Peter Thiel’s investment in Facebook wasn’t solely based on a single meeting with Mark Zuckerberg. Instead, it stemmed from years of prior research and analysis of the social networking market. The fast growth of the site, strong engineering, and relatively low valuation were contributing factors, but the decisive element was Thiel’s pre-existing understanding of the industry and Facebook’s potential within it. The meeting itself was relatively unremarkable, with Thiel focusing on the underlying potential he’d already identified.

Highlights

• 📈 Market Research: Years of studying the social networking landscape prior to meeting Zuckerberg formed the foundation of Thiel’s decision.
• 🚀 Fast Growth: Facebook’s rapid growth was a significant positive factor influencing the investment.
• 🧑‍💻 Strong Engineering: Thiel noted the quality of Facebook’s engineering as a positive aspect.
• 💰 Favorable Valuation: The relatively low valuation of Facebook at the time made the investment more appealing.
• 🤔 Prior Knowledge: Thiel’s previous involvement with similar companies (like Reid Hoffman’s SocialNet) significantly informed his investment strategy.

1. What steps do you take before an investment? What is your process to making an investment?

2. Why is it important to understand an industry before making an investment?