Peter Thiel has never quite fit in with the world around him, Brian Caulfield and Nicole Perlroth say:
He was born in 1967 in Frankfurt am Main, Germany. His father, a chemical engineer, kept the family moving; Peter went in and out of seven schools from Ohio to Namibia before the family settled in Foster City, Calif., 20 miles south of San Francisco. Like lots of boys, he devoured J.R.R. Tolkien’s Lord of the Ring series, absorbing its lessons about the allure of evil and the limits of power. But Thiel’s brain seemed to work faster than most of his peers’. “He knew the name of every country in the world by the time he was five,” says Ken Howery, a partner of Thiel’s at the venture capital firm Founders Fund and a close friend. A chess player, Thiel was ranked seventh in the country as an adolescent. In college the kit that held his pieces had a “born to win” sticker on it.
Obviously, Thiel loves matching wits with friends and enemies, and is fanatical about winning. He is just as obsessive about playing by the rules–his rules. He sometimes raced in his 1978 VW Rabbit (“my Jimmy Carter car”) to chess matches, where he would show up five minutes before having to forfeit the game just to psych out his opponents, recalls high school friend Norman Book, now an executive VP at the conservative website WorldNetDaily. Later on Thiel would write his own playbook when it came to investing — or hiring people. After deciding to bring on Keith Rabois (a law firm chum) to handle lobbying and dealmaking for PayPal, Thiel gave him an ultimatum. “You’ve got to be in my office on Monday. If you can’t start Monday, forget it.” Rabois had to sell his house and move from Washington, D.C. to San Francisco in four days. “That’s classic Peter: If it can’t happen now, it doesn’t count,” says Rabois, now chief operating officer at mobile payments startup Square.
But Thiel bristles under other people’s rules. His buddy Book points to Monopoly games in high school. Thiel, as usual, was winning. “So, I sold all my properties to my brother for a dollar,” Book recalls. “Peter didn’t like that, but he couldn’t find anything in the rules” prohibiting the move. Nor did Thiel like the way Valleywag, an arm of the media and gossip site Gawker.com, played when it wrote the post “Peter Thiel is totally gay, people.” Thiel later called Valleywag the “Silicon Valley equivalent of al Qaeda.”
Some of Thiel’s contentious thinking was forged at Stanford University, where he majored in philosophy and minored in political incorrectness. In 1987 he and Book, disgusted at what they called Stanford’s “culturally liberal ethos,” launched the Stanford Review, a libertarian paper that was, mildly put, unpopular. One student told Thiel he loved the Review — for wiping his butt.
After getting his law degree from Stanford in 1992, Thiel took a job with the white-shoe firm Sullivan & Cromwell. He quit after seven months, six days. He lasted slightly longer as a derivatives trader at Credit Suisse First Boston. Thiel came home in 1996. “I think California was and remains a much better place to do something entrepreneurial than New York,” he says.
He moved to Menlo Park, started Thiel Capital with $1 million from family and friends, and hired fellow Stanford alum Ken Howery. They took the cheapest space they could find in Silicon Valley’s financial epicenter, Sand Hill Road: a windowless storage closet. “The developer hung a picture of an outdoor scene for us,” Thiel deadpans — an affect that comes naturally to him.