The Facebook IPO Players Club: Peter Thiel [Updated]

They were doing just fine before, but Facebook’s biggest minority owners are about to be catapulted into a far more elite bracket. Peter Thiel, for example, will walk away with pockets stuffed with billions in cash, as he’s selling many of his shares straight away.

Who he is: Peter Thiel is a “business magnate, venture capitalist and hedge fund manager.” His own website puts it this way: He’s a “technology entrepreneur, investor and philanthropist.” So he’s a money man. Lest you think that’s all he is, remember he cofounded PayPal in 2002 with Elon Musk and Max Levchin (which must’ve at least required tech smarts, or the ability to spot an emerging market that’s heavily technology-centric), and then sold it to eBay later in the year for a $55 million personal stake. He’s fond of asymmetrical thinking about education, is suspicious about investing in cleantech, and doesn’t think the iPhone’s a technological breakthrough. There’s no answers to a Quora question: “What’s Peter Thiel like in person?” but TechCrunch labeled him a “grump, but a special kind of grump.”


What’s his connection to Facebook?: In 2004 Thiel made a $500,000 investment, as an angel investor. It was a loan, but then restructured for a 10.2% stake of the company. Due to movements in Facebook shares under private sales and dilution, his investment is now about 3%.

How much he’s worth already: Estimates of his net worth in 2011 placed it north of $1.5 billion.

How much Facebook’s IPO could earn him: At 3% of a possible $85 billion company he’ll be worth $2.55 billion more. That’s a quadriggigillion times return on the investment. A googleplex times…a…well, let’s just say if you had $500,000 to spend, it probably wouldn’t earn you over $2 billion just seven years later.

What he may do with the money: If Thiel’s previous habits continue, he’ll likely use any extra cash to fund novel startups and other investments–like his new PayPal-disrupting online payments company Stripe (that whole PayPal thing, again). He may also dole out some of his hoard for political ends, like his recent $900,000 sum to Ron Paul’s PAC. 


How much he may make from IPO: A 3% share of the $100 billion treasure trove would equate to $3 billion. And like several exsiting Facebook investors, Thiel has revealed he’s selling up some of it at IPO itself: He’s raised the amount he’s selling from 20% of his stash to maybe 50%…just think of all those zeros going into a bank account.


What he’s doing with the cash: Weird and wonderful things. Thiel recently revealed plans to build a modern “Atlantis,” a floating city somewhat like a luxury liner. No playing quoits on these decks though, it’s all about putting startups in a neutral environment in international waters off the California (for tax reasons, natch, and also to get around the U.S. somewhat hostile entry visa system). He’s also recruiting analysts for his San Francisco-based “macro-global hedge fund.”


While Thiel was already a wealthy man, we can guess that some of his new capital (it’s thought Thiel raised some $640 million as he sold Facebook shares at IPO) has gone into the dramatic new venture capital firm he’s just founded, dubbed Mithril after the mystical metal in Lord of the Rings. Mithril has $402 million in its initial pot and will target young firms that have gone through their initial funding, and are now looking for more meaningful growth.

That tallies with Thiel’s recently-stated opinion that “this will be the most innovative decade in history,” and if he’s right, as well as clever with his investments, he may well become an even richer man.


Since Facebook’s IPO, and subsequent lapse of a lock-in period, it’s emerged that Peter Thiel has sold nearly 20.1 million shares–about 72% of his total holding. Facebook’s share price has collapsed since IPO, and this dive has been accentuated by people like Thiel disposing of their stock. He’s now an even more rich man.


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