When Silicon Valley libertarians realized they needed government, and vice versa

For a group of people eager to position themselves as opinion leaders, this wasn’t exactly a PR triumph. Others in the industry saw the display as counterproductive.

“There’s universal agreement that libertarian VCs clamoring for bailout money weren’t helpful,” said one person involved in managing Silicon Valley’s response to the crisis, who was granted anonymity to speak candidly about colleagues in the tech industry. industry. “Bringing startup founders or even business owners outside of technology – those are better faces for the industry than a guy in Atherton who is worried about his portfolio companies being hit.”

At the same time, anticipation for some VC merit was growing among tech critics on Washington Twitter.

“Uninsured savers – who are sophisticated risk managers – will lose out. There is no rescue operation here’, tweeted Matt Stoller of the Economic Liberties Projectwhich calls for more aggressive federal intervention to counter monopolies.

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

Washington was even prepared to intervene. After a historically bad year for bond markets, Silicon Valley Bank was far from the only depository institution to take a huge blow to its bond portfolio. And Silicon Valley startups were far from the only companies with huge piles of uninsured money in banks.

And most of Silicon Valley was genuinely happy with the help. “Good news,” Sacks tweetedwith an applause emoji, as the Fed, Treasury and FDIC announced their rescue plan.

Does this mean the end of the sparring between the valley and the capital? Of course not.

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

But there is quite a lot at stake for both sides, and they know it – as the collapse of the SVB makes clear.

Washington needs tech entrepreneurs to stay in the US and not get too disillusioned. As the current generation of Silicon Valley offerings make it easier than ever to start a global business from anywhere, the possibility that the next generation of global technology giants will originate somewhere other than the US has become more real.

As for Big Tech, as those once nimble startups have grown into corporate giants, they are increasingly tied to the federal government. As Amazon and Facebook explore areas such as drone delivery and payments, their clashes with government policy makers — such as the FAA and government money transmission agencies — are becoming more frequent and consistent.

This has affected their corporate culture, according to Nu Wexler, a former congressional aide and veteran of Google and Facebook who now works in public relations. “The companies were more libertarian just because they operated in more unregulated spaces,” he said.

Last year, while Elon Musk was ranting at those in power on Twitter, his network of satellites helped keep Ukraine online in response to the Russian invasion. Even Thiel, despite his libertarian provocations, is financially intertwined with the Pentagon and the intelligence community, some of his data analytics firm Palantir’s biggest clients.

The libertarian ethos of startups and their most vocal mainstays can also be tempered. Last year, A16Z’s Katherine Boyle published an investment thesis titled “Building American Dynamism” that called for “building businesses that support the national interest,” including in the field of national security. At one time, in Silicon Valley, the idea of ​​”American dynamism” might have seemed corny patriotic. Today at A16Z it is just the name of a fund.

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