From PayPal Mafia to Investment Empire: The Rise of Peter Thiel (Part 1)

Podcast: Mario Gabriele, The Generalist Podcast Translated by: Lenaxin

Abstract:

• The essence of success lies in seeking differences.
• Founders Fund manages billions of dollars in assets
• He can foresee the chessboard twenty moves ahead and accurately position the key pieces.
• Talented and unconventional, daring to explore conclusions that ordinary people are hesitant to think.
• Since the mid-1998 Stanford speech, the three founders of Founders Fund officially met.
• Thiel’s strength lies in strategy rather than execution.
• Pursuing macro investment achievements, systematic venture capital practices, while simultaneously founding new companies
• All successful businesses are different - they achieve monopoly by solving unique problems; all failed businesses are the same, as they failed to escape competition.
• “He came from a hedge fund background and always wanted to cash out and exit.” Moritz commented on Thiel.

This article is compiled from the podcast No Rivals, presenting how the Founders Fund transformed from a small side project into one of the most influential and controversial companies in Silicon Valley. It analyzes Peter Thiel’s venture capital empire, including its origin story, how Peter Thiel assembled an extraordinary team of investors, how the fund’s concentrated bets on SpaceX and Facebook yielded astonishing returns, and how Peter Thiel’s contrarian philosophy reshaped the venture capital industry and American politics.

This report is based on exclusive performance data and interviews with key figures obtained from The Generalist Podcast, revealing how the organization achieved the best return record in venture capital history. This podcast has a total of four parts, and this is the first part.

Prophet

Peter Thiel has disappeared.

On January 20, to escape the harsh winter storm, the most powerful figures in the United States gathered under the dome of the Capitol to celebrate Donald J. Trump’s inauguration as the 47th president.

If you have even a fleeting interest in technology and venture capital, it’s hard not to think of Thiel when looking back at the photos from this event. He wasn’t present, yet he was everywhere.

His former employee (current Vice President of the United States, Vance); standing a few steps away is his old partner from Stanford Review (newly appointed AI and cryptocurrency affairs director of the Trump administration); sitting a little farther away is his earliest angel investment target (founder and CEO of Meta); beside him is his frenemy partner: Elon Musk, founder of Tesla and SpaceX, and the richest person in the world.

While it may be an exaggeration to say that all of this is under the planning of Peter Thiel, the career of this former chess prodigy has always demonstrated astonishing talent: he can foresee the chessboard twenty moves ahead and accurately position the key pieces: moving JD to B4, pushing Sacks to F3, placing Zuck at A7, positioning Elon Musk at G2, and guarding E8 with Trump.

He navigates the core power zones, including the financial sector in New York, the technology field in Silicon Valley, and the military-industrial complex in Washington; his actions are always cautious and unusual, making him hard to grasp; he often mysteriously disappears for months and then suddenly reappears, throwing out a sharp witticism, a confusing new investment, or an engaging act of revenge. At first glance, these actions seem to be mistakes, but over time, they gradually reveal his extraordinary foresight.

Founders Fund is the core of Thiel’s power, influence, and wealth. Founded in 2005, it has grown from a $50 million fund with an immature team to a Silicon Valley giant managing billions of dollars in assets, with a top-notch investment team. Its image is controversial, akin to the “bad boy club” of the early 1990s.

The performance data underscores the flamboyant style of Founders Fund. Despite the continuous expansion of the fund’s size, its concentrated bets on SpaceX, Bitcoin, Palantir, Anduril, Stripe, Facebook, and Airbnb have continuously generated astonishing returns. The three funds established in 2007, 2010, and 2011 set a record for the best performance trilogy in venture capital history, achieving total returns of 26.5 times, 15.2 times, and 15 times on principal amounts of $227 million, $250 million, and $625 million, respectively.

Contemporaries described Talleyrand’s smile as “narcotic,” and even the loquacious salon hostess Madame de Staël lamented, “If his conversation could be bought, I would be willing to give up everything.”

Peter Thiel seems to possess a similar charm. This is often evident when tracing the origins of Founders Fund. Encounters with Peter Thiel often leave listeners spellbound: some move cities for him, while others give up prominent positions just to immerse themselves more in his “quirky” thoughts.

