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Peter Thiel *Updated*

I’ve updated this post by adding a recent profile from Forbes Magazine to the “comments” section…  The original post follows below:

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I’ve been surprised by how many emails I have received from people wanting to know more about Peter Thiel simply because I list him as someone I’d like to meet. So, I thought I’d throw this contingent a crumb by posting this Bloomberg article on Peter Thiel that I have.

The two questions I receive the most:

1) Is Peter Thiel gay?

I have no idea and I don’t know why I get this question so often. Who cares?

2) Do I know Peter Thiel’s address?

Yes, I know his address because I have been invited to a couple of cocktail parties at his home in association with his hedge fund (Clarium Capital), but I’m not going to hand out his address without his permission because that would be a little fucked up.

The January 2007 article in Bloomberg Markets

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3 thoughts on “Peter Thiel *Updated*

  1. From Forbes Magazine…

    On The Cover/Top Stories
    Life After Facebook
    Brian Caulfield and Nicole Perlroth 02.14.11, 6:00 PM ET

    Peter Thiel wants to save the world. Or, at the very least, to “take our civilization to the next level,” as he frequently puts it. Almost every problem–the shortcomings of our political and educational systems, the lingering financial disaster, market bubbles, energy crises, the failed promises of the developing world, resource-based wars–stems from what he calls “stalled technological innovation.” What a better place this would be, he often muses, if we could press the reset button and go back to the late 1950s and ’60s and realize the predictions of science fiction that failed to materialize: ubiquitous space travel and colonization, robots à la the Jetsons, underwater cities, desalinization, reforestation of deserts and much more. Because we’re all running harder and harder just to stay in place, the only salvation is big scientific breakthroughs.

    It would be easy to write off Thiel as a “wackaloon,” as one political blogger has called him. Indeed, Thiel is putting serious money behind companies and groups bent on extending life, colonizing on ocean platforms, commercializing space, promoting so-called friendly artificial intelligence and leapfrogging DNA sequencing, among other causes. Freedom, he has said, is incompatible with democracy. In one of his most provocative acts, he has offered hundreds of thousands of dollars to college kids if they drop out of school and start a business or pursue a breakthrough. “People think of the future as something other people do,” Thiel says backstage at a December philanthropic fundraiser in San Francisco. “But there’s something weirder about a society where people don’t think about the future.”

    Harder to write off are Thiel’s solid accomplishments. He cofounded, ran and sold PayPal to eBay. Thiel and his PayPal cohorts have since launched or funded many of the most innovative startups of the last decade. Among them: YouTube, LinkedIn, Slide (widgets to share images), Yelp (user reviews), the Founders Fund (a venture capital firm with a string of successes), Palantir Technologies (software to ferret out terrorists and financial scamsters), SpaceX (rockets), Tesla Motors (electric cars) and Kiva (microloans).

    Thiel made the first sizable investment in Facebook. That $500,000 check is now a 3% share of the social network, a stake reduced by selloffs and dilution that is still worth $1.5 billion. Its cofounder Mark Zuckerberg still considers Thiel a valued consigliere. “Whenever I am not psyched about the way things are going and there don’t seem to be a lot of good choices, I can get some advice by talking to him,” says Zuckerberg. “He’s most helpful . . . when he calls you because he sees something.”

    Investors in Thiel’s Clarium Capital Management may not feel so charitable. Assets in the hedge fund, once as high as $6 billion in mid-2008, have been chopped down to $460 million (a quarter of that is Thiel’s own money). Clarium has had three consecutive losing years–down 23% in 2010, 25% in 2009 and 4.5% in 2008–by betting wrong, variously, on rising oil prices and a sinking dollar. Oddly enough, Thiel’s forecasts were right; his timing was punishingly off. It’s as if he were so fixated on his vision of the future that he couldn’t let go, even in the face of market realities. “It was a crazy ride up and ride down,” says Thiel. Investors who have stuck with Clarium since mid-2008 have lost 65% of their money.

    Are his big successes mere luck? “PayPal wasn’t a fluke, Facebook wasn’t a fluke, Founders Fund wasn’t a fluke,” says Netscape founder and investor Marc Andreessen, who sits on Facebook’s board with Thiel. “Peter aggressively seeks opportunities to invert the conventional wisdom.”

