Transcript: Max Chafkin
The transcript from this week’s, MiB: Max Chafkin on Thiel & Tech, is below.
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RITHOLTZ: This week on the podcast my special guest is Max Chafkin. He is a journalist, and a reporter, and writer, and has a new book out all about Peter Thiel and Silicon Valley. It’s quite fascinating. The book is called “The Contrarian.” Previously, I interviewed Ryan Holiday about his book on Peter Thiel funding the Hulk Hogan litigation against Gawker. That book was called “Conspiracy.”
This book is really less focused on any single event and more of a deep dive into the life and times of Peter Thiel. He’s a fascinating character, and the book is really quite, quite interesting. I found the book intriguing and I found my conversation with Max fascinating, and I think you will also.
So, with no further ado, my interview with Business Week’s Max Chafkin.
ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
RITHOLTZ: My special guest this week is Max Chafkin. He is a Features Editor and Tech Reporter at Bloomberg Business Week. His work has also appeared in such august magazines as Fast Company, Vanity Fair, The New York Times Magazine. He is the author of a fascinating new book, “The Contrarian: Peter Thiel and Silicon Valley’s Pursuit of Power.”
Normally here, I say guest welcome to Bloomberg, but since you work here, I’m going to say, Max, welcome to Masters in Business.
CHAFKIN: Thanks for having me, Barry. It’s a pleasure to be here.
RITHOLTZ: And I have to say this is a fascinating topic about a really interesting eclectic person that even though there’s been a decent amount written about him, before this, there wasn’t as much of a deep dive into his life. So — so we’re going to get to that in a few minutes. Before we do, let’s just start with your background. How did you get into journalism? What attracted you to this?
CHAFKIN: Yeah. So, my first job in journalism was at a magazine called “Inc,” which is a small business magazine. You know, I — I don’t know. I was interested in — I was interested in getting a job in journalism. This is going back 16, 17 years ago, and my father had worked in business his whole career. I sort of have been interested in — in business and — and any idea that like the — the store — the sort of business stories have something to say about, you know, the — the real world. You know, I read Money Ball and, you know — and the Michael Lewis book about the — the — the Oakland A’s and — and kind of like the — the — the sort of business story behind the Oakland A’s being good at baseball.
Anyway, I got this job at Inc magazine, small business magazine, and that was kind of how I got into it. And the way I got into covering tech was, you know, back then tech was kind of the side show, and — and I was like the young reporter. So they kind of just let me like do whatever I wanted in terms of — of — of covering the tech companies because, first of all, the — the — the basic view was that it wasn’t very important, and that, you know — so — so anyway, I got to encounter a lot of these folks, you know, including Thiel, you know, relatively early and got to kind of see — watch this.
You know, obviously, it’s not the entire — I didn’t get witness the entire evolution of Silicon Valley, but I got to see a really important part. You know, going from — from that time 2005 to today where, you know, the tech industry went from being kind of an economic side show where, you know, back at my job at Inc, you know, I had this more sort of senior writers telling me that, you know, these companies are all stupid and — and they’re all — you know, they’re losing money. And it went from being this kind of important, but — but really a sideshow to being, you know, I’d argue, you know, the most important, you know, economic engine in the United States, maybe even the world, you know, really important, maybe the most important cultural center, and I think increasingly, you know, really important political center of gravity. So …
RITHOLTZ: It’s — it’s amazing that people who witnessed the 1990’s so easily drew the wrong lesson, which is, oh, a lot of these worthless (inaudible) companies have no revenue, no profit, they’re worthless, but you can always pick those out. You have to look at the broader trend and, clearly, in the 1990’s, this is in hindsight. Technology was changing everything. You didn’t have to be a genius to figure that out, although you could see how people might miss it because of so many of the negative stories.
CHAFKIN: Yeah, yeah. It’s funny that the people who kind of — who — who thrived in the — in that early period, including Peter Thiel, but also many others, you know, were the — were the kind of contrarians who said — who are arguing back then actually the dot com boom was great and we built all this infrastructure. And — and you heard these arguments back then that — that were mostly dismissed, but — but yeah, I mean, it — now, in — in retrospect, right, it looks like, yeah, they basically had it right, but then a bunch of — there’s a bunch of like sort of dumb money that — that that got dumped into the industry and …
RITHOLTZ: And late, right.
CHAFKIN: … and — and kind of (inaudible) up.
RITHOLTZ: Late to the party, they pick up the drinks for everybody else. Listen I’ve talked about this with other technologists and VCs before, Global Crossing and Metromedia Fiber, and all that stuff that blew up, it got bought out of bankruptcy for pennies on the dollar, and that’s how you ended up with the YouTubes and Netflixs and the Facebooks of the world, but for that it wouldn’t happen.
So, we’re in total agreement on technology. Let me ask you, do you recall the first time you met Peter Thiel. Tell us a little bit about that.
CHAFKIN: So, I was trying to think about this, and I — I — I — I think it was — it’s either 2007 or 2008. So, I was writing a story about Elon Musk. You know …
CHAFKIN: … Elon Musk, at the time, was kind of famous, but not that famous. He had started a company during the dot com boom that had — that had been sold for like 300 million bucks. He had been — he was like one of the early kind of like dot com kids, and that’s when he …
CHAFKIN: … first encountered Thiel. They — they met one another at PayPal, and — and they had this kind of very difficult kind of the — the relationship, they’re like frenemies or something, and that we can …
CHAFKIN: … we can get into that. But any case, I was doing a story about Musk who was distinguishing himself at the time because he was involved in this company Tesla that, you know, nobody was taking seriously because they were trying to make an electric sportscar, which kind of seemed like a joke.
RITHOLTZ: Right. They were bought — taking these — I’m trying to remember what the car, Lotus Elan (ph), right.
CHAFKIN: The Lotus (inaudible), yeah, yeah.
RITHOLTZ: The thing is Lotus Elan (ph) Mules pulling out all the engines, putting in batteries, and laptop batteries. And, you know, nobody thought they were a serious play.
CHAFKIN: Yeah, it was a hobbyist project, essentially, that he was trying to turn into something much bigger. And he also had this crazy rocket thing. And I — and I — and that’s when I talked to Thiel for the first time was just like a — a very quick interview about, you know, what’s up with this guy Elon Musk. And — and — and I encountered him, I guess, basically a handful of times, you know, in the years that follows.
The — the — the funny thing about him, so most people in Silicon Valley know who Peter Thiel is, but I think most Americans — and even a lot of people like who are — who are involved in business like — are not super aware of him because he was this like behind-the-scenes player. He was not — not the front man, not the guy.
CHAFKIN: He only ran. He — he was the CEO of PayPal, but it was a pretty short tenure, just to a couple of years.
RITHOLTZ: They got bought by eBay pretty early on, right?
CHAFKIN: And he left like the day that — you know, the day that Meg Whitman, you know, took the keys, Thiel was out the door. And — and so he had this kind of behind-the-scenes thing where — where he was sort of secretly, you know, this really influential guy. You know, there’s this sense in Silicon Valley especially, you know, in that period from like 2005 to 2016 where, you know, it kind of, you know, the game, you know, Six Degrees of Kevin Bacon or something …
CHAFKIN: … they’re like every startup, one way or another, pretty quickly comes back to — to Thiel. And the way it came back to him was through this thing called the PayPal mafia, which probably a lot of people have heard of, but I’ll just summarize real quick. It was basically just these — this gang of folks who had been involved in the early years of PayPal. They were all sort of working together and making investments early on including in Facebook, but also, you know, LinkedIn, Reid Hoffman was a …
RITHOLTZ: So, I was going to say Reid Hoffman, Elon Musk, Peter Thiel. Who else was in the PayPal mafia?
CHAFKIN: So, the – the YouTube founders are — are members of the PayPal mafia. You also had a couple of VCs — were not super well known, but a pretty important one is Keith Rabois who’s been involved in, you know, some of Jack Dorsey’s Square, Jack Dorsey’s company. Rabois, I think, was — was an executive there and has — you know, has kind of been in the FinTech world in a big way over the last decade. David Sacks, another kind of well-known venture capitalist.
You had — who am I forgetting? Oh, the founders of Yelp. So, it’s like Max Levchin who started a firm, which is this, you know, another kind of FinTech thing that — I think they went public within the last year. So, you have these guys who were all really successful, really smart, were very much very similar, kind of a lot of ideological alignment. And there — there are some exceptions. You know, Thiel and Musk disagree with each other in a lot of things. But for the most part, these guys are really into, you know, the future and — and — and sort of the — the — the — the possibilities that are created by technology, many of them very conservative.
You know, Thiel comes out of this kind of politically activist background. A lot of the early PayPal mafia guys worked for this newspaper that — that Peter Thiel started at Stanford, the Stanford Review. So, it’s this kind of ideological venture capital network where they’re investing each other’s companies, you have employees to bounce from, you know, one company to the next to the next. If you want to like make your career in Silicon Valley, you know, one way to do it — it’s not the only way — is to kind of get in with this — with this group of people.
RITHOLTZ: Tell — tell us about — I love this phrase, “the cult of disruption.”
CHAFKIN: So that’s kind of the cool thing what was attractive to me about, you know, writing about Thiel and about the book is that Thiel — his influence, of course, he has the money, the kind of conventional. He — he was an investor in — the first outside investor in Facebook, co-founder of Palantir, you know, co-founder PayPal. But then there’s this ideological thing where — where Thiel is kind of different from a lot of these other guys, and that he had a — a very clear sort of idea and an ability to articulate, you know, a vision for technology and — and for — for politics.
And — and that idea, which is probably best, you know, kind of laid out in Thiel’s book “Zero to One,” for which you can find, you know, in YouTube videos and things like that is more or less that technology companies are, you know, the — the best hope for the future. They are — they are the things that are going to make the future happen. They’re going to save the world, and that the way that technology companies can thrive are — will — will do best is if they try to get, you know, basically as big as they can, as fast as they can. And if they are constantly trying to overturn norms.