Whether on the stage of a conference or in a rare podcast, listening to Tyler speak, you will find that his charm does not come from the smooth talk of a diplomat. Instead, his charm stems from a versatile ability to dance gracefully across different topics, eloquently conveyed with the profound knowledge of a Trinity College professor.

Who else can write a classic work on startups, arguing for the virtues of monopoly, through Lucretius, Fermat’s Theorem, and Ted Kaczynski? How many people’s thoughts contain such rigor and secularism?

Ken Howery and Luke Nosek had already succumbed to this charm years before co-founding Founders Fund with Peter Thiel in 2004. Ken Howery’s “moment of conversion” occurred during his undergraduate studies in economics at Stanford. In Peter Thiel’s 2014 business philosophy book Zero to One, he described Howery as the “only member who fits the stereotype of a privileged American childhood” among the PayPal founders, the company’s only Eagle Scout. This Texas youth moved to California in 1994 to study and began writing for the conservative student publication The Stanford Review, which Peter Thiel co-founded seven years earlier.

Peter Thiel’s first encounter with Ken Howery originated from a Stanford Review alumni event. As Howery was promoted to senior editor, the two kept in touch. On the eve of this Texas youth’s graduation, Thiel extended an olive branch: would he be willing to become the first employee of his new startup hedge fund? He suggested that the two discuss it in detail at the Sundance steakhouse in Palo Alto.

Howery quickly realized that this was far from a traditional recruitment dinner. During the four-hour intellectual journey, the young Thiel displayed a captivating charm. “From political philosophy to entrepreneurial ideas, his insights on every topic were more engaging than anyone I encountered during my four years at Stanford, and the breadth and depth of his knowledge were astonishing,” Howery recalled.

Although no promise was made on the spot, after returning to campus that night, Hower confessed to his girlfriend: “I may work with this person for the rest of my life.”

The only obstacle was Howery’s original plan to take a high-paying position at ING Barings in New York. In the following weeks, he asked friends and family whether he should choose the well-paying position at a renowned investment bank or follow a new investor managing less than $4 million. “Everyone 100% advised choosing the bank, but after thinking for a few weeks, I decided to do the opposite,” Howery said.

Before graduation, while Howery was attending the campus speech of the new boss, a young man with brown curly hair, Luke Nosek, suddenly leaned over and asked, “Are you Peter Thiel?”

“No, but I am about to work for him.” Howery replied, as the young man who called himself Luke Nosek handed over a business card that simply read “Entrepreneur.” “The company I founded,” Nosek explained. At that time, Nosek was developing Smart Calendar, one of the many electronic scheduler applications that emerged concurrently, which Thiel had invested in.

This interaction raises a puzzling question: how could Nosek forget his supporter, someone he had breakfast with a few times? Perhaps it has been a long time since they last met, or maybe this quirky and energetic founder simply does not care about the investor’s appearance. Or perhaps, Thiel was just briefly forgotten.

In Nosek, Thiel found the ideal talent prototype: brilliant and unconventional, daring to explore conclusions that ordinary people are afraid to think about**. **This powerful brain, free thought, and indifference to societal norms align perfectly with Thiel’s values. Thiel quickly followed Nosek’s lead and signed a contract with the human cryopreservation organization Alcor.

Since the Stanford speech in mid-1998, the three founders of Founders Fund officially met. Although the three spent another seven years establishing their respective venture capital funds, deeper collaboration began immediately.

Retaliatory Store

“I am Larry David, and I want to introduce everyone to the upcoming Latte Larry’s coffee shop.” In the opening line of Episode 19 of “Curb Your Enthusiasm,” this creator of “Seinfeld” said, “Why associate with coffee? Because the owner next door is such a jerk, I had to do something, so I opened a revenge shop for myself.”

This gives rise to a new cultural term “Spite Store” - implementing commercial revenge by competing for customers.

To some extent, Founders Fund is indeed Peter Thiel’s “Spite Store.” While the acerbic Mocha Joe inspired Larry David, Thiel’s actions can be seen as a response to Sequoia Capital’s Michael Moritz. Moritz, a journalist turned investor from Oxford, is a legend in the venture capital world, responsible for early investments in Yahoo, Google, Zappos, LinkedIn, and Stripe.

Moritz is an investment expert with a literary temperament, who has repeatedly become a stumbling block in Thiel’s early entrepreneurial history.

