Peter Thiel: Facebook is Undervalued

Peter Thiel, the notoriously contrarian Silicon Valley VC stalwart and President of Clarium Capital, surprised the audience at TechCrunch Disrupt by stating that “Facebook is undervalued.”

Thiel claimed that Facebook was the most likely company to be undervalued by Silicon Valley VCs. “Back in 2008, we heard talk of another tech bubble, because people thought Facebook was overvalued at $500 million. Flash forward to today, and it’s clearly worth a lot more than that.”

Thiel also claimed that a long-term investment in Google would be a weaker investment than a similar investment in Facebook.

Thiel’s remarks were largely motivated by his understanding of the tech sector. Where many analysts see companies like Microsoft and Oracle as tech sector monoliths, Thiel believes that the size of these companies hinders their innovation and actually prevents them from being classified as true tech companies. While he doesn’t see Google as fitting into this category yet, he says the case for Google as a tech company is “complicated.”

By contrast, Thiel says that Facebook is far more aggressive in terms of constantly changing and overhauling their product. In this way, Thiel says, Facebook tends to be more than the sum of its valued parts.

Thiel also took the opportunity to announce his “20 Under 20” fund for young technologists. The fund plans to offer $100,000 grants to 20 teenaged technologists each year to drop out of school to start tech firms. Thiel believes that young entrepreneurs should be better able to take risks to further their ideas, and so his fund hopes to fund their innovative ideas.