NEW YORK — Venture capitalist Peter Thiel has poured money into efforts to boost the digital currency bitcoin, funded startups that aid insurance enrollment under Obamacare and invested in big-data technology that powers new surveillance tools at agencies like the CIA.
Now many of the companies he’s supported over the years stand to benefit, at least indirectly, as Thiel works to shape Donald Trump’s emerging Cabinet as a member of the president-elect’s transition executive committee.
Since he arrived here at Trump Tower last month, Thiel has worked behind the scenes alongside his close, longtime aides to identify potential candidates for key tech-facing jobs in Trump’s new government. That’s a boon to Silicon Valley, where many tech giants hope to spare themselves from new regulation in Washington. But it’s an even bigger coup for Thiel, 49, whose vast corporate web touches companies like PayPal and Palantir, both of which he co-founded, and Facebook, where he sits on the board of directors.
As a result, experts say Thiel’s unique role raises serious ethical red flags, a conundrum not unlike the conflicts of interest that the president-elect himself faces.
Thiel should “disqualify himself from any transition matter, [and] one would assume that would include appointments … which may directly conflict with his financial interests,” said Norm Eisen, former ethics czar for the Obama White House. “For me, it raises some very substantial concerns.”
Thiel officially joined the transition team Nov. 11 as a member of Trump’s executive committee. Five days later, the president-elect unveiled an ethics agreement that required anyone joining the transition or administration to refrain from lobbying for five years after serving. That restriction ultimately led to an exodus — some by force, others by choice — of current and prospective lobbyists from the transition’s early ranks throughout November.
But the contract also requires participants to “disqualify myself from involvement in any particular transition matter which to my knowledge may directly conflict with a financial interest of mine, my spouse, minor child, partner, client or other individual or organization with which I have a business or close personal relationship.” Thiel, despite his many investments, has not revealed if he or one of his top aides on the transition, Blake Masters, has signed the agreement, which only has invited further criticism.
“I think this is going to be an administration ridden by conflicts of interest, starting with the president’s own,” Eisen said. “I think it’s fair to ask whether Mr. Thiel has signed the code, whether he’s following the code and how.”
Thiel’s spokesman, Jeremiah Hall, did not respond to multiple questions about whether Thiel and his aides have signed the ethics agreement. In a statement, Hall merely said: “Peter’s team wants talented people to work in government. Everyone on the team abides by the rules in pursuing that goal.”
Thiel visited Trump Tower again Monday afternoon, after joining the president-elect at a VIP-studded costume party last weekend in Long Island, dressed as Hulk Hogan, whose lawsuit against Gawker Thiel had helped fund. Asked about his role in the transition Monday, Trump senior adviser Kellyanne Conway said Thiel had “a number of meetings,” before adding: “He’s got a brilliant mind. He’s been a very valuable supporter of our efforts.”
Palantir — which makes up about half of Thiel’s $2.9 billion net worth, as calculated by Bloomberg — may pose the most significant ethical headache for Thiel and the transition. The big-data giant was valued at more than $20 billion as of October and its customers include the Pentagon, CIA and other national security agencies. The privately held company has aggressively bid for new business in Washington, even suing the Army in a case over a $200 million contract that it won in October.
Thiel is Palantir’s chairman, and his primary investment firm, Founders Fund, is one of the earliest, most prominent backers of the company, whose name is derived from J.R.R. Tolkien’s literature. Thiel remains close to Palantir’s co-founder, Joe Lonsdale, a prominent Republican fundraiser for the likes of House Speaker Paul Ryan and others, and the venture capitalist has consulted Lonsdale as part of his work on the transition, multiple sources told POLITICO.
Adding to the overlap, Trump’s transition aides last week tapped Trae Stephens, another partner at Founders Fund who is focused on government startups, to join the team that’s plotting out the future of the Defense Department under the Trump administration. It’s also unclear if Stephens, who previously worked at Palantir, has signed the ethics agreement prohibiting him from focusing on areas related to his investments.
A spokesman for Palantir — and aides for the other Thiel investments referenced in this story — did not respond to requests for comment. Founders Fund has 129 active investments, according to data compiled by Bloomberg, and recently invested in an immunotherapy company and a logistics firm that coordinates local deliveries on demand.
