Peter Thiel is a technology entrepreneur and venture capitalist, recently in the news for leaving the Silicon Valley for Los Angeles. As of February 2018, he has an estimated net worth of $2.5 billion. The majority of his wealth comes from his 10% stake in his data firm Palantir, and transactions involving PayPal Holdings (PYPL) and Facebook (FB). The billionaire entrepreneur's Founders Fund recently also made a big bet on Bitcoin. As he makes his move away from San Francisco, here's a peek into how Thiel amassed his fortune.
Just prior to 1990, Thiel was finishing a bachelor's degree in philosophy from Stanford University. In 1992, he completed a law degree at Stanford. After graduation, he clerked on a federal appeals court for about one year before he was invited to interview for clerkships with Supreme Court Justices Anthony Kennedy and Antonin Scalia. Though Thiel says the interviews went well, he was turned down for the positions. At that point, he decided not to pursue law any further. He moved back to California and spent some time as a derivatives trader. He started his own investment fund, Thiel Capital Management, in 1996. In December 1998, he started PayPal with Elon Musk and Max Levchin, serving as the company's chief executive officer.
Thiel helped grow PayPal for a few years, leading to its initial public offering (IPO) on Feb. 15, 2012. Later that year, the company sold to eBay Inc. (NASDAQ: EBAY) for $1.5 billion. At the time of the sale, Thiel owned a 3.7% stake in PayPal, so his gross proceeds from the deal were $55.5 million. After the deal was closed, Thiel opened Clarium Capital Management, a global macro hedge fund.
Arguably, Thiel's best decision came in August 2004. Reid Hoffman, the co-founder of LinkedIn Corporation (NYSE: LNKD), introduced Thiel to Mark Zuckerberg. Thiel offered up a $500,000 angel investment to Facebook, making him the very first outside investor in the company.
In 2004, Thiel also co-founded Palantir Technologies. Palantir is a private software company that specializes in data analysis. Thiel holds a large number of shares in the company, which is estimated to be valued at approximately $20 billion.
Facebook continued to grow with the help of Thiel's guidance as 2010 drew near. In May 2012, Facebook had an IPO, giving it a market capitalization of approximately $100 billion. At that time, Thiel sold nearly 17 million shares, grossing $638 million. Later in the year, when a lockout period for early investors was over, Thiel sold the majority of the remainder of his shares, bringing the entire proceeds from his Facebook stock to slightly over $1 billion. Even after those sales, Thiel remained on the company's board and continued to own 5 million shares. In May 2016, he sold approximately 860,000 more shares, making him another $101 million. Thiel owns about 60,0000 shares of Class A Facebook stock as of November 2017.
In recent years, Thiel also has invested in private companies Airbnb and Stripe. Airbnb is an online marketplace where people can list, find and rent apartments and vacation homes for short time periods, such as a few days to a few weeks. It is currently valued at approximately $31 billion. Stripe is a technology company that allows businesses and individuals to accept monetary payments over the internet. As of its last funding round in November 2016, Stripe holds a value of approximately $9.2 billion.
Thiel also co-led a $100 million investment into Vivint, a Utah-based company that sells smart home systems on a monthly subscription model. In September 2004, Thiel published a business book, "Zero to One: Notes on Startups, or How to Build the Future," which became a No. 1 New York Times bestseller.
Thiel is also one of the few notable Silicon Valley members to support President Donald Trump and was considered to chair Trump's intelligence advisory board before turning it down.
The Bottom Line
Thiel has started, invested in and advised some of the most important technology companies in the past 20 years, earning himself a fortune in the process.