Much has been written about the many entrepreneurial successes that have come out of PayPal. After all, PayPal’s founders, executives, and employees have gone on to start such stalwarts as YouTube (the biggest hit of Web 2.0), LinkedIn (seemingly on its way to dominating the lucrative industry of business-oriented social networking), and Yelp (seemingly on its way to dominating local reviews…and hedonistic geek parties).
Much has also been written about the political views of Peter Thiel and the PayPal team. Even the New York Times has commented that many of PayPal’s top executives came from the conservative/libertarian student paper that Thiel co-founded while in college, The Stanford Review.
But what no one seems to have pointed out is the obvious fact that being a Silicon Valley Republican may very well be as strong a predictor of entrepreneurial success as being a Stanford CS grad student.
The reasons behind this surprisingly overlooked fact may be even more astonishing. A rock-ribbed belief in free enterprise can’t hurt, but I’m going to argue that the success of PayPal’s GOP mafia is simply the logical extension of one of the eternal truths of Silicon Valley: Outsiders make the best entrepreneurs.
And in our neck of the woods, Republicans are the ultimate outsiders.
In earlier eras, you could spot outsiders by their differences. In the 1970s, there were immigrants like Andy Grove. In the 1980s, there were retro-hippies like Steve Jobs and Sandy Lerner. They came from outside the establishment, which meant that they were willing to think different and disrupt the status quo.
Today, however, the so-called counterculture is the status quo, and a San Francisco mayor who earned national recognition as a gay marriage advocate is scorned locally as a tool of the business establishment.
When Peter Thiel and Dave Sacks were at Stanford, the political correctness movement was at its height, and the Democrats controlled the presidency and both houses of Congress. I recall one lecturer who refused to accept a paper from a student because it used the word “he” as the generic pronoun, rather than “she.” In that environment, Republicans were the renegades, and the Review boys (they were overwhelmingly male) rebelled against the Man by challenging the administration and battling the faculty members who tried to suppress their right to free expression.*
* It is important to note, in the interests of full disclosure, that according to some reports, some of the free speech rights that were exercised involved the use of derogatory terms for homosexuals.
It’s as if Hollywood made a sequel to Animal House, with the plucky, clean-cut Omegas rebelling against the heavy hand of a middle-aged Dean Blutarsky (who accepted the position after retiring from the Senate).
The lessons they learned in guerilla warfare served them well as PayPal fought off challenges from regulators, and direct competition from giants like eBay and Citibank, and in their other ventures, including their successful foray into Hollywood with Dave Sacks’ “Thank You For Smoking” (based on the satirical novel by Christopher Buckley, the son of conservative icon Willam F. Buckley).
So as you’re out searching for the next PayPal or YouTube, don’t ignore the earnest fellows with short haircuts. Consider attending a meeting of the Campus Republicans. The guy with the poster of Milton Friedman in his dorm room today may be tomorrow’s billionaire.
[You can read more of Chris Yeh's prose on his ghetto old-school Blogger blog (up since 2001!), Adventures in Capitalism]
40 Comments
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km4 said:
Chris Yeh what is the point of your post because you know next to nothing about politics or the mindset and mentality of this country.
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Chris Yeh said:
KM4:
I’d love to explain the post further, but you’ll have to be a bit more specific with your critique in order for me to respond.
In general, the point of my post was simply that the conservatism of the PayPal team, which is often viewed as an irrelevant eccentricity, may actually be a contributing factor to their success. The irony is that because entrepreneurship is generally better practiced by outsiders, Republicans may have an advantage in areas where they are outcasts. As a corollary, I suspect that in “red states,” Democrats make better entrepreneurs.
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Enrique said:
I wouldn’t consider California a libertarian state. One example of a succesful republican in the Silicon Valley doesn’t mean anything. Anyways, Capitalism is an economic system while democracy is a political system.
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km4 said:
Chris, thx for your explanation but I think your rationalization is a bit weak.
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Chris Yeh said:
Enrique,
I’m not trying to argue that being a Republican makes you a better entrepreneur…I’m arguing that being an outsider makes you a better entrepreneur, and that paradoxically enough, in the Bay Area, Republicans are the biggest outsiders.
It’s not the political beliefs of the PayPal team that made them successful (though they might argue that with me), it’s the fact that they “thought different” than the rest of their peers.
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Enrique said:
Chris:
I guess I don’t see the connection between Republican (wanting less govt regulations) with the development of another payment method in the internet.
