Peter Thiel Picks Google Over Apple Pay

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It’s no great surprise that Peter Thiel might be hard to amaze right out of the gate with any product, as it is often difficult to impress the impressive.  And Thiel’s track record over the last two decades has certainly been that.  Thiel co-founded PayPal when major players were jus starting to think about how people should pay online and  was among the very first to back Facebook.  In more recent years, the billionaire investor has poured seed funding into such outfits as Airbnb, LinkedIn and Yelp.  In short, Thiel has a track record of picking winners.

So far, however, he’s not picking Apple Pay, which he noted in the above November 3, 2014 interview with ABC News’ chief business and economics correspondent Rebecca Jarvis. He notes that Apple Pay is running after a strategy that is very different than how PayPal sought to take on the payments market a decade and a half ago.

“It’s very different. It’s aiming to be a product that reaches hundreds of millions of consumers at once and incrementally improve the payment experience. It’s the sort of things that is sort of an inch deep and miles and miles wide. PayPal was this very narrow product that helped like 20 thousand power sellers on eBay get money more quickly.  I often think that for a start-up, you need something that is very narrow but very valuable to get started.”

If Thiel’s criticism seems familiar to PYMNTS readers it should, it is similar to the critique David Evans laid against Apple in his commentary last week, Apple Pay’s Most Unusual Ignition Strategy. Although many two-party payments platforms have been successful in the past with a “go local/go deep strategy,” and a few players have succeeded with a “go broad/go deep,” plan,  Apple’s plan is unique and uniquely challenging.

“I don’t know of any two-sided platforms, let alone payment platforms, that have ever succeeded with a ‘go broad/go shallow’ strategy,” Evans wrote of Apple Pay.  “The mathematics of ignition should make us pretty dubious that this strategy could work. It just can’t create enough interactions to get to critical mass.”

However, Evans also offered a caveat similar to what Thiel offered Jarvis on Monday (Nov. 3): Apple is unique in many regards.

“Apple is a much bigger company, they can try to do something that’s of less value to each consumer but that reaches millions and millions of customers.  It’s going to be a challenge whether you can get people to adopt it, but only a big company can try to do something like Apple Pay.”

Thiel noted that he does think it is possible that Apple Pay could do it (if anyone can), but it isn’t enough to sell him on Apple Pay.  Thiel, when asked directly, said that ultimately he put a little more stock in Google’s ability to ignite payments, not Apple’s, despite all the recent excitement around Apple Pay.

“I’d always bet on Google because I think they have much more of a platform and three’s always a worry that Apple will loose its advantage as others catch up on the cell phone, topping the iPhone. So far, Apple has proved to be far more resilient because it’s brand is so great.”

Although Thiel does think Apple is a great brand, he ultimately thinks Google is the better positioned company to take on mobile payments.  And that’s a message he’s been taking on the road and in front of the cameras since Apple was announced in mid-September.

About a week after Apple Pay was launched, Thiel first noted that he believed Google was “more dominant” than either Apple or Facebook

Thiel noted in an interview with CNN on the same day that Apple Pay “wasn’t  a breakthrough.”