Smartest guy in the room

Written By: - Date published: 1:43 pm, February 4th, 2017 - 93 comments
Categories: capitalism, national, same old national, Steven Joyce, the praiseworthy and the pitiful, you couldn't make this shit up - Tags: , ,

Remember Peter Thiel? Who was granted citizenship in New Zealand by this Government even though he did not live here and did not spend enough time here? Who claimed that a grant of citizenship would “enable him to represent the country on the international stage and give him greater confidence in mobilising New Zealand’s talented entrepreneurs”. Who said how his company could contribute to the venture capital market in New Zealand?

Seems that rather than contribute to New Zealand’s venture capital market he has made a killing. At the Government’s expense.

From this Morning’s Herald:

A scheme funded by New Zealand taxpayers netted billionaire Peter Thiel tens of millions of dollars while his publicly funded investment partner barely broke even.

The partnering of Thiel’s Valar Ventures and the Government-owned New Zealand Venture Investment Fund (NZVIF) was launched by minister Steven Joyce in March 2012, nine months after Thiel took his oath of citizenship at the New Zealand consulate in Santa Monica.

Joyce said at the time the venture was “part of the Government’s comprehensive business growth agenda”, but a Herald investigation has discovered the arrangement was quietly ended in October when Thiel activated a generous buyback option allowing him and his private partners to claim all profits from the venture by cheaply buying out his public co-investor.

So how good was the deal that National negotiated?

A Wall St analyst told the Weekend Herald the clause left the Government facing a “horrendous risk-return proposition” that had no place in agreements between commercial parties.

“If a professional investor signed this deal, they would be the butt of their colleagues’ jokes all the way out the door,” the analyst said.

“This is a clear ‘heads I double win, tails I lose’, ‘heads the taxpayer loses, and tails the taxpayer loses’ proposition, and a very savvy deal for Thiel.”

This assessment is echoed by Auckland-based Castlepoint Funds partner Stephen Bennie, who said he would leap at the chance to sign up to a deal if a partner offered such a clause.

“You’d take it. And obviously a fairly smart guy did. Thiel didn’t need to be asked twice,” Bennie said.

The guts of the deal is that Thiel put in under $7 million into the deal and the New Zealand Venture Investment Fund put in $9 million.  The fund was invested primarily into Xero shares.  Then when the price spiked Thiel was able to invoke the buyout clause and pay the NZVIF out essentially at cost.  Kaching.

Steven Joyce is trying to blame Labour for this fiasco:

Finance Minister Joyce, who was Minister for Economic Development at the time the Valar partnership was signed and operated, was asked if the buyout option represented a good deal for taxpayers.

“On the face of it, no,” the minister said.

Joyce said he had inherited the settings for the NZVIF, including the buyout clause, and suggested Lees-Galloway direct his criticism elsewhere.

“If he’s got a problem with it — and I don’t argue with him that he should — then he needs to go back and talk to the Labour ministers at the time [2002] who set this up,” Joyce said.

What a joke.  What has he been doing for the past 8 years.  And his Government signed the deal.  They should wear it.

Iain Lees Galloway has summed up the situation in these terms:

This looks like a terrible deal for New Zealand. No one can blame Thiel for seizing an opportunity to make an awful lot of money at very low risk. It’s very easy to look like an amazing investor when you’ve got people like Steven Joyce prepared to give you a sweetheart deal like this.”

Thiel was let in because he was such a generous person and his presence would be so good for New Zealand business.  The only result I can see from the decision is we have lost lots of money.  Millions.

93 comments on “Smartest guy in the room ”

  • Comments are now closed

  1. Vaughn 1
    4 February 2017 at 1:54 pm

    As the old saying goes, “a fool and his money are easily parted.” However, in this case, minister Joyce has passed OUR money, not his, to a third party. So much for Joyce’s much heralded business acumen. I hope this dreadful man’s reputation in the business community is in tatters.

  2. Ad 2
    4 February 2017 at 2:01 pm

    People who think the way to be really, really .001% world class rich is just through luck aren’t thinking straight and are categorically naive. They do it through rat cunning, 100% focus, luck and timing, and other peoples’ money including their parents and the taxpayers.

    That bent-thinking categorical naivety goes in particular for Ministers who sign off a citizenship for a billionaire, simply on the instinct that it’s simply be better to have a few of these *&^%$#@!&!!@*&!’s working for us, than out there in the world working against us.

    This now taints both Woodhouse and Joyce.

    I can’t even count the number of times I’ve now seen my taxes go out the window to someone like this, and it still pisses me off.

