Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue

How does one conduct a successful conspiracy? "Conspiracy" is a beach read for the grand strategy set. Like his previous "The Obstacle is the Way", this book applies Ryan Holiday's extensive reading on strategy, history, and philosphy to a startling new topic - Peter Thiel's Hulk Hogan sex tape conspiracy. Unlike his prior works, this time Ryan actually has direct access to all parties involved. His exclusive interviews with Denton, Thiel, and the mysterious "Mr. A" are a rare glimpse into both sides of a grand plot. Written like a political thriller, "Conspiracy" traces the origin and execution of Peter Thiel's secret crusade to take down Gawker. This is Holiday's best yet - I blazed through it in two or three sittings and enjoyed every minute.

Did I learn anything though? Beyond the tasty behind-the-scenes look at the Thiel-Hogan-Gawker feud, what stood out was the idea that it is possible to fight the press and win. This flies in the face of most conventional wisdom as well as Robert Caro's brilliant research in "The Power Broker". However, as Holiday notes:

Peter Thiel has done what presidents, robber barons, and folk heroes have been unable to do. He has fought a battle with the people who buy ink by the barrel and come out the better for it.

Throughout this salacious joy ride, Holiday sloshes in a bucket full of quotes and historical lessons that might as well have come from the Grand Strategy class I took at Yale: Thucydides, Scipio, Caesar, Seneca, Machiavelli, Clausewitz, Napoleon, Liddell Hart, Boyd, Caro, etc. He explicitly mentions "grand strategy" only once, but that's clearly what this book is all about - achieving grand ends with limited means.

Holiday emphasizes the importance of patience, perseverance, and determination in a conspiracy, and nowhere was this more clear than in Hogan's refusal of a $10 million settlement after years in court. Damn. Respect to the Hulk.

There are hat tips to a few other thinkers in here too. Dumas gets a few quotes, largely because of the conspiracy in "The Count of Monte Cristo." Somewhat jarringly, Ramit Sethi of "I Will Teach You To Be Rich" notoriety gets a subtle mention for his "briefcase technique" and I'm a bit surprised Ryan's other big buddy Tim Ferriss didn't get a shout-out. Ryan's mentor Robert Greene ("48 Laws of Power") gets a mention but Ryan surprised me by sprinkling in some thoughts on Ross Ulbricht's (of "Silk Road" fame - see "American Kingpin" for more) radical libertarianism. I also noted that Gawker took full advantage of offshore legal and tax protections, the sort that are detailed extensively in my first 5-star "year of crime" book, "Treasure Islands".

This book is part of my 2018 reading theme of "Crime and Punishment".

My highlights below.

A Word

Conspiracy entails determined, coordinated action, done in secret — always in secret — that aims to disrupt the status quo or accomplish some aim.

In real life, the 1919 World Series was fixed not by Wolfsheim, but with great skill and audacity by Arnold Rothstein, a Jewish gangster.

One longtime Washington columnist wrote recently that years of covering politics taught him one lesson: the legend of Washington as a ceaseless, ruthless, scheming place is simply that, a legend. The truth, he says, is that “No one can carry out complicated plans. All parties and groups are fractious and bumbling.”

Peter Thiel, whom you will also come to know, has famously become associated with one question, which he uses in interviews and over long dinners: “What important truth do very few people agree with you on?”

Introduction

It’s the option available to many but pursued by few: intrigue. To strategize, coordinate, and sustain a concerted effort to remove someone from power, to secretly move against an enemy, to do what Machiavelli would say was one of the hardest things to do in the world: to overthrow an existing order and do something new. To engage in a conspiracy to change the world.

As so many reactionary organizations tend to do, it had begun to drift toward absolutism and nihilism.

Seneca is the author you read when your life’s work has been destroyed

Machiavelli said that a proper conspiracy moves through three distinct phases: the planning, the doing, and the aftermath. Each of these phases requires different skills — from organization to strategic thinking to recruiting, funding, aiming, secrecy, managing public relations, leadership, foresight, and ultimately, knowing when to stop. Most important, a conspiracy requires patience and fortitude, so much patience, as much as it relies on boldness or courage.

PART I - The Planning

CHAPTER 1 - The Inciting Incident

When he started his online media company in 2002, his love for tech was at the forefront of his mission: Gizmodo, the first of the many sites that would comprise his publishing empire... Roughly four months later, he launched a new site dedicated to his other, more primal passion: secrets and gossip. He named it Gawker.