And — and in other words, now in this view, right, it’s really important to — to sort of break with the herd. And so, it’s not just that if you’re a startup, it’s good to sort of break the rules. It’s — it’s OK to break the rules. That’s — that’s not what this says. What Thiel thinks is that breaking the rules and kind of changing norms, changing perceptions even — yeah, like even getting into a little bit of trouble is a social good. And that’s kind of how progress happens.
And we see that with Facebook, right? The Facebook motto — motto was, you know, move fast and break things, right? Like the idea of disruption, we normally, I think, conventionally of thought of disruption as being like, you know, a bad thing. You know, here’s the thing you yell your kids at for, but — but — but Thiel kind of rebranded it as — as a — as a social good, as something to be proud of and kind of folds — it gets folded into this sort of imperial capitalism, which again, I think, we see, you know, most clearly with Facebook where the company just is this gigantic company, swallowing competitors, trying to get — you know, getting enormous and — and — and then, you know, attempting to just sort of dominate. And so, that view of technology as both rule-breaking and kind of monopolistic, that comes from — from Peter Thiel.
And, of course, it’s not a totally — you know, it’s controversial vision, right, because like I’m not sure we want to have these giant tech monopolies or –or, you know, obviously once — once companies like Facebook get as big as they are, then that propensity for rule-breaking becomes, you know, a potential problem.
RITHOLTZ: So, he comes out of the PayPal mafia having sold the company to eBay, which eventually gets run by Meg Whitman. I don’t remember if she was CEO during the purchase. Was it — was that (inaudible)?
CHAFKIN: She was. Yeah, yeah. And they had a — a rivalry and …
RITHOLTZ: Yeah. Tell us about — because you would think she — like Meg — Meg Whitman is not exactly the sort of person you think is prickly and going to be getting into spats with people. How did this become some sort of a — a challenge relationship?
CHAFKIN: So, with Thiel, right, there’s always a kind of a business dimension and an ideological dimension. Business dimension, PayPal was growing quickly and, in some ways, is a — was a threat to eBay because like if all the transactions are happening in PayPal that that’s going to, you know, could conceivably hurt eBay in the — in the long run.
But — but, of course, eBay has a lot of power over PayPal because, at any point, eBay could just try to shut it off. eBay had a competing payment service at the time, so there’s this kind of tension that you often see in — in — in these tech businesses where you have a platform and then a company that’s kind of ascendant within that platform. So that was going on.
But — but — but, of course, there’s a — there’s another dimension, which is that Whitman was kind of a conventional business figure, right?
CHAFKIN: She — I can’t member if she — I think she has an MBA. Her — her big success before that was at Hasbro. She’s not a technologist, right? She’s somebody …
CHAFKIN: … who’s kind of like a normal business as Thiel and his — his peers saw it, you know, kind of a square. And they saw themselves as being, you know, the rebels. You know, they had been — they had been involved in this conservative newspaper at Stanford. It was all about kind of sticking it in the eye of the establishment. And — and women, of course, is not a — politically, you know, not that far away, you know, from Thiel. She’s kind of center, right or whatever.
But — but, you know, they are just — but they’re totally different sort of personalities …
RITHOLTZ: Generational viewpoint, just wildly …
RITHOLTZ: … disparate.
CHAFKIN: They want — you know, Thiel and — and his — and his crew like they’re really invested in the idea of kind of overturning, you know, everything about, you know, Meg Whitman’s world, the world of MBAs and, you know, kind of normal Wall Street finance, and — and, you know, kind of normal business practice. They — they thought they were, you know — you know getting rid of all that or — or — or — or revolutionizing all of that.
And the fact that they, you know, they — they — they kind of succeeded, right? They went public. Eventually, they did sell themselves to — to eBay, but — but — but that that — that success, you know, then becomes one of the founding myths of Silicon Valley where you see that same attitude, you know, we are different from those guys on the East Coast. The — you know, nowadays they talk about the paper belt, right, the — the East Coast establishment, the media, the finance, that’s the paper belt (ph).
We’re getting — like the rust belt, we’re getting rid of them. We’re this new thing. And that becomes kind of the — one of — as I said like, you know, the founding myth, the founding ideology that — that kind of helps propel Facebook, and Uber, and many of these other companies to — to their amazing height.
RITHOLTZ: So, we’re going to get to Facebook. I want to stick to this sort of rivalry he has not only with Meg Whitman, but with a famed V.C. Mike Moritz of Sequoia Capital. He’s California V.C. guy. He’s not part of the rust belt/paper belt. Why did they buttheads?
CHAFKIN: Yeah. Well, so Moritz, at the — is and was, you know, one of the most famous venture capital …
RITHOLTZ: Legendary, right? Absolutely.
CHAFKIN: … legend, right? You know, he — he had a close relationship with Steve Jobs when he was a journalist. He’s written this book about Apple, and then had gone on to become an investor, invested in Google.
Moritz — so there were — there are actually — there were so many payments companies back then. And that’s — that’s a thing that we’ve sort of all kind of forgot, right?
CHAFKIN: You just take PayPal, wow, what a — what a revolutionary idea. But it wasn’t really a revolutionary idea. There were, you know, like dozens of these things. Every — every major tech firm had a payments thing. Every bank had a payments thing. And there are a bunch of independent startups, one of which was started by Elon Musk, which we call x.com and Mike Moritz was his investor.
Moritz had — and I think has a kind of a — a more conventional view of — of what a startup is and what a Silicon Valley founder is supposed to be like than — than Peter Thiel. And so, part of what happened is that, you know, the two companies merged. Musk became CEO and Thiel basically got bounced out. And six months after that, Musk goes on his honeymoon. And while he’s away, Thiel and some of these — his friends who — who had — who had started the company with him, basically, engineer a coup. They — they marched to Mike Moritz’ office in Sand Hill Road, and they presented him with letters of resignation for, you know, most of the executive team and say, “You know, you got to — you got to fire everybody and — and replace — you got to fire — sorry, you got to fire Elon Musk and bring in Peter or we’re all going to walk.”
And Moritz agrees because basically he had no choice. But, of course, that creates some — some — some, I think, bad blood. And then there’s — there’s like a further amount of bad blood where Thiel — you know, people think of Thiel as the sort of Silicon Valley guy as being, you know, you know big visionary. But he — his — his involvement with PayPal originally was as an investor. He had started a hedge fund, and he kind of approached the management of the company like a hedge fund guy.
So, he — he — almost the entire time he’s running PayPal, he was trying to sell. He — he — he’s — he — he recognized that the company was on uncertain footing. They were losing money. It had a lot of value. He wanted to sell the company, Moritz did not because, of course, for a venture capitalist, once you have a hit, you really don’t want to — you don’t want to sell early because your entire portfolio is kind of dependent on that hit, you know, going as big as possible. So that was the second way that they butted heads where — where Moritz, you know, kind of comes to see Thiel as this — as — as an operator, not — not as a real entrepreneur.
And Thiel sees Moritz as basically a sharp elbowed guy who’s just trying to get his. And — and — and — and that becomes a conflict that helps set-up Thiel later in his career because when Thiel started a venture capital fund, his — the founders fund, the whole idea is like we’re different from the Sequoia way.
You know, Mike Moritz will fire founders. He’ll — you know, he doesn’t let founders, you know, run the company. This is not an entirely fair critique, although there …
RITHOLTZ: Especially given that he himself orchestrated the firing …
CHAFKIN: Right, yeah, yeah.
RITHOLTZ: … from Elon Musk — from Elon Musk’s company.
CHAFKIN: But — but as they saw it, you know, Moritz was kind of — and the kind of Sequoia way was about preserving Sequoia’s, you know, internal rate of return. It wasn’t about, you know, helping the entrepreneur, and — and they were going to be different. And the — and the Founders Fund approach, which again they — they really marketed as like the opposite of Sequoia which, at the time, was and still is, you know, one of the big venture capital firms as like we are going to — we’re going to let you do what you want. You know, it’s your company. We will never fire a founder. And — and that’s …
RITHOLTZ: And hence Founders Fund.
CHAFKIN: Hence, Founders Fund. And hence, you know, Mark Zuckerberg ending up as like, you know, the absolute dictator of this like trillion-dollar company …
CHAFKIN: … Facebook.
RITHOLTZ: With the A shares that he has a vastly disproportionate voting share, he really can’t be deposed without his own permission. And — and as long as you bring you up Facebook and — and Zuck, Thiel was one of the very first investors into Facebook, wasn’t he?
CHAFKIN: Yeah, yeah, first outside investor. I mean, he — he came in at the same time as Reid Hoffman who’s another one of his buddies. But, you know, he — he — he made a big — the — the — the first significant investment in Facebook, $500,000.
If you’ve watched the social network, he — there’s a scene where Sean Parker or the Sean Parker character played by Justin Timberlake and Jesse Eisenberg play Mark Zuckerberg meet with this kind of suit V.C. who tells them to like, you know, change the company structure to fire the other guy, Eduardo Saverin. And that is Peter Thiel. I mean, that’s that — that — that character who disappears for about, you know, 15 seconds is Thiel because Thiel was this — was the outside money, and Thiel helps set in motion this chain — chain of events that allowed Zuckerberg to restructure the company so that he would be, you know, in control, not just in control then but, you know, in control today.
RITHOLTZ: So, let’s talk a little bit about Thiel the investor and Thiel the businessman. He’s pretty obviously a — a fascinating and complex character, but he very much is a contrarian. From whence does this streak — I mean, there’s a pretty clear path in Silicon Valley to how to succeed as an entrepreneur, how to succeed as a venture capitalist. That wasn’t anything that was a need of reinventment (ph), and yet, he very much reinvented both of those fields. Why? What motivated him?