I would agree with you that any succesful entrepreneur looks at things differently.
I guess I am seeing the article from a political and historical definition of the words libertarian and conservative. -
DAvid said:
Wait…so is Max, D-Day?
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Brandon said:
For more details on the history of PayPal, check out the following write-up:
Who Killed PayPal?
“Thiel and Levchin had hoped PayPal would grow to become an extra-governmental system of currency, something reminiscent of the world described in Neal Stephenson’s novel Cryptonomicon, in which programmers use encryption to create an offshore data haven free from government control.”
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cody said:
Chris…
Dude try finding another occupation in life…writing a blog doesn’t cut it for you…this was such a waste of time on your part. -
Chris Yeh said:
I love the idea of connecting the PayPal team to their Animal House counterparts. Anyone from the old PayPal days want to take that up? Is Peter more of an Otter or a Boon? Who’s the real Bluto? And who would be Flounder….
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Courtney said:
Chris -
Your attempt at becoming the Limbaugh for the tech set by manipulating sociolinguistics failed. The words “Outcasts†and “Republicans†are an oxymoron – your propagandizing. -
Chris Yeh said:
Courtney,
Go to any party in the Bay Area, and tell everyone that you’re an ardent supporter of George W. Bush. If you don’t feel like an outcast afterwards, you’re fooling yourself.
If I wanted to be Rush Limbaugh, I’d go around attacking “liberals” and accusing Hillary Clinton of dark deeds and conspiracies. All I’m trying to do is point out is the irony of how 20 years ago, Steve Jobs and Mitch Kapor were outsiders, and today, Republicans are the outcasts.
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Marc said:
To everyone criticizing this article — you’re missing the point. The tech industry is liberal. If you’re not a liberal but you’re doing tech work, you’re an outsider.
As an outsider, you won’t fall victim to the same kind of groupthink that plagues majorities.
Because you’re outside the majority box, you’ll approach problems differently. You’ll see things that the majority mindset won’t.
A person’s political bent says a lot about their culture, their mindset, their frame of reference. It colors everything they do.
If the Valley only sees blue, people who can see red will be disruptive to the status quo. The Paypal/Youtube/LinkedIn cabal is only the start.
If you don’t think the rise of Conservative tech is going to change the way the industry works, than you deserve to suffer at it’s hands. The comments on this thread already show how defensive liberal techs are.
And Courtney - the words “republican” and “outcast” aren’t oxymorons. Republicans often are outcasts. In my city, they’re pariah. They practically get lynched in public.
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Damon Billian said:
“I love the idea of connecting the PayPal team to their Animal House counterparts. Anyone from the old PayPal days want to take that up? Is Peter more of an Otter or a Boon? Who’s the real Bluto? And who would be Flounder….”
No comment. I probably acted like Bluto sometimes at holiday parties;-)
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Sundar Krishnamurthy said:
Fascinating attempt to connect party affiliation to entrepreneurial success. If you accept Chris’ argument, several successful entrepreneur in Texas must be Democrats since they are outsiders in a red state. However, that doesn’t seem to be true.
Success in the silicon valley comes from the opportunity, investment and access to talent it provides for anyone with an idea or a concept that has the potential to make a difference.
PayPal was originally offered by a company called Confinity Software (which later changed its name to X and then settled on its namesake offering) as a way to settle debts using Palm devices among individuals. It tried it’s hand at being an online bank next and then hit pay dirt by being a payment processor for a fast-growing auction site (called EBay I believe ;-)).
It had nothing to do with the politics but an amazingly talented group of people who delivered a product that simplified payments among buyers and sellers located across the country.
Pinning it on political ideology or party affiliation is simplistic, wishful thinking even.
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Chris Yeh said:
Sundar,
I totally agree that Democrats should do better as entrepreneurs in conservative environments (though Austin would probably be an exception, since it is heavily Democratic).
Certainly it’s not true that all it takes to be successful in the Valley is to vote Republican. If that were true, all of us entrepreneurs would register GOP immediately. But it does seem like Republicans are disproportionately represented in the ranks of successful entrepreneurs, given their rarity in this neck of the woods.
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Sundar Krishnamurthy said:
Chris,
Thanks for the response. Your response actually contradicts the main argument of your column — being a Republican is a strong predictor of entrepreneurial success — since it is not THE deciding factor if a factor at all!
