APRIL 24, 2015
THIS PAST DECEMBER, technology pioneer and venture capitalist Peter Thiel was delivering a speech at the University of California, Berkeley, when a group of students interrupted him halfway through. They were there to protest the NSA’s domestic spying program. (Thiel’s data-analysis company Palantir has extensive ties to the US intelligence community, and the CIA provided it early investment capital.) Some of the students eventually stopped repeating anti-NSA slogans in order to chant, “Black lives matter.” (Only a few days earlier, a grand jury in Staten Island had controversially declined to indict a police officer for the death of Eric Garner.) Thiel simply left the stage, but some members of the audience grew agitated. Eventually, they shouted down the protesters with a different chant: “Peter Thiel matters.” Someone uploaded video of the exchange online, where I found it a few days later. The scene stayed with me. Over time, I realized that this seemingly minor event encapsulated an important distinction about human individuality.
From one point of view, the counter-protesters were correct — Peter Thiel does matter. He’s one of the most respected — and most successful — technology moguls in the country. In addition to Palantir, he’s the founder of PayPal and a major venture capitalist. In 2004, he became Facebook’s first outside investor, and he still sits on the company’s board today. One of the biggest political donors in the country, he helped boost both of Ron Paul’s presidential campaigns, and has given millions to libertarian organizations and right-libertarian super PACS. But, more importantly, he’s an intellectual figure who has consistently tried to enter the national conversation about technology, education, and a number of other issues. Thiel has a large, enthusiastic following both inside and outside the tech world. According to The New Yorker’s George Packer, one investor in Clarium, a hedge fund Thiel runs, called the organization “a kind of Thiel cult, staffed by young intellectuals who were in awe of their boss and imitated his politics.”
So the publication of Thiel’s Zero to One: Notes on Startups, or How to Build for the Future (written with Blake Masters), coming just a few months before that night in Berkeley, is worth noting, because it will resonate in Silicon Valley and beyond. As the subtitle indicates, the book presents itself as a guide for entrepreneurs, particularly those looking to create new technology companies. But it’s far more than that. Thiel is clear about his ambitions, insisting that the book “is not a manual or a record of knowledge but an exercise in thinking.” While grandiose, it’s also quite fair. Taken as a whole, Zero to One presents a pretty coherent political and social ideology.
Thiel divides philosophical and political ideas into two different binary types: optimistic and pessimistic, and definite and indefinite. Optimistic societies are predicated on the idea that things can (and will) get better. Pessimistic ones anticipate stagnation or decline and act accordingly. “Optimists welcome the future; pessimists fear it.” Definite societies are ones that plan for the future and marshal resources on behalf of specific, coherent goals. A definite person or society “determines the one best thing to do and then does it.” In indefinite societies, “Process trumps substance.” To Thiel, societies drift toward one of four combinations: Definite Optimism, Definite Pessimism, Indefinite Optimism, and Indefinite Pessimism. He sees Definite Optimism — where a culture both believes in a better tomorrow and makes concrete plans about how to make it a reality — as the most desirable approach, in both the small culture of a company and the wider culture of society at large. He has a point: optimism and definite thinking are important, and both are very easy to take for granted. It’s to Thiel’s credit that he puts this at the center of his thinking, and is worth seeing how his other ideas fit into this paradigm.
The most prominent of these ideas, of course, is the one contained in the title: that a truly significant company should aspire to create a new market and “go from 0 to 1.” As he explains at the outset, “Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1.” This casts business — and tech startups in particular — in a heroic light. They take not themselves, but the world itself, from “0 to 1.” And Thiel continues in these elevated terms: “Doing something different is what’s truly good for society — and it’s also what allows a business to profit by monopolizing a new market.” In Thiel’s telling, monopolistic companies are the epitome of Definite Optimism, and the key to achieving big things as a society. As he explains: “Horizontal or extensive progress means copying things that work — going from 1 to n […] At the macro level, the single word for horizontal progress is globalization — taking things that work somewhere and making them work everywhere.” This stands in stark contrast to the world of tech: “The single word for vertical, 0 to 1 progress is technology […] Properly understood, any new and better way of doing things is technology.”