CHAFKIN: Yeah. So, I mean, you can go way back. I mean, I — he — so his basic idea, you said contrarianism, right? But — and it — and it’s — it’s really that, you know, the — the majority is often wrong. That’s his idea that like when — when you have these things that we, as a society, have agreed on.
A lot of the time, we’re — we’re — we’re making those assumptions or making those decisions based on sort of faulty assumptions. We’re — we’re agreeing with things because we want to make our — our friends, neighbors, and colleagues happy. And Thiel thinks we make mistakes that way.
That comes — you know, I think you go way back. You know, he was bullied as a child. You know, he bounced around a lot. I think — I think he — it was always kind of him against the world as a kid. But also, it goes to this, you know, French philosopher that he’s really into René Girard who, you know, basically articulated a — you know, a — a sort of philosophical version of — of contrarianism that Thiel is really bought into.
And what’s interesting, so I think, you know, the Thiel approach, you can — you obviously see why it’s useful in — in — in the world as a technology investor because VCs make these high-risk, you know, high-reward bets. And so, you don’t really want to bet on the consensus, right?
CHAFKIN: It’s — it’s a — there’s low upside. But also, you know, Thiel thinks it’s more than that, right? Thiel thinks this is like a potential life philosophy, and — and that — that sort of finding areas of disagreement, you know, in — in — in job interviews. He — he — he asked people, you know, what is the thing that you believe that no one else believes, right? He’s like really interested in — in — in kind of breaking the — the norm and — and — and interested in this as — as a life philosophy.
The funny thing is, right, for somebody it’s all about, you know, being different. And — and I think this is related. A lot of what he’s done is actually like sort of sell into bubbles rather than betting. He doesn’t — he — you know, he sometimes has bet against bubbles, especially when he was running his hedge fund in the — in the 2000s. But — but often, it’s more like he sees something that’s hot and he figures out a way to — to make a play, so that was — so PayPal was certainly one of those where — where there’s this huge boom, and Thiel was an outsider, and he kind of, you know, finds his way to this brilliant coder Max Levchin and — and — and, you know, the rest is history.
Same thing with Palantir where Palantir is this — now today, you know, a government contractor, big data mining firm. And it really grew out of Thiel’s insight, you know, after 9/11 that Silicon Valley had something to sell the U.S. government because the U.S. …
CHAFKIN: … government was really interested in data mining, doing a better job of kind of …
RITHOLTZ: We have all this information. We have all the surveillance, thousands and thousands of hours of audio that we’ve picked up from the field that’s potentially dangerous …
RITHOLTZ: … but how do we do with.
CHAFKIN: Yeah, and Palantir was, more or less, just yeah, you know, an elevator pitch to — that — that was like directly aimed at that, and it took them, you know, a decade or so to — to kind of — of actually find a business. But — so it’s, in a way, Thiel is good at — at — at — at like spotting these trends and — and — and sort of seen the ways that the herd is moving, and then finding ways to maneuver so that he can — he can profit from — from that movement.
And I — I think the — the sort of Trump thing is another — would be another instance of that where Thiel was really early. Now — now, of course, we could talk about the ethics and morality or whatever of this. But — but just from a sort of cold calculation, Thiel was very early in — in — in seeing that there was movement against kind of globalization, that there was the rise of this really, you know, hardcore right wing especially on the Internet. And — and, you know, he saw Trump before many, many other people realized that that — this was happening and that it was real. And — and that — and that allowed him, you know, to get an early on Trump.
RITHOLTZ: So — so let’s combine the conversation about Facebook and the conversation about Trump with the deal. You talk about the secret deal that was caught before the election whereas a lot of people on the right are complaining that the tech world is biased against them, and there’s a liberal bias in reality. That wasn’t what was taking place …
RITHOLTZ: … behind the scenes. Tell us about that.
CHAFKIN: No, I — and I think people — so, you know, there is — on the right over the last, you know, five to 10 years, there’s been a realization that, first of all, Silicon Valley is very powerful, which is true, and that a lot of liberal people work at these tech companies, which is also true. And so, what they’ve done is kind of taking the — the playbook that that is often used against media companies like in your time.
RITHOLTZ: Sure, work the reps.
CHAFKIN: Yeah, they work in the reps, exactly right. And — and so that pressure has been coming for a long time. It — it — it really — it — it bubbled up in a big way before the 2016 election. You know, there was this sort of mini scandal. I talked about this in the book. There was like a mini scandal involving Facebook trying to kind of promote stories at The New York Times and CNN and such for publishing. And — and — and Zuckerberg basically had to have a peace summit with — with all these, you know, key members of the right-wing media establishment. Thiel was a — a sort of broker there where — where Zuckerberg said, “Look, I want to hear you guys. We are going to be unbiased.”
And — and — and over the next, you know, five years, Thiel plays this role where when Facebook is under fire, either from the right-wing press or from Trump, Thiel is there to kind of help Zuckerberg navigate — navigate that world. So — and — and — and the most important thing is, you know, anytime Zuckerberg is accused of being a, you know, liberal shield or whatever because he was — because he was in favor of increased immigration, you know, he started this pro-immigration group, you know, Zuckerberg can say, “Look, look at my — look at this guy on my board member. He’s the longest-serving board member. He’s one of — you know, one of my close friends. He’s not just a — he’s not a rhino. He’s not just a Republican, he is a hardcore Steve Bannon, Donald Trump Republican. He has real credibility with — with Trump world.” And that was like the — the most important thing, I think, that — that Peter Thiel gave Facebook, which is like allowing it to be somewhat insulated from attacks from Donald Trump.
Now, in 2019, Trump and his campaign were running these ads where they were kind of like — they were really crossing the line factually, right? They were claiming — they were sort of making stuff up about — about Hunter Biden. There were these videos of Nancy Pelosi that had clearly been doctored to make it look like she, you know, had some kind of …
RITHOLTZ: She was drunk.
CHAFKIN: Yeah, yeah, yeah, some kind of neurological problem. And there was like a real energy on the left to — to do something about this. He had Elizabeth Warren and AOC saying, you know, Facebook is out of control. And — and Zuckerberg, you know, flies to Washington, D.C. This is right when he was promoting Libra, you know, which is another kind of …
RITHOLTZ: The crypto, right.
CHAFKIN: … crypto thing that is connected to Thiel.
RITHOLTZ: Because — because you’ve — you’ve already trusted Facebook with all your private data, you might as well trust them with your crypto currency.
CHAFKIN: So, he gives a speech at Georgetown where he basically says we’re not going to regulate political speech. Politicians can lie. It’s OK because, you know, that’s — that is — it is not our job as — as a private company to do that and, you know, the truth will out, right? And now that — OK, so that — that was the — that was the — that was kind of an explanation and a defense. And I would argue of kind of signaling of — of intention. And then he — you know, later on in this strip has a meeting with, you know, Donald Trump and — and Melania, and Jared Kushner, and Ivanka Trump, and — and — and him and his wife Priscilla Chan, and Peter Thiel, and — and Peter Thiel’s husband.
And in that meeting, you know, we don’t know what the details of that meeting are, but — but, you know, after the meeting, Thiel expressed to a friend that there was an understanding. And I — that’s how I reported in the — in the book. There’s an understanding reach that Zuckerberg would basically continue to take a hands-off approach on, you know, on — on — on things that Trump said, was going to give Trump a lot of leeway, which is something Trump really wanted and was going to, you know, basically do what he could to ensure that, you know, conservative media didn’t get, you know, sideline, that conservative media would thrive, you know, on Facebook.
RITHOLTZ: But they went much further than that because when you look at the most shared stories, the top 10, it’s supposedly for — for a technology liberals shutting down conservative voices, Facebook is dominated …
RITHOLTZ: … by people like Ben Shapiro, and Dan Bongino, and all these like not just right-wing conservatives, far-right extremist groups.
RITHOLTZ: The algorithm seems to have been set-up to maximize outrage. Facebook is an outrage manufacturing machine, and that played right into this group’s hands.
CHAFKIN: 100 percent. Now, and — and the phrase that was used in this conversation that I reported on was state-sanctioned conservatism, the idea that Facebook would, you know, basically promote these guys — Ben Shapiro, Bongino, and so on.
Now the thing is, OK, so Facebook — we have to say, first of all, Facebook denies this. Facebook …
RITHOLTZ: And yet we — the top 10, top 20 every day is not debatable.
CHAFKIN: Right, that’s what I was going to say.
RITHOLTZ: Is it a wild, wild disparate where you would think for a country that’s pretty evenly split, if anything Republicans are a minority, conservatives are a minority, they dominate Facebook. How do you explain that?
CHAFKIN: Well, I think — so I — I think it’s — it — it is a — a handful of things like one of which is ideological and — and — and to the extent to which Zuckerberg, I think, was — has been pushed to the right by Peter Thiel. And — and you saw a reporting by Bloomberg analysts and others during that time where you had folks like Shapiro, you know, running afoul of Facebook’s rules and Facebook stepping in to say …
RITHOLTZ: You know they’re right.
CHAFKIN: … yeah, exactly, trying to — trying to make sure that these important voices, you know, as Facebook saw it, didn’t get silence.
You know, the other thing is money. And I — I think like a lot of — a lot of — people have spent a lot of time, including me, trying to figure out, OK, like what is Mark Zuckerberg really believed. It’s an important question because, you know, Mark Zuckerberg has, you know, as much power as like arguably anybody in human history, and it’s like not clear what he believes.
It kind of seems like, to me, like he just believes in Facebook and like in Facebook’s bottom line. And — and these guys, you know, Shapiro, Bongino, they are very good for Facebook’s bottom line. And — and — and like having this, you know, rabid, you know, outrage cycle, of course, is — is — is great news for Facebook. And — and so I think — I think that’s part of it as well.
