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- Did Silicon Valley Just Go Republican?
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I’m going to start doing a few posts on how I see business and tech changing as a result of all the political and geopolitical shifts happening right now. I’m calling those posts: The New Rules.
Let’s dive in…
Over the last few weeks we’ve seen an increasing number of key Silicon Valley leaders lining up behind Donald Trump.
First, two hosts of the number one US podcast, All In, hosted a fundraiser for Donald Trump. It’s true that one of those hosts, David Sacks, has been a long time Republican but the other, Chamath Palihapitiya, was not.
Then Trump came on their podcast.
And then this last week saw a flood of news with the two founders of one of the largest venture capital firms in the world, Marc Andreessen and Ben Horowitz, officially endorsing Trump around what they are calling their Little Tech Agenda.
Next came Elon pledging $45m PER MONTH to a Trump superpac through the election. We also saw Trump select a former venture capitalists, JD Vance, as his running mate.
What’s going on here? This is Silicon Valley after all. With a few exceptions like David Sacks and Peter Thiel, this has been a Democratic strong hold since the early 1990s at least and almost every person named here (Chamath, Andreeson, and Elon) supported Hillary Clinton 8 years ago.
Why the change?
Is It Opportunism?: One sentiment I’ve detected from many commentators including from some fellow VCs over at the More or Less podcast is that this is just opportunism.
Many now feel a Trump victory is inevitable and why not get on the winning team? I get the sense that the liberal stalwarts of the Valley like Reid Hoffman and Vinod Khosla feel this way as well. I think there’s an element of this of course but it isn’t just blatant opportunism. There are real issues at stake here.
The Little Tech Agenda: Many of those issues were embodied in Andreessen and Horowitz’s proposed agenda. In their view, Trump is better overall for the start up economy that is so vital to national innovation and their returns.
After reading the manifesto, I see legitimate concerns. On AI regulation, the Biden Administration has seemed to want to move toward a European-style tech suicide attempt and its recent wealth tax proposal is clearly ridiculous.
It’s also true that Biden Administration’s appointees like Lena Kahn have chilled the market for Big Tech mergers and acquisitions. That’s a problem for Little Tech in that they eventually need to either IPO or get acquired. The IPO market is difficult right now and it’s the Big Tech companies that have the money to do the acquisitions.
They also highlight Gary Gensler’s assault on crypto which has thwarted many startups attempts to mature the sector.
But Is This A Match Made In Heaven?: At the same time, there are a lot of potential issues between all these players and a potential Trump Administration.
In reality, I don’t think the situation with the Biden Administration is as bad as Marc and Ben make it out to be. The wealth tax proposal is clear election year nonsense and it will never pass. Even the people who drafted it must know this and the AI executive order has little in the way of teeth and is far from being enshrined in law. You could even see both of these policies as ways to placate the far left with initiatives that will have no effect in the end.
I also cringed a bit when they led the agenda with crypto. The importance of this technology as anything other than a way to sell securities without regulation seems dubious to me. But I’m open to being corrected on this.
Additionally I also see several potential conflicts looming for these right leaning tech leaders. These include:
Immigration: The Trump Administration will be hostile to immigration. It’s possible there is some accommodation for higher skilled immigration but this is going to be flash point. There are many elements in Trump’s world that want to restrict immigration of all types.
Elon?: I can’t help thinking about why Elon’s going all in on Trump. He owns several big tech companies. Tesla is one of top 10 largest companies in the US after all and, even beyond that, wouldn’t a Trump Administration pull support/subsidies for electric vehicles? Of course, Trump will put tariffs on Chinese exports but the Biden Administration has already done that.
M&A: Another issue will be mergers and acquisitions. It’s likely that the Trump Administration will be more permissive about big company M&A but JD Vance has said the Lena Kahn is his favorite member of the Biden Administration. Does this signal a longer term suspicion of big business and end to that permissive attitude?
I think it does but my guess is Trump can paper over the issues for now but watch this a major potential flash point with his new Valley allies.
The Valley is Realigning: In the end what I see is a Silicon Valley that is realigning politically as almost every major demographic and interest group is across the Western world. The New Rules of tech are like everything else.
The old categories are breaking down and as a result, the Valley won’t realign as a cohesive block but rather as a diverse set of interests. I’m not sure whether I believe it’s necessarily Little vs Big Tech that will be the dividing line. As I pointed out above, issues like M&A bring those groups together while players like Elon seem to defy the pattern. I also see no similar rightward trend from smaller VCs like Khosla or Reid Hoffman.
I’m keeping an eye on this and thinking through how that realignment shakes out. Right now I’m just mostly confused.
Keep growing,
Alan
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