Jack Selby, a former PayPal exec and the longtime managing director of Thiel Capital who attracted some attention years back for his low-key largesse, has a new, $110 million venture fund that he intends to invest mostly in his adopted state of Arizona, where Selby has lived since 2002.
The debut vehicle of the firm, called AZ-VC, is backed by a number of real-estate outfits in Arizona, along with a major local utility company. Notably, however, Thiel is not an investor and neither are any of Thiel Capital's many institutional backers.
We talked earlier today with Selby -- who was calling from the Milken Institute summit in Abu Dhabi and planning to attend the last Formula One race of the season afterward -- to learn more about why that is.
We also talked with Selby about his relationship with Thiel and whether, like a growing number of people in Thiel’s universe, Selby plans to jump into regional politics at some point, using this fund as a jumping-off point. Our conversation has been edited for length and clarity.
TC: You've been running Peter Thiel's family office for years, which is in California, but you are in Arizona. How did that happen?
JS: My father worked for a "MadMen" era advertising firm called J. Walter Thompson, in a job where you either got fired or promoted every three or four years. My dad [experienced] a bit of both, so we had this almost army brat-type 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 dad moved to Phoenix; my younger brother grew up in Phoenix. And going in the summers in between college, I really kind of 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 business to eBay in 2002, I knew I wanted to get away from the onerous tax regime of California. Arizona was kind of the obvious choice, so I moved in 2002, and I've been a happy resident for a lot of years.
Do you spend much time in West Hollywood, where Thiel Capital is now based?
I pop back and forth between Arizona and California quite often. That's one of the appeals of Arizona. Contrary to the whole narrative that's been built up around Austin and certainly Miami, proximity to California matters. If you can get back and forth to California in an hour or so by plane, that's very convenient, whereas it's a four-hour flight from Austin. It's one of the huge advantages I think we have in Arizona.
It does seem like a lot of people have headed from California to Scottsdale in particular. Are different cities in Arizona known for different industries?
A lot of the big defense contractors like Lockheed Martin have a presence in Arizona. A lot of the chip companies have a presence in Arizona. Phoenix is the fifth [most-populous] city in the United States, which a lot of folks don't know, so you have pockets of activity throughout greater Phoenix, ranging from Glendale, which is in the far northwest corner, and all points in between. The best analogy I can give you is Los Angeles, but just, say, 50 years earlier.
You've receiving backing for your fund from Arizona's real estate industry, and your anchor investor is a utility company that 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-long courting process to get them across the finish line. With my day job with Peter, and I say this very humbly, but I basically know every LP that allocates venture capital in the world, whether they're here in Abu Dhabi or Tokyo or New York or wherever it is. They all know who we are, and they would love to curry favor with him by giving money to some new fund that's 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 rise up and get off the ground. Honestly, I didn't know what the result was going to be, but I was very heartened by the fact that people raised their hand and put us in business.
Two things. First, I'm still not understanding why a utility company is a natural fit here.
Arizona has been very, very real estate oriented, and if you look back across various housing cycles, Arizona has been the poster child for the boom and bust because we don't have much diversification in terms of industry. The thinking from a utility perspective is [anything that] helps diversify the economy and helps build up the technology sector within Arizona [is a positive] that will help smooth out some of these ups and downs.
And you expressly didn't want or ask for capital from Peter or Thiel Capital's LPs. Why?
My day job with Peter is protecting 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 close friend. He's a very loyal person. As you might imagine, we get barraged with unsolicited inquiries looking for his backing all day long. So sure, I could have gotten [their collective backing] but I didn't go to a sovereign wealth fund in Abu Dhabi or go to Peter because they have no connection or ties to Arizona and I want people to be involved. I want people to be advisors. I want them to be deal scouts. I want them to be mentors. And the Abu Dhabi sovereign wealth fund is not going to do that.
Playing devil's advocate here, what if you strike gold in Arizona? Will that be a problem for Thiel Capital's investors?
If we get to the point where Peter is sniffing around and wanting to look at a deal [in AZ-VC's portfolio], then that's mission accomplished. I will gladly figure out that conundrum.
Obviously, a growing number of people in Peter's world are running for public office. Might this fund be a kind of precursor to a possible political campaign at some point?
No, I don't have any interest in politics. I'm only interested in the sense that I want to see our political environment be as middle and down the fairway and normal as it possibly can be. I don't want to see another Sheriff Joe come about because Sheriff Joe is bad for business.
Regarding your relationship with Peter, you've worked with him since 1999, but pretty much everyone I've known who works for him has worked for him since nearly the outset of their career, sometimes over decades. What is it about him and the culture around him that keeps people around for so long?
He prizes loyalty and he is himself just an extremely loyal person, and I think he's been so mischaracterized in the media. Obviously, I'm biased, but it drives me crazy. He's a very normal guy. He's very rational. He's obviously very smart. And I have a huge amount of respect for him.
I will never voluntarily leave the orbit of Peter Thiel. It's a pretty amazing seat to have.