The Never-Ending Contrarianism of Peter Thiel: Forget The Political Pap, His Move to L.A. is Strategic, Just Like His Support of Trump

Peter Thiel is going Hollywood. Sort of. He’s moving to L.A. But he’ll be looking down on it – Sunset Strip specifically – (figuratively, as well?) from his Hawaiian-styled manse perched up in Hollywood Hills West.

The vantage point should enhance Thiel’s owl-like abilities to spot new opportunities. Perhaps he will find another “single-digit millionaire” to champion, toiling away in obscurity and near poverty down below

Friends of the billionaire venture capitalist, co-founder of PayPal, Trump-supporting gay libertarian, told the Wall Street Journal on Valentines Day that he was leaving Silicon Valley to free himself from the liberal patois spoken from Sand Hill Road to The Presidio where he lived and worked.

Horse hockey!

We call BS. Because:

Thiel loves arguing with people, Los Angeles is one of the fastest growing venture capital markets in the nation (and super liberal), and Silicon Valley is losing its edge.

Thiel’s move is strategic, not political.

If you know anything about Thiel, he thrives on disagreement. So the notion that people with differing viewpoints had just become too much for him to handle beggars belief. Thiel in fact admits to structuring his conversations so that he considers, and usually expresses, the exact opposite viewpoint as that of the person with whom he’s talking.

That contrarianism is not just a facet of his personality, it’s a core part of his investing strategy.

Recall this January 2017 interview the Times conducted with him about a week before Trump was inaugurated. The backstory is that Thiel had given Trump’s campaign $1.25 million and had been hired as part of the presidential transition team. He was being excoriated for both alleged crimes by every Democrat who knew his name.

But Thiel didn’t much defend his support of Trump more than say he thought no real harm would come of it. He then sportively referred to his constant “Pyrrhonian” skepticism aimed at maximizing a nimbleness of mind, so as to outmaneuver the herd. 

“Maybe I do always have this background program running where I’m trying to think of, ‘O.K., what’s the opposite of what you’re saying?’ and then I’ll try that,” he said. “It works surprisingly often.”

But not always. Which brings us to Thiel’s southbound pivot, and why his move to Los Angeles makes strategic sense.

L.A. is one of the fastest growing venture capital markets in the country: Last year, $7 billion in VC funds poured into the City of Angels, up from $4.2 billion in 2016 and $3.06 billion the year before that. And while venture investing ballooned to $14 billion last year in Silicon Valley, double that of L.A., and up 50 percent from the year prior, seed deals dried up in the region, while VC funds plummeted in San Francisco to $10.9 billion, a 21 percent decline from 2016.

Those numbers allude to an apolitical problem: Silicon Valley is deluged with expensive, bad ideas, and behemoths like Amazon, Apple, Facebook and Google that buy up the good (or competing) ones. That’s why the number of seed capital deals in Silicon Valley shrank to 1,547 last year from 1,900 in 2016. The concomitant effect of the dearth of worthy ideas coming out of the Valley is that friends and family-sized investors are exiting the tail-chasing space and trying to move their money downstream into Series A financings, where venture capital begins and amateur hour (sort of, but not really) ends.

But it’s the culture too, as well as the dynamism, that’s slumping. And we mean “culture” in terms of mindset, and specifically, outlook, not political leanings. Of course, innovation requires optimism. Okay. But the insufferable echo chamber that’s become of our startup wellspring, formed from years of relentless positivity, particularly when optimism is unwarranted, as ventures real and proposed that create little innovation or value are nonetheless hyped with religious fervor: It takes a psychic toll. How to think clearly, or actually enjoy living, in such an environment, becomes an issue.

And while we can assume Thiel’s intellectual capabilities enable him to make incisive judgements amid the white-noise roar – essentially the job of any VC – doing so remains an atmospheric hurdle for the people from whom Thiel’s seeking profits: The would-be entrepreneurs who must remain much more myopically and singularly focused on trying to innovate and start new businesses in an environment where working and living has become increasingly impossible.

