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- Peter Thiel explains how he became the first investor in Facebook
Peter Thiel explains how he became the first investor in Facebook
“The first day [Mark Zuckerberg and I] met,” Thiel begins, “We told him to leave for an hour. Then he came back and we gave him a term sheet about an hour later. It was a fast decision.”
Thiel continues:
“People always have this Shark Tank image of these things where it’s some sort of super sophisticated pitch and you say just the right things. It was nothing of the sort. [Mark] was an introverted 19-year-old between his sophomore and junior year of college in the summer of 2004, and the main thing he had going for him was that they were just growing really fast. They were at something like 20 college campuses; they had about 100,000 people on the network; and they just needed more money for computers… as they launched at more colleges in the Fall.”
The key selling point for Thiel was that the product was already working, and he invested $500,000 for a 10.2% stake in the company, valuing Facebook at roughly $4.9 million. But Thiel exp the pre-history was important as well:
“One of my good friends from PayPal and Stanford was Reid Hoffman… Before [LinkedIn and PayPal], Reid had started a social networking company in 1997 — seven years before Facebook. SocialNet was the name of the company. They had “social networking” in the name of the company, and there were all these things they had thought about doing… But the 1990s version of social networking was that we were going to have these avatars in cyberspace… But it turns out people weren’t really interested in that. They weren’t interested in a fictional, online persona. And somehow Facebook was the first one to crack the problem of real identity.”