Last December, Silicon Valley venture capital firm a16z announced it was getting into politics. Ben Horowitz, one of the firm’s partners, posted a blog post on the firm’s website (where the firm provides key thought leadership) declaring that the firm would begin donating to “techno-optimist” political candidates.
Since then, the company has pumped about $50 million into U.S. political action committees, most of it to FairShake PAC, the crypto industry’s largest political group this term. FairShake put $10 million into its primary campaign against Rep. Katie Porter (D-Calif.) and $2 million into Rep. Jamaal Bowman (D-N.Y.). (By “tech optimism,” I assume they meant “the numbers are going up!”)
New tagline: “Little Tech”
Over the weekend, a16z published an update on the political agenda: they are no longer simply spending money to support tech optimism, they are spending money to support the “Little Tech Agenda.”
So what is Little Tech? They’re so glad you asked! Little Tech is startups.
“…the vanguard of American tech supremacy has always been startups. From Edison and Ford to Hughes and Lockheed, SpaceX and Tesla, the path to greatness begins in a garage.”
“A startup is when a group of brave misfits come together with a dream, ambition, courage and a particular set of skills to create something new in the world, build a product that improves people’s lives, and start a company that has the potential to continue to create even more new things in the future.”
In this view, startups are everything that is good and healthy in the American economy: they are courageous risk-takers who take a “clean slate, a shot at imagining and creating a different, better world.”
But startups are at risk like never before: huge, demanding government regulators standing in their way, asking questions like, “Does your product actually work as advertised?”, “Is this a Ponzi scheme?”, “Are you violating multiple laws?”, “No, this is clearly a Ponzi scheme. You know these things are illegal, right?”
To make matters worse, the government is biased towards incumbents – big companies with a proven track record and a more substantial product than a “blank slate”. And the government is vetting startups before allowing them to be acquired by these big incumbents. (Of course the government should, because if a startup gets absorbed by Facebook/Google/Amazon/Microsoft it’s good for the Little Tech Agenda.) Oh, and the government is considering taxing unrealized capital gains, which would be bad for venture capital and therefore taboo for brave outsiders and misfits coming together to build something.
The result, they argue, is “the stagnation and decline of the American economy today.” As evidence, they point to 50 years of the digital revolution that has not produced any real growth in productivity. You might wonder why decades of slow productivity growth and a surge in venture capital wealth only became an issue once venture capitalists started worrying about their investment portfolios. Please don’t wonder. Andreessen doesn’t explain, and probably doesn’t want you to.
In case you can’t tell, all this talk is just pretense. Whether you call it “techno-optimism” or “little tech,” there seems to be a very simple logic to Andreessen Horowitz’s political spending.
A16z is an investment portfolio. Its partners are simply financial managers. They convince rich people to give them money, put that money into early stage companies, and then they pressure those companies to maximize their returns, and they use their connections to facilitate the business.
They spend money to promote the interests of their investment portfolio. They believe that the government should let the crypto industry self-regulate because they invest in many cryptocurrency schemes. They believe that the government should take a hands-off approach to AI because they invest in many AI startups. They are not true libertarians because they would prefer that the government use these portfolio companies as vendors (government contracts built Silicon Valley. Government contracts fueled Silicon Valley after the dot-com crash. Government money is not only reliable, it’s attractive). The only time they oppose Big Tech is when it’s in direct competition with their startup portfolio. They’re happy for Big Tech to acquire the same startups because it’s a liquidity event. And of course they oppose efforts to tax VC money. What’s the point of VCs if they can’t escape the tax man?
The myth of the genius entrepreneur
This is nothing new: since the 1990s, Silicon Valley has been so invested in the mythology of the (fake) genius engineer/entrepreneur in his garage that it has made irrational efforts to pretend that government is nothing but a hindrance to innovation, even when government funding and regulatory clarity are directly driving those industries.
What has changed is the size of the money involved and the boldness of top VCs. VCs also donated to candidates in the 90s, 2000s, and 2010s. In those decades, VCs lobbied candidates to prioritize their businesses and investments over established rivals. But VCs were a smaller share of the global economy back then. Policymakers continued to reduce the tax burden and dismantle the regulatory state, and VCs got richer and richer. And now here we are.
Incidentally, this is the main reason why many in Silicon Valley decided to support the candidacy of former President Donald Trump. It’s not that tech industry leaders necessarily like an incompetent authoritarian, or that they believe in his promises. They’ve been up against Lina Khan at the Federal Trade Commission for 3.5 years and can no longer answer to competent regulators.
Last month, the FTC issued a stern memo warning AI companies not to misrepresent the content or capabilities of their services.
“Your therapy bot is not a licensed psychologist. Your AI girlfriend is not a girl or a friend. Your grief bot has no soul. And your AI co-pilot is not God. We have warned companies not to make false or unsubstantiated claims about their AI and algorithms, and have taken action, including recent lawsuits against WealthPress, DK Automation, Automaters AI and CRI Genetics. And drawing on past litigation, we have repeatedly advised companies not to use automated tools that mislead people about what they are seeing, hearing or reading.”
This is what the Little Tech Agenda is fighting. They oppose the creation of the FTC to prevent blatant fraud. But if the government actually protects consumers, a16z’s investment portfolio could take a big hit. That’s why many VCs prefer tyranny over accountability.
Andreessen and Horowitz could have saved money if their partners had known the Supreme Court intended to overturn the Chevron decision: Six lifetime-appointed Republican senators decided to put the regulatory state at risk, in the personal financial interest of their backers.
But when you have that much money and power, it’s probably just fun to splash the cash and have a little fun. If the term doesn’t catch on by 2026, you can bet they’ll write another blog post and debut a new term for political finance.
The “Little Tech Agenda” has nothing to do with innovation or technology. It’s simply a venture capital wish list. The investor class isn’t smart enough to invest in companies that bring useful products to market and make a profit. They need special treatment from the government to recoup their misinvestments. And they’re willing to spend money to get it.