The story begins with PayPal: that summer, Thiel met the Ukrainian-born genius entrepreneur Max Levchin. He graduated from the University of Illinois, where he developed a highly profitable encryption product for PalmPilot users. After hearing the introduction, Thiel said, “This is a good idea, I want to invest.”

Thiel immediately decided to invest $240,000. This underestimated decision ultimately yielded a return of $60 million and marked the beginning of the most dramatic entrepreneurial epic of the Internet era. (The book “Founders” provides a comprehensive elaboration on this.)

Levchin quickly recruited the entrepreneur Nosek, who had previously failed in his startup. Soon after, Thiel and Howery joined full-time, with Thiel serving as CEO. The addition of talents like Reid Hoffman, Keith Raboy, and David Sachs created one of the most luxurious startup teams in Silicon Valley history.

The company originally named Fieldlink (later renamed Confinity) soon crossed paths with X.com, founded by Elon Musk. To avoid a war of attrition, the two companies chose to merge, naming the new company “PayPal” after the most popular email addresses connected to payments from Confinity.

This merger requires not only the integration of two stubborn management teams but also the acceptance of each other’s investments and investors.

Moritz, who invested in X.com, suddenly needed to deal with a group of quirky geniuses. On March 30, 2000, the two companies announced they had secured $100 million in Series C funding—pushed by Thiel, who anticipated a looming macroeconomic downturn. His foresight proved accurate: within days, the internet bubble burst, and many star companies collapsed.

“I want to thank Peter,” one employee said, “he made the judgment and insisted that the financing must be completed because doomsday is approaching…”

However, his keen macro interpretation was not enough to save the company. Thiel saw an opportunity to profit. At a PayPal investor meeting in 2000, Thiel suggested: If the market really does decline further as he anticipated, why not short it? PayPal just needed to transfer its newly added $100 million in funds to Thiel Capital International, and the rest would be left to him.

Moritz was furious and said, “Peter, it’s simple,” recalled a director of Sequoia’s warning, “If the board passes this proposal, I will resign immediately.” Thiel struggled to understand this stubborn reaction; the fundamental difference lay in Moritz’s desire to do the right thing, while Thiel’s desire was to be the right person. Finding common ground between these two epistemological extremes was not easy.

In the end, both sides suffered: Moritz successfully thwarted Thiel’s plan, but Thiel’s prediction was entirely correct. After the market crashed, an investor admitted, “If I had shorted at that time, the returns would have exceeded all of PayPal’s operating income.”

The conflict in the boardroom exacerbated the distrust between the two, and months later, the power struggle led to a complete rupture. In September 2000, under the leadership of Levchin, Thiel, and Scott Bannister, PayPal employees staged a coup to overthrow CEO Elon Musk (who had just recently replaced the parachuted CEO Bill Harris). Musk refused to compromise, and Thiel’s rebel forces had to persuade Moritz to approve Thiel taking over the company. Moritz set a condition: Thiel could only serve as the interim CEO.

In fact, Thiel never intended to lead PayPal for the long term; his strength lies in strategy rather than execution. However, Moritz’s terms forced him to humbly seek a successor for himself. It was only when an external candidate also expressed support for Thiel to formally take on the role of CEO that Moritz changed his mind.

This game of power, which involves “first belittling and then praising,” deeply hurt this vengeful genius and set the stage for his later founding of Founders Fund.

Despite the internal conflicts within PayPal, the company ultimately achieved success. Thiel must admit that Moritz played an indispensable role in this. When eBay made a $300 million acquisition offer in 2001, Thiel advocated for acceptance, while Moritz insisted on independent development.

“He comes from a hedge fund background and always wants to cash out.” Moritz later commented on Thiel. Fortunately, Moritz convinced Levchin, and PayPal refused the acquisition. Soon after, eBay raised the offer to $1.5 billion, which was five times the exit price Thiel initially suggested.

This transaction has made Thiel and his “gang” members very wealthy, and Moritz’s investment track record has added more brilliance. If the two had different personalities, perhaps time could ease the hostility, but the reality is that this is just the beginning of a prolonged war.

Clarium Call

As evidenced by the rejected $100 million macro bet, Thiel has never extinguished his investment enthusiasm. Even during his time at PayPal, he continued to manage Thiel Capital International alongside Howery. “We kept the fund running through countless nights and weekends,” Howery revealed.

