At a little after nine, Clinton walked in. Despite his suit and tie and graying hair, he still looked like the ebullient, red-cheeked, slightly overweight high school sax player Connaughton had seen in photographs. The president and Lindsey exchanged banter about an old acquaintance from Arkansas who had refused to sleep in the Lincoln Bedroom the night before out of loyalty to the Lost Cause. Then Clinton said tersely, “So what have we got?”
Lindsey and Connaughton described the burdens the bill would place on plaintiffs in fraud lawsuits.
“Well, that’s just too high,” Clinton drawled. “I’ve stood out there in Silicon Valley, and I’ve heard them go on and on about how bad some of these class action suits are, but I can’t be in a position where it looks like I’m protecting securities fraud.” He mimicked the voice of a radio attack ad that could use the issue against him.
When the briefing was over, Mikva and Lindsey walked over to the dining area, where Hillary Clinton was having dinner with Ann Landers, an old friend of hers and Mikva’s. Connaughton waited, alone, in the hall outside the study. After a few minutes, Clinton came out and looked him in the eye. “You think I’m doing the right thing, don’t you?”
Connaughton would never forget this moment. He would always feel an emotional connection with Bill Clinton and believe that Clinton was in politics for all the right reasons. When someone on the White House staff would get up at a function and say, “Why are we here? We’re here for America’s children,” Connaughton would think: “Are we? Or are we really here to climb the greasy pole of Washington power?” But Clinton and his wife were in the White House because they wanted to do good for people. Years later, Connaughton still got choked up thinking about a speech the president gave to his staff on the South Lawn—no press, no cameras—after the crushing defeat in the 1994 midterms. “I don’t know how much time we’ve got left,” Clinton had said. “But whether it’s one day, one week, one month, two years or six years, we have a responsibility to come to work every day and do the right thing for the American people.” During another dark hour, the Lewinsky scandal and impeachment, Connaughton—by then two years out of the administration—went on television at least thirty times as a B-list talking head on Crossfire and Meet the Press and Geraldo Live! to defend Clinton against overzealous prosecutors and a partisan Congress. He never felt that way about any other president.
“Absolutely, Mr. President,” Connaughton said in the hallway. “You can’t undercut the chairman of the Securities and Exchange Commission on a question of securities fraud.” Chairman Levitt, a former Wall Street broker, was getting angry phone calls from the bill’s supporters in the Senate, especially Christopher Dodd, the Connecticut Democrat, who was one of the finance industry’s biggest champions in Washington.
“Yeah, that’s right,” Clinton said. “And Levitt is an establishment figure, right?”
Levitt had been the chairman of the American Stock Exchange for a decade. Before that, he had been a Wall Street partner of Sanford Weill, the future head of Citigroup. He had owned a Capitol Hill newspaper, Roll Call. During his eight years at the SEC, he allowed Enron and other companies to loosen their accounting controls. After leaving the commission, he would work as an adviser to the Carlyle Group, Goldman Sachs, and AIG. Without question, Levitt was an establishment figure.
“Yes, Mr. President,” Connaughton said. “That’s right.” And it was remarkable that the president of the United States needed Jeff Connaughton to assure him of it—to say, in essence, “Yes, Mr. President, you’ll have some cover when the financial and political elite come after you,” because the establishment was much bigger than any president. In his second term, Clinton would prove it by moving in the opposite direction, supporting the deregulation of banks, including the repeal of the Glass-Steagall Act, and preventing financial derivatives from being regulated. For now, though, he stood fast.
The Senate passed the securities litigation bill in spite of the president’s objections. Clinton vetoed it, and Congress overrode the veto, one of only two times that happened to Clinton. Even Ted Kennedy changed his mind and joined Dodd in voting with the corporations. Biden, a former trial lawyer, stuck with the president.
At the end of the year, Mikva quit, and Connaughton left as well. After almost a decade in politics, he was thirty-six and broke, renting a modest apartment in Virginia. In December 1995, he took a job as a junior associate with Covington & Burling, a top Washington law firm. If he made partner, he’d become a millionaire.
