Silicon Valley – the new lobbying monster

Source: Traveling in Four Seasons

This article will appear in the upcoming print edition of The New Yorker magazine on October 14, 2024, with the headline “Silicon Valley’s Influence Game - Silicon Valley, the New Lobbying Monster.” About the author: Charles Duhigg is a Pulitzer Prize-winning journalist and author of books including The Super Communicator: How to Unlock the Secret Language of Communication.

One ​​person familiar with the super PAC Fairshake said the group had "a simple message": "If you're for crypto, we'll help you, and if you're against it, we'll tear you apart." Illustration by Javier Hahn

One morning in February, Katie Porter was sitting on her bed, fooling around on her computer, when she learned that she was the target of a vast technopolitical conspiracy. Porter has served in the House of Representatives, representing Orange County, California, for the past five years. She's known -- at least on C-Span and MSNBC -- for railing against business tycoons, often with the aid of a whiteboard to demonstrate corporate greed on camera. Now she's in a heated race to replace California Senator Dianne Feinstein, who died a few months ago. The primary was in three weeks.

A text message from a campaign staffer popped up on Porter’s screen. The staffer had just learned that a group called Fairshake was buying media time for a last-minute blitz against her candidacy. In fact, the group planned to spend about ten million dollars to stop her.

Porter was confused. She had raised thirty million dollars to finance her entire campaign, which had taken years. The idea that some unknown group would suddenly appear and spend so much money to attack her seemed absurd, she told me: “I was like, ‘What the hell is Fairshake?’”

Porter frantically Googled and discovered that Fairshake was a super PAC funded primarily by three tech companies that work in the cryptocurrency industry. In the House, Porter is loosely affiliated with Senator Elizabeth Warren, an outspoken advocate for financial regulation and a member of the Democratic Party’s progressive wing. But Porter hasn’t been particularly outspoken about cryptocurrency; she hasn’t taken many positions on the industry. As she continued to investigate Fairshake, she discovered that her neutrality didn’t matter. A website politically aligned with Fairshake had characterized her as “very anti-cryptocurrency”—even though the evidence presented for that conclusion was factually incorrect. The site claimed that she had been on a House committee voting against a pro-cryptocurrency bill: in fact, she wasn’t on the committee and didn’t vote.

Soon after, Fairshake began running attack ads on television. They didn’t mention cryptocurrency or anything tech-related. Instead, they called Porter a “bully” and a “con,” and falsely implied that she had recently accepted campaign donations from big pharmaceutical and oil companies. Nothing in the ads disclosed Fairshake’s ties to Silicon Valley, her support for cryptocurrency, or her larger political goals. The negative campaign had a clear impact: Porter, who had initially polled well, lost badly in the primary, finishing third with just 15% of the vote. But according to a person familiar with Fairshake, the super PAC’s intent was to do more than just damage her. The group’s supporters didn’t care that much about Porter. Instead, people familiar with Fairshake said the goal of the attacks was to intimidate other politicians — “to warn anyone running for office that if you’re against crypto, the industry will come after you.”

The super PAC and its two offshoots soon disclosed in federal filings that they had raised more than $170 million, money that could be spent on political races across the country in 2024, with more donations likely to come. That’s more than nearly any other super PAC, including Preserve America, which backed Donald Trump, and WinSenate, which aims to help Democrats take back the Senate. Pro-crypto donors accounted for nearly half of all contributions to PACs in the 2024 election cycle, and the tech industry has become one of the largest corporate donors in the country. The purpose of all that money, like the attacks on Porter, is to draw attention to the financial might of Silicon Valley — and to demonstrate that its leaders are capable of political brutality to protect their interests. “It’s a simple message,” said the person familiar with Fairshake. “If you’re for crypto, we’ll help you, and if you’re against it, we’ll tear you apart.”

After Porter lost, it became clear that the super PAC’s message had been received by politicians elsewhere. Candidates in New York, Arizona, Maryland, and Michigan began making public statements in support of crypto and voting for pro-crypto bills. As Porter tried to explain to her three children why she had lost, part of the lesson focused on the realpolitik of wealth and elections. “When you have members who are worried that ten million dollars will be spent on them overnight, the will to do the right thing in Washington evaporates very quickly,” she recalled. “It was naked political power, designed to influence votes in Washington. And it worked.”

