From: Issue 42 Categories: ideas

The wealthy catalyst

31 January, 2013

Through its breakout labs program, the private foundation of paypal co-founder Peter Thiel funds radical ideas with huge potential for positive change. Executive director Lindy Fishburne has the pleasure of handing out the dough

Written by Tyler Hamilton, Editor-In-Chief

Illustration: Niklas Asker

People with more money than most of us could imagine are throwing their philanthropic weight around in different ways. Jeff Skoll, co-founder of eBay, supports social entrepreneurship around the world. Microsoft co-founder Bill Gates takes aim at poverty and global health. Virgin Group founder Richard Branson finances clean-energy initiatives and leads efforts to make capitalism more environmentally and socially responsible.

Then there’s PayPal co-founder Peter Thiel, who is putting his faith in breakthrough technologies.

Thiel made his first fortune after selling PayPal, the popular online payment service, to eBay in 2002. He then founded global macro hedge fund Clarium Capital to build on that wealth. But it was his $500,000 investment in Facebook in 2004 that eventually launched Thiel, now 45, into the billionaire’s club. The transaction bought him a 10.2 per cent stake in the massive social network, shares of which he sold for more than $1 billion after Facebook went public.

An asset manager, angel investor and venture capitalist, Thiel also devotes a significant amount of his fortune to what he calls “breakthrough philanthropy” – radical ideas around technologies, government and human affairs. He has, for example, funded an organization called the Seasteading Institute, which wants to build autonomous, isolated ocean communities that will test new social, legal and political structures.

To encourage creative and independent thought, his Thiel Foundation gives out up to 30 fellowships annually – each valued at $100,000 – to students under 20 years old. But there’s a catch: the winning students must agree to drop out of college for two years to pursue their own work – be that starting a company, building a social movement or engaging in a new area of scientific research.

And then there’s Breakout Labs, a program the Thiel Foundation launched in late 2011, which is described as “a revolutionary, revolving funding model where successful projects fund the next generation of audacious scientific exploration.” Breakout Labs offers grants of up to $350,000 to scientists and inventors who are taking unconventional approaches to solving major global challenges, from cancer therapy and sustainable food production to clean energy and environmental health monitoring.

One of its most recent grants was to a company called Avetec, which is seeking to generate emission-free electricity from tornadoes created from the waste heat of power plants. Another grant recipient is Modern Meadow, a company that employs 3D technology to “print” meat and leather using animal cells replicated in a lab – a way to make products and proteins without the need to kill cows, pigs and chickens.

A self-described libertarian, Thiel has little faith in government to solve global problems and sees responsible capitalism as a more effective vehicle to positive change. Government, in his mind, stifles innovation. But he’s just as likely to criticize the private sector. He once said “the greatest companies that one can build are ones that represent genuine progress, rather than ones that are just rapid change from one fad to the next.”

Many may question his methods and his definition of progress, but there’s no question that Thiel’s willingness to embrace the radical is rare and welcome.

CK chatted recently with Lindy Fishburne, executive director of Breakout Labs, to learn more about the program:

CK: Why was the Breakout Labs program founded?

Fishburne: It’s essentially set up as a revolving fund to help get funds into very early-stage, extremely innovative, ground-breaking technology and science companies. The hope is our money can be a catalyst that helps them move forward against very specific scientific milestones. It could be a proof of concept. Or, at the intersection of biology and technology, they could use the funds to pursue their own animal studies, which can take them from hypothesis to getting data that supports the outcomes they hope for.

CK: Isn’t that the role that government typically plays, or is this filling a new need?

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