    There’s nothing conventional about Thiel’s wisdom–or anything else. He is a complex package of contradictions: entrepreneur, venture capitalist, libertarian, lawyer, gay, Christian, highly educated, contemptuous of formal education. Asked to solve the paradox of Peter Thiel, he struggles. “Let me see what I, let me see if I can come up with a clever answer on the spot to that sort of question, I, I, I . . .” He picks at the Diet Coke can his assistant brings to the dark wood table in Clarium’s conference room, with a view of San Francisco’s park-like Presidio. “You know, I don’t think, I don’t think that there are, um,” he pauses. “Uh, okay, let me elide it with abstracting it one level, so, um, to the extent that there are contradictions I am much more aware of them than people whose”–short pause–“views fit into a very standard matrix and where they have a lot of other people agree with them, and where there may be a lot of contradictions that run through everybody in society but that are hidden for that reason.”

    Except in his case, they’re not so hidden. Thiel, in a striped dress shirt unbuttoned two holes from the top and dark slacks, puts down the Coke. “I don’t think they’re logical contradictions, but all the questions around these things are ones where to the extent you have an unusual combinations of beliefs or views or whatever, you’re forced to think about them more than if you don’t.”

    About all you can say, with any assurance, is that Thiel has never quite fit in with the world around him. He was born in 1967 in Frankfurt am Main, Germany. His father, a chemical engineer, kept the family moving; Peter went in and out of seven schools from Ohio to Namibia before the family settled in Foster City, Calif., 20 miles south of San Francisco. Like lots of boys, he devoured J.R.R. Tolkien’s Lord of the Ring series, absorbing its lessons about the allure of evil and the limits of power. But Thiel’s brain seemed to work faster than most of his peers’. “He knew the name of every country in the world by the time he was five,” says Ken Howery, a partner of Thiel’s at the venture capital firm Founders Fund and a close friend. A chess player, Thiel was ranked seventh in the country as an adolescent. In college the kit that held his pieces had a “born to win” sticker on it.

    Obviously, Thiel loves matching wits with friends and enemies, and is fanatical about winning. He is just as obsessive about playing by the rules–his rules. He sometimes raced in his 1978 VW Rabbit (“my Jimmy Carter car”) to chess matches, where he would show up five minutes before having to forfeit the game just to psych out his opponents, recalls high school friend Norman Book, now an executive VP at the conservative website WorldNetDaily. Later on Thiel would write his own playbook when it came to investing–or hiring people. After deciding to bring on Keith Rabois (a law firm chum) to handle lobbying and dealmaking for PayPal, Thiel gave him an ultimatum. “You’ve got to be in my office on Monday. If you can’t start Monday, forget it.” Rabois had to sell his house and move from Washington, D.C. to San Francisco in four days. “That’s classic Peter: If it can’t happen now, it doesn’t count,” says Rabois, now chief operating officer at mobile payments startup Square.

    But Thiel bristles under other people’s rules. His buddy Book points to Monopoly games in high school. Thiel, as usual, was winning. “So, I sold all my properties to my brother for a dollar,” Book recalls. “Peter didn’t like that, but he couldn’t find anything in the rules” prohibiting the move. Nor did Thiel like the way Valleywag, an arm of the media and gossip site Gawker.com, played when it wrote the post “Peter Thiel is totally gay, people.” Thiel later called Valleywag the “Silicon Valley equivalent of al Qaeda.”

    Some of Thiel’s contentious thinking was forged at Stanford University, where he majored in philosophy and minored in political incorrectness. In 1987 he and Book, disgusted at what they called Stanford’s “culturally liberal ethos,” launched the Stanford Review, a libertarian paper that was, mildly put, unpopular. One student told Thiel he loved the Review–for wiping his butt.

    After getting his law degree from Stanford in 1992, Thiel took a job with the white-shoe firm Sullivan & Cromwell. He quit after seven months, six days. He lasted slightly longer as a derivatives trader at Credit Suisse First Boston. Thiel came home in 1996. “I think California was and remains a much better place to do something entrepreneurial than New York,” he says.

    He moved to Menlo Park, started Thiel Capital with $1 million from family and friends, and hired fellow Stanford alum Ken Howery. They took the cheapest space they could find in Silicon Valley’s financial epicenter, Sand Hill Road: a windowless storage closet. “The developer hung a picture of an outdoor scene for us,” Thiel deadpans–an affect that comes naturally to him.

