Tales from the PayPal Mafia: Elon’s Hatchet Man & Thiel’s Test

Elon Musk
Photo by Patrick Pleul via Getty Images
Theodore Schleifer
April 26, 2022

Truth be told, incredible wealth doesn’t guarantee incredible power. Many billionaires, in fact, have no discernible impact on public life whatsoever. But when the world’s wealthiest man buys America’s most influential media platform? You betcha. The 0.001 percent are now personally capitalized for vanity projects far beyond mere yachts or sports franchises, such as taking control of a social network with the power to set the daily news agenda and inflame our most noxious cultural debates.

Of course, Elon Musk didn’t do it alone. His public takeover of Twitter was facilitated in part thanks to the quiet efforts of Jared Birchall, the intentionally low-profile chief executive of Elon’s family office, Excession LLC. Family office heads can control billions in deployable capital, but they often remain totally anonymous. And given that they are investing the fortune of some larger-than-life figure, they tend to have Scottie Pippen alpha-adjacent personalities. Many family office employees don’t even identify where they work—not that it is actually a secret to anyone in finance, but the culture of wealth management is rooted in discretion. (You’ll see “UHNW Family” or just “Family Office” as their employer on LinkedIn.) 

The job of leading a family office for a celebrity appears, on the surface, to be rather glamorous. “I work for Elon” plays well at Milken or Davos. But as any wealth manager who has been around the block will tell you, these jobs can be downright awful—they don’t just involve asset allocation and manager selection, but also non-financial extracurriculars: scrambling yachts across the Mediterranean on zero notice; managing household staff; dealing with kids, ex-wives, and nosy reporters. (For what it’s worth, I’ve found Birchall to be perfectly polite.) You’re also accountable to a single person—it’s more stable, and generally more lucrative, to remain at a big firm with more total clients, like Birchall did before coming to Excession from Morgan Stanley Wealth Management in 2016.

And for a client as mercurial and, shall we say, idiosyncratic as Elon, well, you can imagine what it’s like to lead that family office: Birchall, a B.Y.U. grad, ran point on Musk’s expedition to smear as a pedophile the man who criticized Musk’s attempt to intervene in a cave rescue operation several years ago; during the defamation case, Birchall acknowledged that he had assumed a pseudonym to hire a private investigator (who turned out to be an ex-con) to dig up dirt on the critic. (“I work in finance. I have a family. This isn’t what I do,” he testified in the deposition, explaining the pseudonym.) When Musk floated creating a Rate my Professors-style site for journalists, called Pravda, to push back against what he saw as biased media coverage, Birchall filed the paperwork to make it happen. Other ventures have been more traditional: Birchall has also served as an executive at Neuralink, the brain-implant startup founded by Musk. Typically, as one person close to many U.H.N.W. family offices put it, finance professionals like Birchall want nothing to do with these adventures that aren’t about growing A.U.M. But “invariably, it’s involved.”

When it comes to actual financial matters—the core expertise of a family office—managing Elon’s wealth has been relatively straightforward. Unlike, say, Bill Gates, an unusual amount of Musk’s astronomical net worth is tied up in SpaceX, a private company, and Tesla, a public company in which Musk has, until recently, been reluctant to sell shares. He is not particularly diversified: Musk, early to the nomadic lifestyle, even sold seven of his homes over the last few years. So Excession was a pretty small shop with just two staff, as of Birchall’s 2019 testimony, and without a ton of activity. One of Birchall’s duties, as I’ve previously reported, has been coordinating Elon’s nascent charitable efforts, reaching out to other people in the sector to solicit ideas, make hires and cut checks. (Though as his Twitter bid made clear, and as he said recently, Elon thinks about his “impact” through a much-broader lens than traditional nonprofit “philanthropy.”)

Any boredom or narrowness to Birchall’s job, though, is firmly in the past. In his initial filing and takeover offer a few weeks back, Elon implored the Twitter board to “call my family office with any questions.” Over the last few weeks, Birchall has accomplished a real feat of financial engineering. Birchall has served as Elon’s conduit to his old friends at Morgan Stanley, where the financier used to work, and he helped Elon secure an unprecedented private financing package—part L.B.O., part margin loan collateralized by his Tesla stock. Musk is responsible personally for the remaining $21 billion by the time of close; it’s unclear exactly how he’ll finance that part—some of it is likely to come from a stock sale of his Tesla shares, though Elon could also pull in other equity partners, including existing shareholders. As a result, a hefty tax bill, another part of the family office chief’s concern, may be in the offing. An extraordinary deal such as this one—believed to be the largest M&A transaction in which the acquirer was a private individual—is precisely the reason why Birchall earns his keep.

Reid Hoffman Takes On the Far Left

There are few political donors I pay closer attention to than LinkedIn cofounder Reid Hoffman—another alum, alongside Musk, of the PayPal Mafia—who transformed himself into a peerless Democratic big-money force during the Trump years. Since then, it’s been less clear to the Democratic establishment just how engaged Hoffman intends to be in politics going forward, which is precisely why I am always on the hunt for clues to his state of mind. And I just found a fascinating one.