    • Nic the NZer 2.1
      4 February 2017 at 2:51 pm

      Didn’t your avatar comment (a few months back) that it was difficult to justify more socially reasonable investments when Xero shares were beckoning? Sounds like there is a good chance you benefited directly from the deal (well on paper that is).

      • Ad 2.1.1
        4 February 2017 at 3:28 pm

        Where was that?

        Xero always looked to me like the biggest and worst cash-burn we’ve produced in many a long year.

        • Nic the NZer 2.1.1.1
          4 February 2017 at 3:51 pm

          Sorry, I will have to retract that suggestion, the search function is not working so I have no hope in finding it even if you made such a comment. If that’s your opinion then I guess you wouldn’t have said that either, was probably someone else.

    • Rae 2.2
      4 February 2017 at 3:38 pm

      It takes a special kind of personality disorder to seek riches for its own sake. You see, I would not count Bill Gates and possibly Warren Buffet as such, Gates is/was an uber geek in the right place at the right time and Warren Buffet I think just loves the thrill of the chase and has used the sharemarket rather than screwing others to gain wealth, I don’t think it means everything to either of them. People such as them do understand that having great masses of wealth concentrated in one place is not helpful to society.
      The extremely wealthy would harbour some of the world’s most extreme narcissists and most would probably have a fair dollop of psycho/sociopathy in them. It is possibly as treatable as any other mental disorder.
      Its a bit like one person hearing voices telling them to do something awful labeled as schizophrenic while another who says he/she hears the voice of God talking to him/her called a prophet or something and ends up running a church and maybe even amassing wealth doing it.

      • Ad 2.2.1
        4 February 2017 at 3:44 pm

        Agree.
        Both Gates and Buffett have given away a whole bunch.

        • One Anonymous Bloke 2.2.1.1
          4 February 2017 at 3:56 pm

          Is that their rat cunning on display or their 100% focus? 🙄

          • Ad 2.2.1.1.1
            4 February 2017 at 4:24 pm

            Magnanimity.

            • One Anonymous Bloke 2.2.1.1.1.1
              4 February 2017 at 4:28 pm

              …and in the specific case of Warren – his knowledge that his wealth came to him by chance, which he has stated on numerous occasions. Yes yes, you know better.

              • Ad …
                4 February 2017 at 4:49 pm

                Wikipedia knows better:

                https://en.wikipedia.org/wiki/Warren_Buffett

                “Buffett displayed an interest in business and investing at a young age. Much of Buffett’s early childhood years were enlivened with entrepreneurial ventures. One of his first business ventures, Buffett sold chewing gum, Coca-Cola bottles, or weekly magazines door to door. He worked in his grandfather’s grocery store. While still in high school, he made money delivering newspapers, selling golf balls and stamps, and detailing cars, among other means. On his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route.[17] In 1945, as a high school sophomore, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop. Within months, they owned several machines in three different barber shops across Omaha. The business was sold later in the year for $1,200 to a war veteran.[18]”

                • One Anonymous Bloke …
                  4 February 2017 at 4:54 pm

                  Curiously, this model doesn’t work for everyone. I wonder what explains that. What oh what could it be? 🙄

                  Let’s ask Warren.

                  “You’re going to get one ball out of there, and that is the most important thing that’s ever going to happen to you in your life.”

                  • Ad …
                    4 February 2017 at 5:14 pm

                    As you can see from the Wikipedia articles, Warren made sure that luck had as little as possible to him being different to any ‘ball’. So no, there was determination, timing, and a very long term deliberate strategy to avoid negative consequences.

                    That got Mr Buffett where he is.

                    The rest is his typical aw-shucks modesty, which makes him endearing. But has has had a singular goal since he was a child, as his own bio attests.

                    And don’t be fooled: he has squads of staff and analysts ensuring that his own fortune, and the amassed funds of his many acolytes and readers and brokers, stay that way.

                    • One Anonymous Bloke …
                      4 February 2017 at 5:20 pm

                      How lucky he is to be wealthy enough to afford them.

                      I note your argument is still mired in anecdata.

                    • Ad …
                      4 February 2017 at 6:07 pm

                      The anecdote of the post was Mr Thiel. So I provided facts on him.

                      Mr Buffett was introduced so I provided facts on him.

                      Your turn.

