With his funding Thiel went on a hiring spree. He wasn’t looking for industry experience but for people he knew, people who were incredibly smart, people who were like him, Stanford friends like Reid Hoffman, Stanford Review alums like David Sacks and Keith Rabois, and Confinity’s cramped, spartan offices above a bike shop soon filled with carelessly dressed, badly groomed men in their twenties (Thiel was one of the oldest at thirty-two), chess players, math whizzes, libertarians, without distracting obligations like wives and children or time-wasting hobbies like sports and TV (one applicant was turned down because he admitted to enjoying shooting hoops). Some employees lived on junk food at their desks, others were on life-extension calorie-restricted diets. The company took out an ad in The Stanford Daily: “Think kick-ass stock options in a cool start-up are worth dropping out of college? We are hiring right now!” It became the first company in the history of the world to offer cryogenics as part of its employee benefits package.
Thiel was trying to build a successful business that would make him rich, but he also wanted to disrupt the world—in particular, the ancient technology of paper money and the oppressive system of monetary policy. The ultimate goal was to create an alternate currency online that would circumvent government controls—a libertarian goal. The summer he met Max Levchin, Thiel read a book published the previous year, The Sovereign Individual by Lord William Rees-Mogg and James Dale Davidson. It described a coming world in which the computer revolution would erode the authority of nation-states, the loyalty of their citizens, and the hierarchies of traditional professions, empower individuals through globalized cybercommerce, decentralize finance by moving it online with electronic money, and bury welfare-state democracies, while accelerating inequalities of wealth (which, in the madcap late nineties, seemed almost inconceivable). At the same time, local mafias would have wide latitude to inflict random violence. The book sketched out a libertarian apocalypse, a dream with dark edges, and it was part of the inspiration for PayPal.
Thiel disliked the human complication and friction of day-to-day management, which he left to others, but at company meetings he let his employees in on his larger vision. “PayPal will give citizens worldwide more direct control over their currencies than they ever had before,” he told his staff. “It will be nearly impossible for corrupt governments to steal wealth from their people through their old means”—hyperinflation and wholesale devaluations—“because if they try, the people will switch to dollars or pounds or yen, in effect dumping the worthless local currency for something more secure.” He concluded, “I have no doubt that this company has a chance to become the Microsoft of payments, the financial operating system of the world.”
PayPal was growing exponentially, approaching a million users, while burning through ten million dollars of operating capital a month with hardly any revenue coming in. Was it the biggest thing since Netscape, or a Dutch tulip likely to die at any moment? Netscape itself was all but dead by 1999. Throughout that year, Thiel watched the dot-com whirl spin faster and faster—the Idaho billionaires showing up in the Valley looking for someone to give their money to, the brunches at Buck’s and dinners at Il Fornaio, the thousand-dollar meals that broke entrepreneurs tried to pay for in company shares, the select e-mail invitation list to nightly launch parties that were rated with a starred ranking system determined by the fame level of the rock band playing. There were more than four hundred companies in Silicon Valley, and the average house in Palo Alto cost $776,000. The parking lot of the Stanford Shopping Center was full of Audis and Infinitis whose owners were shopping at Bloomingdale’s and Louis Vuitton.
Thiel sensed that the end might come suddenly and soon. On the last night of the millennium, at PayPal’s New Year’s Eve party, he listened to Prince singing “1999,” an early-eighties song that had been like the soundtrack to the whole crazy year—for Prince had somehow seen it coming years before:
Cuz they say 2000 zero zero party over, oops out of time
So tonight I’m gonna party like it’s 1999
In February 2000, The Wall Street Journal gave PayPal a rough valuation of five hundred million dollars. Others in the company wanted to hold out for a larger figure before the next finance round, but Thiel told them, “You’re crazy, this is a bubble,” and in March, with a sense of time running out, he traveled abroad to raise another hundred million. On March 10, the NASDAQ hit a peak of 5133—it had breached 3000 only the previous November—and then it began to drop. In South Korea, still reeling from a financial crisis, investors were so desperate to get in on PayPal’s secret that one tried to eavesdrop from behind a palm tree on a conversation Thiel was having in a hotel lobby. When Thiel’s credit card failed to work at the Seoul airport—he had reached his monthly limit— a group of investors, instead of taking this as a worrying sign about the health of an online payments company, bought him a first-class ticket on the spot. The next day, they wired PayPal five million dollars with no terms negotiated, no paperwork signed, and when the company tried to return the money, the Koreans refused: “We’ve given you the money and you will have to take it. We’re not going to tell you where it came from, so you can’t send it back.”
