Part Three: How Peter Thiel Became the Gravedigger of Democracy

the same man, Richard Milhouse Nixon. Now to talk about our greatest president and I think our greatest future president. Noah Shackman, Noah, how are you feeling? Do you think Nixon's got it this year? You think he's going to pull out a win.

date that lives an infamy. That was my my Pearl Harbor joke, But it's also a joke referencing the Gawker lawsuit, because that is the day that Gawker, via its tech website Valley Wag published an article with the title Peter Teal is totally gay people Now Valley Wag, which was you know, the again, like the tech imprint of Gawker had been writing about Peter Teel for a while, and they had published articles kind of insinuating that Peter was

gay for quite a while. The company founder, Nick Denton, was, to his credit, someone who recognized early on that Peter was not just another rich investor guy, but somebody who was amassing significant power and had a weird ideology and should be covered. Unfortunately, the downside of it was that Nick's instincts were, you know, this was a messy time for digital media, shall we say, and Valleywag was not at this point entirely conducting itself in the best traditions

of a journalistic enterprise. Right. And while I think an argument can be made, a strong one that Peter being gay, given his funding of the Republican Party, is to a degree relevant to the public interest. The way in which Valley Wag reported on this initially was not a public interest story, right, Like that title, Peter Teal is to that, that's not a we're we're getting out necessary information title, right, that's kind of that's being extremely caddy right.

something that could have been adjudicated in court. But it is something that if you're kind of going on, where does Peter Teal have a right to privacy? Like if you're arguing that because of his advocacy, you know this is relevant, which I think is an argument that can be made strongly. You probably want to be a little bit clearer in making that argument than Peter Teal was totally gay folks. Yeah yeah, yeah, Now again, I I that's that. I don't think like the fundamental issue here

is that they out at him. I think it's just more that like, yeah, it's kind of a kind of a grotty way to do it. Do you say grody? I did? I did I am a high school girl in two thousand and four. Wow, late nineties, right, yeah.

tabloid end of things. Right at this period of time, Goker is going to professionalize in the period you know, before they get sued into oblivion by Peter, But in two thousand and seven they are still very much like new kids on the block. We don't really give a shit. Now. The question that comes to if you've read about Peter Teal is like, why did he get so offended at

the fact that he was outed? Because by all accounts, he was pretty open in his personal life, Like, it doesn't seem like this shocked even his like Republican colleagues, people who had gone to Teal parties, who like knew him personally, who had got to his nightclub, like he didn't like, go to extreme lengths to hide this fact about himself. Instead, what seems to have enraged him was not the specifics of the fact that he was outed, but this line from the Valley Wag article. The only

thing that's strange about teal sexuality. Why on earth was he so paranoid about its discovery for so long? Now I wouldn't really that didn't not line doesn't stick out to me. But here's from an article in The Atlantic which interviewed Ryan Holiday, who wrote a book about the Gaker case. Here's here's what Ryan said about why that line, in particular like tweaked Teal. He thought Denton was implying that Peter had psychological problems. When you read the comment,

it doesn't feel that way. But Teal thought, here's the publisher of a media outlet, not just a blogger, going after me. The blog post felt like the first article after years of negative Golcker coverage against Teal.

a big deal. On the other other hand, you know, I think outing people's fucked up and yeah and so and I feel like, you know, people's sexuality is like their own, uh is their own choice. On the other other other hand, like you know, if you're going to embrace some weirdo, like you know, retro seventeenth century ideology about really and empower, then you know, then you might have to grapple with its inconsistencies and hypocrisies. So, I don't know, it's.

was not emotionally balanced. Now, the other argument you'll hear here is that the primary real reason Peter was pissed about this is that it was fine for him to be gay and kind of open about it in his private life with the people who hung out around him, but not publicly open about it because who he really wanted to keep this from or to re maintain plausible deniability with is the Saudis Right, he has a lot of business involvement in the Middle East and the Immirates

as well as in Saudi Arabia, and he didn't want to be an out gay man traveling to in dealing with these countries, right Like, he felt that that would be damaging to his business interests. So that's the other argument that you'll hear, and I'm sure it's probably a

number of things. In any case, it doesn't This is like I think when I first was aware of this case, most of the casual reporting was like, you know, Peter Thiel got involved in wanting to sue Gawker and do oblivion because they outed him, right like, that was the DDT A to B. I think it's a little less direct than that, And I think this is the picture Chafkin page paints, the picture holiday paints and holidays. The

guys really seems to have gone into this. The most is that this is what kind of gets Gawker on Peter's radar and annoys him. But he's not committed to taking them down yet, right, Like that's not going to happen for years and years. So this is just kind of like the beginning of the conflict that they have in each other. So we're we're gonna move on here and later we will come back to the story, but like, yeah, this is this is how he's kind of kind of

starting to get angry at Gawker. And I do think it's useful to holiday suggests that there's another reason why Peter's pissed as a result of this, and it has more to do philosophically with the kind of reporting that Gawker is doing and what they represent about the media in the digital age that Peter is kind of personally

repelled by, maybe even frightened of. And I'm going to quote from an interview that he did again here from two thousand and seven up until twenty twelve, Denton was on a devil may care right of breaking rules as a media publisher, and that was so diametrically opposed to Peter's vision of quiet individuality. This belief that weirdos needed to be left alone if they were going to change the world. Peter saw that Gawker would punish people for that weirdness.

