Business Economy

An incisive portrait of Silicon Valley

| Updated on: Nov 26, 2021
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The author defines Thiel’s value system as a pursuit of market power using regulatory loopholes and stepping over the Silicon valley sense of propriety

Quick trivia query: What’s common between Facebook, PayPal, Quora, Spotify, Airbnb, Slide.com, Linkedin, Spotify, SpaceX, Quora, Asana, Yelp, Palantir, Metamed, Yammer, Stripe, Rypple?

It’s their investor, billionaire venture capitalist, Peter Thiel. And even given all these popular start-ups he’s invested in, there’s no public figure quite as mysterious as him. That’s why his biography, The Contrarian: Peter Thiel and Silicon Valley's Pursuit of Power, is bound to make for interesting reading. Someone who not only has had a close-up view of some of the most interesting tech companies of our times but as an investor built some of them to deliver spectacular returns. Add to that his legendary skills at navigating Silicon Valley, Wall Street and Washington, the big three corridors that define success in the capitalist world of America that we know of and it’s a story we are all waiting to hear.

The biographer, Chafkin, whose years at Bloomberg Businessweek have surely given him years of access to material about Thiel and his pursuit of wealth and power, unravels Thiel’s life like an onion, bit by bit, first as an intellectual kid, then as a tech investor, and then as a hedge fund manager and finally as a right wing political influencer.

Uncanny ability

As a child, Thiel’s favourite game was blitz, a form of speed chess, and Thiel would spend hours playing dozens of consecutive five-minute games, absorbing the lessons of the intense, cerebral sport. In addition to the strategic acumen he built plotting his opponents next move, the game taught him to take decisions swiftly and conjure up convincing contrarian arguments as a negotiating tool. As an anecdote, Chafkin quotes an encounter Thiel had with a police officer when he was let of after speeding where he argued that the concept of a speed limit didn’t make any sense since cars were powered for far greater speeds than limits defined on any road, and that it was actually unconstitutional and an infringement on liberty. That he got away with this argument with only a warning is testament to his ability to navigate sticky situations in his business and political life.

Chafkin provides a wonderful commentary on how differently Thiel as a hedge fund manager and his business rival turned partner, Elon Musk, as an entrepreneur saw money and power. He details on how Thiel negotiated hard to reverse merge his small finance company with Musk’s company to form Paypal even though they had irreconcilable differences as individuals.The stark difference in their understanding of risk comes through in another interesting anecdote about a ride they took together in a $1mn McLaren car, owned by Musk, to a meeting. Due to reckless driving by Musk, the car crashed though both survived. Thiel was completely shaken and decided not to work together with Musk again. Read the book to learn how they both partnered again to claim their respective business glories.

The Jobs value system

In contrast to Steve Jobs, whose value system was about maximising human potential, by getting customers to buy Apple products to transform their lives and their world, Chafkin defines Thiel’s value system as a pursuit of market power using regulatory loopholes and stepping over the Silicon valley sense of propriety. Chafkin attributes all of Thiel’s pursuits to ‘blitzscaling’, the rapid build-up of businesses and cause so much disruption that the winner can take all. This philosophy, called the PayPal mafia philosophy, was demonstrated at PayPal to scale up at such a pace that the difference between its first offer by eBay to buy it for $300 million turned into a final offer of $1.5 billion within a few months, giving Thiel’s 4 per cent stake a tidy sum of money, good enough for him to launch a hedge fund.

Thiel’s world view was if you got one thing right and moved hard with conviction, nothing else mattered. Chafkin claims that Thiel often set up companies and pushed their business models to flaunt norms, then change the rules and set himself up to get rich in the new order.

Like any investor, Thiel may perhaps count Tesla and YouTube as two investments which he gave a regrettable pass. Though he did team with Musk again for Space X, which has now becoming an attractive proposition. Thiel used a kind of soft power, dirty tricks that set in motion events that ultimately took place beyond his control and enriched him and furthered his influence. Eventually, after the 9/11 attacks, Thiel used PayPal’s data and security technology to set up Palantir, a data analytics company that helped government agencies like CIA and NYPD to track behaviour of citizens, a sort of precursor to the surveillance economy and become a supplier to the government.

The jury is still out on whether the pursuit of valuation by the start-up ecosystem by monopolising the markets is a sustainable model, but many of the tech battles with public policy that Thiel has fought are still raging, and do not yield to easy answers. Silicon Valley these days often feels under the sway of a powerful group of monopolists, Thiel being at the top of it.

Hollywood and hypocrisy

One of the landmark cases that set Thiel firmly into the republican fold was his pursuit of Gawker media, a fledging and transgressive web publication filled with tales of politics, power, sex, Hollywood and hypocrisy, which had once declared that Marissa Mayer, a top executive at Google used to date Larry Page, the CEO of Google. Gawker had made the error of declaring Thiel publicly as gay and Thiel left no stone unturned in his pursuit to bring down the media house using all his might and muscle in Washington and Silicon valley.

However, the book fails in giving a balanced view of Thiel. Chafkin covertly manages to portray Peter Thiel as a villain who uses all the tricks in the book in the singular pursuit of wealth.

With easy writing and tons of research material, The Contrarian is indeed an incisive portrait of a tech industry whose explosive growth and power is both thrilling and fraught with controversy.

Book: The Contrarian: Peter Thiel and Silicon Valley's Pursuit of Power Max Chafkin

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(Naveen Chandra runs a regional movie studio)

Published on November 26, 2021

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