From Silicon Valley Startup Help to Cryptocurrency Investment Giant: The Rise of Founders Fund

Podcast Source: Mario Gabriele, The Generalist Podcast

Release date: July 8, 2025

Organized & Compiled by: Lenaxin, ChainCatcher

Original Title: From PayPal Mafia to Investment Empire: Unveiling the Founders Fund’s Rise

Abstract:

TL&DR

• 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 hesitate to think about.
• Since the mid-1998 Stanford speech, the three founders of Founders Fund officially met.
• Thiel’s strength lies in strategy rather than execution
• Pursue macro investment achievements, systematic venture capital practices, and simultaneously establish new companies.
• All successful companies are different – they achieve monopoly status by solving unique problems; all failed companies are the same, as they have failed to escape competition.
• “He comes from a hedge fund background and always wants to cash out and exit.” Moritz commented on Thiel.

ChainCatcher Editor’s Summary:

This article is organized from the podcast No Rivals, fully presenting how the Founders Fund transformed from a small side project into one of the most influential and controversial companies in Silicon Valley. It deeply analyzes Peter Thiel’s venture capital empire, including the 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 performance data and interviews with key individuals obtained exclusively from The Generalist Podcast, revealing how the organization set the record for the best returns 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 being inaugurated 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 was not present, yet he was everywhere.

His former employee (currently the Vice President of the United States); a few steps away stands his old partner from the Stanford Review (the new AI and cryptocurrency affairs director of the Trump administration); sitting a bit further away is his earliest angel investment target (the founder and CEO of Meta); next to him is his frenemy partner: the founder of Tesla and SpaceX, and the richest person in the world, Musk.

While it might be an exaggeration to say that all of this is orchestrated by Peter Thiel, this former chess prodigy’s career has consistently displayed remarkable talent: he can foresee the chessboard twenty moves ahead and strategically position 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 moves in the core areas of power, including the financial world of New York, the tech sector of Silicon Valley, and the military-industrial complex of Washington; his actions are always cautious and unusual, making him difficult to grasp; he often mysteriously disappears for months and then suddenly reappears, throwing out a sharp quip, a perplexing 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 vision.

Founders Fund is the core of Thiel’s power, influence, and wealth. Established 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 investment team. Its image is controversial, akin to the “bad boy” image of the early 1990s.

The performance data corroborates 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 consistently generated astonishing returns. The three funds raised in 2007, 2010, and 2011 have 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, respectively, on principal amounts of $227 million, $250 million, and $625 million.

Contemporaries described Talleyrand’s smile as “narcotic,” even the loquacious salon hostess Madame de Staël lamented, “If his discourse could be bought, I would be willing to go bankrupt.”

Peter Thiel seems to possess a similar charm. This is often evident when tracing the origins of Founders Fund. His chance encounters often enchant listeners: some move cities for him, while others give up prestigious positions just to immerse themselves more in his “strange” thoughts.

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Whether on the stage of a conference or in a rare podcast, listening to Thiel speak, you’ll find that his charm does not stem from the smooth talk of a diplomat. Instead, his charm comes from a versatile ability to gracefully dance through different topics, articulating them with the profound knowledge of a Trinity College professor.

Who else can write a classic work on startups through Lucretius, Fermat’s theorem, and Ted Kaczynski, arguing for the virtues of monopoly and the wisdom of running a business like a cult? How many people’s thoughts contain this kind of rigor and non-religiosity?

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 describes Howery as the “only member of the PayPal founders who fits the stereotype of a privileged American childhood, the company’s only Eagle Scout.” This Texan youth moved to California in 1994 to study and began writing for the conservative student publication “Stanford Review,” which Peter Thiel co-founded seven years earlier.

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

Howery quickly realized that this was anything but a traditional recruiting dinner. During the four-hour journey of ideas, the young Thiel displayed an utterly captivating charm. “From political philosophy to entrepreneurial concepts, his insights on every topic were more engaging than anyone I encountered in my four years at Stanford, and the breadth and depth of his knowledge were astounding,” Howery recalled.

Although no promises were made on the spot, after returning to campus that night, Hower confessed to his girlfriend, “I might be working with this person for the rest of my life.”

The only obstacle was Howery’s original plan to join the high-paying position at ING Barings in New York. In the following weeks, he asked friends and family whether to choose the well-compensated position at a well-known investment bank or to 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 go the other way,” Howery said.

Before graduation, while Howery was auditing the campus speech of the new boss, the 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 started,” Nosek explained. At that time, Nosek was developing Smart Calendar, one of the many electronic calendar applications that emerged around the same time, in which Thiel had invested.

This interaction raises a perplexing 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, energetic founder simply doesn’t care about the investor’s appearance. Or perhaps Thiel was just briefly forgotten.

