Peter Thiel thought about the election like a venture capitalist

When Peter Thiel announced that he would endorse Donald Trump at the Republican National Convention back in July, he got an earful from his fellow technology moguls.

“His friends have generally begged him not to support Trump,” San Francisco journalist Greg Ferenstein told me at the time.

Thiel made his fortune as a co-founder of PayPal and an early investor in Facebook, so he’s well-known across Silicon Valley. And virtually all of his friends and business partners thought he was making a huge mistake. The prominent startup accelerator Y Combinator even came under pressure to sever ties with Thiel over his Trump endorsement.

But Thiel held firm, and to the astonishment of everyone else in Silicon Valley, Trump won. As a result, over the next four years, Thiel will have vastly more influence over American politics than anyone else in the technology world. There are rumors that he may even be tapped to run Trump’s transition team.

A lot of people scratched their heads when Thiel first backed Trump because Thiel’s stated argument — that Trump can bring competence back to Washington — didn’t make a ton of sense. Trump’s views on issues like trade and immigration are also out of step with Thiel’s own libertarian views.

In retrospect, though, there’s an obvious explanation: As a venture capitalist, Thiel knows a good bet when he sees one.

Venture capitalists are in the business of backing small, long-shot companies with a small chance of a really big payoff. Thiel’s decision to back Trump had a similar structure. The costs of doing it, to him, weren’t that high.

And the payoffs to being the only tech investor backing Donald Trump are enormous — both in personal terms and in terms of ideas Thiel cares about. In personal terms, Thiel’s company Palantir is currently competing for a $206 million contract with the military. In intellectual terms, Thiel is likely to have Trump’s ear as the president-elect scrambles to staff his administration and flesh out his policy agenda.

Of course, the costs of backing Trump were lower for Thiel than they would have been for other technology billionaires. Thiel has long courted controversy, once writing that “I no longer believe that freedom and democracy are compatible” and arguing that allowing women to vote has undermined his libertarian conception of freedom. He attracted condemnation in some quarters — and praise in others — for backing the Hulk Hogan lawsuit that put Gawker out of business. Backing Donald Trump simply adds to Thiel’s existing reputation as out of step with Silicon Valley’s prevailing liberal norms.

And while Trump was rightly viewed as the underdog, people should have anticipated that he wasn’t that much of a long shot — especially when Thiel first endorsed Trump in July. A lot can happen in the four months between the conventions and the election. For example, a massive financial crisis in September and October 2008 ruined John McCain’s chances of becoming president.

None of this is to say Thiel was morally right to back Trump. But as far as his own influence is concerned, he made a remarkably savvy bet that will pay off big over the next four years.