    Thiel reconnected with his political and academic roots, in particular the intellectual circle around Stanford professor René Girard. His chief explanation of human motivation centered on a literary theory that all desire is “mimetic,” or imitative, sparked by the desires of other people. Conflict arises not when individuals are different but when they’re similar, when they want the same thing. The theory particularly resonated with the brushfire creation of startups in the dot-com boom, “the bubble that was going on a few blocks outside of campus,” Thiel recalls.

    He wanted to ignite his own fire and didn’t have long to wait. After a talk on political freedom and economic globalization he gave at Stanford in the fall 1998, Thiel was approached by Max Levchin, a young Ukrainian émigré and computer scientist who’d sold his company, NetMeridien Software, which developed marketing tools.

    They started Confinity, an e-payments company with Thiel as CEO, in December 1998. Its first application was called PayPal, which let PalmPilot users beam money to one another; that service broadened out, eventually allowing you to send money to anyone with an e-mail address. After eBay users embraced the service, customers piled in. But for Thiel, PayPal was a libertarian’s dream: It had the potential to become an independent monetary system that could weaken government control over economies and exchange rates. Like everything else he has created or backed, it was a service with a cause.

    But lesser struggles trumped higher aspirations. By early March 2000 the PayPal service had 150,000-plus users but was burning through cash because it offered a $10 bounty to any customer who signed up a new customer. Thiel merged it with X.com–a competitor to PayPal that similarly targeted online auctions but also wanted to branch out into other financial services–and demoted himself to executive VP of finance. Just before the dot-com bubble popped, Thiel hustled to close $100 million in private offerings from venture capitalists and investment bankers. There was tension inside: Thiel clashed with X.com’s CEO, Bill Harris, the former chief of Intuit, according to The PayPal Wars, by Eric Jackson, an ex-employee. While customers complained about PayPal (funky log-ons, trouble accessing accounts and so on), Harris focused on business deals. Thiel quit in May. The board ousted Harris days later, replacing him with X.com’s founder, Elon Musk. Thiel became chairman.

    X.com’s troubles cascaded. Crooks were stealing millions of dollars from PayPal using stolen credit card numbers. Fixing those problems, as well as introducing new features, had to wait while Musk switched PayPal’s operating system over from Unix to Microsoft. Thiel’s loyalists, led by Levchin and then-executive VP (and former Stanford Review editor) David O. Sacks, staged a second coup, according to Jackson’s book. They encouraged their staff members to threaten to quit unless Musk was replaced. He was, in September 2000–by Thiel. (There seems to be little bad blood between them: Thiel invested in SpaceX and, along with Musk, backed the movie Thank You for Smoking.)

    The tight band around Thiel set about weeding out fraud, converting accounts into profits and expanding to 80 countries. In the first large offering after Sept. 11, PayPal went public in February 2002, with a $1.2 billion market capitalization. At the company party Thiel took on multiple employees at once in a game of speed chess, winning all but one contest. After losing that one game, he admits, he “may have knocked over a few pieces” in frustration. Eight months later eBay bought the company for $1.5 billion. Thiel’s take home: $55 million.

    It took a year and a half to find his next megahit, but Thiel made valuable discoveries along the path to Facebook. Within weeks of the 2002 PayPal sale Thiel founded Clarium Capital, part hedge fund, part think tank. It was his way of staking claim to the future as he envisioned it: an ominous era of peak oil, Japanese-style deflation and an emerging markets bubble. With the backing of the likes of institutional investors, pension funds, funds of hedge funds and a few qualified individuals, Thiel placed bets he intended to ride a long time, going long on oil and energy stocks, predicting a rise in 30-year Treasurys if the U.S. economy sank and wagering the dollar would strengthen as investors fled investments in emerging markets backed by borrowed dollars. He later rode oil up to $147 a barrel but also rode it all the way down to $34; prescient calls on a rising dollar and a jump in Treasurys couldn’t stave off losses.

    Clarium charged its investors a flat 25% of profits (and nothing if it lost money), instead of the usual 20% and 2% management fees–and treated them in quarterly letters to pure Thielisms. “Ours is an age in which classic wisdom has failed,” reads one. “Those investors who limit themselves to what seems normal and reasonable in light of human history are unprepared for the age of miracle and wonder in which they now find themselves. The twentieth century was great and terrible, and the twenty-first century promises to be far greater and more terrible.”