like Teal. In this period of time, like two thousand and seven is when that Forbes article on the PayPal mafia that we quoted from comes out where they're like taking a picture of Peter and all of his friends and framing it like it's a like a film, like

a poster and stuff. So yeah, I do think and I do think that's important context for like, we don't want to I'm not like trying to deny how gross a lot of the especially today, a lot of like the way value Wig framed things was, but it is important to note also the value of what they were doing that like, well, at least they were confronting these guys, you know, And it was it was two thousand and seven,

it was a different era. Digital media was new. We can talk about like what the ideal way to confront them would have been but like at least they were, so I don't know, it's it's it's a it's a

messy time. Nobody's nobody. Nobody handled it perfectly now in terms of how Chafkin interprets this, because Chafkin is a lot it gives a lot less slack to Peter, and his argument is that his argument is that like, after this Gawker article comes out, Peter is angry but at the same sense of the but at the same time he's he's kind of like liberated by the fact that he's been outed now, and that this is a big part of why he becomes such an open not just

in funding of the far right, but funding of a lot of his weird libertarian pet causes is now that he has been outed, like, well, you know, maybe it's gonna fuck with some of my business in the Middle East, but at least I can be who I am openly now.

And I think there's a good case to be made for that because it's after this article comes out that Peter starts, for example, sinking huge amounts of money into c steading, which is an art idea championed by weird libertarians who wanted to build their own cities, independence of the government in the ocean. Peter backs the Sea Steading Institute.

He starts funding these guys who are doing like little burning Man style events which actually do sound kind of cool, where they're like living in the sea or rivers and stuff for days at a time. And he's funding this this libertarian uh you know, kind of fail sun dude who's a major c set steading advocate, and he's giving like speeches and stuff. He's actually more into this. This is not just because when you've got Teel money you could just be a dilettante about something that you're casually

interested in. Peter is like giving speeches and writing essays about how sea steading he thinks might hold some of it. It's a sea yeah. Yeah, yeah, like homesteading, but on the sea. Sea steading.

I love the idea of I liked. Look, I watched too much SeaQuest as a kid to not be attracted to the idea of taking to the ocean to build Europe. It's cool. I'm sorry, it's a cool idea. I like fucking forgive me, wow, I like it. I think it's neat what I'm sorry?

ocean to like expand their living territory. And it was the lead actor, like their picard was Roy Scheider, the sheriff from Jaws, and he like ran this giant like submarine city that traveled around and like kept the peace in the underwater frontier. It was a good show. It was a good show.

friends with that guy who raped that dolphin. I'm not saying he was in favor of raping dolphins, but there was a John C. Lily raped a dolphin. Yeah, what well do you guys know about John C. Lily?

But that's a separate question. What So, this is right around the time two thousand and eight or so that Peter Thiel starts reading the work of a fairly new blogger on like the right wing scene, this kind of underground hit who's particularly popular in the Bay Area tech industry scene, a guy named Curtis Jarvin, who at this

point is writing under the name Menshus Moldbug. Now, we did our episodes with you know, pretty recently on Minshus, so I'm not going to go into a ton of detail on him, but he advocates a return to monarchy based around like small city states ruled by ceo kings, Like that's his idea is like, it wouldn't it be better if tech CEOs ran the world and like it was a series of small city states that you could travel in between, which if you've ever like had to

use the yeah, like all of us have. Have you ever used any of the products these companies make, the idea of them running an entire government is a nightmare. But Peter thinks it's starting to think in this period that maybe that's the right way to do things. And I the open question always here is like does he

actually believe this is better for mankind? Because the thing you'll get in Chaefkins writing and in Peter's own writings, if you're trying to figure out, like why does he think this is he has this belief that the tech industry has ground to a halt, that human innovation is frozen, right, that all of the stuff the tech industry is putting out, or these like bullshit little products and like gadgets and stuff that don't actually take us forward in the way

that you know, we had dreamed of going, you know when Peter was a young kid, which you know is to a degree true, although Peter's one of the guys funding and investing in these bullshit projects that absolutely don't take the species forward make a lot of money. So does he believe that, like we need to do this in order to actually increase innovation again because capitalist democracy

can't do it? Or does he? Is he just a guy who wants to be more powerful and he's like, well, if I'm a CEO, k I'm more powerful, right.

