At a current U.S. box office of over $84 million “The Social Network,” – the movie about Mark Zuckerberg and the founding of Facebook – is just another example of the public’s fascination with social networking and young billionaires, not necessarily in that order.
Not mentioned in the movie is the unbelievable story of a Peter Thiel one of the founders of PayPal investing $500,000 in 2004 in exchange for approximately 5% of Facebook.
Given that the estimated market value of Facebook is now worth $20 billion, that represents a 2,000x return in 6 years, qualifying it as surely one of the greatest investments of all time.
Now let’s be real people.
Mr. Thiel, while obviously talented as evidenced by both his founding and then selling PayPal to eBay for $1.5 billion before age 35, had the luck of a lifetime with his Facebook investment.
Yes, luck is a key, and sometimes the key, variable in entrepreneurship and investing.
But as opposed to fighting or getting philosophical re this reality, a far better question to ask is, “How can I improve my likelihood of, for lack of a better turn of phrase, getting lucky?”
Here are three ideas:
I. Run With the Right Crowd. Thiel is part of the famous PayPal Mafia – former founders of PayPal and their friends that travel in the rarefied Silcon Valley air of next generation Internet ideas and technologies. Through this professional and personal network, Thiel sees lots of great startups. Most of them are duds, but a few are world-beaters. Like Facebook, LinkedIn, YouTube, Yelp, and Six Apart.
II. Swing For the Fences. No doubt Thiel’s cat-bird seat as CEO of PayPal in the late 1990’s allowed him to “get” instantly the scalability of the Facebook business model. But give credit where credit is due – meeting Mark Zuckerberg in a Palo Alto bar and writing him a check for $500,000 when Facebook was still in its college dorm mode, channeled the Romans and their famous ode to luck – “Fortes Fortuna Adiuvat,” “Fortune Favors the Bold.”
III. Cultivate Serendipity. How shall we seek the wisdom as to what the next big thing will be? Well, as this example shows us, as much via serendipity as anything else. From conferences, parties, chance encounters, flash and intuitive insights.
From being open to ideas, people and things outside of the normal box.
In many ways, luck and serendipity are the new religions of our age. Books like Outliers, the Black Swan, Fooled by Randomness, and the Age of the Unthinkable profess on them. Successful technocrats like the PayPal mafia toast to them. Aspiring entrepreneurs who seek their name in lights pray to them.
Peter Thiel was both lucky and open to the power of serendipity.
The question, of course is, how about you?
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