The Unwinding: An Inner History of the New America (19 page)

“I hope you’re asking me to research whether there’s enough money in the world to
compensate this man,” Connaughton told the partner who gave him the assignment. “No,
I’m not,” the partner replied.

So much in the world of power came down to chance. One day, Jack Quinn, Mikva’s replacement,
needed someone to write a speech for him about executive privilege. A staffer in the
White House counsel’s office recommended Connaughton. As so often before, he worked
his ass off for no pay or immediate advantage and wrote the speech nights and weekends.
When Quinn needed another speech, on the separation of powers, Connaughton wrote that
one, too.

At the end of 1996, Quinn left the White House to restart his lobbying practice at
Arnold & Porter, a Washington law firm with venerable ties to the Democratic Party.
To get things running, he looked around for a number two—someone who knew how to make
his boss look good. His eye fell on Connaughton.

Clinton had banned top officials who left the administration from contacting the federal
government for five years. The rule applied to Quinn but not to Connaughton, who wasn’t
senior enough. So, at the age of thirty-seven, he joined Arnold & Porter and launched
a new career: as a lobbyist.

SILICON VALLEY

Peter Thiel was three years old when he found out that he was going to die. It was
in 1971, and he was sitting on a rug in his family’s apartment in Cleveland. Peter
asked his father, “Where did the rug come from?”

“It came from a cow,” his father said.

They were speaking German, Peter’s first language—the Thiels were from Germany, Peter
had been born in Frankfurt.

“What happened to the cow?”

“The cow died.”

“What does that mean?”

“It means that the cow is no longer alive. Death happens to all animals. All people.
It will happen to me one day. It will happen to you one day.”

As he said these things, Peter’s father seemed sad. Peter became sad as well. That
day was a very disturbing day, and Peter never got over it. Well after he became a
Silicon Valley billionaire he would remain radically disturbed by the prospect of
dying. The initial shock was still alive in him forty years later. He never made his
peace with death, the way most people learned to do, by ignoring it. Theirs was the
acquiescence of an unthinking and doomed herd. The boy on the cowskin rug would grow
up to view the inevitability of death as an ideology, not a fact—one that had already
claimed a hundred billion human lives.

Peter’s father was a chemical engineer who worked in management for various mining
companies. The Thiels moved around a lot when Peter was young—he attended seven different
elementary schools. Although he had a younger brother, he was a lonely boy, almost
without friends until he approached his teens, lonely and inward in the way of the
extremely gifted. By the age of five he knew the names of all the countries and could
draw the world map from memory. When he was six, his father got a job with a uranium
mining company—it was just after the 1973 oil shock, when America seemed to be headed
toward nuclear energy—and the Thiels spent two and a half years in South Africa and
South-West Africa, under apartheid. Peter began to play chess with his parents and
quickly mastered it. In Swakopmund, a little German town on the coast of South-West
Africa, he spent hours making up adventures for himself in the dried-up riverbed facing
the desert sand dunes behind their house, or reading atlases, nature books, and French
comics in the local bookstore. He attended schools where the boys had to wear a blazer
and tie, and the teacher rapped their hands with a ruler for every misspelled word
on the weekly test. When he got home, he would tear off the uniform as fast as he
could, hating the regimentation. He almost always got perfect scores and avoided the
beatings.

When Peter was nine, the Thiels returned to Cleveland, and when he was ten, in 1977,
they moved to Foster City, California, a planned town on the San Francisco Bay, just
twenty minutes’ drive north of Stanford.

In 1977 hardly anyone used the term “Silicon Valley” to describe the peninsula stretching
from San Francisco to San Jose. The technology firms in the area—Hewlett-Packard,
Varian, Fairchild Semiconductor, Intel—were postwar companies built with the boom
in military research and federal grant money that made Stanford one of the country’s
leading universities. The silicon transistor chip and the integrated circuit were
the concern of electrical engineers and tech hobbyists, not average consumers; the
personal computer was in its infancy. In 1977 the Apple Computer Company was incorporated,
with a dozen employees, and the Apple II was introduced at the West Coast Computer
Faire, but the head office had only just been moved out of the Jobs family garage
in Los Altos to rental space in Cupertino.