In Nosek, Thiel found the ideal talent prototype: brilliant yet unconventional, daring to explore conclusions that others are afraid to think about. This powerful mind, free thought, and disregard for social norms perfectly align with Thiel’s values. Thiel soon followed in Nosek’s footsteps and signed a contract with the human cryonics organization Alcor.

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

) retaliatory shop

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

This gave birth to a new cultural term “Spite Store” - a business retaliation implemented through competing for customers.

To some extent, Founders Fund is 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, an Oxford-educated journalist turned investor, is a legendary figure 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 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 tumultuous entrepreneurial epic of the internet era. (The book “Founders” provides a comprehensive explanation of this.)

Levchin quickly recruited the entrepreneur who had failed, Nosek. 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 the most luxurious startup team 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 popular email address and payment connection from Confinity.

![From PayPal Gang to Investment Empire: Unveiling the Founders Fund’s Rise to Fame]###https://img-cdn.gateio.im/webp-social/moments-455640a24778f97ccedbd68ea2f74bab.webp(

This merger not only requires 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 — led by Thiel, who anticipated a downturn in the macroeconomy. His foresight proved correct: within days, the internet bubble burst, and many star companies collapsed.

“I want to thank Peter,” an employee said, “he made the call and insisted that the financing must be completed because the end is near…”

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 falls further as he expected, why not short it? PayPal just needed to transfer its additional $100 million in funding to Thiel Capital International, and the rest would be left to him.

Moritz was furious and said, “Peter, it’s simple,” one director recalled the warning from the Sequoia investor, “If the board passes this proposal, I will resign immediately.” Thiel found it difficult to understand this stubborn reaction; the fundamental difference lay in Moritz’s desire to do the right thing, while Thiel desired 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 completely correct. After the market crash, an investor admitted, “If I had shorted at that time, the profits would have exceeded all of PayPal’s operating income.”

The conflict in the boardroom intensified the distrust between the two, and the power struggle months later caused a complete rupture. In September 2000, under the leadership of Levchin, Thiel, and Scott Bannister, PayPal employees staged a coup to oust CEO Elon Musk (who had just been preceded by the newly appointed CEO Bill Harris). Musk refused to compromise, and Thiel’s rebellious faction had to persuade Moritz to approve Thiel’s takeover of the company. Moritz set conditions: Thiel could only serve as interim CEO.

In fact, Thiel had no intention of leading PayPal long-term; his strength lies in strategy rather than execution. However, Moritz’s terms forced him to humiliatingly search for his own successor. It was only when an external candidate also expressed support for Thiel to officially take on the role of CEO that Moritz changed his mind.

This power game of “first denigration, then praise” deeply wounded this vengeful genius, laying the groundwork for his later establishment of Founders Fund.

Despite the internal conflicts within PayPal, the company ultimately achieved success. And Thiel must acknowledge that Moritz played a crucial role in this. When eBay made a $300 million acquisition offer in 2001, Thiel advocated for acceptance, while Moritz strongly favored independent development.

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

This deal made Thiel and his “gang” members very wealthy, and Moritz’s investment record gained another glory. If the personalities of the two were different, perhaps time could have alleviated 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 and Howery continued to manage Thiel Capital International. “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 completed per year,” Howery specifically pointed out the email security company Ironport Systems, which was invested in in 2002 and acquired by Cisco in 2007 for $830 million.

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

In the same year that the PayPal acquisition was completed, Thiel set about founding the macro hedge fund Clarium Capital. “We are striving for a systematic worldview, just as Soros and others have claimed,” he explained in a Bloomberg profile interview in 2007.

This perfectly aligns with Thiel’s cognitive traits—he has a natural ability to grasp civilization-level trends and an instinctive resistance to mainstream consensus. This mindset quickly demonstrated its power in the market: Clarium’s asset management scale skyrocketed from $10 million to $1.1 billion within three years. In 2003, he profited 65.6% by shorting the dollar, and after experiencing a downturn in 2004, he achieved a return rate of 57.1% again 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 looked at our portfolio, we found that the internal rate of return was as high as 60%-70%,” Howery said, “and that was just the result of part-time, casual investments. What if it were operated systematically?”

After two years of preparation, Howery launched fundraising in 2004, with an initial fund size of $50 million originally intended to be named Clarium Ventures. They invited Luke Nosek to join in a part-time capacity as usual.

Compared to the billions managed by hedge funds, 50 million seems insignificant, but even with the aura of the PayPal founding team, fundraising is 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 have little interest in such a small-scale fund. Howery had hoped that Stanford University’s endowment fund would act as an anchor investor, but the latter withdrew due to the fund’s small size. Ultimately, only $12 million in external funding was raised—mainly from personal investments by former colleagues.