And I think a third component is probably, you know, failure on the left to — to — to kind of come up with any — any kind of answer to this stuff. I mean, probably part of the problem is — and again I’m just kind of speculating but, you know, the mainstream left really embraced Facebook. A lot of the stuff — back in like 2008. A lot of the — the sort of stuff that Trump was doing in 2016 in terms of like this is like really specific targeting on Facebook. And, you know, that stuff was kind of pioneered by Barack Obama, and — and — and the kind of group of tech workers who are working with them …
RITHOLTZ: People from Google and had very specific, but it wasn’t on a platform like Facebook, it was broad …
RITHOLTZ: … Internet-based, very targeted. He was very successful in that. And the left, I think, they got a little cocky and ignored social media thinking, hey, we got this whole Google SCO thing down.
CHAFKIN: Well, and I think — so I think that was part, but I also think the — because the mainstream left like embrace Zuckerberg and embrace Facebook, I think that may have sidelined the kind of far, like the — basically like the mainstream is always going to be lamer than the — than the crazy people, like in …
CHAFKIN: … in — in Facebook world. And so, what you really had was like, on Facebook, you have the kind of mainstream left arguing with the crazy right. And when that’s happening like the — the crazy people are always going to be more interesting like …
CHAFKIN: … you know, like this — this is like kind of center left people like the Obama types are just going to be like, you know, not as fun as Dan Bongino, who is, you know — you know, obviously, as you say the extreme character, but he is a character, right? He’s entertaining, and he generates outrage. And I think that also kind of perpetuated this kind of outrage cycle that allowed, you know, Republicans to — and — and not just Republicans, sorry, I mean, far right, you know, conservatives to — to — to, you know, make such hay with Facebook.
I mean, I think the alt- right was really — and — and the alt-right, I think, propelled trouble. It was a social media phenomenon and — and they saw that. And — and Thiel saw that. And — and — and that’s part of the reason, you know, he was supportive of that – of that world.
RITHOLTZ: So — so let me ask you a question that’s impossible to answer, but I’m going to throw it out anyway. Would Donald Trump have gotten elected without the support of Peter Thiel? And what I mean by Thiel is him and all of the people he worked with — works with including Facebook, Zuckerberg, et cetera. Can — can Trump thank Thiel for his 2016 victory?
CHAFKIN: I think if you include — if you throw in like the wide network, I think the answer is 100 percent yes? I mean, Trump has said, “Look, I don’t think I would have gotten elected without social media.” But — but I think if we’d narrow it, right, just to Thiel, I think Thiel had a big impact. And I don’t know if you can say, you know, I think it’s — it’s always hard to say like one to — to — to narrow it down to one person.
But, you know, talk to people in — who had been involved with the Trump campaign. And Thiel was very valuable to them, and the — the reason he was valuable is because, you know, Trump obviously had a lot of energy. There’s a lot of kind of, you know, grassroots-type support. A lot — he had a lot of fans. He’s a celebrity, but he has an attractive kind of the — the sort of establishment credibility like real businessman.
If you think back — and business people. Getting back to the — the — the RNC, the 2016 RNC like who else spoke besides Peter Thiel.
RITHOLTZ: It was a surprisingly weak conference considering the winner of the election coming out of that.
CHAFKIN: Yeah, I mean, you had like Chachi from Happy Days. You have like a bunch of guys, a bunch of real estate guys like a bunch of whom are now indicted or, you know, have like serious, but …
RITHOLTZ: Well, but that’s a long laundry list …
RITHOLTZ: … for folks. But mainstream business — at least here in New York, look, we’re both sitting in a studio in New York right now. New Yorkers didn’t take Trump seriously because they know him as like a third or fourth tier …
RITHOLTZ: … I’m not even saying anything critical. He’s just not one of the giant developers, not a big guy in real estate, but that was his brand and that was his reputation. The rest of the country saw him very differently.
CHAFKIN: Yeah. And — but — and so I think Thiel’s presence helped bring around some of that, like the donor class, some of the kind of mainstream support. And — and — and the other thing, and so at that — at the convention, of course, Thiel gave what I think was like really a historic speech. You know, I — I think it was a speech that made him profoundly uncomfortable, but he said, you know, I’m proud to be gay and I’m proud to be an American. And — and that was historically significant.
You know, it was the first time at a Republican convention somebody, you know, openly gay person had spoken and acknowledged their sexuality. And it — it wasn’t just that he did it, but he got around it, you know, a — a huge ovation. It was a moment of, I think, legitimate, you know, equality. And for a political party that has been and had been, you know, pretty hostile to the rights of gays and lesbians, applauding Peter Thiel, I think, made a difference, and — and help — help convey something about Trump that I think was valuable.
And then the final thing is, you know, Thiel hasn’t donated to the campaign until mid-October. He donated days after the access Hollywood tape had come out, the tape where Trump was, you know, quoted, you know, seeming to endorse sexual assault.
Now, at the time, you know, there are always like Republican figures were basically trying to get as far away from Trump as they could …
CHAFKIN: They were like I didn’t really — you know, because there’s a lot of like — a lot of people running away from what they saw as just a total disaster.
CHAFKIN: Trump’s going to lose …
RITHOLTZ: That was the implosion right there.
CHAFKIN: And — and, you know, two things happened, one of which was Wikileaks happened. And that I think, you know, have changed the media cycle and — and — and helped Trump …
RITHOLTZ: Our friends, the Russians …
CHAFKIN: Yeah. And …
RITHOLTZ: … always got to – always got to give props to them.
CHAFKIN: And the second thing was Peter Thiel, instead of running away, ran towards this, and he makes a big donation of $1.25 million which, of course, chump change for Peter Thiel, but in — in political terms is a …
RITHOLTZ: A lot of money.
CHAFKIN: … significant sum. And not only that that gives a speech where he — he defends Trump. And he says, “Listen, I’m not going to defend the comments, but — but overall, I got to look at the big picture,” and he says we need to take Trump seriously, not literally. So, don’t listen to the literal comments. Look at the — the broader image.
And I think that, first of all …
RITHOLTZ: Who are you going to believe, me or your lying eyes? Because that’s what that speech was. And shockingly, it was a very effective speed.
CHAFKIN: I think it very much helped shape public opinion. He actually cribbed it from an Atlantic — from an Atlantic story, so the project give credit to that. But — but in any case, it — it — it definitely helps shape opinion around Trump. And I think it helped not only, you know, helped Trump kind of right the ship, but then post-election, you know, we saw — actually, a lot of business leaders, you know, kind of participated in the honeymoon. They said, “You know what? Giving — well, let’s give this a shot.” And — and there was — there were a handful of meetings, you know, probably most famously this meeting of tech leaders in mid-December that Thiel arranged where he had basically …
RITHOLTZ: Is it post-election after …
RITHOLTZ: … he’s already won?
CHAFKIN: Yeah, the CEOs of basically all of the big technology companies.
RITHOLTZ: And Apple was there, right?
CHAFKIN: Yeah, Tim Apple was there, right?
RITHOLTZ: Right, that was a big one.
CHAFKIN: You know, the Microsoft CEO, Google founders and, you know — so basically the representatives from the, you know, nine largest tech companies which, of course, that — that’s like most of the big tech companies in the United States are all there, and they’re all basically trying to — trying to work with — with Trump. And I think Thiel — I mean, he literally organized that meeting, but I think he also helped create the conditions that allowed that to happen.
And — and I think you have to say like Trump maybe didn’t do that much with that, and — and, you know, those relationships were short-lasting, but it — it definitely brought a bunch of people who had — had before that have been very critical of Trump to the table.
RITHOLTZ: Quite fascinating. Before we get to the tech stuff and the New Zealand stuff with Peter Thiel and some of the other wacky things, I have to ask you, how challenging was it to do this research? Because this is deeply reported. You know, this isn’t just like very superficial. You clearly went down the rabbit hole.
CHAFKIN: Yeah, it was very challenging because, you know, Thiel has made — has — has carved out a lot of, you know, secrecy around himself, you know, secrecy …
RITHOLTZ: Did he cooperate much? Did he talk to you? Did …
CHAFKIN: So, no, he didn’t cooperate, but he also didn’t, you know, I — he wasn’t helpful, and at times, I think he was a little bit unhelpful. But — but he didn’t really — he also didn’t try to stop me.
RITHOLTZ: He didn’t block it anyway?
CHAFKIN: No. And I — you know, early in the process, I, you know, as one does, you know, when you’re doing like a journalistic product such as this in addition to talking to, you know, former employees, friends, colleagues, you know, classmates, you know, or whatever, I also, you know, approached Thiel and — and had, you know, series of meetings with his, you know, P.R. people and — and ultimately an off-the-record meeting in L.A. with — with the man himself. And, you know …
RITHOLTZ: We need to play that tape right now, right? How — how guarded was he or is he sort of, hey, this is off-the-record and he felt comfortable being a little frank?
CHAFKIN: He was very guarded. He is very guarded. I mean, he’s somebody who, you know …
RITHOLTZ: That’s the persona.
CHAFKIN: Yeah. He — he really wants to play this behind the scenes role. He really doesn’t like scrutiny of any kind. When he — you know, he does talk to the press, he actually appears. He does speeches sometimes, but it’s almost always in front of basically a friendly interview or somebody who’s not going to — to kind of push him on some of this kind of further out ideological things or push him on some of the — the business practices that some — that his companies have been involved with, some of which are – are pretty questionable.
And — and, of course, I want to go there and …
RITHOLTZ: You had no choice, you had to go.
CHAFKIN: Yeah, yeah. I mean, I — I just wanted to look — I wanted to — you know, there had been — there — Thiel is an interesting guy because there is — there — there’s sort of two myths around him. One is thee — he’s like a villainous right-wing billionaire, that’s kind of like the left-wing view. And then the right-wing view is that he is this — and — and the view that’s kind of common in Silicon Valley is that he is basically this libertarian hero.
He’s like, you know, combination of Ayn Rand and an Ayn Rand character. He’s an intellectual and a builder.
RITHOLTZ: John Galt for the modern era.
