Features

The Strange Politics of Peter Thiel, Trump’s Most Unlikely Supporter

The Republican Party’s new trade-loving, free-thinking, gay, Christian, antiwar, rich-as-hell, naturalized-citizen, Silicon Valley hero.

How Important Is Peter Thiel to Trump's Campaign?

When Peter Thiel has the first move in a chess game, he lifts his e2 pawn, the fifth from the left and the one directly in front of his king, and advances it two spaces. It’s an aggressive tactic, putting the bishop and queen into play, which is why Thiel likes it.

The king’s pawn, as it’s known, was the preferred opening by the American chess grandmaster Bobby Fischer. And even though Thiel considers the move more perilous than another popular opening, the queen’s pawn, he’s made it his go-to. “It’s the attacking move,” he explained last year. “If you’re short of world champion level, I always enjoy increasing the risk involved and the volatility of the game.” The comments, made at an event at George Mason University, were revealing. If you’re a few rungs down from the biggest players, he seemed to be saying, it doesn’t hurt to create a bit of chaos.

Thiel boasts a World Chess Federation rating of 2,199, one point short of the group’s lowest honorific, candidate master. At 48, he’s co-founded PayPal, was Facebook’s first outside investor, and is worth almost $3 billion. He still sits on Facebook’s board, and through his firm, Founders Fund, made early bets on Spotify, Airbnb, SpaceX, Lyft, Palantir Technologies, and a half-dozen other private companies worth more than $1 billion each.

Peter Thiel

Thiel

Photographer: Bruno Levy/CHALLENGES-REA/Redux

His status as ringleader of the PayPal Mafia, the network of former employees and co-founders that includes SpaceX’s Elon Musk and LinkedIn’s Reid Hoffman, makes him one of Silicon Valley’s most influential and admired figures; his iconoclastic politics make him a subject of amusement. Not coincidentally, and disconcertingly to many of those close to him, Thiel is also one of Donald Trump’s most prominent backers.

On Thursday night, after four days of speeches by an eclectic group including the guy who played Chachi on Happy Days, at least one underwear model, and a promoter of professional cage fighting, Thiel is scheduled to address the Republican National Convention in a prime-time speaking slot shortly before Trump accepts the nomination. Thiel declined to comment for this article, but according to a person familiar with his speech, he plans to embrace Trump’s skepticism about recent U.S. wars in the Middle East and to praise the candidate’s economic qualifications—despite Trump’s advocacy of protectionist tariffs and extreme immigration restrictions, measures that would seem at odds with the radical libertarian image Thiel projects. Thiel also plans to say that, though he considers identity politics a distraction, he’s proud of his identity as a gay man.

Thiel will be the first speaker to publicly acknowledge his or her homosexuality at a Republican convention. Jim Kolbe, the former Arizona congressman, spoke briefly at the 2000 convention without acknowledging his sexuality. (During the speech, members of the Texas delegation removed their cowboy hats and prayed.) Unlike Kolbe, Thiel will speak on the final night, when ratings are highest. His speech also marks an historic moment for Silicon Valley. After decades of avoiding politics, technology companies have suddenly taken an interest in elections. “In the tech world there’s a feeling that politics is not something you do willingly,” says Bruce Cain, a professor of political science at Stanford. “These are not ethnic studies majors.”

But the industry has been moving into more heavily regulated areas of the economy in recent years. Uber and Airbnb are locked in battles with municipalities over the “sharing economy.” Tesla Motors faces scrutiny over its driverless car program. Google and Apple have been fighting off federal government pressure to build backdoors into their technology. Since 2005, the lobbying expenditures of internet companies have increased sevenfold, according to the Center for Responsive Politics. Political contributions by internet companies and their employees, 70 percent of which go to Democrats, are also way up. During the 2006 midterm elections, donors gave $2.4 million; in 2014 the figure was $11.6 million.

The conventional wisdom in Silicon Valley is that Trump would be disastrous for an industry that markets itself to the world and draws from a global talent pool. According to the Silicon Valley Index, a long-running survey published by a Bay Area trade group, 74 percent of workers age 25 to 44 in computer or mathematical roles were born abroad. Many of them come to the country on H-1B visas, which Trump has derided as “a cheap labor program.” Moreover, Apple, Facebook, and Google explicitly promote the same countercultural values, such as racial and religious tolerance, that Trump has routinely attacked as political correctness run amok.

