Tom Everill | 09 August 2024

Summary

• Trump announced Ohio Senator J.D. Vance as his 2024 running mate.

• Vance, 39, is a former Marine, author, and has tech/finance experience.

• Trump has gained support from some Silicon Valley figures like Andreesen and Musk.

• Vance's career was backed by venture capitalist Peter Thiel.

• The choice suggests a potential shift in tech industry political affiliation

Silicon Split?

Last month, via his Truth Social platform, former U.S. President Donald Trump finally revealed his vice presidential pick for the upcoming presidential election. The announcement came two days after an assassination attempt at a campaign rally in Butler, Pennsylvania. Trump named Ohio Senator J.D. Vance as his running mate, prompting mixed reactions among the Republican Party and base. In the social media post, Trump cited Vance's background in the technology and finance sectors, as well as his service in the U.S. Marine Corps. 

The former president’s pick is likely to please elements of Silicon Valley that already appear receptive to a second Trump term as illustrated by the consistent flow of tech money into his campaign warchest. However, many industry leaders, notably those representing FANG companies (Facebook, Apple, Netflix, Google) seem more reluctant to turn their backs on tech’s traditionally Democrat ties.

Much of Trump’s support in the Valley stems from what could be described as a new wave of “anti-establishment” tech players, not necessarily ideologically conservative, but receptive to the former president’s plans and outsider status in DC. A source with direct knowledge told the FT that for venture capital firm Andreesen Horowitz, preferring Trump’s policies on business and the economy ‘doesn't mean support for his views on immigration,’ for example.

Notable examples of this cohort include Marc Andreesen and Ben Horowitz of the aforementioned Andreesen Horowitz, vocal venture capitalist David Sacks, Palantir Technologies co-founder Joe Lonsdone, the Winklevoss twins (of Facebook and crypto exchange Gemini fame) and Sequoia Capital partner Shaun Maguiremost. Most notable though is billionaire Elon Musk who, following the 13th July assassination attempt, pledged $45 million a month until November to the Trump campaign along with a full endorsement. 

Who is J.D. Vance?

Vance, elected in 2022, is a U.S. Senator for Ohio and a New York Times bestselling author for his 2016 memoir, Hillbilly Elegy, detailing his impoverished upbringing in the American Rust Belt. Vance’s political career was launched with support from venture capitalist and high-profile Republican donor Peter Thiel who, in 2021 and 2022, publicly donated close to $15 million to a super PAC supporting Vance’s senate run.

After graduating high school in 2003, Vance spent four years as a U.S. marine including a deployment to Iraq as a combat correspondent in 2005. In 2007 Vance enrolled at Ohio State University where he achieved a Bachelor’s degree in Political Science and Philosophy in only two years and during which time gained political experience working for Republican state senator Bob Schuler. After Ohio State, Vance attended Yale Law on a near full scholarship where he was an editor of the Yale Law Journal and was persuaded by a classmate to publish Hillbilly Elegy. 

After graduating from Yale, in 2014 Vance moved to Silicon Valley to work for Thiel-founded Mithril Capital Management where he remained for a year before moving back to Ohio and working as a corporate lawyer. He published his memoir in 2016 which catapulted him to national fame and in 2019, founded venture capital firm Narya Capital backed by Marc Andreesen and mentor Peter Thiel, with the aim of fostering competition in the tech sector. In March 2021, after announcing his intention to run for the Ohio Senate seat, the PAC Protect Ohio Values supporting his run received $10 million from Thiel before officially launching his campaign in July. One month after another $3.5 million cash injection from Thiel, Vance wins the Republican primary for the Ohio Senate seat which he would go on to win in November 2022 at the U.S. midterm elections.

