Peter Thiel, fhe PayPal co-founder, early Facebook investor and Founders Fund managing partner said there was a famous deal that did not happen and that luck has as much to do with success as anything.
At SXSW this afternoon, the entrepreneur, venture capitalist, and contrarian thinker, told the story of the day Mark Zuckerberg decided to turn down Yahoo’s $1 billion offer to buy Facebook.
“The most important moment in my mind in the history of Facebook occurred in July 2006,” he began.
At the time, Facebook was just two years old. It was a college site with roughly eight or nine million people on it. And, though it was making $30 million in revenue, it was not profitable. “And we received an acquisition offer from Yahoo for $1 billion,” Thiel said.
The three-person Facebook board at the time–Zuckerberg, Thiel, and venture capitalist Jim Breyer–met on a Monday morning.
“Both Briar and myself on balance thought we probably should take the money,” recalled Thiel. “But Zuckerberg started the meeting like, ‘This is kind of a formality, just a quick board meeting, it shouldn’t take more than 10 minutes. We’re obviously not going to sell here’.”
At the time, Zuckerberg was 22 years old.
Thiel said he remembered saying, “We should probably talk about this. A billion dollars is a lot of money.” They hashed out the conversation. Thiel said he and Breyer pointed out: “You own 25 percent. There’s so much you could do with the money.”
Thiel recalled Zuckerberg said, in a nutshell: “I don’t know what I could do with the money. I’d just start another social networking site. I kind of like the one I already have.”
Thiel said the argument Zuckerberg had was this: “[Yahoo] had no definitive idea about the future. They did not properly value things that did not yet exist so they were therefore undervaluing the business.”
Thiel told this story to make a larger point about how the most successful entrepreneurs operate. He said that the best entrepreneurs, like Zuckerberg, have a definitive view about the future and plan for it; they don’t willy-nilly chase luck–using statistics, probability, and iterative processes–to stumble upon something, anything that flies.
“All of us have to work toward a definite future…that can motivate and inspire people to change the world,” he said. In this scenario, “luck is something for us to overcome as we go along the way, but not something that becomes this absolute dominating force that stops all thought.”
Thiel doesn’t subscribe to what he calls the start-up “religion” of a-b testing every tweak (until you run out of money) or incrementally-iterating at every step–to be so systematically chasing some random success that it strips out all conviction and creative ideas about the future.
Read More: inc.com