            • Alnz 2.2.1.1.1.2
              5 February 2017 at 2:57 pm

              In order to salve the guilt that goes along with overabundance many rich try to pay back some, And some even get involved in “charitable work” of dubious intent with or without there knowledge.
              Freedom in capitalist “democracy’s” brings the worst of people into politics and therefore power, corruption and easy money , our money, which politicians ( who supposedly work for us) help them steal.
              The legal criminal class.

      • One Two 2.2.2
        4 February 2017 at 5:29 pm

        Your evaluation of both Gates and Buffet, is incorrect

        Gates plagiarized, and Buffet is the quintessential inside trader. I’ll not spend time listing Gates crimes against humanity

        FYI. The Forbes list is not the ‘wealthiest’..

        Those families and individuals keep themselves in the shade

      • mpledger 2.2.3
        5 February 2017 at 9:19 am

        Gates has a political agenda and donates his money to advance that political agenda. His work in Africa around health has been beneficial but his work in American around education has been mess after mess after mess.

    • One Anonymous Bloke 2.3
      4 February 2017 at 3:47 pm

      People who think the way to be really, really .001% world class rich is just through luck aren’t thinking straight and are categorically naive.

      I see a bunch of assertions with nothing whatsoever to support them. Yes, I know you believe them very very hard and so what? You think ad hominem slurs cut any ice?

      Lots and lots of people have focus and cunning. They don’t all get rich. Timing and inheritance, hello!, are a matter of luck.

      It’s time for your reality check.

      • Ad 2.3.1
        4 February 2017 at 4:21 pm

        You don’t understand causality.

        The necessary conditions for something to occur doesn’t mean they will occur.
        The elements I listed are the necessary but insufficient conditions for causality.

        As to the point of the post, if you really think that punk Thiel just got lucky, you may as well be Stephen Joyce writing out some more of my taxes and giving them to him, thinking it just can’t happen twice.

        • One Anonymous Bloke 2.3.1.1
          4 February 2017 at 4:26 pm

          Theil was already rich. This good fortune enables him to do deals with dimwit wingnuts like Mr. Fuxit.

          Your narrative is barely coherent (eg: Warren Buffets “rat cunning”) and has zero internal consistency.

          That’s because it isn’t yours. You aren’t the first person to be duped by the self-attribution fallacy and you won’t be the last.

          • Ad 2.3.1.1.1
            4 February 2017 at 4:53 pm

            Go and read up on the actual investment strategy of Buffett, rather than a few tossed-off one liners on just how ‘lucky’ the rich are. Anyone can feel lucky after their first billion.

            • One Anonymous Bloke 2.3.1.1.1.1
              4 February 2017 at 4:58 pm

              Go and read up on eg the “meritocracy paradox” or assymetric benchmarking and stop relying on deeply held anecdata.

              • Ad …
                4 February 2017 at 5:02 pm

                Not interested in merit in this discussion.

                That is as stupid as looking for demerit in the poor.

                • One Anonymous Bloke …
                  4 February 2017 at 5:08 pm

                  That’s because the determining factor in wealth is luck, as evidenced in study after study after study.

                  • Ad …
                    4 February 2017 at 5:25 pm

                    You are confusing luck with likelihood.

                    Similarly, you are also confusing luck with ‘failed fewer times than succeeded’.

                    That means calculating odds better than most, more of the time. Entrepeneurs like Mr Thiel have a knack of exposing as little of their own capital as possible to the downsides of such calculations – what looks like luck is mere calculation.

                    As you can see from the above example in the post, that’s exactly what he did.
                    And he saw this government as a soft mark who calculated that he could still rip us off and get away with it, and make it hurt a little less, if he became a citizen as well.

                    None of the above is luck. All of it is the strong likelihood of one kind of outcome over another.

                    Mr Thiel is no hero. He simply has a good team.

                    • One Anonymous Bloke …
                      4 February 2017 at 5:29 pm

                      You are pretending that likelihood is somehow different from chance, and that luck isn’t a synonym of both of them.

                    • One Two []
                      4 February 2017 at 8:40 pm

                      Given that none of you have knowledge of the variables involved…

                      I’d say you’re both on the wrong path

                      Absolutism ensures it!

                    • Ad …
                      4 February 2017 at 5:46 pm

                      Sorry I’ve run out of reply buttons on this thread.

                      Luck is the opposite of risk.

                      Not sure if you know the Ocean’s 11 film, but there’ a difference between rolling a dice, and putting a metallic mix into the plastic when the dice is being manufactured, then ensuring it’s far more likely to land one way than the other.

                      Thiel and ilk are not in a casino.
                      There’s no tossing of a coin going on.

