Trump's relationship with Silicon Valley is off to rocky start

By Max Ehrenfreund

Separated by culture, politics and a long, cross-country flight, Silicon Valley and the new administration have been experiencing compatibility issues. Photo / AP
Separated by culture, politics and a long, cross-country flight, Silicon Valley and the new administration have been experiencing compatibility issues. Photo / AP

Wall Street has President Donald Trump's ear. He meets with bankers and financiers at the White House, and the president has signed orders indicating he will accommodate the industry's needs.

Meanwhile, Trump's relationship with America's other centre of big business has been tense so far, sometimes even hostile. Separated by culture, politics and a long, cross-country flight, Silicon Valley and the new administration have been experiencing compatibility issues.

The contrast suggests how the president's own connections in business and his personal experience in real estate could influence his economic policies in the years to come.

"The tech industry and the Trump administration are talking past each other as opposed to talking to each other," said Venky Ganesan, managing director of Menlo Ventures.

Trump's first three weeks in office have made the difference clear. He sought to impose a ban on all immigration from seven predominantly Muslim countries, an action that prompted outrage from Silicon Valley, where many firms rely on foreign engineers.

A few days later, Trump ordered a review of restrictions imposed on the financial sector after the crisis and delayed a rule intended to require retail financial advisers to act in their clients' best interests. Analysts said the actions signaled the White House would be friendly to Wall Street.

The financial sector is well represented among Trump's cabinet and his advisers.

National Economic Council director Gary Cohn, White House senior strategist Stephen Bannon and treasury secretary nominee Steven Mnuchin have all worked at Goldman Sachs. So did Anthony Scaramucci, a hedge-fund manager who advised Trump during the campaign. Transportation Secretary Elaine Chao spent time at Citi and Bank of America.

The technology sector does have at least one well-placed spokesman among Trump's confidantes in billionaire Peter Thiel.

"Peter is, I think, influential with Trump," said economist Stephen Moore, who advised the president during the campaign. "He's, sort of, the point man when it comes to the concerns and needs and so on of these Silicon Valley companies."

Trump also formed an advisory council of corporate leaders after his election, which includes a couple of delegates from Silicon Valley: Tesla's Elon Musk and IBM President Ginni Rometty. Uber chief executive Travis Kalanick quit the group last week in response to Trump's immigration order.

The technology sector does have at least one well-placed spokesman among Trump's confidantes in billionaire Peter Thiel. Photo / AP
The technology sector does have at least one well-placed spokesman among Trump's confidantes in billionaire Peter Thiel. Photo / AP

Financiers, however, outnumber them on the panel. The group is chaired by Stephen Schwarzman, a founder of the private equity firm Blackstone.

Other members include Jamie Dimon, the head of J.P. Morgan Chase, and Laurence Fink, chairman of the mammoth money manager BlackRock. Patomak Global Partners chief executive Paul Atkins is also on the council - his firm provides consulting services to the financial sector.

To some degree, the discrepancy is attributable to politics. Anecdotally, there are more Republicans working in Manhattan than in the Bay Area, and Democrats in the technology industry made no effort to conceal their distaste for Trump during the campaign.

"Most of the CEOs are pretty hard-core Democrats," Moore said. "You have to search far and wide to find people in Silicon Valley who believe in the things that Trump talked about."

"The tech industry, during the presidential campaign, was far more vociferous in its opposition and disdain for the Trump candidacy than I think other industries were," Ganesan said.

Yet Ganesan, the venture capitalist, argued that the technology sector should find ways of working with Trump.

"Ultimately, both the tech economy and the Trump administration need each other," Ganesan said. "America's leadership in the world is driven by technology."

Michael Beckerman, the president of the Internet Association -- a lobbying group that represents large technology companies -- agreed, predicting that entrepreneurs in technology would eventually find common ground with Trump's administration on areas such as regulation and trade.

U.S. digital exports "can create a competitive amount of economic value and competitiveness in the United States, and that's the exact kind of thing that he's been talking about throughout the campaign," Beckerman said. "Who seems to be getting the love in the first few weeks is not necessarily an indication of the long game of the next four years."

Former Commerce Secretary William Daley, whom President Barack Obama brought on as chief of staff in part to help the him improve his relationships with corporate America, said that Trump's personal relationships likely accounted for some of his apparent preference for bankers so far.

"If you take his whole career back to his father, it's a pretty closed sort of world," Daley said. "He probably knows every banker, because he's probably tried to borrow from every one of them."

While both New York and San Jose are redoubts of the economic elite, the "whole mindset" of doing business is very different between the two cities, Daley said. He said that Trump likely feels more comfortable in the staid, managerial world of finance, real estate and blue-chip corporations, in contrast to the more unpredictable and entrepreneurial world of computing.

Financiers "want to live in a world that's not as chaotic as the Silicon Valley crowd likes to live in," said Daley, a former J.P. Morgan banker who is now a managing partner at the Swiss hedge fund Argentière Capital. "In the Silicon Valley world, they're all over the place. Every day is a new game plan."

Daley pointed out that besides Trump's hotel in Las Vegas, his golf resort in Los Angeles and his recently completed Vancouver building, most of his properties are on the East Coast or overseas, limiting his exposure to the technology sector's culture and clout.

"It's partly because Trump is a creature of New York," Moore said. "He's dealt with Wall Street his whole life."

- Washington Post

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