Peter Thiel’s Flawed Analysis of Hewlett-Packard

Stanford computer science students aren’t very bright. Famed investor Peter Thiel taught a course there, CS183, Startup Engineering, where he explained his theory of how to create a successful business. Unfortunately, not a single one of the many students in the class decided to check Thiel’s work when he claimed one side of a boardroom dispute was to blame for the crash of a Silicon Valley icon.

In the class and in his book based on the class, Zero to One, Peter Thiel argues that Hewlett-Packard (HP) was grossly mismanaged from late 1999 until late 2012 under the leadership of chairwoman of the board Patricia Dunn. However, from 11/1/99 until the day that Patricia Dunn resigned, 9/26/2006, HP stock fell 3%, decisively outperforming the NASDAQ index, which fell 25%. HP continued to outperform the index for 4 years during the period 11/1/99-9/26/2010, by a 25% margin. HP stock crashed in 2011, long after Patricia Dunn had left the HP board.

Stanford students should take nothing for granted; everything should be verified, even the assertions of a prominent successful investor.

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