                    • One Anonymous Bloke …
                      4 February 2017 at 5:54 pm

                      Yawn. I’m not interested in your animated goalposts. Thiel got rich by chance. That gives him the ability to tilt the playing field. How many times do I have to say it?

                      Reading is a skill.

                    • marty mars …
                      4 February 2017 at 6:33 pm

                      I agree with you OAB and I also think these terms – like luck, chance, random and so on are so misunderstood within society – much as the concept of risk (investment) is misunderstood – that misunderstandings are rampant

                      Pain in the butt time – but I think a guest post covering why it is all chance or luck would be helpful and interesting.

                    • mickysavage []
                      4 February 2017 at 6:53 pm

                      Go for it!

                    • One Anonymous Bloke …
                      4 February 2017 at 6:38 pm

                      Thanks Marty – I’ve been considering it for a while. It might even give the nay-sayers a chance to present their evidence, as opposed to repeating their beliefs over and over again in the vain hope that an argument might emerge.

          • Ad 2.3.1.1.2
            4 February 2017 at 5:00 pm

            And for your extra reading, here’s the reality of how Peter Thiel actually got rich. There’s plenty of commentary from other sources, and of course you can go straight to Wikipedia for this guy for further references:

            http://www.investopedia.com/articles/insights/082216/how-did-peter-thiel-get-rich-pypl-fb.asp

            Peter Thiel isn’t striking deals fleecing taxpayers on luck.
            He does that kind of deal week after week, year after year, to stay where he is and improve it.
            He does it because he has lawyers and accountants and investors and capital raisers at his beck and call, working options out for him their every moment.

            These people have squads of Panamanian lawyers to drag the world for loopholes.
            Others like Mr Carlos Slim simply control whole utilities after grinding his way up out of the deregulating/denationalisating 1980s and 1990s.

            This is how the whole field is tilted.

            • One Anonymous Bloke 2.3.1.1.2.1
              4 February 2017 at 5:05 pm

              Derivatives trading???? Investing in Seinfeld when it was cheap? Being lucky enough to have the resources to tilt the playing field?

              You think there’s some sort of skill or merit going on there? hahahahahahah

              • Ad …
                4 February 2017 at 5:27 pm

                The skill is to calculate and risk to get it right a whole bunch more than you get it wrong. It is precisely the opposite of luck. Occasionally, just to make matters worse, some peopled get lucky. But then when you own most of the reds, you cal roll the roulette table for a red and it’s going to get pretty likely you’re going to roll on a winner.

                And what’s worse, in this case the House stepped in and doubled-up for him.

                • One Anonymous Bloke …
                  4 February 2017 at 5:31 pm

                  Watch those goal-posts move.

                  Existing wealth, accumulated by chance, tilts the playing field as you describe. Which is why inherited wealth provides an advantage.

            • One Two 2.3.1.1.2.2
              4 February 2017 at 8:42 pm

              ‘Reality’…

              Only Theil and a very few others will know ‘that story’

              You’re not one of them, and neither is OAB!

      • Ad 2.4.1
        4 February 2017 at 4:23 pm

        A typical overestimation.

        Go out and buy a Lotto ticket, you must be on a roll there.

        • One Anonymous Bloke 2.4.1.1
          4 February 2017 at 4:29 pm

          Cling to the blankie of meritocracy. Clutch at it! 😆

          • Ad 2.4.1.1.1
            4 February 2017 at 4:51 pm

            Nope no meritocracy in there.

            Just a good education in Marx, Weber, and the good people at the Auckland University Department of Philosophy.

            Inherit, have great timing, and control more and more of land, labour and capital. Sometimes luck helps, but only sometimes.

            • One Anonymous Bloke 2.4.1.1.1.1
              4 February 2017 at 5:04 pm

              What part of inheritance and timing aren’t pure luck? Duh.

              In any case, the fixation on inherited (by chance) wealth is a red herring in this context: the current wealthiest individuals in the world started with comparatively little, and got lucky.

              There is zero evidence for your beliefs. Zero. Not only that, this pernicious lie is the root of all right wing hate speech against the less fortunate. Slow clap.

              • Ad …
                4 February 2017 at 5:37 pm

                Inheritance isn’t luck. Hell if only.

                It’s something that families – like the Fletchers, the Fishers, the Caugheys, the Todds – spend many conscious hours carefully calculating. As the editor of the NBR Duncan Bridgeman said, “It’s very hard to get on the rich list. It takes more than winning Lotto.”