To align with Thiel’s broad interests, they assembled a mixed investment portfolio of stocks, bonds, foreign exchange, and early-stage startups. “An average of 2-3 deals per year,” Howery specifically pointed out the email security company Ironport Systems, which was invested in in 2002—this company was acquired by Cisco for $830 million in 2007.

The $60 million profit from the PayPal acquisition has further fueled Thiel’s investment ambitions. Even during the period of expanding management scale, he continues to pursue multiple lines: chasing macro investment achievements, systematizing venture capital practices, while also founding new companies**.** Clarium Capital has become the central vehicle for these ambitions.

In the same year that the PayPal acquisition was completed, Thiel began to establish the macro hedge fund Clarium Capital. “We are striving for a systematic worldview, as claimed by people like Soros,” he explained in a 2007 Bloomberg profile interview.

This perfectly aligns with Thiel’s cognitive traits—he is naturally adept at grasping civilization-level trends and instinctively resists mainstream consensus. This way of thinking quickly demonstrated its power in the market: Clarium’s asset management scale soared from $10 million to $1.1 billion within three years. In 2003, he made a profit of 65.6% by shorting the dollar, and after experiencing a sluggish 2004, he once again achieved a return rate of 57.1% in 2005.

At the same time, Thiel and Howery began planning to systematize their scattered angel investments into a professional venture capital fund. The performance gave them confidence: “When we look at our portfolio, we find that the internal rate of return is as high as 60%-70%,” Howery said, “and that’s just the result of part-time, casual investments. What if it were systematically operated?”

After two years of preparation, Howery launched fundraising in 2004, initially planning to name the $50 million fund Clarium Ventures. They invited Luke Nosek to join as a part-time member, as usual.

Compared to the billions managed by hedge funds, 50 million seems insignificant, but even with the backing of the PayPal founding team, fundraising was still exceptionally difficult. “It was much harder than expected; nowadays everyone has a venture capital fund, but at that time it was very alternative,” Howery recalled.

Institutional LPs show little interest in such a small-scale fund. Howery had hoped that the Stanford University endowment fund would act as an anchor investor, but they withdrew due to the fund’s small size. In the end, only $12 million in external funding was raised, mainly from personal investments by former colleagues.

Eager to get started, Thiel decided to fork out $38 million (76% of the initial fund) to fill the gap. “The basic division of labor is that Peter provides the money, and I provide the effort,” Howery recalled. Given Thiel’s other commitments, this division of labor was inevitable.

In 2004, Clarium Ventures (later renamed Founders Fund) inadvertently became the best-positioned fund in Silicon Valley, thanks to two personal investments made by Thiel before fundraising. The first was Palantir, co-founded in 2003—Thiel once again took on dual roles as both founder and investor, launching the project with PayPal engineer Nathan Gettings and Clarium Capital employees Joe Lunsdale and Stephen Cohen. The following year, he invited his Stanford Law School classmate, the unconventional curly-haired genius Alex Karp, to serve as CEO.

Palantir’s mission is highly provocative: drawing on the imagery of the “Seeing Stones” from The Lord of the Rings, it uses PayPal’s anti-fraud technology to help users achieve cross-domain data insights. However, unlike conventional enterprise services, Thiel has targeted customers as the U.S. government and its allies. “After 9/11, I thought about how to combat terrorism while also protecting civil liberties,” he explained to Forbes in 2013. This government-oriented business model also faces financing challenges—investors are skeptical about the slow government procurement process.

Kleiner Perkins executives directly interrupted Alex Karp’s roadshow, discussing how the business model is unfeasible; old rival Mike Moritz, although arranged for a meeting, doodled carelessly throughout the entire session—seemingly a deliberate slight against Thiel. Despite failing to impress Dune Road Ventures, Palantir garnered the favor of In-Q-Tel, the CIA’s investment arm. “What impresses most about this team is their focus on human-machine data interaction,” commented a former executive. In-Q-Tel became Palantir’s first external investor with a $2 million investment, which later brought Thiel immense financial and reputational returns. Founders Fund subsequently invested a total of $165 million, and by December 2024, the holdings were valued at $3.05 billion, yielding a return of 18.5 times.

