Peter Thiel v. Nick Denton

Gawker’s demise had nothing to do with First Amendment principles; it is a classic story of founder ego, poor risk management practices, and sloppy leadership.

Bud Fox: Why do you need to wreck this company?

Gordon Gekko: Because it’s wreckable.

Peter Thiel and Nick Denton

Through his own negligence, Nick Denton’s Gawker became wreckable.

A civil war rages between First Amendment fanatics like Jeff Bezos defending Nick Denton (as the owner of the Washington Post, he is a bit conflicted), and the original bad boy of the internet, Peter Thiel, the Silicon Valley billionaire, co-founder of PayPal and early investor in Facebook, who helped fund professional wrestler turned libel plaintiff, Hulk Hogan.

Just two internet heavyweights locked in a struggle over independent journalism vs. unfettered capitalist power play. At least that’s what the mainstream media is selling.

Whereas anyone who understands the media business knows the real issue comes down to managerial competence.

In my day, here is how we handled the risk of libel (at Forbes where I was publisher)…

The CEO would emerge from a black SUV flanked by a smartly dressed retinue wearing “how great to meet you” smiles on their faces. Malcolm Forbes, the late great entrepreneurial publishing magnate, and his four sons, with me tagging along, waited downstairs to take the CEO on a journey through the 19th Century world of the Forbes media empire. A long marble staircase led to a hallway of lavish Napoleonic art before a glittering corporate dining room. There was one catch, you had to walk past a door leading to a large, featureless room with a gaggle of reporters hovering over mounds of paper. We would stop briefly to examine manuscripts covered in red grease pencil.

Today we would call them analysts. At the time, desktop actually meant the top of a desk and we had a different name, fact-checkers. Malcolm Forbes (and later his son Steve) would tell the CEO, “When our reporters take you to task, we earn the right to make sure we’re right.”

More practically, if Forbes said you screwed up we needed an ironclad reason why, not just an opinion or how the mood struck us. No reporter did his or her own fact checking and each fact had to be confirmed with the independent checker’s initials. If there was an error after it was published, there would be a reckoning. That meant a long walk to Malcolm’s office and usually, an abrupt ending to one’s Forbes’ career. It concentrated the fact checker’s mind wonderfully.

The business end of the procedure was held in the offices of Ten Shad, our notoriously shrewd libel attorney. He cost Malcolm Forbes hundreds of thousands a year to be sure we didn’t cost ourselves millions. But because of his efforts, readers could bank on what we published. He would work directly with editor-in-chief Jim Michaels (whom Warren Buffett called the best editor in business journalism). They would look at an article like two tailors fitting a wedding dress. Ten would ask for a nip here and a tuck there. Jim would add an inch here and let it out there so that what emerged was powerful, edgy, and libel-proof.

Nick Denton was a journalist before he became a great zillionaire tech sensation. Which is why all the fuss over First Amendment principles doesn’t ring true. If he cared about First Amendment rights he would have safeguarded them through good fact-checking and legal due diligence. Go after Hulk Hogan as hard as you can. But be sure there’s a paper trail a jury can follow and you are on the side of the angels or at least close by. Then back that up with libel insurance. Now you can be as naughty as you wish.

There are only two reasons for ignoring this regimen: too sloppy or cheap. Perhaps a third. Too arrogant.

Denton knew better. But saying First Amendment rights are threatened is so virtue signaling in an era where popularity rests largely on one’s victimization.

Peter Thiel is a Stanford philosophy major, which may be the key to untangling this raison d’etre. He is more well known for being a venture capital investor (co-founder of PayPal along with Elon Musk and Max Levchin) and a brilliant attorney (Stanford Law 1992). The chance to make money by a legal stratagem from a scoundrel sheet like Gawker must have seemed very tempting philosophically and financially. The father of JFK once said, “when there’s cake on the table, eat it.” For Thiel, Gawker’s transgression wasn’t a pornographic video, it was Denton’s hubris to place a bet that he was beyond the rules of legality. There was history between them, to be sure. But there was also cause, thanks to Denton’s arrogance or incompetence, or both.

Jeff Bezos defended Gawker. First Amendment issues are at the heart of his claim, “Thiel needs to develop thicker skin.” But his heart isn’t really in it, his wallet is. Bezos loves easy targets, after all, he clobbered independent bookstores across America. I’m not at all sure how that helped preserve our Freedom of Speech, and I sort of doubt that even crossed Bezos’ mind at the time.

A more accurate defense for Bezos would focus less on the First Amendment than on “best practices” which his electrical engineering and computer science degrees from Princeton (summa cum laude) have prepared him.

Quality control in journalism presumes strong libel and fact-checking procedures so that audience eyeballs see what is legal as well as useful. Freedom of Speech is so important that assuring quality control would seem obvious even when the quality in question is Hulk Hogan’s.

To a publisher the lesson is palpable, drag race all you want, but wear a seatbelt.

So weep not for Nick Denton. He knew what he was doing, or more accurately, what he wasn’t.

Professor of Leadership. Extraordinary Lives Project. Author “Be Somebody” (2021); 2019 Telly Award; ex-publisher Forbes