Skin in the Game

Vance’s personal investments provide a glimpse into the VP hopeful’s economic outlook and ideological leanings with high exposure to publicly traded U.S. stocks. Here are some of Vance’s notable public investments according to his most recent Senate financial disclosure report:

Rumble - Vance has invested an estimated $115,000 to $300,000 into Rumble, a YouTube competitor founded in 2013 that positions itself as champion of free speech. The platform gained newfound popularity, especially among the American right, following the removal of then sitting President Trump from Twitter and Meta social media platforms as well as perceived censorship of non-mainstream COVID-19 discussions on those platforms as well as on YouTube. 

Bitcoin - To many in Silicon Valley, Vance’s estimated $100,000 to $250,000 investment in Bitcoin is the most interesting. To some, the investment represents an endorsement of Bitcoin, blockchain technology and the cryptocurrency market as a whole, providing stark contrast to the Biden and former Trump administrations’ relatively hawkish approach to the technology. 

Anduril - Anduril is a defence technology firm that specialises in AI, autonomous systems and ‘sensor fusion’ that has already won numerous contracts with the U.S. Department of Defense, Air Force, Marine Corps, Custom and Border Protection and other government entities. The company was co-founded in 2017 by American entrepreneur Palmer Luckey and has also seen significant investment from Peter Thiel, plus a small ($1,000 to $15,000) stake by J.D. Vance.

Hallow - Vance also invested up to $100,000 in Christian prayer app Hallow, another Thiel-backed project which has found support from celebrities like former NFL quarterback Brett Favre and actor Mark Wahlberg.

Industry Sentiment

Vance’s nomination and its potential impact underscore a recent ideological realignment among tech founders, capital allocators, the GOP and Trump. How is it that a Democrat fortress like Silicon Valley is seeing so many influential residents shift their support to the right of the aisle? 

One key factor includes pushback by some against what is described as excessive progressive activism or “woke” culture inside Silicon Valley firms characterised by DEI requirements and alleged internal politicisation of issues. Others include fears of increased regulation by a future Democratic administration, issues over free speech and appealing Republican tax and regulation policies. More abstractly, Silicon Valley’s inclination towards contrarian thinking may have pushed some away from what is now perceived by many as a “mainstream” liberal tech culture.   

The shift is illustrated here with some quotes from influential Silicon Valley figures as to why they support a second Trump term:

Historical Parallels

An interesting historical parallel is Reagan’s reconciliation of his party’s evangelical Christian elements with Silicon Valley progressives throughout the 80s and 90s. In short, Trump’s newfound alliance with Big Tech resembles events under Reagan in that both presidents were faced with unifying their parties’ ideological traditionalism with the ambitions of tech and innovation-oriented institutions. Reagan and Trump both accommodated the tech sector with promises of deregulation policies and tax cuts, contrasting perceived overreach by former administrations. 

There are, however, differences which provide clues as to how the Washington-Tech relationship would differ in a second Trump term versus  under Reagan. Firstly, current political and geopolitical contexts characterised by intense ideological polarisation and rising multipolarity differ from a more unified America facing a clear, defined adversary in the Soviet Union under Reagan. Domestic political polarisation adds pressure for prospective donors and corporate partners to choose the side most ideologically acceptable to consumer bases and stakeholders.

Furthermore, Trump’s past protectionism, contrasting Reagan’s preference for free trade, provides additional concerns for would-be Trump backers concerned about a potential impact to their bottom lines. Sector maturity and the extent of tech’s influence on daily life also serve as clear contextual differences. The intersection of Trump and Vance’s free speech ideals and the need to prevent extremism, foreign influence and disinformation on social media platforms presents challenges absent in the Reagan era. Another difference is that, Reaganism, as a movement, was broad and, in regards to tech, all encompassing, whereas this “New Tech Right” movement is more diffuse, made up mostly of individuals and a handful of firms. This raises questions about the potential longevity of such a movement and Trump’s ability to keep Silicon Valley onside. 

What would Trump-Vance mean for the Tech Sector?

