“If you hear about a trend, it’s already passed. It means it’s a consensus thing,” says Peter Thiel, co-founder of PayPal and venture capitalist. Speaking at LendIt USA, the largest online lending conference in the world, Thiel says he dislikes being asked what trends he’s excited about because he “isn’t a prophet” and “almost all trends are overrated”.
While Thiel is best known for making investments in companies like fellow PayPal founder Elon Musk’s SpaceX, Airbnb and biotech firms working to beat the ageing process, he has also invested in several P2P businesses, like SoFi and OnDeck.
Bubble in the market?
Today, the billionaire also spoke out about the state of the global economy, saying that he’s “concerned about the frothiness of markets”, before adding that, if there is a bubble, it’s “not centred on tech”.
“Bubbles are psycho-social phenomena. The public hasn’t been involved in the latest tech boom [unlike in the late 90s]. If there is a bubble, it’s down to printing money – QE – and zero per cent interest rates. That affects housing, government bonds, public equities… they’re all overvalued.”
The presidential race
Thiel, a libertarian, has donated to presidential candidates like Ted Cruz in the past. But this time round, he says he’s “just trying to stay out of it. Politics always seems very important and counterproductive. It’s just a way to get people really angry and polarised. If I was involved now, I’d just blow my brains out. The Trump/Sanders phenomenon suggests voters are angry.”
The current administration, he continues, has “been generally disconnected”, and people want this, combined with things like a lack of economic growth, to be addressed.
The real question around unicorns
Talking about unicorn companies – those worth over $1bn – he stresses that the real question is what’s going to be the next company on the scale of Google or Facebook.
Commenting on his own breakthrough business, PayPal, Thiel points out that 80 per cent of its value came about via cashflows realised from 2011 onwards.
So he reminds startup founders that “three quarters or more of the value of your business will come from cashflows seen in 2026 and beyond. That’s extremely counterintuitive when you’re thinking about how to grow over the next year, but the really valuable companies are the last movers.”