CHAFKIN: Yeah. And so, — and I wanted to — you know, honestly, both those stories have truth to them, and — and I think understanding where they come from is really interesting, but I wanted to do something that well hopefully complicated both stories and — and — and got actually at the — at the real person. And Thiel, I think, is — is really, you know, has really invested in his own mythology. And — and at times …
RITHOLTZ: I like the phrase, that — that that’s really interesting. Let’s …
RITHOLTZ: … talk about some of the mythology where things that are a little out there are kind of intriguing, and let’s start with the billion-dollar IRA. Tell us about how any of us can have $1 billion tax-free IRA.
CHAFKIN: I’m glad we moved to the service portion of the — the show. So Thiel — so Roth IRA, this was created in the — in the 90’s. It was designed as like a middle-class. I think for lower and middle class, the idea is you put after tax dollars in and — and anything — anything you make on your — inside of your IRA, your Roth IRA is tax-free. And they did this because they were trying …
RITHOLTZ: Without limitation.
CHAFKIN: … well, so there are some really important — the — the — once it’s in there, it’s — it’s tax-free, no limitation. They did try to have some limitations on how much you could put in. The original contribution limit was $2,000. I think it’s about $6,000 …
CHAFKIN: … now. There were — they’re — they’re pretty low-income caps, I think, around — it’s a little higher now, but it’s around $100,000.
RITHOLTZ: Makes sense if it’s pre — if it’s — if you’re using pretax dollars, but if it’s after-tax dollars, is it just too expensive for the government? Who knows.
CHAFKIN: So …
RITHOLTZ: So …
CHAFKIN: Yeah. And — and so what — what Thiel figured out is that you can put in — you can — you can buy shares in privately-held venture-backed companies early on, shares are pretty much costing zero …
CHAFKIN: … like a thousandth of a penny. So early on in PayPal, Thiel uses a Roth IRA and now which — which he — you know, at the time, I don’t think he had much income, maybe no income at all as — as, you know, CEO — first as an investor in this company and then a CEO in a startup. He — so — but he uses the Roth IRA to buy shares in PayPal for like a thousandth of a penny. And over the next couple of years acquires more PayPal shares for fractions of a penny.
And — and — and, you know, and basically those shares then were ultimately worth millions of dollars, tens of millions of dollars. Then he uses some of that money inside the Roth IRA to buy shares in Palantir. Palantir, again, were going from, you know, a valuation of near zero to — it’s — it’s worth $50 billion today.
Same thing with Facebook, right? Facebook buying — buying early shares on Facebook inside the Roth IRA, and then, you know, the — those shares, you know, ultimately are worth — you know, at the end of 2019, Thiel’s Roth IRA had something like $6 billion in it.
Now, stock market has done pretty well since then.
CHAFKIN: So — and — and particularly, technology companies, particularly kinds of companies appear Thiel invest in, so it’s — you know, and my guess is that is his Roth IRA, his tax-free account is in — is maybe around $8 billion something like that now, maybe a little more. And — and again, it’s — it’s — it’s this amazing, you know, kind of — it’s — it’s not really — I guess it’s a loophole. I don’t know what to call. This is just a very aggressive tax strategy.
Now the thing about this is — and — and if you — depending on who you get your tax advice from, they might advise you not to do this because there is a specific rule that says you cannot buy shares in companies you control. So, you can’t — if you own a restaurant, you can’t like put the restaurant inside …
CHAFKIN: … the ROTH IRA. That’s self-dealing.
The great thing about these venture-backed tech companies is although somebody like Peter Thiel has effective control, he does not have legal control because …
CHAFKIN: … you know, there’s an independent board of directors. He only owned 20 or 30 percent of the company. So — so it’s — it’s a very, very aggressive interpretation of this statute because, effectively, the CEO of a venture-backed tech company has a lot of influence on the stock price — you know, on the share price of these companies.
RITHOLTZ: But — but influences in control.
RITHOLTZ: That’s — that’s the loophole.
CHAFKIN: And we’ve seen — so — so — so that, you know, structure now has become very popular in Silicon Valley, like other people have — you know, this is a thing that wealth managers are now — you know, have – have made — have made into a little cottage industry. And we even saw — you know, when this first came out, so it was kind of heartbreaking to me because like this was in the book, which — which was in a galley, at that point. But ProPublica broke this story.
And — and — and the way — the — the spin that you heard from some folks was — was not like, oh, what an outrage. It was like, you know, how can I do that? And — and — which — which I understand because I mean, everyone wants to pay less in taxes, but it really is quite a — you know, a perversion of the original intent of the law …
CHAFKIN: … which was again to — to help basically like lower and middle-income people, and — and — and not to just deprive the U.S. government a huge amount of tax revenue.
RITHOLTZ: So — so let’s talk about something else that’s a little bit out there. New Zealand, why become a New Zealand citizen? What’s that about?
CHAFKIN: Well, so if you — if you — if you listen to what Thiel said, he really loves New Zealand, which I think is probably partly true. He’s a big Lord of the Rings fan.
RITHOLTZ: I was going to say a Peter Jackson fan then sure.
CHAFKIN: Yeah. Lord of the Rings films were — were — were — were shot there …
CHAFKIN: … and …
RITHOLTZ: You could still see a Shire there, the Hobbitville …
RITHOLTZ: … and …
CHAFKIN: And let’s be honest like New Zealand is great. I mean, it’s — it’s a, you know, very nice place to — to — to visit. I mean, they have beautiful nature, great, great cuisine. I think the specific appeal to Thiel when he got the New Zealand citizenship, and — and now he did this in a — in a really interesting way. I mean, it was in secret. And it happened when Obama was president. And — and, you know, as — my — my sense is and as I say in the book that, you know, he was basically looking for a backup plan. I mean, he was really worried about — about Obama and about the Democrats. And I think specifically …
RITHOLTZ: For sure you had — you had all those concentration camps in Texas.
RITHOLTZ: And they were going to round everybody up and — right? I mean, that was — I’m not making this up. This is — this is …
CHAFKIN: Yeah, yeah, they were …
RITHOLTZ: … legitimate what some of the far-right was complaining about.
CHAFKIN: Exactly. And — and — and when you’re Peter Thiel and you have this enormous amount of money that’s tied up in a — it’s — it’s illegal, but — but — but a little bit uncertain structure where, at any moment, the IRS could say — because of the — because of the control thing, right, it — it leaves him a little bit vulnerable because …
CHAFKIN: … you could go back and start looking for — for violations. Maybe they’re not real violation, maybe they’re just bogus.
RITHOLTZ: You could bust those jobs if you want to (inaudible).
CHAFKIN: And — -and the way the IRA laws — the way these rules are structured, if you break one, if you do one — if you make one mistake within that IRA, they can take — they can take the whole thing. They can — they can …
RITHOLTZ: Oh, they could capture it?
CHAFKIN: They get — well, no, they can’t — they could have to collect taxes on the whole thing, so tax advantage …
RITHOLTZ: All right, so your worst-case scenario is you lose your tax. And even that, you have the wherewithal to fight it …
RITHOLTZ: … and eventually you’ll negotiate it down.
CHAFKIN: But …
RITHOLTZ: So, his worst-case scenario is he might pay half the taxes he owes?
CHAFKIN: Exactly. But I think what he was trying to do was find a — a friendlier your jurisdiction. And — and back then — or as a potential backup plan, right, not necessarily where he’s going to — not necessarily like he’s going to go run away from Obama. But — but, at the time, you know, New Zealand had a right-wing government, and it was very …
CHAFKIN: … it was very easy for him to acquire citizenship. I mean, he only spent 12 days or so in the country to …
RITHOLTZ: (Inaudible) your citizen.
CHAFKIN: … to get the citizenship. And — and then I think it, you know, gives him a potential way to — to — at least as a negotiating point if he’s — ends up negotiating with the U.S. government, being able to — to, you know, claim citizenship or whatever in a foreign country, I think, is — was potentially helpful or just as a way to, hey, let me get away from these crazy liberals.
And like the — one of the — you know, one of the big ideas that — that Thiel and his followers are into is this idea of exit, that — that you — that billionaires should potentially be willing to threaten to leave the United States in order to — to push policymakers, you know, in the direction that they want them to push, that you can vote or you can leave, and that the — the threat of leaving is an important part of that, which I think is really — I mean, it’s certainly counter to like a normal notion of patriotism or whatever if I want to buy into that, you know, whatever, I — I do personally.
But anyway I — I — but it’s definitely like the idea is that you should be willing to kind of jurisdiction shop. And so, that’s what I think he was doing.
After Trump was elected, my reporting says that basically he hasn’t been in the country since Trump took office. He’s maybe …
RITHOLTZ: Oh, really?
CHAFKIN: … he’s maybe come back. You know, there’s — he’s now renovating one of his properties. Maybe he went back. But as far as I can tell you, he hasn’t been there since like 2017.
RITHOLTZ: In New — in New Zealand?
RITHOLTZ: Quite, quite interesting. Let — let’s talk about something else that’s a little surprising, and I just had to look up the name of Ryan Holiday’s book, “Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue.”
So, it’s now come out, and — and Holiday did some nice reporting a couple …
RITHOLTZ: … of years on this a couple of years ago that Thiel is the one who funded the entire Hulk Hogan litigation against Gawker because Gawker, some years ago, outed Thiel as gay.
RITHOLTZ: And then had the bad judgment to reproduce a — and publish a sex tape that was surreptitiously recorded of — of Hulk Hogan. And effectively, Thiel bankrupted Gawker. He — he apparently carried a grudge.
CHAFKIN: Yeah, I’ll say. Yeah, this was — as I — as I talked about in the book, I mean, the — the Hulk Hogan case was not really isolated. He was trying basically all sorts of things in the period between when that blog post outing him came out, which I believe was late 2007. And — and the — and — and the ultimate, you know, verdict, which is in 2016, basically was, you know, there’s — there’s sort of other litigation efforts. There was — you know, he had — had hired private investigators. He also tried to kind of romance Gawker at one point, but — but ultimately, this Hogan thing was a real gift to Peter Thiel because it was a very clear-cut case. Gawker had published this — this — this sex tape that had been recorded without Hulk Hogan’s knowledge or consent, which is a violation of privacy.
