The PayPal co-founder, early Facebook investor, and Founders Fund managing partner talks about the most famous deal that never happened–and what luck has to do with it.

At SXSW this afternoon, Peter Thiel, the entrepreneur, venture capitalist, and contrarian thinker, told the story of the day Mark Zuckerberg decided to turn down Yahoo’s $1 billion offer to buy Facebook.

“The most important moment in my mind in the history of Facebook occurred in July 2006,” he began.

At the time, Facebook was just two years old. It was a college site with roughly eight or nine million people on it. And, though it was making $30 million in revenue, it was not profitable. “And we received an acquisition offer from Yahoo for $1 billion,” Thiel said.

The three-person Facebook board at the time–Zuckerberg, Thiel, and venture capitalist Jim Breyer–met on a Monday morning.

“Both Briar and myself on balance thought we probably should take the money,” recalled Thiel. “But Zuckerberg started the meeting like, ‘This is kind of a formality, just a quick board meeting, it shouldn’t take more than 10 minutes. We’re obviously not going to sell here’.”

At the time, Zuckerberg was 22 years old. [read]

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