Regulation

The question now on the minds of traders and industry insiders is how does a successful Trump-Vance ticket actually change things? Despite the party's traditional stance on limited government intervention, Vance has openly praised Federal Trade Commission Chair Lina Khan, aligning himself with a group of Republican lawmakers dubbed ‘Khanservatives.’ This unexpected alliance suggests a more nuanced approach to antitrust issues under a potential second Trump administration. ‘She recognised there has to be a broader understanding of how we think about competition in the marketplace,’ Vance remarked at a February event in Washington. 

This creates tension within the GOP, pitting those who advocate for reigning in regulatory agencies against those challenging Big Tech on perceived conservative censorship. While the previous Trump administration initiated investigations into Meta, Amazon, Apple, and Google, Vance has pushed for further action. ‘Long overdue, but it's time to break Google up,’ he tweeted in February, expressing concern over ‘monopolistic control of information in our society’ by ‘explicitly progressive technology ' companies. This approach echoes the Biden administration's expanded antitrust considerations beyond price effects to include impacts on workers and product quality. 

Vance's philosophy seems to transcend traditional party lines, as evidenced by his statement at an event hosted by tech startup incubator Y Combinator in February. Vance said, ‘I want people to live good lives in our country. I don't really care if the entity that is most threatening to that vision is a private entity or a public entity.’ This suggests that a Trump-Vance ticket may actually pursue a somewhat interventionist approach on regulating tech, but one that risks clashing with an established “hands off” view among Republicans. 

Cryptocurrency 

Trump’s view on crypto has shifted massively since 2016, winning the former president many new supporters in the industry and, with it, campaign donations. In July 2019, the now crypto-friendly Trump tweeted: ‘not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.’ The first Trump administration worried that cryptocurrencies could threaten US dollar supremacy and largely viewed the digital currencies as unregulated speculative assets and tools to facilitate illicit activity and money laundering. As such, Trump’s appointed Securities and Exchange Commission (SEC) Chairman Jay Clayton oversaw increased scrutiny of Initial Coin Offerings (think Initial Public Offerings but for crypto tokens) and rejected several Bitcoin ETF proposals, before the first was eventually approved in October 2021 under a Biden-led SEC.

The choice of Vance as a running mate is indicative of this sentiment shift. As noted, Vance personally owns a six-figure Bitcoin holding and as a senator has been one of Washington’s most vocal supporters of the technology. Vance has previously opposed tax reporting rules for crypto companies and criticised regulators for negligence, sponsoring the Financial Regulatory Accountability Act in July of last year. Vance has also criticised the SEC for hostile behaviour towards industry players, specifically the freezing of crypto lending firm DEBT Box’s assets based on what have been alleged by some to be falsehoods. Moreover, in January, Vance criticised the SEC for its premature announcement of the approval of spot Bitcoin ETFs and the subsequent market impact, and has accused current SEC Chair Gary Gensler of politicising securities regulation to the detriment of the crypto sector. 

Gensler also finds a staunch critic in Trump who, at the Bitcoin 2024 conference in late July, included plans to fire the SEC chairman ‘on day one’ and appoint a ‘Bitcoin and Crypto presidential advisory council’ in his speech. ‘The moment I’m sworn in, the persecution stops, and the weaponisation ends against your industry,’ he later added. This, coupled with his mere presence at the event, indicates a desire by Trump to put crypto on the ballot come November and to position himself as an industry saviour of sorts.

This is further supported by Trump’s decision to invite crypto mining executives for discussions at his Mar-a-Lago property in June. The former president hosted nine to 11 of the industry’s top executives, who, Jayson Browder, a senior vice president at Marathon Digital bitcoin mining firm and an attendee at Mar-a-Lago, told Axios, represented 30% of the total Bitcoin network computing power. Trump discussed policy issues including the Department of Energy’s attempt to mandate energy surveys on crypto miners, Biden’s proposed 30% levy on Bitcoin miners and U.S-China great power competition in the tech realm. Browder also suggested that his firm would engage similarly with the DNC if they were ‘open and willing,’ perhaps indicating that the budding relationship is not being forged due to a warmth towards Trump specifically. However, the general sense appears to be that Trump is now viewed by the industry as the candidate most receptive to its needs. 

