Peter Thiel: 1967–2002

Caemin (0:10)

Morning, folks, and welcome to today's episode called Peter Thiel, 1967 to 2002 And as regular listeners will know, I've wanted to cover Thiel for a long time now. And he's going to warrant a three-parter at least, because love him or loathe him, Thiel is without doubt one of the most interesting, controversial and polarizing people in business over the last 30 years. And for listeners who don't know him, Thiel was part of what became known as the PayPal Mafia. It was this group of super smart guys, and they were all guys, who founded and built PayPal. And the company survived the.com crash. It almost went under because of Russian fraudsters. And they eventually cashed out in 2002 And then a lot of the people involved in PayPal went on to even more success. We're talking about Thiel himself, Elon Musk, David Sacks, Reid Hoffman, to name but a few. So this episode, I'm focusing on Thiel's early life, and it brings us right up to the sale of PayPal in 2002 It is a cracking story. Enjoy.

So Peter Thiel, born in Frankfurt, West Germany, 1967 His father, Klaus, was a chemical and mining engineer, while his mother, Suzanne, looked after the family. And because Klaus' work involved these big international mining projects, the family, they moved around a lot. When Thiel was three, the family moved to what is now Namibia. Back then, it was controlled by South Africa, and apartheid was still in place. Now, they always spoke German in the home. So, in South Africa, Thiel went to a very strict German language school. There were very rigid rules, harsh discipline, even corporal punishment. And Thiel later said that this experience, it was where his distrust of conformity and authority began. It was his dislike for institutions telling people what to think and how to behave. Now, as a young child, no surprise, Thiel was exceptionally bright. He knew the name of every country in the world by the time he was five. When he was six, he started playing chess and this really suited him because chess is all about planning ahead and out thinking the person opposite you. The family, they returned to America in 1977 and they moved to Foster City. This is beside Silicon Valley. Now, in his new school, Thiel remained an outsider. He didn't mix a whole lot. He was obsessed with Tolkien. He read Lord of the Rings more than 10 times, and he continued excelling at chess. By the time he was 12, he was ranked seventh in his age group in America, and his chess set had a sticker that said, born to win. And this is the thing about Thiel. He is ultra competitive. And look, we're all pretty competitive. You have to be if you're in business. But according to all of Thiel's other very, very competitive friends, Thiel's competitiveness stands out. He absolutely hates losing.

Now, while in high school, Thiel discovers Ayn Rand. She was this famous Russian born writer and philosopher who developed a philosophy called Objectivism. Now, I'm not going to go too deeply into this or into any of Thiel's ideologies. Mainly because I don't really enjoy or understand a lot of this stuff. But why I'm bringing it up is because Thiel takes these ideas very seriously. And over the years, the ideas of people like Rand, they have a huge influence on how he thinks, what he says, how he does business, and of course, how the rest of the world sees him. So Rand's basic argument was that people should follow their own ambitions rather than doing what the government or everybody around them expected. And for Thiel, who at this stage, and remember, he's just a teenager, he's already supporting Ronald Reagan and admires Richard Nixon. So he hated the idea of simply following the crowd. And you can see how Rand's ideas appealed to him.

Now in his SAT exams, Thiel achieved a near perfect score. But interestingly, some of Thiel's former classmates told Max Chafkin, he's the author of a book on Thiel called The Contrarian, that Thiel also did the SAT exams for other students and charged them $500 each.

Now Chafkin's book contains a lot of stories from people who knew Thiel at school and college. And some former Stanford students claim that he once defended apartheid in this very cold, logical way, looking at it purely in economic terms and in their view, completely missing out on the human side of it.

When Chafkin's book came out, Thiel strongly denied ever supporting apartheid. But the reason why I mentioned this is because he never publicly denied the SAT story. So if we assume that it did happen, Thiel was taking an enormous risk here, like he could have destroyed his chances of getting into college.