(Bloomberg) — David Sacks, President-elect Donald Trump’s surprise pick to guide artificial intelligence and cryptocurrency policy, doesn’t have deep ties to either industry or a long experience in investing in them. What he does have, however, is even more important in the eyes of tech investors: a tech-friendly worldview and a long history of skepticism about government regulation.
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“He will ensure that the United States is at the forefront of innovation,” said Keith Rabois, who celebrated the victory with Sacks at a private home in Miami on Thursday evening. The layoffs will prevent the country from falling behind China and protect “new and emerging technologies from censorship and left-wing bias,” Rabois said.
The nomination of Sacks, one of Trump’s top fundraisers, was not widely expected in Silicon Valley. Venture capitalists have only made a handful of crypto investments and are not considered a key player in the sector. He has also made relatively few bets on AI, although he backs xAI, the Elon Musk-led startup that has raised more than $10 billion this year.
But Sacks has long criticized too much government involvement in the affairs of private companies. The 52-year-old founder of venture capital firm Craft Ventures and member of the so-called PayPal Mafia has been one of the loudest right-wing voices in the industry for years.
The move is seen as a boon for the startup world, where AI and crypto executives view government intervention as a potential existential threat. US action against crypto companies has pushed many startups overseas. And AI executives fear that overly burdensome regulations will stifle the nascent industry in the name of security.
Crypto supporters celebrated the selection, which Trump said would bring regulatory clarity to startups. “Crypto and AI are two of America’s most pressing strategic priorities right now, and David Sacks is one of the only people in the world uniquely qualified to lead this crucial role,” said Kyle Samani, Partner director at Multicoin Capital, where Sacks is an investor. The layoffs will be an “invaluable asset in shaping the future of the nation,” Samani said.
Startup competition
Trump has indicated he will take a friendly approach to both crypto and AI. Bitcoin has reached unprecedented highs since his election and he has pledged to repeal President Biden’s 2023 executive order on AI that requires developers to test the security of new models. AI is also a priority for Musk, a key Trump ally and longtime friend of Sacks.
Investor Marc Andreessen, whose company invests heavily in both sectors, was enthusiastic about Sacks’ choice. “From the Wright Brothers to Starship With Chopsticks, in one election,” Andreessen wrote on X Thursday night, referring to SpaceX’s latest achievement of landing reusable spaceships.
Sam Altman, CEO of OpenAI, also struck a celebratory note, writing on X: “Congratulations to the czar @DavidSacks!”
But there has been some trepidation about Sacks’ allegiance in the world of AI. Sacks’ Craft Ventures is an investor in Musk’s xAI, and Sacks’ ties to Musk have raised questions about how he would treat rival companies in a fiercely competitive industry. Sacks has previously criticized OpenAI, a key competitor to xAI.
In a now-deleted article on AGI. » AGI, or artificial general intelligence, refers to AI technology that can perform most tasks better than humans. Sacks did not respond to a request for comment on the post.
Sacks and Trump allies say involvement in the industry is a prerequisite for understanding it and that some perceptions of conflict of interest will be inevitable. “I think we should take people’s word for it,” said Shaun Maguire, an investor at the prestigious Sequoia Capital, which has backed both xAI and OpenAI. The layoffs “won’t hurt any competitors,” he said.
Sacks’ other bets include BitGo and Bitwise in the crypto world. In the AI space, Sacks co-founded a startup called Glue that makes chat software for businesses, and he has invested in developer startup Replit Inc. and AI writing tool CopyAI Inc. Sacks will not leave Craft, a spokeswoman said, and the new czar position will. operate as an advisory role rather than a full-time government job. The appointment will not require Sacks to divest or publicly disclose his assets. Like Musk, Sacks will be a special government employee. He can serve a maximum of 130 days per year, with or without compensation.
However, conflict of interest rules apply to special government employees, and Sacks would be required to recuse himself from any matters that could impact his assets.
Adapted to technology
There is a long history of technology executives taking advisory roles to government, said Silicon Valley historian Margaret O’Mara. But the roles don’t always have a clear mandate. “You can have a title, but if you don’t actually have a budget or people reporting to you, it’s something more ambiguous,” O’Mara said, emphasizing that Sacks would not be a member of the White House staff. “Sometimes it turns into something that has some power.”
Some industry observers would have preferred that the crypto czar and AI positions were separated – a move that could have shown the importance of each and reflected the different risks and rewards of the two technologies.
“While I am very encouraged by the pro-crypto direction of the new administration, I would have preferred separate crypto and AI czars,” said Campbell Harvey, a finance professor at Duke University . “Both require urgent and dedicated attention,” he said.
Sacks has forged a broader career, rather than focusing solely on AI or cryptography. He first made his name at PayPal, the payments company whose founders in the late 1990s included Musk and billionaire investor Peter Thiel. While in Hollywood, he produced the 2005 satire Thank You for Smoking. At Craft, his venture capital firm with stakes in Musk-owned companies including SpaceX, he has invested heavily and hosts the All-In podcast.
His comments about crypto on the podcast have not been universally positive, but he has discouraged attempts to penalize or control industry players. “The fact is you have a lot of brilliant young entrepreneurs, computer scientists who are building this financial infrastructure of the future with crypto,” he said in a 2021 podcast episode. “We don’t necessarily want to interfere with that to the point where we break it.
He has also made a lot of money from crypto. Craft Ventures invested in Samani’s Multicoin Capital in 2018, which in turn was an early investor in the Solana cryptocurrency. The token was worth less than a dollar when it launched in 2020, but reached a peak price of around $250 in late 2021. “That will end up being about $1 billion worth of Solana for us in terms of yield,” he said. Sacks said at the time. .
Most recently, in a November podcast episode after Trump’s election, Sacks took aim at the Securities and Exchange Commission’s aggressive stances on crypto under its chairman, Gary Gensler. “The days when Gensler terrified crypto companies – those days are about to be over.”
–With help from Shirin Ghaffary, Olga Kharif, Katie Roof and Jackie Davalos.
(Updated with historian’s comment in 15th paragraph.)
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