David Sacks Part III

The War Comes Home

Sep 22, 2023

Welcome to the conclusion of my series on David Sacks. I thought I should probably outline a thesis for why exactly I’m writing this. Admittedly, I have probably relied too heavily on innuendo and left you, dear reader, a lot to put together yourself for the sake of revealing some kind of pseudo-mystery at the end. This piece is the outline of David Sacks’ journey as a political actor after disappointing results in the 2022 midterms. You will see how exactly right wing tech capitalists came into the limelight for the first time and how they generally failed to get any real popular support. David Sacks is at the center of this, and embodies the actions and failures of many other conservatives in America.

I chose David Sacks for this project because he is probably the most interesting of these would be oligarchs. He’s not as charismatic as Elon Musk, not as Machiavellian as Peter Thiel, certainly not as rich as either, but he’s incredibly persistent in getting his point across. Musk and Thiel were both technically Sacks’ boss at one point or another, and you can see that in Sacks’ more bold approach to dealing with politics. David Sacks tries to be so many things, a libertarian, a right wing populist, an anti-interventionist, a monetary interventionist, the list goes on. In his attempts to make these all work together, he fails. David Sacks is almost impossible to describe, god knows I’ve tried. He is an ever changing ideological mosaic made up of not just the bar graphs of his investment portfolio, but also the very human emotions that come with political commitment. David Sacks isn’t cold and calculating, if he was, then I would just be writing about Peter Thiel minus a digit on his net worth. Instead, David Sacks is a man whose idiosyncratic approach reveals the human emotions undergirding the broader ideology of Silicon Valley conservatives. Among so many cynics and ironically detached peers, David Sacks is a Rosetta Stone. As I’m writing this, I find myself getting sentimental. I started this to write about this middle age South African guy who threatens to self harm his stock portfolio if Jerome Powell doesn’t pay attention to him. Finishing, I feel like I understand more, not agreeing with him on anything, but understanding David Sacks beyond a mid life crisis. I don’t know, maybe it’s just my emotions, maybe it’s Stockholm Syndrome, maybe it’s because I found David Sacks’ Quora account and he was asking a lot of questions about Harry Potter.

Where was I? Oh right, David Sacks eating it in the midterms. You probably want to hear about that.

Chapter I: Break Things

David Sacks was crestfallen at the results of the 2022 midterms. Most of the money he donated was essentially flushed down the drain, either going to a senator who would probably rather not associate with Sacks at this point or to an outright loser that did historically poorly in his state. But there was one diamond in the rough, one new ally that Sacks secured in his political misadventures of 2022. Not only was he friendly to Sacks, he was pretty much the only Republican to outperform his predicted results. In the wake of Trump-backed candidates who failed horribly, there was, at least for a moment, one shining north star for the GOP. It was none other than Florida governor Ron DeSantis.

DeSantis emerged from 2022 basking in the spotlight of the country’s various pundits. He proved to them that the GOP didn’t have to lose, they could win, which was a very comforting message for those fed up with Trump’s antics. By this point, DeSantis had already been something of a media darling or pariah, depending on who was covering him. But being a pariah was crucial for DeSantis, who had been taking unusual and/or drastic measures as governor ever since the pandemic began. These weren’t necessarily all in response to the pandemic, but that’s when he first gained national notoriety. After 2020, he started doing things like severely restricting the ways public schools can teach the topics of race and sexuality, getting into legal battles with Disney, sending flights of migrants to Martha’s Vineyard, and waging a general war against “woke”. It was pretty obvious to anyone that this was being done to raise DeSantis’ national profile ahead of a presidential run. You don’t pick a fight with Mickey Mouse unless you’re drunk at Disney Land, trying to display your culture war credentials to the country, or both. Probably the most ridiculous of these was when DeSantis declared he would fight a supposed gas stove ban that the Biden administration was going to implement to prevent climate change. That wasn’t true, there was proposed regulation on gas stoves to prevent potential childhood asthma caused by them, and only 8% of Floridians even used a gas stove [3]. Even with all this effort to appeal to the national voter base at the expense of most Floridians, DeSantis managed to still win his race by almost 20 points.

The appeal of DeSantis as a candidate is pretty straightforward, he got elected by 19 points and over performed in a year that most Republicans underperformed. Any popular governor is almost guaranteed to be floated as a name when their the primaries come around, and DeSantis was no different. On top of this electoral strength, the Florida governor had a wide range of niche appeals as well, some of which seemed to get the attention of David Sacks. Given what we know of Sacks’ predictions and assertions before the election, he clearly sees a future in “populism”. Despite this, he also dislikes Trump with a passion, believing that he lost the 2022 election with his brand of rhetoric. So naturally, when DeSantis was combining the social issues that right wing populism needs to survive with good electoral results, it was a match made in heaven. There was also the fact that DeSantis is young, which Sacks brings up in his 2022 post mortem.

