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Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

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Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#41

Post by spaghetti »

xpose2000 wrote: post #35
cfront wrote: post #21

Earlier quoted context omitted.

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

Facebook a fad? Think of it this way... The social web is just as important as search on the web. The web will always have search engines, and it will always have social networks. Google took over where Excite and Altavista left off. Facebook took over where MySpace and Friendster left off. Google controls the majority of the social search market. Facebook controls the majority of the social network market. So you mi…

The "social web" is no where near as important as search. Imagine removing search from the net. Now imagine removing Facebook or other social networking sites. The difference is staggering.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#42

Post by 001sky »

tatsuke95 wrote: post #37
qq66 wrote: post #24

Earlier quoted context omitted.

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

He dumped his shares at half the IPO price. Say what you will about diversification, it doesn't represent much faith in the future growth of the company. You don't "diversify away" from a good investment. So, if you believe that Thiel is a savvy investor, then it's hard to be bullish in Facebook.

"You don't 'diversify away' from a good investment"

Didn't USV did a similar thing on twitter? Before IPO?

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#43

Post by qq66 »

tatsuke95 wrote: post #37
qq66 wrote: post #24

Earlier quoted context omitted.

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

He dumped his shares at half the IPO price. Say what you will about diversification, it doesn't represent much faith in the future growth of the company. You don't "diversify away" from a good investment. So, if you believe that Thiel is a savvy investor, then it's hard to be bullish in Facebook.

"You don't 'diversify away' from a good investment." -- that's exactly what you do. Given that there's nothing as a 100% sure good investment, you diversify away from investments that seem great to distribute your risk.

Let's say Company X has a 10% chance of being worth nothing, and 90% chance of being worth five times what it is today. Is that a good investment? Of course. Would you want to bet a billion dollars on it? If you had $20 billion, sure -- if you had $1 billion, probably not.

You can easily create a real-world analogy, a dice game where you pay me $X and roll a single die. I keep your money if you roll a six, but give you five times your money back if you roll anything else. You can only play once. How much do you bet? I hope you do bet something, because it's a very favorable game to play, but I also hope that you don't sell your car, house, everything in your refrigerator, and your dog to wager everything you have.

The IPO price is not really relevant since he couldn't sell at that price -- he sold nearly everything at the first chance he had, which was wise of him regardless of whether Facebook's stock price goes to $0 or $500.

The bottom line is that this has nothing to do with Facebook and is based solely on the mathematics of random variables.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#44

Post by TillE »

cfront wrote: post #36
saraid216 wrote: post #33

Earlier quoted context omitted.

> Why can't people just accept that Facebook is a fad? I actually made the prediction that Facebook would be where MySpace is--forgotten and irrelevant by the mainstream--by 2006. I was wrong.

Only as to the year. Give it time. They have a lot of money to spend so the decline will be slow and they will not go down without making lots of noise and buying out lots of potential successors. But the decline is beginning. Sooner or later Facebook believers have to accept this. I'm excited about the decline because it means the rise of something better. Continual improvement. When one door closes, another opens.…

> The internet just keeps growing. We are in its infancy.

Exactly. The internet 10-15 years from now will be unrecognizable, especially the social parts. Facebook (and Twitter, by the way) certainly won't be doing the innovating, and odds are they won't be able to keep up either.

Personally, I thought FourSquare might be the next big thing, but they failed to do anything compelling with the basic idea of location-based social networking. I still think that something big will come along in that space eventually, though.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#45

Post by 001sky »

cfront wrote: post #31
qq66 wrote: post #24

Earlier quoted context omitted.

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

Yes, diversification is smart. But you're trying to use this general idea to explain a specific decision that is clearly a matter of timing. You could claim that everytime an insider at any company sells the majority of his stock he is diversifying. But that's not really looking at what the real reason is. There is a reason that "now" is the "time to diversify". And it's not just because diverisification is generally…

"So while the timing may look ugly, Thiel has been with Facebook since [2004] nearly the beginning of the company’s eight-year slog towards going public. It’s not anathema to cash out — especially at an 800x return."

