From the PayPal mafia to an investment empire: The history of Founders Fund

Podcast source: Mario Gabriele, The Generalist Podcast

Air Date: July 8, 2025

Compiled and edited by Lenaxin and ChainCatcher

summary:

TL&DR

• The root of success lies in seeking difference
• Founders Fund manages billions of dollars in assets
• He can foresee the chess game twenty moves ahead and place the key pieces precisely.
• Talented and unique, daring to explore conclusions that ordinary people are afraid to think about
• The three founders of Founders Fund met formally after a Stanford speech in mid-1998.
• Thiel's strength lies in strategy, not execution
• Pursuing macro-investment achievements, systematizing venture capital practices, and simultaneously creating new companies
• All successful companies are different—they achieve monopoly status by solving unique problems. All failed companies are alike—they fail to escape competition.
• "He comes from a hedge fund background and always wants to cash out," Moritz said of Thiel.

ChainCatcher Editor Summary:

This article is compiled from the podcast No Rivals, which fully presents how the Founders Fund has transformed from a small side project to the most influential and controversial company in Silicon Valley. It deeply analyzes Peter Thiel's venture capital empire, including the origin story, how Peter Thiel built an extraordinary team of investors, how the fund's concentrated bets on SpaceX and Facebook brought amazing returns, and how Peter Thiel's anti-mainstream philosophy reshaped the venture capital industry and American politics.

This report is based on performance data and interviews with key people exclusively obtained by The Generalist Podcast, revealing how the institution set the best return record in venture capital history. This is the first of four parts of the podcast.

prophet

Peter Thiel was nowhere to be seen.

On January 20, America's most powerful people gathered under the Capitol dome to escape a severe winter storm to celebrate the inauguration of Donald J. Trump as the 47th President.

If you have even a passing interest in tech and venture capital, it’s hard not to look back at photos of the event and think of Thiel. He wasn’t there, but he was everywhere.

His former employee (currently the Vice President of the United States); a few steps away stood his old partner at the Stanford Review (the new director of AI and cryptocurrency affairs in the Trump administration); a little further away sat his earliest angel investment target (founder and CEO of Meta); and next to him was his partner who was both his enemy and friend: Musk, the founder of Tesla and SpaceX and the world's richest man.

It would be an exaggeration to say that all of this was planned by Peter Thiel, but this former chess prodigy has always demonstrated amazing talent throughout his career: he can foresee the game twenty moves ahead and accurately place key pieces: moving JD to B4, Sacks to F3, Zuck to A7, Elon Musk to G2, and Trump to E8.

He moves through the heart of power, including New York's financial world, Silicon Valley's tech world, and Washington's military-industrial complex; his behavior is always cautious and erratic, making him elusive; he often disappears mysteriously for months, then suddenly reappears with a sharp quip, a confusing new investment, or a fascinating revenge. At first glance, these actions seem to be missteps, but over time, they gradually reveal his extraordinary vision .

Founders Fund is the core of Thiel's power, influence and wealth . Since its establishment in 2005, it has grown from a $50 million fund with an immature team to a Silicon Valley giant that manages billions of dollars in assets and has a top investment team. Its image is controversial, similar to the "bad boy army" in the early 1990s.

Performance data confirms Founders Fund's flamboyant style. Despite the continued expansion of the fund size, its concentrated bets on SpaceX, Bitcoin, Palantir, Anduril, Stripe, Facebook and Airbnb continue to create amazing returns. In 2007, 2010 and 2011, the three funds set the best performance trilogy in venture capital history: with a principal of 227 million, 250 million and 625 million US dollars, it achieved a total return of 26.5 times, 15.2 times and 15 times respectively.

Contemporaries once described Talleyrand's smile as "paralyzing", and even Madame de Staël, a salon hostess who was used to seeing him talkative, lamented: "If his conversation could be bought, I would be willing to spend everything I have."

