David Sacks' Intellectual Journey
The Evolution of Silicon Valley: From Free Speech Haven to Institutional Capture
Housekeeping: We have over 100 nominations for Turpentine Lists from great founders and investors. Submit your nominations if you want access to the recommendations of breakout people, products, and companies and/or if you want to influence which people or companies get recognized.
David Sacks is a technology entrepreneur, investor, and co-founder of PayPal. As an early member of the "PayPal Mafia," he has been a prominent voice in Silicon Valley for over two decades. In this wide-ranging conversation with Erik Torenberg, Sacks discusses the transformation of Silicon Valley's culture, the rise of tech censorship, and the future of institutional reform.
Note: this is an edited version of a podcast we recorded well before the election. In light of him joining the Trump admin, I thought it’d be interesting to share his thinking that justified his intellectual evolution as well as his prediction of how the Republican Party would evolve.
This is an experiment in posting edited versions of our best interviews, “like” this post if you want us to do more of it.
PayPal's Transformation and Big Tech Censorship
Erik Torenberg: David, let's start with PayPal. What's happened at PayPal has been a metaphor for what's happened in the Valley at large. It was started by free speech proponents like Thiel, Elon, and yourself—some of the biggest free speech activists in the tech world today. And it's become run by people who want to restrict free speech in the name of preventing harm. Could you have foreseen that as the tech industry matured?
David Sacks: No. If you look at polling from a decade ago, both Democrats and Republicans had a consensus in favor of free speech. Going back 20 years to the founding of Web 1.0 companies, there was a real sense that these companies were breaking down boundaries and borders, democratizing access to financial services, payment systems, and, eventually, speech. It seemed to be a consensus in Silicon Valley that this was a good thing. Even roughly a dozen years ago, the then-CEO of Twitter declared they were the free speech wing of the free speech party.
What PayPal's doing now is particularly nefarious. It's bad enough to take away someone's free speech rights, but they're trying to starve out political opposition by denying them the ability to transact, accept payments, pay people, and run businesses. They're encouraging other tech companies to follow suit. The collective effect, if implemented widely, would restrict not just free speech rights but people's ability to make a living.
Erik Torenberg: This was your baby. Elon’s baby. Thiel’s baby. Have you guys tried communicating with management about this?
David Sacks: It's too far removed at this point. They won't reverse course because one of us makes a phone call. I think the only thing they’ll respond to is public pressure, so us speaking publicly is probably as much as we can do.
If you look at the bios of PayPal's leadership, particularly the CEO, you'll see about one paragraph on professional credentials and five paragraphs on left-wing activism. The CEO's received every woke award possible. The company works with groups like the ADL and SPLC to define blacklists. These organizations historically did good work with noble missions fighting antisemitism and discrimination. But in recent years, they've been hijacked by a conventional left-wing agenda, straying far from their original purpose to become standard left-wing groups.
These advocacy groups can promote whatever cause they want, but they shouldn't be trusted to create platform blacklists because they're highly partisan. They can't make honest assessments of anyone from the other side of the political spectrum. Yet PayPal defers to them.
You have to wonder if this is part of the woke capitalism game where executives work with these groups, give them censorship power over political enemies, and receive awards advancing their careers up the woke corporate totem pole. It's a concerning quid pro quo, but it appears to be our current system.
Erik Torenberg: It’s ironic in many ways because there used to be this big libertarian streak in tech where there was concern that the government would enforce a kind of political monoculture but that corporations would keep each other in check and act rationally in terms of maximizing their profits, but in turns out corporates started doing activism all on their own.
David Sacks: They did do it on their own but also, as we’re learning, with the help of the government. The head of Twitter's "trust and safety"—their euphemistically named censorship department—had recurring meetings with the FBI and Department of Homeland Security. Jen Psaki, as White House press secretary, admitted they worked with social networks to identify posts for removal. We're discovering extensive cooperation between security state agencies and big tech companies.
And so all these liberal apologists for big tech who are saying that, ‘well, they’re private companies’ – they’re making a very disingenuous argument because these very same people are supporting new bills in Congress that would regulate these companies in other ways.
On the one hand, they’re saying they’re private companies, they can do what they want, but on the other hand, these private companies are working hand in hand with the state, as we saw with the Twitter files.