    Thiel, meantime, kept an eye out for promising startups. One little-loved sector, seen by some as the next dangerous dot-com fad, was social networking. But Thiel put $100,000 of his own into LinkedIn, a business-focused social network. In the spring of 2004 Thiel got a call from LinkedIn founder Reid Hoffman, an old Stanford friend and PayPal alum. Would he take a meeting with Facebook’s Sean Parker and a kid named Mark Zuckerberg? He and two Harvard dropout friends had just moved to a rented house in Palo Alto and needed cash. Hoffman didn’t want to invest in Facebook, to avoid the appearance of a conflict of interest. The meeting in August 2004 was at Thiel’s offices at 555 California Street, the same setting for the confab in The Social Network.

    Zuckerberg has hazy memories of that first meeting. As usual, Parker did much of the talking. “Sean and Peter had worked out most of it,” says Zuckerberg. What sold him on Thiel? That he wasn’t a conventional venture capitalist. “I really just wanted to work with other people who had built great things,” says Zuckerberg. “I had a lot of respect for PayPal. I associated him with more as being a founder and entrepreneur than being an investor.” Thiel’s recollection of Zuckerberg: “Somewhat introverted, very smart and very driven. And a very strong engineer, which would be critical if Facebook would solve the scalability problems that caused Friendster to founder.” According to David Kirkpatrick’s The Facebook Effect, Thiel loaned Facebook $500,000, convertible to 10.2% of the equity if the site reached 1.5 million users by December 2004. It didn’t, but Thiel let it convert anyway. (In May 2009, according to The Facebook Effect, when Russian tech holding company Digital Sky Technologies participated in a round of fundraising with Facebook, Thiel sold roughly half his stake, which has also been diminished by dilution.)

    The money was great, but Thiel’s counsel was a godsend. “He has continued to push this theory that focusing on user growth and expansion is the most important thing the company can do,” says Zuckerberg. “That’s been a really defining thing at Facebook.”

    Later that year Thiel set up a new venture firm, called the Founders Fund, with former PayPal employees Ken Howery and Luke Nosek. (They added Sean Parker as a managing partner in 2006.) The fund focused on early-stage social media and Web startups with investments between $500,000 and $5 million. They backed companies such as Levchin’s Slide (social media applications), IronPort (e-mail security appliances), Powerset (search engine) and Mint (personal finance site). They have been hits: IronPort was sold to Cisco in 2007 for $830 million and Powerset to Microsoft for $100 million in 2008; Slide was bought by Google last year for a reported $228 million.

    Guiding principles of the Founders Fund–invest early, aggressively and in people you respect–are standard practice today among the angels and early-stage venture firms in Silicon Valley. Parker and Thiel also came up with a special class of shares, called Series FF, to help cash-strapped entrepreneurs. Founders can sell Series FF stock at the last price paid by new investors for preferred stock, so they don’t have to wait for the frozen capital markets to thaw. This, too, has been copied. “If imitation is the most sincere form of flattery, they have been flattering the Founders Fund,” says Venky Ganesan, a managing director at $1 billion (assets) venture firm Globespan Capital.

    Few are deliberately imitating Clarium Capital, which is bleeding executive talent as well as assets. Thiel says the hedge fund now has no equity exposure. It is “slightly short” the dollar, fixed income and commodities, and long on oil. “We’re basically in a holding pattern,” says Thiel. “The fundamentals have to be fixed, but this radically decoupled market may last for a while.”

    Which leaves him with plenty of time to solve the future–most of it, judging by where he puts his money, beyond social media. Why? A clue lies in an essay Thiel wrote for the libertarian Cato Institute in April 2009. “Because there are no truly free places left in our world, I suspect that the mode for escape must involve some sort of new and hitherto untried process that leads us to some undiscovered country; and for this reason I have focused my efforts on new technologies that may create a new space for freedom.” Those new frontiers, he says, are cyberspace, outer space and seasteading (creating settlements in oceans). The Internet, where Thiel has invested much of his imagination and made most of money, is limited, he says, because “these new worlds are virtual and . . . any escape may be more imaginary than real.”

    Far better to create new, like-minded communities by trying to escape the laws of gravity, nationalism, even biology. Through his Founders Fund, Thiel has invested more than $30 million in Elon Musk’s SpaceX (Space Exploration Technologies Corp.), a nine-year-old transportation company. “The SpaceX vision was to start by trying to build a basic, functionally cheap rocket,” says Thiel. “Once you shift the economics from $20,000 for a pound of payload to $1,000 for a pound of payload there are all kinds of things you can do”–giving a kick, perhaps, to space tourism, Mars exploration, maybe even lunar colonization. In December SpaceX became the first private outfit to send up and recover a spacecraft.

