43 • San Francisco
Finance & Philanthropy
Peter Thiel’s name should show up on any list of the nation’s top innovators. This is the man who cofounded PayPal and later sold it to eBay. He invested in Facebook early, even before it was worth billions. Thiel is famous — or, rather, infamous — for predicting a bubble would burst in the financial markets when no one else saw it coming and then doing it again with the housing market. What many want to know from Thiel is how he consistently stays ahead of the curve. But he can’t answer that question.
Unless he doesn’t want to let everyone in on his secret, Thiel truly cannot pick out the singular quality that’s made him rich. So he relies on the one thing he’s sure will make him original — being himself.
The founder of Clarium Capital, an investment management firm, this entrepreneurial oracle is catching a great deal of criticism for his recent endeavor. Thiel launched a scholarship program this year that paid 24 young people $100,000 each to skip or drop out of college and build a company instead. Some of the recipients, many of whom had jaw-droppingly high SAT scores, eschewed Ivy League schools such as Harvard or Princeton in order to give Thiel’s idea a try. The winners were announced in May, and the roster of ideas includes projects supporting new biofuels and electric cars, research that promotes longevity, and of course, innovative new Web-based businesses.
Thiel says that higher education for these folks would have been a waste — of time and money.
“I suspect that if the education bubble pops, it’s not quite the thing that is seen as valuable anymore,” foresees Thiel.
For promoting the idea that education could (perhaps should) be replaced in popular estimation with experience, Forbes columnist Peter Cohan called the “hard-partying investor” irresponsibly naive. Jacob Weisberg, the former editor of Slate, wrote that “tech prodigies sometimes grow up late. Perhaps Peter Thiel will one day as well.”
Thiel is coy about it all. He says the Thiel Fellowship program was not intended to be provocative. “I didn’t even think it would be controversial,” says the notorious contrarian, who practically gets paid to see things coming.
People were dumbfounded when Thiel asserted his libertarian viewpoint by publicly supporting Republican candidate Ron Paul in the 2008 presidential campaign. Later, when Thiel wrote an essay for a Cato Institute blog that said, “I no longer believe that freedom and democracy are compatible,” the Internet responded with a rash of Thiel-can’t-help-himself critiques.
But when Thiel sat down with advisers at his foundation and brainstormed ways “to get more innovation going” because the United States is “too complacent about technology,” curiously, no one thought a college-dropout factory might garner some attention. After all, not every Thiel Fellow will be a success. Odds are that some of their companies will crater and give educators a chance to wag their collective fingers about the wisdom of skipping school.
“We think the people we’ve selected all have a chance at being quite successful and doing better than they would have done in college,” says Thiel, who holds a law degree from Stanford. While Thiel believes his group of wünderkinds is special — and that most high-schoolers should stick to their college plans — he says, “I also think it becomes dangerous when it becomes an absolute dogma and people don’t ask certain questions about why they are doing it and where they hope it goes. It’s worth thinking about a lot more, and I know I certainly did not do so."
One of Thiel’s rare failures came during his pivotal post-college years. He applied to be a clerk for the Supreme Court, even scoring two interviews. But he was passed over.
“At the time, this was really traumatic,” says the pragmatist. “If you never had a setback and you never made a mistake, that is probably in itself a really big mistake because that means you are taking no risk at all.”
While the recent recession sent the value of Clarium Capital’s portfolio dropping significantly from its peak, Thiel is always in demand. He’s shared insight with Facebook CEO Mark Zuckerberg on occasion, and even with gay business groups that invite him to speak, though the gay innovator admits he lacks any LGBT-specific advice.When it comes to business, he says, “you learn it by doing it. And if people have great ideas, they should do it whenever they have it. I don’t think there is anything about people having to be young or old.” Or, apparently, gay or straight. —Lucas Grindley