Peter Thiel, the famed entrepreneur – co-founder of payment service PayPal – and venture capitalist – backing social network Facebook from an early stage – has been on a grand tour to promote his new book Zero to One. While the book is hugely thought-provoking on many topics, and well worth a read for all who have anything to do with entrepreneurism, one claim he plants front and centre of his musings seems ill-timed or especially poignant, depending on your point of view. Thiel is arguing that “technology is more important than globalisation”, for technology companies create something from nothing, or go from zero to one, while globalisation simply expands on this original creation.
The full press book tour has ironically come at the same time as China-based e-commerce company Alibaba has secured the largest initial public offering (IPO) in history, and Germany-based incubator Rocket Internet cemented the rapid success of its globalisation incubator model by floating in Germany.
Thiel responded to the timing controversy by saying: “Both globalisation and technology are important themes, but I think technology, because it is always new and one of a kind, is less well understood than globalisation, because it involves copying things that work and are tried and tested. It is for this reason that most investors are more comfortable with plays on globalisation – they correctly sense that they understand them much better. And it is for the same reason that I prefer plays on technology, because I think it is far more likely that I will be able to get some sort of edge and understand something that other people do not, which is always the key, in my mind, to making great investments.”
The full press book tour has ironically come at the same time as China-based e-commerce company Alibaba has secured the largest initial public offering (IPO) in history, and Germany-based incubator Rocket Internet cemented the rapid success of its globalisation incubator model by floating in Germany.
Thiel responded to the timing controversy by saying: “Both globalisation and technology are important themes, but I think technology, because it is always new and one of a kind, is less well understood than globalisation, because it involves copying things that work and are tried and tested. It is for this reason that most investors are more comfortable with plays on globalisation – they correctly sense that they understand them much better. And it is for the same reason that I prefer plays on technology, because I think it is far more likely that I will be able to get some sort of edge and understand something that other people do not, which is always the key, in my mind, to making great investments.”
Thiel argues the future values of Alibaba and Rocket are easy to understand, and they are likely to be fully priced. Thiel added: “This is why I think the Rocket IPO was fully priced – lots of people understood everything about the value proposition there, and paid up for it. Alibaba had a healthy pop, but only because they intentionally priced it way under market.”
Intriguingly, corporate venturing units have been quick to spot globalisation plays. Alibaba’s investors included search engine Yahoo and Japan-based conglomerate SoftBank. Rocket Internet had corporate backers including internet services provider United Internet, telecoms firm Philippine Long Distance Telephone, conglomerate Access Industries, and Holtzbrinck Ventures, the corporate venturing subsidiary of publishing company Georg von Holtzbrinck.
Other corporate venturing investors like Naspers, Qualcomm Ventures, Intel Capital and International Data Group have secured some of their biggest successes in emerging markets.
This ability to spot and scale businesses pursuing a growth theme like globalisation, while understandably less interesting to someone like Thiel, looking for innovation and the biggest returns, is perhaps worth re-examining from a corporate venturing approach. Perhaps corporate venturing that tends not to be the first money into companies, but is good at latching on to a theme likely to be big in its particular market, should be seen as a one-to-infinity pursuit.
Of course, such an approach may be less glamorous and also better understood than the contrarian Thiel playbook. Yet perhaps there is more to scaling businesses where a technological theme has already emerged, for those investors who are not enthralled to the alchemy of innovation, which is so exciting about the early stages of pure financial venture capital.
Global Corporate Venturing will be discussing the merits of technology versus globalisation investment themes in corporate venturing at our June 2 and 3 symposium next year. Thoughts on this topic are welcome.
Other corporate venturing investors like Naspers, Qualcomm Ventures, Intel Capital and International Data Group have secured some of their biggest successes in emerging markets.
This ability to spot and scale businesses pursuing a growth theme like globalisation, while understandably less interesting to someone like Thiel, looking for innovation and the biggest returns, is perhaps worth re-examining from a corporate venturing approach. Perhaps corporate venturing that tends not to be the first money into companies, but is good at latching on to a theme likely to be big in its particular market, should be seen as a one-to-infinity pursuit.
Of course, such an approach may be less glamorous and also better understood than the contrarian Thiel playbook. Yet perhaps there is more to scaling businesses where a technological theme has already emerged, for those investors who are not enthralled to the alchemy of innovation, which is so exciting about the early stages of pure financial venture capital.
Global Corporate Venturing will be discussing the merits of technology versus globalisation investment themes in corporate venturing at our June 2 and 3 symposium next year. Thoughts on this topic are welcome.