Peter Thiel seems to have a similar charm. It is repeatedly shown when tracing the origins of Founders Fund. A chance encounter with Peter Thiel often fascinates listeners: some people move to other cities for him, and some give up prominent positions just to immerse themselves in his "weird" thoughts.

Listen to Thiel speak, whether on a conference stage or on a rare podcast, and you’ll discover that his charm comes not from the glibness of a diplomat, but from his versatile ability to dance across topics and deliver them with the deep scholarship of a Trinity professor.

Who else could have written a classic book on startups, arguing the virtues of monopolies and the wisdom of running a business like a cult, with Lucretius, Fermat’s theorem, and Ted Kaczynski? How many others have thought with such rigor and irreligion?

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

Peter Thiel and Ken Howery first met at a Stanford Review alumni event. As Howery rose to senior editor, the two kept in touch. On the eve of the Texas teen's graduation, Thiel offered an olive branch: Would you like to be the first employee of his new hedge fund? He suggested that the two talk at the Palo Alto steakhouse Sundance.

Howery soon realized that this was no traditional recruitment dinner. During the four-hour intellectual roaming, the young Thiel showed his full charm. "From political philosophy to entrepreneurial ideas, his insights on every topic were more fascinating than anyone I met in my four years at Stanford, and his breadth and depth of knowledge were shocking," Howery recalled.

Although he did not make a commitment on the spot, Hower told his girlfriend after returning to campus that night: "I may end up working with this guy for the rest of my life."

The only obstacle was that Howery originally planned to go to New York to join a high-paying position at ING Barings. In the following weeks, he asked his relatives and friends whether to choose a well-known investment bank with good treatment or follow a new investor who managed less than $4 million in funds? "Everyone 100% suggested choosing a bank, but after thinking about it for a few weeks, I decided to do the opposite," Howery said.

Before graduation, Howery was listening to his new boss’s campus speech when Luke Nosek, a young man sitting next to him with curly brown hair, suddenly leaned over and asked, “Are you Peter Thiel?”

"No, but I'm going to work for him," Howery replied, and the young man who called himself Luke Nosek handed over a business card with just "Entrepreneur" printed on it. "The company I founded," Nosek explained. At the time, Nosek was developing Smart Calendar, one of the many electronic calendar applications that had emerged at the same time, which Thiel had invested in.

The interaction raises a puzzling question: How could Nosek forget his backer, a man he had had breakfast with several times? Maybe it had been a long time since they last met, or maybe the eccentric, driven founder didn’t care about the investor’s face. Or maybe Thiel was just briefly forgotten.

In Nosek, Thiel found the prototype of an ideal talent: talented and independent, daring to explore conclusions that ordinary people are afraid to think about . This kind of powerful brain, free thinking and indifference to social discipline are in line with Thiel's values. Thiel soon followed Nosek's example and signed a contract with Alcor, a cryonics organization.

The three founders of Founders Fund formally met after a speech at Stanford in mid-1998. Although it took them another seven years to establish their own venture capital funds, deeper cooperation began immediately.

Revenge Store

"My name is Larry David, and I'd like to introduce you to the soon-to-be-opened Latte Larry's coffee shop," the Seinfeld creator says in the opening narration of Curb Your Enthusiasm Episode 19. "Why coffee? Because the guy next door was such a jerk, and I had to do something, so I opened myself a revenge shop."

This gave rise to a new cultural term: "Spite Store" - commercial revenge by competing for customers.

In a way, Founders Fund is Peter Thiel's "Spite Store." While the sarcastic Mocha Joe inspired Larry David, Thiel's move can be seen as a response to Michael Moritz of Sequoia Capital. Moritz is an Oxford-educated journalist-turned-investor and a legendary venture capitalist responsible for early investments in Yahoo, Google, Zappos, LinkedIn, and Stripe.

Moritz is an investment expert with a literary temperament, and he has repeatedly been a stumbling block in Thiel's early entrepreneurial history.

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

Thiel immediately decided to invest $240,000. This decision, which he underestimated, eventually brought a return of $60 million and kicked off the most dramatic entrepreneurial epic in the Internet era. ( The book "Founders" fully explains this .)