There’s a really scary alliance right now between the largest tech companies, politicians, and the permanent Washington establishment. We're getting to the point where it looks more like a Big Brother social credit system.
Erik Torenberg: Well, they're just trying to hold you accountable, whereas when you’re doing the same thing, you’re putting them in harm’s way.
David Sacks: Right. They live in such a bubble where everybody agrees with them, and they have so much entitlement. And it's such a closed loop that if you subject them to any criticism or public debate whatsoever, that’s deemed to be harassment and jeopardizes their safety.
But of course that same argument doesn't apply when they engage in criticism of the other side. Then it’s not harassment, it’s public debate. And these are people who are seeking to control the public debate, so they can't be immune from criticism.
Silicon Valley's Political Evolution
Erik Torenberg: You’ve been in Silicon Valley for the last 25 years. When did this political monoculture start to take shape? What was the catalyst?
David Sacks: Silicon Valley's always been very liberal—if measured by party affiliation, it was 90+ percent Democrat. But the real change came with Trump's 2016 election, where all of a sudden liberal elites who thought connecting the world was a good thing, “We’re opening up the world” and “we’re inspiring populist social movements around the world (e.g., Arab Spring) – now all of a sudden the narrative completely flipped to “Oh my God, what have we done? Social networks helped elect Trump."
I now believe that story is largely nonsense. I think the idea that Facebook was the reason Trump got elected is ridiculous. It’s scapegoating. There are other explanations you could point to, like the fact that Hillary Clinton just ran a terrible campaign. But Silicon Valley, particularly social networks, became the scapegoat. After that, big tech leaders started questioning themselves. The media, which had been the champions of the First Amendment, bought into this censorship agenda and abandoned the principles on which the entire media industry was based.
Erik Torenberg: I think Trump was an accelerant, but I noticed changes earlier. At Product Hunt in 2013-2015, there was already tension between tech and media. Media became increasingly hostile, first mocking "silly apps" and then warning about platforms getting too powerful.
David Sacks: True. The big tech companies were growing larger, more valuable, and increasingly dominant. People began recognizing their power and wealth. There are legitimate concerns about these monopolies and how they should be reined in for the startup ecosystem's health.
But over the last six years, the party in power hasn't focused on limiting these companies' power—they want to co-opt it. They're working with these companies to censor political opponents and control narratives. You see this in Senate hearings where Judiciary Committee members tell tech leaders to "take down more content"—content they couldn't legally restrict through legislation due to First Amendment protections. Then in the next breath, they’re saying, ‘you guys have these monopolies we need to look at. We need to pass some legislation to rein you guys in. So they’re hanging these Damocles over their heads and effectively saying you need to do what I say.
And it’s been very effective. It’s created top-down pressure for companies to put their thumb on the scale of democracy and sensor opponents of the people in power. On the other hand, you have the problem of bottoms-up pressure, which comes from the activist employee base. Company leaders are caught in this pressure cooker and haven't shown courage in resisting it. They've consistently capitulated, which makes Elon's actions at Twitter so significant.
Erik Torenberg: Did you experience any of this activism as CEO or only later as a VC?
David Sacks: Not really. PayPal had a strong libertarian culture. At Yammer (2008-2012) and then Microsoft, we were creating tools for free company communication. We didn't have the problems of Slack channels being hijacked by activist employees to unionize and create problems for the company. This started happening later.
Erik Torenberg: Yeah, maybe it was a cascading effect where activists saw it happen in one company, and the rest just followed.
David Sacks: When was Matt Yglesias’s Great Awakening piece written?
Erik Torenberg: I’m not sure, but he was talking about this surge of activism happening on college campuses and the rest of the country. Wow, this is crazy. And then people on the left were saying, don’t exaggerate, it’s just a couple of campuses. And it turned out that activity spilled out to the rest of the corporate world.
What’s fascinating is that you wrote about this in the 90s with Peter Thiel when you guys were back at Stanford. It feels like your writings 30 years ago could have been written today. Talk about having that vantage point.