On Friday, March 31, Thiel closed the hundred million dollar round. On Tuesday, April 4, the NASDAQ plunged below 4000, heading south toward 1000, and the dot-com bubble burst.
PayPal was one of the few survivors. Just before the crash, it had merged with X.com. Thiel stepped down as CEO, then returned later in 2000 when Musk was forced out. In February 2002, PayPal went public, the first company to do so following the September 11 attacks (which proved fatal to PayPal’s libertarian ambition—electronic currency systems suddenly seemed like ideal ways for terrorists to hide money). At the IPO party, Thiel took on a dozen employees simultaneously in a round of speed chess. In 2002, PayPal became the method of payment for more than half of eBay’s auction customers, and after doing everything possible to create a more successful alternative, eBay purchased PayPal in October for $1.5 billion. Thiel quit the same day, walking away with $55 million on his $240,000 investment.
What came to be called the PayPal mafia went on to found a lot of successful companies: YouTube, LinkedIn, Tesla Motors, SpaceX, Yelp, Yammer, Slide … Thiel moved out of his one-bedroom apartment in Palo Alto to a condo in the Four Seasons Hotel in San Francisco. Within a week of leaving PayPal, he started a new fund called Clarium Capital Management. The end of his career as the CEO of a Silicon Valley start-up marked the start of his life as a technology mogul.
1999
WILD RIDE TO THE TURN OF THE CENTURY … ELOQUENT CLINTON ALLY CHOSEN TO GIVE CLOSING ARGUMENT … when you hear somebody say, “This is not about sex,” it’s about … Bill and Hillary Clinton are experimenting with a trial separation, the DRUDGE REPORT has learned.… Party like it’s 1999. Smell like it’s 1959.… Investigators, meanwhile, were hunting for a mystery man who fired two shots from a 40-caliber handgun inside Club New York during the dispute between Puffy’s posse and … IS THE INTERNET THE NEW HEAVEN?… FOR TALK MAGAZINE, ECLECTIC PARTY AND A “HIP” LIST … Tina must have struck a deal with the gods of weather. It was an incredibly perfect night for dining alfresco, under the stars, with Manhattan as a dazzling backdrop and everything dominated by the dramatically lit Lady Liberty. The American flag billowed magnificently as the crowd danced … CONE MILLS TO CLOSE PLANTS AND TRIM STAFF IN REVAMPING … THE COMMITTEE TO SAVE THE WORLD The inside story of how the Three Marketeers have prevented a global economic meltdown—so far … MILLIONAIRES? DIME A DOZEN. MARTHA STEWART’S DOMESTIC EMPIRE HAS MADE HER WORTH A BILLION … Fuck Martha Stewart. Martha’s polishing the brass on the Titanic. It’s all going down, man. So fuck off with your sofa units and Strinne green stripe patterns … COUNTRYWIDE BEEFING UP SUBPRIME MORTGAGE LOANS … Today’s postfeminist era is also today’s postmodern era, in which supposedly everybody now knows everything about what’s really going on underneath all the semiotic codes and cultural conventions, and everybod
y supposedly knows what paradigms everybody … US BANKS UNLEASHED Imminent Death of Glass-Steagall Act Will Create Giant US Financial Firms … The United States seems keener than most countries to celebrate the new millennium in style: maybe the nation is wealthy and optimistic enough that big parties seem apropos.… COAST-TO-COAST FIREWORKS … “This is a unique moment for our country,” Clinton told a crowd assembled just off the National Mall, where a gala public celebration was scheduled for later Friday night. “Light may be fading on the twentieth century, but the sun is still rising on America.”