The Valley was egalitarian, educated, and comfortable—one of the finest examples of
postwar middle-class life in America. More than almost anywhere else, ethnicity and
religion and even class tended to bleach out in the golden sunlight. Residential streets
around the Valley were lined with modest two-thousand-square-foot midcentury Eichlers
built on quarter-acre lots. The average house in Palo Alto cost $125,000. Commerce
in downtown Palo Alto consisted of variety stores, sports shops, several movie theaters,
and a pizza parlor. Across El Camino Real, the Stanford Shopping Center was dominated
by Macy’s, Emporium, and Woolworth’s; in 1977 Victoria’s Secret opened a shop, but
there was no Williams-Sonoma or Burberry, no upscale boutiques at all. The parking
lot was full of Pintos and Datsuns.

Almost all the children in the Valley, even ones from the few wealthy families, went
to local public schools, and they were good schools—California was ranked number one
in the country. The best students went on to Berkeley, Davis, or UCLA (a few made
it to Stanford or the Ivies), the average ones went to San Francisco State or Chico
State, and the burnouts and heads could always get a two-year degree at Foothill or
De Anza. The tax revolt—Proposition 13, a referendum that would limit property taxes
in California to 1 percent of assessed value, sending the state’s public schools into
a long decline—was still a year away.

Peter Thiel moved to the Valley in the last year of its middle-class heyday. Everything
was about to change, including the name.

After Swakopmund, Foster City in the school year of
Saturday Night Fever
seemed riotous and decadent. A lot of the kids had divorced parents. In Peter’s fifth-grade
classroom, the teacher was a long-term substitute who lost all control. Kids stood
on their desks and yelled at one another and the teacher. “I hate you!” one boy screamed.
“Why don’t you go home?” The teacher managed a weak smile. Peter withdrew into his
mind and became fiercely devoted to getting perfect scores, every test a matter of
life and death, as if to stave off the chaos of his classmates—the California equivalent
of a ruler to the hand. He was lousy at PE but exceptional at math, and as a chess
player he was ranked seventh nationally in the under-thirteen bracket. He was as insanely
competitive at chess as at school—later, he put a sticker on his chess kit that said
BORN TO WIN
—and on the rare occasions when he lost he would sweep the pieces off the board in
total disgust at himself. In high school he ran the math team, which was competing
for the district championship. At one point the team’s faculty adviser said offhandedly,
“Well, someone is going to win,” and Peter thought, “This is why you are still a high
school teacher.”

He preferred
Star Wars
to
Star Trek
but loved them both. He read the novels of Asimov, Heinlein, and Arthur C. Clarke—the
sci-fi of the fifties and sixties that dreamed of interplanetary travel, visitors
from Mars, underwater cities, flying cars. A generation later, Peter lived in that
mental world with the belief that miracles of technology would make the future wondrous.
No TV was allowed in the Thiel house until he was twelve, but by then he was more
interested in playing computer games on the family’s Tandy TRS-80—such as Zork, a
text-based, nongraphic adventure game set in the ruins of an ancient underground empire—as
well as endless hours of Dungeons & Dragons with his nerdy friends. He also discovered
J.R.R. Tolkien and read the
Lord of the Rings
trilogy at least ten straight times, almost memorized it—he loved the quality of
its fantasy, the value placed on the individual against mechanistic and collective
forces, the theme of power corrupting.