Which brings us to Silicon Valley’s real millstone: real estate. As we wrote this sentence, the average monthly rent for a 3-bedroom apartment in Santa Cruz, according to, was $3,257. But Santa Cruz isn’t even in Silicon Valley; it’s an hour away from Palo Alto, the ur-capital of startup-land, where now that same $3,257 gets you a studio apartment. If you want a 3-bedroom where you can live and work with your staff, you’re going to need $4,600 to $6,000 a month; and if you want to live like the boys from Pied Piper in HBO’s “Silicon Valley,” you’re going to need about $8,000 per month. (The filming location of the “hacker hostel” is actually a 4-bedroom, 3-baths home of 2,857 square feet in Woodland Hills, Calif., in Los Angeles’ San Fernando Valley: If you plop those descriptives into the middle of Palo Alto, Zillow spits out an eight grand rental.)

What’s arguably frothier than the real estate market in Silicon Valley is the blather, meaning the semantic oblivion and marketing-speak that infuses everything. For instance, instead of admitting a loss of fundable ideas and an obvious follow-along consolidation in the angel investor-end of the venture market, the trend in the Valley is instead to take the view that the “seed niche simply needs more institutional, professionalized management.”

Fair enough. But instead of doing that, the bushy-tailed optimists have invented a whole new stage of startup investing they’re calling “pre-seed.” And by all means, folks, “proceed.” But know that such teeth-gleaming corporate-ese deployed as issue-avoidance stretches credulity to the point where one knows instinctively the spell the Valley has held over us is breaking, the sell-by date has passed, and you’re witnessing at least the partial devolution of our startup capital becoming primarily a real estate market for an institutionalized Wall Street West.

And it was precisely expensive real estate and the stifling atmosphere of the corporate East Coast that transistor co-inventor William Shockley and integrated circuit creator Robert Noyce were escaping from when they migrated to Santa Clara County in the middle 1950s and created the entire dreamy notion of Silicon Valley. Thiel is doing the same. He’s just escaping a costly, stifling place that happens to be Silicon Valley, now that it has become more like its old East Coast rival: Rich and stiff.

Or so says Thiel. But even the way he leaked the news of his move was strategic: By handing the scoop to just one outlet, and particularly the conservative Journal, Thiel created a network effect that moved the whole media herd to cover his purported reason for splitting – lefty politics – while distancing everyone from the more likely underlying and substantive reasons for bolting Silicon Valley, which are the same reasons why any business would relocate: To arrive in a place that offers better probabilities of finding more opportunities for making more money versus the place left behind.

CNN, either to its credit, or benefiting from Thiel’s media management, picked up a bit on this subtext, but instead of contextualizing it, the cable news network offered only an emailed quote provided by an unnamed Thiel pal:

“Peter thinks the same network effects that concentrate talent in the Valley (adding value) are leading to conformity of thought (limiting the generation of new ideas). SF [San Francisco] is still important but the most exciting future tech developments may come outside of it. Peter also thinks the Valley has become too mono-cultural and the cost of living is making the whole area more sclerotic, less vital.”

Thiel’s judgement, like everyone’s, is certainly flawed at times. The moral equivalence, for instance, involved in his support of Trump, a man who called Mexican migrants “rapists,” whose vice president Mike Pence said on the House floor that gay marriage would lead to “societal collapse” (it has not), and whose campaign guru Stephen K. Bannon exploited a virulent undercurrent of misdirected bigotry of the financially frustrated and culturally underexposed of our nation in a race-baiting strategy that in part got Trump elected, is astounding.

Presumably, Thiel could stomach all of that, as long as he could influence Trump during the transition and after on matters of policy.

It’s important to understand that Thiel is a libertarian, meaning he wants less government oversight of business, not more, and that he remains a tech advocate, even though he’s become pessimistic about what he views as the stagnation of innovation in tech.

What that means is that Thiel wants less government oversight of the tech world, specifically, not more. We should think about this when forecasting what companies will come under the hammer of the antitrust division of Trump’s Department of Justice.

Thiel led the effort to pick the antitrust head of Trump’s DoJ as well as the head of the Federal Trade Commission. One could assume without seeming ridiculous that part of Thiel’s moral equivalence in stepping into the polarizing Trump fray was being a good soldier for his tech friends and shepherding in someone who would let our dominant tech firms continue to grow. The thought exercise here being that he might specifically try to help spare tech’s biggest success stories, Amazon, Apple, Facebook and Google, from their biggest fear: regulation, and in particular, the cudgel of antitrust law.