Levchin quickly recruited Nosek, who had failed in his entrepreneurial career. Thiel and Howery then joined full-time, with Thiel becoming CEO. The addition of talents such as Reid Hoffman, Keith Raboy, and David Sachs created the most luxurious entrepreneurial lineup in Silicon Valley history.

The company originally named Fieldlink (later renamed Confinity) soon ran into Elon Musk's X.com. To avoid a war of attrition, the two companies chose to merge, naming the new company "PayPal" after Confinity's most popular email address connected to payment.

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

Moritz, who invested in X.com, suddenly had to deal with a group of eccentric geniuses. On March 30, 2000, the two companies announced that they had received $100 million in Series C funding. Thiel pushed for this round of financing because he predicted that the macroeconomic situation would deteriorate. Facts proved his foresight: within a few days, the Internet bubble burst and many star companies collapsed.

“I want to thank Peter,” one employee said. “He made the judgment call and insisted that the financing had to be completed because the end was coming....”

Yet his astute macro reading wasn’t enough to save the company. Thiel saw an opportunity to profit. At a PayPal investor meeting in 2000, Thiel made a suggestion: If the market did fall further, as he expected, why not short it? PayPal would simply transfer its new $100 million in funding to Thiel Capital International, and he’d do the rest.

Moritz flew into a rage. “Peter, it’s simple,” one director recalled the Sequoia investor warning. “If the board passes this, I will resign immediately.” Thiel found it hard to understand this stubborn reaction. The fundamental difference was Moritz’s desire to do the right thing and Thiel’s desire to be the right person. Finding common ground between these two epistemological extremes was not easy.

In the end, both sides lost: Moritz succeeded in stopping Thiel’s plan, but Thiel’s prediction was completely correct. After the market crash, one investor said frankly: “If I had shorted it at that time, the profit would have exceeded PayPal’s entire operating income.”

This boardroom conflict exacerbated the distrust between the two, and the power struggle a few months later completely broke it down. In September 2000, led by Levchin, Thiel and Scott Bannister, PayPal employees launched a coup to overthrow CEO Elon Musk (they had just removed the parachuted CEO Bill Harris). Musk refused to compromise, and Thiel's rebellion had to convince Moritz to approve Thiel to take over the company. Moritz put forward the condition that Thiel could only serve as interim CEO.

In fact, Thiel had no intention of staying at PayPal for a long time. His strengths were in strategy rather than execution. But Moritz's terms forced him to humiliate himself by looking for a successor. Moritz did not change his mind until an external candidate also expressed support for Thiel to officially become CEO.

This power game of "first criticizing and then praising" deeply hurt this vengeful genius and laid the groundwork for his later establishment of Founders Fund.

Despite PayPal's internal conflicts, the company ultimately succeeded, and Thiel must admit that Moritz played a big role in that success. When eBay made a $300 million acquisition offer in 2001, Thiel advocated accepting it, while Moritz insisted on independent development.

"He came from a hedge fund background and always wanted to cash out," Moritz later commented on Thiel. Fortunately, Moritz persuaded Levchin and PayPal refused to acquire him. Soon after, eBay raised its offer to $1.5 billion, five times the price Thiel had originally suggested to exit.

This deal made Thiel and his gang members very rich, and Moritz's investment record was further brilliant. If the two had different personalities, perhaps time could eliminate the hostility, but the reality is that this is only the beginning of a continuous war.

Clarium Call

As the rejected $100 million macro bet showed, Thiel never lost his passion for investing. Even during his time at PayPal, he and Howery continued to run Thiel Capital International. “We spent countless nights and weekends running the fund,” Howery said.

In keeping with Thiel’s wide-ranging interests, they pieced together a mixed portfolio of stocks, bonds, currencies and early-stage startups. “We were doing two to three deals a year,” Howery said, noting his 2002 investment in email security company Ironport Systems , which Cisco acquired for $830 million in 2007 .