Unless you have actual numbers to prove it with a count of all successful companies in the valley (both past and present) and show that a majority of the founders are Republican, your thesis is still a speculation.
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Chris Yeh said:
Sundark,
Let me quote my column:
“I’m going to argue that the success of PayPal’s GOP mafia is simply the logical extension of one of the eternal truths of Silicon Valley: Outsiders make the best entrepreneurs.
And in our neck of the woods, Republicans are the ultimate outsiders.”
I think it’s pretty darn clear that I’m not saying that Republicans make better entrepreneurs, I’m saying that outsiders make better entrepreneurs, and paradoxically, in Silicon Valley, Republicans are the ultimate outsiders.
I must say that the degree to which people have misread my arguments is quite disturbing–it shows that partisan politics is blinding folks to anything other than the label of one’s political party.
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Sundar Krishnamurthy said:
Chris, you may be jumping to conclusions too quickly! Even if you change all mentions of Republican to Democrat, I will argue the exact same point.
I am only questioning your statement about being Republican is a strong predictor of success in the valley.
It is hard to pin entrepreneurial success on just a single factor. Political affiliation may help make the right connections but success isn’t guaranteed just because of that.
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Chris Yeh said:
Sundar,
I do not believe that I ever tried to “pin entrepreneurial success on just a single factor” or argue that being a Republican would “guarantee” success.
While it would be nice if a scholarly study existed to show whether or not Silicon Valley Republicans were disproportionately successful, I’m unaware of any such study, though if you can produce one that contradicts my speculation, I’m all ears.
I’ve simply noted that A) Republicans are outsiders in the Valley, B) Outsiders have historically had more success as entrepreneurs, and C) The success of the PayPal team at that company and many others could be seen as supporting the conclusions that Republicanism might be correlated with entrepreneurial success.
If you wish to dispute the facts that went into my argument, by all means do so. Right now, it seems like you are setting up straw man arguments that you easily refute, but which don’t reflect my actual column.
This suggests that either you are misunderstanding my words, which proves my point about how partisan politics is making it difficult for people who practice it to evaluate things objectively, or you using an feigned misunderstanding as a rhetorical technique.
I don’t have any goal to convert people to being Republicans; I’m simply highlighting an interesting and somewhat counterintuitive observation.
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Joe said:
“I must say that the degree to which people have misread my arguments is quite disturbing–it shows that partisan politics is blinding folks to anything other than the label of one’s political party.”
Chris, you are being intellectually dishonest. First you write a column that uses pretzel-style logic. You go from:
1. Outsiders make the best entrepreneurs.
2. In Silicon Valley, Republicans are outsiders.
3. Therefore, Republicans are the best entrepeneurs in Silicon Valley.Even though you wrote this column at a time when the country is deeply divided over the Iraq War and many other emotional issues, you imply that you expected readers to read it dispassionately. I don’t believe for a second that your intention from the start was to do anything other than needle liberals.
After readers called you on your faulty logic, you claimed that you were not making a political argument.
The funniest part of all this is that you’re trying to make yourself out as the victim of overzealous liberals. Shame on you.
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Joe said:
Yeah, Chris, you’re so misunderstood. Your own words from your personal blog at:
http://chrisyeh.blogspot.com/2007/02/silicon-valley-hates-republicans.html
“Now of course, the very act of writing a post on Republicans was a calculated attempt on my part to stir up controversy, so I’m actually pretty happy with the results. But it certainly doesn’t bode well for bipartisanship in this neck of the woods. Any closeted Republicans want to speak up?”
posted by Chris @ 10:16 AM 7 comments links to this post
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Chris Yeh said:
Joe,
I’m glad you feel like you “got me” by exposing a public post from my very own blog (which appears in the “About the Author” section) that links to this one. But don’t be surprised if few think that this qualifies as much of a gotcha.
Hell, if you want to claim that I’m a Republican, you can point to this post in which I freely admit to having voted for Republican politicians (which, incidentally, must be true for most people in California, since Arnold Schwarzenegger easily won re-election):
http://chrisyeh.blogspot.com/2004/09/republicans-and-democrats-i-abhor.html
The bottom line is, everyone who writes in to attack my logic and arguments has to misinterpret my post and claim that I’m arguing something that I’m not.
Joe, you call my classic syllogism “pretzel-style” logic. To paraphrase “The Princess Bride”: “Socrates, Aristotle, Descartes? Morons!” All right then, what is the right argument?