Ron DeSantis had the makings of a once-in-a-generation politician. He was leading from the front in the culture war and outpacing the rest of his party. But he was also at a crossroads, facing down the prospect of opposing Trump in the primary, the man who helped get him elected by a slim margin in 2018. Instead of facing the former president down directly through the traditional avenues of discourse, DeSantis would need help getting traction for his new vision so it could be appealing to the rest of the country. It would have to get the attention of both moderate Republicans, and disillusioned Trump supporters that felt betrayed. Give the former some more sensible fiscal policies, give the latter rage and vitriol towards their enemies. It wasn’t guaranteed to work, but with this much growth potential a venture capitalist like David Sacks would be a fool to not get in on the ground floor.

DeSantis clearly sought to be a tastemaker like Trump, operating independently of the typical power structures of the GOP. DeSantis was ambitious, politically flexible, and seemingly popular, everything that David Sacks wanted in a candidate. After about eight hours of no commentary on election night from the usually politically verbose Sacks, he posted a picture at 1:37 AM on November 9th. There was no caption, it was simply the cover of the New York Post, claiming that the reelected Florida governor was ‘DeFUTURE’.

Chapter II: Under New Management

David Sacks had a lot on his plate as 2022 came to an end. There wasn't just the election, there was also the now concluded purchase of Twitter by Elon Musk that Sacks was heavily involved in. Even if Sacks didn’t like that assertion for legal reasons, it's probably no accident you get an official Twitter email a few days after your friend buys it [8]. Sacks was a member of Musk’s inner circle, along with Jason Calacanis, Musk’s lawyer Alex Spiro, ex-Twitter employee/venture capitalist Sriram Krishnan, and Neuralink CEO Jared Birchall. Musk had dissolved the board of Twitter when he took over, so these men were his go-to team for reshaping the company.

One of David Sacks’ initial proposals was almost immediately put into effect once Musk finalized the deal. The proposal that seems to have had the most appeal was from April of that year, where Sacks declared that the next Twitter CEO should, among other things, “fire useless employees (50%?)” [10]. As we saw over at Zenefits, firing half of the work force from a sinking company might as well be Sacks’ signature move at this point. While it’s fairly easy to fire half your workforce, it would be more difficult to implement Sacks’ other proposals. One of these changes that Sacks recommended was to “eliminate all bots”, a bizarre request given that many bots aren’t harmful and serve an active role in people’s enjoyment of the platform, be it a bot that reminds you of something in a specified amount of time, saves a video, or posts hourly images of opossums. I don’t see what Sacks would be getting out of a demand this extreme. After looking a fair amount, there doesn’t seem to be a definitive reason that Sacks wants to bring the Butlerian Jihad to a company that relies on many things being automated. Bots can obviously be an issue, but their total elimination is something else entirely.

I’m sure you’re all well aware of what Elon Musk’s initial take over of Twitter was like, so I won’t belabor all those details. I will however note the ways in which David Sacks chose to interface with the public during this time. Sacks’ was unapologetic in his support of Elon during this period of time, which makes sense when you consider who had just given Sacks an official company email. While ‘Free Speech’ was one of Sacks’ initial demands for a new Twitter, what that meant was pretty vague and subject to revision. The first of these revisions was during the controversy over the Twitter account @ElonJet, which tracked the flight paths of Musk’s private jet based on publicly available data. Musk decided to ban this account as he said that it was a form of doxxing and that he was in danger [10]. Sacks was not happy about the existence of this account, joining Musk in his struggle to justify this banning. According to Sacks, these were ‘real-time assassination coordinates’ and illegal [12]. Sacks went as far as to say that Elon Musk was in danger from “GPS-guided weapons”. Despite this assertion, it seems like no legal action has yet come about over the account. Musk and Sacks’ case seems to be based on the idea that the data tracking private jets is being actively leaked by the government against its own laws on privacy.

That isn’t how it actually works. While the FAA does not publish flight codes, there isn’t any law preventing hobbyists from picking up readings from these airwaves and cross referencing those with other publicly available data to establish a flight path [13]. So while David Sacks earned some clout with Musk and his allies, he had already conceded that the limits of free speech were not absolute in his mind. This isn’t even to mention the hysterical and humiliating claim that reporting this public data put Musk in danger because of GPS-guided weapons, which doesn’t hold up to scrutiny from anyone with a passing knowledge of how planes tend to be shot down (hint: it usually involves military grade heat seeking missiles or high explosives stashed on board). The account remained banned, but the lack of legal action indicates that it probably wasn’t illegal. Still, Sacks had spent two days trying to whip up an angry mob to threaten a college student who was accessing aviation broadcasts. One thing was clear: free speech stops where David Sacks’ investments start.