A little over ten years into Gawker’s run, its revenues would be nearly $40 million a year and the sites would have more than 40 million readers a month.

his most important shift was away from a raw number of posts per day (how many things can you make fun of today) toward page views (how many people agree with what you’re making fun of). Denton’s mind gravitates toward small publishing innovations like these. His sites were some of the first to post the view count at the top of the article.

For his bravado, Nick Denton was an incisive reader of other people. What he knew was that most people did not have the stomach — or the cash — to actually take it very far against a media outlet. He felt protected by the moat explained in the old twentieth-century proverb: Never fight a battle against someone who buys ink by the barrel. It’s easier to just let the whole thing go.

CHAPTER 2 - Deciding to Act

There is an old Scottish motto: nemo me impune lacessit. No one attacks me with impunity.

Peter would, at one point, pass me a copy of The Fifteen Decisive Battles of the World by Sir Edward Shepherd Creasy, the book he had read as he’d mulled his options over.

Twenty-five hundred years ago, Thucydides would say that the three strongest motives for men were “fear, honor, and self-interest.” Fear. Honor. Self-interest. All covered.

CHAPTER 3 - Turning to Conspiracy

Machiavelli said that conspiracies were weapons of the people. Only princes could afford to send an army against another army, he observed, but a conspiracy is available to every man.

“At the time, it felt like a crazy uphill battle, you know, even with all the financial resources,” Thiel would say of this period of consideration. “It was the nature of the thing. Gawker’s power in part came from pretending that it was more powerful than it was.”

Alexandre Dumas once wrote that the king of the press has a throne everywhere.

One of the most profound intellectual influences on Peter Thiel is a French thinker named René Girard, whom he met while at Stanford and whose funeral he would eventually speak at in 2015. Girard’s theory of mimetic desire holds that people have no idea what they want, or what they value, so are drawn to what other people want. They want what other people have. They covet.

Peter Thiel’s friend, the mathematician and economist Eric Weinstein, has a category of individual he defines as a “high-agency person.” How do you respond when told something is impossible? Is that the end of the conversation or the start of one? What’s the reaction to being told you can’t — that no one can? One type accepts it, wallows in it even. The other questions it, fights it, rejects it.

“Anyone who is threatened and is forced by necessity either to act or to suffer,” writes Machiavelli, “becomes a very dangerous man to the prince.”

CHAPTER 4 - Assembling the Team

There is something popular with ambitious people called the “briefcase technique.” You don’t show up to a meeting with a few vague ideas, you have a full-fledged plan that you take out of your briefcase and hand to the person you are pitching. Even if nothing comes of this plan, the person on the other side is knocked over by your effort, so impressed by the unexpected certainty that they cannot help but see your usefulness to them.

Peter had seen many ambitious upstarts out of what Alexandra Wolfe called the “eternal freshman herds” of Silicon Valley. But Mr. A is different. Multiple people, describing him to me, borrowed Robert Caro’s description of LBJ as a young man: a professional son.

The professional son understands what every father wants — a progeny worth his time, someone to invest in, someone who can further his legacy. The professional father wants to see his greatness given a second body — a younger one, with more energy, with the benefit of his hard-won experiences.

Mr. A takes a certain pride in this little lie, the use of the word individuals instead of individual. Throughout the conspiracy, he would try to refer to Thiel as “my principals” — implying that there was some consortium of backers involved.

This compartmentalization is key to a conspiracy. Not everyone can be in charge.

In the search for collaborators, hunger is an essential qualification. While it’s dangerous to conspire with people who have a lot to lose, you can’t conspire without someone who is afraid to bet on themselves, who isn’t willing to take a big stake on something that very well could fail. Where these two traits overlap there is often a sweet spot: the man or woman who has something to prove and something to protect, the strong sense of self-belief coupled with that killer instinct.

CHAPTER 5 - Finding the Back Door

But this isn’t how Thiel thinks. He would say his favorite chess player was José Raúl Capablanca, and remind himself of the man’s famous dictum: To begin you must study the end. You don’t want to be the first to act, you want to be the last man standing.

It’s because of this use of the “hidden hand” that McCarthy never knew that the president was working against him, and so when Eisenhower crushed McCarthy, and crushed him completely using the man’s weaknesses against him, it would be decades before historians could even piece the evidence together.