And the — and the great thing about that from — from the sort of Peter Thiel perspective is number one, it’s not a free speech case, right?
CHAFKIN: It makes it easier — it’s a little bit easier to make. And — and number two, he gets it in front of a Florida jury. You know, Hulk Hogan is like — is from Tampa. He’s like …
RITHOLTZ: Superstar, yeah.
CHAFKIN: … a famous person in Tampa. And you have this — this celebrity — bona fide celebrity going against this like as — as Thiel and his allies presented it as a sociopathic New York media company.
CHAFKIN: And — and — and — and the case was pretty clear cut, so it’s like not surprising the jury, you know, opted to bankrupt Gawker. But well, you know, what is surprising, of course, is that — is that this billionaire was — was the — was the man behind it and particularly, the amount of time that passed and the way that he did it, he did it in secret. I mean, he didn’t tell anybody. It only came out afterwards.
And after it happened, you know, he didn’t — he wasn’t apologetic, right? He said, “This is my proudest philanthropic moment. This is my great contribution to — to the world,” which is, you know, that’s pretty out there, right? It’s a — it’s — it’s a — it’s — it’s definitely different, and I think it won him a lot of fans, of course, on the — on the right because Gawker was seen as this like liberal media outlet. He was seen as a billionaire willing to, you know, take it to the — take it to the — the — the liberal media. But, of course, it also, I think, critics rightly point out that like this has profound implications for freedom of the press and for — for — for other …
RITHOLTZ: Potentially chilling, right.
RITHOLTZ: That – that’s the argument. So, I want to continue discussing some of the specifics about Thiel because it’s fascinating, but I always have been operating under the assumption that Silicon Valley is, you know, part of a — the triangle of power. It’s New York, D.C., and Silicon Valley as engines of — of economy, technology, and government. What don’t we know about Silicon Valley? Isn’t it a given that they’re a power player or are they more powerful than most Americans have realized?
CHAFKIN: Well, I think they’re still — I mean, I agree with your assessment completely. I think that — I think Silicon Valley still has more power than — than people realize. And I also think that Silicon — that — that certain aspects of the — of the Silicon Valley ideology have really kind of seeped into our culture in ways that we don’t fully appreciate.
RITHOLTZ: Give us some examples because that’s fascinating.
CHAFKIN: So — so I mean, the …
RITHOLTZ: I mean, move fast and break things …
RITHOLTZ: … certainly one example.
CHAFKIN: A hundred percent. So, this idea that disruption is a good — a social good that it needs to be embraced is I’d argue that is a — a new thing that most — that a lot of people have bought into, even people who are 180 degrees away from — from …
RITHOLTZ: Innovator’s Dilemma, that’s been around for decades.
CHAFKIN: But — well, yeah, but I think there’s — I — I think there’s something a little bit different about — I mean, it’s been a while since I’ve read the Innovator’s Dilemma, but …
RITHOLTZ: Well, you disrupt something then eventually you get disrupted.
CHAFKIN: Right, yeah, yeah, yeah.
RITHOLTZ: If only — you know, most of these companies only last a certain …
RITHOLTZ: … and Apple is a rarity that disrupted itself.
CHAFKIN: Yeah, yeah. So, I think that — so — but I think the idea that rule-breaking, in particular, is something worth celebrating is — is new and different. And like the way — we’re — we’re watching this attitude. You know, Facebook, there’s this whistleblower and we’re — we’re suddenly like watching all this criticism of Facebook and sort of wondering why, like why is Mark Zuckerberg so indifferent to choose (ph) responsibilities to society. And it’s like, well, that’s because that’s the whole point of this company and this ideology.
I also — I think that the — I — I — I think that this idea that technology companies — so — so one of Thiel’s big ideas, right, is that — that these technology companies should — are basically going to rule the world, that — that we — that we would be better off. And this is something that is, I’d say, widely — people buy into and including a lot of liberals and stuff that like basically technology is going to set us free. And I think and that it’s …
RITHOLTZ: How’s that working out?
CHAFKIN: Yeah, well, exactly. And I — and I think …
RITHOLTZ: They are — you know, to — to assume that the people who run Facebook or Amazon or Google are benevolent overlords is really the height of naivete.
CHAFKIN: It reminds me of — I realize this is somewhat controversial thing to say, but like when I was reading the book, “Kochland” by Christopher Leonard …
CHAFKIN: … about the Koch brothers and — and the Koch Industries, in particular, the way Koch Industries had sort of, you know, had this, you know, really important industrial conglomerate, and they had really changed the conversation around regulation, particularly deregulation, to a point where like everyone sort of bought into that — the story that they were telling. And I think the same thing including liberals, right? And I think the same thing kind of happened — has happened and maybe is continuing to happen with Silicon Valley where we’ve sort of all bought into the idea that, you know, that — that disruption is good, that tech company should have more power not less.
And — and, you know, we’re — obviously, we’re in a reckoning right now, but I don’t know, I think those ideas are still, more or less, ascending and it’s — it’s still …
CHAFKIN: … still outside the mainstream if you …
RITHOLTZ: That’s interesting. I’m surprised you think those ideas are still ascending because there’s a difference between saying, hey, here’s how we’ve always done it, but we have a way to do it faster, better, smarter …
RITHOLTZ: … versus just look at the three biggest companies …
RITHOLTZ: … that are kind of going through turmoil — Uber, WeWork and Theranos.
RITHOLTZ: So, have we seen peak disruption and now things are curling back?
CHAFKIN: Maybe, although I would push back on some of that because I think — so yeah, it’s true that with Uber we — you know, the — the founder got bounced out and we now have like a …
RITHOLTZ: Little two frat boy …
CHAFKIN: … a kinder, gentler Uber. But how much …
RITHOLTZ: That’s not making money the way it was expected to.
CHAFKIN: But yeah, but how much has Uber really changed? I mean, we — we — like this labor model that Uber pioneered, so like, you know, that — that is like, you know, completely indifferent to the — to the — to the — to the needs of workers, I would argue, has become — it’s — it’s not — that labor model is not on the — on the retreat, I mean, bigger …
RITHOLTZ: Big economy, no healthcare …
RITHOLTZ: … no — not necessarily any qualifications.
CHAFKIN: And — and so I don’t know, like I think there — I think it’s true that that we have become more attuned to some of the — the failings of the tech industry. I’m not sure that …
RITHOLTZ: All right, so outright fraud is not allowed.
RITHOLTZ: Disruption, no healthcare. Hey, maybe this guy is qualified to drive. Maybe he’s not, but he got a license, what more do you want? We’re OK with that. And WeWork, what do we care much if he’s — he’s lost a bunch of money.
CHAFKIN: Right, yeah, yeah. Yeah, I think — I mean, that’s pretty fair. I mean, I — again, and I also think like …
RITHOLTZ: And not just a bunch of VCs, mostly Softbank and people care about them much less than they do Benchmark or …
RITHOLTZ: … Sequoia or Flatiron or whoever.
CHAFKIN: Right. And I think, you know, when we look at the — the — the big companies — Facebook, Google, like it doesn’t feel like there’s really any serious — I don’t know, like it’s — it’s — it’s — it’s not clear to me how Facebook could be reined in. And I don’t think it’s really clear to anybody how it could be reined in like (inaudible) 01:03:35.
RITHOLTZ: Well, with the benefit of perfect hindsight, it’s pretty clear hindsight …
RITHOLTZ: … that a lot of those seminal purchases that were done, whether it’s Instagram or WhatsApp sap or go down the whole list of — of some of their best properties, if people weren’t asleep at the switch in the antitrust department, that might not have been permitted.
I suspect going forward, Facebook might encounter more difficulty trying to swallow a competitor …
RITHOLTZ: … a nascent competitor early because arguably — listen, when you speak to the kids and you’re closer in age than I am, they’re not on Facebook, they’re on …
RITHOLTZ: … Insta. And Facebook is now for us old people.
RITHOLTZ: And I can’t stand Facebook, so I’m not one of those old people, but I use WhatsApp pretty regularly …
RITHOLTZ: … and I use some of their other stuff. So — so what happens when the — the — the next TikTok comes along that Facebook wants to buy? Will they still be in that position? Would they be able to make that purchase?
CHAFKIN: Yeah, I completely agree. I think — I think you’re right that there was, you know, a total failure of imagination there. And — and yeah, you would –you would think there will be more — certainly more (inaudible).
RITHOLTZ: Google, I don’t know what’s going to happen with. I don’t see — does anyone really see Amazon getting split up or Google being broken into the G Drive and this and that or — or Apple being broken into a Mac side, and a phone side, and a service? None of that really looks likely …
RITHOLTZ: … if — if any of the big tech is going to suffer. The one that seems to be most vulnerable seems to be Facebook.
CHAFKIN: Yeah, yeah, because they have these reputational problems. There’s also a way you could imagine. I mean, again, I don’t think it’s going to happen, but you could imagine breaking up fate like bringing Facebook into Instagram and …
CHAFKIN: … it’s like not impossible to — to see that.
RITHOLTZ: And — and clearly, Thiel is behind the concept that bigger is better. Let these companies do what they’re going to do unregulated. The marketplace will sort it out. Let’s stick with that concept and talk about Palantir …
RITHOLTZ: … which ironically for a sort of anti-government libertarian, he’s — essentially his biggest client is the U.S. government.
RITHOLTZ: And other — the other governments, Palantir got into quite a bit of trouble post-election. Tell us about what the company is and how it sort of ran afoul and seemed to have shaken it off.