He hated the work. A minute ago he’d been briefing the president and battling Congress, and now he was literally on his knees, sifting through fifty boxes of documents one page at a time doing an attorney-client privilege review, or stuck at his desk, writing memos on behalf of a silver mine that was polluting groundwater in Idaho. As far as Connaughton was concerned, the firm was just churning the client for billable hours. He did research on another case in which the plaintiff had been moving bottles of acid with a forklift, accidentally broke some bottles, and burned most of his body as he repeatedly slipped into the acid. Covington was representing the company.
“I hope you’re asking me to research whether there’s enough money in the world to compensate this man,” Connaughton told the partner who gave him the assignment. “No, I’m not,” the partner replied.
So much in the world of power came down to chance. One day, Jack Quinn, Mikva’s replacement, needed someone to write a speech for him about executive privilege. A staffer in the White House counsel’s office recommended Connaughton. As so often before, he worked his ass off for no pay or immediate advantage and wrote the speech nights and weekends. When Quinn needed another speech, on the separation of powers, Connaughton wrote that one, too.
At the end of 1996, Quinn left the White House to restart his lobbying practice at Arnold & Porter, a Washington law firm with venerable ties to the Democratic Party. To get things running, he looked around for a number two—someone who knew how to make his boss look good. His eye fell on Connaughton.
Clinton had banned top officials who left the administration from contacting the federal government for five years. The rule applied to Quinn but not to Connaughton, who wasn’t senior enough. So, at the age of thirty-seven, he joined Arnold & Porter and launched a new career: as a lobbyist.
SILICON VALLEY
Peter Thiel was three years old when he found out that he was going to die. It was in 1971, and he was sitting on a rug in his family’s apartment in Cleveland. Peter asked his father, “Where did the rug come from?”
“It came from a cow,” his father said.
They were speaking German, Peter’s first language—the Thiels were from Germany, Peter had been born in Frankfurt.
“What happened to the cow?”
“The cow died.”
“What does that mean?”
“It means that the cow is no longer alive. Death happens to all animals. All people. It will happen to me one day. It will happen to you one day.”
As he said these things, Peter’s father seemed sad. Peter became sad as well. That day was a very disturbing day, and Peter never got over it. Well after he became a Silicon Valley billionaire he would remain radically disturbed by the prospect of dying. The initial shock was still alive in him forty years later. He never made his peace with death, the way most people learned to do, by ignoring it. Theirs was the acquiescence of an unthinking and doomed herd. The boy on the cowskin rug would grow up to view the inevitability of death as an ideology, not a fact—one that had already claimed a hundred billion human lives.
Peter’s father was a chemical engineer who worked in management for various mining companies. The Thiels moved around a lot when Peter was young—he attended seven different elementary schools. Although he had a younger brother, he was a lonely boy, almost without friends until he approached his teens, lonely and inward in the way of the extremely gifted. By the age of five he knew the names of all the countries and could draw the world map fr
om memory. When he was six, his father got a job with a uranium mining company—it was just after the 1973 oil shock, when America seemed to be headed toward nuclear energy—and the Thiels spent two and a half years in South Africa and South-West Africa, under apartheid. Peter began to play chess with his parents and quickly mastered it. In Swakopmund, a little German town on the coast of South-West Africa, he spent hours making up adventures for himself in the dried-up riverbed facing the desert sand dunes behind their house, or reading atlases, nature books, and French comics in the local bookstore. He attended schools where the boys had to wear a blazer and tie, and the teacher rapped their hands with a ruler for every misspelled word on the weekly test. When he got home, he would tear off the uniform as fast as he could, hating the regimentation. He almost always got perfect scores and avoided the beatings.
When Peter was nine, the Thiels returned to Cleveland, and when he was ten, in 1977, they moved to Foster City, California, a planned town on the San Francisco Bay, just twenty minutes’ drive north of Stanford.