Gawker’s financial structure is complicated. It’s based in the Cayman Islands, and it has a Hungarian-based subsidiary to which it sends millions of dollars annually. There are very few shareholders. It constitutes multiple sub-LLCs. All of this for the explicit purpose of reducing tax and legal liability.

The great strategist B. H. Liddell Hart would say that all great victories come along “the line of least resistance and the line of least expectation.”

“Given the same amount of intelligence, timidity will do one thousand times more damage in war than audacity” is the dictum from Clausewitz.

CHAPTER 6 - Tear Out Your Heart

One of the informal mottos of the libertarian community is “Don’t hurt people and don’t take their stuff.” But that is explicitly what conspiracies do, and fundamentally what Thiel’s conspiracy had committed to do.

The Count of Monte Cristo would put it better: “What a fool I was not to tear my heart out on the day when I resolved to avenge myself!”

William James knew that every man is “ready to be savage in some cause.” The distinction, he said, between good people and bad people is “the choice of the cause.”

We can see this illustrated in the case of another peculiar, independent thinker named Ross Ulbricht, who around the very same time that Nick Denton and Peter Thiel are jostling toward conflict sits in a dingy apartment in Austin, chafing under constraints he believes are wrongly imposed on adults and the drugs they might like to put in their bodies. He sees oppression not in the media system but in the U.S. government, which he believes unfairly infringes on the liberties of its people.

The savagery of ordering not just one murder but six would eventually put Ulbricht in a federal prison cell. Few would come to admire the cause he had been willing to commit such acts for, or appreciate the steeling of his soul that had been required to do it. And indeed he stands now as a cautionary tale, a kind of true story of how one breaks bad. Yet the paradox is that if one is too concerned about this criticism or these consequences, one will never proceed.

CHAPTER 7 - Seizing the Sword

On January 10, 49 BC, he pauses on the banks of the Rubicon, utters those famous words Alea iacta est — “the die is cast” — and crosses the river with his army.

PART II - The Doing

CHAPTER 8 - Prepare for Setbacks

“The problem with the Silicon Valley,” as Jim Barksdale, the former CEO and president of Netscape, once put it, “is that we tend to confuse a clear view with a short distance.”

And so the essential trait of the successful man is not only perseverance but almost a perverse expectation of how difficult it is going to be.

Napoleon’s dictum for the general-in-chief is that he “must not allow himself to be elated by good news or depressed by bad.”

CHAPTER 10 - The Power of Secrets

Thiel hired Mr. A as his operative for similar reasons. He is young, he is foreign, he has no footprint to speak of, there is no discernible connection between him and Peter.

And as of this writing, even the existence of Mr. A is a fact unknown by the mainstream media.

In her classic The Journalist and the Murderer, Janet Malcolm wrote, “If everybody put his cards on the table, the game would be over. The journalist must do his work in a kind of deliberately induced state of moral anarchy.”

Secrets are how real work is done. Peter makes no secret about that. There’s an entire chapter in his book Zero to One called “Secrets.”

CHAPTER 11 - Sow Confusion and Disorder

A good strategy, for its part, must be flanked by feints and disguises. Otherwise, the counterstrategy becomes too easy to deduce. The Russians call this maskirovka — the art of deception and confusion.

Mr. A claims that the conspirators had nothing to do with starting Gamergate, but they undoubtedly fanned the flames.

And yes, he had to go on record to say that, no, the company did not endorse bullying. Gawker would estimate the loss in revenue to be in the hundreds of thousands to millions of dollars — money the company needed as its legal bills mounted.

Max Read would write, in retrospect, “Of all the enemies Gawker had made over the years — in New York media, in Silicon Valley, in Hollywood — none were more effective than the Gamergaters.”

Not all these cases are public, some of their financial arrangements are different, but they are all part of the same grand strategy.

So Harder calls the insurance company and lets them know he’ll be dropping the claim, clearing the path for the insurance company to exit the conflict by 2015. While it seemed odd to Gawker at the time that Hogan would voluntarily give up one of his claims and willingly eliminate the potential liability of a deep-pocketed insurance company in future settlement talks, it was in fact a brilliant and ruthless move. Now Gawker was on the hook by themselves. Now their war chest was depleted — they’d have to defend their story to that jury in Florida on their own.