In Thiel’s view, scarcity of resources means “globalization without new technology is unsustainable.” By itself this isn’t a radical idea, but it takes on a more serious dimension when combined with his ideas about competition. As he explains, “competition is an ideology — the ideology — that pervades our society and distorts our thinking.” He decries the way schools encourage children to compete with each other academically, and the way some companies get so wrapped up in topping their “rivals” that they fail to invest resources in genuinely new ideas. He points to the fierce competition between various online pet stores in the 1990s (Pets.com, Petopia.com, etc.), each of which raised a lot of money but none of which managed to make all that much of their own, in part because they competed each other’s profits away. Most importantly, though, he worries about the toll competition takes on those competing. As he puts it, “The competitive ecosystem pushes people toward ruthlessness or death.” If you believe, as Thiel does, that optimism helps push society forward, competition looks especially dangerous. The toll of “the competitive ecosystem” cannot help but breed pessimism and despair.
His solution to both the problem of scarcity and the toll of competition is monopoly. As he puts it,
Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep on innovating because profits enable them to make the long-term plans and to finance the ambitious research projects that firms locked in competition can’t dream of.
Thiel’s plan for innovation centers on exempting certain companies from the pressures of competition, with the promise that they would use their massive profits to create big projects that will move humanity forward. But Thiel never really spells out just what a society built along these lines might look like for everyone else — i.e., the people who aren’t tech moguls. The full implications of his monopolistic world only come into focus when you consider one of the book’s central questions: “How can the future get better if no one plans for it?” After all, if monopolistic technology companies are what drive progress, then it stands to reason that it is monopolistic technology companies who will do the planning.
Thiel first rose to fame as the founder of PayPal, and he draws heavily on his experiences in Zero to One. PayPal — a little like Bitcoin today — was originally conceived not as a payment system but a (potential) digital currency that, in his words, “would be controlled by individuals instead of governments.” Again, this sounds like something revolutionary, even anarchistic — but unlike Bitcoin, which is highly decentralized and has no central authority, PayPal was from its inception a for-profit entity. The “individuals” controlling it consisted of Thiel, his partners (nicknamed the PayPal Mafia for their closeness), and whatever investors came aboard. If it succeeded in its original ambitions, and acquired the monopolistic success that Thiel says must be the ultimate goal of all technology companies, then it would have led to an extraordinary amount of power concentrated in a very small number of hands. The only check he really acknowledges on that kind of power is the possibility that another startup might come along someday and displace their way of doing business.
This kind of situation already exists in certain sectors of the economy. The most obvious example is the commercial web — the nebulous assortment of search engines, social media companies, and large for-profit websites that dominate the internet. As Thiel himself points out, “The dozen largest [technology] companies were all venture-backed. Together those 12 companies are now worth more than $2 trillion, more than all other tech companies combined.” Thiel’s correct: most of them have near-monopoly market share in at least one core business — Google dominates online search to such an extent that its name has become a verb. Even when the status of the commercial web’s individual players shift relative to each other, the basic dynamics remain — platforms dominate, and everyone else is at their mercy.
Despite its promise of openness and transparency, the commercial web ends up putting an extraordinary amount of power in the hands of a few big players, who then determine what the rest of us will and will not see. So when Facebook announces its algorithm will begin to favor video created by Facebook users over those originating at You Tube or Upworthy, it’s worth wondering if they’re doing it to better serve users or if they’re just trying to make their native content more attractive to advertisers. And when Google researchers announce that the search engine can tell what links are more likely to be “factually true,” it’s worth wondering if this is a prelude to a more “filtered” search. As Eli Pariser points out in his book The Filter Bubble, Google already personalizes its search results by location and user behavior. People who care about access to information have the right to ask whether or not further tailoring will become a way to “hide” content that the company’s management considers controversial, or even ideologically distasteful.
The commercial web’s imbalances have serious implications for society as whole, not least because they undermine culture — specifically, the deliberate engagement with someone else’s imaginative work. Reflecting on the nature of reading, David Foster Wallace once observed,
We all suffer alone in the real world; true empathy’s impossible. But if a piece of fiction can allow us imaginatively to identify with a character’s pain, we might then also more easily conceive of others identifying with our own. This is nourishing, redemptive; we become less alone inside.