The starkness of his positional change and sudden use of “in-the-know” language in crypto discussions suggests that Trump’s U-turn decision to court the cryptocurrency industry likely originates from behind the scenes. For example, at Bitcoin 2024, Trump announced that he ‘will always defend the right of self-custody,’ referring to a type of cryptocurrency ownership where users have full control of their assets in a private wallet as opposed to on a third-party exchange. This is not an issue that a 78 year old, who until recently dismissed the technology and has not traded in it, would be likely to understand. Trump also hinted that his appearance at the conference was pushed by advisers, including Republican primary rival turn ally Vivek Ramaswarmy, who asked him to ‘be nice’ to crypto supporters. 

Artificial Intelligence

Vance's stance on AI appears cautiously optimistic, potentially shaping a Trump-Vance administration's tech policies. At a Senate hearing on 11th July, he voiced concerns about generative AI enabling online child predators, indicating awareness of both AI's potential and risks. Unlike some Republican colleagues, Vance supports the creation of a new federal agency for AI regulation. ‘We need a dedicated body to handle the unique challenges posed by AI,’ he said in a recent interview, ‘one that can move at the pace of technological advancement.’ Vance has also criticised Big Tech for what he describes as overselling the existential risk connected to AI in an attempt to trigger regulation that would prevent smaller firms from competing.

Economically, Vance emphasises a need to maintain U.S. leadership and dominance in AI. He has proposed tax breaks for companies investing in AI and increased federal funding for AI research in universities. ‘We can't afford to fall behind China or any other nation in this critical field,’ he stated during a Silicon Valley campaign stop. In addition to the aforementioned, the attainment of this leadership and dominance, one can assume, would be attempted in large part through deregulation in the hope of boosting domestic competitiveness. Vance also plans to address potential AI-driven job displacement with a proposed ‘AI Transition Fund’ for retraining labour in affected industries.

On national security, Vance advocates for stricter export controls on AI tech to potential adversaries while pushing for more AI integration in U.S. defence. ‘AI will be as crucial to our national security in the 21st century as nuclear technology was in the 20th,’ he said at a recent foreign policy forum. Vance’s apparent views on AI governance represents a shift from traditionally more cautious Republican stances, suggesting potential changes in how a future Trump presidency might handle AI and other emerging technologies.

Vance claims to support the development of AI systems with built-in safeguards against bias and the establishment of AI transparency and accountability guidelines. ‘We need to ensure that as AI systems become more prevalent, they align with our values and respect individual privacy,’ he noted at a tech policy roundtable. To Vance, open-source AI represents a large part of this. In a 4th March X post, he writes that one of the biggest risks related to AI is that, ‘a partisan group of crazy people use AI to infect every part of the information economy with left wing bias…the solution is open source.’ Despite the statement’s ideological ruminations, it indicates preference for a decentralised approach to AI. 

Conclusion

Vance's selection as Trump's running mate signals a potential shift in Republican tech policy, blending traditional conservative values with a more nuanced approach to emerging technologies. This stance, while appealing to some in Silicon Valley, could create tensions within the GOP.

The ticket's seemingly contradictory positions - courting Silicon Valley while simultaneously proposing to break up tech giants - could prove difficult to reconcile in practice. Its pro-crypto stance and AI policies, while potentially invigorating certain tech sectors, might face resistance from more conservative elements within the party and traditional financial institutions. Furthermore, the rapid pace of technological change, particularly in AI, may outstrip the ability of any administration to effectively regulate and adapt, regardless of their intentions.

As the 2024 election approaches, the tech industry finds itself at a crossroads, with the Trump-Vance ticket offering a vision that is both promising and problematic. The success of its approach will depend on their ability to navigate these complex issues while maintaining a cohesive party and policy platform.