The $60 million in revenue from the PayPal acquisition further fueled Thiel's investment ambitions. Even as he expanded his management scale, he continued to pursue multiple fronts: pursuing macro-investment achievements, systematic venture capital practices, and establishing new companies . Clarium Capital became the core vehicle for these ambitions.

The same year that the PayPal acquisition was completed, Thiel set out to found macro hedge fund Clarium Capital . “We’re trying to pursue a systemic worldview, like what Soros and others claim ,” he explained in a 2007 Bloomberg profile .

This fits perfectly with Thiel's thinking traits - he is naturally good at grasping civilization-level trends and instinctively resists mainstream consensus. This thinking mode soon showed its power in the market: Clarium's asset management scale soared from US$10 million to US$1.1 billion in three years. In 2003, it made a profit of 65.6% by shorting the US dollar. After a sluggish 2004, it achieved a return rate of 57.1% in 2005.

At the same time, Thiel and Howery began planning to systematize scattered angel investments into professional venture capital funds. The performance gave them confidence: "When we looked at the investment portfolio, we found that the internal rate of return was as high as 60%-70%," Howery said, "and this is just the result of part-time casual investment. What if it is operated in a systematic way?"

After two years of preparation, Howery started fundraising in 2004. The initial fund of $50 million was originally planned to be named Clarium Ventures. As usual, they invited Luke Nosek to join as a part-time employee.

Compared to the billions of dollars managed by hedge funds, $50 million seems insignificant, but even with the halo of PayPal's founding team, fundraising was still extremely difficult. "It was much more difficult than expected. Nowadays, everyone has a venture capital fund, but it was very different at the time," Howery recalled.

Institutional LPs had little interest in such a small fund. Howery had hoped that Stanford University’s endowment fund would be an anchor investor, but the fund withdrew because the fund was too small. In the end, only $12 million in external funds were raised, mainly from personal investments by former colleagues.

Thiel, eager to start, decided to pay $38 million of his own money (76% of the first fund) to make up the gap. "The basic division of labor was Peter paid the money and I did the work," Howery recalled. Considering Thiel's other affairs, this division of labor was inevitable.

In 2004, Clarium Ventures (later renamed Founders Fund) became the best-positioned fund in Silicon Valley by accident, thanks to two personal investments Thiel made before raising funds. The first was Palantir, co-founded in 2003. Thiel once again played the dual role of founder and investor, co-founding the project with PayPal engineer Nathan Gettings and Clarium Capital employees Joe Lunsdale and Stephen Cohen. The following year, he invited Alex Karp, a Stanford Law School classmate and eccentric curly-haired genius, to serve as CEO.

Palantir's mission is extremely provocative: borrowing the image of the "Spar of True Knowledge" in The Lord of the Rings, using PayPal's anti-fraud technology to help users achieve cross-domain data insights. But unlike conventional corporate services, Thiel targets the US government and its allies as customers. "After 9/11, I thought about how to fight terrorism and protect civil liberties," he explained to Forbes in 2013. This government-oriented business model also encountered financing difficulties - investors were full of doubts about the slow government procurement process.

Kleiner Perkins executives directly interrupted Alex Karp's roadshow and talked about the unfeasibility of the business model; although old rival Mike Moritz arranged a meeting, he doodled carelessly throughout the meeting - this seemed to be another deliberate snub to Thiel. Although it failed to impress the Sand Hill Road venture capital firm, Palantir was favored by In-Q-Tel, the investment department of the CIA. "The most impressive thing about this team is their focus on human-computer data interaction," commented a former executive. In-Q-Tel became Palantir's first external investor with $2 million, and this investment later brought huge financial and reputational returns to Thiel. Founders Fund subsequently invested a total of $165 million, and as of December 2024, the value of its holdings reached $3.05 billion, with a return rate of 18.5 times.

