New Yorker Profiles Hedge Fund Tech Maestro Peter Thiel

Date: Tuesday, November 22, 2011
Author: HedgeCo.net

ew York (HedgeCo.net) – In the upcoming issue of The New Yorker, writer George Packer profiles hedge fund and venture-capital entrepreneur Peter Thiel. The article “No Death, No Taxes” comes out on November 28th.

His venture-capital firm, Founders Fund, has an online manifesto about the future that begins with a complaint: “We wanted flying cars, instead we got 140 characters.” Thiel believes that this failure of imagination explains many of the country’s problems—from the collapse in manufacturing to wage stagnation to the swelling of the financial sector. As he puts it, “You have dizzying change where there’s no progress.”

His hedge fund, Clarium Capital Management, “became one of the meteors of the hedge-fund world,” Packer writes.

Thiel also founded PayPal, which he and his partners sold to eBay for $1.5 billion, he also gave Mark Zuckerberg a half-million-dollar loan, the first outside investment in Facebook, in the summer of 2004—a loan that Thiel later converted into a seven-per-cent ownership stake and a seat on the board.

Packer writes, “The information age has made Thiel rich, but it has also been a disappointment to him.” The creation of virtual worlds turns out to be no substitute for advances in the physical world.” “The Internet—I think it’s a net plus, but not a big one,” Thiel tells Packer.

Twitter has a lot of users, but it doesn’t employ that many Americans: “Five hundred people will have job security for the next decade, but how much value does it create for the entire economy?” Thiel’s questioning of the Internet’s significance does not, however, come from an indifference to technology. “He’s enraptured with it,” Packer writes. “Indeed, his main lament is that America… has lost its belief in the future. Thiel thinks that Americans who are beguiled by mere gadgetry have forgotten how expansive technological change can be.”

He believes that education is the next bubble in the U.S. economy, and dislikes the idea of using college to find an intellectual focus; above all, because “a college education teaches nothing about entrepreneurship,” Packer writes. “Thiel thinks that young people—especially the most talented ones—should establish a plan for their lives early, and he favors one plan in particular: starting a technology company.”

Last September, Thiel and Luke Nosek—Thiel’s friend and a partner at Founders Fund—came up with the idea of giving hundred-thousand-dollar fellowships to brilliant young people who would leave college and launch their own startups. The Thiel Fellowships “would help ambitious young talents change the world before they could be numbed by the establishment,” Packer writes.

Thiel has also poured money into futuristic projects such as artificial intelligence, space travel, life extension, and seasteading—the establishment of floating city-states on the high seas. He says, however, that even though he ideologically believes “that it’s unhealthy if society is totalitarian or dominates everything, if I had been libertarian in the most narrow, Ayn Rand-type way, I would never have invested in Facebook.”

He hasn’t backed a Presidential candidate for 2012 yet; he is spending his time and money building “the machinery of freedom” outside politics, so that, Packer writes, “technology will win the race.”

Thiel tells Packer that he is “weirdly hopeful…… There is a very cathartic crisis that’s gone on, and it’s not clear where it’s going to go. But at least everyone knows things are rotten. We’re in a much better place than when things were rotten and everyone thought things were great.”