Silicon's Valley's most celebrated venture capitalist is a past master at spotting bubbles. One of the few who saw the 2000 Nasdaq crash coming, he then correctly diagnosed that "the equity bubble had simply shifted onto the housing market", says TechCrunch. Now he claims that America is under the spell of a "higher education bubble" that saddles its brightest with ruinous debts for little discernible return. Hence his plan to offer 20 young entrepreneurs $100,000 in grants on condition that they drop out of college to pursue their ideas.
"A true bubble is when something is overvalued and intensely believed," says Thiel. "Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It's like telling the world there is no Santa Claus." That might explain some of the opprobrium that has landed on Thiel's head since he launched the scheme, says Bloomberg Businessweek. Yet, as he points out, at least three US "defining tech geniuses" Steve Jobs, Bill Gates and Mark Zuckerberg were college drop-outs.
Many view the "consummately educated" Thiel's crusade as hypocrisy, says Forbes. Others have dismissed him asa "wackaloon". But it's hard to write-off Thiel's record. Having co-founded, run and sold PayPal to eBay, he went on to launch or fund many of the most innovative start-ups of the last decade: YouTube, LinkedIn, SpaceX (rockets) Tesla Motors (electric cars), and Kiva (microloans). He was also the first to make a big investment in Facebook and still has a 3% stake worth $1.5bn.
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In the various accounts of Facebook's founding, Thiel is almost invariably cast as "a remote, brooding master of the universe, the archetypal tycoon in a black wing chair, stroking a cat", says Businessweek. He has certainly never quite fitted into the world around him.
Born in 1967 in Frankfurt, his father a chemical engineer kept the family itinerant before eventually settling in California. An intensely competitive child, who insisted upon playing any game by his own rules, Thiel was a national chess champion before going to Stanford to read philosophy. His mentor there was Ren Girard, a proponent of "mimetic desire" theory, which holds that "people are essentially sheep-like and will copy one another without much reflection", notes The Guardian. To Thiel, that provided a plausible explanation foreverything from stockmarket bubbles to political correctness.
Thiel's libertarian outlook hasn't changed, says Forbes. The chief reason he focuses on new technologies, he wrote in a 2009 essay, is "because there are no truly free places left in our world". By expanding into cyberspace, outer-space and under the oceans, he hopes to find "an undiscovered country a new space for freedom".
Respected seer, lucky chancer, or reckless pessimist?
Peter Thiel's contribution to Silicon Valley is undisputed: the guiding principles of his Founders Fund "invest early, aggressively and in people you respect" are now standard practice among the Valley's many angels and early-stage venture firms, says Businessweek. Many of its titans continue to view Thiel as a valued and visionary mentor. "Whenever I am not psyched about the way things are going I can get some advice by talking to him," says Mark Zuckerberg.
Investors in Thiel's hedge fund, Clarium Capital Management founded to make big macro-economic bets along the lines of George Soros's Quantum Fund "may not feel so charitable", says Forbes. Those who have stuck with Clarium since mid-2008 have lost 65% of their money because of Thiel's bets on rising oil prices and a sinking dollar. His forecasts were right, but "his timing was punishingly off". That has led some critics to dismiss Thiel's successes as mere luck a charge supporters vigorously refute. "PayPal wasn't a fluke, Facebook wasn't a fluke, Founders Fund wasn't a fluke," says Netscape founder Marc Andreesen. "Peter aggressively seeks opportunities to invert the conventional wisdom."
Still, Clarium's freefall has exposed Thiel to attacks from those who see his investment strategy and philanthropic ventures "as expressions of a reckless, preening vanity", says Businessweek. No initiative has provoked more howls than his "20 under 20" scheme. Writing on Slate.com, Jacob Weisberg condemned the plan as a "nasty" idea that encourages students to "halt their intellectual development". Thiel counters that that's just vested interests talking. He's unhappy with levels of student debt "pretty much the only form of indentured servitude in the US". Whether you view his plan as feasible or not depends on your take on America's future. For a futurist philosopher, Thiel is remarkably pessimistic.
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