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.

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

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.”

Thiel’s own story of progress began near the end of the golden age, in 1967, in Frankfurt, Germany. When Peter was one, his father, Klaus, moved the family to Cleveland. Klaus’s employment in various large engineering firms kept uprooting the family—South Africa and Namibia were other locations—and Peter attended seven elementary schools. The final one was near Foster City, a planned community, along the southern edge of San Francisco Bay, where the Thiels settled when he was in fifth grade. His parents banned TV until Peter was in junior high school. He grew up with the untrammelled self-confidence and competitiveness of a brilliant loner. He became a math prodigy and a nationally ranked chess player; his chess kit was decorated with a sticker carrying the motto “Born to Win.” (On the rare occasions when he lost in college, he swept the pieces off the board; he would say, “Show me a good loser and I’ll show you a loser.”) As a teen-ager, his favorite book was “The Lord of the Rings,” which he read again and again. Later came Solzhenitsyn and Rand. He acquired the libertarian faith in high school and took it close to the limit. (He now allows for government spending on science.)

Though Thiel is forty-four, it isn’t hard to imagine him in his late teens. He walks bent slightly forward at the waist, as if he found it awkward to have a body. He has reddish-brown hair with a trace of product on top, a long fleshy nose, clear blue eyes, and fantastically white teeth. He wears T-shirts and sneakers and prefers to hang out in coffee shops. He thought that the actor who played him, for thirty-four seconds, in “The Social Network” made him look too old, and too much like an investment banker. Although he’s acquired various luxuries that one associates with a twenty-first-century mogul, he lacks the firm taste that would allow him to spend money naturally. His most striking feature is his voice: something metallic seems to be caught in his throat, deepening and flattening the timbre into an authoritative drone. During intense moments of cerebration, he can get stuck on a thought and fall silent, or else stutter for a full forty seconds: “I would say it’s—it’s—um—you know, it is—yes, I sort of agree—I sort of—I sort of agree with all this. I don’t—um—I don’t—um—there is a sense in which it’s an unambitious perspective on politics.” Thiel expresses no ill will toward anyone, never stoops to gossip, and seldom cracks a joke or acknowledges that one has been made. In an amiably impersonal way, he is both transparent and opaque. He opens himself to all questions and answers them at length, but his line of reasoning is so uninflected that it becomes a barrier against intimacy.

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Thiel’s closest friends date back to the early days of PayPal, in the late nineties, or even further, to his years at Stanford, in the late eighties. They are, for the most part, like him and one another: male, conservative, and super-smart in the fields of math and logical reasoning. These friendships were forged through abstract argument. David Sacks, who left PayPal in 2002 and now runs Yammer, a social-network site for businesses, met Thiel at Stanford, where they were members of the same eating club. The topics of conversation included evolutionary theory, libertarian philosophy, and the anthropic principle, which holds that observations about the universe depend on the existence of a consciousness that can observe. “He would demolish your arguments in five minutes,” Sacks said. “It was like playing chess. He was libertarian, but he would ask questions like ‘Should there even be a market for nuclear weapons?’ He would drill down and find the weakness in your argument. He does like to win.”

In the summer of 1998, Max Levchin, a twenty-three-year-old Ukrainian-born computer programmer, had just arrived in the Bay Area when he heard Thiel give a talk at Stanford on currency trading. The next day, they met for smoothies in Palo Alto and came up with the idea that became PayPal: a system of electronic payment designed to make e-commerce easy, consistent, and secure. “I’m addicted to hanging out with smart people,” Levchin said. “And I found myself craving more time with Peter.” While developing the first prototype for PayPal, Levchin and Thiel tried to stump each other with increasingly difficult math puzzles. (How many digits does the number 125100 have? Two hundred and ten.) “It was a bit like a weird courting process, nerds trying to impress each other,” Levchin said.

In 2005, Eliezer Yudkowsky, an artificial-intelligence researcher, met Thiel at a dinner given by the Foresight Institute, a nanotechnology think tank in Palo Alto. They argued about whether someone could have an anti-knack for playing the stock market—whether “reverse stupidity” could be a form of intelligence. Yudkowsky said, “I remember all my conversations with Peter as very pleasant, far-ranging experiences that I would be more tempted to analogize to a real-world I.Q. test than to anything else.”

Few people in Silicon Valley can match Thiel’s combination of business prowess and philosophical breadth. He pushed hard to build PayPal, against formidable obstacles, because he wanted to create an online currency that could circumvent government control. (Though the company succeeded as a business, it never achieved that libertarian goal—Thiel attributes the failure mainly to heightened concerns, after 9/11, that terrorists might exploit electronic currency systems.) At Stanford, he was heavily influenced by the French philosopher René Girard, whose theory of mimetic desire—of people learning to want the same thing—attempts to explain the origins of social conflict and violence. Thiel once said, “Thinking about how disturbingly herdlike people become in so many different contexts—mimetic theory forces you to think about that, which is knowledge that’s generally suppressed and hidden. As an investor-entrepreneur, I’ve always tried to be contrarian, to go against the crowd, to identify opportunities in places where people are not looking.”

Thiel’s friends value his openness to intellectual weirdness. Elon Musk, who went on from PayPal to found SpaceX, a company that makes low-cost rockets for space exploration, and Tesla, the electric-car manufacturer, said, “He’s unconstrained by convention. There are very few people in the world who actually use unconstrained critical thinking. Almost everyone either thinks by analogy or follows the crowd. Peter is much more willing to look at things from a first-principle standpoint.” Musk added, “I’m somewhat libertarian, but Peter’s extremely libertarian.”