In this light, the fact that Thiel has embedded himself in Trump World should surprise no one. Thiel, as well as being a libertarian, is an opportunist – particularly involving his and his colleagues’ vested interests – and opportunists require moral equivalence. The equivalency, or more precisely, the tradeoff here, would be an implicit acceptance of the jingoism, the anti-gay record, the gender- and the race-baiting of Trump’s campaign, and any policies to follow it, in return for keeping regulation at bay. Seen this way, the “horrors” of regulation would have outweighed the malignancy of cultural, ethnic, racial and gender bias, a position which seems to some, less relativism than just plain wrong, i.e. immoral.

Put another way, the moral equivalence in question begins with weighing the harms of race-baiting – which exploits and awakens underlying bigotry – with the harms of regulation, as similarly serious societal problems. A decision that regulation tips the scales, and therefore, bigotry real or implied can be waylaid or dismissed when deregulation is the aim, could be seen as a moral failing.

While critics generally view all pro-business Trump supporters as having made such a tradeoff, many on the left and in the LGBTQ community are particularly angered that, despite Thiel’s very public and sometimes arch conservatism, such a decision would be made by a gay man and self-described “Christian” whose own freedoms, they argue, have been curtailed and civil rights suppressed by American policy and society. In these quarters, the perception of a tradeoff imbued with moral failing remains.

Thiel’s supporters have countered that trying to influence policy by getting close to and advising those in power – Trump specifically – has nothing to do with ethical quandaries or moral failings and everything to do with prioritizing a moment in time.

Indeed, Thiel’s pick for Trump’s antitrust head, Makan Delrahim is expected to be more friendly to mergers than the former Obama administration was. Delrahim was the deputy to the assistant attorney general for antitrust during the George W. Bush years. While his office was criticized for letting too many mergers occur, Delrahim and his boss stopped mergers between US Airways and United (which in 2015 merged with American Airlines) and DirecTV and EchoStar. But Delrahim’s office failed to block Oracle’s purchase of PeopleSoft.

Many would say going through such an experience – losing a high-profile case to a tech giant – makes it unlikely that Delrahim would want to attempt it again, particularly given that prevailing against behemoths like Amazon, Apple, Facebook or Google, which are for the most part beloved by consumers, would be much more politically difficult than winning a lawsuit against a database software company. So while even laissez-faire justice officials must make some cases to prove they’re executing the mission of the office, such scrutiny is more likely to fall on old-line also-rans like AT&T and the airlines, instead of the darlings of Silicon Valley.

Plus, while Thiel is a critic of the tech giants, he’s in the end, a promoter. He remains on the board of Facebook: Thiel was the social network’s first investor. And while he has recently mulled leaving the board, with his friends citing the same reasons they gave for Thiel wanting to move to L.A. – right-left political disagreements, in this case between Thiel and other Facebook board members like Reed Hastings – these same people have said nothing publicly about what seems a huge conflict of interest Thiel carries, which is remaining on the board of the nation’s dominant social network while picking the nation’s top antitrust official, and shaping Trump’s regulatory agenda since helping in the transition.

That ongoing influence is evident in that Trump’s top technology adviser is Michael Kratsios, who was Thiel’s chief of staff at Thiel Capital for three years until he joined the administration in March 2017. Kratsios had previously been chief financial and chief compliance officer at Thiel’s hedge fund, Clarium Capital Management since 2010.

Such an appearance of a major conflict would be a more substantive reason to resign from a board, versus an inability to endure annoying political debates over email or in the conference room.

Thiel relentlessly and quite humorously ribs Google executives for failing to loosen the purse strings on the company’s gigantic stash of cash, but both he and Google Chairman Eric Schmidt share the same opinion about government, which is held by most in the Valley: that regulation and politics are harmful to innovation. And while Thiel very publicly says America’s search giant has grown too conservative to innovate, and its search business comes as close to a monopoly as a company can legally get, he’s still careful to single it out as a “creative monopoly,” one he says is ultimately good for the economy and society, because while it may not currently engage in innovation at the rate he would like, Google, freed from the rigors of competition, is nonetheless enabled by its huge cash horde to invest in its employees and invent new products and services. He contrasts this with a “rent collector” monopoly, which can only grow by hiking prices or buying up more property. Thiel is a huge fan of monopolies of the former stripe. They are in his eyes the ultimate end-game success for any investor or any venture.

He makes a good case for this in a cogent essay adapted for the Journal from his book “Zero to One” entitled, “Competition is for Losers.” The piece was summarized in a sub-hed as stating: “If you want to create and capture lasting value, look to build a monopoly.” Thiel later emphasized that monopoly should be creative. 