during this period of time as well. He invests you know, like a million dollars something like that in the stupid tech company project Yarvin has and I think there's probably an additional chunk of dark money that he he could And this is where this is. You know, we can laugh about how inconsistent or an ethicle his like motivations are, but the way he does this is smart because he

recognizes I really like this guy's writing. This guy is putting out some stuff that's legitimately subversive on like the role of democracy and how it's like doomed that I think is useful towards where I want to see things go. And he's right against such a way that is inherently attractive and magnetic to other tech bros. So I want to fund this guy as a way of like slipping this drug into the supply of the Silicon Valley power elite that's going to warp the way they think about

the world. And this is a very successful project. You know, I don't know the degree to which all of that is a plan from the beginning, but he really, like like Yarvin, goes to parties at Peter's house and stuff like they are tight, and I think this is very much like a kind of part of his cohesive increasing plan that like, this is a guy who's a reflexive contraryan. He kind of hates ordinary people. He wants to be able to rule them. He certainly wants to be locked

forever as someone who is above them. And he I think finds very attractive idea of if we build go back to a system that's this kind of neo monarchist system, I can be enshrined like the House of windsor as a permanent especially if I never have to die, right as a permanent power and speaking of never dying, nova, you know, who can't die, who cannot be killed. Absolutely cannot be killed. I've tried to kill them. They won't die. Is the sponsors of our podcast. We're backed before the Yeah ship.

like a platform. But I also think he probably found it kind of like emasculating maybe to need someone else's money that like his first plans had failed and that's why he had to take that right wing influencer grifter money in the first place. And I think maybe there's

a satisfaction to him in having the shoeb be. On the other foot, on now being the guy who is funding those influencers, right, obviously he sees the value in that kind of funding, right, So I think he's always been kind of supportive of that, and maybe on the if you're being you're giving him more credit as like being less of a dick. All again, this is still an evil thing to do. Maybe it's that he genuinely is like, well, this money was there for me when

I was a fledgling right wing shithead. I got to pay it forward, you know, and invest in the career of another asshole.

go back to the beautiful days of the Romanovs. All of those guys are no less intellectually courageous than fucking Peter teal Right, they just dress it up a little less by masturbating over the fucking tzar. All of these guys just want a tzar or they want to be the czar, right, or they want to be you know, the Czar's I think Peter wants to be a grand duke or some shit.

Depending on how you kind of read into things. I think he's a guy who got a lot more credit because I used to be interested in some of what he had to say. I think maybe in I've come around to it, he's more of a con man in the modern era. That's not an allegation, but like that's kind of my gut feeling about the dude. But he's certainly he is not a right wing figure in this period. Degray, if anything, would be more on the progressive side of

things in the early two thousands, like progressive left. So the fact that Peter is funding him again, Libertarians are kind of like more aligned with the left in this period of time because of their opposition to the Bush Party is a general rule, So the fact that Teal, who is kind of a neocon in some ways, is funding a guy like Degray might would not have been seen as like, oh, it's this weird right wing billionaire foisting money rights right, Like, That's just not how it

would have looked. He also puts money into cryogenics and he's sure. There's some interesting interviews with him where he's like, asked what he thinks would be a good human life span, and he was like, I don't see why people shouldn't live forever, right, But specifically he's what's kind of important to note here is that Peter doesn't really have an interest in making sure people live forever. That's not what

he's about. He wants to live forever. And he even makes some specific statements about how I don't agree with the ideology that death for every person is necessary, right, yeah, And I think what's happening here is that, like again, Peter is this kind of to his bones contrarian. He rejects other people. And one of the things that bonds all people together, no matter how smart you are, how rich you are, who you are, is that everybody dies.

And that I think is what's most offensive about death to Peter is that it it it kind of forever locks him in as one of the herd, right, Like, you're not fundamentally above the rest of mankind if you die like everyone else. And I think that's the primary reason why he's so obsessed with this, you know, like he is he wants to be a pharaoh. He sees himself as like a pharaoh type, right, that he has owed this kind of eternity of power and influence because

he is so special. And the idea that like no man, when it all comes down into it, you wind up in the dirt like everybody else. Like that is the most offensive part of this to him, even more than like any fears about, you know, the the final cessation of consciousness. It's it's being inextricably bound to everyone else who exists.

stages of aging. There is a lot that if you have shitloads of money for the right kind of drugs and the right kind of like personal training and shit, you can kind of push off the early steps of aging significantly, and you can also do stuff like you see this with both Teal and with Elon Musk. Once

they get rich physically, they change a lot. Initially, you know, you can get the hair tramlance like Jeff Bezos, you get on Hgah, you get a personal trainer, and you start to convince yourself, wow, so much of what I you know, when I was like a young kid just working, I couldn't have a body like this because I didn't have the resources to pay experts to maintain it for me. And I'm able to what else is possible, right right, And I think that's probably part of what's going on there.

the Zuckerberg route. So at this point, all of these gifts that Peter you know, has been giving, it's interesting, like he's a The primary thing that he's done at this stage, right for all of you know, the money and the high ambitions, is he has started cashed out on and abandoned PayPal, and then he has launched an investment firm called Clarium, and by kind of the the second Bush term, Clarium is becoming a really big deal.