Institutional Capture and Elite Class Dynamics
David Sacks: Let’s back up. You're right. The interesting thing about this woke phenomenon is that it spans across corporate America. You have so-called woke capitalism. You've got ESG with boards of directors and all these global nonprofits and NGOs.. You've got the think tank world. You've got the media. You’ve got Hollywood. It’s a phenomenon that spans across virtually every major institution in our society. And so the question is how does something like that happen?
This can only happen through a shift in attitudes of an entire class—specifically the professional class with college degrees. The polling data is clear: the biggest socio-cultural divide isn't race or gender; it's educational attainment.
Political science research, particularly Roy Texeira’s work, shows roughly a 30-point gap in voting patterns and party affiliation between professional and working classes. Professional means at least one college degree, and working-class means a high school education or less. This educational divide is the largest electoral split we have seen.
How do you explain that? I think it’s downstream of the fact that universities got taken over a couple of generations ago by the far left. The societal bargain became: if you want economic and social advancement through a college degree, you submit to four years of ideological reeducation. This explains why graduates emerge with far-left views so different from the rest of the country. Andrew Sullivan has this line. We all live on campus now.
I see three distinct groups: About 10% are true believers, 1% rebel and become conservative journalists or founders—which explains how I survive with my views—and roughly 90% become the herd.
The herd populates professional elite ranks—McKinsey consultants, Goldman bankers. True believers take lower-paying jobs in think tanks, foundations, and HR departments, becoming the regime's enforcement arm.
This explains institutions going woke simultaneously—all college graduates have absorbed this ideology and either actively support it or know not to oppose it. And I do think this explains a huge amount of the conflict in our country because two thirds of the country is working class, only one third of the country's professional class. And the professional class holds beliefs and values that are at odds with the working class, which is a majority of the country, yet runs all the major institutions.
You can’t have a democracy where a majority of the country doesn’t agree with the agenda that’s being foisted upon them by their institutions.
Now, the elites running these institutions are always claiming that what they're doing is in the interest of democracy, but democracy is letting a majority of the population exercise its will and get its way. And that's not what’s happening here. Instead, we’re getting this Orwellian doublespeak where, in the name of democracy, they’re doing things like censoring the majority.
In the 2020 election, we had nearly a 50/50 election, but that’s 50/50 with our big tech companies engaged in shadow banning and broad-scale censorship and putting their thumb on the scale. You have to wonder if we had a completely fair and level playing field if the big tech wasn't engaging in censorship on behalf of the elite, and if the media wasn’t constantly covering for the elite, which they’re part, maybe these elections might have gone a little differently.
Erik Torenberg: Balaji likes to say that when people say they’re fighting for democracy, what they really mean is fighting for the Democrat party. It’s never fighting for the Republicans. So even if they’re doing things that seem at odds with actual democratic principles, as long as it’s in favor of the Democrat party, then it’s internally consistent.
David Sacks: Right. If you're in power, you obviously want to perpetuate that power, and you want to insulate yourself from accountability.
And so, like every ruling elite that's ever been in power, you're willing to use tactics of censorship. That's always the reason for censorship. Is that the people with the power wanna protect that power, and they wanna make themselves immune from criticism? And they do that with this Orwellian relabeling of terms where if you criticize them, that's harassment. They’re allowed to criticize and attack you, de-platform you, take away your speech rights, and starve you out. But that's just, you know, appropriate punishment for people who won't behave.
Foreign Policy
Erik Torenberg: One irony is that you yourself are a Stanford graduate, a successful entrepreneur, and yet you’ve gravitated to working-class views on trade, foreign policy, and big tech. How have your views evolved?
David Sacks: Some of it has been a change in my views, and some of it has been the world changing around me and relabeling what used to be liberal views to conservative views. I mean, being a free speech advocate was a liberal position in the 1970s.
I don't think I've changed that much, but I think that what's happened is that the elite in our country has kind of bought into these very illiberal ideas in terms of censorship and just fully embracing the collusion between big tech and our security state. Liberals who used to be quite skeptical of the power of the state and the power of monopolies are now fully bought into the collusion of both of them, provided they can use that power and align it with their agenda.
Erik Torenberg: Let’s do foreign policy. Have you always been a realist?
David Sacks: This is one of those issues where I've just evolved by watching what's been going on. I mean, like everybody else, when we got involved in the Iraq war, I supported it cause I thought they were telling us the truth. I mean, they told us that the Bush administration did that. Saddam Husain was in cahoots with Al-Qaeda, and they had WMD programs. And in fact, we knew where those programs were.