CHAFKIN: Yeah, so Palantir was started by Thiel basically out of this — you know, this intuition that he could take some of the security technology that PayPal had developed, well, not even technology, really an idea that PayPal developed, which was to use network analysis. So, looking at who is connected to whom to figure out to — how to do security. And he — and he offered that to the U.S. government, got backing initially from the CIA, which was hugely both — be hugely important for Palantir because it kind of opened the door for …
RITHOLTZ: Legitimize them, sure.
CHAFKIN: Yeah, exactly, to — and give them some money, but also legitimacy with government contracts. And then that legitimacy not only got them contracts with other parts of the government, including the U.S. military, it got them legitimacy with the corporate world because if you are like a chief security officer at a big bank or whatever, the idea that you can have CIA-grade, you know, data mining technology, which is more or less what they were promising, you know, you too can have the same technology we used to get Bin Laden to like, you know, to — to run your — to — to like come up with your trading strategy or — or route out, you know, a bad behavior by your trade or something. That was like a really compelling pitch.
Now, that pitch was not entirely true, I think, as I talk about the book like I think the idea that Palantir like — was responsible for — for getting them on this like huge stretch that — that …
CHAFKIN: … kind of creation of the media, but the narrative of like CIA-grade data mining for the government has been — for — for government and for private enterprise has been hugely successful in the long run.
Now, in 2016 though, Palantir was really in — in a bad shape. It had — it had lost out a bunch — on a bunch of big contracts. It — it was — it wasn’t looking so good. A lot of the big companies that were doing business with it had — had backed out and, you know, gone in other directions. And then post Trump though, of course, things have really gone well. And — and Palantir will say, hey, it has nothing to do with politics. We just — just a — it’s a matter of …
RITHOLTZ: A coincidence.
CHAFKIN: … beating the bushes and …
CHAFKIN: … you know, and — you know, sometimes like everything just falls into place. And, you know, my reporting and also, you know, I think just normal rationality suggests that like having a major backer of the president, especially a president like Trump who, as we know, likes to get involved in the nitty-gritty and …
CHAFKIN: … you know, is not totally averse to rewarding his friends and punishing his enemies, you know, had a — had a — had a positive impact on the company and helped them win this $800 million military contract and then, you know, you know, dozens of other contracts worth, you know, in the — in the hundreds of millions, if not billions of dollars.
And we’ve seen the company, you know, really go from being kind of substantial, but not that big, you know, worth $20 billion or so to — to now it’s worth, you know, $50 billion. They have these huge military contracts. And — and — and during that time, the product has improved a bit, so they’ve, you know, they’ve managed to — to land some corporate deals. And, of course, that’s been great for Peter Thiel who was the single largest shareholder owning — owning a lot of those shares through the Roth IRA, so — so nice tax advantage there.
And — and because of the way Palantir is structured, the founders have this special class of — of share that’s a — that’s a group that includes Thiel that allows them to effectively, you know, control companies. So — so it’s a — so he’s kind of in the cat bird seat. And — and I think I would argue that a huge reason for that is because of — of his decision to support Trump early, which got him access to the White House, which got access to Palantir and, you know, and kind of the rest is history.
RITHOLTZ: So, before we get to our favorite questions, I have one other thing I have to get to, let’s talk about crypto. He was pretty early into looking at bitcoin and some of the other crypto currencies. What led him there and what is he doing in that space currently?
CHAFKIN: So yeah, I mean, really early. He — like — like …
RITHOLTZ: So, from the …
CHAFKIN: … like 90’s early, yeah.
RITHOLTZ: Right? Like way ahead of why we’re relying on printed government dollars, shouldn’t it be free? It’s kind of a — a libertarian fantasy to some degree.
CHAFKIN: A 100 percent. You can go back — and — and I did, you know, reporting this book, but like the — you can go back to PayPal, and the way they were talking about PayPal is really not that different from the way the — not — you know, crypto community has gotten pretty big and pretty diverse ideologically. But — but it’s — it’s the way the kind of ultra-libertarian part of the crypto community.
RITHOLTZ: The narratives are very similar.
CHAFKIN: Yeah. You know, so — so that — he was talking in like 2000 or thereabout about giving everyone a Swiss bank account in their pocket, this idea that once you had money inside PayPal, it’d be impossible for governments to — to track and, in particular, be impossible for repressive governments to track. So, we sort of — sort of like if you’re in a country with currency controls, you know, there’s really nothing stopping you from putting money in a PayPal account and then using it. And — and that is really similar.
And he talked about how this was going to erode the sovereignty of the nation-state. And this is really similar to how kind of the libertarian part of — of — of the crypto world talks, and — and — and kind of what’s motivating some of the — some of the crypto ideology. So, I think it’s — it’s not surprising at all that he — he got in, you know, on crypto early.
He, you know, for — I don’t know how much crypto he has now. I mean, he definitely had some crypto for a time. It’s unclear if he — if he sold or not, but he’s also making investments in — in crypto companies. And he’s clearly, you know, pretty interested. There — there was like a little mini scandal earlier this year, at least in the crypto world, that you may remember where Thiel described bitcoin as potentially a — an arm of the Chinese government where he sort of said that because — because it hurts — you know, it wasn’t entirely clear, and all these crypto people kind of went berserk because he’s on their team. He’s a early believer.
And — and my suspicion there is what was happening is he was trying to shape regulation into a — in a favorable way in the United States, warning essentially if the U.S. goes to sleep on crypto, if we don’t move to kind of embrace and cultivate this industry, we’re going to lose to other countries, which is …
RITHOLTZ: And he has — China ends up tossing out all their — their go (ph) miners and none of that ended up being a …
CHAFKIN: But — no, no, it completely — it was exactly — but it’s exactly the same argument that Mark Zuckerberg has made in terms of like how we should regulate Facebook. The reason we should be hands off on Facebook is because if we don’t, China and TikTok is going to, you know, become supreme and then we’re all going to be, you know, living in a — in like, you know, Xi’s world or something.
There are also like some weird conspiracy theories, which I don’t think are totally out of the realm of possibility, like Thiel was a big-time trader. You know, he’s — he’s somebody who’s always — who very often has bets on both sides of a particular trend or a particular company. So, it’s possible, you know, he was — he was betting against …
RITHOLTZ: He’s hedged.
CHAFKIN: Yeah, yeah, that — that — that those comments were — were aimed at a trade like maybe who’s trying to buy low, I don’t know. But it was — it was definitely like an interesting moment. And I think, you know, Thiel is always somebody worth watching because he knows kind of what’s next or his very good ideas about what’s next. And, you know, right now for — for — in his world, that’s crypto, so I mean, I think that’s — it’s worth watching that space, obviously, but also worth watching specifically what Thiel does, what he says about it.
RITHOLTZ: So — so fascinating. All right. So while I — I have you, let me jump to my favorite questions that I ask all my guests starting with tell us what you’ve been streaming during the past 18 months, Netflix, Amazon Prime, podcast? What’s keeping you entertained?
CHAFKIN: Yeah. So OK, so I mean, I just finished — I — I finished Squid Game.
RITHOLTZ: Literally two nights ago I did.
RITHOLTZ: Surprisingly, surprisingly satisfying.
CHAFKIN: I — yeah, it was really good. Although I did — I found it so stressful that I had to watch — my wife and I had to watch like Ted Lasso.
RITHOLTZ: We do a palate cleanser …
RITHOLTZ: … after each one (inaudible).
CHAFKIN: We also have a rule. You could — we only watch one game per night.
RITHOLTZ: Us, same thing.
CHAFKIN: … because — because it got too stressful.
RITHOLTZ: Except for the last two, which were like …
RITHOLTZ: … the ninth one — the eight one was 33 minutes, and then the ninth one was short. But, you know, anytime you watch stuff over time like that, you really get the full flavor of it.
CHAFKIN: I’ve been also — I’m a huge — I listen to a lot of podcasts, but — and right now, I’m really into this really nerdy virology podcast that’s called This Week in Virology, which …
CHAFKIN: … you know, honestly, like it’s — it — it — the episodes are really long, and — and I think …
RITHOLTZ: What does it cover?
CHAFKIN: … it — but it — it covers the — the science behind viruses. But, of course, they’ve been talking about COVID all the time.
CHAFKIN: And I think like really paying attention to what scientists have been saying has been a great way for me, you know, to — to be ahead — ahead of the curve. I mean, I think like these — you know, we’re having this — this conversation about boosters. You know, they’ve been talking about this stuff for — for months. And it — and — and you get a perspective that is more nuanced, but also …
RITHOLTZ: Right, right.
CHAFKIN: … maybe more interesting than kind of the media narratives, which tend to swing. So, it’s made me a little bit more kind of immune to like the latest freak out over …
RITHOLTZ: No — no pun intended.
CHAFKIN: Yeah, yeah, exactly.
RITHOLTZ: So — so I tried to train Alexa and I couldn’t get it to do it, that if anybody on TV uses a phrase, “I’m not an immunologist, but” I want the TV muted, just — just I don’t care what that person has to say.
What — what else — that’s an interesting podcast. What — tell me what else besides that in Squid Game that’s entertaining you.
CHAFKIN: Yeah, yeah, so well, I’ve been — I — I’ve been — I — I run a lot, so I listen to all these crazy — crazy running podcasts. I also listen, you know, pretty religiously to the — to the FiveThirtyEight podcast. Nate Silver, I know, is controversial and people love to — to rag on him, but I think …
RITHOLTZ: He got a pretty decent track record.
CHAFKIN: Yeah, yeah.
RITHOLTZ: You got to respect the — he’s done better than most.
CHAFKIN: But I think his kind of like frame on politics is really useful, and it’s another one where like, you know, when you pay super close attention to the polls, it kind of makes you a little bit more immune to the — to the crazy swings in — in …
CHAFKIN: … in narrative. And especially because I’m a — you know, I’m a journalist, you know, I work at Bloomberg, you know, it’s good for me to like get that perspective because we, as journalists, are very — you know, we’re — we’re immersed in the narrative, right? It’s like all we think about.