Things didn’t get better for David Sacks as the new year began. Twitter was facing more scrutiny, and Elon Musk himself was trying to find a way out of being responsible for it without damaging his ego [14]. Musk had turned his leadership of Twitter into the vehicle with which he tried to dispense personal vendettas. Sacks had been there since the beginning, dutifully carrying out attacks on any of Musk’s enemies, but he was clearly getting tired. In the first episode of All-In for the new year, Sacks and his co-hosts offered predictions for the year. Sacks’ forecast was grim, the only business ‘winner’ that he predicted in 2023 was natural gas in reaction to the war in Ukraine. The only other advice Sacks gave was that there’s no reason not to just invest in short term treasury bills.

Things weren’t great at Twitter either. Elon Musk had set his full focus to the technical aspect of Twitter in his quest to fix the platform from which he had drained of more than half of the staff. Now, David Sacks is not a coder, nor is he an engineer of any kind. So it would seem strange that he was brought on personally to help with the restructuring of the company. These facts are what lead to an incident involving Musk and Sacks that was only leaked in January of 2023.

During a meeting with engineers in October of 2022, Elon Musk was ask about the potential of long form video content on Twitter. These engineers didn’t know what to tell him, given that they were engineers and not content specialists, but the meeting continued alongside Musk’s stream of consciousness. After a while, Musk was finally interrupted by none other than David Sacks entering the room. Noticing that Sacks had wandered in, Musk, with a flick of his hand, dismissed Sacks from the meeting. “David, this meeting is too technical for you” Musk said, as Sacks silently turned around and dutifully exited the room [15]. Ironically, Sacks probably would have been the most informed person in that room when it came to procuring long form content, CallIn was still up and running, and had his own podcast. But Elon was making a good point when he dismissed his inner circle member, a lot of things are too technical for David Sacks.

“David, this meeting is too technical for you.”

While he was deciding who to advise Musk on who to fire, David Sacks scheduled a meeting with one of the head developers at Twitter. The meeting with Sacks was scheduled for 1pm, but kept getting delayed. Hour after hour, the developer was informed that their meeting was going to be in an hour until eventually, at 8pm, Sacks finally showed up. As this developer laid out the roadmap for the future of Twitter, the developer noticed that Sacks wasn’t actually engaged and spent most of the meeting checking his phone. “He didn’t want to understand anything” the developer said of Sacks [15].

There’s a term in Silicon Valley, “move fast and break things”. It was Facebook’s motto until 2014, and was used by many commentators to optimistically describe the new approach to Twitter. The quote brings to mind a misunderstood genius who doesn’t stay down for long in the pursuit of inventing something new, breaking whatever needs to be broken to achieve that goal. The way that Musk and Sacks embody “move fast and break things” brings to mind your uncle drunk driving his 2009 PT Cruiser through the backyard fence and ruining your 11th birthday party.

After a few months of whatever was going on at Twitter, we’re back to the beginning of 2023. David Sacks was coming off a year of political networking and reshaping one of the biggest social media platforms in the world. Maybe Sacks could take the year off, go easy on himself. He just turned 50, had a family, and just got back into producing movies. The biopic he was asked to produce almost two decades ago was finally coming out this year. Maybe that would be the most notable event of the year, the outlook was rough from Sacks perspective, but it seemed like he was handling himself well enough, it’s not all about the economy, right?

Chapter III: American Carnage

It all started March 8th, 2023. The favorite financial institution of American tech venture capitalists, Silicon Valley Bank (SVB), sold $21 billion of its investments, borrowed an additional $15 billion, and sold $2.25 billion in its own stock. SVB did this to try to avoid a downgrade in its rating by Moody’s, a firm which assesses corporate bond risk. Unfortunately, this was not able to stop Moody’s from lowering the ratings on the banks assets.

Some background first. Silicon Valley Bank was in trouble because it had essentially made a bad bet. After an explosion in deposits following the Covid tech stock boom, SVB had more money in deposits than it knew what to do with. In an attempt to put that money into something safe that could still make the bank money, they bought billions in long term treasury bonds in 2021 using the new deposits. But with the rise in interest rates by the Federal Reserve, these bonds purchased in a 0% interest rate environment became much less valuable. In total, SVB held over $90 billion in bonds [16]. The 10 year returns on bonds purchased in 2021 could range from 1.15-1.73%, while the same bond purchased on March 7th of 2023 would yield a return of 3.97%. With such a large proportion of their deposits tied up in these bonds, liquidity was a massive potential issue should there ever be an unusual influx of withdrawals. Interest rate hikes also had the effect of squeezing tech companies, especially smaller ones, that needed cash on hand for expenses like payroll. Do you see where this is going?