In fact, Porter’s defeat was the culmination of a strategy begun more than a decade ago to turn Silicon Valley into the most powerful political operation in the United States. As the tech industry became the world’s dominant economic force, a group of experts, led in part by the same politicians who had coined the idea of ​​a “vast right-wing conspiracy” decades ago, taught Silicon Valley how to play the political game. Their goal was to help tech leaders become as powerful in Washington, D.C., and in state legislatures as they were on Wall Street. For decades to come, these efforts could affect everything from presidential races to which party controls Congress and how antitrust and artificial intelligence are regulated. Today, the tech industry has quietly become one of the most powerful lobbying forces in American politics, and it is wielding that power much like corporate special interests before it: to bully, cajole and reshape the country as it sees fit.

When Chris Lehane was in his late twenties, he coined the concept of a “great right-wing conspiracy” as a way to explain Republicans’ plans to undermine Bill and Hillary Clinton. The showmanship was so clever that Hillary Clinton made it one of her signature rhetoric. At the time, Lehane was a lawyer in the Clinton White House, charged with defending the administration from allegations of scandal, but he was adept at taking control of the political conversation and finding clever ways to put Republicans on the defensive. Strategies like claiming that the president of the United States was the victim of a conservative cabal were so effective that The New York Times later called Lehane a modern-day “master of the dark arts of politics.”

After his time in the White House, Lehane joined Al Gore’s presidential campaign as press secretary, and after Gore lost the election, he opened an office in San Francisco. Despite its size and the significance of its elections, many campaign workers considered California a political backwater because it was so far from Washington. But Lehane, who had helped write the 1996 Telecommunications Act, was convinced that Silicon Valley was the future, and he soon built a business providing black magic to wealthy Californians. When trial lawyers wanted to raise the state’s cap on jury awards for medical malpractice, they brought in Lehane, who helped send voters fliers that looked like cadaver toe tags and created ads suggesting that doctors might perform surgery while intoxicated. A few years later, when a prominent environmentalist hired Lehane to oppose the Keystone XL pipeline, he sent activists to press conferences carrying vials of oil-spill sludge; the sludge was so toxic that reporters fled the room. Then he hired a Navy SEAL who had helped kill Osama bin Laden to talk to reporters and explain that if the pipeline was approved, a terrorist attack could cause one of the largest oil spills in U.S. history in Nebraska. Lehane explained his theory of civil discourse to a reporter: “Everybody has a game plan until you punch them in the mouth. So let’s punch them in the mouth.”

But Lehane’s efforts generally failed to impress the tech industry. For decades, Silicon Valley companies considered themselves agnostic to electoral politics. As one senior tech executive explained to me, until the mid-20th century, “if you were a venture capitalist or a CEO, you might hire a lobbyist to talk to a politician or gossip with you, but other than that, most people in Silicon Valley thought politics was stupid.” Within a decade of Lehane’s move west, however, a new kind of tech company was emerging: the so-called sharing economy companies, like Uber, Airbnb, and TaskRabbit. These companies were “disrupting” long-standing industries, including transportation, hospitality, and contract labor. Politicians had long considered it their prerogative to regulate these industries, and as some startups grew to multibillion-dollar valuations, they began to make demands of them. They felt an affront to companies like Uber that refused to comply with even mild regulation. Other companies tried more conciliatory approaches but soon found themselves mired in local political infighting and municipal bureaucracies. Regardless, “not being politically savvy becomes an existential risk,” said another senior tech executive. “There’s a general awareness that we have to be politically engaged whether we want to be or not.”

In 2015, San Francisco itself became the battleground for a major regulatory fight, Proposition F, a ballot initiative to restrict short-term home rentals that both sides acknowledged was an attack on Airbnb. The proposal grew out of accumulating grievances: Some San Franciscans complained that many buildings had effectively become unlicensed hotels, hosting reveling tourists who never turned off their music, didn’t clean up their trash, and — most worryingly for city leaders — didn’t pay the taxes the city would have levied if they’d stayed at a Marriott. Other residents argued that Airbnb’s presence made it harder to find affordable housing because it was more profitable to rent a home to short-term visitors than to long-term tenants. Proposition F would effectively make it impossible for Airbnb to work with many hosts for more than a few weeks a year. Early polls showed the initiative was popular. Dozens of other cities were considering similar legislation and watching eagerly to see whether lawmakers in San Francisco, where Airbnb was based, could teach them how to rein in the internet giant, then valued at about $25 billion.