RITHOLTZ: The — the line I love is news is — is equal cap-weighted when reality is market cap-weighted.
CHAFKIN: Yeah, yeah.
RITHOLTZ: Kind — kind of fascinating. Tell us about some of your early mentors who helped shape your career.
CHAFKIN: Yeah. My mentor — my big mentor was this woman Jane Berenson who is basically the editor of Inc and who came out of the Wall Street Journal, and she’s just a really cool — she’s retired now. She’s a really cool journalist.
And — and, you know, the thing I’ve been thinking — I was thinking about when I was thinking about this question was just, you know, there was a point in my career where I had like an opportunity like freelance opportunity, I wanted to pursue it. And I went to her. She’s my boss. I said, “Can I do this?” And she said, “No, you can’t do it. Only — you have to leave if you do it.” But — but I want you to leave, and I’m going to make it easy for you to — I’m going to make it easy for you (inaudible) 01:17:39 structure.
So basically, she kind of like allowed me to, you know, spread my wings like — like, you know, move — and in a way that I think like, well, obviously, (inaudible) 01:17:49 my career and it’s made me feel very close to her, but it makes me think like that’s — whatever, that’s a big part of mentorship is like. At a certain point, these — these — these …
RITHOLTZ: Making out of the nest.
CHAFKIN: Yeah. And — and — and not — not necessarily reacting in a selfish way. You know, it probably would’ve been better. It’s often better, right, to — to — to — to push the mentees or whatever to stay in the — in a position of support where they’re helping you. And — and the fact that she’s kind of pushed me away and helped me like, you know, I don’t know it’s just — anyway, that’s — we — we’ve continued to have very strong relationships since then.
RITHOLTZ: So, I know what it’s like when you’re writing a book and you don’t have time to read it, but this — his book has been put away for a while. What have you been reading since you finished writing “Contrarian”?
CHAFKIN: I just — so I just finished a book called “American Prometheus,” which is about — it’s a biography of Robert Oppenheimer. It came out about 15 years ago. Oppenheimer is the guy who created the — the bomb for — you know, well, he led the Los Alamos Lab that — that created the bomb.
The book is — first of all, it’s really good. It has — it’s like kind of — I — I hate this frame, but it honestly has interesting management lessons because like I think Oppenheimer’s management style was like — is actually kind of similar to Elon Musk like sort of this, you know, jack of all trades. He’s really good at inspiring, you know, people to — anyway, I found it really interesting there.
It also kind of has interesting things to say about this whole, you know, conversation around cancel culture or whatever. You know, Oppenheimer famously was, you know, kind of blacklisted as a — as a communist sympathizer, which he was to some extent. So anyway, there’s — there’s just a lot of interesting stuff. It’s about technology. It’s about, you know, about management. And anyway, just fascinating guy.
And then another book that I’ve read previously that I really liked is the “The Man Who Solved the Market,” the story — you know, the — Jim — Jim Simons. Am I saying Simons right?
RITHOLTZ: Simons, right, Renaissance Technologies, Greg Zuckerman’s book.
CHAFKIN: Yeah, yeah, yeah, Renaissance Technologies …
RITHOLTZ: Let’s — let’s talk about his book.
CHAFKIN: … and — and just — you know, the — both like just explaining that — I mean, I really love like explanatory journalism and just like explaining how Renaissance Technologies, you know, works and how they made money, and the — and the kind of really cool, you know, ways in which it brought like this kind of sophisticated math and stuff into — into the finance world. I — I just found it like just mind-expanding and — and really cool.
RITHOLTZ: Yeah, amazing book, terrible title because he didn’t solve them all. It’s — he just figured out how to use the markets to make bucket loads of money. And nobody — nobody has come close to the sort of returns that he’s generated with a couple of billion dollars, but that’s all he could run before he started to see returns attenuate.
CHAFKIN: Yeah, yeah, yeah.
RITHOLTZ: So — so that’s why they kicked out the outside investors early on. That book, it was fascinating, and he — he just did an amazing job. So, I asked you before we might as well talk about this here. So, when Zuckerberg — Zuckerberg — Zuckerman …
CHAFKIN: Zuckerman, yeah.
RITHOLTZ: … when Zuckerman — not Facebook, Wall Street Journal — when Zuckerman was writing the book, he reached out to a whole bunch of people who had worked with Simons early on and found himself getting blocked by Simons and said, “Hey, listen, this book is coming out with your assistance or without. You can either help shape it or just being happy what the result is,” and ended up getting, you know, 20, 30 hours of interview time with him.
You tried that with …
CHAFKIN: Yeah, yeah, I tried that (inaudible) …
RITHOLTZ: … you got a lit bit of — of — of gift from him, but not nearly — Simons is, you know, much older. The end of his career was — and is now doing philanthropy …
RITHOLTZ: … so he was more amenable to that. You didn’t get that sort of cooperation.
CHAFKIN: Yeah, I think Thiel is a little bit — I mean, Simons, of course, had been very secretive. And I — I read — I mean, particularly like the introduction of the book describes his kind of back and forth with Simons and all these people, you know, telling him, “Forget it, you’re totally — you know, never …
RITHOLTZ: I can’t talk to you, you cost me my career.
CHAFKIN: And which I really enjoyed, you know, and — and I found very inspiring just because, of course, I — you know, I ran into some of the same — the same things. I mean, Thiel has been very closed off. And — and that was, to me, part of opportunity book because anytime — you know, anytime someone is — is closed off like that, it’s a journalistic opportunity because they — you know, there — there’s — there’s lots of stuff to say.
The other thing that kind of worked in my favor is that, you know, venture capital is like a pretty — it’s a networky business, right?
CHAFKIN: So, which — which hurts me because everybody I talked to, somewhere down the line, they may need to go to Peter Thiel to ask for money. So even people who hate him are like unwilling to — they’d either want to like cut off any future …
CHAFKIN: … you know, any future investment, which is — it’s particularly important because like the — the way these VC deals, right, work is that it’s really important to have great competition. So even if you don’t take money from Thiel, you really want to have him as a potential backer to help, you know, create a sense of, you know, (inaudible).
RITHOLTZ: (Inaudible), right, exactly.
CHAFKIN: So — so that works against you. But because he’s all over the place, because there are, you know, dozens — hundreds of companies that he’s an investor in, all these companies have employees, like there’s just — it’s a pretty big network. So even if you’re closed off, there are ways to — you know, there are ways to — to — to sort of work your way inside because the network is — is so sprawling, and you have people who are — are — who actually know a lot, but don’t necessarily have like a — a super close relationship with Thiel.
CHAFKIN: So anyway, I think that — that was helpful, especially at the beginning, because you’re always sort of trying to work your way into the — you know, into the inside.
RITHOLTZ: Fascinating. What sort of advice would you give to a recent college grad who is interested in the career in journalism?
CHAFKIN: Oh, I would say that you should — and this will be my advice for like any career, I guess. You should try to read a lot of stuff. I feel like people don’t — it’s like the most obvious thing you can do, but like — but — but like — and this is, I think, useful …
RITHOLTZ: Research the space you want to go in.
CHAFKIN: Yeah, and — and …
RITHOLTZ: Go figure.
CHAFKIN: … and also just like — and — and read it for real, like don’t just try to like, OK, figure out what that book says, but like really actually read it because …
RITHOLTZ: Immerse yourself.
CHAFKIN: … because that’s how like — I — I think that’s like pretty good advice for almost any career because — but — but — particularly in journalism, I mean, you know, most good story ideas and stuff come from — for me anyway, come from reading things. It’s — it’s — you know, talking to people is helpful, but a lot of times like it’s just some — something I read and it’s like that raises an interesting question and gets you to another question. And I just think people tend to — it’s also good to just be a little bit, I think, undirected like — again, like not just trying to figure out what something says, but like just — just engage with it on an emotional level and — and like sometimes good things happen. Sometimes not though, sometimes you just, you know …
RITHOLTZ: Very, very interesting. And — and my final question, what do you know about the world of technology, venture capital, finance, investing today that you wish you knew 20 years or so ago, 15 years or so ago …
CHAFKIN: Well, yeah.
RITHOLTZ: … when you’re first starting out?
CHAFKIN: Yeah. I mean, it’s two things, like one, this is — they are kind of the opposite, so I don’t know. But one is like that — that — that book — the — the Zuckerman book was really mind-expanding for me because it’s all about the way the computers have had this, you know, crazy impact …
RITHOLTZ: Change the industry …
CHAFKIN: … on the world of money.
RITHOLTZ: … right.
CHAFKIN: And like I wish I knew — and — and — and it’s still happening and there’s still ways in which like, you know, you watch — you look at this like Wall Street — that stuff where — where there’s interesting dynamics happening on social media. And there’s like so many ways that algorithms are like driving, you know, moving money and in doing so are – are – are – are telling the story of our lives. And like that — I mean, I wish I knew more — I wish I knew more about that now. I — I wish I have been more attuned to it, you know, 15 years ago.
The other thing is networks, and it’s — so this is like the opposite, but like — like in venture capital, so much of it is still just like a — is happening on an interpersonal level. It’s these like the Thiel’s world is completely, you know, is completely person-to-person, it’s completely loyalty based. It’s all about, you know, who knows who. And — and I think like understanding that early — even though that’s kind of the opposite of the computer thing would’ve — would’ve also helped me a — a great deal because really, especially in venture capital, like it still a very kind of old school business. It’s not like — I mean, they’re buying — they’re — they’re buying stock in companies that do computer stuff, but the — the way they’re doing it is very, very much about — yeah, impressions and networks, and — and who you know and stuff.
RITHOLTZ: Very interesting. Well, thanks, Max, for being so generous with your time. We have been speaking with Max Chafkin. He is the author of “The Contrarian: Peter Thiel and Silicon Valley’s Pursuit of Power.”
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