“long-term local currency bank deposit and issuer ratings were downgraded to A1 from Aa3 and Baa1 from A3, respectively” - Moody’s on March 8th

On March 8th, Silicon Valley Bank’s credit rating was downgraded for the first time. Now, this chart doesn’t look too bad, at least to a passing observer. They still weren’t junk bonds at least. But you probably figured that’s not how this ended. With the volatility of venture capital investments, the security of financial instruments is absolutely key to the existence of this form of investment. So, when most VC-funded start ups prioritize growth at the expense of immediate profitability, and those funds are now being kept in a bank that can’t be absolutely guaranteed to be solvent, the entire VC structure is made unsound. Risk is no longer just being concentrated at the point of investment in a company that can be easily accounted for and analyzed, now there were aspects of their investments out of the venture capitalist’s control which previously were not. After years of low interest rates and upward momentum, the golden age of tech venture capital was finally coming to an end. Many of these venture capitalists were getting a fastball down center plate after only playing tee ball. The dominoes began to fall as news of the downgrade came out [18, 19]. A bank run began as thousands tried to pull their money out of SVB all at once. Surely they knew this day would come, but why did it have to be now?

As the world began to shake underneath David Sacks, a cold fear set in, the kind you experience only when you know you’re already past the point where you can get yourself out of a situation unharmed, the fear that comes from the certainty that sacrifices would have to be made. You fucked up, maybe more than you ever have before and you know it’s your fault. Now the panic begins, your stomach drops like a stone, your mouth goes dry, your arms feel like clubs that can only be swung towards anything they can grab on to, all the mistakes you can even remember making come rushing back into memory all at once and overwhelm your psyche. That was the fear overtaking the venture capital industry beginning on March 8th. And David Sacks was right in the center of it all as Silicon Valley Bank collapsed.

If you’ve learned at least one thing from this series, it should be that David Sacks is usually very publicly forthcoming about the issues he thinks are important. But the collapse of Silicon Valley Bank was different, at least at first. It was different because from 11:26 pm on March 7th to 12:36 pm on March 10th, there was radio silence from Sacks. Suddenly, as the government regulators showed up at Silicon Valley Bank’s doors, and Moody’s officially downgraded its assets to C rated junk bonds, David Sacks spoke. The normally snarky and contrarian Sacks, the man who had been playing the stock market since the start of the 21st century, the so-called ‘Rain Man’ who may be abrasive but goddamnit still knows how to get shit done, hit send on an uncharacteristic yet incredibly personal tweet.

“Where is Powell? Where is Yellen? Stop this crisis NOW. Announce that all depositors will be safe. Place SVB with a Top 4 bank. Do this before Monday open or there will be contagion and the crisis will spread.” - David Sacks, March 10th, 12:36pm

When I started writing about David Sacks, I thought it was weird that he was the editor-in-chief of the Stanford Review. He always struck me as more of a numbers guy. But I can see now why he got that job. I can see all the reasons in that one tweet. The pure rage that seeps through his words is so palpable, but also not the only emotion he evokes. In those words you can sense the fear behind the rage. He knows he can’t actually do anything to hurt Jerome Powell or Janet Yellen, so he turns his gun on the rest of America. David Sacks wants these two to know that unless they save him, he will take as much of the financial system down with him as he possibly can. If political maneuvering couldn’t get him the policies he wanted, there were still the billions in other people’s assets that he could use to punch a hole and sink this entire vessel. The porcelain mask he wore, which depicted a man that fought selflessly for both free markets and the empowerment of the people, had shattered across the floor. As the foundation of his political project began running down his face, the true man was finally revealed, after almost 30 years of sociopolitical posturing from atop a throne made of cheap cash, the charade was over. This is who David Sacks always was deep down, a man begging the government for help.

As you might have been able to guess, David Sacks was not getting very much sympathy for his position. The replies were filled with people pointing out his hypocrisy. Reader, I’ve seen a lot of David Sacks tweets, and most of the time, he has a decent number of people agreeing with him. That was not the case this time. You might think that he was getting ganged up on by smug leftists, but no, everyone was joining in. Keith Olbermann chimed in to reply “Utter hypocrisy. Fuck off.”, to which one seemingly conservative user replied “My God… I just agreed with Keith Olbermann!”. NFT enthusiasts, finance guys, Gen-Z Democrat activists, my friend Dawn, wrap around sunglasses pfp conservatives, college professors, Leninists, Black nationalists, genuinely dumbfounded libertarians, and countless others gawking at Sacks.

Later in the thread, David Sacks asserts that his VC firm, Craft Ventures, didn’t have any money at Silicon Valley Bank. The attempt was to make Sacks’ argument seem at least somewhat selfless, like he was just trying to help others. In the tragic yet common case of talking about something a bit too much on a podcast, we learn that Sacks is, to be generous, stretching the truth. In episode 119 of All-In, Sacks is joined by his usual co-hosts for the first, and so far only, episode to be recorded without face cams. Around the timestamp 1:13:20 (apparently the “most replayed” part of the video), a list of SVB’s clientele (compiled by the company CastleHall) gets pulled up by co-host Chamath Palihapitiya, who begins scrolling down the list. It goes on and on, Canterbury… Capital Dynamics… Cendana… Compound…, until eventually: Craft. Sacks clarifies that his VC firm had left a few months prior, and that they were only using SVB to ‘warehouse’ loans. However, Sacks also adds that many of his portfolio companies needed help getting their money out of SVB when the collapse came. To say Sacks was out of SVB was a half truth, his company’s direct assets weren’t being kept there, but Craft Ventures clearly relied on Silicon Valley Bank and directed a significant amount of cash into it.