While Thiel has donated to the Missouri Republican Attorney General Josh Hawley, who announced an antitrust probe of Google in November, we view such maneuvers more as points of pressure Thiel may be trying to apply to get Google to research and produce its own new products instead of buying ideas from others, versus a full-throated push to break up the search giant. A couple of states attorney generals launching investigations is one thing; a federal probe would be a whole other.

And take a look at the Trump administration’s first antitrust target, AT&T. Although it’s too early to tell if we’re witnessing the DoJ pick on the rent collectors and leave the creatives alone, AT&T, which is currently under DoJ scrutiny for its intended merger with Time Warner, would seem to nearly everyone more like a rent collector. That’s at least how Thiel portrayed AT&T in the excerpt from his book: as an incumbent undone by more creative and innovative cellphone service providers.

Given all this, Thiel’s move to L.A. makes more sense. He likes to set himself apart from his brethren; doing so physically may help him find more freedom to operate unconstrained by the conflicts he would otherwise face, particularly in dual roles as resident Silicon Valley tech promoter and Trump antitrust adviser. Those dichotomies become less apparent if he lives 356 miles away from the source of his pain. He’s also probably ready for a change.

We should mention Thiel is moving Thiel Capital and Thiel Foundation to L.A., but keeping his VC firms Founders Fund, known for investing in Airbnb, Lyft and SpaceX, and Mithril Capital, known for investing in Thiel’s CIA-backed Palantir Technologies, in San Francisco. However, understand that aside from investing in startups like sleep apnea-fighting Invicta Medical, Thiel Capital provides strategic and operational support to all of Thiel’s companies, including the two VC funds staying in The Golden City.

We can’t help but respect, at times, Thiel’s intelligence and contrarian nature. He makes himself, at times, extraordinarily likable to journalists, because he’s known for providing the most refreshingly blunt and impolitic yet thought-provoking quotes on technology, of anyone in tech. He’s attuned to the annoyance for marketing muck that journalists naturally feel regarding the buzzwords of the day.

When asked what to watch and what to ignore in technology at a “Post Seed” conference in 2014, Thiel said: “As an investor, entrepreneur, people often ask me this question, ‘What are trends that I see in technology?’ What are things that I see happening? I dislike that question because I have no [idea] what the future holds on that sort of level, but I can say systematically that I am skeptical of all trends. Every single trend you can name is overrated. Educational software, healthcare IT software, SaaS is really overrated. If you hear the words ‘cloud computing,’ ‘big data,’ ‘machine learning,’ you just think ‘fraud’ and run away.”

We admit swooning a bit: A refreshing relief if not a complete truth-teller, Thiel is a pro at counter-narrative, which the world, at times, needs.

However, Thiel’s obsessive contrarianism has in the past derailed him, destroying such goodwill and bonhomie. Case in point is an unbelievably wrongheaded screed he co-wrote with David O. Sacks called “The Diversity Myth: Multiculturalism and Political Intolerance on Campus.”

Here are some cringeworthy snippets of a then 28-year-old Thiel, promoting the book in a speech at the Heritage Foundation in 1996:

“The problems of racism, sexism, other forms of oppression have been vastly exaggerated. And as a result, people get unjustly accused. A culture of complaint leads to a culture of blame. And that is ultimately the real problem with it…

“There is no problem of racist speech on campus; there is no problem with racism; there is no problem of sexism. Or to the extent there is a problem, it is not very big. One of the reasons that multiculturalism was able to get off the ground in the first place is that most college aged students and especially those who are attending our top universities are not bigots. There are very few, who are…

“The reason we have racial tensions in our society, the reason we have other kinds of tensions, is not because there is a problem with racism and other forms of oppression, but because people are looking for these things too much.

“If you are dealing with a multicultural educator who is looking for racism everywhere, and who’s finding racism everywhere, then I think one of the things you might do is you might just stay clear of that person. Because whatever you’re going to say, if you ask him about racism, well that’s evidence of racism. If you don’t ask him about racism, then that’s evidence that you’re not interested and that you’re racist. It’s a ‘no win, you lose’ situation. You will stay totally clear of that whole debate.

“And so I will suggest to you that one of the reasons we do have some tensions between different groups of people in our society, is in fact, precisely because the focus on these issues has become so misplaced. In many ways, the cure is worse than the disease, at this point.”

