At the time:
→ Zuckerberg was a student at Harvard
→ the name was still "the Facebook"
→ the platform had ~1 users
They needed more money to scale.
Sean Parker, then Facebook's president, first approached LinkedIn CEO Reid Hoffman for investment.
Hoffman liked Facebook.
But after thinking about it, he had to pass due to a potential conflict of interest. Wise choice.
He referred Parker to Thiel.
Thiel met Zuckerberg. The two got along well, and Thiel agreed to lead Facebook's seed round.
The terms:
→ a convertible note based on users growth
→ $500,000 for 10% of the company
→ and a seat at the board.
The investment was to be converted to equity if Facebook reached 1.5 million users by the end of 2004.
Facebook missed the target.
But Thiel allowed the loan to be converted to equity anyway.
The rest is history.
When Facebook went public in 2012, Thiel owned over 44 million shares. Over the next few years he would cash out more than $1 billion from his investment.
A stunning 2,000x return.
Founders - the beauty of scaling a company is also to reward the people that believed in you early on. I love when angel get massive returns.
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This post was originally shared by Hugo Rauch on Linkedin.