To wit, Hoffman recently made a $500,000 donation to a new, somewhat stealthy political group called Mainstream Democrats PAC. It has an anodyne name, but a description of the PAC’s mission hints at how Hoffman, who spends much of his time near the remote San Juan Island north of Seattle, is thinking about the 2022 midterms, in which Democrats are expected to suffer serious losses. “Some far-left organizations are attempting what they themselves call a ‘hostile takeover’ of the Democratic Party,” according to a statement on the group’s bare-bones website. “That makes it more difficult for Democrats to win the swing seats that make a majority and weakens the party’s ability to govern.” The PAC’s purported mission is to “defend mainstream Democrats and defeat extreme candidates whose stated goal is ‘to overthrow’ the Democratic Party.”

It’s no revelation that Hoffman is one of his party’s more centrist donors. He supported Joe Biden’s super PAC toward the end of the primary, is a big fan of other centrists like Mike Bloomberg, and has been privately worried about the rise of progressives like Bernie Sanders. But like many Democratic mega-donors, especially in Silicon Valley, Hoffman is active, but not quite as active, in politics as he was in the Trump era. His biggest bets of the 2022 cycle have been on what is considered his “narrative change” portfolio: He has backed Tara McGowan, an operative trying to build a network of progressive newsrooms, with a few million (the exact amount wasn’t disclosed), and has also placed a similarly-sized bet on PushBlack, a media group focused on mobilizing Black voters. Another rather novel Hoffman priority this cycle, which I revealed in October, is his $1 million investment to change how elections are run through open primaries with ranked-choice voting. (Hoffman recently sent $100,000 to try and make it happen in Nevada, for instance.)

Now, though, Hoffman appears to be acting out of concern for the party’s ideological drift. Hoffman is effectively Mainstream Democrats’ anchor donor, making a $500,000 donation just eight days after the group quietly launched in February. Of the $1 million it has raised in total, I’m told much of the other $500,000 has been raised by Hoffman and his team, too. The logic? Hoffman agrees with conventional wisdom that Democrats are likely heading for a hard defeat in the November midterms, but he is particularly concerned about a few high-profile progressive standouts that could be used to tar the party’s brand on places like Fox News, according to a person close to the group. In response, they intend to focus on a half-dozen or so Democratic primaries where a polarizing nominee most puts the broader party at risk. “Do you spend $50 million to lift up the Democratic brand—or do you spend a few million to stop it from being so damaged in the first place?” posited my source. “Unfortunately, if we don’t spend some of this money making sure that our side’s crazies are not in office, it’s just going to overwhelm our efforts overall.” Watch for them to battle candidates backed by Justice Democrats, Our Revolution, and other lefty populist groups.

A spokesperson for the super PAC, whose existence hasn’t previously been reported, declined to answer questions on the record. The group did, however, disclose in a new F.E.C. filing that it is targeting Nina Turner, the far-left Bernie acolyte who is primarying an incumbent Democratic congresswoman, Shontel Brown, in an election next week. And there is one other clue: Mainstream Democrats shares staff, offices and other resources with another PAC that has gone after Turner, the Democratic Majority For Israel—which, despite its name, has been focused on beating back liberals more broadly. Now, with a new brand and with Hoffman’s help, the group is going bigger.

Peter Thiel’s Judgment Day

I wrote last week about the political adventures of Peter Thiel, Hoffman’s college buddy on The Farm, and another PayPal Mafia member who is waging his own political mission, of to-be-determined scale, to reshape his party’s ideology. Thiel faces the music just one week from today, when J.D. Vance, the Ohio Senate candidate and Thiel mentee, faces Republican primary voters.

Thiel is on the cusp of helping to secure a massive, unexpected political win: Vance is surging in Ohio after winning the endorsement of Donald Trump, which unlocked $3.5 million more in money from Thiel (and at least $1.5 million in cash elsewhere). He also received a boost when Trump promoted him at a rally over the weekend. A new poll released on Tuesday showed, for the first time, Vance in first place. Meanwhile in Arizona, Blake Masters—the other Thiel mentee running for Senate—won the endorsement of Josh Hawley, another Thiel favorite. A Trump endorsement of Masters seems quite possible later this summer, especially if Vance wins his primary.

It’s worth noting that Thiel’s money has not been determinative in either race—in Ohio, two of Vance’s competitors are major self-funders, and Josh Mandel has the anti-Vance Club for Growth spending big for him, despite Trump reportedly telling them last week to “go fuck yourself.” Outside spending in Ohio has now eclipsed $30 million. If he wins, of course, Vance will be in for a very expensive race against the Democratic nominee, Tim Ryan, requiring probably even more money from Thiel. One person who has been thinking a lot about the Ohio Senate race, and may be on the other side of Thiel in a general election, I hear? His college friend—Reid Hoffman.