Why Donald Trump scares Silicon Valley
Silicon Valley may be the mecca of tech innovation, but it is struggling to adapt to the electoral earthquake that propelled Donald Trump, a candidate who drew near-universal scorn from tech power players, to the White House.
Venture capitalists, entrepreneurs and tech employees are bracing for the switch from a president who openly admired the tech industry, to one who -- on the campaign trail, at least -- viewed its ascendancy with skepticism. That’s despite the possibility that Trump may go down in history as one of the savviest users of social media (Twitter, in particular) on the planet.
A key point of conflict: Silicon Valley’s innovations tend to eliminate blue-collar American jobs, which Trump has promised to restore. Many of the Valley’s most promising projects in the pipeline, including automated vehicles, could inflict even more carnage, although tech supporters argue that the resulting efficiency gains would provide a big boost to the economy. The industry also thrives on immigration, and Trump has promised a crackdown on that.
Meantime, the tech sector’s financial lifeblood comes from private-equity and venture-capital investors, who bank on the carried-interest tax loophole, which Trump (in agreement with Hillary Clinton) has promised to eliminate. With this tax break, the investors pay a lower rate on their profits than than the IRS charges for ordinary income.
Worry among Valley thought leaders runs so deep that after Trump’s triumph, several folks quickly signed on to a quixotic movement launched by Shervin Pishevar, co-founder of high-speed train startup Hyperloop One and an investor in the car service Uber, to push for California to become an independent country.
“It’s the most patriotic thing we can do,” Pishevar wrote on Twitter. “Country is at serious crossroads. We can reenter the union after California becomes a nation.” He later clarified his tweet to say he doesn’t want California to secede, but rather to “fight against a centralized Federal gov that’s amassed too much power.”
On the campaign trail, Trump repeatedly showed animosity toward the tech industry. He sided with the FBI in a high-profile battle with Apple (AAPL) over whether the tech giant should be forced to build a backdoor to access data on its iPhones, allowing government snooping on customers.
He also implied he would force hardware companies like Apple to bring back their offshore-based manufacturing operations to the U.S. Such a move would put them in a tough competitive position against foreign rivals because production costs are lower in many overseas locations.
Trump also pledged to allow fewer foreign employees to work in the U.S. on H1B visas, which grant temporary status here for those with specialities, such as in technology. And his rhetoric on Muslim and Latino immigrants was seen as an affront to the tech industry’s stated commitment to diversity and inclusion.
Not helping matters: The president-elect recently added billionaire investor and Paypal founder Peter Thiel, who went from quirky insider to Valley outcast after embracing Trump’s campaign, to the presidential transition team.
The tech industry is not alone in fearing a Trump presidency: The political novice is a virtual blank slate in terms of policy, which has disconcerted executives in areas ranging from finance to health care. Still, it’s entirely possible the prolific Twitter user (who reportedly does not use email or even a computer) will be more of a supporter of the tech industry than his campaign suggests.
Stock indexes rallied to new highs this past week (although tech shares sat out much of the gains), as relieved investors bid up shares amid more measured remarks from the incoming president. Trump struck a conciliatory tone in his acceptance speech and signaled his first priority as president will be investing tens of billions of dollars in infrastructure. The tone was a far cry from the divisive language he deployed during his campaign.
Tech leaders in the Valley took to Twitter, naturally, to lament -- as well as offer hope -- to their frustrated followers.
“This is a bad beat for the U.S. But tomorrow the sun will come up and we’ll get on with figuring it out. Be decent, be proud. Work hard. Hope,” wrote John Lilly, a venture capitalist and former chief executive officer of Mozilla, the open-source software firm
“It’s two steps forward, one step back. This is a step back. Next two are forward,” said Stewart Butterfield, CEO of Slack, the instant messaging company.
“So many disastrous ideas have been surfaced throughout this election. We must now do everything we can to ensure America is for everyone,” said Aaron Levie, CEO of cloud storage provider Box (BOX) .
Added AOL co-founder Steve Case, quoting Winston Churchill: “Success is not final, failure is not fatal: It is the courage to continue that counts.”