I recently listened to a New York Times DealBook conference chat with Peter Thiel and Chris Sacca. The full chat is below.
One of Peter’s most successful investments is in Facebook where he was a personal angel investor. The same is true for Chris in Uber where his fund Lowercase Capital was an angel investor.
Both men are very well known for these successful investments. What’s less well known, and which was shared in the chat, is that if Mark Zuckerberg and Travis Kalanick, the founders of Facebook and Uber respectively, had done what Peter and Chris advised them to do in the early stages of their companies, Facebook and Uber wouldn’t be the runaway successes that they are today.
Specifically, Peter advised Mark to accept Yahoo’s $1 billion bid for Facebook back in July 2006. At the time Facebook had $40M in annual revenue. Mark didn’t take Peter’s advice and Facebook is now a nearly $300 billion company. On a side note, one of the reasons why Mark didn’t accept the offer is because, although he would have netted $250 million, he said he wouldn’t know what to do with the money. This is a valuable reminder for many entrepreneurs contemplating early exits.
In the case of Chris, he advised Travis to not take Uber down market where it would compete with taxis on price. Instead, he recommended that it continue to operate with its higher end and more expensive Uber Black service in order to not have to face off with regulators. If Travis had taken Chris’ advice, Uber’s low cost UberX solution which is responsible for the bulk of Uber’s success (in fact, Uber is now trying to further lower prices through UberPool) likely wouldn’t exist.
Both of these examples show that important decisions are very tough to make. With the benefit of hindsight, it’s easy to claim that Facebook clearly shouldn’t have sold out early, and that Uber clearly needed to offer a lower priced transportation alternative to Uber Black. However, in the moment, the decision is never easy.
As these examples show, when it comes to tough decisions, even very intelligent people with aligned incentives can disagree. Sometimes founders are right, and sometimes investors are right. However, it’s ultimately the founder’s responsibility to make the tough decision. As in these cases, hopefully they’ll be right.