Billion entrepreneur Elon Musk on Thursday shared a video snippet on X of Palantir Technologies co-founder Peter Thiel applauding his penchant for risk. Thiel’s The Founders Fund is among the backers of Musk’s SpaceX and the two worked together at PayPal in the 2000s.
What Happened: The snippet shared by Musk is from a longer conversation that Thiel had with journalist Andrew Ross Sorkin in late June at the Aspen Ideas Festival in late June.
"You know, when Elon was building both Tesla and SpaceX in the 2000s, people thought he was just really, really crazy. I think even those of us who had worked with him at PayPal, I mean, there's this PayPal book that David Sacks and I thought of writing, and the Elon chapter was titled something like, "The Man Who Knew Nothing About Risk",” Thiel said.
“There are all these crazy Elon stories I could tell… If one of the two companies had succeeded, you would say, "Well, maybe he still got really lucky," but when two out of two companies that people thought were completely harebrained in the 2000s, when they both succeed, man, you have to somehow reassess it, and somehow, the rest of us, somehow, are too risk averse, or there's something about risk he knows that we don't, or something like this,” he added.
Musk’s former internet banking firm, X.com, merged with Confinity, a security software company co-founded by Peter Thiel, in 2000. The union of these two companies eventually brought about PayPal.
Thiel’s Investment In Musk’s Companies: While Thiel’s The Founders Fund is a backer of Musk’s SpaceX, he has no investment in Musk’s publicly-listed EV company Tesla.
Talking about his decision to not invest in Tesla, Thiel said that he tends not to invest in public companies and Tesla went public way early in 2010. However, Thiel also has his regrets.
“We should have invested in that one,” Thiel said at the festival.
However, had he been a shareholder, he would have definitely voted for Musk’s $56 billion pay package from 2018 which was rescinded by a Delaware Court earlier this year, Thiel said.
“….because you would know that if it failed, the share price would have gone down a lot the next day….whether you believe in the package or not, the rational thing would be that you should vote for it,” Thiel said.
After the judge voided Musk's package, the company's board put the pay package up for shareholder vote yet again, the result of which was announced in June at the company's annual shareholder meeting. The proposal was passed after it received 72% of all votes cast, only marginally lower than the 73% it received in 2018.
Why It Matters: In November, Musk voiced his disagreement with Thiel’s popular ‘law’ on startups that a startup that is messed up at its foundation cannot be fixed. Tesla too was initially ‘insanely messed up' but has grown since to be one of the biggest companies around the globe by market cap, Musk said.
"While I have immense respect for Peter’s intellect, he did explicitly pass on funding Tesla at a $70M valuation, despite being offered priority," the CEO added.
Tesla went public in 2010. Its stock has risen over 19,000% to date to close at $246.39 on Wednesday. The company now has a market cap of $737.53B and is placed amongst the most valued companies around the globe.