That's literally what the administration told us. It was all lies. Those lies got us into that war. The war did nothing to improve American security. We destabilized the Middle East. We turned Iraq into an Iranian proxy state. We created a huge destabilization, which created a huge refugee problem that spilled over into Syria.
We got involved in Afghanistan. I think the original motivation for going into Afghanistan was just because they actually did support Al-Qaeda, which attacked us on 9/11. But then we stayed there in an open-ended occupation for 20 years, and the entire time, we were told that we were winning and the country was being transformed into a democracy, and everything turned out to be just a lie.
All these foreign interventions in the Middle East cost us something like 8 trillion dollars and at least a million direct deaths. So I don't know how you live through that over the past 20 years and not rethink American Foreign Policy. I realized that American foreign policy has been overly activist and overly interventionist and that has totally backfired and blown up in our faces.
And the sad thing is that the same people who got us involved in that foreign policy are still there. It's the foreign policy establishment, the blob. There's been very little accountability for all those people. In fact, most of them have moved to the Democratic party. They're very comfortable with the idea of state power.
But there was a small circle of people in foreign policy who accurately predicted what would happen, and that’s basically the realist camp. And, of course, they're very out of favor with the elites in Washington because they wanted to restrain American involvement. So, I guess I've become more realistic over time by virtue of just seeing the results of our policies.
Erik Torenberg: With regards to Russia-Ukraine, is it possible that elites became so pro-Ukraine because they were so anti-Trump that once Trump was rumored to be friendly with Putin, it was inevitable that they’d take the other side? Is there another world where Trump tweeted out that we should support Ukraine, and then liberal elites would say ‘no, we shouldn’t’?
David Sacks: Well, I think one of the big things that happened during the Trump administration was you had the whole Russia collusion hoax where they basically invented it. It wasn't even one hoax, it was like a series of hoaxes. You had the Alfa Bank hoax, you had the whole Mueller investigation which went on for years. And what happened is that the left scapegoated not just social networking but also Vladamir Putin for Trump’s election. Presumably, they were working together somehow, and this is what caused Trump to win. That led to the whole Russia collusion hoax. By the way, the whole thing started with the Steele dossier, which, again, we know was a piece of phony opposition research that was commissioned by the Clinton campaign's law firm Perkins Coie, paying a British spy. And I think this backdrop has contributed to the way we perceive the Ukraine war.
Erik Torenberg: To be fair, on the right, there have been some factions glamorizing Russian culture or at least sympathizing with it.
David Sacks: I think that’s overblown. I follow a lot of people on the right, and I don’t see any people holding up Putin as a leader we want to emulate. That’s something the left accuses the right of doing — I mean, I’m accused of being pro-Putin because I don’t want us to get into World War III over Ukraine. I want us to pursue America's vital interests. I’m not pro-Russian. There's nothing about Putin or the Russian regime that I want to emulate. I just think America’s foreign policy should be guided by what’s in America’s best interest, and that’s the discussion we need to have. But that’s just not the conversation we have on Ukraine.
Big Tech Regulation and Monopolies
Erik Torenberg: Let’s get back to big tech. You've advocated for tech regulation because these companies have become too powerful. One challenge is that regulations often entrench existing power structures. Why couldn't innovation solve this as it did with Microsoft?
David Sacks: These monopolies are incredibly powerful, and as they mature, they dominate all downstream business opportunities. Look at Google search—less than 50% of searches now lead to non-Google properties. They keep advancing their own properties in search results and creating reasons never to leave Google's ecosystem.
VCs have little incentive to fund innovation on these platforms if the platform owner will just appropriate that value. You prove an idea and make it successful, and then the operating system copies it, cuts off your distribution, and pushes users to their version. You can't sustain a healthy tech ecosystem under these conditions.
The Microsoft antitrust intervention actually worked. Without it, Microsoft could have seamlessly extended from dominating desktop operating systems to browsers to search. The web would've been far less free. The Netscape lawsuit hamstrung Microsoft enough to allow other companies to innovate.
