How Peter Thiel became the most feared man in Silicon Valley

PayPal founder Peter Thiel liked Mark Zuckerberg for the same reasons most people couldn’t stand him. 

Though the Facebook CEO is often criticized for being robotic and unfeeling, Thiel saw the younger man’s indifference as “a sign of intelligence,” writes Max Chafkin in his book, “The Contrarian” (Penguin Press), out now. 

The two formed a mutual respect based on their iconoclastic ways. 

“Zuckerberg, like Thiel, had stuck it in the eye of his politically correct peers when he’d hacked Harvard’s online directory to create FaceMash.” At college in the ’80s, Thiel had launched a conservative monthly called The Stanford Review, which fearlessly mocked liberals on campus. 

When Facebook’s first president, Sean Parker, first brought Thiel into the fold as an investor in 2004, he warned Zuckerberg against the financier’s “dirty tricks.” 

But Zuckerberg said he found Thiel’s tactics inspiring, and would even use them to drive his friend and co-founder Eduardo Saverin out of Facebook the next year. 

“I learned it from him,” Zuckerberg replied to Parker in an instant-message exchange. 

“And I’ll do it to Eduardo.” 

Thiel, who turns 54 next month, is one of the most cutthroat financiers of his generation. With a fortune of $4.3 billion, according to Forbes, he’s difficult to pigeonhole — having gone from hedge-fund trader to Silicon Valley entrepreneur to data-mining surveillance capitalist — and almost impossible to understand. 

“He is self-created, a Silicon Valley Oz, who has, through networking and a capacity for storytelling, constructed an image so compelling that it has come to obscure the man behind it,” Chafkin writes. 

THE ADMIRER: Mark Zuckerberg says he learned from Thiel — to cut out friend Eduardo Saverin.
Ron Sachs – CNP

Many of the people the author contacted for his book — millionaires with political power — “told me they were scared of him,” Chafkin writes. “He was that powerful, and he was that vindictive.” 

Thiel is famously so vengeful that his name itself has become a verb. To “Peter Thiel” someone is to exact horrible retribution, like he did when he brought down gossip Web site Gawker Media in 2016. And as with almost every other takedown in his life, he did it without personally pulling the trigger. 

The son of German immigrants, Thiel was born in Frankfurt and moved with his family to Cleveland, Ohio, when he was a baby. The Thiels moved frequently before settling in the San Francisco suburb Foster City. He was an outsider from the beginning, a fan of science fiction — he claimed he had memorized the entire “Lord of the Rings” trilogy — and an easy target for bullies, “even among people who considered themselves Thiel’s friends,” writes Chafkin. 

One of his bullies, who helped plant “for sale” signs on the front lawn of Thiel’s home, told Chafkin that he “always thought [Thiel] might have a list of people he’s going to kill somewhere and that I’m on it.” 

When Thiel enrolled at Stanford in 1985, he was disgusted by the hard-partying antics of his peers. “They drank; they smoked pot; they hooked up,” writes Chafkin. “Needless to say, Thiel did not partake in any of it. He didn’t really seem interested in making friends.” 

THE CHALLENGER: Elon Musk tried to force Thiel out at PayPal — but found himself ousted instead.
THE CHALLENGER: Elon Musk tried to force Thiel out at PayPal — but found himself ousted instead.

Instead, he started the satirical publication The Stanford Review, which lampooned progressive causes with false reports on everything from a new course on black hairdos, implying that “Stanford had replaced the traditional Western Culture curriculum with discourses on kinky hair,” to a story on how “it was impossible to visit a men’s restroom (on campus) without witnessing a gay sex act.” 

It was also where he first learned to become a “puppet master,” Chafkin writes. 

When law student Keith Rabois, a frequent contributor to the Review (and, like Thiel at the time, still very much in the closet), decided in 1992 to hurl homophobic slurs at a professor’s cottage as an exercise in free speech, Thiel didn’t discourage it. 

“Fa–ot!” Rabois shouted. “You are going to die of AIDS. You’re going to get what’s coming to you!” 

Overall, Thiel felt that outrageous stunt was justified because conservatives [had become] “too conservative,” writes Chafkin. Just like mainstream liberals accepted communists, he felt conservatives shouldn’t be shy about associating with more extreme, far-right views. 

After graduating from Stanford Law School in ’92, he worked at a law firm and as a derivatives trader in New York before launching PayPal in California in 1998. The idea was to create a space for financial transactions that couldn’t be regulated by the government. In other words, an anonymous foreign bank account, “which Thiel wanted to make available to all,” Chafkin writes. 

“It was a real-world version of the wild arguments he’d published in his Stanford Review days,” Chafkin writes. “Forget bringing down morally bankrupt university administrators — PayPal had the potential to bring down governments.” 

THE ALLIES: Max Levchin (left) and Keith Rabois (right) are founding members of PayPal.
THE ALLIES: Max Levchin (left) and Keith Rabois (right) are founding members of PayPal.
Bloomberg; Getty Images

He brought many of his more outlandish Review scribes like Rabois with him. “I used to think it was a mistake, because what does a guy who worked on a weekly newspaper know about tech support?” said Martin Hellman, a Stanford professor who helped design PayPal’s encryption software. “But Peter was brilliant in hiring people who recognized him as the leader and would not fight with him.” 

By January of 2000, PayPal was a hot commodity, with 9,000 new users joining every day. Finding new customers was “easier than catching a cold,” Thiel bragged to The Wall Street Journal. “And it’s spreading as fast as a virus.” 

