Peter Thiel Regrets Not Investing in Tesla, Praises Elon Musk’s Unique Risk Management

Today, Tesla is a profitable and rapidly growing company thanks to the unique risk management of Elon Musk. Palantir Technologies co-founder Peter Thiel said he regrets not investing in Tesla because Musk knows how to make companies profitable.

Thiel’s The Founders Fund is among Musk‘s SpaceX backers, and the entrepreneurs worked together at PayPal in the 2000s. However, in an interview with Andrew Ross Sorkin in late June at the Aspen Ideas Festival, Thiel admitted that it was a mistake not to invest in Tesla. Musk’s ability to assess risk differs from Thiel’s understanding of risk.

“You know, when Elon was building both Tesla and SpaceX in the 2000s, people thought he was just really, really crazy. I think even those of us who had worked with him at PayPal, I mean, there’s this PayPal book that David Sacks and I thought of writing, and the Elon chapter was titled something like, ‘The Man Who Knew Nothing About Risk,’” he said.

“There are all these crazy Elon stories I could tell… If one of the two companies had succeeded, you would say, ‘Well, maybe he still got really lucky,’ but when two out of two companies that people thought were completely harebrained in the 2000s, when they both succeed, man, you have to somehow reassess it, and somehow, the rest of us, somehow, are too risk averse, or there’s something about risk he knows that we don’t, or something like this,” added Thiel.

The entrepreneur said that he has no investments in Musk’s public company, Tesla. He explained that he usually does not invest in public companies, so he has not invested in Tesla since it went public at the beginning of 2010. Now he regrets his decision.

“We should have invested in that one,” Thiel said in an interview.

He also noted that if he were a Tesla shareholder, he would definitely vote for Musk’s pay package, which shareholders voted on in 2018 and which was overturned by a Delaware court earlier this year. Thiel said that would be the smartest thing to do, whether shareholders believe in the pay package or not.

“…because you would know that if it failed, the share price would have gone down a lot the next day….whether you believe in the package or not, the rational thing would be that you should vote for it,” Thiel said.

In a recent re-vote, Tesla shareholders again stood by their earlier decision and advocated for Musk to receive his pay earned through his years at the company. The proposal passed after it received 72% of all votes cast, almost on par with the 73% received in 2018.

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