But substantial returns take time. Thiel’s second key investment before founding Clarium Ventures bore fruit more quickly: in the summer of 2004, Reid Hoffman introduced the 19-year-old Mark Zuckerberg to his old friend Thiel. This pair of PayPal comrades, who had differing political views but mutual respect (Hoffman founded the social networking site SocialNet in 1997 and later joined Confinity as COO), had already engaged in deep discussions about social networks. By the time they met Zuckerberg in Clarium Capital’s luxurious San Francisco office in Presidio, they had a mature understanding and investment determination.

“We have conducted thorough research in the field of social networks,” Thiel admitted at the Wired event, “investment decisions are unrelated to meeting performance — we have made up our minds to invest.” The 19-year-old, dressed in a t-shirt and Adidas sandals, exhibits the “Asperger’s-style social awkwardness” trait that Thiel praises in “Zero to One”: neither trying to please deliberately nor ashamed to ask about unfamiliar financial terms. This trait of stepping away from imitative competition is precisely the entrepreneurial advantage in Thiel’s eyes.

A few days after the meeting, Thiel agreed to invest in Facebook in the form of a $500,000 convertible note. The terms were straightforward: if the number of users reached 1.5 million by December 2004, the debt would convert to equity, granting him 10.2% of the shares; otherwise, he had the right to withdraw his funds. Although the target was not met, Thiel still chose to convert to equity—this conservative decision ultimately yielded him over $1 billion in personal gains. Although Founders Fund did not participate in the first round of investment, it subsequently invested a total of $8 million, ultimately generating a return of $365 million for LPs (46.6 times).

Thiel later regarded Facebook’s Series B funding as a major mistake. The valuation during the first round was $5 million, and eight months later, Zuckerberg informed him that the valuation for Series B had reached $85 million. “The graffiti on the office walls was still terrible, the team had only eight or nine people, and every day felt like no change,” Thiel recalled. This cognitive bias led him to miss the opportunity to lead the investment, and he only doubled down when the valuation for Series C reached $525 million. This taught him the counterintuitive lesson: “When smart investors lead a valuation surge, it is often still underestimated—people always underestimate the acceleration of change.”

Sean Parker had his reasons for putting Michael Moritz on the “blacklist”. The son of a television advertising agent and an oceanographer, he shook the tech world at the age of 19 in 1999 with the P2P music-sharing application Napster. Although Napster was ultimately shut down in 2002, it earned Parker both fame and controversy. In the same year, he founded the contact management application Plaxo, which attracted $20 million in investments from investors like Sequoia Capital’s Moritz, thanks to its social features and the aura of the “dangerous prodigy”.

Plaxo repeated the mistakes of Napster: a high start and a low finish. According to reports at the time, Parker’s management style was erratic—disorganized schedules, a lack of focus in the team, and fluctuating emotions. By 2004, Moritz and angel investor Ram Sriram decided to remove Parker. When Parker attempted to cash out his shares and was obstructed, tensions escalated: Plaxo’s investors hired a private detective to track his movements and checked communication records, discovering signs of drug use (Parker claimed it was for recreational purposes and did not affect his work). This farce ended with Parker’s exit in the summer of 2004, but unexpectedly led to a turning point—after leaving Plaxo, he immediately began collaborating with Mark Zuckerberg. The two had met earlier that year when Facebook was rapidly taking over the Stanford campus, and Parker proactively reached out to this young founder to discuss development.

Parker even flew to New York specifically to have dinner with Zuckerberg at a popular Tribeca restaurant, going so far as to overdraw his bank account. When Plaxo was falling apart, he reunited with Zuckerberg in Palo Alto and soon became the president of Facebook, beginning a brief yet legendary partnership. His first move was to take revenge on Michael Moritz and Sequoia Capital—when Facebook’s user count surpassed a million in November 2004, Sequoia sought to make contact. Parker and Zuckerberg devised a cruel prank: they deliberately arrived late and dressed in pajamas, using a presentation titled “The Top Ten Reasons Not to Invest in Wirehog” to mock Sequoia, which included slides stating “We have no revenue”, “We arrived late in pajamas”, and “Sean Parker is involved”. “Given what they did, we could never accept a Sequoia investment,” Parker said. This missed opportunity may have become one of Sequoia’s biggest blunders in history.