(quote from WSJ/All things D).

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#46

Post by untog »

J-H wrote: post #27
aasarava wrote: post #25

Everyone keeps focusing on Facebook as an ad platform, and pointing to the difficulty in monetizing mobile via ads. But I'm betting Facebook is on the brink of rolling out a digital wallet. They already act as an authentication/identity service with hundreds of millions of users. If those users linked their FB accounts to their bank accounts, they'd be able to buy anything on any integrated website that they log into…

The problem here is would you trust Facebook with your wallet? I wouldn't, and I'm betting most wouldn't after all of Facebook's Privacy gaffes.

I'm betting most wouldn't after all of Facebook's Privacy gaffes.

I think you overestimate the extent to which average users are aware of/care about Facebook's privacy gaffes.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#47

Post by dj2stein9 »

The Facebook story is over. They got ahead in the social network game of making communication over the Internet easier. They did this by making Email obsolete. One centralized system where all users can send instant messages to one another without remembering user logins, email addresses, or phone numbers. This is the ONLY advantage Facebook has over its competitors. And I guarantee their current advantages are going to be eroded away by more open protocols. In the same way that Twitter's current advantage in microblogging is also going to be eroded away.

If you get too far ahead of everyone else you become the target, and there are simply so many startups and smart brains working against Facebook and Twitter at this point that they simply will not be able to maintain their leads indefinitely (which is what their market values are incorrectly predicting).

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#48

Post by csallen »

dj2stein9 wrote: post #47

The Facebook story is over. They got ahead in the social network game of making communication over the Internet easier. They did this by making Email obsolete. One centralized system where all users can send instant messages to one another without remembering user logins, email addresses, or phone numbers. This is the ONLY advantage Facebook has over its competitors. And I guarantee their current advantages are going…

You're focusing only on features, and ignoring the fact that Facebook has more active users on their site for more time per day and with a higher retention rate than any other site in existence, and that network effects have created an almost insurmountable barrier to entry.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#49

Post by dj2stein9 »

csallen wrote: post #48
dj2stein9 wrote: post #47

The Facebook story is over. They got ahead in the social network game of making communication over the Internet easier. They did this by making Email obsolete. One centralized system where all users can send instant messages to one another without remembering user logins, email addresses, or phone numbers. This is the ONLY advantage Facebook has over its competitors. And I guarantee their current advantages are going…

You're focusing only on features, and ignoring the fact that Facebook has more active users on their site for more time per day and with a higher retention rate than any other site in existence, and that network effects have created an almost insurmountable barrier to entry.

You know who currently has an even better advantage in social networks? Cell phone carriers. If I take a look at my Facebook friendlist or feed, and compare it to the last calls and messages made on my cellphone -- they don't match up at all. That means, at least to me, Facebook's graph for me doesn't relate at all to my real world social network, and so most of its value is probably artificial.

Certainly no system ever built can match Facebook's penetration rate, but it will probably always pale in comparison the real world social network. The difference is mobile devices are going to map a lot better to the actual network in ways that Facebook will be unable to capitalize on.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#50

Post by PakG1 »

cfront wrote: post #21
qq66 wrote: post #18

Would you expect him to do anything else? Invert the question: if you had $500 million cash, would you spend it all on Facebook stock? Or Google stock? Or any one stock? Even for company insiders who really believe in the future of their company, it isn't prudent to hold more than a small fraction of a billion-dollar fortune in one stock, from a purely rational perspective. Of course, the public expects irrationally…

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

Eventually the market figures it out. Move on. That's what Thiel is doing.

Thiel is an investor. Most investors eventually move on. He invested in 2004. 8 years, and he netted a billion dollar cash profit so far on a $500,000 investment. He's not in it for long-term company building like Zuckerberg is. He's not trying to be Warren Buffett. He shouldn't be panned for this. And he still owns millions of shares. So it's not like he's completely out.

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