DEAN PRICE
In 2003, Dean’s younger son, Ryan, who was eight, began begging his mother to let him go live with his father in North Carolina. She finally told Ryan, “If you can remember your father’s phone number, you can call him and have him come pick you up.” Ryan stayed up all night trying to remember. Around 6:30 in the morning it came to him and he called his father. By ten o’clock Dean was at the doorstep.
Dean was in the middle of divorcing his second wife, and he and Ryan moved into the main house while Dean’s mother took the apartment in back. Dean realized that it was just like The Andy Griffith Show, with Andy, Opie, and Aunt Bee living together under one roof. Dean made his family house, the house where his father had slapped him down, into his own. He hung carved mottoes around the rooms: DREAM on the fireplace mantle, SIMPLIFY SIMPLIFY SIMPLIFY on the stone chimney above it, SEE THE POSSIBILITIES over the opening between the living room and study. The Gettysburg Address hung on the wall over his bed, Robert E. Lee’s definition of a gentleman stood on a table in the living room, and in the study there was a framed tobacco leaf. His mouse pad showed a picture of white-haired Thomas Edison from the eyes up: “There is always a way to do it better … find it!” On his bookshelves were classics like Emerson’s essays and Tobacco Road, biographies of Carnegie and Lincoln, books on entrepreneurship, and Think and Grow Rich. A couple of old but functional twelve-gauge shotguns leaned in doorways. For heat he burned wood pellets in a woodstove hooked up to the chimney. His garage was cluttered with farm machinery, vintage signs, and a framed copy of his favorite Bible verse, Matthew 7:7. It was the house of a man with his eyes turned to the future and the past.
By 2003, Dean was starting to hate the convenience store business. He was better at conceiving and starting a business than running one, and the daily operation of the stores bored him. He had gotten into this business to be able to farm and sell his own produce, but no one had told him about the fifteen-hundred-mile Caesar salad. This wasn’t real entrepreneurship—all it took was a calculator and a good profit-and-loss statement. He had two hundred employees, poor blacks and white trash, many of them single mothers, and he hated paying them close to minimum wage with no health benefits—how could you raise kids on that?—but when he tried to get a better class of workers by pushing the pay up to ten or twelve dollars an hour, the performance never improved and it took him two years to get the wage back down by attrition. You were totally taking advantage of people in this business, but there was no way around it—fast food drew the lowest of the low, people with no ambition, and the quality of the food reflected it. He knew that some of his employees were stealing from him, and a lot of them were doing drugs. They would stay up all night and come to work high at six in the morning.
Once, a customer called Dean and said, “I just left one of your restaurants.”
“Really?” Dean said. “How was it?”
“I went in, got me a cup of coffee, asked the waitress, ‘How you doing today?’ She said, ‘I’m doing just fucking great. I’m working at a damn Bojangles’.”
Dean always relied on a partner to oversee the stores and take care of the books. That had been his brother-in-law, but after he and Dean’s sister divorced, Dean had to buy him out for fifty thousand dollars, and he needed a new partner. His closest friend was Chris, the guy he’d lived out of a VW bus with in California. They had been each other’s best man, and Chris had gotten into the bar business and lost everything when he developed a drug problem—bar, wife, child. Chris was a kind, bighearted guy, and Dean tracked him down in Florida and asked if he wanted to come back to North Carolina and make a new start by helping to build Red Birch into a southeastern chain. He always felt that a good bartender would be a good fast-food person because of the speed of the work.
Dean and Chris were business partners for several years, until June 6, 2003, which was Chris’s thirty-seventh birthday. That day they played golf together, and then they went out for dinner with another guy to a restaurant in Martinsville. Dean was the designated driver, and Chris had been drinking beers much of the day. In the middle of dinner, Chris got up and left the table. Dean thought that he had gone to the bathroom, but after fifteen minutes Chris hadn’t returned, and Dean started to worry. He checked the bathroom, but Chris wasn’t there. He walked outside and looked around the parking lot—no sign of Chris. He got in his truck and drove the roads around Martinsville for two and a half hours, and he still couldn’t find his best friend. He called Chris’s wife, his second wife, and said, “You’re not going to believe this but I have lost your husband.” The wife came to meet Dean and said, “Why don’t you just go on home and I’ll call you tomorrow, let you know what happened.”