By two thousand and four, they had two hundred and sixty million dollars under management, and within like a couple of years, the fund was worth more than two billion dollars, which is that it's double and triple digit growth for most of its early years. It changes. People will say it completely changed how venture capital works in the valley, right,

because it was such a successful company. The kind of bets that Peter and his because all of the people's staff there are his friends from PayPal and his like right wing buddies at Stanford, right, who are also in large part a lot of his buddies from PayPal, you know, and he's kind of picking. He's finding guys who are starting companies. Some people will allege their all guys he

finds attractive. You know. I don't know. I think that sometimes it's just people being like, oh, this guy's handsome, Peter's gay. That must be part of it. I don't know that it actually is, but he's he's finding these other founders and he's bringing them in. It is noted. There's a couple of things that make Peter's fund really different from other funds. For one, he's not interested in people constantly making moves. He's fine if you only make

one investment a year, right. And again, he doesn't really fire people. He's bad at that. He's bad at confrontation. You can kind of wind up shuffled off to a part of the company where you don't have much connection to Peter if you fuck up enough. But like, he doesn't like conflict. For as many sort of evil, fucking confrontational things and people as this guy invests in, he personally doesn't seem to have much stomach for conflict, especially

not with people he likes. So when it comes to like what made Clarium super wealthy, one of the things that was hugely influential in their growth was backing one of the most toxic corporations on the planet, Opti Canada.

Peter is very much anti kind of climate change. I don't know how much he acts climate Chang's very pro climate change. Yeah, I think he's anti anti like he's I think he would say anti the ideology of climate change. Right. And one of the things that's happened here is right around like two thousand and six seven he he Elon Musk and David Sachs fund a movie called Thank You for Smoking, which I actually just watched the day that Biden dropped out of the election. It still holds up. Yeah,

it's a good movie. It's it's a fucking what's his name the guy who played two Face and the new in the chrysn Ol in Batman movies. Yeah him.

those things. I think if you take the ideology that the book's characters have completely seriously, then it's a lot less enjoyable. But it's it's impossible to really do that when you're watching it because there's just so many talented people involved, and it's a good script. Again, Aaron eckert is is just just soaking up the screen, and you've got fucking JK. Simmons is kind of the antagon. There's a lot of great people in that movie. Anyway, go

watch Thank You for Smoking. It holds up like believe me people. But you also as you watch it think like this is pretty true to Peter's actual unironic belief about politics in the early two thousands, right, as opposed to just like, well, this is a fun movie about like these absolutely amoral merchants of disinformation, right.

Self actualization would pay off. In August two thousand and seven, four months before the recession began and close to a year before most Americans realized the economy was collapsing, sent a letter to investors declaring that the economic expansion was officially over. We've begun a long post boom phase that

can be called the long Goodbye, the letter said. And this is one of Peter's great successful predictions, right, which is that he calls he starts writing in two thousand and seven about the global financial crash that's going to really hit in two thousand and eight. He is very much ahead of the curve on this. A few months after that two thousand and seven letter, right at the start of two thousand and eight, just weeks after he'd been outed by Gawker, Peter sends out a ten thousand

word essay to investors. And this is another thing that kind of he's famous for as like a hedge fun guy, is he will periodically write these massive political and philosophical sometimes even religious essays and send them out to all of his funders right to kind of explain their philosophy at the moment. And a lot of this is like, I have a lot of confidence in your fucking dorm

room ass musings. If you're sending this kind of shit out of people are trusting to invest money in, I'm guessing a lot of these wound up just kind of like thrown into trash. But so he predicts correctly that there's this crash coming. But he also I think, because just of who he is, he over captastrophizes, right. The two thousand and eight crash was really bad. He sees

that coming. He also thinks it's definitely going to cause a depression, right, that no one is going to bail out anything, and that the cycle of collapse will continue absolutely unabated, will go on like a runaway sort of freight train kind of deal.

this cruel winter coming. Peter, he kind of continues in this like apocalypse preacher persona and quote uh and states that he is quote recommending prayer and repentance in lieu of investments analysis insane things. They're right to investors. Yeah, He's like, you should all repent to Christ. We're done.

Kind of at the height of this that between six point four and like eight billion dollars under management, right, and this is a fund that back in like two thousand and two or three was two hundred and sixty million.

