Xero’s billionaire backer

Rod Drury is an entrepreneur who seldom puts a foot wrong. His stock exchange-listed Xero software company goes from strength to strength.

So it was not surprising that his choice of Peter Thiel as a new shareholder passed without comment, other than that he is San Francisco-based and a successful technology investor.

Mr Thiel clinched the deal at $1.49 and since then the shares have jumped to $1.68, so he is already well ahead.

Most would know Mr Thiel is a co-founder of PayPal, the internet payment system that was sold to eBay, and an early investor in Facebook, both of which put him on the Forbes’ list of billionaires.

He also runs the Clarium Capital, a macro hedge fund, thus mixing a narrow technology focus with large-scale bets on the future of world markets.

But the German-born Mr Thiel, 42, is a far more interesting fellow than just a savvy investor. In an interview with the Wall Street Journal earlier this month, he was described as either a “crackpot” or someone who “is on to something.”

This is because Mr Thiel believes technological progress is over-rated and that it will not cure the US financial imbroglio. His message to Journal readers:

Today's heightened political acrimony is but a foretaste of the "grim Malthusian" politics ahead, with politicians increasingly trying to redistribute the fruits of a stagnant economy, loosing even more forces of stagnation.

We don't have flying cars. Space exploration is stalled. There are no undersea cities. Household robots do not cater to our needs. Nuclear power "we should be building like crazy," he says, but we're sitting on our hands.

Mr Thiel makes an exception for computers and the internet, hence his interest in Xero. While all this makes interesting reading, it is not particularly controversial.

Even a snippet that he co-hosted a fund-raiser in Manhattan for gay Republicans is hardly surprising these days. But wait, as they say, there’s more.

Silicon Valley’s Savonarola
The hit new movie on the founding of Facebook, The Social Network, throws up an entirely different view of Mr Thiel – one that has made him the scourge of liberal America.

In the film’s version of events, he connives with Sean Parker, the founder of Napster, to deprive Mark Zuckerberg’s friend Eduardo Saverin of his 30% stake in the company. Aaron Sorkin’s screenplay devastates the venture capitalist in a line: “We’re in the offices of a guy whose hero is Gordon Gekko.”

These are words of Jacob Weisberg in Newsweek, which portrays a man who likes playing Richie Rich, drives a McLaren supercar and has an apartment in San Francisco's Four Seasons Hotel.

But that’s just a warm-up to Mr Thiel’s techno-utopianism that lies behind PayPal (global currency beyond the reach of taxation and central-bank policies) and Facebook (voluntary supra-national communities).

Thiel’s belief system is a mixture of unapologetic selfishness and economic Darwinism. In a personal statement produced last year for the Cato Institute, he announced: “I no longer believe that freedom and democracy are compatible.”

The public, he says, doesn’t support unregulated, winner-take-all capitalism, and so he won’t support the public any longer. “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women—two constituencies that are notoriously tough for libertarians—have rendered the notion of ‘capitalist democracy’ into an oxymoron.”

Mr Weisberg concludes by ridiculing Mr Thiel’s backing of Sea-steading, a movement to create law-free floating communes and explore space; the Methuselah Foundation, which does research into life-extension based on the premise that humans can live to be 1000 years old; and the Thiel Fellowship, which gives entrepreneurs under 20 a cash award of $US100,000 to give university education and pursue their business ideas.

Matt’s gambit to woo workers
In a move that shows the Left is not as bereft of ideas as the Labour party’s reversion to socialist economics suggests, radical union leader Matt McCarten’s decision to stand in the Mana by-election must have come as a bolt from the blue to Phil Goff and his team.

Mana is considered a blue-collar stronghold, similar to Mr McCarten’s south Auckland fortress.

Though unlikely to unseat the Labour candidate, Mr Goff’s chief press secretary Kris Faafoi, Mr McCarten will drive a wedge into an already fragmented left-wing constituency, which also has the choice of candidates representing the Greens, Alliance and the Aotearoa Legalise Cannabis Party.

Mr McCarten’s motives, however, are not Parliamentary. He is trying to raise the profile of his union, Unite, which has targeted low-paid workers in the hospitality, fast-food and entertainment sectors (that includes cinemas, not film-making).

Unite takes its name from a global brand – dare we say transnational? – and its banners can be seen in TV coverage of strikes and other forms of militancy around the world. (This website gives a good idea of its international spread.)

One can only imagine what havoc Unite in planning during the build-up to the Rugby World Cup. Mr McCarten is a media luvvie and the by-election will focus on him – not the unknown Mr Faafoi.

Also, if Labour thought it was clever in playing a race card, the ruse may backfire. Resigned MP Winnie Laban may have been widely admired, but her Polynesian ethnicity is a minority in an 80% pakeha electorate.

One thing is certain: Mr McCarten won’t be taking any votes from National’s list MP Hekia Parata, who could well appeal to some of Mrs Laban’s supporters.

The Hobbits stay home
Middle-earth remains open for business. That will be as welcome on Wall Street as it will be in Hollywood and Wellington.

NBR’s Briefcase columnist John Bowie (himself an expert on entertainment law) reveals the film business is controlled from New York.

The money men wear suits – not black T-shirts and chinos – and no cigar-chomping studio types were in sight this week in the capital. Mr Bowie notes the significance of who represented the world’s largest entertainment and media company, Time Warner, in discussions with the government:

This was a visit from a movie Boss-of-Bosses, together with a power team that included Warner’s chief counsel. Lawyers play an increasingly important role in filmmaking at this level, particularly with new media issues and, in the case of The Hobbit, the mind-bendingly complex disentangling of the property from MGM’s trip to bankruptcy court. Then there’s the tax offsets, exchange rates, IP and other issues that were also in play.