The Facebook (NASDAQ:FB) IPO may have been a flop — at least so far — but it was a huge win for Peter Thiel, who cashed out $640 million. Thiel was the first outside investor in the company back in 2004, when he wrote a check for $500,000. Oh, and he still has a stake worth about $800 million.
What can investors learn from him?
First of all, Thiel is a sponge for information — not just about finance or business. At Stanford, he got a BA in philosophy and then a law degree.
In 1998, he co-founded PayPal, which was sold to eBay (NASDAQ:EBAY) for $1.5 billion in 2002. After that, he started his own hedge fund and venture capital operation.
When it comes to his investment approach, Thiel considers himself a contrarian. But that doesn’t mean he just does the opposite of the crowds. Interesting enough, his version of contrarian seems more like a philosopher’s. Thiel thinks about one Big Question: What do you know is true that the rest of the world does not?
Kind of heavy, right?
The approach, it turns out, has worked extremely well. For example, Thiel applied his Big Question to space exploration. He believed that by using new technologies, it was possible to lower the cost by a tenth. So he invested in SpaceX.
So far, it looks like a great move. Last month, SpaceX successfully launched the Falcon 9 rocket, which will deliver cargo to the International Space Station. And, with no competition, the company is likely to benefit tremendously as NASA continues to outsource its space-exploration activities.
So what’s next for Thiel? With his Facebook windfall, he’s now doubling down. This week, he announced a $402 million fund called Mithril Capital Management. The focus will be on companies that are poised to make huge changes and need long-term capital.
He does not believe the best opportunities lie in social or even mobile apps. Instead, Thiel is focusing on overlooked markets, such as energy, transportation, biotechnology and even artificial intelligence.
O.K., so what’s the takeaway for retail investors?
Often, the best investments are about understanding major themes — and not getting sidetracked by short-term noise. As I noted here at InvestorPlace in April, an investor generally needs to wait at least a decade to get huge returns, as happened with breakout companies such as Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).
As Thiel said in announcing his new fund: “Technology holds solutions to most of the world’s most pressing challenges, from resource scarcity to disease. Solving an intractable problem may require a decade of work, but a lifetime of vision.”
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of the upcoming book How to Create the Next Facebook: Seeing Your Startup Through, from Idea to IPO. Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.