I'm not saying endless litigation is ideal, but we need mechanisms to restrain these monopolies, or Silicon Valley will become like Hollywood—where creativity is constrained, and studios control everything.
Erik Torenberg: What specific regulations would you propose? Blocking acquisitions like Facebook-Instagram? Reducing Apple's 30% rate?
David Sacks: Banning acquisitions isn't necessarily the answer. We need a healthy startup ecosystem, and there are already a few good outcomes. IPO windows are frozen, SPACs are gone, and M&A is difficult because Washington opposes it. You're foreclosing exit opportunities while most startups still fail. We need some good outcomes to justify front-end risk.
If you restrict M&A, it should be very targeted. Currently, acquirers don't know what's allowed. Facebook was blocked from acquiring a VR app, while Wall Street questions whether VR is viable at all. These interventions in nascent markets, where you can't claim dominant market share because the market barely exists, are misguided. Save restrictions for mature, well-defined markets where acquisitions would significantly increase market concentration.
Not all monopolies are equal. The most dominant are operating system monopolies—Google and Apple's mobile app stores. The principle should be that they cannot impose rules on startups that they themselves don't follow, and they cannot prefer their own apps over third-party apps. There are various enforcement mechanisms like sideloading, but that's the core issue.
The censorship problem is harder because you won't get 60 Senate votes for reform. Section 230 needs fixing—tech companies are having it both ways, claiming distributor immunity while exercising publisher-like editorial control. Twitter's activities proved this. Companies acting as true distributors should keep protection, but those acting as publishers should face publisher liability. However, Democrats want more censorship while Republicans want less, making bipartisan agreement unlikely until perhaps 2024.
Erik Torenberg: Is there a role for antitrust beyond just blocking mergers?
David Sacks: Yes, particularly in addressing platform favoritism. When platform owners can arbitrarily advantage their own services, it destroys incentives for third-party innovation. We've seen this pattern repeatedly—a platform allows innovation until competition threatens their interests, and then they clone successful products and bury competitors.
This requires structural reform beyond just merger review. We need clear rules preventing platforms from exploiting their gatekeeper position to exclude competition. However, reform must preserve legitimate platform innovation while preventing unfair leveraging of monopoly power. It's a difficult balance that pure antitrust tools struggle to achieve.
Preserving Democracy?
Erik Torenberg: Let’s zoom out for a thought experiment. What do you say to the person who says, over the last 30 years, we’ve had tremendous social progress? And free speech was a great tool for getting it. But now, censorship is actually a more helpful tool for producing social progress. Isn’t the goal of speech social progress anyway?
David Sacks: Well, who defines social progress? That’s up to democratic majorities to decide. That elitist view you've just described is the rationalization for a small number of elites who have the institutional power to suppress the will of the majority and interfere in elections.
And then, of course, those very same people will puff out their chests and say, we're the protectors and defenders of democracy. No. If you truly believe in democracy, you would allow the people to have a voice and then let the chips fall where they may in terms of how they vote. The reason why I've become more populist is because it aligns with civil liberties
The person who I've heard made the argument similar to what you've made is Erdogan in Turkey, who basically has said, look, the thing that you in America don't understand is that in the Middle East democracy is just the bus that people take to get where they're going. Once they have the power, they don’t need democracy anymore. They’ve just used it as a tool to get in power.
Erik Torenberg: What do you say to a more nuanced version of that argument, which is the idea that wokeness is just the logical conclusion of liberalism? That liberalism is fundamentally confused because it tries to optimize for freedom and equality, but those values are fundamentally at odds. And that people who are saying we need to get back to classical liberalism are like the communists who are saying, ‘real communism has never been tried’?
David Sacks: If you go back to the '90s, Fukuyama's "End of History" was popular—the idea that democratic capitalism was humanity's final destination and our biggest problem would be boredom. Part of that argument must be true: if we believe in democratic capitalism, it should be an ideal end state for everyone. But the timeframe was way off. Cultures and civilizations are stubborn things.
The bigger error was about boredom. As we approached Fukuyama's "End of History," our biggest problem wasn't boredom but hubris. This hubris in thinking we had all the answers led to a loss of tolerance.
When you think you have all the answers, there's no reason to allow debate or a free marketplace of ideas. This became the woke theology: we understand virtue, and anyone opposing our agenda is simply bad and must be silenced, deplatformed, unpersoned.