                Go through these families if you like. I’m sure they all feel lucky, but luck was the least of it:

                http://www.stuff.co.nz/business/money/82568239/rich-list-revealed-with-combined-wealth-of-60-billion

                A really good author on this is Bruce Jesson, who really studied our rich from a left view. Check in your local library:
                – “Behind the Mirror Glass: the Growth of Wealth and Power in New Zealand in the 1980s”, and
                “To Build a Nation: Collected Writings”

                In that first work in particular there’s a terrific illustration of how a network of family names were interrelated in most of our major companies at the time. It was as if there was some elaborate match-making service – instead it was the system of elite capital working quite consciously across a range of fronts to ensure it was replicated, and defended, and didn’t need oiks from downstairs getting uppity.

                If you’ve ever been near a family with a bunch of money going through a will, you can understand that. It ain’t luck – it’s real nasty, real fast.

                • One Anonymous Bloke …
                  4 February 2017 at 5:46 pm

                  Evidence (yes, that again) suggests that most of them probably believe they’re wealthy because merit.

                  And no, I’m not doing your homework for you. You go through these families if you think it’ll support the self-attribution fallacy that informs your entire argument.

                  Meanwhile, read about “headwind/tailwind asymmetry” if you’re interested in how individuals come to believe this drivel at a personal level.

                  • Ad …
                    4 February 2017 at 5:49 pm

                    I wouldn’t impute knowledge of what they believe about themselves.
                    I wouldn’t claim merit for them, if that’s what you’re worried about.
                    I’d leave ‘merit’ arguments to the loonier fringes of the Act party or the Libertarians.
                    Lotto aside, being rich in New Zealand is due to a set of conditions that are extremely closely calculated.

                    • One Anonymous Bloke …
                      4 February 2017 at 5:51 pm

                      It’s just that you can’t say what they are, nor cite any evidence for them.

                    • Ad …
                      4 February 2017 at 6:04 pm

                      I don’t presume to be an economist, so I’ll first let Thomas Piketty speak:

                      On inheritance:

                      “Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance (of fortunes accumulated in the past) predominates over saving (wealth accumulated in the present)…. Wealth originating in the past automatically grows more rapidly, even without labour, than wealth stemming from work, which can be saved.” – Thomas Piketty

                      And round that off with the role of inheritance in wealth distribution from The Economist, who fully gets the cruel and deliberate sorting mechanism that it is.

                      http://www.economist.com/blogs/buttonwood/2014/03/inequality

                      On what Marx calls “The Greed for Surplus-Labour”, the rich do it day after day to us, hour by hour, squeezing all causal margin – and luck has nothing to do with it:
                      “These small thefts of capital from the laborer’s meal and recreation time, the factory inspectors also designate as ‘petty pilferings of minutes’, ‘snatching a few minutes’, or, as the laborers call them ‘nibbling and cribbing at meal times.’ It is evident that in this atmosphere the formation of surplus-value by surplus-labour, is no secret. “If you allow me’, said a highly respectable master to me, ‘to work only ten mites in the day over-time, you put one thousand a year in my pocket.’ ‘Moments are the elements of profit.’

                      No mug, that Marx, knowing all us Ragged-Trousered Philanthropists so well. And no luck at all, just pure planned deliberation.

                      I’ll have to leave it there for the evening as my sister’s come around for dinner. See you next time. Let me know if you get through Bruce Jesson without weeping.

                    • One Anonymous Bloke …
                      4 February 2017 at 6:33 pm

                      You’re saying being born rich is a skill? Looks like it’s a matter of luck to me, not to mention the various other authors I’ve cited.

  4. The Pink Postman 4
    4 February 2017 at 2:10 pm

    For years the Nat’s have managed to con the people into believing that they are the best party to manage the economy . Time and time again this has been proven wrong ,yet the general public still fall for this lie.ts beyond belief .Wake up NZ.

    • Deane Craw 4.1
      4 February 2017 at 2:22 pm

      yes I can’t understand how that particular myth keeps perpetuating itself. These stewards of the public purse have made fools of us for long enough … surely people can see this!

    • Draco T Bastard 4.2
      4 February 2017 at 2:52 pm

      +1

      National are the worst economic managers as all they ever do is hand our wealth over to rich people thus making us poor.

      • Richard McGrath 4.2.1
        5 February 2017 at 11:34 pm

        Politicians from all the major parties transfer wealth from the poor to the rich. We should stop giving them our money!

  5. Sacha 5
    4 February 2017 at 2:17 pm

    So we actually paid the guy millions to become a citizen. Genius deal-making, again. Right up there with Brownlee and the insurance companies, or Joyce and the casino.