Alarmed, Airbnb executives called Lehane and asked him to come to headquarters. Minutes later, Lehane arrived, wearing the sweatpants and baseball jersey he wore to his son’s Little League games. Lehane was skinny and used to athletic self-torture—he ran every day, often for 15 miles at a stretch, often while sending oddly punctuated emails and leaving stream-of-consciousness voicemails—and had a pair of crooked boyish front teeth that offset a receding hairline. To Airbnb’s leaders, he looked like an unlikely political guru. But once Lehane had caught his breath, he launched into a commanding speech. You’re all thinking about this situation all wrong, he said. Proposition F was not a crisis—it was an opportunity to change the political landscape of San Francisco and to upend the narrative. The key, he told executives, was to build a campaign against Proposition F that was as sophisticated as Barack Obama’s recent presidential campaign and to spend billions of dollars warning politicians that there were “Airbnb voters”—people who shouldn’t be offended. He laid out a three-pronged strategy, explaining to executives that politicians cared most about getting re-elected. If the company could prove that opposing Airbnb would make it harder for them to stay in office, they would give in. Lehane was soon named Airbnb’s head of global policy and public affairs.

The first step in that role was to mobilize Airbnb’s natural constituencies: homeowners who profited by renting out their properties, and tourists who avoided expensive hotel rooms by using the service. By the end of 2015, more than 130,000 people were renting or hosting rooms in San Francisco. Recruiting several former Obama campaign staffers, Lehane led a team that made tens of thousands of calls to Airbnb hosts and guests, warning them about Proposition F. Team members also urged hosts to attend town hall meetings, talk to neighbors, and call local officials. During this time, the company (allegedly inadvertently) sent an email to everyone who had stayed at an Airbnb in California, urging them to contact the California Legislature. The legislature was flooded with messages from around the world. The Senate president pro tempore called Lehane to tell him he had received the message and to plead with him to stop the attacks. “I kind of wish we were doing this on purpose,” a person close to the campaign told me.

The second part of Lehane’s strategy was to use a lot of money to pressure San Francisco politicians. The company brought in hundreds of lobbyists to knock on the doors of 285,000 people—about a third of the city’s population—and urged them to contact local elected officials and say that opposing Airbnb was an attack on innovation, economic independence, and American ideals. The relentless campaign posed an obvious threat to the city’s Board of Supervisors: If an official supported Measure F, Airbnb might encourage someone to run against him or her. “We spoke out loud for the silent part,” one campaign worker said. “The goal was to intimidate, to let everyone know that if they mess with us, they’re going to regret it.” In total, Airbnb spent eight million dollars on the campaign, about ten times more than all the Proposition F backers combined. “It was the most ridiculous campaign I’ve ever been involved in,” the staffer told me. “It was outrageous and extreme. You shouldn’t spend that much money on a municipal election.” That said, the staffer enjoyed his time at Airbnb: “It was the most money I’ve ever made working in politics.”

The third prong of Lehane’s strategy was to upend the debate over Proposition F by proposing alternative solutions. Otherwise, Lehane and Airbnb’s CEO, Brian Chesky, believed the company would face similar proposals in other cities. “You can’t be against everything,” Lehane told the Airbnb board. “You have to be for something.” As a gesture of compromise, Airbnb has voluntarily begun paying taxes on short-term stays within the city. It has also offered to share some internal company data—such as the number of guests visiting the city each month—that will help local officials monitor the service’s impact on the community. More importantly, Airbnb eventually offered to build a Web interface that San Francisco officials could use to register hosts and track rental patterns. The solution was self-serving, because it made the city dependent on Airbnb to monitor Airbnb’s activity. But the proposals addressed many of the complaints that prompted Proposition F. More importantly, they guaranteed San Francisco tens of millions of dollars in tax revenue each year. When Proposition F finally came to a vote, it was soundly defeated.

Airbnb’s approach to political conflict stood in stark contrast to that of Uber, which had just become the world’s most valuable startup but soon came under fire from cities and the country for resisting various taxi regulations. Airbnb’s strategy was designed to appeal to politicians’ lofty ideals. After the Proposition F campaign, Lehane began working with the SEIU, one of the country’s largest labor unions, to form a union for Airbnb rental cleaners. The plan never came to fruition, but labor-friendly politicians in San Francisco and New York began to see Airbnb as a potential ally.

To other politicians, Lehane’s strategy wouldn’t seem groundbreaking. But in Silicon Valley, his approach was refreshing. “It’s a relatively small investment, but the payoff is huge,” one tech executive told me. “It turns out that the ROI — the political payoff — was much better than anyone thought.”

