Silicon Valley's Frankenstein
The story is the proverbial "road to hell..."
Joel Kotkin had a fascinating piece in the California Post about Silicon Valley on the 16th of May. Essentially, he is arguing the hostility to their wealth is a product of their own making- a Frankenstein if you will.
Per Kotkin:
“…the oligarchs’ most damning error has been to fund the same groups and politicians that now are calling for their collective scalps.”
He points to a few examples of foundations they funded turning to support their opponents on things like the Billionaire Tax Act and San Francisco’s CEO tax.
He goes on to describe the extraordinary wealth at a time of extremes between the rich and poor in California. The fact they rose to the top, he observes, means they are targets for the world they created.
He notes that while some have cozied up to MAGA and Trump, many have continued to fund and support the more liberal/progressive causes which are at odds with the exact world the Tech Bros want to preserve.
He bluntly summarizes their worldview as such:
“But it also results from a basic naivete and love of virtue-signaling, common to the tech elite. They may know their bits and bytes, but not the messy realities of political life.
“They may be smart about technology,” notes long-time political consultant Arnold Steinberg, “but they are stupid about politics.””
The view expressed by Kotkin is supported by Labor and Lorena Gonzalez, as we have noted multiple times here.
Regarding Matt Mahan and the Tech Bros supporting him, Gonzalez said:
“For him, and the tech bros that are supporting him,” said Lorena Gonzalez, head of the powerful California Labor Federation, “they don’t understand voters and they don’t understand the moment.”
The California Teachers Association (CTA) further noted in publication:
“Whether it’s AI, whether it’s the wealth tax, whether it’s some other issue they care about, they’ve decided to play,” said Gale Kaufman, a longtime consultant for groups like the California Teachers Association. “They don’t even know the game.”
In the long history of pro-business groups going to battle with labor, she said, “Many have tried. Few have succeeded.”
What was not mentioned is the history of the Effective Altruism which we feel was a major factor in this Greek story of Chronos and Uranus- the children overthrowing their father.
We wrote in February, before all these pieces, about the BTA and the part of its origin story neglected in the Media.
”To the Billionaire’s complaining about the BTA on the way, I point them to “Effective Altruism” as the roots of their Billionaire’s tax. The rich billionaire tech moguls said it- “they were willing to give away their wealth.” The admission of concentration of wealth and the need to “equalize the playing field” opened the door to these discussions. Well, now you get it, you reap what you sow, but not where you control it, rather, where others come for what you have, property rights be damned. In fact, I have not heard a word about Effective Altruism and its roots for these efforts, and one wonders why. For those VC’s and supporters of the young wealthy, you get what you sow. Effective Altruism is turning into Effective Seizure or Effective Failure for our Government (I will get a better slogan). I do hope the folks fighting the BTA are better than the people who fought Prop 50. There has to be a point of stopping the madness, regardless of whether billionaires deserve what they are getting or not (see Matt Mahan and is his reasons for opposition because wealthy borrow against their wealth to not pay any tax on income to understand where some equalization should occur). We have some ideas but those are probably too pragmatic for our populace. Why would we give more to the people who have failed us again and again here in LA and California? “
As we sit today, the Mahan campaign is proving the points made by Steinberg in Kotkin’s article, by Gonzalez in her assessment in March, and the CTA’s opinion the same month- they are political sheep in a world of wolves. Proof positive? Matt Mahan peaked at 7% in the weekly Democratic Polling and now has retreated back to 4%. He never broke through.
It is not about name recognition, it is the fact Silicon Valley selected one of their own. Mahan is a tech entrepreneur (in educational software) who has served for 4 years in public office in a City which while large, is not representative of California and its complications. He was selected at the last minute to be Governor of the 4th Largest Economy. He never rose above “Mayor of San Jose,” as we wrote here on numerous occasions. He did not go “all in” as we counseled in January.
The same travails afflict Adam Miller, another tech entrepreneur in Los Angeles. He too made his money in educational software. Though he never ran for public office, he ran a homeless nonprofit and started Project Rubicon, so he was aptly qualified to run.
He was too pragmatic and not “sharp elbow” enough to take on the entrenched interests he had to know existed (he was in homelessness).
It has been said that reformers will have to go where few understand to get to the real reform needed. I call it the Second Dimension. It is where all government battles really happen. It is zero sum. It is amoral. Think selecting Swalwell. Those who selected him to be their choice were amoral- they knew about his proclivities and still thought he would get through.
To get there, you have to really threaten.
When you do, they punch hard. Gonzalez’s response, along with the CTA consultant, to Mahan showed they never thought he would reach to the Second Dimension, so he was not really a threat. Same with Adam Miller. He was not going to challenge Bass and the group the way Rick Caruso did in 2022.
To take on those interests, you need to know how to get there and then win. They are designed to stop you. They are designed to outlast you. They are designed to slow you. Think Trump’s first term. He was unprepared. He did not know where the skeletons were buried. He was naive. He left after four years, frustrated, realizing he could not “take the reins” as much as he wanted to.