He described his school of thought on these matters as being a global macro investor, which in his terms, meant looking out at world events and basing your economic predictions on kind of the vibe you felt about the times in large, as opposed to the specific situation each of those companies was in. He urged investors at Clarion to make one trade per week, which chaf Can credits to his combination of indecisiveness and high tolerance for risk. Quote.

Teal argued that the world was heading to end times. Investment analysts often employ religious metaphors, speaking of the second coming of bond yields or inequities apocalypse, but Teal was not speaking metaphorically. The entire huge in order, he wrote, could unravel in a relentless escalation of violence, famine, disease.

Wore a death against this future. It is far better to save one's immortal soul and accumulate treasures in heaven, in the eternal city of God, than it is to a mass of fleeting fortune in the transient and passing city of Man. And when you read it like that, it's kind of hard to see that as not like, I don't know, man, you're going If that's just totally tongue in cheek, you're really going far with it.

are much better than people usually. But that's I think. I think I'm accurately describing. That's how I think Peter feels. I'm basing that off of vibes, like Peter was basic thinking about the collapse of the world. Right, But I have as good a record with vibes as Peter does, at least. Uh yeah, yeah, here's some ads and we're bad anyway. That's all very weird that Peter is so kind of married to the fucking Bible as a hedge

fund guy. But the weirdness does mask there's a real insight here right in that Peter again, he's going to fuck up on taking advantage of this. He extends it too far. I also think his fundamental analysis is correct, which is he argues in that paper that investors are going to be unable to as the housing market comes unwound and as these increasing contradictions in the way our

economy is set up become impossible to ignore. And I think, although Peter won't admit this, climate change is a big part of that, investors are going to be unable and unwilling to accept that things can't continue growing at the rates that they'd always been growing, right, that that's not possible, and rather than accept the inevitability of contraction or even collapse, they will start a process of massively overvaluing every asset systematically,

causing an endless cascade of bubbles in every sector. And that is what happened, right, that's today, that's the last twenty years. Right, Like, he's not fundamentally wrong, but he also overextends how bad it's going to be and how quickly it's going to be that bad.

It kind of makes them want to build bunkers and maybe feel like they need some of that money liquid to build bunkers, right right, Yeah, So Peter starts to panic increasingly Later in two thousand and eight, as the signs get worse, he holds meetings to Warren employees that he thinks every brokerage in the country is going to go under and there's going to be no currency, and like he literally he has his company making sure they have at least a couple grand or a thousand or

something on hand for every employee so that he can keep his employees fed if all of the currency collapses. They're talking about like buying gold bricks, like this is like apocalypse hoarder nonsense. Nice, Like Peter is worried that his employee best friends, who were his entire social group are going to starve to death and he has to make sure he has cash to pay for their food,

which is actually kind of sweet. Like it does show Peter is to some extent capable of caring about other people, if that's accurate, but not in a way that makes them a good guy. But there's a degree of care there.

That makes them a fuck load of money, right, and in the second half it's going to cost them everything. Right. So, because Peter's word is law, very little is expected of his workers on a day to day basis, So life of the company is like pretty chill during these early apocalypse stages. According to chaef Gen, people played a lot of chess and spent their free time to over how they'd run a theoretical country if they had the freedom

to build it from the ground up. Quote. Everyone spent a lot of time talking politics, although it was important that those politics always be of the right wing variety. An employee told me that it was common to hear about talk about climate change denial and to see web browsers open to v dare, a far right web site with a long record of publishing white nationalist writing. Oh, we'll be talking about that. It gets a lot worse

in terms of Vdair's shit, my man's. This had been a good enough strategy for years, but Peter's inherent distrust of tech businesses is going to cause him to miss a lot of opportunities here, as well as his belief that like collapse is inevitable. He turns down a chance to invest in Tesla, which might be understandable given his history with Elon. Right, if I can, if I can be like, well, I get why you would miss this, because you know what a mess he is, right, but

that is undoubtedly it's a bad financial decision. To not get involved with Tesla in two thousand and eight is a poor financial mission, right. He also turned down the money, the chance to put money into YouTube when it was still a startup and that is a catastrophic bit as a tech founder. Missing YouTube is a big one.

collapse year, by betting on against the dollar. But then he has this belief that as the as the collapse starts to run away, he believes, not only are some banks going to collapse, every bank is going to be nationalized, right and because he thinks that the government is going to have to take over all of the banks. I think this is just because he's also a libertarian, so his nightmare is like this, you know, the government taking over everything. He decides unlike all of the guys who

make money off of, you know, the collapse. Unlike all the big short guys, he decides not to short any banks because he thinks that since the government's going to nationalize them all, once they get nationalized, their stock value

is going to soar. And so after predicting the collapse, he puts nearly a billion dollars into stocks and all of these banks, and like another one and a half billion or so into Google and fucking of all of the places to put like eight hundred million dollars, fucking Yahoo. He puts eight undred million dollars in such a whiff. It's such a fuck up.

is that's such a human thing to do. I've been there myself, where like you, you predict a big thing correctly and your micro response to that you fuck up because of who you are, right, right, that's so human.