Not all cultural work focuses on pain — some reflects joy, or presents abstract ideas — but all of it involves this same process. It invites us to engage with the operations of another person’s mind and allow that person’s thoughts to mingle with our own, if only for a little while. This kind of engagement — a deep consideration of another person’s imaginative efforts — is a highly deliberate act, one that takes effort and concentration. It is the very model of “definite thinking.”
In his essay “Masscult and Midcult,” Dwight MacDonald looks at cultural work devised exclusively for commercial purposes and laments that it “offers its customers neither an emotional catharsis nor an aesthetic experience […] It asks nothing of its audience, for it is ‘totally subjected to the spectator.’ And it gives nothing.” This is what happens when a reader (or viewer, or listener) is reduced to a consumer — suddenly the deep, deliberate engagement of culture becomes marginalized in favor of an easier, less powerful experience. The commercial web encourages a consumer’s version of culture. Why? Because on the commercial web, power resides with platforms, and a platform thrives when its users engage with the platform itself — not the cultural work it contains. The experience is “totally subjected to the spectator,” because all the incentives lie in getting the user to consume more: to like, share, or click as often as possible, in order to generate more potential advertising revenue. As the commercial web acquires more power over cultural work — and certainly as its players acquire monopolistic power — platforms become more central. It becomes harder and harder to engage that work in the deliberate, definite way that true culture requires. Cultural work is reduced to mere “content.” When this happens, monopoly power chokes off culture, and actually imperils “definite” thinking. As a result, what serves the financial interests of the commercial web’s owners often undermines the interests of society at large.
But monopoly power has other, even more serious implications. Any society that concentrated power in an ever smaller set of hands would inevitably be a staggeringly unequal place. Thiel concedes this readily, but justifies it by citing early 20th-century economist Vilfredo Pareto’s “Pareto principle.” Pareto noted that in his era (1906), 80 percent of the land in Italy was owned by 20 percent of the people, something he saw mirrored in his own garden where 20 percent of his peapods yielded about 80 percent of his peas. Thiel points to the massive impact of a small number of people — the work of Shakespeare and Einstein is still known today, for example, while almost all of their contemporaries have been forgotten — and judges that, “This extraordinary stark pattern, in which a small few radically outstrip all rivals, surrounds us everywhere in the natural and social world.” This is the key to understanding venture capital as well: “The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.” This is part of what makes technology elites like himself special. Thiel says, “We don’t live in a normal world; we live under a power law.” This power law is seen not only as just, but inevitable.
Early 20th century Italy was an aristocratic society, dominated by a rentier class made up of powerful families, so Pareto’s power law isn’t exactly rooted in unequal abilities — just unequal results. And any society run according to the power law inevitably looks aristocratic. In The Social Contract, Rousseau claims, “In a word, it is the best and most natural arrangement for the wisest to govern the multitude,” i.e., aristocracy. But Rousseau rejects hereditary aristocrats as corrupt, instead preferring an “elective” aristocracy based on merit. His is an aristocracy forged by the Enlightenment, founded on the idea that the wisest will simply present themselves in an easily recognized form and then take on the task of planning for the future. While Thiel is no disciple of Rousseau, Zero to One similarly introduces an aristocratic class of the “wisest” to plot society’s path.
This neo-aristocratic mindset isn’t unique to Thiel. Economist Tyler Cowen details a similar system in his 2013 book Average Is Over, where he explores the idea of “hyper-meritocracy” — a highly stratified society run according to the same dynamics of Thiel’s “power law.” In Cowen’s telling, this division is a hallmark of contemporary society, and is steadily increasing. He explains that due to labor market polarization, we’re seeing the emergence of a hyper-meritocratic elite: “Labor market polarization means that workers are, to an increasing degree, falling into two camps. They either do very well in labor markets or they don’t do well at all.” Thiel himself draws attention to this polarization when he compares PayPal in its earliest days to the restaurant scene in its “hometown” of Mountain View, California: “We employed fewer people than the restaurants on Castro Street did, but our business was much more valuable than all of those restaurants put together.” But Cowen invokes the most memorable — and disturbing — metaphor to explain just what this polarization entails at a society-wide scale:
Imagine a wealthy billionaire […] riding in a limousine, with open windows, through the streets of Calcutta. A lot of beggars will be competing for the attention of that billionaire, and yet probably the billionaire won’t much need the attention of the beggars […] This in short is what the contemporary world is like, except the billionaire is the broader class of high earners and the beggars are wealthier than in India.