Assuming that one agrees that outsiders make better entrepreneurs, and that in Silicon Valley, Republicans are outsiders, show me what kind of logic allows one to conclude: “But Republicans won’t make better entrepreneurs because they are not the *right kind* of outsiders.”
This kind of insane troll logic should be exposed for what it is, whether its the idiocy of intelligent design, or raising minimum wages. To pick and choose when to apply logic depending on one’s political beliefs is nothing more than hypocrisy, a crime of which both Republicans and Democrats are plenty guilty.
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Joe said:
“All right then, what is the right argument?”
Why don’t you just admit that your logic is faulty and move on? You keep claiming that everyone who disagrees with you is partisan and that partisanship is coloring their perception. But why can’t you see that your own partisanship is what prompted you to write a column based on a tissue-thin premise in the first place? Oh, I forgot that I’m wasting my time asking this question because you have no interest in honest dialogue. As you wrote in your personal blog: “Now of course, the very act of writing a post on Republicans was a calculated attempt on my part to stir up controversy, so I’m actually pretty happy with the results.” Your wish came true, Chris. We’re all so proud of you.
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Chris Yeh said:
Joe’s argument speaks for itself. I rest my case.
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Joe said:
Chris Yeh: “I rest my case.”
Judge: “But, Mr. Yeh, you haven’t presented one shred of evidence to prove your case.”
Chris Yeh: “What are you, some kind of LIBERAL?! I rest my case!”
Judge: “OK. Have it your way, Mr. Yeh. This court finds Mr. Yeh’s argument to be without merit. Case dismissed.”
Chris Yeh: “But, but, but Clinton…”
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Chris Yeh said:
Joe, a wise man told me, you can either be right, or you can be happy.
All my readers know that I prefer to be happy. They also no that I harbor no hatred of liberals or conservatives. If agreeing with The Economist makes me a vile, evil Republican in your mind, then count me in. Believe what you want to believe, and go in peace.
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Joe said:
And (peace) also with you.
Whether you believe it or not, Chris, I am trying hard to be NON-partisan in understanding your reasoning. When I read your column, something “felt” wrong with your conclusion. It got me to thinking about a logic class I once took. I went over to Wikipedia and looked up syllogisms. I think (I haven’t made a firm conclusion, mind you), that the problem with your argument is that it uses a “fallacy of the undistributed middle.” See Wikipedia here: http://en.wikipedia.org/wiki/Fallacy_of_the_undistributed_middle
Here’s what Wikipedia says:
[START QUOTE] The fallacy of the undistributed middle is a logical fallacy that is committed when the middle term in a categorical syllogism isn’t distributed. It is thus a syllogistic fallacy.
The fallacy of the undistributed middle takes the following form:
All Zs are Bs
Y is a B
Therefore, Y is a Z [END QUOTE]Looking at your argument, I understand it as follows:
1. All great entrepreneurs (Z) are outsiders (B).
2. Republicans in Silicon Valley (Y) are outsiders (B).
-or-
2. Democrats in Orange County (Y) are outsiders (B).
3. Republicans in Silicon Valley (Y) are great entrepreneurs (Z).
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3. Democrats in Orange County (Y) are great entrepreneurs (Z).Mind you, I’m not trying to berate you on this. I just love to argue and I’m also a bit OC (like you couldn’t figure that one out).
What’s your take on this? Am I breaking down your argument fairly or am I misunderstanding the “fallacy of the undistributed middle”? Anyone else want to weigh in? I honestly do want to know if I’m wrong … or right.
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Courtney said:
Chris -
I see that Joe and Sundar have taken their time and interest as I did to try and let you know how your coming across. Please be gracious and listen to what is being said. You can attract more flys with honey….
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Chris Yeh said:
Courtney,
I definitely believe in attracting flies with honey rather than vinegar, but I also believe in fighting vinegar with vinegar. I am grateful that you and Joe have taken the time to engage in dialogue!
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Chris Yeh said:
Joe,
Thanks for your recent comment. I’m glad that you are trying to be non-partisan (as am I–I generally self-identify as independent, though I do end up voting for Democrats and Republicans because, well, that’s who ends up on the ballot).
I agree with your argument about the fallacy of the undistributed middle–note that I was careful to indicate that I was only speaking of Silicon Valley Republicans.
I would definitely speculate that Democrats in the OC make better entrepreneurs than OC Republicans.