And he's like, no, that's not what they did. Turns out they are just owned by bankers. Yeah, sorry, sorry, Peter, you guys won too much and now you've lost your money.

the year, he's down five percent, right. And then, to make matters worse, once kind of the collapse hits, he dumps a shitload of his holdings while stock prices are low because he assumes a deppression is and nothing is going to rebound, and he needs cash. And then all of this shit does rebound, and so he misses out

twice in a row. Here, investors begin to abandon Clarium, which had been worth eight billion almost I think at his at its height, and by the end of the year was down to two billion dollars, like by two thousand and nine, it's like a quarter of what it had been at its height, right, which is a major fuck up, you know, So yeah, fascinating stuff. Now, this is where we also get back to Gawker, right kind

of two thousand and eight or so. Here I stated earlier that Ryan Holiday argues Peter responded to Gawker's confrontational tabloid expose style, right, which he saw as a danger to weird geniuses like him who moved the species forward. Chafkin makes a somewhat different argument quote Teal came to believe that the real reason for the mass redemptions, which is like all of the people taking their money out

of Clarium, was Gawker Media. Some of Clarium's big investors, according to former employees, were Arab sovereign wealth funds controlled by governments that considered homosexuality to be a crime. Teal has never explicitly acknowledged this, but he has hinted at why he may have wanted to keep his sexual orientation out of view. So he a bunch of people pull their money out of his fund in this period where he is making repeated fuck ups, and he blames it on Gawker outing him right.

a petty billionaire seemed clearer with that statement. But this is much more standard, evil rich guy, They damaged my business interests by reporting on me screwing up, and so

I wanted them out right. That's perfectly normal, rich guy, evil bullshit, right, Yeah, So this period, though, you know, while he is apparently burning with rage at Gker the end of the Bush years to start of the Obama era, it's not a whole bad time for him either, because while he's again he's super rich, so he's insulated personally

from any real consequences. And while his clarium investments fail and he stops being like the lauded, you know, hedge fund genius of the new generation, Peter ces success in another venture which had been launched based on the Egor software that he's depending on. I've heard a couple of different versions of the story. One is that Levchin, his founder at PayPal Buddy codes it some of them. The intercept reporting says it was another guy at PayPal who

coded it. I don't know which one of them coded it. But Igor is this software that they had started at PayPal to stop Russian scammers. Right that there are allegations and lawsuits that it was kind of stolen in part from another company, But that's a story for another day.

Peter is as obsessed with security and fighting terrorism as any neo coon, and he starts to focus on the idea that like Egor, might be useful for something Besides fighting fraud, perhaps this could also allow the government to hunt and kill terrorists that had Peter to fear for his own life. I'm going to have to go back in time here, and I hate to jump around like this, but Peter's involved in too many things to not do

this from time to time. So let's go back to July of two thousand and four, right when he and a conservative chaplain from Stanford organize a six day seminar with Renee Girard. The scapegoat philosopher Guy Til had attacked the Bush administration then for not being cruel enough to Muslims, and had gone after the ACLU for their unhinged support of civil liberties at the expense of security. He had encouraged the creation of a new system, which he built

as a replacement for the UN. He was like, instead of the UN, we should have an international consortium of public and private intelligence companies all working together to quote forge the decisive path to a truly global packs Americana. Right, this American piece that intelligence agencies can bring us if we give them enough money and power to murder people

with drones. It's so why yeah, and Igor at this point, it's just a fancy way of what I call making a crazy board, right, that thing you see in like movies and TV, you know, True Detective where you've got like all the pictures connected by bits of string. Right, IGOR is a way of doing that on the computer right where you're plugging it. And it also is pulling

from you can have it pull from. Oh, I know that we're looking for a guy who drives a who lives in the state and drives a blue car, and as a DUI, I want you to pull up from like all of these records. You have access to everyone who fits that, right, and we can add them to the crazy board, you know.

were going to stop the next nine to eleven before the guys even you know, had really hatched the plan. And so there have been a bunch of programs that started and failed, you know, before then. And you know, there were some that were in existence and law enforcement, but they were clunky. There were you know, there were government software. So they did they look shitty, and they you know, and and and they didn't work so well.

And then and they didn't have real Silicon Valley talent, like yeah, these guys did.

