Peter Thiel, hedge fund manager, venture capitalist, and former CEO and co-founder of eBay’s (NASDAQ:EBAY) Pay-Pal says the talk of a new tech bubble sprouting in the valley is nothing more than just that, talk. The Silicon Valley mainstay who is estimated to be worth over $1.5 billion was an early investor in Facebook and now sits on the company’s board, and has also been financially involved with hot startups, LinkedIn (NYSE:LNKD), Friendster, Yelp, and others.
The “don of the pay-pal mafia” (as he is known in the valley), thinks that talk of the bubble is premature, saying the groundwork for bubbling isn’t even in place in the tech sector. According to Thiel,“The first component of a bubble, something a lot of people believe and can act on, doesn’t even exist…Most of these companies are privately held. There is no way for the public to become involved.”
Thiel’s views echo the sentiments of fellow valley guru Marc Andreesen (Former Netscape founder, current angel investor and board member on many valley-based companies), who argued last week in an interview at the D9 conference that there was definitely not a bubble because of an undervalued tech industry and current market psychology. (From the interview) Andreesen added, “A very large number of people think there’s a bubble, which makes us think there isn’t a bubble…The public markets hate tech…(they) are tremendously scarred of what happened ten years ago.”
While Thiel and Andreesen were in accord on many of their arguments, Thiel added some sensical rationale to his conclusions, saying of the rise of social media companies, “We need technology for our society to get better in the decades ahead. So if you say there are not even five good companies, that even those five companies are fake, that is saying that our society is completely stagnant and that nothing is happening at all.”
The five companies Peter Thiel had in mind were none other than LinkedIn (NYSE:LNKD), Zynga, Facebook, Groupon, and Twitter. While both tech experts offer palatable explanations to talk of the bubble hype, it remains unclear how pure their interests may be in downplaying these fears. Both were angel investors in LinkedIn (NYSE:LNKD), and likely made windfalls through its IPO. With Zynga, Facebook, Groupon, and Twitter all expecting to make IPOs very soon, given Thiel and Andreesen’s significant financial involvement with these companies, investors would best look elsewhere for an unbiased assessment of the bubble talk.