    Less costly are dreams recently on display at a fundraiser hosted by Thiel’s philanthropic organization for what it called Breakthrough Philanthropy, at the Palace of Fine Arts Theatre, a few blocks from Clarium’s offices. Many in Thiel’s influential circle were there–Facebook cofounder Dustin Moskovitz; onetime PayPal cohorts and Stanford Review alums Luke Nosek, Keith Rabois and David Sacks–with their big checkbooks. There were warm sliders, cold sushi, plenty of wine and pitches from the leaders of eight philanthropies.

    Among them was Patri Friedman, an ex-Google engineer and grandson of late economist Milton Friedman, the Nobel Prize winner, who was hawking sea colonies on behalf of his Seasteading Initiative. (Thiel has contributed $900,000 to it so far.) “What we need are new countries,” said Friedman, 34 and bearded. “Seasteading is the entrepreneurial way to fix government, by competing with governments rather than complaining.” His group has explored the idea of building a floating structure off the coast of San Diego for 270 residents, at a cost of $200 million. Unresolved: the small matter of how to form an independent or semi-autonomous republic.

    Another hat in hand belonged to Michael Kope, an intellectual property lawyer who is also chief executive of the SENS (Strategies for Engineered Senescence) Foundation. Its elusive goal is the same as Ponce de Leon’s 500-plus years ago: discovering the secret of regeneration. “A man by the name of Frank Fenner died two weeks ago,” Kope says in his warmup, adding mournfully, “He was only 95 years old.”

    Immortality, you might say, is Thiel’s ultimate long-term bet. “Lengthening people’s time horizon is a good thing,” he says. “If you could cure aging, that would change all sorts of things that are now constrained.” His involvement in the movement grew out of an introduction to Methuselah Foundation cofounder Aubrey De Grey, a computer scientist who posited a theory that you could extend life by reducing the damage to mitochondrial DNA (essentially, the cells’ power plants), among other possibilities. Intrigued, Thiel later ponied up $500,000–and promised to match half of all donations, up to $3 million. Since then, Methuselah has spun off SENS, which focuses on developing life-extension technologies and has a modest lab in Mountain View, where researchers try to reverse the damage that causes macular degeneration and atherosclerosis. In April Thiel signed on to pick up $1.2 million of SENS’ $2 million annual budget. No breakthroughs yet.

    But Thiel doesn’t sound discouraged. “Do we try to pursue ideas that are weird and have optimism about the future?” he asks the audience at the Fine Arts Theatre. “Or do we give up on all new things and sort of compromise [and live in] the much more pessimistic zone we’re in?” The crowd is apparently with him; the evening raises nearly $700,000 for all the causes. “It’s good to have somebody who is out there and really taking the extreme position on these things because it encourages a different kind of public debate,” says Moskovitz.

    To goose the supply of brainpower that will lead us to the promised land of limitless opportunity, the Thiel Foundation is actively recruiting. Its “20 Under 20” program, launched in September, encourages would-be entrepreneurs to apply for one of a score of $100,000 fellowships. Two requirements: Aside from being 19 or younger, you have to drop out of school.

    For a consummately educated guy, Thiel is derisive about American colleges and universities. In his view they’ve become too politically correct (he and David Sacks argued as much in their 1997 book, The Diversity Myth), hobbling the hard sciences as well as the humanities. Schools have created a classic bubble, says Thiel: Inflation-adjusted spending on administration per student jumped 61% between 1993 and 2007, while the number of administrators per 100 students rose 39%, reports the Goldwater Institute. Student debt levels fill Thiel with disgust. “It is pretty much the only form of indentured servitude in the U.S.,” he says.

    Yale math major Thomas McCabe, 19, is applying for a Thiel grant. McCabe hopes to commercialize low-cost 3-D printers that now make a range of plastic goods on demand. “We are living among the ruins of a fallen civilization,” he says, sounding a lot like Thiel must have 24 years ago. “Take all of the basic infrastructure, our roads and bridges and so on that we built in the 1950s and ’60s. If we tried to build them now we couldn’t do it.” But with a grubstake from Thiel we might get a little closer.

  2. Thiel’s Clarium Hedge Fund Invests in Tech

    By Miles Weiss – Aug 15, 2011

    Peter Thiel, whose Clarium Capital Management LLC lost 90 percent of assets from its peak until the end of last year, plans to invest the global macro hedge fund in what made him a billionaire: private technology ventures.

