When Silicon Valley Libertarians Realized They Needed Government, and Vice Versa

For a group of people eager to position themselves as thought leaders, it wasn’t exactly a public relations triumph. Others in the industry saw posting as counterproductive.

“There’s universal agreement that libertarian VCs screaming for bailout money weren’t helpful,” said a person involved in running Silicon Valley’s response to the crisis, who got anonymity to speak candidly about his peers in the tech industry. “Elevating startup founders or even business owners out of tech – those are better faces for the industry than a guy from Atherton who is afraid his portfolio companies will be affected.”

At the same time, anticipation was growing for some venture capital earners, among tech critics on Washington Twitter.

“Uninsured depositors – who are sophisticated risk managers – are going to suffer a loss. There is no bailout here,” tweeted Matt Stoller of the Economic Liberties Projectwhich advocates more aggressive federal intervention to counter the monopolies.

The stage seemed set for a big, messy collision between two opposing forces. Except which turned out to be little more than a revenge fantasy.

In fact, Washington was ready and willing to intervene. After a historically bad year for bond markets, Silicon Valley Bank was far from the only custodian to take a huge hit to its bond portfolio. And Silicon Valley startups were far from the only companies with huge piles of uninsured money in the banks.

And most of Silicon Valley was genuinely happy to have help. “Good news,” Sacks tweetedwith a cheering emoji, when the Fed, Treasury and FDIC announced their bailout.

Does that mean the end of sparring between the Valley and the capital? Of course not.

Now that Silicon Valley has what it wants from Washington, VCs can be free to start plotting the capital’s planned obsolescence again. And members of Congress want to keep dragging Big Tech CEOs in front of them to intimidate them.

But both sides have a lot at stake and, as SVB’s collapse makes clear, they know it.

Washington needs tech entrepreneurs to stay in the United States and not be too disappointed. While the current generation of Silicon Valley offerings make it easier than ever to start a global business from anywhere, the possibility of the next generation of global tech giants popping up outside of the United States is become more real.

As for Big Tech – as these once-nimble startups grew into giants, they became increasingly tied to the federal government. As Amazon and Facebook explore areas such as drone delivery and payments, their clashes with government decision makers — like the FAA and state money transmission authorities — are becoming more frequent and consequential.

It’s affected their corporate cultures, according to Nu Wexler, a former congressional aide and Google and Facebook veteran who now works in public relations. “Corporations were more libertarian simply because they operated in less regulated spaces,” he said.

Last year, even as Elon Musk railed against the powers that be on Twitter, his network of satellites helped keep Ukraine in line as it responded to the Russian invasion. Even Thiel, despite his libertarian provocations, is financially tied to the Pentagon and the intelligence community, some of the biggest clients of his data analytics firm, Palantir.

The libertarian ethos of startups and their most vocal supporters could also be tempered. Last year, A16Z’s Katherine Boyle released an investment thesis titled “Building American Dynamism” that called for “building businesses that support the national interest,” including national security. Back in Silicon Valley, the idea of ​​“American dynamism” might have seemed purely patriotic. Today, at A16Z, it is only the name of a fund.


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