Best trades in history... Facebook shares for murals
Artist David Choe was born in Los Angeles in 1976 and from an early age he took up illicit spray-painting of graffiti, running into trouble with the police. Following a brief spell at the California College of Art, he worked as a cartoonist and illustrator for magazines and album covers (most notably for a 2004 Linkin Park album). He also made money as a professional gambler. However, it was his fame as a graffiti artist that enabled him to start winning commissions for murals from various individuals and companies.
What was the investment?
In 2005 Choe was hired by Sean Parker, who was closely involved with Facebook, to do some murals for its first corporate headquarters in Silicon Valley. Choe was given the option of receiving his fee, which had risen to around $60,000 by then, in either cash or share options in the fledgling company. Parker recommended that he take the shares. Despite the fact that Choe disliked social media, and thought that Facebook was “ridiculous and pointless”, he decided to take Parker’s advice and opted for the shares, giving him a stake equivalent to 0.1% to 0.25% of the company.
What happened?
Over the next seven years Choe’s reputation as an artist would rise – his portrait of former US president Barack Obama hangs in the White House. Facebook, however, would do even better, becoming not just the largest social-media network in the world, but also one of the biggest technology companies ever. In 2012 it floated on the stockmarket, putting its value at $120bn. This made Choe’s stake in the company worth around $200m (a return of more than 30,000 times the value of the fee that he had foregone). Choe’s net worth is currently estimated at $300m.
Lessons for investors
You could say that Choe’s success here was down to luck, but he deserves credit for taking the risk, something he could do because he had other sources of income, and so didn’t immediately need the money. He also had the discipline not to sell his stake in the company before it went public. Perhaps the most important lesson, however, is that while scepticism can be useful, especially where new technology is concerned, it is also a good idea to keep an open mind – as exemplified by Choe taking a stake in a company he personally disliked.