As recently as last year, Thiel was still contemplating how to break into China. He evaluated various options, including partnering with local venture firms, people familiar with the conversations said at the time. Those talks never progressed, some of those people now say. It’s essentially too late, said Helen Wong, a partner at Qiming Venture Partners. Today’s market is highly competitive and leaves little room for an outsider, she said: “China is one of the two largest tech ecosystems in the world.”
The new contrarian strategy, it seems, is to turn a weak business record in China into an asset. By targeting Google with his unsubstantiated claim last month, Thiel suggested associations with Beijing should be a disqualifier for a U.S. contractor. Trump at first entertained the idea, promising in a tweet that the White House would look into Thiel’s claims of treason and calling him “a great and brilliant guy.” The sideshow appeared to temporarily take the heat off Facebook Inc., where Thiel is a board member. But Google denied the claims, and Treasury Secretary Steven Mnuchin said last week that they found no security concerns.
Some in Thiel’s orbit said the venture capitalist’s concerns are authentic. “He’s a very patriotic guy,” said John Meyer, who received a grant from Thiel’s fellowship program to start a company in lieu of attending college. “If Google is building an AI office in Beijing and hiring a ton of AI engineers there, that means its working with the Chinese government in some way. He’s worried about that.”
Thiel’s stance could also win him fans in Washington. The three major U.S. contractors in which he holds stakes have at times echoed Thiel’s message of American loyalty. They have a lot of money riding on federal spending.
Just this year, SpaceX has won more than $350 million from the Air Force, Defense Department and NASA. Palantir, which counts Thiel as a founder and chairman, secured a contract worth more than $800 million from the Army in March and another in July from the Defense Department for $144 million.
In the second agreement, which hasn’t been previously reported, Palantir will supply software to intelligence agencies and the Coast Guard over four years. This deal was particularly significant because it wasn’t open to competing bids and established Palantir as a “brand name” federal provider of defense technology, in the same league as Microsoft Corp. and Oracle Corp. The designation can set a precedent, said Meagan Metzger, who runs Washington-based Dcode accelerator, which consults with tech companies on federal contracting. “When you do a brand name contract of that size, you have to get a bunch of approvals up the chain,” she said. “That’s a huge award.”
The newest addition to Thiel’s portfolio of government suppliers is digital surveillance company Anduril. Palmer Luckey, founder of the Facebook-owned virtual-reality headset Oculus, runs the business, which, like Palantir, takes its name from the lore of Thiel’s beloved childhood book series, the Lord of the Rings. Anduril is staffed by more than a dozen Palantir veterans and funded largely by Thiel’s Founders Fund.
Anduril has gained significant traction inside the U.S. government in the two years since it started operating. The startup quietly took over the military’s Project Maven this year, according to a news report in the Intercept, after Google faced employee protests and abandoned the effort. Anduril also secured a $13.5 million contract with the U.S. Marine Corps to provide autonomous surveillance towers on the border and at military bases, according to documents surfaced in July by worker advocacy group Mijente.
Thiel’s love of country is being embraced throughout his empire. One of the newest additions to the Founders Fund investing team, Delian Asparouhov, posted a photo July 17 to Twitter showing the office décor set to commemorate a visit from Luckey to discuss Anduril. An American flag was draped across a white board in the conference room, as he held a red, white and blue napkin emblazoned with the words, “USA all day.”
This article was provided by Bloomberg News.