Columns correspond to: Manager Name, Private Fund Name, and Private Fund Gross Asset Value

Some of the information that isn’t shown on the podcast but can be seen in the full document Palihapitiya reads through confirms this. What this document shows is that Craft Ventures moved well over $4 billion through Silicon Valley Bank, with one private fund (“Craft Ventures II, L.P.”) even amounting to over $2 billion in listed Gross Asset Value. This is strange, given that Craft’s round II funding amounted to only $500 million and the total profit of $112 million on a sale price of $612 million in 2021. I could very well be missing something here, or maybe the data was entered improperly, but if you have an explanation for why Craft had so much money in these SVB accounts, I would genuinely like to hear an explanation. Until then, there’s a lot to doubt about David Sacks’ characterization of Craft’s wider involvement with Silicon Valley Bank.

It seems like the previous links I had used for the list of VCs at Silicon Valley Bank are now paywalled. Here’s the pdf of all the investments and a backup just in case.

Vc List Svb

1.03MB ∙ PDF file

Download

You might also note that David Sacks pulled his own firm’s money from SVB but didn’t extend this wisdom to his clients which still kept their money at the bank. You might understand why once you realize how the bank run started. Returning for the final time in this series, the alpha and the omega, Peter Thiel. It would appear that the run on Silicon Valley Bank began because of advice sent out from Thiel’s own VC firm, Founders Fund. Now, it would never have taken overwhelming financial resources to trigger a bank run, but there was still an anomaly which caused the run on SVB. Details remain murky, but it seems that by March 9th, the day after SVB’s first downgrade, all of Thiel’s money was out of the bank after urging its clients to put money into the bank that same day. It wouldn’t take a genius to figure out SVB was in deep shit, but someone with more community-minded intentions would probably use that observation more constructively.

We saw David Sacks had pulled a similar maneuver by taking his money out of SVB before the collapse but leaving his clients money in. This isn’t to say everything was going according to plan, Sacks would definitely have preferred this not have happened at all, but there were only so many lifeboats.

But even if Craft Ventures wasn’t in direct trouble, David Sacks wasn’t out of the woods yet. Because the collapse took place on a Friday, those affected had to wait a tenuous weekend for the financial markets to respond to the crisis. This was compounded by the fact that President Biden was choosing to drag his feet deciding on bailout terms. On Friday, Sacks may have lost his cool, over the weekend, he lost his credibility.

It wasn’t just David Sacks who was having a rough weekend, to be fair. Alongside our silver-haired protagonist was a series favorite: Jason Calacanis. While Sacks was trying for put together emotional appeals where he reflected on how bad political division had become that we cheered on the pain of others, Calacanis had a … different approach.

I honestly don’t know what either of them thought was going to come of this. David Sacks somehow acquired a somberness only known to generationally traumatized Norwegian authors. On the other hand, Jason Calacanis spent the weekend tweeting next to what I can only assume would be some kind of rotating doner kebab made out of a single giant gummy bear seasoned with Adderall. Calacanis also chose to only tweet in ALL CAPS for the whole weekend, seemingly to emphasize how dire the subject matter was. All this seemed to do was give the impression that Calacanis was trying to spook the rest of the country. Making statements like this does not inspire confidence in the rest of the banking sector:

“ON MONDAY 100,000 AMERICANS WILL BE LINED UP AT THEIR REGIONAL BANK DEMANDING THEIR MONEY — MOST WILL NOT GET IT THIS WENT FROM SILICON VALLEY INSIDERS ON THURSDAY TO THE MIDDLE CLASS ON SATURDAY — MAIN STREET FINDS OUT MONDAY”

It’s not hard to see wishful thinking underpinning these statements. If Silicon Valley Bank and by extension venture capitalists were the people that could have stopped an economic collapse, then their political and social clout would increase massively. Maybe they could get a movie in a few years like The Big Short where businessmen that prey on the weaknesses of the American economy turn out to be basically the same as Winston Churchill. I honestly don’t know how much of this was theatrics on Calacanis’ part, he’s a professional venture capitalist in an industry reliant on confidence, but it’s also hard to see who he would be winning over with these hysterics in the long run. The bottom line was that Silicon Valley Bank’s depositors needed to be bailed out lest venture capital be sent back to the Stone Age, and with them would go much of Calacanis’ fortune.

