How $100k From Peter Thiel Helped A Dropout Become The Youngest Self-Made BillionaireDec 07, 2020
As far as audacious attacks on the importance of an elite university education go, Peter Thiel may take the crown.
In 2010, he launched The Thiel Fellowship which encourages visionary students to drop out of college in return for his mentorship. Oh, and a little sum of $100,000 to get whatever venture inspires them off the runway. Amongst the alumni are the youngest person to produce nuclear fusion and the co-creator of the Ethereum.
It’s been controversial, to say the least. Larry Summers, the former head of the US Department of the Treasury had this to say:
“I think the single most misdirected bit of philanthropy in this decade is Peter Thiel’s special program to bribe people to drop out of college.”
Yet in December 2020, Austin Russell became the second fellowship alumni to become a billionaire when his company Luminar went public. At just 25, he joins the exclusive club of the Facebook, Snapchat, and Stripe founders to get there before 30.
He is the world’s youngest billionaire with Kylie Jenner currently disqualified. He is far less famous so it’s time to illuminate the story of the prodigy.
Nerd first, entrepreneur second
It would be an outright lie to look at Austin’s childhood and declare there were no signs he would achieve anything out of the ordinary.
Look at what he worked out at such young ages; I can confirm at 28, I have done none of these things.
- At 2 years old, he memorized the periodic table.
- At 10 years old, he converted his Nintendo DS into a mobile phone.
- At 11 years old, he built a research lab in his family garage.
- At 13 years old, he patented technology to recycle sprinkler water.
Austin was obsessed with learning new things and spent lots of his free time independently studying. After building his own supercomputers, he landed on his true passion. Lasers.
The University of California gave him access to their laser institute when he was 14 impressed by his intellect. He focused on lidar technology which bounces lasers off objects to map the surroundings. Why this? Because he thought others were looking at it completely incorrectly.
The technology is crucial in self-driving cars to make them as safe as possible. It doesn’t sound right that a teenager was the one pushing forward such an obviously needed system and Austin would agree with you.
“It should not be a 16- or 17-year-old and then subsequently a 25-year-old that can build a business like this.
We’ve been able to accelerate this because no one has really done this before.”
Austin was a nerd with a mission who believed his ideas could make the world a safer place. It’s why he succeeded over the huge companies who focused on the balance sheet.
Despite his founding Luminar in his garage, he still went to Stanford to study physics. Yet he jumped at the chance to bring his dream into reality when the opportunity came to take Peter Thiel as his mentor through the fellowship. He knew science but now he could nerd out on entrepreneurship.
Channeling the founders of Silicon Valley
Austin Rusell perfectly illustrates the advice that podcast legend Guy Raz gave in an interview with Tim Ferriss.
Silicon Valley doesn’t exist because of Amazon, Apple, or Facebook. The gold rush is what brought people to the area who came from all over the world. Few people actually got rich through striking gold but several entrepreneurs did. These were the people who saw an opportunity to service those blinded by the gold rush.
- Wells Fargo — Started as a business to transport gold for miners from California to the East Coast to sell. They needed to handle money as part of this which would go on to be a $122bn business.
- Levi Strauss — Created work pants for miners of high quality, this made him a millionaire. Later in his career, he made the first denim jeans and the rest is history.
Right now tech has made several industries seem like gold rushes. The race to dominate the self-driving car market is fierce because it is estimated to be worth $221 bn in 2025. All the major competitors have almost unlimited pockets and could muscle Russell out if they wanted to.
But Austin isn’t competing with them, he is servicing them. He’s feeding the giants who have big appetites and already has production orders from Volvo, Daimler, and Mobileye. Luminar is worth around $8bn which sounds big but is little more than a pest if he tried to fight them head-on. Austin has kept his company laser-focused on lidar and if he achieves his dream, his company could be worth 10 times that in 10 years' time.
“When this becomes a new, modern safety technology on vehicles that’s integrated on every vehicle globally produced, that’s when I’d firmly say that we’ve accomplished the goals that we set.”
Somehow he kept control
Self-made tech founders rarely own a significant stake in their company by the time IPO rolls around. Most business insiders tell them to raise money through selling equity rather than relying on banks. Equity holders have a vested interest in the company succeeding whereas banks can seize the company’s assets to make their money back.
It starts with seed or angel investors who take a chunk to get the company off the ground. Then another round with another venture capitalist and repeat. It’s not uncommon for this to go on for 5 rounds, leaving the founder with 10% at the end. Luminar had funding from Peter Thiel, Volvo Cars Tech Fund, Alec Goes, and Dean Metropoulos. Yet Austin still has a third of the equity!
“I’m still relatively young, but … a lot of blood, sweat and tears have gone into it. And I was fortunate enough to be able to retain a good enough stake.”
He is far too modest. If his billionaire backers are to be believed, fortune played much less a part of it than he believes. Alec Gores thought Austin understood the listing process better than “sixty-year-old guys who’ve been in the business for 40 years”.
Austin is the genius who has pushed lidar technology forward but it’s even more impressive he kept the rights to the huge value he has created. The science nerd applied his brainpower to the startup world and has become an entrepreneur nerd. I’m sure young tech hopefuls will be studying him for decades to come.