The credo of Thiel’s venture-capital firm: “We wanted flying cars, instead we got 140 characters.” Photograph by Robert Maxwell

Peter Thiel pulled an iPhone out of his jeans pocket and held it up. “I don’t consider this to be a technological breakthrough,” he said. “Compare this with the Apollo space program.” Thiel, an entrepreneur who runs both a hedge fund and a venture-capital firm, was waiting for a table at Café Venetia, which is on University Avenue in downtown Palo Alto, California. The street is the launchpad of Silicon Valley. All the café’s tables were occupied by healthy, downwardly dressed people using Apple devices while discussing idea creation and angel investments. Ten years ago, Thiel met his friend Elon Musk for coffee at the same spot, and decided that PayPal, the online-payments company they had helped found, should go public. Soon after the initial public offering, in 2002, PayPal was sold to eBay for one and a half billion dollars, and Thiel’s take was fifty-five million.

Most of Thiel’s fortune was made within shouting distance of Café Venetia. PayPal’s first office was five blocks down the street, above a bike shop. Just across the street was 156 University Avenue, the original headquarters of Facebook. In the summer of 2004, Thiel gave a Harvard dropout named Mark Zuckerberg a half-million-dollar loan, the first outside investment in Facebook, which Thiel later converted into a seven-per-cent ownership stake and a seat on the board; his share today is worth at least one and a half billion dollars. Facebook’s successor at 156 University Avenue is Palantir Technologies, whose software helps government agencies track down terrorists, fraudsters, and other criminals, by detecting subtle patterns in torrents of information. Thiel co-founded Palantir in 2004 and invested thirty million dollars in it. Palantir is now valued at two and a half billion dollars, and Thiel is the chairman of the board. He might be the most successful technology investor in the world.

The information age has made Thiel rich, but it has also been a disappointment to him. It hasn’t created enough jobs, and it hasn’t produced revolutionary improvements in manufacturing and productivity. The creation of virtual worlds turns out to be no substitute for advances in the physical world. “The Internet—I think it’s a net plus, but not a big one,” he said. “Apple is an innovative company, but I think it’s mostly a design innovator.” Twitter has a lot of users, but it doesn’t employ that many Americans: “Five hundred people will have job security for the next decade, but how much value does it create for the entire economy? It may not be enough to dramatically improve living standards in the U.S. over the next decade or two decades.” Facebook was, he said, “on balance positive,” because of the social disruptions it had created—it was radical enough to have been “outlawed in China.” That’s the most he will say for the celebrated era of social media.

Thiel rarely updates his Facebook page. He “never adapted to the BlackBerry/iPhone/e-mail thing,” and began texting only a year ago. He hasn’t quite mastered the voice-recognition system in his sports car. Though he owns a seven-million-dollar mansion in San Francisco’s Marina District, and bought a twenty-seven-million-dollar oceanfront property in Maui in July, he sees the staggering rise in Silicon Valley’s real-estate values as a sign not of progress but of “how people have found it very hard to keep up.” There was almost never a free table at Café Venetia, he noted, or anywhere else on University Avenue, throwing the sanity of local housing prices into further question. Silicon Valley exuberance had become yet another sign of blinkered élite thinking.

Thiel—who grew up middle class, earned degrees from Stanford and Stanford Law School, worked at a white-shoe New York law firm and a premier Wall Street investment bank, employs two assistants and a chef, and is currently reading obscure essays by the philosopher Leo Strauss—holds élites in contempt. “This is always a problem with élites, they’re always skewed in an optimistic direction,” he said. “It may be true to an even greater extent at present. If you were born in 1950, and you were in the top-tenth percentile economically, 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-one years. Most people who are sixty-one years old in the U.S.? Not their story at all.”

When Thiel questions the Internet’s significance, it’s not out of an indifference to technology. He’s enraptured with it. Indeed, his main lament is that America—the country that invented the modern assembly line, the skyscraper, the airplane, and the personal computer—has lost its belief in the future. Thiel thinks that Americans who are beguiled by mere gadgetry have forgotten how expansive technological change can be. He looks back to the fifties and sixties, the heyday of popularized science and technology in this country, as a time when visions of a radically different future were commonplace. A key book for Thiel is “The American Challenge,” by the French writer J. J. Servan-Schreiber, which was published in 1967 and became a global best-seller. Servan-Schreiber argued that the dynamic forces of technology and education in the U.S. were leaving the rest of the world behind, and foresaw, by 2000, a post-industrial utopia in America. 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.”

In the era of “The Jetsons” and “Star Trek,” many Americans believed that travel to outer space would soon become routine. Extreme ideas caught the public imagination: building underwater cities, reforesting deserts, advancing human life with robots, reëngineering San Francisco Bay into two giant freshwater lakes divided by dams topped with dozens of highway lanes. For science-minded kids, the fictional worlds of Asimov, Heinlein, and Clarke seemed more real than reality, and destined to replace it.

Thiel says that the decline of the future began with the oil shock of 1973 (“the last year of the fifties”), and that ever since then we have been mired in a “tech slowdown.” Today, the sci-fi novels of the sixties feel like artifacts from a distant age. “One way you can describe the collapse of the idea of the future is the collapse of science fiction,” Thiel said. “Now it’s either about technology that doesn’t work or about technology that’s used 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,’ 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.’ ”

Thiel’s venture-capital firm, Founders Fund, has an online manifesto about the future that begins with a complaint: “We wanted flying cars, instead we got 140 characters.” He believes that this failure of imagination explains many of the country’s problems—from the collapse in manufacturing to wage stagnation to the swelling of the financial sector. As he puts it, “You have dizzying change where there’s no progress.”