Peter Thiel gripes about San Francisco rents, ‘slumlords’ in Silicon Valley

Outspoken venture capitalist Peter Thiel has trouble finding people who agree with him in the Bay Area these days, but at a speech Thursday at the Economic Club of New York, Thiel may finally have found common ground with the average San Franciscan by railing against skyrocketing rents.

When asked about the future of the tech industry, Thiel speculated that the lure of Silicon Valley may no longer be enough to overcome the pain of punishing housing costs.

“At what point is this a feature and what point is this a bug?” asked Thiel, admitting that “it’s a feature if [...] everyone has to be where everyone is, where all the ideas are, where the capital is” and thus creating an enormous network.

Thiel also asked, “At some point does it just get so expensive that it doesn’t quite work? That you have to very quickly make money just to pay the rents?”

The venture capitalist complained that most of the money he invests in new companies these days goes not into product development but instead “to landlords, to commercial real estate.” He even referred to Silicon Valley landlords as “urban slumlords.”

“When a one-bedroom apartment is $2,000 in SF and $1,000 in Austin, maybe that difference reflects that San Francisco is just a much better place,” said Thiel. “But once it’s $4,000 per month, maybe you should think of some other place.”

For the record, even the most expensive online rental platforms report a median one-bedroom apartment price of less than $3,450/month. But the point probably still stands.

Thiel made his name as one of the founders of PayPal and later as an early investor in Facebook, with a net worth that Forbes estimates at $2.5 billion.

Thursday’s speech was the latest in a steady stream of Thielian hot takes about Silicon Valley. In February, the Los Angeles Times reported that he plans to move to LA along with his company, Thiel Capital, citing Southern California’s more conservative political atmosphere.

The move exposes Thiel to criticism that his Thursday comments are merely sour grapes, especially given that LA also suffers from some of the most expensive real estate and rent prices in the country, making the relief on tap down south for the most part minimal.

Be that as it may, Thiel is still not wrong that the rents are too damn high.

• Thiel at Economics Club [Facebook]
• San Ramon Has Area’s Highest Rent [Curbed SF]
• Peter Thiel Bio [Forbes]
• Thiel Leaving SF [LA Times]
• National Rent Report, January 2018 [Zumper]