SILICON VALLEY
The last time Peter Thiel went to the World Economic Forum was in January 2009. Davos was a highly visible status marker for the global elite, but inclusion that year seemed to designate you as part of the group of people who had messed up the world. Thiel went away resolved that for the next decade he would be short status, long substance. If a sort of unwinding was happening in America, status markers became weirdly problematic—in a screwed-up society, they could not be the correct, real things. Almost nothing that had high status was a good thing to invest in.
After the global financial crisis, Thiel developed a theory about the past and the future.
It went back to 1973—“the last year of the fifties.” That was the year of the oil shock, the year when median wages in America began to stagnate. The seventies was the decade when things started going wrong. A lot of institutions stopped working. Science and technology stopped progressing, the growth model broke down, government no longer worked as well as in the past, middle-class life started to fray. Then came the eighties—when Thiel graduated from high school in 1985, things had seemed very optimistic, anything was possible. And the nineties—the Internet replaced heaven, fortunes were made, everyday life with a mouse pad seemed kind of miraculous. After the millennium and the dot-com crash, a down decade—Bush 43, violence and war, a weak economy, except on Wall Street, leading to the seismic events of 2008 and a new depression. Four decades—down, up, up, down. After forty years, you were flat.
That was harder to see during the middle years, when things seemed to be going up. It was even harder to see from Silicon Valley, where the years after the dot-com crash had still been pretty good ones—the Google IPO, Facebook, the rest of social media. But thirty miles east of the Valley, people were not doing well, especially after their only asset, their house, lost half its value. In effect, those middle decades were a kind of Indian summer following the seventies, and it lasted such a long time—about a quarter century, if you started with the end of the Reagan recession in 1982 and ended with the housing collapse in 2007—that it would be almost impossible to go back to where things stood before it all began and try to reset. Throughout the Indian summer, the same key institutions continued to erode, with a lot of recession years and financial panics along the way. One way to see the Indian summer was as a series of bubbles: the bond bubble, the tech bubble, the stock bubble, the emerging markets bubble, the housing bubble … One by one they had all burst, and their bursting showed that they had been temporary solutions to long-term problems, maybe evasions of those problems, distractions. With so many bubbles—so many people chasing such ephemera, all at the same time—it was clear that things were fundamentally not working.
In the spring of 2011, Mitt Romney came through Silicon Valley looking for supporters, and he stopped by Thiel’s house in San Francisco for breakfast. Romney said that his campaign was going to focus on the economy, not social issues, and let the numbers make his argument. Thiel found him extremely polished and impressive, and he offered Romney a prediction: “I think the most pessimistic candidate is going to win, because if you are too optimistic it suggests you are out of touch.” In other words, it would be a mistake for Romney just to argue that Obama was incompetent, and that things would automatically be much better with a different president. Reagan might have been able to make that argument against Carter in 1980, but in 1980 only 50 percent of the people thought that their children would be worse off than they were, while in 2011 it was closer to 80 percent. It would be smarter for Romney to say that things could be much better, but getting there would be very hard and would take more than changing presidents. But it was a point that Romney couldn’t grasp. He assumed that the more optimistic candidate would always win. He assumed that things were still fundamentally working.
For example, what about the information age? Wasn’t it working unbelievably well? Thiel, whom it had made rich, no longer thought so.
At Café Venetia in downtown Palo Alto—the spot where Thiel and Elon Musk had decided over coffee in 2001 to take PayPal public, five blocks up University Avenue from the original offices of PayPal, which were across the street from the original offices of Facebook and the current offices of Palantir, six miles from the Google campus in Mountain View, less than a mile in one direction and half a block in the other direction from that secular temple of the new economy known as an Apple Store, in the heart of the heart of Silicon Valley, surrounded by tables full of trim, healthy, downwardly dressed people using Apple devices while discussing idea creation and angel investments—Thiel pulled an iPhone out of his jeans pocket and said, “I don’t consider this to be a technological breakthrough.”
Compared to the Apollo space program or the supersonic jet, a smartphone looked small. In the forty years leading up to 1973, there had been huge technological advances, and wages had increased sixfold. Since then, Americans beguiled by mere gadgetry had forgotten how expansive progress could be.
One of Thiel’s favorite books was the French writer J. J. Servan-Schreiber’s The American Challenge, published in 1967, the year of Thiel’s birth. Servan-Schreiber argued that the dynamic forces of technology and education in the United States were leaving the rest of the world behind, and he foresaw a postindustrial utopia in America by the year 2000. Time and space would no longer be barriers to communication, income inequality would shrink, and computers would set people free: “There will be only four work days a week of seven hours per day. The year will be comprised of 39 work weeks and 13 weeks of vacation … All this within a single generation.” The information age arrived on schedule, but without the utopia. Cars, trains, and planes were not much better than they had been in 1973. The rising price of oil and food showed a complete failure to develop energy and agriculture technology. Computers didn’t create enough jobs to sustain the middle class, didn’t produce revolutionary improvements in manufacturing and productivity, didn’t raise living standards across classes. Thiel had come to think that the Internet was “a net plus, but not a big one.” Apple was “mostly a design innovator.” Twitter would give job security to five hundred people for the next decade, “but how much value does it create for the entire economy?” Facebook, which had made Thiel a billionaire, was “on balance positive,” because it was radical enough to have been banned in China. But that was all he would say for the celebrated era of social media. All the companies he invested in probably employed fewer than fifteen thousand people. “You have dizzying change where there’s no progress.”