Like Thiel, Cowen is untroubled by this state of affairs — he advises the rest of us to simply figure out a way to get that billionaire’s attention. But Cowen’s look at hyper-meritocracy reveals the lacuna in Zero to One — namely, that the actual human beings that make up society (i.e., “the beggars”) are curiously absent from its vision of “society.” A world where venture capital’s power law reins supreme is ultimately a place of near infinite competition — at least, for the overwhelming majority that aren’t at the very top. Thiel tacitly acknowledges this when he warns,
People who understand the power law will hesitate more than others when it comes to founding a new venture: they know how tremendously successful they could become by joining the very best company while it’s growing […] You could have 100% of the equity if you fully fund your own venture, but if it fails you’ll have 100% of nothing.
He puts it more elegantly than Cowen, but essentially, Thiel is saying that if you aren’t certain you’re going to become that billionaire in the limousine, then be sure to get his attention. Those that don’t will be left trapped with the 80 percent or more on the bottom, scrambling. If that scramble isn’t a “competition,” then the word has no meaning.
While he’s emphatic in his desire to free companies and investors from the pressures of competition, Thiel fails to extend this concern to ordinary individuals. Though at one point he notes that his parents’ and grandparents’ generations “looked forward to a four-day workweek,” and implies that its failure to materialize is an indication of stagnation, he then almost immediately turns around and blames that same stagnation on […] an increase in leisure time. He looks at contemporary Europe and accuses it of “vacation mania,” which he sees as a product of pessimism and a sign of the continent’s inexorable decline. But Thiel works hardest to dismiss anyone who rejects the values of commerce and moneymaking. He sees people who find virtue in avoiding the business world as not only pessimistic but dangerous. At one point he even goes so far as to compare people he calls “urban hipsters” to the Unabomber, Ted Kaczynski:
Kaczynski’s methods were crazy, but his loss of faith in the technological frontier is all around us. Consider the trivial but revealing hallmarks of urban hipsterdom: faux vintage photography, the handlebar mustache, and vinyl record players all hark back to an earlier time when people were still optimistic about the future.
I can’t imagine a more loaded way of introducing a particular point of view than comparing it to the ravings of a violent terrorist. It’s an effort to marginalize people through an implied (though in fact nonexistent) association, and a mean-spirited one at that.
Zero to One began its life as a class at Stanford University, and in that context, Thiel’s comparison of “hipsters” with terrorists (he throws in environmentalists and unspecified “religious fundamentalists” for good measure) comes off as a strained joke. But it’s a revealing one: first, because he conflates a disinterest in a particular set of values with nihilism and violence, which is curious; second, and more importantly, because it reveals Thiel’s attitude about technology. In Zero to One, technology is exalted as the driver of all human progress. But at the same time, the only measure he gives for technological achievement is financial success. There are no noble failures in this book — only monopolistic companies. His slurs against “hipsters” — people “who feign an allergy to achievement and become a barista” — explicitly equate choosing a noncompetitive career with a rejection of technology.
But there are lots of perfectly good reasons to reject a specific version of the good life. Two versions associated with the epithet “hipsters” spring to mind — culture workers, such as artists, and the underemployed young. Culture workers might shun a time-consuming career so they can engage in the deliberate tasks of writing, painting, or composing. An underemployed person might embrace their down-and-out status as a survival mechanism. Finding the virtue in a low-pressure job can be a way to deal with the stress of owing tens of thousands of dollars in student loans and still being unable to find any employment more remunerative than serving coffee. To the extent either group could fall into pessimism it’s not because they’re rejecting the future — it’s because they’re reacting to the present. We’ve already seen how the commercial web devalues cultural work. But it’s the plight of the underemployed young that poses the most important challenge to Thiel’s vision.