Former Utah Gov. Michael Leavitt, a Republican who led Mitt Romney’s potential transition in 2012, said Thiel shouldn’t automatically face criticism for bringing his expertise to the task at hand.
“During the transition process, many people make recommendations based on their interests and/or experiences,” Leavitt said in an email to POLITICO, adding he didn’t have the full details of Thiel’s role. “Up until the inauguration, such situations do not constitute a conflict any more than a person campaigning for a particular candidate because it would be good for their purposes. After the inauguration, the rules change.”
For Thiel, his position on the transition team is the culmination of yet another high-stakes investment bet. A longtime libertarian who backed the likes of Rand Paul and Ted Cruz in the Senate and Carly Fiorina in 2016 for president, Thiel switched his allegiances last summer to Trump. By July, Thiel had endorsed Trump on stage at the Republican convention, and he later donated more than $1 million toward efforts to help elect him.
Thiel long has maintained he does not want a role for himself in government. Asked at an event in Washington in October if he might ever enter politics, he said he would “occasionally get involved, but don’t want to make it a full-time thing.”
Even in a part-time capacity now aiding Trump and his transition, however, Thiel has an unparalleled opportunity to advance his most ambitious technology gambits.
Take Thiel’s primary investment arm, Founders Fund: It has led or participated in investment rounds in SpaceX, led by a fellow PayPal founder, Elon Musk. In an industry valued globally at more than $330 billion, SpaceX competes aggressively for key NASA contracts against longtime aviation giants, and it’s lobbied for years for new opportunities for commercial space providers to perform missions that long have been funded and completed by government. Demand for public-private partnerships in the space sector is likely to increase in the next administration, and that would benefit SpaceX, said Eric Stallmer, president of the Commercial Spaceflight Federation, whose member companies include SpaceX.
So too has Thiel’s fund been a player in financial tech firms, like the mobile-payments company Stripe and the student-lending giant SoFi. Both companies this year hired their first Washington lobbyists, according to government ethics records, as agencies like the Consumer Financial Protection Bureau and the Treasury Department under the Obama administration have eyed new regulation of the nascent “fintech” industry.
And Founders Fund is an original backer of sharing-economy giants, like Airbnb and Lyft, which for years — and in multiple states, and even continents — have been fighting for the permission to operate, while warding off housing, labor and safety regulations that might raise their costs of business.
In these and other instances, experts say there is unavoidable overlap between Thiel’s work on the transition and his vast investments in companies at the forefront of some of the most disruptive elements of the changing U.S. economy.
“Given how unusual it is to have someone from this sector at this level of participation right now, it will give him enormous influence …. both to shape the policy but personally to emerge as a political figure in a way he hasn’t been,” said Julian Zelizer, a political analyst and political science professor at Princeton University.
Another Thiel-backed venture-capital firm, Mithril Capital Management, has a stake in Helion Energy, a startup that is trying to create a cold-fusion reactor. Helion has also gotten grants from the Energy and Defense departments.
Others point to Thiel’s investments in Oscar Health, a portal for insurance enrollment formed in the wake of the Affordable Care Act. If Trump and fellow Republicans succeed in gutting or replacing Obamacare, it could spell trouble for the firm’s founder, Josh Kushner, the brother of Trump’s son-in-law Jared Kushner. Jared Kushner is also the architect of Trump’s insurgent campaign and a tech investor in New York in his own right.
And like many in Silicon Valley, some of Thiel’s other investments originate with the Defense Advanced Research Projects Agency, the Pentagon’s high-tech research arm that played a central role in the creation of the internet itself.
For example, Thiel has backed Qadium, a startup created by former DARPA engineers that aims to safeguard government computers against cyberattacks. The firm, which launched in 2014, has drawn more than $6.5 million in grants and other aid from the Defense Department, federal records show, one of the agencies Thiel and his team now are assisting on the transition.
“The idea that he’s not going to make any policies that affect his financial interests [is] unbelievable,” said Lisa Graves, the executive director of the Center for Media and Democracy who served as a deputy assistant attorney general at the Justice Department during the Clinton administration. With Thiel, she explained, the benefit of his involvement — and his financial interests — also will “continue beyond the transition.”
“The potential for rewards for changing policies, to benefit Thiel, are enormous,” she said.