Then you have Trump’s second term. You got Project 2025. You got the intense study of the Government and the dark corners. You had DOGE, which was not exactly what was presented. It was as much as way to enforce discipline after the example of USAID was made, as anything. USAID sent a message- the Administration would come for your “slush funds” too. They are everywhere in Government. They are the key to the favor factory. If leaks happened, “DOGE would come for you too.” It understood the motivations and how to enforce discipline. It understood the pressure points and leveraged them. It is how reform is done.
Thereafter, proving they were serious, Trump systematically went after programs they knew were working counter to their agenda.
Some were cut. Others, commandeered. Reform is about shifting, not necessarily cutting. Why should you give up a program or pot of money you can use for your own ends?
Trump might be bombastic but the people executing the strategy are not stupid.
The lesson is also not lost on those looking to get at it. Look at the left.
The Wall Street Journal had a piece in the fall about this internal battle in the Democrats.
Donors are not giving money to the Party. Instead they are bypassing it.
Seizure of the Party’s apparatus, including nonprofits, universities, Labor, et cetera, has happened too efficiently by the Progressives, and therefore, another approach was needed. The true Power, the campaign dollars and donors would not be fully captured. There is resistance. Silicon Valley is a part of that “resistance,” but they are naive based on how they “played” this one.
Fast forward to today, to Mahan, to Silicon Valley trying to ward off the “long game” players.
They needed to get to the Second Dimension if they wanted to have an effect. They need to understand the “pressure points.” They need to understand the “deals,” and start to “pressure” them.
Money can be spent in politics like in Hollywood, with no effect. It happens all the time. Lobbying and Consultants live on the “almost there” mentality of those advocating. You expect to fail. You expect to pay to get access. You expect to have to use “special relationship” to accomplish anything.
In reality, Money has to be coupled with something else, whether it is a campaign or advocacy. There must be substance. There must be an idea. There must be a way to get to the answer.
Mahan’s campaign is proof positive of this failure. Some do the opposite (see the CDBG-DR not being included in the Housing Bill Compromise today if it holds). Alternate plan, built around pressure points, knowing where the strength was, and a little luck. How politics works. We did not hire a lobbyist either, those advocating for it did. Let’s see if the bill holds up as is.
Look at Steyer?
He got closer, played rougher, but he too could not get to the Second Dimension and threaten it. He needed it to get elected, and they had him at that point (note the CTA endorsement and other needs for Labor support).
Money is only an element in Politics. It is important, yes, but not determinative. $200 million and did he get there? Close so far, but seemingly, it looks like it is another vanity project.
Silicon Valley has money and can flex muscles if they learned how. The immaturity is the point Kotkin is making. You need to be more than a “check writer” to get respect. “Check writers” are equivalent to those who get “appointed.” Sure, they have the position, but it is not earned in the Game’s eyes.
Kotkin’s point fits nicely with what we have been saying since the BTA found its way out there. The push back has not been sophisticated, and their competition is more sophisticated than them.
Crucially, there has been no counterpoint, just as we expected, just as Prop 50 missed. They would lean on their relationship with Governor Newsom, not put out alternate proposals to attack the other side (such as we offered in November). Sure confusion around ballot measures will be a part of the strategy. So will a compromise, but it was a reliance on those in Power instead of capturing your own. It again will not strengthen their standing with those who they are going up against.
Rather, it reinforces the impression already out there- they do not know how to play this game for the long-term.
They have money, and the Consultants love that fact. They do not realize the Consultants will say “the right things,” they will “get close enough” to look like they fought the good fight, a victory here and there too to keep them coming back, but they are “limited” because of their own allegiances to themselves.
They cannot have too much success because they then dismantle the system they live in. It is the symbiosis we talk about- the opposition needing the instigator so both can survive so neither actually wins the battle.
Labor will blacklist anyone who wins too aggressively. There is a level of “opposition” tolerated, but that opposition has to “pull punches” when necessary. Silicon Valley and its cohorts get the “punches pulled” at “the crucial time.” Think Swalwell and Mahan. Think how he left the opening the Swalwell scandal created when he should have destroyed everyone associated with Swalwell.
It did not matter the effect. You were vested tens of millions to win, and he did not do it. He proved Gonzalez, et al, correct at that crucial moment.
Politics is a tough game. Interests are deeply entrenched. Kotkin scratches the surface, but the points are very much backed up by what we have seen and written about here.
For those in Silicon Valley, do not give up, but seriously think about what you want to do to get at the bigger issues. Lurie was a success, but replicating it State-wide will require some real strategy and taking on serious interests.
We are talking about hundreds of billions of dollars here, so those groups are not going to sit back and let someone waltz in with a reform mindset if the would be reformers cannot even begin to understand where their opponent’s weakness lays.