Jack Selby, a former PayPal executive and longtime manager of TL Capital, has a new $110 million fund that’s gotten some attention for his small-key venture. Selby has lived since 2002.
The company’s first vehicle, called AZ-VC, is backed by several real estate outfits in Arizona, along with a major local utility company. Notably, TL is not an investor, nor is it one of TL Capital’s many institutional backers.
To find out more why, we spoke earlier with Selby, who called a meeting from the Milken Institute in Abu Dhabi and plans to attend the final season.
In addition to Selby’s relationship with TL, and like a growing number of people in the TL universe, this new fund is an indication that Selby plans to jump into regional politics at some point. Our conversation has been edited for length and clarity.
TC: You’ve been running Peter Thiel’s family office in California for years, but you’re based in Arizona. How did this happen?
JS: My father was J.J. in a job where you were fired or promoted every three or four years. Walter Thompson worked for the MadMen advertising agency. my father [experienced] A little bit of both, so we had an army brat-type upbringing when I was moving seven times. In my senior year, I refused to move [from our then-home] He stayed with friends and family in suburban Detroit until graduation, but my father moved to Phoenix. My younger brother grew up in Phoenix. And going in the winter between college, I really fell in love with the place.
Later, I was part of the team that launched PayPal. [as a VP nearly straight out of college] And when we sold the business to eBay in 2002, I knew I wanted to escape California’s harsh tax regime. Arizona was an obvious choice, so I moved in 2002, and have been a happy resident for many years.
Do you spend a lot of time in West Hollywood, where Thiel Capital is now based?
I often go back and forth between Arizona and California. That’s one of Arizona’s appeals. In contrast to the general narrative built around Austin and certainly Miami, the proximity to California issues. If you can fly back and forth to California in an hour or so, that’s pretty convenient, but it’s a four-hour flight from Austin. That’s one big advantage I think we have in Arizona.
A lot of people in particular seem to be headed to Scottsdale from California. Are different cities in Arizona known for different industries?
Many large defense contractors, such as Lockheed Martin, are located in Arizona. Many chip companies are located in Arizona. Phoenix is fifth. [most-populous] A city in the United States that most people don’t know about, so you have pockets of activity throughout greater Phoenix, from Glendale, in the far southeast corner, and all the pockets in between. The best analogy I can give you is Los Angeles, but just, like, 50 years ago.
You’ve secured your fund’s backing from the Arizona real estate industry, and your anchor investor is a utility company that has committed to investing $25 million in the fund. Why would a utility company do this?
I don’t mean to flatter myself, but it was a two-year marriage to get them through the finish line. My day job with Peter, and I say this politely, but I know every LP in the world that allocates venture capital, whether they’re here in Abu Dhabi or Tokyo or New York or wherever. They all know who we are, and would love to curry favor with him by donating money to a new fund connected to Peter’s universe. But I wanted to use the money as a litmus test to see if the Arizona community wanted a fund like this to get off the ground. Honestly, I didn’t know what the result would be, but I was very concerned when people put their hands up and went into business.
Two things. First, I still don’t understand why a utility company is a natural fit here.
Arizona has been very, very real estate focused, and if you look back through the various housing cycles, Arizona has been the poster child for booms and busts because we don’t have a lot of diversity in terms of industry. It’s a utility mindset. [anything that] It will help grow the economy and help build the tech sector in Arizona [is a positive] It can help alleviate some of these complications.
And you did not seek or solicit capital from Peter or TL Capital LPs. why?
My day job with Peter is keeping the nest, so to speak, and the nest is very important. Peter is my golden goose. I have worked with him more than anyone else. He is a very close friend. He is a very honest person. As you can imagine, we’re obsessed with unasked questions, seeking his support all day long. So definitely, I could get it [their collective backing] But I didn’t go to a sovereign wealth fund in Abu Dhabi, or I didn’t go to Peter because they don’t have any ties or ties to Arizona, and I want people to get involved. I want people to be mentors. I want them to be scouts. I want them to be mentors. And Abu Dhabi’s sovereign wealth fund does not.
Playing devil’s advocate here, what if you struck gold in Arizona? Will that be a problem for TL Capital investors?
If we get to the point where Peter is sniffing around and wants to see a deal [in AZ-VC’s portfolio]Then that mission was accomplished. I will gladly understand that controversy.
In Peter’s world, it is clear that more and more people are running for public office. Maybe this is a prelude to a political campaign that will eventually be funded?
No, I am not interested in politics. I just want to see the middle and bottom of our political environment fair and normal as possible. I don’t want to see another Sheriff Joe come because Sheriff Joe is bad for business.
Regarding your relationship with Peter, you’ve worked with him since 1999, but almost everyone I know who worked for him worked for him early in their careers, sometimes decades. What is it about it and the culture around it that keeps people going for so long?
He rewards honesty and he’s a very honest person himself, and I think he’s been very mischaracterized by the media. I’m biased, but it drives me crazy. He is a very normal person. He is very reasonable. He’s obviously very smart. And I have a lot of respect for him.
I will not willingly leave Peter Thiel’s orbit. It is an amazing seat.