Billionaire investor Peter Thiel: Silicon Valley’s monopoly on big growth tech companies is over

Peter Thiel
Adam Jeffery | CNBC

Peter Thiel is a heavyweight entrepreneur and investor who made his career in Silicon Valley. He launched and took public online payments company PayPal, was an early investor in Facebook and Airbnb and went on to launch software company Palantir Technologies. But now the billionaire says that Silicon Valley's monopoly on technology company growth is over.

"I have been investing in the technology space — entrepreneur and investor over the past 20 years in Silicon Valley — and within the area of IT, it has for the last 10, 15 years in the US and the world been extremely centered on Silicon Valley," Thiel says, speaking at the Future Investment Initiative in Riyadh, Saudi Arabia, Thursday.

"I think there are a lot of reasons for that, but the question is, 'Where is the growth going to happen the next 10 years?' And what I would tend to think is that it will be more diversified from just Silicon Valley."

The concentration of global tech companies in one small region in California has been a peculiar feature of the industry.

"There was something very paradoxical about it all being in Silicon Valley, because after all these Internet companies are global in scope," Thiel says. "They can be built anywhere. You just need some talented people, some capital, the right governance structures and so it was always this very odd question, why all the companies of this new global technology were built in one specific place."

Until this point, the growth of successful tech companies being nearly monopolized in Silicon Valley has been largely due to the concentration of knowledge about entrepreneurship and the presence of mentors, Thiel says.

"The answers for that had to do with network effects and knowledge and role models, but I think at this point, I would bet on places outside of Silicon Valley."

Peter Thiel wishes he could give his younger self this advice
Peter Thiel wishes he could give his younger self this advice

California still sees a disproportionate percentage of venture capital deal flow. In the third quarter of 2017, California was home to 580 companies receiving venture capital investment, according to the most recent data on the industry from the National Venture Capital Association and PitchBook. New York had the second highest number of venture capital deals with 188, or 32 percent of the number of deals closed in California.

But when Thiel is thinking about where the next big technology deals will be, he thinks globally.

"The one big place outside of Silicon Valley over the last few years has been China, where there have been some spectacular companies started," Thiel says. "I don't think there is a single other place, it is not a specific city or specific country, but I think in general there is much opportunity outside of Silicon Valley."

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