But it will take time for huge returns. Thiel's second key investment before founding Clarium Ventures was more effective: in the summer of 2004, Reid Hoffman introduced 19-year-old Mark Zuckerberg to his old friend Thiel. The two PayPal comrades (Hoffman founded the social networking site SocialNet in 1997 and later joined Confinity as COO) who had different political views but admired each other had already discussed social networks in depth. When they met Zuckerberg in the luxurious office of Clarium Capital Presidio in San Francisco, they already had mature knowledge and investment determination.

"We have done a lot of research on the social networking field," Thiel said at the Wired event, "and the investment decision has nothing to do with meeting performance - we have made up our minds to invest." The 19-year-old youth, wearing a T-shirt and Adidas sandals, showed the "Asperger-style social awkwardness" that Thiel admired in "Zero to One": he was not deliberately trying to please others, nor was he ashamed to ask about unfamiliar financial terms. This trait of being out of imitative competition is exactly what Thiel sees as the advantage of entrepreneurs.

A few days after the meeting, Thiel agreed to invest in Facebook in the form of $500,000 in convertible bonds. The terms were simple: if the number of users reached 1.5 million by December 2004, the bonds would be converted into equity to obtain 10.2% of the shares; otherwise, the funds could be withdrawn. Although the goal was not reached, Thiel still chose to convert the shares - this conservative decision ultimately brought more than $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 creating a return of $365 million (46.6 times) for LP.

Thiel later considered Facebook's Series B financing a major mistake. The valuation was $5 million in the first round of 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, the team had only eight or nine people, and it felt like nothing had changed every day," Thiel recalled. This cognitive bias caused him to miss the opportunity to lead the investment, and he doubled down until the Series C valuation was $525 million. This taught him a counterintuitive lesson: "When smart investors lead valuation surges, they are often still underestimated - people always underestimate the acceleration of change."

Sean Parker has his reasons for putting Michael Moritz on the "blacklist". The son of a TV advertising agent and oceanographer, he shocked the technology world in 1999 at the age of 19 with the peer-to-peer music sharing app Napster. Although Napster was eventually shut down in 2002, it won Parker fame and controversy. In the same year, he founded the contact management app Plaxo, whose social function prototype and the aura of "dangerous prodigy" attracted investors such as Sequoia Capital Moritz to invest $20 million.

Plaxo repeated Napster's mistakes: it started high but ended low. According to reports at the time, Parker's management style was erratic - chaotic work and rest, the team lost focus, and his mood was changeable. By 2004, Moritz and angel investor Ram Sriram decided to remove Parker. When Parker's attempt to cash out his shares was blocked, the conflict intensified: Plaxo's investors hired private detectives to track his whereabouts and checked his communication records to find signs of drug involvement (Parker argued that it was entertainment and did not affect his work). This farce ended with Parker's exit in the summer of 2004, but it unexpectedly led to a turnaround - after leaving Plaxo, he immediately started working with Mark Zuckerberg. The two met at the beginning of the year when Facebook took over the Stanford campus, and Parker took the initiative to write to the young founder to discuss development.

Parker even flew to New York to have dinner with Zuckerberg at a popular Tribeca restaurant, even at the cost of overdrawing his bank account. When Plaxo fell apart, he reunited with Zuckerberg in Palo Alto, and immediately became the president of Facebook, starting a short but legendary cooperation. His first move was to take revenge on Michael Moritz and Sequoia Capital - when Facebook's user base exceeded one million in November 2004, Sequoia sought to contact them. Parker and Zuckerberg designed a cruel joke: they deliberately arrived late and in pajamas, and taunted Sequoia with a presentation titled "Ten Reasons You Should Not Invest in Wirehog", which included slides such as "We have no income", "We were late in pajamas", and "Sean Parker was involved". "Given what they did, there was no way we would accept Sequoia's investment," Parker said. This miss may be the most painful mistake in Sequoia's history.

As the episode shows, the Napster founder played a key role in Facebook's early financing and introduced Zuckerberg to the world of venture capital, so when Zuckerberg met with Thiel and Hoffman at Clarion's Presidio office, Parker was there.