After Proposition F was defeated, the San Francisco Board of Supervisors eventually agreed to many of Airbnb’s proposals. By then, Lehane had taken his business elsewhere. He launched similar Airbnb campaigns in dozens of other cities, including Barcelona, ​​Berlin, New York, and Mexico City. In 2016, at the U.S. Conference of Mayors in Washington, D.C., Lehane was invited to speak after Michelle Obama. “Listen to my lips — we pay taxes,” he told attendees. Airbnb soon had deals with more than a hundred cities, and when local politicians proved intransigent — Austin’s leaders, for example, seemed unmoved by Airbnb’s proposals — the company simply passed them over. In Texas, it persuaded the state legislature to make it difficult for any municipality to ban short-term rentals. Today, Airbnb has agreements with thousands of cities.

A few years after Lehane joined Airbnb, a venture capitalist pulled him aside at a party and said, “It used to be that hiring the right CFO was the most important thing to get a company public. But you’re proving that politicians are just as important.” Lehane had a bigger insight, however. What these events showed was that tech companies—especially ones like Airbnb that have platforms that connect people who otherwise would have trouble finding each other—may now be the most powerful group in politics. “Once, organizations like labor or political parties had the ability to organize and really engage large numbers of voters,” Lehane told me. Today, internet platforms have a much greater reach; a tech company can communicate with hundreds of millions of people at the push of a button. “If Airbnb can attract 15,000 hosts in a city, that can make a difference in who wins the city council or mayoral election,” Lehane told me. “In a congressional or Senate race, 50,000 votes can make a huge difference.” Of course, simply having a large user base doesn’t guarantee that Airbnb will get everything it wants. Voters respond only to inducements they find persuasive. But Lehane understands that companies like Airbnb can make arguments faster and more effectively than almost any political party or other special interest group, a source of their enormous power. “Right now, the platforms are really the only thing that speaks to everybody,” Lehane says.

For the tech industry, the Trump era has been a chaotic mess. The president has blasted tech platforms as biased against conservatives, while liberals have blasted Silicon Valley’s social media companies for putting Trump in the White House. Tech executives have declared support for the industry’s many immigrants in the face of Trump’s Muslim ban and border segregation; they’ve also dealt with employee walkouts and protests over racial injustice, sexual harassment and shared bathrooms — topics that neither engineering degrees nor business school prepared them for. When Joe Biden won the presidency in 2020, Silicon Valley leaders breathed a sigh of relief. The Biden administration seemed a throwback to the Obama years, when tech was considered cool and politicians boasted about knowing Mark Zuckerberg. Biden’s victory also meant that Lehane, who has deep roots in the Democratic Party, was unquestionably Silicon Valley’s top political guru. Companies came to him; employees loved that he gave generously and made politics fun. (Many former colleagues spoke with pride of the nicknames he gave them.) Most important, he made those who worked with him feel like they were on a righteous quest. Peter Ragone, a prominent adviser to numerous Democratic politicians, told me that of the handful of political consultants who were transforming Silicon Valley, “Chris was in the vanguard. His ability to process information quickly was amazing.”

Silicon Valley’s enthusiasm for Biden didn’t last, however. The president quickly appointed three prominent tech skeptics—Gary Gensler, Lina Khan, and Jonathan Kantor—to oversee the Securities and Exchange Commission, the Federal Trade Commission, and the Justice Department’s antitrust division, respectively. Soon the government was suing or investigating Google, Apple, Amazon, Meta, Tesla, and dozens of other companies. Some of these lawsuits and investigations had been launched during the Trump administration, but Biden’s SEC found a particular target in the cryptocurrency industry. An ally of Elizabeth Warren, Gensler has filed more than 80 lawsuits alleging that cryptocurrency companies or promoters have violated the law, most commonly by selling unregistered securities. Some of the executives sued by the SEC have made large donations to Democrats. Brad Garlinghouse, the CEO of the cryptocurrency company Ripple and a former Obama fundraiser, is among those under legal attack, and he clearly feels like a victim. He told Bloomberg that the federal government has acted like “a bully,” and tweeted, “Democrats continue to support Gensler in his illegal war on crypto — undermining America’s ability for innovation to thrive. No wonder Republicans have declared their support for crypto… Voters are watching.” (Last year, a federal judge upheld some of the SEC’s charges against Ripple and dismissed others.)

