-20 people under 25. The funds are intended for the winners of the competition to convince the foundation to invest the funds. The money can be used to develop scientific research, create a startup or develop a social movement. Among the scholarship recipients is Austin Russell, who became the youngest billionaire in the world. He founded the company Luminar Technologies, which produces systems for autonomous cars.