It then presents the linkages and colorful, easy to interpret graphics that look like spiderwebs. So, based on this technology, Peter founds Palenteer that same year, two thousand and four, and Palaeer is the name of the infamous seeing stones in the Lord of the Rings, which are you know, the most famously the one is owned by the evil wizards sorrowmon. Right, So if you're naming your company that exists to provide this like seeing stone to the highest

bidder palateer, that's explicitly evil. Right. This isn't like a case where like the good guys have their own seeing stones. It's just the bad guys. It's a bad thing to have. It connects you inevitably to Sauron. Like anyway, very fun.

I love fiction, now, Peter, one of the things that interesting about fucking Pallenteer is that, like with most of his companies, Peter has an interest in this, but he also has one of his close friends actually running shit, being the day to day guy organizing everything, and Peter's friend who helps him run. Palenteer is famously always described as his most liberal friend, a guy named Alex Karp,

who Bloomberg identifies as a self described neo Marxist. Now, I don't know about Alex, you know, like, what the fuck do you mean about as the guys starting the capitalist spy firm? How can you consider yourself a neo Marxist? But also some Marxists or boot liquors. So maybe that's the kind of guy that Alex Karp is.

hard to convince them to make moves like that. It doesn't matter what kind of agency it is. This is always an uphill struggle. So in order to aid Pallenteer in kind of getting this buy in, they needed to really start to take off. Peter brought in some of the most ghoulish neocons he could find to apply pressure in DC, and this included friend of the Pod John Poindexter, who oh JP had worked for Ronald Reagan until he

was convicted of lying to Congress about Iran contra. He then got kind of quote unquote exonerated and gets hired by Dick Cheney to craft the Total Infraation Awareness Program. This was a Bush era intelligence mission with a seemingly

kind of reasonable goal. Right, We're going to collect all of the data we can on everything happening, food prices, YadA, YadA, YadA, and these different areas that we have military interests in, and we're going to have algorithms comb that data to spot patterns that might be indicative of terrorist groups operating beneath the surface. Right. It's one of those things that sounds reasonable on its face. If you look at how the War on Terror went, none of this ever works

out quite as way well as they think it does. Right, But the smart guys in the room are all like, obviously, this is how we win the war on Terror back then, you.

can put at your disposal. Right, it's data mining, you know. Now, One early concern is that analysts using EGOR would use the vast array of catalog data at their disposal to stalk and harass their ex girlfriends, which, if you know how cops work, is a thing that happens constantly. Anytime you've got a database that like a certain chunk of employees have access to, some of them are going to use it to stock their girlfriends.

actually provide accountability in the spook process. Right. Chaef Get describes this as a key part of the company's pitch, but he also writes one of Palenteer's former engineers were called meetings during which government clients would suggest trying to use the database to look up an ex girlfriend immediately after hearing the whole privacy spiel. Palenteer employees would never

object to these requests, this person said. Instead, they would remind clients that searches were logged and then allow them to look up whoever they want it, no matter how flimsy the pretext. Yeah, that's how that always works. Ah, every time.

that only the government used. Peter tried to force the government's hand here by selling other hedge funds, like selling Igor to other finance companies, right, and he marketed it as Palenteer Finance. So we've got this software that the government's interested in using. It is the spy software, but you can use it to predict which kind of investments are going to work out best. Right by gathering all of this data and using it to predict the future of finance. Now, this is a massive failure as an

actual finance product because it doesn't work very well. People don't really make a lot of money off of Palenteer finance advising their trades, but it works out as a business decision because they're able to get a couple of different finance companies to buy into it, and then they can go back to the government and say, hey, look,

this company and that company already using it to make trades. Obviously, DC should be using this to fight terrorism, right, And the government's like, oh, well, some bank bought it, so I guess we should as well, like.

gets purchases like makes a contract with Palenteer. Now almost the instant they and they're doing this as like a security measure. We want to we want we have like a division in our company that's looking for evidence based on like the communications our employees have internally that we might have an employee who's breaking the law. Right, that's part of compliance. Right, we want to be there's a degree to which we're legally obligated to spy on our

employees making investment decisions to make sure nobody's doing anything criminal. Right. Sure, So that's why they get this software. The instant they get it, they're head of security who's like using the Palenteer software, uses it to spy on the entire c suite for no real reason, right, Like he loses his mind with power and starts stalking all of the people

running the company. This guy's name was Peter Kovicia, and he was a former secret serviceman who ran again a group in the company that was taped with using algorithms to monitor employees. And I'm going to quote again from

