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Peter Thiel must tread carefully between Trump and Palantir, experts say
Billionaire Peter Thiel 's solitary support for Donald Trump is not his only tie to the new administration: A company he co-founded, Palantir , also receives millions of dollars annually from the federal government.
In helping Trump, Thiel will likely have to be careful to limit his reach over decisions that impact Palantir's multimillion-dollar contracts, as well as his large web of investments across the technology sector, experts said.
Thiel, known best for co-founding PayPal (NASDAQ: PYPL) and sitting on the board of Facebook (NASDAQ: FB), is a member of the Trump transition team, where he will assist the president-elect in making about 4,000 political appointments, shape policy agendas and assess the scope of the president's $4 trillion budget, according to the nonpartisan Partnership for Public Service.
Trae Stephens, a principal at Thiel's Founders Fund, which has invested in Palantir, and a former Palantir employee himself, has also been tapped for the transition team working on defense, according to Bloomberg.
"If [Thiel]'s in the room where they start talking about Facebook's fake news, or an issue about a national security program that affects their interests — even if they don't mention Palantir — if he's in the room and they start talking about them, he's got to leave the room," said Norman Eisen, who worked on the Obama transition team and served as special counsel to the president for ethics and government reform.
"And if he does work on the NSA [for Trump] and suddenly one of the issues that Palantir billed on comes up, he can't call the NSA and say, 'Hey, remember me.'"
It's unclear what his role is in the transition, but Thiel is no stranger to working with the government: Palantir received about $83 million from the government this year and is backed by the CIA's venture arm, In-Q-Tel. The company already had strong "relationships up at the fort," or NSA , according to emails leaked by WikiLeaks.
In joining the team, Thiel and Stephens would likely have signed the Trump transition team's code of ethics, which requires they disqualify themselves from involvement in any particular transition matter which may directly conflict with a financial interest, and address any appearance of a conflict with the general counsel. (A spokesperson for Thiel declined to say whether either had signed the agreement.)
That's no small task, given Thiel's portfolio of start-up investments in everything from health insurance to advertising to energy, and Palantir's "tens of thousands" of users across the Department of Defense and intelligence community.
While Thiel has much at stake in the financial decision of Trump's nominees, he doesn't have to deal with the rigorous ethics agreement that limits those who will be officially employed by the Trump administration, and often requires blind trusts and the divestiture of assets.
Meanwhile, thanks to a recent hard-fought lawsuit, Palantir is free to bid on an even juicier contract under Trump's administration: an Army computer system that's reportedly worth more than $200 million. Palantir is also sparring with the Department of Labor over its hiring practices.
The start-up is notable for being ultra-secretive , making its ties to the new administration less obvious.
"As a libertarian ... he ought to believe in transparency and he would be willing to share that information [about his ethics agreement with Trump]," Eisen said, calling Palantir's interests the "second-biggest secret" in the Trump transition, behind the president-elect's tax returns.
It can be harder to nail down the appearance of a conflict of interest in the case of classified contracting, since the scope of the contracts is unknown, said Steven Schooner, a professor of government procurement law at George Washington University.
"Government employees are not supposed to hold government contracts. Where it gets a lot more interesting is actual conflicts of interest versus apparent conflicts of interest," Schooner said. "Almost any job that [Thiel] has would not involve choosing contracts."
Thiel has long preached the limits of politics, writing that "the great task for libertarians is to find an escape from politics in all its forms."
Despite the potential of Trump's ethics code, other tech executives — many of whom lambasted Trump's campaign — are already hoping that Thiel will use his access to Trump's ear to further the agenda of technology companies . Aside from Virginia Rometty , CEO of IBM (also a government contractor), Thiel is one of the few technology executives in the fold of the new administration.
Meanwhile, at least one of Trump's picks so far could have positive ramifications for Palantir: Michael Flynn , a Trump national security adviser who has pressured the Army to move to a new computer system, like those offered by Palantir.
Regardless of Thiel's influence, there's a growing trend of marrying commercial technology with government innovation, said Jeff Ryder, founder and CEO of Glacier Point, which helps connect start-ups to the aerospace and defense industry.
Though he declined to comment on Thiel or Palantir's role in the new government, Ryder said that Gen. James "Mad Dog" Mattis, Trump's pick for secretary of Defense, is known as an intellectual warrior who's open to innovation.
"There's definitely a lot of energy toward increasing collaboration with start-ups, but it's still in the experimental phase," Ryder said. "It's not yet really crystallized as a clear model on how start-ups should go to work with government ... but there is definitely a question mark as to what the new administration will do."
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