Eager to get started, Thiel decided to personally contribute $38 million (76% of the initial fund) to fill the gap. “The basic division of labor was that Peter provided the money, and I provided 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 raising funds. The first was Palantir, co-founded in 2003—Thiel played 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 Stone” from The Lord of the Rings, it employs PayPal’s anti-fraud technology to help users achieve cross-domain data insights. However, unlike conventional enterprise services, Thiel targets clients 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 of the slow government procurement process.

Kleiner Perkins executives interrupted Alex Karp’s roadshow, claiming that the business model was unfeasible; old rival Mike Moritz, despite arranging a meeting, doodled inattentively throughout the session—seemingly a deliberate snub towards Thiel. Although they failed to impress the Sand Hill Road venture firm, Palantir garnered the favor of In-Q-Tel, the CIA’s investment arm. “What impressed me most about this team is their dedication to focusing 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 substantial financial and reputational returns to Thiel. Founders Fund subsequently invested a total of $165 million, and by December 2024, the stake was valued at $3.05 billion, yielding an 18.5x return.

However, substantial returns will take time. Thiel’s second key investment before founding Clarium Ventures had a quicker payoff: in the summer of 2004, Reid Hoffman introduced the 19-year-old Mark Zuckerberg to his old friend Thiel. These two PayPal comrades, who had differing political views but shared 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 the luxurious office of Clarium Capital in San Francisco’s Presidio, they had a mature understanding and investment determination.

“We have conducted thorough research in the field of social networks,” Thiel confessed at the Wired event, “investment decisions are unrelated to meeting performance — we have made a firm decision to invest.” The 19-year-old, dressed in a T-shirt and Adidas sandals, exemplifies the “Asperger’s-style social awkwardness” that Thiel admires in “Zero to One”: neither trying to ingratiate nor ashamed to ask about unfamiliar financial terms. This trait of stepping away from imitative competition is, in Thiel’s view, an advantage for entrepreneurs.

A few days after the meeting, Thiel agreed to invest in Facebook in the form of a $500,000 convertible bond. The terms were straightforward: if the number of users reached 1.5 million by December 2004, the debt would convert into equity, granting him a 10.2% stake; 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 resulted in a personal gain of over $1 billion. Although the Founders Fund did not participate in the first round of investment, they later cumulatively invested $8 million, ultimately generating $365 million in returns for LPs (46.6 times).

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

Sean Parker put Michael Moritz on his “blacklist” for a reason. The son of a television advertising agent and an oceanographer, he shocked the tech world at the age of 19 with the P2P music-sharing application Napster. Although Napster was ultimately shut down in 2002, it earned Parker a reputation and controversy. That same year, he founded the contact management application Plaxo, whose social features and the “dangerous prodigy” aura attracted $20 million in investment from investors like Sequoia Capital’s Moritz.

Plaxo repeated the mistakes of Napster: high expectations followed by a decline. According to reports at the time, Parker’s management style was erratic—disorganized schedule, lack of focus in the team, and fluctuating emotions. By 2004, Moritz and angel investor Ram Sriram decided to oust Parker. When Parker faced obstacles in cashing out his shares, tensions escalated: Plaxo’s investors hired private detectives to track his movements, and communications records revealed signs of drug involvement (Parker argued it was for recreational purposes and did not affect his work). This farce concluded 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 during Facebook’s rapid takeover of Stanford’s campus, and Parker proactively reached out to the young founder to discuss development.

Parker even flew to New York specifically to have dinner with Zuckerberg at a trendy restaurant in Tribeca, even at the cost of overdrawing his bank account. When Plaxo was falling apart, he reunited with Zuckerberg in Palo Alto and immediately took on the role of president of Facebook, starting a brief yet legendary partnership. His first move was to take revenge on Michael Moritz and Sequoia Capital—when Facebook’s user base surpassed one million in November 2004, Sequoia sought a chance to engage. Parker and Zuckerberg designed 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 like “We have no revenue,” “We arrived late in our pajamas,” and “Sean Parker is involved.” “Given what they did, we could never accept Sequoia’s investment,” Parker said. This missed opportunity may have become Sequoia’s most painful loss in history.

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

Although Thiel and Parker had interactions during the early days of Plaxo, it was during the Facebook era that the foundation for their collaboration was truly established. In August 2005, Parker was arrested during a party at a rented villa in North Carolina due to the presence of underage assistants and a cocaine search incident (although he was not charged and denied any knowledge), ultimately being forced to leave Facebook. This turned out to be a turning point that benefited multiple parties: Zuckerberg was ready to take over management, investors were relieved to be rid of the talented yet 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 this time it had been renamed Founders Fund (which ultimately dropped the definite article like Facebook). This name better aligned with its aspirations and positioning. “We had some criticisms of certain investors from the PayPal era, and we believed we could operate in a completely different way,” Howery said. Its core idea is simple yet disruptive: never oust the founders.