As this episode illustrates, the founder of Napster played a key role in the early financing of Facebook, guiding Zuckerberg into the world of venture capital. Therefore, when Zuckerberg met Thiel and Hoffman in Clarion’s Presidio office, Parker was also present.

Although Thiel and Parker had intersected during their early days at Plaxo, the real foundation for their collaboration was established during the Facebook era. In August 2005, Parker was arrested for having an underage assistant present and for a cocaine search incident (though he was not charged and denied knowledge of the situation) while renting a party house in North Carolina, which ultimately forced him to leave Facebook. This became a turning point for multiple parties: Zuckerberg was ready to take over management, investors were freed from a talented but elusive spokesperson, and Parker admitted that his character of “sprinting and then disappearing” was not suitable for daily operations.

Months later, Parker joined Thiel’s venture capital firm as a general partner—by then it had been renamed Founders Fund (eventually dropping the definite article like Facebook). This name better aligned with its ambitions and positioning. “We had some criticisms of certain investors from the PayPal era; we believed it could be run in a completely different way,” Howery stated. Its core principle is simple yet revolutionary: never oust the founders.

This seems commonplace in today’s market flooded with “founder-friendly” practices, but it was a groundbreaking idea at the time. “They pioneered the concept of ‘founder-friendly’, while the norm in Silicon Valley was to find technical founders, hire professional managers, and ultimately kick both out. Investors were the actual controllers,” commented Flexport CEO Ryan Peterson.

“This is how the venture capital industry operated for the first 50 years, until the Founders Fund emerged.” John Collison, co-founder of Stripe, summarized the history of venture capital. Since the 1970s, Kleiner Perkins and Sequoia Capital achieved success through active management involvement, and this “investor-led” model was notably effective in cases like Atari and Tandem Computers. Even 30 years later, top venture capitalists still retain this cognitive bias—power belongs to the capital side rather than the entrepreneurs. Sequoia’s legendary founder Don Valentine even joked that mediocre founders should be “locked in the Manson family’s dungeon.”

The “founder-centric” philosophy of Founders Fund is not only a differentiation strategy but also stems from Thiel’s unique understanding of history, philosophy, and the essence of progress. He firmly believes in the genius value of the “sovereign individual” and argues that restraining those who break the mold is not only economically foolish but also a destruction of civilization. “These people will destroy the creations of the world’s most valuable inventors,” Luke Nosek expressed the team’s disdain for traditional venture capital.

Sean Parker perfectly embodies this philosophy, but his joining at the age of 27 still raises concerns among investors. Reports announcing the appointment candidly state: “His past experiences have made some LPs anxious.” Parker himself has also admitted: “I have always lacked a sense of security, and after meetings, I often ask myself if I provided value.”

This concern has attracted the counterattack of old rival Mike Moritz. After raising $50 million in 2004, Founders Fund made another move in 2006, targeting $120-150 million. By this time, the team had undergone a complete transformation: Parker joined, Nosek came on board full-time, and with Thiel’s status as Facebook’s first external investor, this small institution, originally a side project of a hedge fund, was transforming into an emerging force.

This move clearly angered Moritz. According to Howery and others, the Sequoia leader tried to obstruct their fundraising: “During our second fundraise, a warning slide appeared prominently at the Sequoia annual meeting - ‘Stay away from Founders Fund.’” Brian Singerman, who joined two years later, added details: “They threatened LPs that if they invested in us, they would permanently lose access to Sequoia.”

Reports from the same period show that Moritz’s wording was more ambiguous. At the LP meeting, he emphasized “appreciating founders who stick with their companies for the long term,” specifically naming several well-known entrepreneurs who failed to do so. This clearly alluded to Founders Fund partner Sean Parker. “We increasingly respect those founders who create great companies rather than speculators who put personal interests above the team,” Moritz wrote in a subsequent response.

This “boomerang” instead boosted the Founders Fund: “Investors are curious: why is Sequoia so wary? This actually sends a positive signal,” Howery said. In 2006, the fund successfully raised $227 million, with Thiel’s contribution ratio dropping from 76% in the first round to 10%. Howery pointed out, “The Stanford University endowment fund leading the investment marks our first recognition by institutional investors.”

As early investments begin to bear fruit, Founders Fund’s unique investment philosophy starts to show its power. Thiel’s aversion to institutionalized management kept the fund in a state of “efficient chaos” during its first two years. Howery was busy with project scouting, while the team refused to adhere to a fixed agenda or regular meetings.