In 1977 hardly anyone used the term “Silicon Valley” to describe the peninsula stretching from San Francisco to San Jose. The technology firms in the area—Hewlett-Packard, Varian, Fairchild Semiconductor, Intel—were postwar companies built with the boom in military research and federal grant money that made Stanford one of the country’s leading universities. The silicon transistor chip and the integrated circuit were the concern of electrical engineers and tech hobbyists, not average consumers; the personal computer was in its infancy. In 1977 the Apple Computer Company was incorporated, with a dozen employees, and the Apple II was introduced at the West Coast Computer Faire, but the head office had only just been moved out of the Jobs family garage in Los Altos to rental space in Cupertino.
The Valley was egalitarian, educated, and comfortable—one of the finest examples of postwar middle-class life in America. More than almost anywhere else, ethnicity and religion and even class tended to bleach out in the golden sunlight. Residential streets around the Valley were lined with modest two-thousand-square-foot midcentury Eichlers built on quarter-acre lots. The average house in Palo Alto cost $125,000. Commerce in downtown Palo Alto consisted of variety stores, sports shops, several movie theaters, and a pizza parlor. Across El Camino Real, the Stanford Shopping Center was dominated by Macy’s, Emporium, and Woolworth’s; in 1977 Victoria’s Secret opened a shop, but there was no Williams-Sonoma or Burberry, no upscale boutiques at all. The parking lot was full of Pintos and Datsuns.
Almost all the children in the Valley, even ones from the few wealthy families, went to local public schools, and they were good schools—California was ranked number one in the country. The best students went on to Berkeley, Davis, or UCLA (a few made it to Stanford or the Ivies), the average ones went to San Francisco State or Chico State, and the burnouts and heads could always get a two-year degree at Foothill or De Anza. The tax revolt—Proposition 13, a referendum that would limit property taxes in California to 1 percent of assessed value, sending the state’s public schools into a long decline—was still a year away.
Peter Thiel moved to the Valley in the last year of its middle-class heyday. Everything was about to change, including the name.
After Swakopmund, Foster City in the school year of Saturday Night Fever seemed riotous and decadent. A lot of the kids had divorced parents. In Peter’s fifth-grade classroom, the teacher was a long-term substitute who lost all control. Kids stood on their desks and yelled at one another and the teacher. “I hate you!” one boy screamed. “Why don’t you go home?” The teacher managed a weak smile. Peter withdrew into his mind and became fiercely devoted to getting perfect scores, every test a matter of life and death, as if to stave off the chaos of his classmates—the California equivalent of a ruler to the hand. He was lousy at PE but exceptional at math, and as a chess player he was ranked seventh nationally in the under-thirteen bracket. He was as insanely competitive at chess as at school—later, he put a sticker on his chess kit that said BORN TO WIN—and on the rare occasions when he lost he would sweep the pieces off the board in total disgust at himself. In high school he ran the math team, which was competing for the district championship. At one point the team’s faculty adviser said offhandedly, “Well, someone is going to win,” and Peter thought, “This is why you are still a high school teacher.”
He preferred Star Wars to Star Trek but loved them both. He read the novels of Asimov, Heinlein, and Arthur C. Clarke—the sci-fi of the fifties and sixties that dreamed of interplanetary travel, visitors from Mars, underwater cities, flying cars. A generation later, Peter lived in that mental world with the belief that miracles of technology would make the future wondrous. No TV was allowed in the Thiel house until he was twelve, but by then he was more interested in playing computer games on the family’s Tandy TRS-80—such as Zork, a text-based, nongraphic adventure game set in the ruins of an ancient underground empire—as well as endless hours of Dungeons & Dragons with his nerdy friends. He also discovered J.R.R. Tolkien and read the Lord of the Rings trilogy at least ten straight times, almost memorized it—he loved the quality of its fantasy, the value placed on the individual against mechanistic and collective forces, the theme of power corrupting.
