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What We Can Learn from One of the Greatest Investors of All Time

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On the cover of this week’s Fortune Magazine is PayPal founder and famed technology investor Peter Thiel. Within is an awesome 4,000+ word opus on Thiel’s views on technology, investing, education and innovation.

Thiel’s career and successes span almost the entirety of the Internet Age - in 1998 he co-founded PayPal, sold to eBay in 2002 for $1.5 billion.

More impressively, the managers and engineers that Thiel attracted to PayPal went on to become some of the most famous entrepreneurs of our era – including at least seven that went on to build companies valued at more than $1 billion: Tesla and SpaceX (Elon Musk), LinkedIn, (Reid Hoffman), YouTube (Steve Chen, Chad Hurley, and Jawed Karim), Yelp (Jeremy Stoppelman and Russel Simmons), Yammer (David O. Sacks), and the data-mining company Palantir (co-founded by Thiel himself).

This recognition for entrepreneurial talent has also made Thiel one of the greatest investors of all time.

His prescience is of course best highlighted by his most famous investment, when in 2004 he gave the 20-year-old Mark Zuckerberg, a Harvard sophomore at the time who had never held a steady job, $500,000 in exchange for 10.2% of the company then called “Thefacebook.”

That investment has so far netted Thiel more than $1 billion in cash, and is the highest profile of a string of amazingly lucrative stock picks, a list that includes the aforementioned LinkedIn and SpaceX, but also tech high-flyers like Spotify and Airbnb.

While lately Thiel has become somewhat infamous for his controversial views on anti-aging (Sens Institute), Libertarianism (Seasteading Institute), and education (20 under 20), let this not distract from the fact that we can all learn a lot from his astoundingly successful approach to investing, technology and entrepreneurship.

A few of my favorites are:

1. Run With the Right Crowd.  Starting with the PayPal Mafia, with his teaching of a famed Stanford Computer Science course, and his ongoing writing, speaking, and networking in Silicon Valley and beyond, Thiel travels in the rarefied air of next generation technology ideas and technologies. And because of this, he meets great technologists and entrepreneurs and sees deals.  Many are duds of course, but a few are world-beaters like the list above.

2. Think AND Act.  As PayPal, Facebook, LinkedIn, Airbnb and so many others so aptly demonstrate, Thiel “gets” key technology and investing precepts like scalability, switching costs, double feedback loops, customer acquisition costs, minimum viable paid options, lifetime value, and many more.

And he acts on what he thinks – through founding and investing in companies with these concepts inherent to their business models.

3.  Get Lucky. In so many ways, Peter Thiel’s successes are emblematic of the business religion of our technology age: LUCK

Books like Outliers, the Black Swan, Fooled by Randomness, and the Age of the Unthinkable profess on it.  Successful technocratics like the PayPal mafia toast to it.  Aspiring entrepreneurs who seek their name in lights pray to it.

And the average man unwilling to step outside of his box gets none of it.

Peter Thiel, from his earliest days, has stepped out of the box and has thought for himself and challenged others do the same.

He has acted on those thoughts and beliefs through founding and investing in companies that in retrospect might look like easy calls, but at the time were shrouded in considerable doubt and passed over by almost everyone else.

With this way of thinking and doing, Peter Thiel has channeled the Romans and their famous ode to luck - "Fortes Fortuna Adiuvat", "Fortune Favors the Bold."

The question, of course, is will you?

P.S. Looking for Opportunities Now? Each year, Growthink reviews hundreds of emerging company opportunities and selects those with the best management teams, market opportunities, and financial prospects. 

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