    Clarium may invest a “significantly higher percentage” of assets in private equity in the near term, the San Francisco- based firm said in a July regulatory filing. The investments will include tech companies, James O’Neill, a managing director, said in an interview.

    Thiel, who became a billionaire with investments in PayPal Inc., Facebook Inc., game maker Zynga Inc. and LinkedIn Corp., is steering his hedge fund to technology companies after Clarium’s assets shrunk some 90 percent from more than $7 billion in mid-2008, thanks in part to losing bets on oil prices, currencies and stocks. Demand for social-networking stocks has pushed the implied value of privately owned Facebook beyond $82 billion, leading some investors to caution that a new tech bubble is underway.

    “There is a strong appetite for these Internet and emerging technology companies,” Aaron Kessler, an analyst at ThinkEquity LLC in San Francisco, said in a telephone interview. “Only a couple winners can do well for you, as Peter has seen in the past.”

    Clarium LP, the firm’s main hedge fund, takes contrarian positions based on major economic trends influenced by government policies, economic cycles, new technology and commodity fluctuations, according to the company’s July registration with the U.S. Securities and Exchange Commission. Clarium, like other macro funds, traditionally has made its macroeconomic bets by trading futures, foreign-currency contracts, bonds and stocks.

    ‘Attractive’ Opportunity

    Now the firm views private equity as an “attractive investment opportunity,” according to the filing.

    “It was important to give our investors advance notice that we were going to potentially branch out into a new asset class,” said O’Neill, adding that Thiel wouldn’t be available for an interview. “Peter has a long and successful track record as a technology investor.”

    While many investors equate private equity with leveraged buyouts of public companies by firms such as KKR & Co. and Blackstone Group LP (BX), the term has another meaning in connection with tech businesses that have yet to hold initial public offerings. For them, private-equity deals are tantamount to late-stage venture capital, with a single investment firm often committing $30 million or more, all in cash.

    Late-stage deals accounted for 24 percent of venture capital financing rounds in the 18 months through June, compared with 10 percent in the same period ended 10 years earlier, according to the National Venture Capital Association in Arlington, Virginia.

    ‘Filling in Gaps’

    “Venture funds and private-equity funds are filling in gaps where companies used to raise money from the public markets,” said Harry Weller, a general partner in the Chevy Chase, Maryland, office of New Enterprise Associates, the first venture firm to back Groupon Inc., the Chicago-based provider of online coupons. “The small tech IPO no longer exists.”

    Private equity has also attracted Steve Case, co-founder of AOL Inc. (AOL), and Ted Leonsis, the owner of the National Hockey League’s Washington Capitals, who teamed up in June to open Revolution Growth Management Company II LP, a Washington firm raising $400 million to invest in 10 to 12 “technology-enabled businesses,” according to SEC filings last month.

    Private-equity investments tend to produce lower returns than seed and early-stage venture deals, while the risks are also reduced because companies are less likely to fail, according to Emily Mendell, a spokeswoman for the venture- capital association.

    Doubles and Triples

    “You may not have the home-run returns, but you will get a double or triple,” Mendell said.

    LinkedIn, based in Mountain View, California, and ranked as the largest professional networking website, soared after its initial public offering in May, with shares reaching $122.70 on their first trading day from an offering price of $45. The market value of Palo Alto, California-based Facebook surged above $82 billion as of Aug. 5 from $12.7 billion at the end of 2009, according to SharesPost Inc., a trading market for closely held companies.

    Valuations are being driven in part by small investors based on the success of the Facebook website, which has more than 750 million users, and Apple Inc.’s iPad computer tablet, said Bill Glynn, chief executive officer of ISB Ventures LLC, a Dallas-based private-equity firm. Current valuations are unsustainable, he said, adding that some of these companies will share the same fate as Internet stocks that cratered when the 1990s tech bubble burst in 2000.

    Former High-Fliers

    “Remember when AOL and Yahoo were high-fliers?” said Glynn, referring to AOL Inc., the New York based Web-services company, and Yahoo! Inc., the Sunnyvale, California, owner of the most visited U.S. Web portal. “They are nothing now.”

    Thiel, 43, a graduate of Stanford Law School who previously traded derivatives for a Credit Suisse Group AG unit and practiced securities law at the New York firm Sullivan & Cromwell LLP, has a history of making both macro and technology bets. In pursuing private-equity deals, he would be adding to his earlier role as a seed investor by also focusing on more- established companies.