On July 14 a group of 140 or so tech industry figures including Slack’s Stewart Butterfield, EBay founder Pierre Omidyar, Twitter co-founder Evan Williams, and, for some reason, the Reverend Jesse Jackson, released an open letter decrying Trump’s candidacy. “Trump would be a disaster for innovation,” it read. “His vision stands against the open exchange of ideas, free movement of people, and productive engagement with the outside world that is critical to our economy— and that provide the foundation for innovation and growth.” On the same day, Thiel issued a statement confirming he’d speak in Cleveland. “Many people are uncertain in this election year but most Americans agree that our country is on the wrong track,” he said. “I don’t think we can fix our problems unless we can talk about them frankly.”

The timing, according to an investor who knows him, was classic Thiel: “He’s always thinking, ‘How can I use this to move my agenda forward?’ ” Another acquaintance, a founder of a startup in which Thiel is an investor, says with a mix of fear and admiration, “He’s diabolical.”
 
 
“Every time I read [of Thiel’s support for Trump], I typically check the calendar because I’m not completely sure it’s not April 1,” said Max Levchin, Thiel’s friend and PayPal co-founder, at a June conference, after recovering from a giggling fit. He went on: “It wouldn’t surprise me if the underlying reality of his choice were the sheer contrariness of what he is doing.” (Levchin declined to comment further.)

Thiel’s presence in Cleveland is mystifying in part because he seems so at odds with the 2016 Republican Party, even in all its heterodox, Trumpian glory. Thiel is not only gay, he’s a pro-marijuana immigrant in a party that has long seemed hostile to all those things. In a 2014 interview with the conservative website the Daily Caller, he referred to Trump as “sort of symptomatic of everything that is wrong with New York City.”

Republicans often talk of using free-market competition to bring the cost of attending college down; Thiel is anti-college. He runs a fellowship that gives promising students $100,000 to drop out. “Education,” he said in a 2011 interview with the National Review, “is a bubble in a classic sense.” Among other generally agreed-upon concepts about which Thiel has expressed doubts: antitrust policies (he’s pro-monopoly), women’s suffrage (in a 2009 essay for the libertarian journal Cato Unbound, he noted that women have a troublesome tendency not to be libertarian), and the political system of the U.S. (in the same essay he noted, “I no longer believe that freedom and democracy are compatible”). Thiel has also funded efforts to cure death, which he considers a treatable disease, and to create an offshore colony free of governmental interference. The concept is known as “seasteading.”

Thiel’s politics may be weird, but they’ve endeared him to the press, which has presented him as a kind of TED Talk eccentric, or as Fortune put it, “America’s leading public intellectual.” He wears his contrarian thinking as a badge of honor, always asking job candidates to name one true thing that the world disagrees with them on.

Over the years he has evolved into a calculating operator, a man who nursed a decade-long grudge against a blog while secretly spending millions to destroy it. In 2007, Valleywag, the tech gossip site owned by Gawker Media, noted that Thiel, who had come out to friends but not to the public, was gay. Nine years later, in May, Thiel revealed he’d been funding numerous lawsuits against Gawker, including one involving a sex tape featuring Terry Bollea, also known as Hulk Hogan, that resulted in a $140 million judgment in Bollea’s favor. Gawker filed for bankruptcy in June; founder Nick Denton has indicated that he may file for personal bankruptcy as well. Meanwhile the episode has led to unflattering headlines for Thiel, who defended his involvement in a trial involving a sex tape and a professional wrestler as “one of my greater philanthropic things.”
 
 
Thiel’s childhood was filled with signs of quirky genius. He was born in Germany in 1967 and moved to the U.S. at age 1. He was a chess prodigy—ranking seventh in the U.S. Chess Federation’s under-13 age group—with a thing for J.R.R. Tolkien and Ayn Rand. But by the time he made it to college, he was on a very conventional path. The man who urges young people to drop out of college did the full four at Stanford, plus three to earn a law degree. At Stanford, Thiel was a rabble-rouser, but a respectable one. He founded a right-wing newspaper, the Stanford Review, and chose to chronicle the culture wars as a writer, rather than taking up arms himself. The Diversity Myth, a 1995 book he co-wrote with David O. Sacks, railed against multiculturalism, which, they wrote, “exists to destroy Western culture.”

After Stanford came an appeals court clerkship and a job at the white-shoe law firm Sullivan & Cromwell in New York. In a commencement speech at Hamilton College earlier this year, Thiel recalled quitting the firm after seven months and three days. “Looking back at my ambition to become a lawyer, it looks less like a plan for the future and more an alibi for the present,” he said. In the speech, as he usually does, he skipped over the three years he spent at Credit Suisse as a derivatives trader before moving West.

In the Cato Unbound essay, he said his vision for PayPal was “centered on the creation of a new world currency, free from all government control and dilution—the end of monetary sovereignty, as it were.” But in Zero to One, a startup how-to manual he published in 2014, he seemed to moderate this, emphasizing that the message was self-consciously strident and thus useful in recruiting talented, impressionable young programmers. (The word “libertarian” plays very well in tech.) Indeed, PayPal almost seems to have immediately abandoned any radical ambitions, striking deals with banks and credit card companies, and selling itself to EBay for $1.5 billion just four years after its founding. The company was spun off last year and is now worth almost $50 billion.