    • Draco T Bastard 5.1
      4 February 2017 at 2:51 pm

      Typical National. Rich guy says that he needs millions of dollars and National happily hand taxpayers money over.

  6. Siobhan 6
    4 February 2017 at 2:17 pm

    ah yes, more shenanigans, firmly in the camp of ‘the awkward issue’.

    https://www.nbr.co.nz/article/yet-another-nz-tech-company-sold-offshore-uk-outfit-buys-ebus-ck-135359

    and from Cunliffe in back 2012.

    http://www.radionz.co.nz/news/political/116547/'too-many'-high-tech-companies-sold-overseas

    As I found this week, certain high-tech fan-boys may well dismiss people such as myself for being a Luddites and simply not understanding the glorious benefits of Tech Age, IT Economy…but as a tax payer and citizen, even I know when we’re getting screwed…

    • Draco T Bastard 6.1
      4 February 2017 at 2:49 pm

      IT and tech development is great for the economy and NZ.

      The problem is that it then all gets sold offshore so that the benefits don’t accrue to NZ but to rich foreign bludgers.

      • Siobhan 6.1.1
        4 February 2017 at 3:07 pm

        The problem is that these Tech companies seem to have the ability to not be of true and genuine benefit to any economy beyond employee wages, atleast in comparison to their value and turn over.

        They are built on tax breaks and IT development and research perks, then ‘disappear’ off when the time comes for ‘payback’. It appears to be an industry that relies on this technique of always being just out of reach of the taxman.

        These ‘rich foreign bludgers’, don’t have any loyalty to any nation, and you have to wonder if IT is an industry that interests them purely because it is so movable and hard to pin down.

        • Draco T Bastard 6.1.1.1
          4 February 2017 at 4:28 pm

          They are built on tax breaks and IT development and research perks, then ‘disappear’ off when the time comes for ‘payback’.

          That happens across the board. It was mentioned in The Entrepreneurial State that the venture capitalists would come in once the hard work was done and funded by government, make millions on the IPO and then leave taking all the money with them often to the point of collapsing the business behind them.

          They make millions in profit but it dearly costs the rest of the community. This is the result of the financial/ownership system that we have. Thing is, I don’t believe that it’s an accident and that the system is designed to do that.

          The tech development would be great – if our financial/ownership system didn’t encourage theft and destruction for profit.

          • ian 6.1.1.1.1
            4 February 2017 at 4:48 pm

            This is something Noam Chomsky talks about as well. The United States government spends untold trillions on research and development of technology through the Pentagon, much of which goes through Chomsky’s own institute, MIT. Things like ‘the internet’ are developed at great cost by the state and, once they have become economically viable, they are handed off to corporations to make money out of. Same with NASA, to a degree. The Apollo program was the first time navigation was handled by computer and the agency contracted Westinghouse to produce the computer chips. NASA were buying as many computer chips as Westinghouse could produce, providing a guaranteed buyer while the company perfected their mass-production techniques.

        • One Two 6.1.1.2
          4 February 2017 at 8:48 pm

          ‘IT’ is essentially a vapor industry, and Xero is a perfect example of this

          Knowing how to manipulate business rules and local jurisdictions enables vapor to be turned into paper…

        • Paul Campbell 6.1.1.3
          6 February 2017 at 12:31 pm

          That’s true for some companies, but not all.

          I run a small tech company, I’m not a rich foreign bludger, I haven’t taken any tax breaks, I base my company in NZ and do nothing to avoid NZ taxes. In fact I structure my business on purpose to pay all its taxes, and my taxes, in NZ (our taxes are so low here ,the only reason I can imagine to do otherwise would be to avoid paying any taxes at all). 99% of my income comes from off shore and apart from some expenses the bulk stays in NZ as taxable income.

          So please don’t paint us all with such a broad brush – target the people who are behaving badly, not the rest of us who are trying to do the right thing

  7. Draco T Bastard 7
    4 February 2017 at 2:47 pm

    Another example of the rich stealing from society with the help of National.

  8. Keith 8
    4 February 2017 at 3:08 pm

    Typical Nats, obsessed with enriching the rich using taxpayer money. And Xero features yet again. No wonder Rod Drury is such a spokesman for National.

    Joyce is a simpleton who is played like a guitar by these rich boys and they must be laughing!