Both David Sacks and Jason Calacanis were not well received by anyone outside their immediate friend circles. Kim-Mai Cutler, a partner at the venture capital firm Initialized, said this of the pair’s weekend antics:

“While they were screaming histrionically on Twitter and juicing emergency podcast episodes, there were lots of other great folks putting together founder petitions, comms, having convos with staffers, members of Congress and governors to push the urgency of the situation” - Kim-Mai Cutler, speaking to the crisis management skills of David Sacks and Jason Calacanis

A quick Google search for news on either of the pair during the period of March 10th - 30th reveals less than stellar headlines. Some choice picks are:

VC podcast duo faces criticism for frantic response to Silicon Valley Bank collapse

Silicon Valley's Titans Are Realizing a Lot of People Really Don’t Like Them

Opinion | I Was an S.V.B. Client. I Blame the Venture Capitalists.

Silicon Valley Congressman Fundraising With Whiny Venture Capitalist

The Silicon Valley Bank Collapse: Fear Mongering And Other Bad Takes

By the end of the weekend, Sacks found himself on CNBC to discuss the failure of Silicon Valley Bank and argue that it wasn’t the fault of Venture Capitalists. In fact, Sacks argues, it’s actually the government’s fault and that they (the government) tries to cover their asses by blaming the people who noticed the problem. The hosts of the program don’t push Sacks on how exactly this is the governments fault, but given past statements it seems like he would blame mismanaged interest rates and a delayed response on the bailout.

You gotta give respect to get respect, but you have to have respect first, and that starts with self respect.

This bailout did eventually come the morning of March 13th before the markets opened via an announcement from President Biden. All Silicon Valley Bank deposits were insured fully by the government, but the bank itself remained under receivership of the FDIC as a post mortem and sell off were conducted. To be fair, not bailing out these deposits would have probably been financially ruinous for the whole country and caused more long term financial strain on the American taxpayer than simply taking the cost on the chin.

This is partially because SVB had invested in the government itself and was actually holding very safe assets in comparison to the rest of Silicon Valley. Financial expert Daniel Davies said in an interview with the American Prospect “(the) FDIC did this because it doesn’t cost that much to do so. In this case, SVB doesn’t have that many messy investments on its asset sheets”. Ironically, Silicon Valley Bank’s depositors were saved by the bank’s trust in government institutions. This also means that if the billionaires of Silicon Valley wanted to, they could have easily saved SVB by intervening and restructuring the finances using some of their vast wealth as collateral. Maybe that’s what late capitalism is, where J.P. Morgan once used his railway and steel fortune to keep the system which made him that fortune going, David Sacks now begs the US government to protect his investments in Reddit and Bird scooters.

But it seems like David Sacks got what he wanted, right? Not exactly. Venture capital funding accelerated its already steady decline in Q2 of 2023 and tech sector layoffs continued as the rest of the economy moved forward at a steady clip. With Sacks at the intersection of these two declining sectors, he wasn't doing too hot. Still, it seems like the bailout wasn't being received by the public as well as Sacks would have preferred.

In one attempt to recapture his populist ethos, David Sacks shared an email from an associate at a “small non-profit school”. This email lamented the way that the media treated the bank collapse, and how the school had its assets at SVB despite not being anywhere near Silicon Valley. The email ends with this paragraph:

“While I personally agree that customers of all stripes should have confidence in their bank deposits, clearly some people don't have sympathy for tech companies. Perhaps they should know that freezing out SVB customers would have caused collateral damage including a nonprofit school located 3,000 miles from Silicon Valley”

Now, I don’t know about you, dear reader, but there’s a very noticeable smell coming from this email and tweet by extension. First of all, describing a primary and/or secondary school as ‘non-profit’ is extremely vague. Most schools are non-profit, so bringing it up is like saying that your friend is struggling to keep his restaurant open despite the fact that it’s entirely rat free. Second is that the entire email seems to be really sympathetic to tech companies, like, really sympathetic. The ‘modestly paid teachers’ are mentioned in the middle of the email before going back to describing how mean people are to tech companies. Third, why is this school so far from California putting its money in Silicon Valley Bank?

Turns out, the author of that email had taken some liberties. Luke Goldstein in an article for The American Prospect managed to deduce who this email was from and what institution he represented. This ‘non-profit school’ was actually the North Country School, which is an elite boarding school that costs more to attend than most private colleges. The school is the alma mater of several Rockefellers and other billionaire children along with them. As for the send of the email, Goldstein found that it was in all likelihood David Stewart, a previous VP of product management at David Sacks’ company, Yammer.