Information itself was a sign of the problem. The creation of virtual worlds had taken the place of advances in the physical world. “You can say the whole Internet has something very escapist to it,” Thiel said. “You have all these Internet companies over the past decade, and the people who run them seem sort of autistic, these mild cases of Asperger’s seem to be quite rampant, there’s no need for sales, the companies themselves are weirdly nonsocial in nature. Google is sort of the archetype. But in a society where things are not great and a lot of stuff is fairly dysfunctional, that may actually be where you can add the most value. We have this messy real world where things are incredibly difficult and broken, and there are crazy politics, and it’s hard to get good people elected, the system doesn’t quite work. And then there’s this alternate virtual world in which there’s no stuff, it’s all zeros and ones on a computer, you can reprogram it, you can make the computer do anything you want it to. Maybe that is the best way you can actually help things in this country.”
The problem came down to this: Americans, who had invented the modern assembly line, the skyscraper, the airplane, and the integrated circuit, no longer believed in the future. The future had been in decline ever since 1973. Thiel called it a “tech slowdown.”
Here was one example: the sci-fi novels of the fifties and sixties, the ones he’d grown up reading, with utopian visions of space travel and undersea cities, seemed like artifacts from a distant age. Sci-fi was now about techno
logy that didn’t work or worked in bad ways. “The anthology of the top twenty-five sci-fi stories in 1970 was, like, ‘Me and my friend the robot went for a walk on the moon,’” Thiel said, “and in 2008 it was, like, ‘The galaxy is run by a fundamentalist Islamic confederacy, and there are people who are hunting planets and killing them for fun.’” Together with Sean Parker and two other friends, Thiel had started an early-stage venture capital firm called Founders Fund. It published an online manifesto about the future that began with a complaint: “We wanted flying cars, instead we got 140 characters.”
There was no single cause of the tech slowdown. Perhaps there were no more easy technological problems, those had all been solved a generation ago and the big problems left were really hard ones, like making artificial intelligence work. Perhaps science and engineering were losing their prestige along with their federal funding. The libertarian in him pointed to overregulation of things like energy, food, and drugs—it wasn’t a coincidence that the fastest growth had come in one of the least regulated industries, computers—and the kind of narrow environmentalism that wanted all the solutions to look like nature, so that hundreds of new nuclear reactors were not on the radar. Maybe (and this thought particularly disturbed Thiel, who had a deep aversion to violence) the loss of an enemy in the Soviet Union had taken away the incentive to work on military innovations and the larger willingness to make sacrifices—maybe an extended peace left people with less reason to work hard, and the decline of the future had actually begun in 1975 with the joint Apollo-Soyuz flight, which ended the space race. Maybe education, especially higher education, was part of the problem. A younger friend of Thiel’s described his freshman orientation at Yale, where a dean had told the incoming students, “Congratulations—you’re set for life.” People should never think they’re set for life.
Thiel was an elite among elites, but he directed his intellectual fire at his own class, or people a couple of rungs down—professionals making two or three hundred thousand a year. Elites had become complacent. If they couldn’t grasp the reality of a tech slowdown, it was because their own success skewed them in an optimistic direction, and wealth inequality kept them from seeing what was happening in places like Ohio. “If you were born in 1950 and were in the top ten percent, everything got better for twenty years automatically. Then, after the late sixties, you went to a good grad school, and you got a good job on Wall Street in the late seventies, and then you hit the boom. Your story has been one of incredible, unrelenting progress for sixty years. Most people who are sixty years old in the U.S.—not their story at all.” The establishment had been coasting for a long time and was out of answers. Its failure pointed to new directions, maybe Marxist, maybe libertarian, along a volatile trajectory that it could no longer control.
Thiel’s argument ran into resistance across the political spectrum. On the right, market fundamentalism took the place of serious thinking about innovation (that was why Romney hadn’t understood Thiel’s point at their breakfast meeting). On the left, there was an official smugness about innovation—just spend more money—while deep down lurked an unspoken pessimism. President Obama probably believed that there wasn’t much to be done about decline except manage it, but he couldn’t give another “malaise” speech (after what happened to Jimmy Carter, no one ever would again), so his picture of the future remained strangely empty. Both Obama and Romney ended up in the wrong place: the former thought American exceptionalism was no longer true and should be given up, while the latter thought it was still true. Neither was willing to tell Americans that they were no longer exceptional but should try to be again.
Thiel was no longer a hedge fund titan, but as he began to air his ideas, in published essays and at the kind of elite discussion/networking sessions that proliferated across America, he was becoming the intellectual provocateur he had dreamed of being at Stanford. In the summer of 2012 he was invited to the Fortune Brainstorm Tech conference in Aspen, Colorado, where he debated the chairman of Google, Eric Schmidt, on the future of technology. Schmidt, just the kind of sanguine liberal who brought out Thiel’s cerebral malice, told the audience that transistors, fiber optics, and data analytics were making the world a better and better place, and that Moore’s Law, which held that computing power would double every two years, still had at least another decade left.