Although Thiel and Parker had crossed paths during their early years at Plaxo, it was during Facebook that the foundation for their collaboration was laid. In August 2005, Parker was arrested for the presence of an underage assistant and a cocaine search while renting a party house in North Carolina (although he was not charged and denied any knowledge of the incident), and was eventually forced to leave Facebook. This turned out to be a win-win turning point for all parties: Zuckerberg was ready to take over management, investors got rid of their talented but elusive spokesperson, and Parker also admitted that his "disappear after sprinting" personality was not suitable for daily operations.

A few months later, Parker joined Thiel’s venture firm, which had been renamed Founders Fund (eventually dropping the definite article like Facebook), as a general partner. The name better matched its ambitions and positioning. “We had a lot of complaints about some of the investors from the PayPal era, and we thought there was a way to do it differently,” Howery says. Its core philosophy was simple but subversive: never oust founders .

This may seem common in today's "founder-friendly" market, but it was a pioneering effort at the time. "They pioneered the 'founder-friendly' concept . At the time, the Silicon Valley practice was to find technical founders, hire professional managers, and then kick both out. Investors were the real controllers," said Ryan Peterson, CEO of Flexport.

"This is how the venture capital industry worked for the first 50 years, until Founders Fund came along," said John Collison, co-founder of Stripe, summarizing the history of venture capital. Since the 1970s, Kleiner Perkins and Sequoia Capital have achieved success by actively intervening in management. This "investor-led" model has been effective in cases such as Atari and Tandem Computers. Even 30 years later, top venture capitalists still retain this mindset - power belongs to the capital side rather than the entrepreneur. Sequoia's legendary founder Don Valentine even joked that mediocre founders should be "locked up in the dungeon of the Manson family."

Founders Fund's "founder-first" philosophy 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 "sovereign individuals" and believes that restricting those who break the rules is not only economic stupidity, but also civilization destruction. "These people will destroy the creations of the world's most valuable inventors," Luke Nosek said, expressing the team's contempt for traditional venture capital.

Sean Parker fits this concept perfectly, but his joining at the age of 27 still caused investors' concerns. The report announcing his appointment said bluntly: "His past experience made some LPs nervous." Parker himself also admitted: "I always lack a sense of security. After the meeting, I always ask myself whether I have provided value?"

This concern attracted the blockade of old rival Mike Moritz. After raising $50 million in 2004, Founders Fund attacked again in 2006, aiming for $120-150 million. At this time, the team was completely new: Parker joined, Nosek joined full-time, and Thiel was the first external investor in Facebook. This small institution, which was originally a sideline of hedge funds, was transforming into an emerging force.

This move obviously angered Moritz. According to Howery and others, the Sequoia chief tried to obstruct their fundraising: "When we were raising the second fund, a warning slide appeared 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 their access to Sequoia."

Reports from the same period showed that Moritz's wording was more obscure. He emphasized at the LP meeting that he "appreciates founders who stick to their companies for a long time" and named several well-known entrepreneurs who failed to do so. One of them was clearly a reference to Founders Fund partner Sean Parker. "We increasingly respect founders who create great companies, rather than speculators who put personal interests above the team," Moritz wrote in a subsequent response.

This boomerang actually boosted Founders Fund: "Investors were curious: Why is Sequoia so timid? This actually sent a positive signal," Howery said. In 2006, the fund successfully raised $227 million, and Thiel's investment ratio dropped from 76% in the first round to 10%. Howery pointed out that "Stanford University Endowment Fund led the investment, marking our first recognition by institutional investors."

As early-stage investments began to bear fruit, Founders Fund's unique investment philosophy began to show its power. Thiel's aversion to institutionalized management put the fund in a state of "efficient chaos" in the first two years. Howery was busy exploring projects, and the team refused to have fixed agendas and routine meetings.