David Sacks Populism was gone and while the contradictions in Sacks’ brand of politics always existed, they were made abundantly clear to even a passive observer over the course of a weekend. Not even J. D. Vance, one of Sacks’ only notable victories in 2022, would lend credibility to the bailout and started asking questions about what special perks VCs received from Silicon Valley Bank. Sacks had been utterly humiliated twice over the course of less than 6 months. It wasn’t like he was bankrupt, but David Sacks found himself worse off by the end of March, both socially and financially.

Those rate hikes David Sacks tried so desperately to prevent were finally being felt by Silicon Valley. As Sacks and the rest of the tech industry had sown their windfall in 2020, now the time came that they reaped the whirlwind. Sacks’ venture capital firm, Craft Ventures, lists all of the companies that Sacks has invested in on a section of its website. Using this, we can see how Sacks’ investments did once they were in a market that had interest rates over 2.4%. The following are all of David Sacks’ investments that I could confirm had to make cuts from late 2022 to mid 2023, cue 1812 Overture:

Addepar 3% of workforce laid off
AgentSync 24% of workforce laid off
Airbnb 30% of recruiting staff laid off
OpenDoor 22% of workforce laid off
Bird 23%
Lyft 30%
OpenDoor up to 20%
Houzz 8%
Eventbrite 8%
Intercom 13%
Lyft 26%
Meta 21,000 employees or 25%
Palantir 2%
EightSleep 20%
Pipe 2% all three founders resigned
Postmates 15%
Productboard 20%
Reddit 5%
Slack 10% on average
Trellis ‘Mass layoffs’
Affirm 19%
Uber 35% of the recruiting team
Vendor 25%
BitWise 100%, it went bankrupt.
(sources can be found at the bottom of the article, preferably opened and read while listening to the Tchaikovsky)

So, where was David Sacks going to go now, he already made himself a political figure and needed to stop talking about Silicon Valley Bank somehow. Thankfully, the GOP primaries were heating up as more and more candidates entered the race. Sacks had a second chance to become a king maker. An old favorite from November was about to announce his candidacy, and David Sacks wouldn’t miss it for the world.

Chapter IV: DeStroy

“Alright, I think we’re broadcasting, man, I think we melted the internet there”. Those were the first words spoken during Ron DeSantis’ campaign announcement. The person talking was David Sacks, who was hosting the announcement on Twitter Spaces. This wasn’t being hosted from the Florida governor’s Twitter account for some reason, so the first two minutes of the campaign announcement was just David Sacks’ profile picture accompanied by elevator music. This impressive display of David Sacks face in front of a stock image beach was followed by acknowledgments of the technical difficulties and complements to DeSantis’ on “breaking the internet” by getting 500,000 listeners. Elon Musk was also on the call, clarifying in the first few minutes that he was doing the space on David Sacks’ account because speaking from his account didn’t work. This would give anyone that tuned in after that the impression that David Sacks’ is a man that has two very different voices that he switches between in order to stimulate conversation.

Then Ron DeSantis started to speak, boy, did he start to speak. I don’t know where DeSantis was recording from, but his audio is notably worse than most amateur podcasts I’ve listened to. This is partially because Spaces only works on phones for some reason, but it’s an amazing failure of game theory that neither party seemed to push the other on this issue. Twitter didn’t develop some official method for microphone inputs and the DeSantis campaign wasn’t able to jury-rig some solution that would make the governor not sound like he was a 19-year-old recording the first episode of his podcast. The actual content of what DeSantis was saying is pretty much what you’d expect: Sacks and Musk throwing him softballs on how the media was wrong about book bans and covid lockdowns. DeSantis handled these well enough, not getting tripped up on anything really, but it was thoroughly unimpressive for someone taking a risk launching on an untested platform.

I'm on the phone wit the CEO of Twitter he's telling me David #RonDeSantis only been on Twitter for hour and u streaming like crazy my staff is telling me the servers is about shut down I gave them the ok to add the most powerful servers to handle this

Then more people showed up. As Ron DeSantis spoke, additional speakers joined the call. One by one, accounts showed up muted with speaker under their name. All had some relation to the conservative media sphere, either being commentators, covid lockdown skeptics, or unexceptional college swimmers that would actually be really good if it weren’t for trans people. The purpose was to have them ask the governor questions towards the end of his announcement. First up was Steve Deace, a conservative talk show host from Iowa who looks like he may have broken the Kinsey scale by standing on it. After about 30 seconds of awkward comments by Sacks asking Deace to unmute himself, the resident Iowan finally figured out how to make his audio work and apologized. After an additional 30 seconds of praise for Elon Musk that involved citing a meme he saw, Deace finally asked his question. This continued with other guests like Dana Loesch and Chris Rufo until eventually the Space concluded.

I assume he thought of the title ‘Faucian Bargain’ and then worked backwards

The entire launch was a total disaster. It is really difficult to emphasize enough how amateur the whole thing sounded when I was listening to it for this piece. The way Musk and Sacks talked about the technical issues throughout the announcement was with the tone of young tech entrepreneurs who are surprised at the popularity of their own product. That doesn’t work when both the guys running this announcement just gutted the staff of the platform they’re talking about and are both in their 50s. It also doesn’t work when you’re launching the campaign of a political candidate with millions of dollars of funding and the support of much of the Republican establishment.