    Thiel Capital International LLC, a hedge fund he set up in 1996 to trade futures on equity indexes, debt and foreign exchange, made the sole seed investment in December 1998 in FieldLink Inc., the predecessor to PayPal, according to a 2006 lawsuit filed by Amit Choudhury, a former business associate.

    Price ‘Distortions’

    Thiel later became chief executive officer and invested his own cash in PayPal, acquiring a stake that was valued at more than $100 million after the online-payment company’s IPO in February 2002, the court documents say. That July, EBay Inc. (EBAY) agreed to pay $1.54 billion to acquire PayPal.

    When the deal was completed that October, Thiel started Clarium Capital Management to carry out a macro strategy based in part on exploiting “asset price distortions,” the July SEC filing said. Meanwhile, he reinvested some of his personal wealth in technology startups such as Facebook, where he became the first outside investor by purchasing a $500,000 stake in 2004.

    Thiel’s personal tech bets have prospered, lifting his net worth to $1.5 billion as of March, as estimated by Forbes, which ranked him No. 833 among the world’s billionaires. Meanwhile, Clarium has struggled since a plunge in crude prices in the second half of 2008 left the fund down 4.5 percent for the year, according to SEC documents and investor letters.

    Losses, Redemptions

    By the end of 2010, Clarium had fallen 65 percent from its mid-2008 peak, even as annualized returns since inception equaled 12 percent, according to an investor letter. Losses and redemptions had cut the firm’s assets to $462 million as of Jan. 1, according to the adviser registration.

    Clarium signaled it might be making more tech investments when it closed its New York office last June. O’Neill said at the time the New York employees would be relocated to San Francisco as part of an effort to be nearer to Silicon Valley to monitor innovation.

    The firm listed a second macro fund in its lineup as of March 1. Clarium Macro Investments Ltd. held $304 million, and Clarium LP’s assets fell to $129 million from $924 million a year earlier, according to the July filing.
    Thiel, who added about $200 million of his own money to Clarium LP in 2009, is cited as an investor in Clarium Macro. The fund follows the same strategy as Clarium LP and invests in parallel with it in some instances, the filing said.

    Dual Roles

    In addition to running Clarium, Thiel is a managing member and stakeholder in Founders Fund LLC, a venture pool whose principals include Ken Howery and Luke Nosek, co-founders at PayPal, and Sean Parker, Facebook’s founding president. “There may be circumstances” in which Clarium and Founders Fund invest in the same companies, according to Clarium’s filing.

    Thiel’s roles with both Clarium and Founders Fund don’t create a material conflict of interest, the company said in the filing, “because the investment focus of the Founders Fund is generally different” from that of the macro manager, according to the filing. When the two firms invest in the same company, Clarium’s conflicts committee will be responsible for identifying and resolving any issues.

    To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net

  3. S.F. billionaire quietly funds Ron Paul super PAC

    Richard S. Dunham,Carla Marinucci
    Sunday, February 26, 2012
    Washington —

    Ron Paul revels in the fact that he is the presidential candidate of America’s small donors, receiving more contributions under $200 than any other Republican seeking the White House in 2012.

    But, like every other GOP presidential contender, he also has a mega-millionaire “sugar daddy” helping to fund a super PAC that is promoting Paul’s candidacy.

    Yet while Newt Gingrich underwriter Sheldon Adelson and Rick Santorum super-supporter Foster Friess have shared the campaign stage – and the national political spotlight – with their candidates, Paul’s benefactor, San Francisco entrepreneur Peter Thiel, has never met the Texas congressman he’s aiding.

    Who is this mystery man who has donated $2.6 million to Endorse Liberty, the pro-Paul super PAC that has produced several viral videos and sponsored sharp attack ads against Santorum, Gingrich and Texas Gov. Rick Perry?

    Thiel, 44, is a low-profile libertarian with a background as quirky as the candidate he supports.

    Born in Germany, he’s a self-made billionaire who became a chess master as a child, majored in philosophy at Stanford University, and founded the conservative-libertarian Stanford Review to “present alternate views” on a campus he felt was dominated by liberals.

    Co-founded paypal

    He’s a lawyer who co-founded PayPal, invested early in Facebook (he was portrayed by actor Wallace Langham in the Academy Award-winning “The Social Network”), dabbled in Hollywood (as executive producer of the libertarian satire “Thank You for Smoking”), ran a venture capital firm that saw the potential in startups such as LinkedIn and Yelp, and now serves as president of a global hedge fund, Clarion Capital.

