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Trump victory bursts Silicon Valley bubble

JP Mangalindan
·Chief Tech Correspondent

Donald J. Trump was elected the 45th president of the United States late Tuesday in a victory that stunned much of the US and the world. The shockwaves were perhaps most felt in the homes, offices and wired cafes of Silicon Valley.

The two dozen executives, founders and investors Yahoo Finance reached out to for this story — many of whom declined to speak on the record — uniformly voiced surprise and disbelief.

“Like many, I’m surprised by the outcome,” conceded Brad Garlinghouse, CEO of the cryptocurrency startup Ripple. “But I’m also embracing the hope that President Trump is far more inclusive and positive than Candidate Trump.”

Other members of the tech community appeared somewhat less enthused about their next president. Indeed, if Silicon Valley exists in a bubble, it’s not merely a financial bubble, but also a cultural bubble — an industry diametrically opposed to many American voters and the values and issues that Trump made the centerpiece of his campaign platform.

“I think the technology industry tends to be optimistic and more economically advantaged,” says Susan Etlinger, an industry analyst at the San Francisco-based Altimeter Group. “Tech tends to congregate in cities. None of these attributes mirror what we saw in the results of the election.”

The San Francisco Bay Area tech community generally leans Democrat or Libertarian, albeit with a greater focus on social issues, with pro-immigration and pro-trade positions. Indeed, roughly 50% of the country’s “unicorns” — private companies with $1 billion-plus valuations — have at least one immigrant founder at the helm, according to a report this March from the National Foundation For American Policy. This illustrates the increasing importance of contributions of immigrants to the US economy, particularly to tech.

Tech workers from overseas sometimes come to the US on an H-1B visa, which lets companies employee foreign workers for graduate-level occupations like engineering. While Hillary Clinton had vowed to uphold the H-1B visa, a Trump administration would possibly restrict the number of workers who enter the country with an H-1B visa — the same kind of visa his wife Melania received in 1996 to legally work in the U.S.

Over 500 people turned up for the election night viewing party held by Sean Parker's civics-focused startup Brigade, based in San Francisco. The last of the crowd filtered out around 12:30 a.m. following Donald Trump's victory speech. Source: Brigade
Over 500 people turned up for the election night viewing party held by Sean Parker's civics-focused startup Brigade, based in San Francisco. The last of the crowd filtered out around 12:30 a.m. following Donald Trump's victory speech. Source: Brigade

The prospect of President Trump, who has proposed building an “impenetrable physical wall” on the southern border and made controversial comments about women, immigrants and the physically handicapped, is perhaps the largest driver behind Silicon Valley becoming the most politicized it has ever been around a presidential election. Indeed, billionaire PayPal co-founder Peter Thiel distinguished himself from much of the rest of the tech community simply by donating to Trump’s campaign.

Many more tech leaders gave to Hillary Clinton, spoke out against Trump, or simply encouraged their employees to go out and vote. Facebook co-founder Dustin Moskovitz and his wife, for example, made their first contributions by giving $35 million in total to Democratic groups, including Priorities USA Action, the largest super PAC supporting Hillary Clinton.

In August, the venture capital firm Charles River Ventures posted a blog entitled simply, “F*** Trump,” which declared Trump’s stance on immigration to be “diametrically opposed to the core values of entrepreneurship.” And employees at more than 300 companies, including Square (SQ), Twilio (TWLO) and venture capital firm Homebrew all gave employees part or all of Election Day off to cast their votes.

“The terrifying display of populism, racism, and sexism during this campaign was, to us, otherworldly, but it was real,” explains Matt MacInnis, CEO of the startup Inkling, which creates tools for digital content distribution. “It spurned the catnapping Valley elite into action to protect the bubble because, at some level, I think people here fear that the ‘other America’ will encroach upon our lifestyle.”

Former Pinterest software engineer Tracy Chou, a talented coder who also worked at Facebook (FB) and Google (GOOG), was more politically engaged in this election cycle than ever before. Chou voted in the primaries, which she had never done before and watched all the presidential debates, which she had also never done. She donated an undisclosed amount to the Clinton campaign and participated in phone banks, calling and encouraging Americans to cast their vote.

Former Pinterest software engineer Tracy Chou was more politically engaged in this election cycle than ever before. She voted in the primaries, which she had never done before and watched all the presidential debates, which she had also never done. Source: Steve Jennings/Getty Images for TechCrunch
Former Pinterest software engineer Tracy Chou was more politically engaged in this election cycle than ever before. She voted in the primaries, which she had never done before and watched all the presidential debates, which she had also never done. Source: Steve Jennings/Getty Images for TechCrunch

“I think the mobilization had more to do with the fear of a Trump presidency — and the attendant moral significance of the country repudiating truth and tolerance — than anything else,” says Chou, who’s known for encouraging companies to disclose the number of female engineers in their ranks.

Like many other members of the tech community, she was shocked to learn of Trump’s victory late Tuesday evening.

“A Trump presidency, an outcome that seemed as improbable and inexplicable as Brexit, is the utter political shock to jolt all of us into our sustained civic responsibility in making this country the kind of place we want to live,” Chou adds. “The criticism of Silicon Valley being its own echo chamber has never felt so dismally true.”

It’s far too early to tell how much of Trump’s campaign rhetoric will translate to actual policy, and whether for instance, his scapegoating of immigrants will indeed result in the mass deportation of an estimated 11.5 million undocumented immigrants or the construction of a massive wall along America’s southern border. But for Silicon Valley, at least, pundits expect a possible chilling effect for investments.

“We’re likely to see a possible ramping down on funding of existing start-up and future companies,” contends Etlinger.

Jeremy Liew, a partner at Lightspeed Venture Partners, a Menlo Park, Calif.-based venture capital firm, predicts the IPO window for startups could be impacted if the immediate-term reaction of the markets holds for a prolonged period of time.

In the medium- to long-term, however, members of the tech community remain optimistic.

“While many in our industry may be surprised by last night’s outcome, it presents an opportunity for bold, new thinking, planning and doing,” says Matt Mahan, CEO of the civics-focused mobile platform Brigade. “Silicon Valley entrepreneurs and innovators don’t shy away from challenges — and when it comes to technology’s impact on U.S. politics, policies and elections, this cycle just scratched the surface. It’s incumbent upon us in the tech sector to continue building tools to help voters make sense of our system of government and hold our elected officials accountable.”

Nicole Shariat Farb, CEO of the San Francisco-based craft kit startup Darby Smart, emailed a note to her 20 employees on Wednesday morning encouraging them to work towards better understanding the rest of America.

“I sat down to write this letter to you and asked myself, ‘What have you taken away from this experience?’” part of Shariat Farb’s note reads. “I’m choosing to come through this experience empowered, to remember that we each can impact change and to continue to invest in that. I’m also walking away learning to listen more. If I had, I think I would have heard more clearly, that people outside of my reach are suffering and frustrated. My commitment this year is to try and listen more and understand better the views of others who live outside of where I live and what I experience.”

In other words? Members of Silicon Valley’s elite should use Trump’s victory as an impetus to do what they continue to do best. But they should also remember that the luxuries and privileges enjoyed by many in Silicon Valley aren’t the norm for America, but the exception.

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.

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Silicon Valley has never been more politicized