Thiel’s libertarianism also proved useful in promoting Palantir, a data mining company he co-founded in 2004, which received funding from the CIA. Palantir’s software has been used by police and intelligence agencies to search vast databases for suspicious clues and patterns, though it’s unclear exactly which databases and what the technology is capable of finding. The mystery has made the company controversial, especially after the Edward Snowden leaks. The company responded to concerns that it was enabling domestic spying by emphasizing Thiel’s civil libertarian bona fides, arguing that Palantir creates a paper trail that makes government abuses less likely. “It was a mission-oriented company,” Thiel told Forbes in 2013. “I defined the problem as needing to reduce terrorism while preserving civil liberties.”

Thiel’s main gig for much of the Aughts was at Clarium Capital Management, which attempted to leverage his pessimism about U.S. economic institutions into a profitable investment strategy. He made a contrarian bet against housing prices, and the fund delivered a 59 percent return for the first half of 2008. But Thiel stumbled in 2009, clinging to his bearish thesis and missing the recovery. The fund ultimately lost more than 90 percent of its value and Thiel laid off most of its staff, transforming it into a personal investment vehicle. Several people familiar with Clarium said that Thiel’s insistence that the fund ignore short-term volatility and stick to his long-term investment thesis was what doomed it.
 
 
In interviews, four of Thiel’s friends and colleagues—all of whom would speak only on the condition of anonymity—characterized his decision to back Trump as in keeping with his entrepreneurial instincts. He loves disruption, in the Silicon Valley sense of “creative destruction,” as opposed to the usual connotation of “making things worse,” and has weighed the candidate’s demagoguery against a hope that a Trump administration would clear the way for further disruption. It is, these friends and colleagues say, a perfectly sensible chess move—the political equivalent of the king’s pawn.

“I don’t think it’s completely out of character,” says Garrett Johnson, co-founder of SendHub, a Bay Area messaging startup, and Lincoln Initiative, a right-leaning nonprofit. Johnson, who supports the Libertarian candidate Gary Johnson (no relation), notes that many of Thiel’s portfolio companies might benefit from a Trump presidency. “Donald Trump is saying the system is rigged,” he says, adding that SpaceX, which counts NASA as its biggest customer and which Founders Fund has been backing since 2008, “is being blocked by Boeing and the aerospace cartels.” Many of Thiel’s smaller investments, such as the health-care startup Oscar and the education company AltSchool, also do business in highly regulated industries.

Perhaps the biggest Thiel-backed beneficiary of a Trump administration would be Palantir. The company, recently valued at $20 billion, still isn’t profitable and has struggled to retain employees over the past year. Today about half of Palantir’s sales—it booked deals totaling $1.7 billion in 2015—comes from companies such as BP; the other half comes from the National Security Agency, the FBI, branches of the U.S. Department of Defense, and other government entities. The U.S. Army isn’t a customer—yet—but it’s currently bidding out a software contract that could be worth up to $25 billion. Palantir, which had hoped to win some of the business, is suing the Army on the grounds that the process is biased toward longtime contractors.

In this light, it’s easy to see why Thiel’s ambitions extend beyond those of your average public intellectual. He doesn’t just want to be respected by readers of the Daily Caller and the National Review; he wants, or at least seems to want, actual power, which a Trump presidency would undoubtedly deliver. It’s not clear what Thiel gives Trump in this trade, beyond a sheen of Silicon Valley respectability. (According to the Center for Responsive Politics, Thiel hasn’t donated any money this election cycle to Trump. Last year he gave $2 million to a PAC that supported Carly Fiorina and more than $8,000 to the campaign of Mike Lee, a Utah senator who’s part of the #NeverTrump movement.)

Trump is widely seen as the underdog, a sense that was magnified by a series of missteps during the convention’s first three days—including an apparent instance of plagiarism in a speech given by his wife, Melania. But that’s the point. According to people who know him, Thiel sees his support of Trump as the ultimate hedge. Having already staked out a position as the Valley’s preeminent kooky libertarian, he’d see his standing largely undiminished by a Trump loss. Betting markets put the possibility of a Trump victory at about 30 percent. Most prone to judge Thiel probably already despise him for his other heresies. But if Trump wins, Thiel will be the U.S. president’s kooky libertarian.

(Corrects the position of the pawn Thiel moved in the first paragraph.)
Before it's here, it's on the Bloomberg Terminal.
LEARN MORE
Subscribe to Bloomberg Businessweek