The Thiels were conservative evangelical Christians. Communism was the worst thing imaginable, and it was taking over the world country by country during the Carter era, and the process was irreversible. The U.S. government was bad at everything it tried, from reducing inflation to keeping cities safe. In his eighth-grade social studies class during the 1980 election, Peter supported Reagan and collected newspaper clippings on the conservative hero. Tolkien, sci-fi, chess, math, computers: in the 1970s and ’80s, especially among high-achieving boys in places like the San Francisco Bay Area, these attributes were often correlated with one another and with a worldview, which was libertarianism. It had the prestige of abstract logic behind it. Peter became a libertarian in his teens, at first infused with Reagan-era conservatism, eventually taken to the purified limit. He didn’t read Ayn Rand until his early twenties, and then he found the heroes of Atlas Shrugged and The Fountainhead to be implausibly righteous, the villains excessively evil, the outlook too Manichean and pessimistic after Tolkien—maybe having something to do with Rand’s early years under Soviet totalitarianism, which made her see America in a similarly sinister light. Still, she was prescient in ways that no one could have imagined when Atlas Shrugged was published in 1957—so when the two main characters go on vacation, they end up in the worst place in America, a place no one visits because everything has fallen apart, everyone is angry, nobody works, and there they discover traces of a revolutionary engine model in the ruined factory of the Twentieth Century Motor Company, which has gone bankrupt due to the socialism of its feckless heirs. Rand foresaw that outcome at a time when General Motors had the largest market capitalization of any company in the world, and the average income in Detroit was 40 percent higher than in New York. As the years went by, Peter was more and more impressed by Ayn Rand.
In high school he never drank or did drugs. He earned straight A’s at San Mateo High and was class valedictorian in 1985. He got in everywhere he applied, including Harvard, but he was afraid that Harvard might be too competitive, that he might get beaten there, and after all the uprootings of his childhood he wanted to stay near home. So he went to Stanford, the epicenter of what was beginning to be known as Silicon Valley.
“I remember 1985 as just very optimistic,” he later said. He didn’t have a clear plan—he could go into biotech, law, finance, even politics. “My default view was that you could do everything. You could make lots of money, and you could have a respectable job, and you could do something intellectually stimulating, and somehow one could combine everything. It was part of the eighties optimism that I didn’t feel I needed to be too concrete about it. The ambition was to somehow have an impact on the world.”
* * *
Well into middle age, Thiel could be fairly
easily imagined as a college freshman. He walked bent slightly forward at the waist, as if he found it awkward to have a body. He had copper-colored hair, pale blue eyes, a long fleshy nose, and fantastically white teeth, but his most striking feature was his voice: something metallic seemed to be caught in his throat, deepening and flattening the timbre into an authoritative drone. During intense moments of cerebration, he could get stuck on a thought and fall silent, or else stutter for a full forty seconds.
In a philosophy class his sophomore year, Mind, Matter, and Meaning, Thiel met another brilliant student, named Reid Hoffman, who was far to the left of him. They stayed up late arguing about things like the nature of property rights (that was how Thiel made friends, at Stanford and all his life). Hoffman said that property was a social construct, it didn’t exist without society, while Thiel quoted Margaret Thatcher: “There is no such thing as society. There are individual men and women.” Hoffman became one of Thiel’s closest friends, and their undergraduate debates would have a long afterlife when they both went into business. Most of his friends, though, were fellow conservatives. They were an isolated and besieged group, and they relished it. Stanford in the late eighties became the scene of a furious fight over the core curriculum—Western Culture, as it was called—a fight that amounted to the last campus battle of the sixties. One side, led by minority and liberal student groups, argued that Stanford’s required freshman humanities courses were biased toward “dead white males” while shutting out the experience of other cultures. On the other side were traditionalists who believed that the anti–Western Civ students were using the curriculum to push a left-wing political agenda on Stanford. The quarrel over reading lists seemed every bit as meaningful to undergraduates at the time as demonstrations over civil rights and Vietnam. A group of students even took over the Stanford president’s office.
The Unwinding Page 14