Business

Into the ‘Thielverse’: Tech billionaire’s influence has global ramifications

American tech billionaire and NZ citizen Peter Thiel is not just an eccentric oddball, according to a new book. His influence has global ramifications. By Peter Griffin.

As the first wave of the pandemic swept the United States last year, the country’s billionaire doomsday preppers were expected to put their plans into action.

Peter Thiel, the vastly wealthy co-founder of PayPal and an early investor in Facebook, still had time to board his private jet and escape to his house overlooking Lake Wakatipu in Queenstown.

A New Zealand citizen since 2011, Thiel had long anticipated global collapse. He’d even made massive financial bets on it. Here was his chance to ride out the crisis and emerge unscathed to build the libertarian utopia he’d always dreamed of. But, as is so often the case in Thiel’s life, his contrarian instincts led him elsewhere, to Hawaii, where he laid low at one of his other lavish properties, an ocean-front mansion on Maui.

Rather than live up to his prepper image, says Max Chafkin, the features editor at Bloomberg Businessweek and author of The Contrarian, a new biography on Thiel, the entrepreneur saw opportunity amid the chaos. He chose to stay within striking distance. “Thiel lives in the realm of ideology,” Chafkin told the Listener on a Zoom call from his home in New York. “But at the end of the day, a lot of what he has done is easily explained through the norms of capitalism. He’s just trying to make money.”

To those of us distant from Silicon Valley, and unaware of his links with New Zealand, Thiel can come across as nothing more than an eccentric oddball. But his back-room deal making and power broking have indirectly helped shape the technology used by millions of people every day.

His influence in the political realm has also had global ramifications, with his support for Donald Trump ushering in an era of ultra-nationalist and xenophobic policies that altered the US’ relationship with the rest of the world.

There are more recognisable names associated with Silicon Valley – Bill Gates, Steve Jobs, Mark Zuckerberg, Elon Musk –but Thiel, perhaps more than any other tech entrepreneur, has influenced the prevailing culture of the Valley. It is one that prizes disruption over everything else, has a healthy disdain for business norms and pesky regulations, and has given rise to a handful of tech giants who rival nation states in their wealth and influence.

Chafkin has charted Thiel’s rise over the past 15 years and wrote The Contrarian to try and unpick some of the myths that surround him. “One is that he’s a right-wing supervillain, sucking up our data through his companies and hiding out in his bunker in New Zealand,” says Chafkin. “Then there’s the myth of Thiel as a right-wing superhero, a combination of Ayn Rand and one of her characters.”

While both of these myths contain truth, the full picture that emerges is one of a shrewd investor who is socially awkward but still a consummate networker. He’s a gay Christian who embraced libertarian ideals early in his life and who used his considerable wealth and connections to pursue a political project that helped Trump into the White House.

Powerful and vindictive

Chafkin’s most telling insight comes in the introduction to The Contrarian. Of the dozens of people he spoke to while researching the book, many of them successful contemporaries of Thiel, most wanted to remain anonymous. “They told me they were scared of him,” writes Chafkin. “He was that powerful and he was that vindictive.”

Born in Germany in 1967 and taken to the US the following year by his parents, Klaus and Susanne, Thiel had two obsessions as a child: chess and The Lord of the Rings. The latter, more than anything, may explain his infatuation with New Zealand.

Klaus, an engineer, settled his family in Cleveland before uprooting them to apartheid South Africa, where he had a contract to help construct a uranium mine. The family eventually settled in California, where Thiel initially studied philosophy at Stanford University.

When he eventually graduated from Stanford with a law degree, in 1992, Thiel had visions of becoming a lawyer and even applied to become a clerk for the Supreme Court. But, to his dismay, he was turned down. He quit and joined Credit Suisse in New York as a derivatives trader.

That, at least, fed his interest in making money, but it, too, would prove to be a brief stint. Thiel’s attention was soon captured by the internet companies emerging back in California with revolutionary ideas and business models. He decamped back across the country to get in on the action.

That coalesced in his first major success, the online payments platform PayPal. In 2002, eBay bought PayPal for US$1.5 billion. A share of the proceeds would help bankroll numerous investments in other emerging companies, some of which were founded by the “PayPal Mafia” of Thiel’s former colleagues. Chief among them was Elon Musk, who was working on a rival to PayPal, but who threw his lot in with Thiel before being ousted as chief executive of the company by his business partner.

Thiel would later bury the hatchet with Musk and invest in his rocket company SpaceX, although not his other key venture, electric-car company Tesla.