To sum up, Thiel was alleging that claims of racism are more harmful to society than actual real racism, which he said, may not exist on campus nor elsewhere in society. Yet even a cursory glance at events on campus occurring in 1996 that clearly had involved individuals evincing racist attitudes that induced outrage and emotional trauma in the minority students forced to experience them, serve to severely weaken this book’s already spurious argument. Overt incidents of racism since have in fact increased not only on campus, but also in American society writ large. And systemic bias that has produced inequality along race lines has gotten even worse in terms of housing and schools, which are more segregated than they were in the 1980s, according to a study released today as a followup to the landmark Kerner Commission report on racial inequality in America, first published 50 years ago.

Both Thiel and Sacks have apologized for making statements in their book that seemed to place blame in part on the victims of rape, and each have expressed generalized regrets for other views expressed in the book. Thiel told the New Yorker in 2011 that he had a “much more nuanced” understanding of the issues of race, gender and sexual identity than he did when he co-wrote the book with Sacks in the middle ’90s.

Yet recent references to Thiel escaping an “ossified monoculture” refer not to Silicon Valley’s widening racial diversity gap, but to the same purported liberal groupthink on issues like race and identity that continue to annoy him, which he first publicly alleged in his book over 20 years ago.

“When I was a kid, the great debate was about how to defeat the Soviet Union. And we won,” Thiel said in a 2016 speech endorsing Trump at the Republican National Convention. “Now we are told that the great debate is about who gets to use which bathroom. This is a distraction from our real problems. Who cares?

“Of course, every American has a unique identity. I am proud to be gay. I am proud to be a Republican. But most of all I am proud to be an American. I don’t pretend to agree with every plank in our party’s platform; but fake culture wars only distract us from our economic decline, and nobody in this race is being honest about it except Donald Trump.”

Again, Thiel appears to be denying that policies that feel oppressive to others are “real problems” worthy of debate, if they exist at all.

Silicon Valley, Race and Identity

Racial tensions in particular have dogged Silicon Valley since its inception. It bears noting that Shockley, the “Moses of Silicon Valley,” was an avowed racist. Of course, this historical fact has stopped few from adopting Palo Alto as their hometown. And why should it? No ground in America is sacred, or bereft of unspeakable transgressions or injustices – racial and otherwise – by its denizens. In the end, one must accept the good with the bad and either move in and seek to change things for the better or move on. Nowhere in America offers solace from its past or this choice: All any town has, is its future.

But, while it’s not for lack of trying, Silicon Valley has yet to hack it’s lack of diversity. The racial gap has in fact gotten worse, not better, which begs the question of whether the Valley is trying hard enough to change its demographic disparities. Is any town, for that matter?

When issues such as race or identity place decisions of morality on par with decisions on money, people prioritize differently which they think holds greater importance. And however dispiriting, history and research has shown that money, when introduced into a spectrum of moral choice, nearly always sways people away from ethical complexities and toward, essentially, grabbing for cash. As the Times’ Eduardo Porter put it more finely in describing the aforementioned research: “The simple idea of money changes the way we think – weakening every other social bond.”

So Thiel’s choices on identity tending toward the economic not the demographic could be seen as more of a human (our; everyone) flaw versus a personal one.

Conservatives would also counter that prioritizing unhindered markets over social issues is pragmatic, due to human nature, and that executing such a preference will lift all boats, so that in the end, making such a choice is moral.

That said, we are not the sum of our faults. And dignity necessitates we overcome our most basal human tendencies and see one another, not as “the other,” but rather, see others as we see ourselves, and to imagine walking in others’ shoes. This is the definition of empathy. But achieving such understanding, which is implicit in the do-unto-others Golden Rule that is an ideal of Christianity, Judaism, Islam, Buddhism, Hinduism, Zoroastrianism and all the major religions, differs in that it pressures practitioners to presuppose nothing.

So dismissing acts of accommodating for diversity as distractions to economic progress seems just as myopic – particularly for an opportunist – as does critics seeing someone like Thiel solely as a Trump supporter.

There are valuable opportunities to be had in seeking to understand one another’s unique experiences based on who they are, how they look, what they’ve seen and what they do. Witness the record-breaking revenues and audiences for “Black Panther,” a film based on a Marvel Comics story with a black superhero. Cross-cultural understanding is required for both economic and social progress: When growth in either component – social, economic – inspires growth in the other, we move the whole society forward.

It’s just a matter of priorities.

Shane Kite

This Brooklynite covers music, art, film, finance, technology, politics, small business, economics, clean energy, national security and local and foreign affairs.

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