“Eric, I think you do a fantastic job as Google’s minister of propaganda,” Thiel began.
The moderator broke in. “You said you were going to be nice.”
“Well, he does a fantastic job.” Thiel, his blue blazer buttoned at the middle and his white shirt open several buttons down, laid out his argument about the tech slowdown. As a libertarian, he placed most of the blame on regulation. “We’ve basically outlawed everything having to do with the world of stuff,” he said, “and the only thing you’re allowed to do is in the world of bits. And that’s why we’ve had a lot of progress in computers and finance. Those were the two areas where there was enormous innovation in the last forty years. It looks like finance is in the process of getting outlawed, so the only thing left at this point will be computers, and if you’re a computer that’s good. And that’s the perspective Google takes.”
Schmidt was smiling to suppress his irritation. The moderator pointed at the Google chairman. “You’re not accusing him of being a computer, are you?”
“You know, they like computers more than people in many cases,” Thiel said. “That’s why they missed the social networking revolution. But if you look at it from the perspective of forty years in the future, Moore’s Law is good if you’re a computer. But the question is, how good is it for human beings, and how does this translate into economic progress for humans?”
Thiel loved to scandalize respectable opinion. A passage from one of his essays, “The Education of a Libertarian,” rocketed around the Web in 2009 and brought down the wrath of the bien-pensants: “The 1920s were the last decade in American history during which one could be genuinely optimistic about politics. Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women—two constituencies notoriously tough for libertarians—have rendered the notion of ‘capitalist democracy’ into an oxymoron.” Thiel tried to explain that he didn’t want to take away women’s right to vote—instead, he wanted to find a way around democracy, which was incompatible with freedom. He had a long record of donating to political causes. In 2009 he funded James O’Keefe, whose undercover videos subsequently took down ACORN. In 2011 and 2012 he gave $2.6 million to Ron Paul’s Super PAC and another $1 million to the pro-free-market Club for Growth, while hosting a fundraiser for a gay conservative group, GOProud, in his Union Square loft, with Ann Coulter as the featured speaker. But more and more he wanted to get away from politics, a highly inefficient way to bring about change. He remained committed to the faith of his teenage years, but Americans would not vote for libertarians.
Technology, on the other hand, could change the world without other people’s permission. In the same essay, he wrote:
In our time, the great task for libertarians is to find an escape from politics in all its forms—from the totalitarian and fundamentalist catastrophes to the unthinking demos that guides so-called “social democracy” … We are in a deadly race between politics and technology … The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism.
Thiel set out to become that person.
* * *
On a rainy spring morning in Silicon Valley, Thiel, in windbreaker and jeans, was at the wheel of his dark blue Mercedes SL500, trying to find an address in an industrial park between Highway 101 and the bay. The address was for a company called Halcyon Molecular, which wanted to cure aging. Thiel, who was the company’s biggest investor and sat on its board, was driving with his seatbelt off. He oscillated on the seatbelt question—the pro-seatbelt argument was that it was safer, and the anti-seatbelt a
rgument was that if you knew that you were not as safe, you would be a more careful driver. Empirically, it would be safest if you wore a seatbelt and were careful at the same time. He made a left turn and fastened his seatbelt.
In spite of oscillating on the seatbelt question, Thiel had never lost the three-year-old’s primordial dismay at the news of death. He refused to submit to what he called “the ideology of the inevitability of the death of every individual.” He saw it as a problem to be solved, and the sooner the better. With the current state of medical research, he expected to live to be 120—a sorry compromise, given the grand possibilities of life extension. But 150 was becoming thinkable, and immortality wasn’t out of the question. In his last years, Steve Jobs had given speeches about how motivated he was by the prospect of death, but Thiel didn’t agree. Death was very demotivating. It ended up having a depressing effect, it gave a desperate tone to things and imposed constraints on what people tried to achieve. It would be healthier to live every day as though life were going to go on forever. Immortality would make people treat one another better, if they thought they were going to see one another over and over forever. There was a line from the old song “American Pie”: “with no time left to start again.” The idea of your own decline was like the idea of America’s—you wanted to be in a place where it was never too late to start again.
In 2010, Luke Nosek, Thiel’s friend and partner at Founders Fund, told him about a biotech start-up that was developing a way to read the entire DNA sequence of the human genome through an electron microscope, potentially allowing doctors to learn everything about their patients’ genetic makeup quickly, for around a thousand dollars. Halcyon Molecular’s work held the promise of radical improvements in detecting and reversing genetic disorders, and Thiel decided to make Founders Fund the first outside investor. He knew little about electron microscopy DNA sequencing, but then the young scientists at Halcyon hadn’t yet mastered it, either—no one had, which was why it excited Thiel. He took note of their talent and passion, and when they asked for fifty thousand dollars he gave them a first round of five hundred thousand.
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