I. “You’re Sitting in the Big Chair . . .”

Ross Ulbricht had imagined that it might all come down to this one day. That at some point during the prodigious rise of his hot tech start-up he would be obliged to make a terrifyingly ruthless decision. Now, in early 2013, the time had arrived. The question was rather simple: Was he ready to kill someone to protect his billion-dollar company?

The technology business has long purported to change the world and make it a better place. But, in reality, there is a decidedly more cynical underside to all this euphoria. In Silicon Valley, after all, many founders will often do whatever is necessary to protect their creations—whether that means paying a hefty legal settlement to hush the people who helped hatch the idea for their company in the first place (Facebook, Square, Snapchat), callously vanquishing a co-founder (Twitter, Foursquare, Tinder), or remorselessly breaking laws and putting thousands of people out of work (Uber, Airbnb, among hundreds of others). But, for Ulbricht, the price was steeper. In order to save his beloved start-up, the Silk Road, an Amazon-like “everything store” for the Dark Web, he needed to “call on my muscle,” as he put it to one associate. He needed to have a guy whacked.

Ulbricht hadn’t intended for it to all come down to this. The Silk Road, like many start-ups, had begun simply enough, in 2011, as a college curiosity. As a rakishly handsome wanderlust kid from central Texas, Ulbricht had traveled north, away from his small life. He matriculated at Penn State University, where he studied materials science and engineering, and acquired interests not uncommon among contrarian millennials—particularly those who enter the technology business. Ulbricht, now 33, developed an affinity for Ayn Rand books and libertarian philosophy; he appeared to view the world not as it was, per se, but as he wanted it to be. Like Uber co-founder and C.E.O. Travis Kalanick, or early Facebook investor (and Donald Trump supporter) Peter Thiel, both of whom had been fans of Rand, Ulbricht adhered to a particularly defiant strain of Randian dogma: “The question isn’t who is going to let me; it’s who is going to stop me.”

In political-debate clubs and at the Corner Room diner, on campus, the young Ulbricht fixated on the ostensible inconsistencies in how the U.S. government determined what was, and was not, legal. His philosophizing relied on a particularly college-aged line of argumentation. Big Macs led to diabetes and heart attacks, he would often argue, so why was McDonald’s lawful? Cars facilitated tens of thousands of casualties per year, he noted, yet they remained highly unregulated and were capable of going several times the speed limit. The same was true with alcohol and cigarettes, which have killed millions. So why, Ulbricht provoked, were recreational drugs illegal?

To Ulbricht, it seemed like an arbitrary distinction. Weren’t people inevitably responsible for what they put in their own bodies—be it fast food, booze, cigarettes, or, say, marijuana? The real problem with the drug business, he surmised, was that it was violent and opaque. So he came up with the germ of an idea: what if there were a Web site, like Yelp, that rated buyers and sellers, so that exchanges would be fair and more transparent? There would be fewer fatal overdoses, he reasoned.

“I WOULD HAVE NO PROBLEM WASTING THIS GUY,” ULBRICHT SAID.

But Ulbricht wasn’t simply a precocious and edgy libertarian. He was also a gifted, self-taught computer programmer—someone who could engineer code to the whims and vicissitudes of his wildest fancies. And so, like many bright kids in their 20s, Ulbricht eventually headed to San Francisco to develop his company. He arrived in Silicon Valley as the peninsula was feverishly bubbling with a new wave of start-ups (Uber, Lyft, Airbnb, Slack), all of which were taking advantage of easy access to venture capital and low interest rates—and growing their valuations into the billions as they made stars of their founders.

Ulbricht’s idea for an e-commerce site that operated on the Dark Web, beyond the watchful eye of the government, may have seemed galling to some. But a new precedent was emerging in the Valley. Countless start-ups were already trying to capitalize on the legalization of marijuana in various states. Others operated in similarly opaque markets, like facilitating prostitution on pseudo dating Web sites. In Silicon Valley, indeed, pushing the letter of legality is not only admired but also financially rewarded as the very essence of “disruption.” By the time Ulbricht arrived in San Francisco, Uber and Airbnb had already staked their entire multi-billion-dollar business models on defying existing regulations, from what constituted a hotel room to who could offer a taxi ride. They were not only in heated battles with various unions but also in litigation with city governments. This new generation of Randian founders didn’t ask for permission. They just took it.

Video: When Bad Things Happen to Good Ideas

Ulbricht’s start-up, which he named the Silk Road, an homage to the ancient trade route of the Han dynasty, was no different. The Silk Road matched buyers and sellers, who shipped the product right to your door as if it were simply a hardcover book or sweater, all for a small commission. Sometimes drug dealers would take their “product” and tape it to the back of DVD cases or stuff it into hollowed-out batteries, but most drugs just appeared in a puffy envelope, undetected by federal enforcement agencies. The entire system, at least from a tech perspective, was admirably efficient.