This Strategy Is The Key To Every Victory
The following article is an adaption of one of best chapters in my book Conspiracy: A True Story of Power, Sex, and a Billionaire’s Secret Plot to Destroy A Media Empire. The book is out in paperback today and I think is one of my best pieces of writing ever. The New York Times called it “one helluva pageturner” so if you’re looking for something to read this summer, give it a look.
It is easy to confuse strategy and boldness.
“Given the same amount of intelligence,” Clausewitz dictum goes, “timidity will do one thousand times more damage in war than audacity.
It was a favored expression of the Roman poet Virgil, for instance, that Fortune favors the bold.
But the truth is that most difficult ventures and even most stunning victories are as much the result of patience and due diligence than any single, brave stroke.
For instance in 2012, nearly five years have passed since Peter Thiel had been outed as gay very much against his will by by Gawker Media. It hadn’t taken too long after that Wednesday in December for him to decide that something had to be done, but it had taken four full years since then to conceive of what kind of response might even be possible. Thiel founded and sold PayPal in considerably less time. Gawker itself had gone on to become a company worth hundreds of millions of dollars.
But Thiel, sworn to exact vengeance on the people who he believed had humiliated was not noticeably any closer to his goal. He had made only a single hire, a then-anonymous twenty-something named Mr. A would be tasked with leading Thiel’s conspiracy to destroy Gawker.
“With patience and resources,” Mr. A would come to say often on his weekly calls with Peter, “we can do almost anything.” Tolstoy had a motto for Field Marshal Mikhail Kutuzov in War and Peace—“Patience and Time.” “There is nothing stronger than those two,” he said, “. . . they will do it all.” In 1812 and in real life, Kutuzov gave Napoleon an abject lesson in the truth of that during a long Russian winter.
Their target, Nick Denton, the founder of Gawker, is not a patient man. Most entrepreneurs aren’t. Most powerful people are not. One of his editors would say of Denton’s approach to stories, “Nick is very much of the mind that you do it now. And the emphasis is to get it out there and be as correct as you can, but don’t let that stand in the way of getting the story out there.” Editorially, Nick Denton wanted to be first—which is a form of power in itself. 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.
How does one do that? Especially against a wily and powerful opponent?
We can look to Eisenhower in his battles with Joseph McCarthy, then at the height of his power as a demagogue. Though most Americans would come to see Eisenhower as the kindly, friendly “Ike,” they did not realize that beneath that exterior was a cunning strategic mind that knew how to wield power without raising alarms and was, if anything, a patient plodder. Seeing that opposition and publicity were what gave McCarthy his power, he looked for a better opportunity. Eisenhower began to work behind the scenes, directing and pushing for others to limit McCarthy’s power, stripping the man of allies, using his own allies to criticize him, removing opportunities McCarthy would have liked to take advantage of. 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.
So the user of special means must scorn the obvious—ignore the conventional wisdom and voices from the sideline. Eisenhower watched as McCarthy attacked his closest friends, pocketing at one point a full- throated defense of George Marshall that he must have wanted to give so badly, because while it might have scored public points against his opponent, it wasn’t the right strategy.
“It’s almost limitless what one could do,” Mr. A said, musing on all the theoretical angles of attack they brainstormed in meetings at Thiel’s house and in late-night phone calls. Given the resources he had to draw on, the limitlessness of the options is nearly true: they could have bribed employees at Gawker to leak information, or hired operatives to ruin the company from the inside. They could have directed hackers to break into Gawker’s email servers. Someone could have followed Nick Denton and, while he dined at Balthazar one morning, stolen his cell phone. A team could have attempted to bug the Gawker offices. You could fund a rival website, operate it at a loss, and slowly eat away at the razor-thin margins of Gawker’s business. Or create a blog that does nothing but report on gossip about Gawker writers—returning the very pressure and scrutiny they’d put on other people. “There are things that were very tempting, an eye for an eye, tooth for a tooth. Retributive justice,” Peter said. “But I think those would’ve ultimately been self-defeating. That’s where you just become that which you hate.” The victory would be pyrrhic, too, easier but at a higher personal cost.
A decision was made to eliminate the strategies that would either be illegal or fall into any one of a number of gray areas. For instance, Thiel could have easily hit Gawker with many meritless cases that he never expected to win in order to bury the company in legal bills, but how effective would that really have been? It’s a brute-force tactic that ignores the strategic value of exploiting your opponent’s fundamental weakness—if one could be found. “There were all these things that you could be tempted to do and it’s not clear they would work any better. So we decided very early on we would only do things that are totally legal, which is a big limitation. But it forced us to think really hard about what to actually do,” says Peter. “We were comfortable taking a very aggressive legal posture, just entirely within the system.”