On another level, you can see the corrosive impact that incumbency has had in Washington. When the Republicans were on the outside looking in, they actually generated interesting ideas and promoted reform. Then when they took control of Congress in recent years, they tossed their ideals aside and focused on the classic Washington activity of pork-belly and partisan politics, as exemplified by Tom DeLay and crew.
It’s also important to remember that Republicans, like Democrats are a fragmented bunch. There are the Eisenhower Republicans, Ayn Rand Republicans, and Moral Majority Republicans. Each has very different characteristics, and can barely stand the other!
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dave mcclure said:
hi, my name is dave mcclure and i’m starting a new political [sub]-group called “Dr. Seuss Republicans”… for more info on this important development, please read details on my blog.
we now return you to your regularly scheduled argument.
;)
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phil black said:
OK, i have read the article and all the comments and I must say, i’m leaving my own comment b/c it pisses me off that i wasted my time on this one. this argument is crying out for a quantitative economic theory analysis to see what the correlating factors are to success. it appears that the author has called out one piece of data and has splashed it on the headlines as THE reason. PUh-leez. it’s ridiculous to generalize as the author has done.
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Chris Yeh said:
Phil,
I believe I stated very clearly:
“I do not believe that I ever tried to “pin entrepreneurial success on just a single factor†or argue that being a Republican would “guarantee†success.
While it would be nice if a scholarly study existed to show whether or not Silicon Valley Republicans were disproportionately successful, I’m unaware of any such study, though if you can produce one that contradicts my speculation, I’m all ears.”
Ultimately, I’m just a guy with a blog commenting on what I see as an interesting possibility. I don’t claim to have followed the scientific method–after all, how many blog postings include peer-reviewed primary research?
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Matt said:
Joe,
I do not think that Chris’s logic is faulty. Rather, he has a faulty premise that makes his argument logical but nonsensical. This faulty premise is the “eternal truth” that outsiders make the best entrepreneurs. Simply note that some outsiders have failed at entrepreneurship while many insiders have prospered.
BTW, Chris is not committing the fallacy of the undistributed middle. An example of that failing would be something like:
Bananas are yellow.
The school bus is yellow.
Therefore, the school bus is a banana.Chris never really claims that entrepreneurial skill grants you outsider status which you are saying in part (1) of your post on 03.2.07 | 9:12 am.
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Phil Edwards said:
Chris-
Enjoyed the article. And I don’t necessarily think that the point is erroneous even on a logical basis (in addition to the coincidental one you describe). Computer companies of the past were founded on a certain type of democratization of information and resources, an undoubtedly bipartisan issue. However, it could be argued that companies like Paypal, which encourage economic liquidity, and their progeny, Linked in et al, encourage a certain amount of social liquidity, are conservative ideas. While Republicans don’t exclusively hold insights into the advantages of liquidity in an economic and social “free market”, it wouldn’t be incorrect to say that a lot of conservative/libertarian ideals are predicated on that theory.
My one point of confusion was at the mention of the Thank You for Smoking film- this is a liberal film, despite it’s coming from an author with Bill Buckley’s DNA. Most libertarians/conservatives wouldn’t be anti lobbying, and while many conservatives might agree with the point of the film (lobbyist structures are corrupt), it isn’t really an example of Republican or conservative principles.
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Chris Yeh said:
Phil,
I’m glad that you enjoyed the article. I have to disagree, however, in your assessment of “Thank You For Smoking.” TYFS was written by Chris Buckley, a conservative. It was rewritten for the screen and directed by Jason Reitman, a self-described libertarian. And of course the film was produced by David Sacks, a member of the PayPal team, and a former editor of the Stanford Review.
What makes the film so successful is that it defends freedom of choice, not smoking, and attacks the hypocrisy of the mainstream.
Don’t forget that this is a movie where the hero is a tobacco lobbyist, and the villains are the liberal senator and the intrepid investigative reporter.
The thing that seems to trip people up is that the movie is incredibly funny, and humor has not been a noted attribute of mainstream Republicans in the US. Nonetheless, I would argue that things like “Thank You For Smoking” and “Team America: World Police” express a point of view that Republicans would feel more at home with than Democrats.
P.S. Watch for an upcoming blog post on humor and politics.
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David Scott Lewis said:
Amen, Chris.
At least there’s the Churchill Club and the AlwaysOn Network. Thank G-d for Tony Perkins!!
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