Wednesday, September 29, 2010

Did Peter Thiel Make The Single Best Investment In History?

In 2005, Peter Thiel paid $500,000 for a 10% stake in Facebook.

Today, with Facebook's estimated value topping $33 billion, his stake is worth between $2-3 billion. That's a 6,000x return on his capital in 5 years.

I'll put it this way--if you made a $250 IRA contribution in 2005, it would have to be worth $1,500,000 today to match that return.

I never thought I'd see a better return than Google. Sequoia and Kleiner Perkins paid $25,000,000 for a 20% stake in Google.

At its IPO, Google was worth $27 billion, making that 20% stake worth $5.4 billion. That's a stunning 216x return but still more than an order of magnitude short of the return Peter Thiel would earn if Facebook went public today.

From what I can tell, that one deal was the single best investment in history.