Thiel may have backed a string of successful tech ventures through Founders Fund, his venture-capital company – Airbnb, Facebook and Stripe among them – but he’s also a climate sceptic. He was the first outside investor in Facebook and found a kindred spirit in founder Mark Zuckerberg, who was more than a decade younger. “After investing in Facebook,” Chafkin writes in The Contrarian, “Thiel had set up Zuckerberg with absolute control over it, helping to transform the kid with the words ‘I’m CEO, Bitch’ on his business cards into the fairly polished capitalist he would become.”

But Thiel didn’t cash in on his protégé’s success. He dumped most of his stake as soon as Facebook’s shares went public, sacrificing a fortune. His net worth is conservatively estimated at US$6.9 billion. That’s chump change compared with Zuckerberg, or the world’s richest man, Amazon’s Jeff Bezos, reportedly worth US$190-$200 billion.

Thiel’s biggest success to date has come in the form of Palantir. Named after Saruman’s all-seeing crystal ball in The Lord of the Rings, the controversial data-analytics company helps intelligence and law-enforcement agencies, as well as private companies, scoop up masses of data.

Again, his timing was perfect. Palantir has become the largest of a new breed of defence contractors founded in Silicon Valley, with tentacles deep into the public sector. It listed on the Nasdaq last year and currently has a valuation of nearly US$47 billion.

Palantir’s reach extends to governments around the globe. An NZ Herald investigation in 2017 revealed the company’s long-standing commercial links to the New Zealand Defence Force, the SIS and the Government Communications Security Bureau. Last year, as Palantir turned its data-mining prowess to tracking the spread of Covid-19, it sat down with Ministry of Health officials in Wellington to offer its services. No deal was struck, but Palantir secured numerous health-sector contracts in numerous other countries.

“Thiel’s very good at seeing which way the wind is blowing and finding a way to pitch himself and his companies,” says Chafkin.

Trumpist project

Thiel’s ideology and business interests converged on Trump, whom he stood alone among tech leaders in backing in the 2016 presidential election.

Although he quietly backed away as Trump’s presidency unravelled, he has doubled down on Trump’s brand of politics. Chafkin doesn’t rule out Thiel backing Trump for another run at the presidency. But Thiel has also been bankrolling rising stars of the political right. “There’s a possibility there could be four senators after 2022 with very close relationships to Thiel, who in some sense owe their political careers in part to his support,” says Chafkin.

The political project continues as a long game for Thiel. But what about his New Zealand project? Matt Nippert, the NZ Herald journalist who in 2017 broke the story about Thiel’s successful bid for citizenship years earlier, describes his interest in our country as simply a “hedge” against uncertainty in the US.

“That’s my take, too,” Chafkin says. “Thiel was totally freaked out by Barack Obama, who he thinks is a communist. New Zealand had a conservative, centre-right government. He’d travelled there before; it all kind of made sense.”

Thiel’s efforts to endear himself to then-prime minister John Key and the country, his $1 million donation to the Christchurch earthquake rebuild and small investments in our tech start-ups were seen by most Kiwis for what they were, says Chafkin: “a cynical grab for citizenship”.

For years, he has remained largely absent from New Zealand. But the lure of the “shire” is still great. He may have sold the Lake Wakatipu “plasma house”, named for the massive plate-glass window fronting it, but Thiel is finally progressing plans to develop his 193ha estate on the shores of Lake Wānaka, with plans for a luxury lodge sparking objections from environmental groups worried it will be an eyesore on the landscape.

Chafkin had only one off-the-record discussion with Thiel for the book. A list of questions went unanswered. He is naturally a bit nervous about Thiel’s reaction to the book. It was Thiel, after all, who secretly waged a US$10 million legal campaign to bankrupt Gawker Media and its owner Nick Denton, who years earlier had outed him as being gay. “Yes, I am afraid of him, but not exclusively afraid of him, because any billionaire could follow the same playbook and achieve the same thing,” says Chafkin.

In the end, Thiel was too intriguing a character to ignore. “How does a libertarian start a gigantic data-mining defence contractor? How does a privacy advocate become a key investor and long-standing board member of Facebook? Why is a nationalist supportive of Trump going around acquiring citizenship in third-party countries?” In the Thielverse, if nowhere else, all of this makes sense.

The Contrarian: Peter Thiel and Silicon Valley’s Pursuit of Power, by Max Chafkin (Bloomsbury, $32.99).

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