The Thiels were conservative evangelical Christians. Communism was the worst thing
imaginable, and it was taking over the world country by country during the Carter
era, and the process was irreversible. The U.S. government was bad at everything it
tried, from reducing inflation to keeping cities safe. In his eighth-grade social
studies class during the 1980 election, Peter supported Reagan and collected newspaper
clippings on the conservative hero. Tolkien, sci-fi, chess, math, computers: in the
1970s and ’80s, especially among high-achieving boys in places like the San Francisco
Bay Area, these attributes were often correlated with one another and with a worldview,
which was libertarianism. It had the prestige of abstract logic behind it. Peter became
a libertarian in his teens, at first infused with Reagan-era conservatism, eventually
taken to the purified limit. He didn’t read Ayn Rand until his early twenties, and
then he found the heroes of
Atlas Shrugged
and
The Fountainhead
to be implausibly righteous, the villains excessively evil, the outlook too Manichean
and pessimistic after Tolkien—maybe having something to do with Rand’s early years
under Soviet totalitarianism, which made her see America in a similarly sinister light.
Still, she was prescient in ways that no one could have imagined when
Atlas Shrugged
was published in 1957—so when the two main characters go on vacation, they end up
in the worst place in America, a place no one visits because everything has fallen
apart, everyone is angry, nobody works, and there they discover traces of a revolutionary
engine model in the ruined factory of the Twentieth Century Motor Company, which has
gone bankrupt due to the socialism of its feckless heirs. Rand foresaw that outcome
at a time when General Motors had the largest market capitalization of any company
in the world, and the average income in Detroit was 40 percent higher than in New
York. As the years went by, Peter was more and more impressed by Ayn Rand.

In high school he never drank or did drugs. He earned straight A’s at San Mateo High
and was class valedictorian in 1985. He got in everywhere he applied, including Harvard,
but he was afraid that Harvard might be too competitive, that he might get beaten
there, and after all the uprootings of his childhood he wanted to stay near home.
So he went to Stanford, the epicenter of what was beginning to be known as Silicon
Valley.

“I remember 1985 as just very optimistic,” he later said. He didn’t have a clear plan—he
could go into biotech, law, finance, even politics. “My default view was that you
could do everything. You could make lots of money, and you could have a respectable
job, and you could do something intellectually stimulating, and somehow one could
combine everything. It was part of the eighties optimism that I didn’t feel I needed
to be too concrete about it. The ambition was to somehow have an impact on the world.”

*   *   *

Well into middle age, Thiel could be fairly easily imagined as a college freshman.
He walked bent slightly forward at the waist, as if he found it awkward to have a
body. He had copper-colored hair, pale blue eyes, a long fleshy nose, and fantastically
white teeth, but his most striking feature was his voice: something metallic seemed
to be caught in his throat, deepening and flattening the timbre into an authoritative
drone. During intense moments of cerebration, he could get stuck on a thought and
fall silent, or else stutter for a full forty seconds.

In a philosophy class his sophomore year, Mind, Matter, and Meaning, Thiel met another
brilliant student, named Reid Hoffman, who was far to the left of him. They stayed
up late arguing about things like the nature of property rights (that was how Thiel
made friends, at Stanford and all his life). Hoffman said that property was a social
construct, it didn’t exist without society, while Thiel quoted Margaret Thatcher:
“There is no such thing as society. There are individual men and women.” Hoffman became
one of Thiel’s closest friends, and their undergraduate debates would have a long
afterlife when they both went into business. Most of his friends, though, were fellow
conservatives. They were an isolated and besieged group, and they relished it. Stanford
in the late eighties became the scene of a furious fight over the core curriculum—Western
Culture, as it was called—a fight that amounted to the last campus battle of the sixties.
One side, led by minority and liberal student groups, argued that Stanford’s required
freshman humanities courses were biased toward “dead white males” while shutting out
the experience of other cultures. On the other side were traditionalists who believed
that the anti–Western Civ students were using the curriculum to push a left-wing political
agenda on Stanford. The quarrel over reading lists seemed every bit as meaningful
to undergraduates at the time as demonstrations over civil rights and Vietnam. A group
of students even took over the Stanford president’s office.

At the end of his sophomore year, in June 1987, Thiel and a friend leaped into the
ring by founding a conservative publication called
The Stanford Review
. They had funding and intellectual guidance from a national organization that had
been started in 1978 by Irving Kristol, the father of neoconservatism, to help just
such right-wing student efforts. Though Thiel rarely wrote for the
Review
, every issue carried its editor’s stamp—a mix of high-minded, rational-sounding attacks
on leftist ideology and mischievous ridicule of political correctness among students,
faculty, and administrators.