As they had decided from the outset, Thiel would not be a claimant in any of these cases and, equally early, Thiel claimed to be interested only in litigating and funding claims that could be expected to survive appeal, were they fortunate enough to reach a positive verdict. “We had the idea early on that there must have been any range of legal violations,” Peter tells me, echoing the thrust of Mr. A’s pitch to him in Berlin the previous April, “but I wanted to find a cause of action that wasn’t libel.”
The First Amendment was unappealing not because Thiel is a libertarian, though he is, but because as a strategist he understood that it was Gawker’s strongest and most entrenched position: we’re allowed to say anything we want. It challenges the legal system and conventional wisdom where they are the most clearly established. Forget the blocking and tackling of proof and precedent. At an almost philosophical level, the right to free speech is virtually absolute. But as Denton would himself admit to me later, free speech is sort of a Maginot Line. “It looks formidable,” he said, “it gives false confidence to defenders, but there are plenty of ways around if you’re nimble and ruthless enough.” That’s what Thiel was doing now, that’s what his legal time was paid to find.
Someone from Gawker would observe with some satisfaction to me, many years away from this period of preliminary strategizing from Thiel, that if Thiel had tried to go after Gawker in court for what it had written about him, litigating damages and distress from being outed, for example, he certainly would have lost. This was said as a sort of condemnation of the direction that Thiel ultimately did attack Gawker from. Which is strange because that was the point. 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.” John Boyd, a fighter pilot before he was a strategist, would say that a good pilot never goes through the front door. He wins by coming through the back.
And first, that door has to be located.
“The gating resource here was not capital,” Thiel said. “The gating resource was the ideas and the people and executing it well. It’s not like lawsuits haven’t been brought in the past. It’s something that’s been done, so we were required to think very creatively about this space, what kind of lawsuit to bring.”
In the first year that this conspiracy is picking up steam, Gawker Media would post something like 100,000 articles across its eight sites. Almost none of these pieces see an editor before they go live. In 2012 alone, Gawker would find itself the recipient of multiple leaks of celebrity photos, it would unmask a famous internet troll, it would go after politicians, break technology news, publish controversial first-person essays, repeat gossip, and antagonize the sports world. Most of its posts were ephemeral, simple aggregation of the news and trends of the day. Not all, though.
Contained within Gawker’s hundreds of thousands of articles, Mr. A and Peter Thiel were sure, were the seeds of destruction. How many? One? A handful? A hundred? Thiel had limited him in terms of what the range of violations he was comfortable funding would be, so now his legal team would need to really look, not for the obvious but for the ones that everyone else had missed.
That would be their door. That’s how they would destroy Gawker.
As an investor, Thiel’s question is always: What do I know about this company that other investors don’t know? In other words: Do we have an edge? It’s only with some sort of informational asymmetry, goes his thinking, that one can not only beat the market but dominate it, and get the kind of return that takes a $500,000 check and turns it into a billion. Or pulls off what no one else thought possible.
Peter Thiel was looking for Gawker’s version of Al Capone’s tax evasion, a legal mistake that no one else had bothered to enforce, something dismissed potentially even by the person on the other side of the story. The conspirators wanted valid causes of action that did not involve the simple fact of whether a journalist has a right to say something or not. They wanted examples of Gawker’s potentially violating the law, violating a copyright, violating the rights of others in ways that might not be protected under the generous shield offered by the Constitution to reporters and citizens. Not just the kinds of cases that a judge would allow to proceed, but ones that would resonate with a jury of ordinary people in whatever jurisdiction they might find themselves.
Gawker was designed to give someone an opportunity like this, even if they did not know Thiel was plotting against them. They had always pushed the boundaries. They had courted controversy. They had blown apart the old model of journalism. They published first and edited (and fact checked later). A Gawker writer once explained why he liked working at Gawker, what drew him there: “Ultimately, I would rather work at a place that’s bold enough to fuck up than one that is too afraid to ever risk it.” But would someone ever spend $550 an hour to crawl through everything they ever did to find that mistake? Would they take them to court over it? Who would to get sucked into a knock-down, drag-out fight with the outlet that will say anything and everything? The overwhelming belief of their enemies, as was true of Walter Winchell decades before, was that to sue Gawker was to touch pitch.
Gawker bet they were unbeatable.
Thiel was willing to call the bluff.
And he within just a matter of weeks, he would find the perfect weak spot in their defenses. It’s name was Hulk Hogan.
