Tuesday, July 26, 2005

On Google, Capital, and Hedge Funds: Charlie Rose 7/25

Its 11 PM in NYC and you are at home flicking through all that mindless drivel that contaminates TV airwaves.

Ready to give up on all that inanity, suddenly, you fall upon the greatest conversation you've heard since your Philosophy 101 college prerequisite.

I'm talking about the Charlie Rose show.

If you have never seen Rose's nightly talk show on PBS, you are missing out on arguably the last refuge of TV-based intelligence.

I believe he is the best interviewer in the game, the reason being that he is very subdued and never gets in his visitor's faces.

He is concerned less with the personal lives of his visitors and more with their intellectual gifts and contributions.

At the same time, Charlie certainly knows how to provoke and "get the truth" out of his guests.

Last night, PayPal's orginal founder & CEO Peter Thiel was on the show.

Some of the more interesting points Thiel (who now runs his own hedge fund) made on the show:

1. Going forward, hedge funds will earn lower returns since there is "too much capital & too few good ideas" in the marketplace.

Thiel forgot to add that increasing regulation could further dampen hedge fund ROE.

2.Thiel said the overall "return-on-capital picture" is bleak, citing the low yield on the 10 year treasury (3.96%).

3. Conversely, he said it is a great time for entrepreneurs.

Because there is a lot of money sloshing around, VCs are willing to fund even "half-decent" ideas.

I'm not sure I agree completely with Thiel on this one.

After the dot.com bust, most VCs are much more prudent and vigilant with their funds.

More VCs are giving serious attention to the due diligence process.

Still, what we're experiencing on the Internet (proliferation of great ideas revolving around end-user friendly apps, like Flickr) means there are a plethora of startups in dire need of VC attention.

4. Charlie asked him what he thought about Google and Thiel lit up like a child: "Google is an awesome company."

Google, he added, has ''reinvented the way companies govern themselves...they are a real company...people actually use their site..."

I think Google -- whose market cap trumps AOl and Yahoo's -- can stay on top as long as they reinvent themselves and thwart new entrants from imitating their idea flow.

The best thing Thiel said wasn't even said -- it was suggested.

Thiel started speaking about the 1999 AOL merger with Old Media icon Time Warner and it was clear that Thiel was also thinking about Google.

Will Google -- just 7 years old -- also merge with/buy a media giant in the near future?

Anything is possible and Google definitely has more than enough cash in the coffers.

I can't think of one reason why any company wouldn't want to join forces with Google and leverage their brand name and global user base.

Peter Thiel was a founder of PayPal, the online payment service that eBay bought in 2002 for $1.5 billion.

Thiel walked away with $100 million and subsequently founded Clarium Capital, a SF-based hedge fund.

It is always a treat when Charlie has big business gurus on the show.

If you think smart conversation doesn't exist on TV, think again.

Charlie Rose certainly puts that myth to sleep.

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