What we're living through isn't the free democratic capitalism we expected but something more repressive. It's managerial capitalism, as Burnham predicted—ruled by experts, technocrats, and mid-level managers who control everything. You have collusion between tech platforms, media, and the state, with closely prescribed limits on speech and behavior. It's a strange form of democratic capitalism that feels far more oppressive than we imagined 30 years ago.
The professional class has created a system where they're insulated from accountability while enforcing strict ideological compliance. They claim to defend democracy while actively subverting democratic will through censorship and social control. This isn't about protecting democracy—it's about protecting class interests and power.
Industrial recapture
Erik Torenberg: We’ve been talking about institutional capture -- but could these institutions be recaptured? If Balaji were here, he’d say you can’t recapture them. You have to start new ones. But Elon just captured Twitter. Has that made you rethink what’s possible with institutional capture?
David Sacks: I think we need a multifaceted solution to this problem. Part of it is gonna be creating new institutions and alternatives like we've seen in alternative media. Part of it, though, has to be revitalizing and reforming existing institutions because some of them are just too important and too powerful just to completely concede.
But I can’t understate what Elon is doing here. Elon's going over the heads of the elite and appealing directly to the people. That's what you must do to win this battle. The professional class is only one-third of the country but holds all institutional power, especially media control and narrative-shaping ability. The only way to fight that is by direct public appeal.
This explains the intense reaction to Elon opening Twitter as a true alternative to elite media. Social media's original promise 15 years ago was democratization—giving average people a voice to compete with elite media. Instead, content moderation machinery was captured by elites sharing mainstream media's viewpoints, turning social networks into enforcement arms of traditional media.
Look at the media's hysterical reactions: They called him a Thanos-like supervillain for snapping 50% of the employees out of existence. Then they said that he was starving the employees cause he was going to charge for lunch because no one was eating the food in the cafeteria. Then, they predicted the imminent collapse of the company and the site would go down because he gave a generous voluntary severance package.
He said that if you don't want to return to the office and work hard, you can take a three-month severance. And so all these liberal elites were tearfully saying their goodbyes on Twitter, predicting the site was gonna go down, saying I'll see you in the next life on Mastodon or whatever. And, of course, a month passes, and the site runs just fine.
This terrifies the elite laptop class because he's proving these people aren't necessary. Their previous formula was simple: hold approved opinions, support approved causes, and advancement follows. SBF explained this perfectly—it's the game "woke Westerners" play. Elon's changing the rules: now you must create actual economic value or face termination. It's threatening both ideologically and economically. The era of bloated tech companies serving as jobs programs for surplus elites is over.
What could a counter-elite look like?
Erik Torenberg: Is it fair to say polarization is only going to get worse? Will we see parallel economies with "blue platforms" and "red platforms"?
David Sacks: Well, again, I think the division is caused by the fact that the majority of the country holds more populist working-class views, whereas the elite who are running the institutions hold these far-left cultural views. And that's just the fundamental tension. And the question is, who wins that battle? I think in democracies, majorities end up winning.
Erik Torenberg: maybe there'll be an Elon-ification of the Republican Party at some point where there's just like a really credible tech operator or who tech can respect a peer. What could a counter-elite movement look like?
David Sacks: Our professional managerial class has insulated themselves from consequences. They don't want accountability for mistakes. During COVID, health bureaucrats claimed exclusive expertise, enforced through big tech, but faced no consequences for errors. They even asked for amnesty on all decisions related to COVID.
So you had all these ‘experts’ who were the only ones allowed to have opinions on COVID — and enforced by big tech — and when it turned out they were wrong, there was no accountability. No one got fired, they just moved onto the next thing.
I think the bigger question is whether the Republican Party could marshal this populist energy.
Ultimately, you need somebody who can build a majority coalition and then actually execute this program of accountability for elites. Because society is always going to have these mid-level managers, it’s always going to have these elites. It’s always going to have institutions. We’re not going to get rid of them. But if they want the power that elite status brings, they have to be accountable for the results.
Erik Torenberg: That’s a good note to wrap up on, David thanks for a great discussion.
David Sacks: Good to be with you Erik. Thank you.