The media response to this was very similar to the Silicon Valley Bank collapse, by which I mean there was a fresh list of articles answering the question “who is that David Sacks guy and why did he fuck up this time?”. To be fair, he was literally the face of this ramshackle announcement. Sacks was hosting this Space, inviting his best shot at getting back into the political arena to make his campaign announcement on the platform reshaped according to Sacks’ vision. Instead of a triumph, it was a showcase of everything wrong with the Twitter that Sacks’ had helped to create: plagued with technical issues, serving the ego of Elon Musk at every chance, filled with manufactured conservative media figures.

Ron DeSantis’ lukewarm campaign launch would turn out to be one of the high points for the Florida governor’s bid for the nomination over the next few months at least, as his favorables would decline steadily afterwards (I’m sorry for using 538, Josh). This downturn can be attributed to a few things, but DeSantis’ support of unpopular policies that Floridians were ambivalent towards at the ballot box turned out to be a liability. One particularly unpopular measure is the implementation of a 6 week abortion ban permitting it only for cases of rape or incest in March of 2023. The previous limit (enacted immediately after the Dobbs decision) was 15 weeks, something that David Sacks’ praised as the moderate choice between radical Republicans and Democrats. Turns out, a 6 week abortion ban is not moderate in the eyes of many moderate voters, and to hard liners it sounds like you’re making an arbitrary window for when baby murder is allowed. DeSantis’ focus on culture war issues wasn’t doing him any favors either, with less than a third of voters supporting his banning of DEI offices at colleges. Imposing the Florida governor’s will on the GOP is an ongoing uphill battle, all to give him a chance to take his ‘unique’ set of policies to the national stage. Unless there’s a dramatic turn around for DeSantis before Iowa, it seems like the governor is on a sinking ship, and has lost substantial amounts of good will regardless.

It was this and the Silicon Valley Bank collapse that initially inspired my crusade analogy from the previous part. While the first three crusades were holy wars against Islam, the Fourth Crusade ended up being a complete mess. Crusaders departed from the merchant republic of Venice which had essentially hired the knights on credit by promising to pay them after conquering a rebellious city. After carrying out this task, the crusaders continued to their original goal of Jerusalem. But still in need of money, the crusading armies stopped in the Byzantine Empire to besiege Constantinople on behalf of an insurgent prince. When this prince couldn’t pay his mercenaries off, they took over the city for themselves and established a Catholic successor state, the Latin Empire.

The turn that the Republican Party took after 2022 can be seen in this story. The culture warriors of the GOP were mobilized by wealthy venture capitalists like Peter Thiel and David Sacks. But when these plutocrats could only provide promises of future victories after coffers ran dry, the crusaders continued their war path against their supposed allies in the form of Trump supporters and tried to install a new ruler. The entire thing turned into an embarrassing mess for everyone involved, and resulted in a fracturing of the broader ideological coalition. I don’t think it’s the best comparison though. It follows all the main beats, except it doesn’t line up in the crucial part where Sacks and DeSantis win any battles and assert their authority over a conquered foe.

So where does that leave David Sacks? What has our protagonist gotten up to since that campaign launch? Well, there was that movie he produced. Dalíland, the biopic Sacks was asked to make back around 2006, finally got its full release on June 9th, 2023. In a year of political bickering, financial loss, and public humiliation, Sacks might’ve had something with his return to producing. The movie, starring Ben Kingsley, covers the tail-end of the Spanish painter’s life in New York City through the perspective of a young assistant. The movie is interspersed with occasional flashbacks to the life of a younger Dalí, played by Ezra Miller.

"Those who do not want to imitate anything, produce nothing" - Salvador Dalí

Looking at the reviews on Rotten Tomatoes, it seems like Dalíland was everything Sacks wanted to be. Mixed reviews from film critics, but overwhelming accolades from fans. Some professionals found it to be bland, but the audience, the people, couldn’t get enough of it. It wasn’t even political, it was a biopic in an industry dominated by high budget franchise movies. It was ideal populism put to screen. A synchronization of personal wealth and artistic talent delivering to the people what they want. A sliver of Carnegie may even come to mind, this is no concert hall, certainly, but the same function could be served in the digital age.

It makes one wonder what other paths David Sacks could have gone down. Even if he was just the money man, he was finally responsible for something that other people could come back to and appreciate for years to come. Somebody will fondly show their kids Dalíland, nobody will fondly show their kids the financial software they had to use at work. I don’t know if that’s the Sacks we’ll ever get again, he’s a very stubborn person. But one can hope that he’s learned which ventures actually make the world a better place.