  9. JustMe 9
    4 February 2017 at 3:44 pm

    Yet another multi-corporate from America gets away with daylight robbery on the NZ taxpayers and this government turns a blind eye.
    Way to go English and Co. You certainly know how to rip off NZers especially in the best interest of “Making America Great Again”.
    But then how much of a donation did Thiel make to the National Party to get Instant Kiwi citizenship?
    I am sure many of us NZers are so fed-up with the blame-game tactics. If this is the best Joyce can do then he is a prime idiot.
    Lets applaude Joyce for helping to demean the National Party to the low level of respect and regard where is seems to be at home in.
    But let us look at the track record of the National government since 2008. The best they can do is blame someone else for THEIR mistakes. Here we are into 2017. There has been a National government since 2008. That is approximately 9 years of National. And all along they resort to blame games towards a previous government of almost 10 years(a decade)ago. How complicitly childish Joyce can be when he is questioned on something that is HAPPENING IN THE NATIONAL GOVERNMENT WATCH?!

  10. HDCAFriendlyTroll 10
    4 February 2017 at 5:11 pm

    Sigh. Another reason the government shouldn’t be in the business of business.

    • One Anonymous Bloke 10.1
      4 February 2017 at 5:14 pm

      I agree. Governance is not business. Government is simply the most powerful of all market forces.

      • North 10.1.1
        5 February 2017 at 8:22 am

        The keener observation which we never hear from the mouths of fetid rightist trolls is that Business should never be admitted into Governance, or Government (G’nce and G’ent being different quantities by the way). The current extreme examples of the ill of it are Thiel in NZ and Trump in the US.

        What we really need to find out is the measure in which Thiel benefited National Party coffers/interests/connections. That’s the essential question.

        Take your pick…….a corrupt deal or a “dumb” deal.

  11. silvertuatara 11
    4 February 2017 at 6:57 pm

    Quoted directly from the NZ Herald today;

    “It remains unclear where the buyout leaves Valar Ventures’ New Zealand adventure.

    Thiel wrote a letter to Internal Affairs officials considering his citizenship application saying he incorporated the limited partnership after meetings with senior Government figures John Key, Bill English and Gerry Brownlee.

    He said it was intended to be “dedicated exclusively to funding and aiding New Zealand technology companies”.”

    For the sake of transparency I would love to know if John Key’s blind Trusts have traded in Zero shares, and if the trust did, the timing associated with any purchases/sales of shares and any shares associated with any of Peter Thiel’s associated ventures.

    If John Key was still prime minister….surely he would be under renewed pressure to declare any and all investments that his blind trusts are and had been associated with since he became prime minister of New Zealand…..even as a member of parliament under National….questions need to be asked of John Key’s blind trusts portfolio make up through 2009 to current?

  12. NZJester 12
    4 February 2017 at 7:15 pm

    National are slow to react to things as they always look at the now and never to the future while wasting public cash on non-permanent quick fixes.
    All of the long-term planning and fixes always come out of Labour Governments.
    Funny how Labour governments manage to finance essential services while paying down debt, but National racks up debt while underfunding everything.
    National governments are just no good at handling public money and willing to give it away like this to every rich person who asks.

  13. The Chairman 13
    4 February 2017 at 9:18 pm

    The Pineapple Lump of the week award goes to Joyce.

    Though it’s disappointing to hear Labour initially set this up.

    • mickysavage 13.1
      4 February 2017 at 9:28 pm

      Desperate, really desperate. It was all Labour’s fault? National drafted the agreement and Joyce presumably signed it. The fault is entirely theirs.

      • The Chairman 13.1.1
        4 February 2017 at 9:37 pm

        “The fault is entirely theirs.”

        Indeed. It’s just disappointing to hear Labour set this up.

        Moreover, actions as such give National the opportunity to turn around and blame Labour.

        Let’s hope Labour will stop giving National this stick to hit them with.

        • Wayne 13.1.1.1
          5 February 2017 at 8:52 am

          I think the policies to boost innovation can quite easily have unintended effects that are quite difficult for governments, whether National or Labour.

          The policies to attract investment in innovative business often exists within special entities like NZVIF as in this case. Ministers are not necessarily aware of the detail of the arrangements. But they can have effects as exist in this case which are frankly not what the public expect.

          To a lesser extent the same problem exists with all grants that stimulate innovation. A number of very high innovative businesses will receive very substantial grants to develop new technology. Often the people who own these businesses (or a significant share of them) will be very wealthy people.

          If the company succeeds then their shareholding can dramatically increase in value. Of course one of the major purposes of these schemes is to produce exactly that effect, wildly successful businesses that can build an international presence.

