In the stodgy world of the cultural right, Milo Yiannopoulos stood out like a neon, designer-branded peacock. He was vulgar in a way that the old-school, Moral Majority-era conservatives could not tolerate: gay, brash, self-admittedly promiscuous, and frank about his innumerable biases, racial and otherwise. He was sacrilegious, famously causing his own downfall at Breitbart when a video of him appearing to defend pedophilia surfaced on the Internet. He dressed like a Kardashian, deliberately distancing himself from the Brooks Brothers-loving Young Republicans. In other words, he was the kind of disruptive presence that Robert and Rebekah Mercer wanted to boost in their attempt to accelerate the so-called culture war. With Ted Nugent far out of the demo, he was the right’s young pop star, a whole new thing. View more As the billionaire father-daughter duo behind Breitbart and, later, Donald Trump, the enigmatic Mercers flex their muscles much like the rest of their wealthy conservative mega-donor ilk: by sitting on think-tank boards, backing super PACs, funding scholarships, and donating to candidates. But the Mercers also think rather differently from their peer group, acting as angel investors for projects they hope will shift the cultural conversation. In 2012, they invested $10 million in Breitbart and then watched it turn into a blazingly offensive news organ for pro-Trump opinions; with the founding of Milo Inc. this year, they hoped to break into the next generation. “The interesting thing about the Mercers is that they’re the only people on the right who fund anything that’s cultural, which has always been the big weakness of the right and conservatism,” said Internet conspiracy theorist Mike Cernovich, chalking it up to conservatives simply being bad at understanding culture, much less participating in it. In this context, Milo Inc. can be viewed as the Mercer version of the conservative movement’s oft-failed attempt to Appeal to the Youths. (Watch any Republican attempt to prove their hipness and the struggle is immediately clear.) In keeping with their goal to construct a parallel cultural universe, the Mercers, according to one person with direct knowledge of their fund-raising activities, were curious to see whether Yiannopoulos could create a media empire that could bring in younger voters, make money, and drive a wedge in the culture war. Despite his less-than-pure conservative history—the pedophilia comments, his boast that he engaged in prostitution, and a litany of other taboos—the Mercers would continue to support Yiannopoulos as long as he continued to enrage feminists, college campuses, and anyone with a whiff of good taste. Even a BuzzFeed report detailing his extensive ties to the white-nationalist and neo-Nazi movement would not shake the Mercers from Milo Inc. As that person told me, the Mercers knew full well something controversial could happen. “The Mercers are already immune to negative press,” he said. “They invested in Milo knowing that he would generate negative press, knowing that he’s someone with a past, someone with controversial habits. No revelation is going to take that away.” Yiannopoulos’s biggest problem, however, may not be his outlandish behavior, but rather his undernourished managerial skills, which were manifested during the stillborn Free Speech Week event in Berkeley last month. (Another planned event in Chicago was canceled this week when a theater yielded to community pressure and backed out.) And in the fractious world of the far right—where it’s hard to convince advertisers to sponsor content with comments from unapologetic racists—fund-raising opportunities are scarce, but the competition is real. As Yiannopoulos flails, some of his erstwhile allies are hoping to dip into the Mercers’ reliable honeypot. The person familiar with their investment habits told me that he knew of several other start-up ventures trying to pitch to the Mercers at the Owl’s Nest, their waterfront Long Island retreat, “that could also have a culture-war impact.” Outside their doors, other activists are waiting. “With all of their money, I don’t think they do enough,” said Cernovich, whose super PAC, Rev18, has started seeking funding. A right-wing media-industry professional described the issue slightly differently: “Forget everything else, it’s a huge business mistake,” he said. “Because if you’re going after the Roy Moore vote, the coke-using male prostitute guy may not be the best bet.” Yiannopoulos’s flamboyance makes his missteps all the more glaring. And some former allies believe that he’s had his turn, and wish his backers would take notice. “I don’t know what’s going to break the Mercers, to wake them up,” said one person who worked closely with Yiannopoulos. “That’s a mistake they’re going to have to make for themselves. But I can guarantee you, that money is not being used efficiently. It’s not being used responsibly. It’s basically party money.” The company’s C.E.O., Alexander Macris, says that while the company may be making certain adjustments to its mission—more of a touring company, less about video production, for instance—it’s far from the profligate train-wreck some would allege. “We are executing on our business model and looking forward to continued success,” he said.