Bloomberg here. Aided by as many as one hundred and twenty forward deployed engineers from the data mining company Palateer Technologies, Kavicia's group vacuumed up emails and browser histories, GPS locations from company issued smartphones, printer and download activity, and transcripts

of digitally recorded phone conversations. Pellenteer software aggregated, searched, sorted, and analyzed these records, surfacing keywords and patterns of behavior that Kavichia's team had flagged for potential abuse of corporate secrets. Pellenteer's algorithm, for example, alerted the Insider Threat team when an employee started badging into work lated and usual, a sign of potential disgruntlement that would trigger further scrutiny and

possible physical surveillance after hours by bank security personnel. So that's nuts, but that's also what he's supposed to be doing. But right after, right as soon as they get access to this, Kavicia goes rogue and I'm going to continue with that quote. Former JP Morgan colleagues described the environment as Wall Street meets Apocalypse now with Kovichia as Colonel kurtz ensconced upriver in his office suite eight floors above

the breast of the bank's security team. People in the department were shocked that no one from the bank or Palenteers said any real limits. They darkly joked that Kovichia was listening to their calls, reading their emails, watching them come and go. Some planted fake information in their communications to see if Kavichia would mention it at meetings, which

he did. It all ended when a bank's when the bank's senior executives learned that they too were being watched, and what began as a promising marriage of masters of big data and global finance descended into a spying scandal. Nice, very funny, extremely funny. Oh my god, no, no, no, and just like the most predictable thing that could have happened, right, this is what happens. Every time you give these guys

this toy. Kavichia gets fired. But the promise of pallenty remain undimmed, even though there is tremendous debate app to the present day as to whether or not much of what they do works. This is less the case now that they're doing like we'll talk about this some in the last episode, like when it comes to providing targeting solutions based on data. I mean, there's the jury is still out on how well that's working in like Ukraine, But certainly in this period there's a big debate as

any of the shit really work. Right, Pallenteer's going to take credit for the bin Laden assassination, very unlikely they had anything to do with it, but they do kind of. They take like oblique credit for it, and the software is swiftly adopted by police stations and cities like New York, Chicago and La Palateer software was often used allegedly to single out innocent individuals because the connections in their lives

look suspicious to the algorithm. And here's Bloomberg again. The platform is supplemented with what sociologist Sarah Brain calls the secondary surveillance network, the web of who is related to,

who friends with or sleeping with whom. One woman in the system for example, who wasn't suspected of committing any crime was identified as having multiple boyfriends within the same network of associates, says Brain, who spent two and a half years embedded with the LAPD while we searching her dissertation on big data policing at Princeton University and who's now an associate professor at the University of Texas at Austin.

Anybody who logs into the system can see all these intimate ties, she says, to widen the scope of possible connections, she says, the LAPD has also explored purchasing private data, including social media for closure and toll road information, camera feeds from hospitals, parking lots and universities, and delivery information from Papa John's International and Pizza Hut LLC. Now this

is used. Yeah, no I no, I do think that the government should have access to our Papa John's records, but mainly to make sure like, hey man, you've ordered fourteen extra large pizzas this month? Okay, do you like a hug? Can we should send a guy by your house to give you a hug?

Like my buddy's in a gang, Like, of course he's going to flee. I'm not doing anything wrong. But because you know, cops be how they are, he gets added to the LAPD's gang database right and Pallenteers software because of how many other gang dudes that he's just kind of socially knows, because of where he lives, he gets identified as a high priority target and he starts getting

stopped constantly by the cops. Quote the police on autopilot with Palenteer are driving Rios towards his gang friends, not away from them. Worries Maria Saba, a neighbor and community organizer who helped him get off meth. When whole communities like East La are algorithmically scraped for pre crime suspects,

data is destiny, says Saba. These are systemic processes, and when people are constantly harassed in a gang context, it pushes them to join the internalized being told they're bad, and that's kind of the you know, one of the we will talk a lot more about Pollentteer, even in part four. But that's like, one of the really dark things about this is that it's masquerading as like this genius predictive, but all it's really doing is like, oh, you live in a poor neighborhood, a lot of your

friends grow up to be in gangs. Cops should probably fuck with you constantly, you know, fuck with this guy constantly, right, And that's all it is. It's stopping frisks that you threw an algorithm over.

libertarians on the need to embrace being spied on. He argued that data mining was less harmful than the quote crazy abuses entraconian policies the Bush administration had pushed after nine to eleven, And I would desperately love to hear which of those policies didn't you agree with, Peter, because it seems like you think they didn't go far enough, right, But he's like, look, if we want to avoid a police state, obviously you have to let me, Peter Tiel,

build a surveillance state. That's all that can stop us from having an evil police state. Right, what a libertarian. That's why I'm selling this shit to the CIA and to spy on us. Keeps liberty libertate.

It's so much because a big part of this is like you have this kind of same thing that happens where you've got all these guys who in the early two thousand's kind of the early part of the Bush era the late nineties had been like atheist activists who were like super anti the religious right, and then after nine to eleven they all get really racist against Muslims, and it pushes them towards conservatives and it's like, oh, guy, so you guys didn't have any principles ever, right, Okay,

I get it, I get it. Yeah.

eat anything but amphetamines. Cigarettes, just just them up. Make us make a cigarette shake every morning. Okay.