In February of 2000, Elon Musk called Thiel, proposing a fifty-fifty merger. He was worried that PayPal would end up being acquired by a company like Yahoo, and, Musk’s online bank, would be pushed out of the market. 

“Together, Musk argued, they would have a better shot of surviving,” Chafkin writes. “And they would have an easier time dealing with federal regulators if and when the government got around to cracking down on the new digital payment technologies.” 

Thiel agreed but tensions between the two visionaries ran high from the start. Musk insisted on switching servers, putting PayPal on a Microsoft platform. He also wanted to change the name to “PayPal by,” eventually phasing out the PayPal name altogether. 

THE MORTAL ENEMY: Thiel destroyed Nick Denton’s Gawker after the Web site outed him as gay.
THE MORTAL ENEMY: Thiel destroyed Nick Denton’s Gawker after the Web site outed him as gay.

But Thiel found a way to oust Musk without getting his hands dirty. 

Even though Musk got to be CEO after the merger, most of Thiel’s deputies — Stanford alum and Review writers like Paul Marti, Max Levchin and David Sacks — filled the executive ranks. “X’s former executives were marginalized, and Musk was surrounded by a team that was more loyal to Thiel than to him,” writes Chafkin. He had, in effect, “laid a sort of trap for Musk.” 

In May 2000, Thiel resigned from the company, claiming in an e-mail to employees that he was “exhausted” and that he considered himself “more of a visionary and less of a manager.” When Musk disappeared for his honeymoon in Australia that fall, several Thiel loyalists — like PayPal co-founder Max Levchin and Vice President of Finance Roelof Botha — issued an ultimatum to Mike Moritz, one of the company’s biggest investors. Either the board fired Musk and installed Thiel as the new CEO, or they would walk. 

PayPal “wouldn’t have a chance of survival if Levchin, the company’s most talented engineer, walked out with half the business development team,” writes Chafkin. 

Without any direct involvement from Thiel, their demands were met before Musk had returned from his honeymoon. Not only did Thiel seize total control without lifting a finger, he also convinced almost all of Musk’s most ardent defenders to stay with the company. 

One former X staffer, who declined to give his name, met with Thiel to scold him for what happened, but after listening to the new CEO discuss his vision for PayPal, he left “with a lot of respect for him. It was a formative experience.” 

When former wrestler Hulk Hogan filed a lawsuit against Gawker for publishing portions of his private sex tape, Thiel secretly contributed $10 million to his legal costs.
When former wrestler Hulk Hogan filed a lawsuit against Gawker for publishing portions of his private sex tape, Thiel secretly contributed $10 million to his legal costs.

Two years later, Thiel sold PayPal to eBay in 2002 for $1.5 billion. 

After that, Thiel used his PayPal profits to invest in everything from hedge funds to new technologies like Palantir, a big data analysis company, and a new social networking site called The Facebook. In 2004, Thiel became the company’s first angel investor, laying down $500,000 for a 10 percent stake and giving Zuckerberg one piece of advice: “Just don’t f–k it up.” Thiel eventually walked away with a billion dollars for his investment. 

But he could also make moves that were surprisingly obtuse. In 2006, Thiel turned down the opportunity to invest in Tesla because, as Musk told the author, “he doesn’t fully buy into the climate change thing.” 

As a result, “Thiel lost out on a chance to own a substantial chunk of a company that would be worth $800 billion by the end of 2020,” Chafkin writes. 

Later, Thiel showed how ruthless he could be when Gawker published a story in 2007 with the headline, “Peter Thiel is totally gay, people.” It wasn’t exactly an outing — Thiel’s homosexuality was an open secret by that point — but still, Thiel was furious. 

He first hired a private investigative firm to dig into the personal life and finances of Gawker’s founder, Nick Denton. But then he decided to enact revenge in an even more lethal way. In 2016, when former wrestler Hulk Hogan filed a lawsuit against Gawker for publishing portions of his private sex tape, Thiel secretly contributed $10 million to his legal costs. Hogan went on to win his lawsuit and was awarded $140 million in damages, forcing Gawker to fold. 

Later, when Thiel’s involvement was revealed, he said it was “the most philanthropic thing I’ve ever done.” 

The Contrarian

That same year, Thiel became one of the few major figures in Silicon Valley to back Donald Trump in the presidential election. Though they were in many ways polar opposites — he was no fan of Trump the “libidinous New Yorker incapable of preserving an inner monologue,” Chafkin writes — Trump was also a candidate willing to say the unsayable, “and for this, Thiel would love him.” 

His donations to the Trump campaign led reporters to unearth his 1995 book “The Diversity Myth,” in which he called date rape “belated regret.” 

In a rare show of remorse, Thiel said in a statement: “I wish I’d never written those things.” 

But a year later, at a Stanford Review event, he allegedly told a student editor that the apology had been for show. “Sometimes you have to tell them what they want to hear,” he allegedly said. 

Today, he lives in Vienna, Austria, with his long-time partner, Matt Danzeisen, whom he married in 2017, and now co-parents a baby daughter. Though he’s avoided the limelight in recent years, he is still feared by many. As anti-monopoly activist Matt Stoller told Chafkin: He’s “a nihilist, a really smart nihilist. He’s entirely about power — it’s the law of the jungle: ‘I’m a predator and the predators win.’ ”