Before Trump, before Cambridge Analytica, even before the Koch brothers and the Tea Party, Bob Mercer made his fortune at a hedge fund. And it’s clear how the Mercers’ political activities replicate the fundamental strategy of a hedge fund: invest in everything that has anything to do with cultural politics, from actual campaigns to troll armies ready to take over the Internet; junk anything that fails and accelerate anything that succeeds. It’s the same on an ideological level, too, as my source familiar with the Mercers’ investments summarized it. “Every American can benefit from conservatism, and we just have to figure out how to talk about it, and how to have a winning conversation about it,” was how he said Robert described it, suggesting that there were aspects of the ideology that a diverse array of people could, at some level, accept. In the best-case scenario, Milo Inc. would be the first attempt to create a conservative-leaning talent agency, pumping out books, television shows, events, and speeches; an ideological version of William Morris, as it were. Yiannopoulos told me that he had raised $10 million back in April, though sources maintain it was less. The funding, according to this source, was intended as seed money to see if Yiannopoulos’s grand vision of creating a media company would both open a new front in the culture war and turn a profit, or at the very least, be sustainable. “Bob loves sustainability,” the source told me, adding that Milo Inc. had an investment schedule—something that Breitbart did not when it received $10 million in 2012. “It [was] enough to put behind somebody to say, ‘I have faith in you and I’m going to stand with you,’ but it’s not enough to say, ‘Oh my god, this is the next biggest thing,’” like it was with Breitbart. But though the Mercers may have steeled themselves for revelations like the ones published by BuzzFeed, they may not have prepared for the fact that Yiannopoulos’s checkered past involves a history of financial issues. In 2013, his former site The Kernel shut down amidst a raft of legal problems, and in 2016, he drew ire for raising nearly $350,000 for a scholarship fund and never disbursing the money. Issues like this, when seen against his well-publicized extravagances, do more than raise eyebrows. “All of their money is going to Milo so he can buy a fucking $1,500 Louis Vuitton iPhone case,” said a colleague of his. Yiannopoulos is still living high at Milo Inc.—two sources spoke of a dinner with a bottle of Champagne that cost upwards of $1,000. Macris said that while Yiannopoulos Instagrammed the $11,000 bill from the dinner after the funding came through, ordinary expenditures have been much less. A colleague mentioned that they were considering moving out of the Meme Mansion, a house where they planned on shooting a Big Brother–esque show. The house, his colleague said, is normally populated with young men playing video games. Lavish spending is part of Yiannopoulos’s brand, yet another bird he flips at correctness and decorum. In the midst of his Free Speech Week debacle, he told a reporter that he would hold a press conference on a nearby island, arriving on a speedboat while wearing a $15,000 fur coat. While Macris acknowledged that Milo Inc. is an “aspirational brand,” he said that luxury spending only accounted for less than 0.3 percent of the budget, and the fancy dinner parties were less than 0.5 percent. “I can assure you,“ he said, “the notion that every night, he and I are guzzling thousand-dollar bottles of Champagne and jetting around to penthouse suites—maybe next year, I don’t know.” By Justin Sullivan/Getty Images. Meanwhile, Yiannopoulos has fallen short of some of the goals he promised for his ambitious, multi-pronged company. The Dangerous Books imprint has only published one book, which Yiannopoulos has not gone on tour to promote, and Free Speech Week was a P.R. disaster. Macris insisted the company is on schedule: “In fact, we are set to publish our next book, FATWA, by Pam Geller, on November 1.” As for social media, the world where he first made his name, some have noticed that the investments don’t match the somewhat anemic content. “If he was pumping out a daily YouTube episode or some big, well-produced content, I’d be like, ‘O.K., money well spent,’” the frustrated associate told me. “For $10 million, you better be putting out, five times a week, quality content. Instead, he has a Facebook page where he steals memes and videos that he reposts with his logo on them.”