Au contraire: why VC’s idea of a ‘contrarian’ mindset doesn’t work if you want a democratic government

This is the infamous question Peter Thiel used to filter prospective employees and test for their tendency towards contrarian thinking — the type of thinking that enabled Thiel to be a successful venture capitalist.

For a while there, many of us also believed to be a good VC you need to be a contrarian thinker. I bought into that concept for a while.

After all, it makes sense that to achieve better returns than the average market, you need to think differently than most people. The adage is you need to be a contrarian and right to make the outsized returns needed to win at the power law of VC (the idea that 25 investments in a portfolio might fail, but one will be extraordinarily successful and dwarf the losses).

Over time, the nuance of contrarian thinking has become a little clearer – to me at least. It’s not so much that you have to be contrarian — to believe something no-one else does, or take a view that is the opposite to everyone else — to make investors money.

It’s that you need to ‘skate to where the puck is going’, and then move earlier than everyone else. To be an early recogniser of a trend or an inevitability, that’s how you take advantage of outsized or rapid growth in the investing world or as an entrepreneur.

Peter Thiel and many of the tech elite, having such success in funds management and tech entrepreneurship, have sought to apply contrarian thinking, and their very great intellect to broader issues. Including recently, the government of the United States. Famously, Thiel backed a Trump bid for the presidency in 2015/16, considered a typical contrarian Thiel play at the time, long before the current swathe of tech billionaires did.

There are several pretty common mistakes that even (more often?) the smartest humans make which is to assume:

• what worked for me in one area, should work for me in a different area
• if I’m good at one thing, I should be good at many other things I try my hand at
• if lots of people listen to me and sycophantically agree with me (because I’m now very wealthy and very influential), I must be really smart, and perhaps I am the person to solve ‘problems’ that people and institutions, have carefully sought to manage over millennia.

And one very specific trait that some entrepreneurs also bring to the equation (or algorithm) is that the concept of ‘disruption’ is a positive, cleansing force.

That old institutions don’t necessarily deserve to be sustained, if a challenger company can do it better, cheaper, faster. Of course, technology is the great enabler of this.

They also can sometimes bring an arrogance that only they are the ones who can bring this disruption to the masses. This is partly because of their perceived intellectual superiority or hustle and partly because the tech industry has validated that view for them, repeatedly.

However, outside of fund returns, where the metrics of success are binary or just financial, when applied more broadly, it’s possible 25 failures might very well be intolerable, dangerous or catastrophic.

When applied to democracy for example. Which is sadly, where I think this contrarian thinking is leading us today.

In capitalism — defined as an economic system in which the factors of production are privately owned and individual owners of capital are free to make use of it as they see fit; in particular, for their own profit — that thesis is sound.

And while capitalists have, in democratic societies, traditionally left governing and politics to the government of the day (notwithstanding lobbyists and other strategies to influence policy to their benefit), the tech billionaires have since worked out that to maximise their returns for the companies (and shareholders) they are the helm of, they need to have greater control over the factors of production which means regulation, anti-competitive restrictions, trade agreements, tariffs and many other things that might limit their monopoly or growth.

While regulation is not new — having been applied to many, many industries, the rate of growth and influence of the tech world is unprecedented which has meant regulations and other laws to protect the people haven’t yet caught up. And probably more importantly, corporate tech is not tethered to the land or a country in the way that agriculture or resources is which can be protected by sovereign strategies. A tech company is now global, in fact it is now sub-orbital.

To truly optimise the potential of, say a satellite company which seeks to service every country today, one needs to shrug off the shackles of country politics, geopolitics, regulations, tariffs and and taxes — and not just in the U.S, but in every country.

But what has changed today with the broligarchs of tech, compared to say the wealthy patriarchs of the industries of yesteryear is not necessarily their wealth and it’s desire to influence government. Afterall America has had plenty of billionaires, lobbyists etc. Governments, particularly democratic governments have evolved over many many years to ensure checks and balances are in place to be generally resistant to the influence of individuals or corporations at the expense of what is in the best interests of the people. Not perfectly, but well enough to oversee almost a century of relative prosperity including through creation of the middle class, which led to the ability to afford greater protections for the more vulnerable in our society, some hands up to those with systemic challenges, and relative peace (for western democracies at least).

What is different today is the broligarchy’s ability to influence the people has changed. You may have known what the scion of Purdue Pharmaceuticals wanted in the 90s when he was trying to navigate FDA regulations for his oxycontin products, but I suspect most of you weren’t even remotely aware.

As such this couldn’t influence your vote even if Purdue tried their very best to push through their scourge on society via every lever imaginable. Purdue had to rely on lying and hiding about how truly addictive their product was to the FDA, which was well established as regulatory agency, and which had criminal consequences if (and when) it was discovered. They scaled their narrative through company sales representatives and inducements, relying on credibility anchors like the medical profession.

The only real protection for the people was government as the gatekeeper to Purdue’s violent capitalism through regulations and the rule of law. When Purdue’s illegal and harmful activities finally came to light, the consequences were swift and serious. The social ‘cancellation’ for the entire Sackler family was arguably more viscous with their names torn down from buildings and as donors from museums everywhere after their money was found to have ‘ blood on its hands’.

It is not a stretch to say that what happened with Purdue and oxycontin is analogous to what is happening today with Meta — an equally addictive and potentially harmful suite of products.

The difference is today, Meta and its patriarch can communicate directly with you about its product, convincing you sweetly of its positive impacts on the world, while lying to your face about it’s negative ones. But unlike the pharmaceutical industry, regulations have not yet caught up for platforms like Meta, they have section 230 protections which means as a communications platform, they operate with impunity and cannot be held criminally responsible for their platforms and the content they publish — no matter how hateful, how damaging.