    He is a conservative Christian, a strong supporter of unfettered capitalism, an aggressive critic of “political correctness” and a generous donor to Republican candidates, including Paul, his son Kentucky Sen. Rand Paul, and California Republican Reps. Dan Lungren, Dana Rohrabacher and Ed Royce.

    The only Democrat to receive a contribution from Thiel is Ro Khanna, a former Obama administration trade official who may mount a primary challenge to staunchly liberal Fortney “Pete” Stark in the newly created 15th Congressional District in the South Bay and Silicon Valley.

    Conservative gay christian

    But the Bay Area billionaire is not just a free-enterprise fan. He’s also a proud gay Christian who has supported a wide range of causes including gay rights, freedom of the press, antiaging research and artificial intelligence. He’s funded a “seasteading” foundation that wants to create artificial, self-governing islands some 200 miles off the California coast to serve as experiments in innovative political, social and legal systems.

    “He has great insight,” said Jimmy LaSalvia, executive director of GOProud, a group of gay conservatives that has received fundraising help from Thiel and conservative commentator Ann Coulter. “He also is inquisitive, and most of the conversations I’ve had with him have been him asking questions. He gathers a lot of information.”

    Thiel’s associates say that once he gathers information on a subject, he acts decisively.

    He has done that with the pro-Paul super PAC, Endorse Liberty. After a 30-minute meeting at Thiel’s San Francisco home, he agreed to aid the cause. Federal Election Commission documents reveal that he is responsible for more than half of the super PAC’s proceeds.

    “I think Peter has a gift for seeing trends,” said Endorse Liberty founder Jeffrey Harmon, a Utah entrepreneur and chief marketing officer of Orabrush, a company that creates products to clean the tongue and freshen breath. “PayPal and Peter’s early investment in Facebook are examples of the vision. I believe Peter can see that Ron Paul is the future of the Republican Party.”

    Thiel declined an interview request for this article. But he has told friends and political allies that he hopes to build a libertarian movement that can compete for political dominance in American politics.

    “Men and women who want freedom and growth should take action,” he said in announcing one of his four contributions to the pro-Paul super PAC. “A good place to start is voting for Ron Paul.”

    Thiel says his approach to life is wrapped up in his favorite question for job applicants: “What do you believe is true that almost nobody agrees with you on?”

    “That’s probably a good starting point to find something that’s valuable and is undervalued,” he said in a recent speech to Students for Liberty, a group of young libertarians.

    Possible future candidate

    John Dennis, a San Francisco businessman and Paul supporter, says Thiel is “broadly respected” on the right for his libertarian views, his efforts to provide seed money to young entrepreneurs and his philanthropy. Dennis talks about his fellow Bay Area Republican, who makes Forbes magazine’s list of the 400 wealthiest individuals in the world, as a potential Republican Senate candidate at some point in the future.

    “He has the money to do it,” said Dennis, who is challenging House Minority Leader Nancy Pelosi in her San Francisco House district this year.

    ‘Cyber-espionage’ criticism

    But Thiel has his detractors, too.

    “You’re only a genius if people don’t know about your bad bets,” said Wade Randlett, a major Silicon Valley fundraiser and bundler for President Obama’s re-election campaign. “He started his own hedge fund, which lost a gigantic amount of his own money. He had all of his bets on oil (prices) going up and up and up. And everyone thought it would happen – but then the financial crisis hit (in 2008) and because of housing, oil goes down to $38 a barrel and wipes out his fund.”

    Thiel also has been criticized by some on the left for the alleged “cyber-espionage” work done by a company he launched. San Francisco blogger Lee Fang reported that the company, Palantir Technologies, may have hacked into computers of liberal nonprofit organizations and reporters, including his own, after they criticized secret fundraising by the U.S. Chamber of Commerce. Palantir’s alleged role “should come as a shock and disappointment to (Paul’s) followers,” the left-wing magazine the Nation declared recently.

    Thiel declined comment, but Paul’s followers are not shying away from their benefactor.

    Super PAC founder Harmon says Thiel is convinced that Paul “can beat Obama” if he wins the GOP nomination.

    “Even if he doesn’t win, we are part of a movement that is one thousand times bigger than in any (previous) election cycle,” Harmon added.

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