Confusum est, quidquid usque in pulverem sectum est — cut anything into tiny pieces and it all becomes a mass of confusion.

"At some point the word ‘strategy’ becomes a euphemism for procrastination."

CHAPTER 12 - The Ties That Bind

The line attributed to the management guru Peter Drucker is that culture eats strategy.

“There are no outside investors to make us compromise our goals,” Denton would write in a memo to his staff. It’s an inspiring, clarion call to all those whose first instinct is to speak the truth and consider politics later — but it also means nobody there is responsible for urging a middle course, so that they might live and fight another day. A rare mutual friend of Thiel’s and Denton’s would tell me that this was Gawker’s main weakness, one that was inevitably going to cause a fatal problem, if not from Thiel then from someone, eventually. There were no competent managers or operators in the company. And why would there be?

Which is how A. J. Daulerio, a rebellious, self-destructive thirty-something with a drug problem and hardly a penny to his name (even before the verdict he would have a net worth of -$27,000), had ended up as the editor of a company worth hundreds of millions of dollars.

CHAPTER 14 - Who Wants It More?

Terry Bollea turns down at least $10 million, quite possibly much more, and smiles to Harder and Houston as he does it.

As far as I know, Gawker conducted no mock trials — at least it couldn’t in the Tampa Bay region. Because Mr. A claims he hired the only two firms in the area to conflict them out of being able to work with Gawker. His simple move had kept the fog of war thick around them. No chance for last-minute clarity or perspective.

The truth is probably simpler. “Nick refused to believe it because he did not want to get wrapped in any kind of conspiracy theories,” John Cook, then Gawker’s executive editor, explained. But is it really conspiracy theory? Why is it crazy if that’s actually what’s happening? It’s not paranoia if someone is actually trying to get you.

Another maxim from Napoleon: “Never interrupt an enemy making a mistake.”

It is with a kind of nasty glee, more characteristic of Gawker than anyone else, that Thiel’s team would recount to me, several times, a discovery which they would exploit, which very well might have been the deciding factor in the entire case. In those expensive mock juries, they had discovered that their case played exceedingly well to a very specific type of person. “It became very clear that the kind of jurors we wanted were overweight women. Most people can’t empathize with a sex tape, but overweight women are sensitive about their bodies and feel like they have been bullied on the internet. Men don’t have that problem. Attractive women don’t have that problem. They haven’t been body shamed,” Mr. A tells me proudly.

By the end of it, three of the people sitting in that box would be overweight women. A fourth looks like a conservative married woman. The two men are not young hipsters. One is nicknamed “Old School” by plaintiffs because during voir dire he’d used those words to describe himself. There is no smirking youth culture represented here. This is a jury who would say during the selection process that they got most of their news from Fox News, from the local news, from Yahoo, from MSN, not from blogs, not from Twitter.

PART III - The Aftermath

CHAPTER 15 - The Battle for Hearts and Minds

“If you want to win, ‘ego is the enemy,’” Peter would say, “and the anti-ego thing we did was downgrade Harder’s role in the trial. Harder was not happy about this. It was the case of your lifetime and you get to have a much smaller part in it than you originally thought? But if we win, you get to take credit.”

The Newburgh Conspiracy, as it would later come to be known, the one that could have killed the country before it really began, is dispatched to nothing more than a footnote in history.

What would ultimately be the undoing of Gawker was the simple fact that they came across as genuinely unsympathetic.

The great sin for a leader, Frederick the Great once observed, was not in being defeated but in being surprised.

CHAPTER 16 - Managing the Aftermath

Peter Thiel has done what presidents, robber barons, and folk heroes have been unable to do. He has fought a battle with the people who buy ink by the barrel and come out the better for it.

On May 24, 2016, Forbes wins the race: “This Silicon Valley Billionaire Has Been Secretly Funding Hulk Hogan’s Lawsuits Against Gawker.”

But like so many conspirators, they seem not to have stopped to ask, Okay, then what?

Cunning and resources might win the war, but it’s the stories and the myths afterward that will determine who deserved to win it.

CHAPTER 17 - The Art of Settling

Scipio Africanus, the general who defeated Hannibal, would say that an army should not only leave a road for their enemy to retreat by, they should pave it. The Romans had a name for this road, the Gallic Way.