          Virtually all successful NZ technology companies will have had grants from government, especially through Callaghan. For instance I imagine Xero has significant direct investment through the Callaghan Growth grant.

          One solution is that the taxpayer, whether through Callaghan or NZVIF, can directly benefit from any major gains, particularly when the investment is a substantial size, say over $3 million or so.

          • Incognito 13.1.1.1.1
            5 February 2017 at 11:12 am

            Ministers are not necessarily aware of the detail of the arrangements. But they can have effects as exist in this case which are frankly not what the publicMinisters expect.

            FIFY

            1) The Minister doesn’t know the salient details.
            2) It’s a badly designed grantdeal.
            3) Shit hits the fan.
            4) The buck stops with the Minister.
            5) The Minister is politically embarrassed but personally doesn’t give a shit.
            6) The Minister passes the buck (shit travels sideways and downwards).
            7) The Taxpayers pay, as per usual.
            8) Repeat!

      • Ed 13.1.2
        5 February 2017 at 3:48 pm

        I would like to know more about the scheme that Labour designed. From the little I have read in the myriad articles, it seems it was intended to enable some projects to get off the ground that did not meet normal requirements for a safe investment, but would benefit New Zeal;and through development of business, perhaps in part of the country that has unemployment that the project would reduce (that is now of course anywhere in New Zealand) and where assessing the market value of the business would be difficult for some time. Encouraging private investment by giving a small backup on investment return (government stock yields may not be high, but they are at least positive), and enabling a part owner to take over enterprise once assistance is no longer needed may be quite appropriate for developing a craft industry in a regional area suffering low employment. Do we have any examples of where such deals turned into a success for New Zealand?

        Then look at this deal – It seems Theil had already invested in Xero – and it was or shortly afterwards became a listed company. There was a market for the company – all they needed was success to get people investing more. So then Key and Joyce decide that it is worthwhile giving this private company a boost through a bit of government money, and encouraging one of its shareholders to accept a deal where he invests some more – but this time with a stop loss clause (if the share price falls he will get a govt stock return) and a buy option in his favour – if all goes well he can take over all the profits! Did nobody think that this was just interfering in he stock market in a way that is a one-way bet in favour of one investor at the expense of the government? Now we know that John Key doesn’t believe in a fair market, but this deal is ridiculous! Surely there should be a paper where Treasury or a government department recommended against it? (Is it possible there was but the right questions were never asked? So much for Key being billed as a financial expert – the only possible reason for this deal is that there was something we did not know – have there been unexplained deals ‘outside’ the official arrangement? Have there been any once-off donations to National (or even a “friend’ of National that may also have influenced a citizenship decision? Perhaps we will never know, but what we do know looks very bad for National’s claim of competence..

  14. marty mars 14
    5 February 2017 at 7:54 am

    the scum in the room – from oct last year

    “But part of Thiel’s 1995 book The Diversity Myth: Multiculturalism and Political Intolerance on Campus suggests that he may sympathize more with Trump – who has recently been accused of sexual assault and misconduct by several women – than with his victims.

    The PayPal co-founder attempted to discredit the idea of date rape – he wrote that the definition of rape had been erroneously expanded to include “seductions that are later regretted”. He also suggested that the movement to combat it on college campuses was motivated by animosity toward men.”

    https://www.theguardian.com/technology/2016/oct/21/peter-thiel-support-donald-trump-date-rape-book

  15. Philj 15
    5 February 2017 at 11:16 am

    Good discussion. This is what I value at the Standard. Keep it true and relevant. Keep up the good fight.

  16. Ichiro 16
    5 February 2017 at 7:30 pm

    If anyone’s read up on Thiel it’s clear he’s both very intelligent and is a billionaire sociopath, something that seems to go hand-in-hand. His only defenders are those who have a vested interest (like the CEO of a company he’s invested in, or a potential co-investor in a fiber cable).

    I guess the one big question hanging over not Thiel but over New Zealand’s media is why is this story not gaining more coverage? Why is it only showing up on a left-leaning blog? Why isn’t someone on the DomPost or Herald roasting Steven Joyces’s almonds over a fire?

    […and yes, I know the reason; it’s just frustrating that we’ve reached that point in this country, where it’s impossible for any story critical of the neoliberal agenda that solely benefits the wealthiest to gain any traction… it’s almost as if those who envy that wealth (and defend it) think these buggers have actually earned it, as if any person could actually *earn* a billion dollars.]

  17. Smilin 17
    6 February 2017 at 2:02 pm

    The country has turned into an unprincipled place run by unscrupulous politicians and lobbyist