Since Thiel has to take care of Clarium Capital, his time is extremely limited. Howery said: "I can only arrange for him to participate in key meetings." Although Parker's joining has not changed the operating principle of the fund, it has brought more systematization: Howery explained, "When Luke and Sean joined, the three of us can evaluate projects together, or one person can make an initial screening and then introduce it to the team decision-making."

The core team has complementary capabilities: "Peter is a strategic thinker, focusing on macro trends and valuation; Luke is both creative and analytical; I focus on team evaluation and financial modeling," Howery analyzed. Parker completes the product dimension: "He has a deep understanding of Internet product logic, and his experience at Facebook has made him proficient in consumer Internet pain points and can accurately identify opportunities in niche areas." His personal charm also becomes a negotiation weapon: "He is very inspiring and is particularly good at closing deals."

In addition to the two iconic investments in Facebook and Palantir, Founders Fund also bet on Buddy Media, which was sold to Salesforce for $689 million in the early days, but also missed out on YouTube, which should have been a project "within its reach" because its founders Chad Hurley, Steve Chen, and Joed Kareem all came from PayPal. It was eventually captured by Sequoia's Roelof Botha and sold to Google for $1.65 billion just one year later.

In any case, Founders Fund’s performance in the past few years has been amazing, and even more glorious moments are about to come.

In 2008, Thiel met his old rival Elon Musk at a friend's wedding. The former PayPal executive had already used the cash from his investment to found Tesla and SpaceX. As the venture capital market chased the next consumer Internet hotspot, Thiel lost interest - this stemmed from his obsession with the teachings of French philosopher René Girard during his Stanford years. "Girard's ideas were out of step with the times and were just what rebellious undergraduates wanted," Thiel recalled.

Girard proposed the theory of "mimetic desire": human desire comes from imitation rather than intrinsic value. This theory has become Thiel's core framework for analyzing the world. After the rise of Facebook, the venture capital industry collectively pursued the imitation craze of social products. Although Founders Fund invested in the local social network Gowalla (later acquired by Zuckerberg), it seemed reluctant.

Thiel made a succinct summary in "Zero to One": "All successful companies are different - they achieve monopoly status by solving unique problems; all failed companies are alike - they have failed to escape competition. " Although there is no monopoly in the venture capital field, Thiel still implements this concept in his investment strategy: looking for areas that other investors are unwilling or unable to touch.

Thiel turned his attention to hard tech—companies that built the world of atoms rather than bits. The strategy had its costs: After Facebook, Founders Fund missed out on Twitter, Pinterest, WhatsApp, Instagram, and Snap, all big social opportunities. But as Howery puts it: “You’d trade all those misses for SpaceX.”

After the wedding reunion in 2008, Thiel proposed to invest $5 million in SpaceX, partly to "repair the rift during the PayPal period", showing that he was not yet fully convinced of Musk's technology. At that time, SpaceX had experienced three launch failures and its funds were almost exhausted. An email that a former investor mistakenly copied to Founders Fund further exposed the industry's general pessimism about SpaceX.

Although Parker chose to avoid the investment due to his unfamiliarity with the field, other partners pushed forward with all their strength. As the project leader, Nosek insisted on increasing the investment amount to US$20 million (accounting for nearly 10% of the second phase of the fund) and entering the market at a pre-investment valuation of US$315 million - this was the largest investment in the history of Founders Fund and proved to be the wisest decision.

"It was very controversial, and many LPs thought we were crazy," Howery admitted. But the team firmly believed in Musk and the potential of the technology: "We have missed out on several PayPal colleagues' projects, and this time we must go all in." In the end, this investment quadrupled the fund's holdings in its best projects.

A well-known LP that Founders Fund was approaching cut off contact because of this. "We parted ways because of this," Howery revealed. The anonymous LP missed out on amazing returns - in the following 17 years, the fund invested a total of US$671 million in SpaceX (the second largest holding after Palantir). As of December 2024, when the company repurchased its shares internally at a valuation of US$350 billion, the holding was worth US$18.2 billion, achieving a return of 27.1 times.