The governments of the day over several administrations, allowed them to operate with almost no regulation and no consequences, and they have no interest in that changing.

And like Rupert Murdoch before him, Elon Musk can influence the views of billions of voters and consumers through Twittter/X.

The difference between Elon and Rupert is that his actual business interests are not his media assets, they are his Space and Satellite company — Space X. The similarities between Elon and Rupert is that they can use these media assets to influence elections which influence corporate regulations. And they have.

Which leads us to the most recent phase of the tech billionaire capitalism play, which is to remove the restrictions — regulations, anti-competitive limitations — and reduce their risk of accountability such as their requirement to answer questions like the harm they inflict that had them hauled before congress last year (remember the child social media harm questions Zuck had to answer — “I’m sorry for everything you’ve been through” he said meekly and without a scintilla of remorse for his role in it).

The only way for these tech entrepreneurs to do this, to reduce their personal risk and maximise their personal gain, is control the government. Not BE the government of course, because that has real consequences they don’t want of course, like a day job that means they need to act in the interests of the broader people and country.

They just want to control the government and its policies that impact them, which means installing their surrogates in key positions of influence (but not accountability), and undoing all the barriers in the way of their business, under the guise of ‘improving government efficiency’.

And to do that they needed a capitalist candidate who would put his own self interest ahead of the people, a government that was for sale, and a narrative they could perpetuate on the platforms of disinformation that would convince the people to put him there.

The tech entrepreneurs can’t just come out and say that’s what they want of course – because firstly, a traditional democratic US government wouldn’t allow it, and the ‘people’ would be up in arms, particularly against the backdrop of income inequality which is driving so many global challenges, and other factors that should be part of the broad tapestry of government decision making such as how do we protect and look after the most vulnerable in ours society, how do we prepare for an increasingly warming planet which may make it uninhabitable, how do we ensure that we establish rules of diplomacy and economic partnership that ensure that we do our mighty best to prevent a third world war or the rise of tyrannical rulers.

If today’s announcement that Meta has settled a lawsuit with President Trump from 2021, where they will pay him personally US$25 million for removing his account post the insurrection on the Capitol — a case they were almost guaranteed to win and a development that has happened only after he has become President and threatened retribution on his rivals — doesn’t make my point about their willingness to bend the knee, to make whatever conflicted decisions will maximise shareholder value and keep them in the government tent to moderate policy for personal gain, I don’t know what will.

A 2019 White House meeting President Donald Trump and Meta CEO Mark Zuckerberg. Photo: White House/Joyce N. Boghosian

The unintended consequences so far of this contrarian capitalist strategy — which in case it hasn’t been crystal clear has been to benefit the very few, at the expense of the very many — of course, are that this narrative has respawned the very worst of the people — hatred, discrimination, and any other sort of ‘ism’ you could imagine.

The contrarian capitalist approach to ‘disrupt the government’ seems to be going down a very dark path for everyone but the few tech elite.

And now they have been successful in installing and influencing the US government, they are trying their hand at UK and European politics. And they are using a well worn play book of far right ideology, to activate the base that is the most angry at the ‘restrictions’ they have had to wear over the last century of progress — such as political correctness, the curbing of hate and speech and discrimination, acknowledging the identity of trans people, the imposition of equity and inclusion policies to name a few.

Make no mistake, the broligarchy goal is to seek less corporate global restrictions and accountability and so they will seek to control the global governments.

Elon’s recent foray into UK politics supporting right wing candidates, his speech in Germany warning against ‘cultural dilution’ is straight out of 1930’s Germany.

And they are enlisting ‘the people’ to help them do it — convincing us that any sort of restrictions or oversight — whether that be on trade, necessary public health initiatives, down to what you are entitled to say without social consequence under the guise of ‘free speech’ is actually a form of tyranny that we need to rail against it in its entirety. That your discomfort at political correctness for example, or being required to isolate during a pandemic for the benefit of the wider community, is all part of the same spectrum as the muting or limiting of their corporate interests by government, and they are here to save you from it.

However, all that has really happened is ‘restrictions’ have been transferred from one set of people, to another.

Perhaps today you might be able to hire your white, straight college buddy without jumping through some DEI hoops and you can feel confident to call people names that have long been socially unacceptable in civil circles, but millions more women can’t get access to reproductive healthcare in the multiple states in America placing them and the country in what has been understood for decades as a economic and sociological vicious cycle.

The greatest trick the devil ever played was convincing you he didn’t exist and the greatest trick these guys have ever pulled is convincing you that their contrarian view and lack of restrictions and regulation is in your best interest.

When Zuckerberg says corporate America needs more masculine energy, I don’t think he really means it needs more men.

Adolf Hitler and Franz Von Pappen, one of the naked opportunist German elite who backed Hitlers regime, thinking they could ride Hitler like a horse, but then found out they were the horse.

What I think he means is he should be able to build what he wants, take what he wants and operate without accountability — especially without accountability to a group who he regards as intellectually inferior and with less status or money. He and others like him are deeply annoyed that those — such as career public servants, lawmakers and others who power our democracies— who have achieved less than he (in the way he measures achievement) should wield more power. ‘

But while you might think those with more power means the government, know that what that really means is you and I. Because the government should be elected by and for the people.

But sadly, there is no power law in democracy. We cant tolerate the 25 failures for one success.

There is no portfolio diversification luxury – democracy is supposed to reflect the will of the people for the benefit of the people as a whole.

The worst part is I feel like we have seen this story play out before — I can see ‘where the puck is going’.

I know we won’t benefit from it, and feel utterly powerless, apart from blogs like these that 5 people read, to make a move earlier than everyone else, to change it.