Jack Selby, a former PayPal exec and the longtime CEO of Thiel Capital who attracted some attention years ago for his quiet generosityhas a new $110 million venture capital fund that he plans to invest primarily in his adopted state of Arizona, where Selby has lived since 2002.
The company’s debut vehicle, named AZ-VC, is backed by a number of Arizona real estate companies along with a large local utility company. It is noteworthy, however, that Thiel is neither an investor nor one of Thiel Capital’s many institutional lenders.
We spoke to Selby earlier today, who called from the Milken Institute summit in Abu Dhabi and planned to attend the latter Formula 1 race of the season after – to learn more about why that is.
We also spoke to Selby about his relationship with Thiel and whether Selby, like a growing number of people in Thiel’s universe, plans to get into regional politics at some point and use this fund as a starting point. Our conversation has been edited for length and clarity.
TC: You’ve run Peter Thiel’s family office for years, which is in California, but you’re in Arizona. How did that happen?
JS: My dad worked for a “MadMen”-era advertising agency, J. Walter Thompson, in a job where you got fired or promoted every three or four years. My father [experienced] a little bit of both, so we had an almost army-like upbringing, moving seven times during my childhood. During my senior year, I refused to move [from our then-home] in suburban Detroit and stayed with a friend and his family until graduation, but my father moved to Phoenix; my younger brother grew up in Phoenix. And going in between college in the summer, I really fell in love with the place.
Later I was part of the group that started PayPal [as a VP nearly straight out of college] and when we sold the company to eBay in 2002, I knew I wanted to get away from California’s heavy tax regime. Arizona was an obvious choice, so I moved in 2002, and have been a happy resident for many years.
Do you spend a lot of time in West Hollywood, where Thiel Capital is now located?
I often pop back and forth between Arizona and California. That’s one of the draws of Arizona. Contrary to the whole story built around Austin and certainly Miami, the proximity to California is important. Being able to fly back and forth to California in about an hour is very convenient, while from Austin it’s a four-hour flight. It’s one of the huge advantages I think we have in Arizona.
It seems that a lot of people have moved from California to Scottsdale in particular. Are different cities in Arizona known for different industries?
Many of the major defense contractors such as Lockheed Martin have a presence in Arizona. Many of the chip companies have a presence in Arizona. Phoenix is the fifth [most-populous] city in the United States, which a lot of people don’t know about, so you have activity all over Phoenix ranging from Glendale, which is in the extreme southeast corner, and all the points in between. The best analogy I can give you is Los Angeles, but say 50 years earlier.
You receive support for your fund from the Arizona real estate industry and your anchor investor is a utility company that has committed to invest $25 million in the fund. Why would a utility company do this?
I don’t mean this to compliment myself, but it was a two-year courtship process to get them across the finish line. With my day job with Peter, and I say this very humbly, but I actually know every LP that allocates venture capital in the world, whether they’re here in Abu Dhabi or Tokyo or New York or wherever. They all know who we are, and they would like to court him by donating money to some new fund connected to Peter’s universe. But I wanted to use the fund as a litmus test to see if the Arizona community wanted to see something like this fund get up and off the ground. Honestly, I didn’t know what the outcome would be, but I was very encouraged by the fact that people raised their hands and got us into business.
Two things. First, I still don’t understand why a utility company is in place here.
Arizona has been very, very real estate focused, and if you look back through different housing cycles, Arizona has been the poster child for the boom and bust, because we don’t have a lot of diversification in terms of industry. Thinking from a utility perspective is [anything that] helps diversify the economy and helps build Arizona’s technology sector [is a positive] that will help smooth out some of these ups and downs.
And you explicitly did not want or ask for capital from Peter or Thiel Capital’s LPs. Why?
My daily job with Peter is to protect the nest, so to speak, and the nest is very important. Peter is my golden goose. I’ve been working with him longer than anyone else. He’s a very good friend. He is a very loyal person. As you might imagine, we are inundated with unsolicited questions all day long looking for his support. So sure, I could have had it [their collective backing] but I didn’t go to a sovereign wealth fund in Abu Dhabi or Peter because they have no connection or ties to Arizona and I want people to get involved. I want people to be advisors. I want them to be deal scouts. I want them to be mentors. And the sovereign wealth fund of Abu Dhabi is not going to do that.
Playing devil’s advocate, what if you find gold in Arizona? Will that be a problem for Thiel Capital’s investors?
When we get to the point where Peter is sniffing around and wants to look at a deal [in AZ-VC’s portfolio]then mission accomplished. I would like to solve that riddle.
It is clear that a growing number of people in Peter’s world are running for public office. Could this fund at some point be a kind of precursor to a possible political campaign?
No, I’m not interested in politics. I am only interested in the sense that I want our political environment to be as mediocre and normal as possible. I don’t want to see another Sheriff Joe because Sheriff Joe is bad for business.
As for your relationship with Peter, you’ve worked with him since 1999, but pretty much everyone I know who works for him has worked for him since almost the beginning of their careers, sometimes for decades. What is it about him and the culture around him that keeps people around for so long?
He values loyalty and he’s just an extremely loyal person himself, and I think he’s been so mischaracterized in the media. Of course I’m biased, but it drives me crazy. He’s a very normal boy. He’s very rational. He is clearly very smart. And I have a lot of respect for him.
I will never voluntarily leave Peter Thiel’s job. It’s a pretty awesome chair to have.