In September 2014, the month Zero to One was published, a staggering 11.5 percent of Americans between the ages of 20 and 24 were unemployed. It’s unsurprising that people would be less than optimistic in the face of that kind of job market. But if some of those 11.5 percent have grown pessimistic, it seems pretty clear why — their entire economic experience has been one of relative powerlessness. Thiel answers the problem of unemployment and underemployment only with vague gestures, spouting platitudes like “Properly understood, technology is the one way for us to escape competition in a globalizing world.” But technology is not magic. As Thiel himself observes, “computers are tools.” It matters a great deal who wields them. And that’s the problem. Thiel skips the most important part of the equation: who will control that technology and how they will use it. That’s what Thiel never quite admits: the power law he exalts isn’t about technology at all — as its name implies, it’s about power. Though Thiel often extols the virtues of individualism, his vision of the individual stems from his beliefs about the power law. In effect, he turns Pareto’s vision into something approaching a system of ethics. Under this power-law ethic, individualism consists of certain people exerting their power unchecked, the way the founder of a monopolistic business leverages the power that comes from cornering a market in order to escape the destructiveness of competition. But the power-law ethic offers very little to those who lack power to begin with.
It’s important to point out, though, that Thiel didn’t create the power-law ethic. He’s not even the only one who embraces it — almost all of us do in one way or another. Cowen’s hyper-meritocracy — which is, at bottom, exactly the kind of society Thiel describes — is a simple projection of current trends. Very few of us have made much effort to alleviate those trends, and our political system barely even discusses them. With the possible exception of a 1990s investigation of Microsoft’s business practices, which is a rather distant memory at this point, there has been very little public pushback against the growing power of large tech companies. And the few good suggestions for dealing with the miniature power-law society of the commercial web remain ignored by policymakers. Some of these overlooked ideas are worth exploring, however. The very best comes from Astra Taylor’s The People’s Platform, where she advocates what she calls “cultural democracy.” In a cultural democracy, “a diversity of voices and viewpoints is expressed and accessible,” “visibility and notoriety should not be the consequence of cumulative advantage alone,” and, perhaps most importantly, “influence within the cultural field is achieved by a variety of factors, not simply ceded to those who can afford to pay to be seen and heard.” But while this strikes me as a good first step, reading Thiel convinces me it needs to be taken one step further. The real solution to the rise of a new aristocracy is to lay out an alternate value system: culture and democracy.
Again, culture happens when someone imaginatively engages a serious piece of cultural work. Like technology, culture is only a tool, and it only works when well used. But this tool offers us a chance to sort out not only what we should do, but what is worth doing. I share Thiel’s enthusiasm for big projects, but not all big projects are created equal. The launching of Sputnik I in 1957 and Yuri Gagarin’s 1961 spaceflight are tremendous achievements — the first time humanity launched an object, and then a person, into space. But neither redeems the brutality of the Stalinist-era Soviet Union, and I would readily trade either in order to undo the worst of Stalin’s (and his successors’) misdeeds. Some things are simply more important than technological progress. Culture is the tool that helps us figure out what those things are. Protecting it from the predations of monopoly is of the highest importance.
Like culture, the word democracy can mean a lot of things, but anthropologist and political activist David Graeber hits upon a useful starting point in his book The Democracy Project when he writes, “It’s not even really a mode of government. In its essence it is just the belief that humans are fundamentally equal and ought to be allowed to manage their collective affairs in an egalitarian fashion, using whatever means appear most conducive.” From this standpoint, democracy is not a particular set of norms, such as elections or political parties, but a way of thinking. Thiel has a point about the power law — society is very unequal in a lot of ways. In effect, large businesses and venture-capital-backed startups are planning the future — just as the titans of the commercial web are planning life online. A democratic mindset looks at this and says that because imbalances might exist in someone’s circumstances — because they don’t have a lot of money, or because they’re marginalized socially in some way — doesn’t mean they don’t have a stake in society. And if someone has a stake in society, they deserve a say in how it’s run. It’s a simple matter of human dignity.
