For a group of people keen to position themselves as thought leaders, this wasn’t exactly a PR triumph. Others in the industry saw the ad as counterproductive.
“There is a general consensus that libertarian VCs clamoring for bailouts have not been helpful,” said one person involved in Silicon Valley’s response to the crisis, who was granted anonymity to openly date peers to speak to the technology industry. “Promoting startup founders or even business owners outside of tech — those are better faces for the industry than some guy in Atherton who’s afraid his portfolio companies might get hit.”
At the same time, anticipation of some VC comeuppance was growing among tech critics on Washington Twitter.
“Uninsured depositors – who are experienced risk managers – will take a loss. There is no bailout here.” tweeted Matt Stoller of the Economic Liberties Projectwhich advocates more aggressive federal intervention against monopolies.
The stage seemed set for a grand, chaotic collision between two balancing forces. Except this turned out to be little more than a revenge fantasy.
In fact, Washington was ready and willing to intervene. After a historically poor year for bond markets, Silicon Valley Bank was far from the only custodian to take a big hit on its bond portfolio. And Silicon Valley startups were far from the only companies with huge stacks of uninsured cash in banks.
And most of Silicon Valley was really glad to have the help. “Good news,” Sacks tweetedwith an applause emoji as the Fed, Treasury Department and FDIC announced their bailout plan.
Does that mean the end of the sparring between the valley and the capital? Of course not.
Now that Washington’s Silicon Valley has what it wants, venture capitalists may be free to resume planning the capital’s planned obsolescence. And members of Congress want to keep dragging big tech CEOs in front of them for intimidation.
But both sides have a lot at stake and, as the SVB bankruptcy makes clear, they know it too.
Washington needs tech entrepreneurs who stay in the US and don’t get too disillusioned. As current-generation offerings in Silicon Valley make it easier than ever to launch a global business from anywhere, the possibility of the next generation of global tech giants emerging somewhere other than the US has become more real.
Washington needs tech entrepreneurs who stay in the US and don’t get too disillusioned. | J. Scott Applewhite/AP photo
As for Big Tech, as these once nimble startups have matured into corporate behemoths, they’ve become more tied to the federal government. As Amazon and Facebook explore areas like drone delivery and payments, their clashes with government policymakers — like the FAA and state money transfer agencies — are becoming more frequent and consequential.
According to Nu Wexler, a former congressional assistant and Google and Facebook veteran who now works in public relations, this has impacted their corporate cultures. “Companies were more libertarian just because they operated in more unregulated spaces,” he said.
Last year, when Elon Musk railed against the powers that be on Twitter, his satellite network helped keep Ukraine online as it responded to the Russian invasion. Even Thiel, despite his libertarian provocations, is financially intertwined with the Pentagon and the intelligence agencies, which are among the largest clients of his data analytics company Palantir.
The libertarian ethos of startups and their most vocal supporters might also be toned down a bit. Last year, A16Z’s Katherine Boyle published an investment thesis entitled “Building American Dynamism,” which called for “building businesses that support the national interest,” including national security. Once upon a time, in Silicon Valley, the idea of “American dynamism” might have seemed kitschy patriotic. Today, at A16Z, it’s just the name of a fund.