This may seem common in today’s market flooded with “founder-friendly” practices, but at that time it was a groundbreaking initiative. “They pioneered the concept of ‘founder-friendly’. At that time, the norm in Silicon Valley was to find technical founders, hire professional managers, and ultimately kick both out. The 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,” summarized venture capital history by Stripe co-founder John Collison. Since the 1970s, Kleiner Perkins and Sequoia Capital achieved success through active management involvement, and this “investor-led” model has proven effective in cases like Atari and Tandem Computers. Even 30 years later, top venture capitals still retain this cognitive bias — power belongs to the capital side rather than the entrepreneurs. The legendary founder of Sequoia, Don Valentine, even jokingly suggested 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 nature of progress. He firmly believes in the genius value of the “sovereign individual” and argues that restraining those who break conventions 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 his appointment state plainly: “His past experiences make some LPs nervous.” Parker himself also admits: “I have always lacked a sense of security, and after meetings, I often ask myself whether I provided value?”

This concern has drawn the attack of old rival Mike Moritz. After raising $50 million in 2004, Founders Fund launched another round 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 as the first external investor in Facebook, this small institution that originally belonged to a hedge fund’s side business was transforming into an emerging force.

This move clearly angered Moritz. According to Howery and others’ recollections, 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. He emphasized at the LP meeting the “appreciation for founders who stick with their companies for the long term” and named several well-known entrepreneurs who failed to do so, clearly implying Founders Fund partner Sean Parker. “We increasingly respect founders who create great companies rather than speculators who place personal interests above the team,” Moritz wrote in a subsequent response.

This “boomerang” has instead propelled Founders Fund: “Investors are increasingly curious: why is Sequoia so wary? This has instead released 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 show results, Founders Fund’s unique investment philosophy starts to reveal 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 fixed agendas and routine meetings.

Due to Thiel’s commitment to Clarium Capital, 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 fund’s operational principles, it brought more systematic structure: Howery explained, “When Luke and Sean joined, the three of us could evaluate projects together, or one person could initially screen before bringing in the team for decision-making.”

The core team has complementary capabilities: “Peter is a strategic thinker focused on macro trends and valuation; Luke possesses both creativity and analytical skills; I focus on team evaluation and financial modeling,” Howery analyzed. Parker then added product dimensions: “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 identify opportunities in niche areas.” His personal charm also becomes a negotiation tool: “He is highly charismatic and especially outstanding during the final stages of a deal.”

In addition to the iconic investments in Facebook and Palantir, Founders Fund also invested $689 million in Buddy Media, which was sold to Salesforce, but missed out on YouTube—this was a project that was “within reach” since the 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.

In any case, the performance of Founders Fund in previous years has been remarkable, and even more glorious moments are about to come.

In 2008, Thiel reunited with his old rival Elon Musk at a friend’s wedding. The former PayPal executive had by then used his cash-out funds to establish Tesla and SpaceX. While the venture capital market chased the next consumer internet hot spot, Thiel gradually lost interest—this stemmed 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, perfectly fitting the rebellious undergraduate’s taste,” Thiel recalled.

Girard’s theory of “mimetic desire”: human desire originates from imitation rather than intrinsic value. This theory has become the core framework for Thiel’s analysis of the world. After the rise of Facebook, witnessing the venture capital community’s collective frenzy of imitating social products, Founders Fund invested in the local social network Gowalla (which was later acquired by Zuckerberg), but it seemed forced.

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 failed to escape competition.” Although monopoly is hard to define in the venture capital space, Thiel still applies this concept to his investment strategy: seeking areas that other investors are unwilling or unable to touch.

Thiel has shifted his focus to hard technology - companies that build the atomic world rather than the world of bits. 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 puts it, “You would willingly trade all those misses for SpaceX.”

After reuniting at a wedding in 2008, Thiel proposed investing $5 million in SpaceX, partly motivated by a desire to “make up for the rift during the PayPal era,” showing his incomplete confidence in Musk’s technology. At that time, SpaceX had already experienced three launch failures and was nearly out of funds. An email mistakenly cc’d to Founders Fund by a former investor further exposed the industry’s widespread pessimism about SpaceX.

Although Parker chose to avoid due to unfamiliarity with the field, other partners pushed forward with full force. As the project leader, Nosek advocated for increasing the investment to $20 million (nearly 10% of the second phase of the fund), entering at a pre-investment valuation of $315 million—this is the largest investment in Founders Fund’s history 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 several projects of our PayPal colleagues, 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 have parted ways because of this,” Howery revealed. This anonymous LP missed out on astonishing returns - over the next 17 years, the fund invested a total of $671 million in SpaceX (the second-largest holding after Palantir). By the time the company conducted an internal share buyback at a valuation of $350 billion in December 2024, the holding had reached a value of $18.2 billion, achieving a return of 27.1 times.