“No,” Dean said, “I want to know tonight. I’m responsible.”
So Chris’s wife got in Dean’s truck and she directed him to a broken-down house on an abandoned street near the center of town, with rotting boards nailed across the windows and two black guys sitting on the front porch, smoking what looked like a joint. It was one in the morning and Chris was inside and Dean couldn’t get him to come out.
It was worse than a sucker punch to the gut, because Dean loved Chris. He drove home to Stokesdale and stayed up crying the rest of the night. It turned out that Chris had left the crack house after Dean went away and in the middle of the night he let himself into the Red Birch office behind the Bojangles’ restaurant in Martinsville. There, Dean believed, Chris took some cash and a check out of the safe to cover his fix. Dean concluded later on that Chris had been stealing from him for quite a while. Early the next morning, he called Chris: “I want you to meet me at Fairy Stone State Park.” That was a park near Bassett where Dean planned to whup the shit out of Chris with a peachtree stick. Chris was messing with the lives and families of all the people who worked for them, along with his own and Dean’s, and he needed to be taught a lesson. But Chris wouldn’t meet him.
Dean agonized about what to do. Napoleon Hill had a theory that he got from Andrew Carnegie, about the “Mastermind,” which was the coordination of effort between two people for a definite purpose. Just as hydrogen and oxygen combined to make something new—water—the blending of two like minds created a third mind, which had a divine power or force. With the Mastermind alliance, ideas could be caught out of the air that wouldn’t have appeared to someone working alone. Dean and Chris had been like that. But Napoleon Hill didn’t have instructions for what to do if one of the minds turned out to be a crackhead.
Then Dean remembered a story about Abraham Lincoln. One day, Lincoln was sitting under an old oak tree outside his log cabin and he saw a squirrel run down from a branch into the middle of the tree. That seemed strange, and Abe climbed up to look down into the place where the squirrel had disappeared, and he found that the whole center of the tree was hollow. He had to make a decision. Should he leave the tree standing, because it shaded his house from the sun? Or cut it down in case a strong wind toppled it? It pained him, for he loved the tree, but Lincoln cut it down. “And that’s what I had to do with Chris. I had to cut him loose. It devastated his life.”
Dean and Chris never spoke again. Last he heard, Chris had gone back to Florida and opened a shoe store around Fort Myers, but within a few years he disappeared again, one step ahead of his creditors.
When Dean looked back on that period, losing Chris was the first of a string of blows that came one after the other. In a way they ended up
getting him out of the convenience store business. But first came the only windfall he ever enjoyed, and it appeared in the form of two brothers from India, Dave and Ash. They had been in the country for twenty years, living in Burlington, North Carolina, and they owned a hot dog stand in Florida called Hot Diggity Dog. One day not long after Dean sent Chris away, Dave and Ash stopped by the store in Stokesdale and left their names and number. Dean called, and the Indians said that they were interested in buying the Stokesdale truck stop. This led to a series of eight-hour meetings at Red Birch, with Ash compulsively punching numbers in his calculator the whole time, even when numbers weren’t at issue—it was his security blanket. But there was a sparkle in his eyes.
Dean wanted to sell. He had always been overleveraged, playing the same game that people were playing with houses but on a commercial scale, taking on more debt as he built his stores from the ground up. He and the Indians went back and forth, going over every detail of the business. In the end, Dave and Ash paid him a million and a half dollars. It would have taken Dean twenty years to make that kind of money.
He might have gotten out of convenience stores right then—sold his other two truck stops to Dave and Ash, or found some other Indians looking to buy a piece of the American dream. Instead, he turned around and spent part of the money on a Back Yard Burgers franchise across from the Piedmont Mall in Danville. Back Yard Burgers was oriented more toward a white middle-class clientele than other fast-food chains, with a charcoal grill taste. Dean hired his three sisters to run the restaurant and sent them to corporate headquarters in Nashville for training. He planned a grand opening two weeks before Christmas in 2004.
The Unwinding Page 16
