Max Chafkin writes:

Other Silicon Valley personas may be better known to the general public, including Jeff Bezos, Elon Musk, and even a few who don’t regularly launch rockets into space. But [Peter] Thiel is the Valley’s true idol — the single person whom tech’s young aspirants and millennial moguls most seek to flatter and to emulate, the cult leader of the cult of disruption.

The blitzscaling strategy he and his employees pioneered at PayPal created the growth playbook for an entire generation of start-ups, from Airbnb to WeWork. His most legendary bet — loaning $500,000 to a socially inept Harvard sophomore in exchange for 10 percent of a website called TheFacebook.com — is significant less for the orders-of-magnitude economic return he realized and more for the terms he embedded in the deal. Thiel ensured that Mark Zuckerberg would be the company’s absolute dictator. No one, not even Facebook’s board of directors, could ever overrule him. Similar maneuvers were adopted at many of Thiel’s portfolio companies, including Stripe and SpaceX, and today, across the industry, it’s more the norm than the exception.

Thiel hasn’t just acted in a certain way and left it for others to notice and follow. He taught his methods to founders-in-training at Stanford, codifying the lessons from the fleet of companies founded by his former employees — the so-called PayPal Mafia. He later collected his thinking in a book, Zero to One. It became a best seller, partly because it promised a path to Thiel-scale wealth and partly because it developed the idiosyncrasies that had been present in the college-age Thiel into a full-blown ideology. The book argues, among other things, that founders are godlike, that monarchies are more efficient than democracies, and that cults are a better organizational model than management consultancies. More than anything, it celebrates rule-breaking. Thiel bragged that of PayPal’s six founders, four had built bombs in high school.

The ideas were out there, but they were, undeniably, different. For decades, Silicon Valley had been dominated by the mythology of Steve Jobs. The acid-dropping hippie CEO had argued that technology could be a form of creative expression, and he convinced a generation of entrepreneurs that they should invent products that would improve the lives of their customers. This was the “‘bicycle for the mind’ value system,” says Roger McNamee, the founder of the venture-capital firm Elevation Partners, and it filtered into many of the most successful companies of the ’90s and ’00s.

Thiel despises the counterculture (he dates the precise beginning of American decline to Woodstock) and is contemptuous of the notion of creativity for its own sake. For Thiel, the purpose of founding a company is to control your own destiny. “A startup is the largest endeavor over which you can have definite mastery,” he wrote. A new generation of entrepreneurs, coming of age in the wake of the financial crisis, embraced his ideas. Thiel told them to flout norms and seek lucre, not impact. “Only one thing can allow a business to transcend the daily brute struggle for survival,” he wrote. “Monopoly profits.” Perhaps his single best student has been Mark Zuckerberg, who built a monopoly in his industry and used it to crush competitors and charge progressively higher fees to advertisers — all while telling the world that this essentially predatory behavior was a social good. [Continue reading…]