Silicon Valley billionaire Peter Thiel gained considerable notoriety during last year’s presidential election cycle when he lent his name, and a $1.25 million campaign contribution, to boost Donald J. Trump into the Oval Office. That has created considerable tension between Thiel and most of his peers in the tech sector. In the latest development, Thiel no longer has a relationship with the legendary startup incubator Y Combinator.
TriplePundit began following the unusual trajectory of Peter Thiel, a noted libertarian, in May 2016, when he first made headlines as Silicon Valley’s only active Trump supporter. Another thread in the Thiel story is his role in the bankruptcy of one of his most persistent public critics, the Gawker Media news organization. The reach of a conservative billionaire into politics, corporate investment and free media enterprise is a key issue for a publication covering the intersection of sustainability and the economy like TriplePundit
Peter Thiel out at Y Combinator
Peter Thiel gained A-list status in Silicon Valley through his early investments in Facebook, PayPal and others. Cementing his stature was the position he enjoyed as a “part-time partner” with Y Combinator. Hundreds of new businesses have benefited from Y Combinator’s mix of seed money and mentoring, and several have gone on to become billion-dollar enterprises.
The relationship apparently continued throughout the 2016 presidential campaign. In the runup to Election Day, investor Ellen Pao severed ties between her non-profit Project Include and Y Combinator, citing Thiel’s $1.25 billion campaign contribution (emphasis hers):
While all of us believe in the ideas of free speech and open platforms, we draw a line here. We agree that people shouldn’t be fired for their political views, but
this isn’t a disagreement on tax policy, this is advocating hatred and violence.
At the time, Y Combinator President Sam Altman defended Thiel (cited by Bloomberg):
“It’s important to keep talking to people who hold very different views,” Altman said in a company video the month after Trump assumed office in January. Altman defended Thiel’s track record and at the time pledged to keep him involved.
The case for “different views” echoes similar writings and statements by Peter Thiel. However, Altman appears to have had a change of heart. Earlier this month Bloomberg reported that Peter Thiel is no longer affiliated with Y Combinator:
Y Combinator, a startup accelerator famous for launching Airbnb Inc., Stripe Inc. and Reddit — has ended its affiliation with Thiel. That could limit his access to the crop of up and coming startups that regularly emerge from Y Combinator.
To be clear, Y Combinator did provide Thiel with some cover. According to a report in Buzzfeed News, Y Combinator ended the entire “part-tijme partner” program some time last year. However, a number of people involved in that program are still affiliated with Y Combinator through another program, and Peter Thiel is not among them.
Cracks in the Facebook facade
Facebook is another high-status arena for Thiel. He was the company’s first major investor and his position on the Facebook Board of Directors dates back to 2005. However, that has become a headache for the company, which has been forced to defend him repeatedly over the Trump connection.
In June 2016, Facebook COO Sheryl Sandburg leveraged the familiar “different views” argument to fend off the critics (cited in Forbes):
“… We have very independent board members with very independent thoughts that they share publicly.”
“Those strong people make really good board members because they have strong views, and they’re not afraid to think differently than other people, which has served Facebook well …”
Facebook founder Mark Zuckerberg also deployed the “different views” argument to defend Thiel in the runup to Election Day 2016. In a note on an internal company message board, Zuckerberg explained that caring about diversity is “a lot harder when it means standing up for the rights of people with different viewpoints.”
In the latest development, eyebrows were raised last week when Thiel sold the majority of his remaining stock in Facebook, but the move was reported to be the latest in a series of planned transactions.
Although the stock move does not appear to signal a growing break, it is stirring up some old news that Thiel would probably like to keep dormant. CNBC pointed out that the new stock sale underscores a colossal misstep by Thiel back in 2012. He sold a much larger share that year, when Facebook went public:
While Thiel is in no way hurting for cash, he would have been much wealthier had he stashed those Facebook shares away after the 2012 IPO.
Instead, as part of a pre-arranged plan, he sold almost 80 percent of his stake within a few months of the IPO at an average price of less than $20 a share. Facebook is now trading at $180.50.
What about Gawker?
In another development that stirs the bad news pot, last week news surfaced that Thiel may be interested in buying the Gawker.com website and its assets.
For those of you new to the Gawker episode, in 2016 word leaked out that Thiel was the secret funder behind a lawsuit against Gawker, brought by the entertainer Hulk Hogan. The suit was ultimately successful, Gawker filed for bankruptcy, and Univision bought some of Gawker.com’s sister sites.
In defense of his support for Hogan, Thiel claimed a personal motivation for championing the “little guy” against “media bullies.” However, there was a financial angle as well. In the field of business reporting, Gawker was one of Thiel’s most persistent critics, especially when it came to highlighting the failure of his hedge fund Clarium Capital.
Meanwhile, the Gawker.com archive is still available online.
Photo: JD Lasica/flickr.