Due to Thiel’s commitments to Clarium Capital, his time is extremely limited. Howery stated: “I can only arrange for him to participate in key meetings.” Although Parker’s addition did not change the fundamental operations of the fund, it brought more systematic structure: Howery explained, “When Luke and Sean joined, the three of us could evaluate projects together, or one person could do an initial screening before bringing it to the team for a decision.”

The core team forms complementary abilities: “Peter is a strategic thinker, focusing on macro trends and valuations; Luke combines creativity and analytical skills; I focus on team assessment and financial modeling,” Howery analyzed. Parker then completed the product dimension: “He has a deep understanding of internet product logic, and his experience at Facebook has made him proficient in identifying consumer internet pain points, allowing him to accurately pinpoint opportunities in niche areas.” His personal charisma also became a negotiating weapon: “He is highly charismatic and especially outstanding during the final stages of a deal.”

In addition to the two iconic investments in Facebook and Palantir, Founders Fund also had a $689 million bet on Buddy Media, which was sold to Salesforce, but it missed out on YouTube—this was a project that should have been within its “range” because its founders Chad Hurley, Steve Chen, and Joed Kareem all came from PayPal, and it was ultimately captured by Sequoia’s Roelof Botha, who sold it to Google for $1.65 billion just a year later.

Regardless, the performance of Founders Fund in previous years has been remarkable, and an even more glorious moment is about to arrive.

In 2008, Thiel reunited with old rival Elon Musk at a friend’s wedding. The former PayPal executive had already used his cash-out funds to establish Tesla and SpaceX. As the venture capital market chased the next consumer internet hotspot, Thiel gradually lost interest—stemming from his obsession with the teachings of French philosopher René Girard during his time at Stanford. “Girard’s ideas are out of sync with the times, just right for the rebellious undergraduate,” Thiel recalled.

Girard’s theory of “mimetic desire”: human desire originates from imitation rather than intrinsic value. This theory has become the central framework through which Thiel analyzes the world. After the rise of Facebook, witnessing the venture capital community collectively chasing the mimetic frenzy of social products, Founders Fund, although it invested in the local social network Gowalla (which was later acquired by Zuckerberg), seemed to struggle.

Thiel succinctly summarizes in “Zero to One”: “All successful companies are different—they achieve monopoly by solving unique problems; all failed companies are the same—they all fail to escape competition.****” Although monopoly is hard to define in the venture capital field, Thiel still applies this concept to his investment strategy: looking for areas that other investors are unwilling or unable to touch.

Thiel has turned his attention to hard technology — companies that build the atomic world rather than the bit world. This strategy comes at a cost: after Facebook, Founders Fund missed all the major opportunities in the social space, including Twitter, Pinterest, WhatsApp, Instagram, and Snap. But as Howery said, “You would willingly trade all these misses for SpaceX.”

After their reunion at the wedding in 2008, Thiel proposed to invest $5 million in SpaceX, partly motivated by “repairing the rift from the PayPal days,” showing his incomplete confidence in Musk’s technology at the time. SpaceX had already experienced three launch failures and was on the verge of running out of funds. An email mistakenly forwarded by a former investor to Founders Fund further exposed the industry’s general pessimism towards SpaceX.

Although Parker chose to stay away due to unfamiliarity with the field, the other partners pushed forward vigorously. As the project leader, Nosek advocated for increasing the investment amount to $20 million (nearly 10% of the second phase of the fund), entering at a pre-money valuation of $315 million — this is the largest investment in the history of Founders Fund and has proven to be the wisest decision.

“This is highly controversial; many LPs think we are crazy,” Howery admitted. But the team firmly believes in Musk and the technological potential: “We have missed multiple projects from PayPal colleagues, and this time we must go all in.” Ultimately, this investment quadrupled the fund’s stake in its best projects.

A well-known LP that a certain Founders Fund was negotiating with has therefore severed ties. “We parted ways because of this,” Howery disclosed. This anonymous LP missed out on astonishing returns—over the subsequent 17 years, the fund invested a total of $671 million in SpaceX (the second-largest position after Palantir). By the time the company conducted an internal share buyback at a valuation of $350 billion in December 2024, the position had reached a value of $18.2 billion, achieving a 27.1 times return.