"Australia's a very fortunate country, but people haven't had to work quite as intensely on some of these technological innovations as elsewhere."

Investment strategy

Mr Thiel has more than a passing interest in the Asia Pacific tech startup sector. He set up a New Zealand fund through his firm Valar Ventures in 2012, which has occasionally shopped across the Tasman for investment opportunities.

He said his personal preference was to invest in "monopolies" - companies which either dominate or have created an industry - and that Australian startups, with a clear plan to become global players, had increasing opportunities of being hugely successful.

"The knowledge of what goes into building a great company will be a little bit more diffuse," Mr Thiel said. Forbes estimates that Mr Thiel is worth around $US2.7 billion.

Mr Thiel warned that Australia's tech sector had been stifled by investors' continued success in other areas. Bloomberg

His first high-profile windfall came when PayPal was sold to eBay for $US1.2 billion in 2002, and his most recent success came three weeks ago when Stemcentrx, a company developing stem cell cancer treatments, was sold to AbbVie for up to $US10.2 billion.

Mr Thiel's Founders Fund was the company's largest external shareholder, having made a series of investments totalling about $US300 million in the company.


Other recent investments include smart home software firm Vivint, spider silk yarn business Bolt Threads and financial lending start-up Affirm, in which Mr Thiel's Founders Fund led a $US100 million Series D round.

He spoke to the Financial Review following a meeting with a delegation of high net worth investors and superannuation funds from across Australia, Asia, the UK and the Middle East, who were on a Silicon Valley roadshow arranged by Melbourne-based Trimantium Capital.

When asked how emerging Australian companies should best approach the challenge of going global, he said the trick was to "scale at the right pace", and to look outside the US for initial international expansion.

"Maybe the first market is not the US, but maybe it's the UK or another naturally adjacent market," Mr Thiel said.

"The US is an incredibly big, fairly competitive market, so it's not necessarily the right one to go to immediately next."

Impressing Thiel

When being pitched by startups, Mr Thiel said he always asked how co-founders first met, but said alarm bells rung with those who reported meeting a few weeks ago at a business conference.

He also believed startup founders often focused too much on the "elevator pitch", rather than the underlying business.


"I think people exaggerate how important the pitch is ... It's not actually like Shark Tank," Mr Thiel said.

"It's not like it's a one minute elevator pitch that really matters and you have to get it delivered in just the right way ... You've got to get the substance right, rather than working out the right words to use… it's always substance over process."

Mr Thiel also said he was tired of companies emerging that base their proposition on the success of others ... claiming to be the "Uber of X or Y," a common phenomenon in Australia.

"The something of somewhere is the nothing of nowhere," he said.

"'We're the Airbnb for dogs' is a very simple description, an elevator pitch, but the fact that it's so elegant is itself cause for suspicion in my mind… If it's a unique business, you don't even have the words for it."

The reporter's trip to San Francisco was co-sponsored by Trimantium Capital.