PayPal co-founder rounds on European tech entrepreneurs and regulators

Murad Ahmed and Sally Davies

Europe is a "slacker with low expectations", held back by the poor work ethic of its people and run by politicians that strangle technological progress with regulations that are a "cure worse than the disease".

That is the scathing assessment of Peter Thiel, co-founder of PayPal, the first venture capitalist to back Facebook and one of Silicon Valley's most celebrated investors.

Peter Thiel, co-founder of PayPal and Palantir.
Adam Jeffery | CNBC

"If you're a slacker with low expectations, those low expectations are likely to be met," he said. "I don't think optimism always works. There is a form of pessimism, such as in China where people work really hard because they are scared that they will be old while they are still poor.

"Pessimism in China motivates hard work. Pessimism in Europe has a more demotivating effect. When you're pessimistic and unmotivated, it has as self-fulfilling character."

Mr Thiel has a reputation for forthright views. In Zero to One, a new book, he writes that tech start-ups should aspire to become monopolies because the rapidly shifting nature of the sector ensures they "don't typically last for ever" and that "disruption", a Silicon Valley obsession, is a "self-congratulatory buzzword".

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Mr Thiel, a libertarian, also attacked EU regulators and policy makers, which have sought to rein in the likes of Google, Uber and Facebook, where he is a board member, with regulatory probes related to antitrust and privacy.

"Google obviously has a monopoly in search," he said. "There are all sorts of questions about whether it is abusing that monopoly or not. But I distrust the power of the EU regulators to make things better. I think the [technology industry] is dynamic enough that the Google monopoly will not last for ever. In practice, anything [the EU does] to micromanage the Google product will produce a cure that's worse than the disease."

He does have encouraging words to say about London, which he said straddles continental Europe and the US in attitude and has overtaken Berlin as the best and "most logical place" to build technology businesses. "People just work harder here ," he said. "They just work less hard in Berlin."

Mr Thiel, who has rarely invested outside of the US, has invested in two start-ups based in the UK capital: TransferWise, a money transfer business, and Deepmind, an artificial intelligence group bought by Google for £400 million last year.

The city's strength is in start-ups that combine financial services and technology. "London is a financial hub, and unlike New York, it's not a financial hub where people hate finance," he said.

"There's much more of a self-hating character to New York than there is to London. This matters, because if you start a tech company in New York, you will do something very far from finance. Whereas in London, it would be perfectly respectable to do something with finance and technology."

But he is critical of Rocket Internet, the German ecommerce venture capitalist, which announced the pricing for an initial public offering, targeting a midpoint market capitalisation of €6.2bn, last week. The €1.5bn IPO was fully subscribed within hours of orders being taken, leading the group to bring forward the flotation.

"I would not invest in Rocket . . . I would not take a venture capital firm public, because so much of the value comes from the people who have started the companies, and its hard to separate the human capital from the operational component," he said.

He added that Rocket's companies, which often involve imitating successful business models from the US and exporting them to new markets, are "much more plays on globalisation than on technology . . . and I believe technology is more important than globalisation".