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PayPal Co-Founder Peter Thiel Tells Post Seed 2014: 'There’s No Tech Bubble, But Many Companies Are Poorly Managed'

( [email protected] ) Dec 04, 2014 03:06 PM EST
PayPal and Palantir co-founder Peter Thiel spoke to attendees at the first Post Seed 2014 Conference in San Francisco on Tuesday and told the gathering that he did not view the currently hot technology startup market as a tech bubble. "We are nowhere near the 1999/2000 insanity," said Thiel, referring to the infamous "dot com" collapse when many new technology firms failed to survive.
(Bloomberg Finance)

PayPal and Palantir co-founder Peter Thiel spoke to attendees at the first Post Seed 2014 Conference in San Francisco on Tuesday and told the gathering that he did not view the currently hot technology startup market as a tech bubble. "We are nowhere near the 1999/2000 insanity," said Thiel, referring to the infamous "dot com" collapse when many new technology firms failed to survive.

But Thiel, who currently manages the $2 billion Founders investment fund and is more famously known as the first outside investor in Facebook, was not as positive about how many technology firms are being managed these days. "In Silicon Valley, the companies are generally not well run," admitted Thiel.

He said the management of many firms ranged between "really bad to mediocre," but believed that the tech sector would remain solid "because the business model is so strong."

Thiel's remarks yesterday came before an audience of startup entrepreneurs and venture capitalists at the conference. Two hundred of the attendees also received copies of Thiel's new book, Zero To One. The gathering was organized and hosted by Bullpen Capital, Venture 51, and Vator.

Addressing the venture capitalists and seed funders in the audience directly, Thiel expressed concern that too many investors today were looking at technology companies as nothing more than "lottery tickets."

"All people are created equal. Certainly all companies are not created equal," said Thiel.

He indicated that his funding bias is for companies with only a limited number of investors and appeared disdainful of the latest trend by startups to raise several small "seed" rounds rather than one major investment. When challenged by interviewer Brandi Francisco of Vator that this seemed to be a helpful way for many startup tech firms to gain traction, Thiel replied "People still have the right to invest their money badly," generating much laughter among the conference attendees.

Thiel repeated his previously reported comments about Uber calling it again "the most ethically challenged company in Silicon Valley." The urban ride sharing company, which has put the taxicab industry in a tailspin, made its own negative news recently when their lead manager in New York City used a company tool to track the ride sharing usage of a blogger who wrote negatively about the firm.

It was reported last week that the Uber executive has since been disciplined, although the company would not provide any further details.

Thiel, who is an investor in a competing ride sharing firm called Lyft, said he felt that Uber was "overvalued" at the most recent estimate of $40 billion. His reason was that unlike a popular service like Airbnb which provides rooms for short term rental to a picky clientele, people don't care as much about what kind of car they ride in. According to Thiel, the cutthroat nature of the car sharing business means that "the competitive dynamics are way more intense."

The investor and author, who received undergraduate and law degrees from Stanford University, also had some particularly harsh comments about the current educational system of higher learning. Calling colleges today "incredibly corrupt institutions at the core," Thiel expressed concern that young people today were being forced into near bankruptcy to obtain a degree at the expense of their future careers.

"People are not being prepared for the future world," said Thiel. "They're just being prepared for college."

Thiel told the audience that they should be wary of the buzzwords and jargon that have become an accepted part of the technology world today, citing widespread use of terms such as "cloud computing," "big data," and "machine learning."

"I am skeptical of all trends," said Thiel. And he is outspoken about them too.

Tags : Bullpen Capital, Venture 51, Vator, Zero to One, Post Seed 2014 Conference, Paypal, Palantir, Uber, Airbnb, Lyft, Cloud computing, big data, machine learning, Peter Thiel