Cowen’s billionaire and the beggars outside his window suggest that a society run according to the power-law ethic will inevitably be pessimistic — not because people will give up on the future or on technology, but because they will feel marginalized, just like many of the underemployed young do today. Thiel blames that feeling of marginalization on a “loss of faith in the technological frontier.” This is absurd. I share a lot of the disillusionment of Thiel’s pessimists, and I have plenty of faith in technology. I just don’t have faith in Peter Thiel (just as I wouldn’t expect him to have any faith in me). The only way to create a truly optimistic society is to share power as broadly as possible.
Which brings me back to that video of Thiel at Berkeley. The dueling chants offered by the protesters and the audience fascinated me — but it took me a minute to figure out why. As I watched, it dawned on me that the shouting match inadvertently revealed two different ideas of the individual. In one case, what matters is the dignity of the individual and the value of human life. (The chant “black lives matter” is fundamentally about claiming that all lives matter, even those marginalized due to race or any other reason.) In the other, what matters is the idea that a powerful individual ought not to be subject to criticism for, say, helping the US government monitor the private data of its citizens. (“Peter Thiel matters,” and should therefore not be shouted down.) Ultimately, the democratic insistence on individual dignity is more appealing, and more optimistic, than the aristocratic exaltation of individual power.
Zero to One comes down on the side of the aristocrats. And this is what makes it such an important book. Thiel is our most articulate, forthright advocate of the power-law approach to individuality. He claims that freeing companies from competition will liberate them to make the kinds of advancements we need to conquer scarcity. But the lesson of the commercial web — where monopoly control undermines culture, in order to advance the interests of platforms and companies — makes me wonder why we should expect these monopolies to manage technological resources for the benefit of society at large, as opposed to only for themselves. If anything, Thiel’s forthright embrace of power-law principles convinces me that the contemporary understanding of antitrust law — where we look at its impact on consumers almost exclusively through prices — is insufficient. Antitrust law exists first and foremost to foster competition between companies, and we need to enforce it with that in mind. That’s not enough, of course. We also need to support — and engage with — cultural work, extend democratic values into more corners of society, and most importantly commit to an understanding of humanity that doesn’t reinforce aristocracy or hyper-elitism. Ultimately, it is human dignity, and not the power-law ethic, that deserves to be enshrined at the center of our politics, our technological ventures, and our society.
 Zero to One began as a class Thiel taught at Stanford University. Masters was a student in that class, and his notes form the basis of the finished book. However, since its ideas originated with Thiel’s lectures, this essay treats Thiel as its primary author.
 Emphasis Thiel’s
 Please see here for more background: http://www.newscientist.com/article/mg22530102.600-google-wants-to-rank-websites-based-on-facts-not-links.html#.VPRHx1OsXqr
 A fuller discussion of the implication of filtering can be found in “Different Voices,” a previous essay in this series: https://v2.lareviewofbooks.org/review/different-voices
 And that’s without even getting into allegations that Google has sometimes “tweaked” its search results to favor links to its own services over those of its competitors.
 Emphasis Thiel’s
 For a fuller discussion of Cowen’s book and the concept of hyper-meritocracy, please see “Aristocrats of ‘Merit,’” a previous essay in this series: https://v2.lareviewofbooks.org/review/aristocrats-merit
 Though mostly raised in the United States, Thiel was actually born in Europe (namely Germany), so it’s worth saying that he isn’t speaking entirely as an outsider to the continent.
 Thiel himself makes much of this investigation, though he never once acknowledges that a federal court found the company guilty of violating antitrust law.
 For a fuller discussion of Taylor’s ideas, please see “Contemplation vs. Consumption: Making Sense of the Commercial Web,” a previous essay in this series: https://v2.lareviewofbooks.org/review/contemplation-vs-consumption-making-sense-commercial-web
 Thiel’s commitment to the power-law ethic is so firm that in 2009 he openly questioned whether or not democracy and “freedom” were even compatible: http://www.cato-unbound.org/2009/04/13/peter-thiel/education-libertarian