To some, the government’s approach seemed aggressive. One cryptocurrency executive told me that she found her bank account frozen — with no explanation — when she tried to withdraw funds to fix a catastrophic failure of her home septic system. Around this time, regulators were warning banks about the risks posed by the cryptocurrency industry. When the executive’s account was later unfrozen—again without clear explanation—she began to wonder if the government’s aim was to intimidate the industry. (The Office of the Comptroller of the Currency, which oversees national banks, has said it does not instruct banks to freeze individual accounts.)

The Biden administration’s opposition seemed plausible, however, after FTX, a major cryptocurrency exchange and hedge fund led by Sam Bankman-Fried, collapsed in 2022 amid revelations that more than $8 billion had been misallocated or lost. Bankman-Fried, a former generous political donor, was arrested for violating campaign finance laws. Another cryptocurrency executive told me that after the FTX scandal, many figures in the industry “just wanted to put their heads down and disappear,” adding, “The less people noticed us, the better.”

But for the Valley’s wealthiest class, retreating is not an option. Andreessen Horowitz, the powerful venture capital firm, has raised more than $7 billion for cryptocurrency and blockchain investments. “Super angel” investor Ron Conway has poured millions into cryptocurrency companies through his own venture fund. Lehane urged some of the biggest cryptocurrency investors and companies, many of whom were bickering on Twitter, to form a coalition dedicated to changing the public narrative. He began hosting private gatherings every two weeks, called the Ad-Hoc Group, to discuss various collaborations. Eventually, Katie Haun, a former partner at Andreessen Horowitz, suggested that Coinbase, a large cryptocurrency company (where she sat on the board), hire Lehane as an advisor.

Lehane met with Coinbase co-founder Brian Armstrong and told him that, like Airbnb, what looked like a crisis was actually an opportunity. “This is not the time to be silent,” Lehane told him. “This is your chance to define your company and your industry, and prove that you are different from FTX.” In 2023, Lehane joined Coinbase’s global advisory board. Twenty-five days later, the SEC sued the company.

Lehane set up a war room whose main goal was to convince politicians that the political consequences of opposing cryptocurrency would be painful. Someone familiar with Fairshake, who was then an employee at Coinbase, told me, “It wasn’t about explaining how cryptocurrencies work, or anything like that. It was about hitting politicians where they’re most sensitive—reelection.” Armstrong clarified the goal at a cryptocurrency conference in 2023. The goal, he said, was to ask candidates, “Are you with us? Are you against us? Are we going to run ads for you or against you?”

While Lehane’s basic strategy was similar to the one he’d used at Airbnb, that campaign focused on municipal issues and local political races. The cryptocurrency campaign was national, targeting Senate and House races—and maybe even the presidential one—and would require far more money. Lehane suggested to Armstrong that cryptocurrency companies should set aside $50 million for outreach. Armstrong responded, “Let’s set aside $100 million.” Coinbase, Ripple, and Andreessen Horowitz have donated more than $140 million to Fairshake, the cryptocurrency super PAC. Executives at other companies have donated millions more.

Working closely with Fairshake, Lehane began writing pro-cryptocurrency messaging and helping build a “grassroots” army. “We need to prove there’s a crypto voter,” he told the Coinbase team. “There are millions of Americans who own this stuff. We need to prove they’ll vote to protect it.”

The Federal Reserve says fewer than 20 million Americans will own cryptocurrency by 2023. Polls show the issue isn’t an election priority for many voters. A Coinbase staffer pointed out the discrepancy to Lehane, saying, “I don’t know if there’s a crypto voter.”

“Then let’s make one,” Lehane responded.

Coinbase began trumpeting the results of surveys showing 52 million Americans own cryptocurrency, many of whom intend to vote to protect their wallets. Those polls showed that 60% of crypto owners were millennials or Gen Z, and 41% were people of color — demographics that both parties are trying to win over. Lehane also quietly helped found an advocacy group, Stand with Crypto, which advertises to Coinbase’s millions of American customers every time they log in and urges cryptocurrency owners to contact their lawmakers and sign petitions. The group says it now has more than a million members. The Coinbase employee told me that Stand with Crypto identifies a city with a large population of cryptocurrency enthusiasts, such as Columbus, Ohio, and then sends them a flood of push notifications aimed at organizing town halls and rallies. “If you can get 50 or 60 people to show up, if the photo is well angled, you can make the crowd look like hundreds,” the employee explained. In a small state or a close election, that could be enough to convince a candidate that they should remain paranoid. ”

This army of so-called crypto voters feeds directly into the next phase of the attack: intimidating politicians. Stand with Crypto has set up an online dashboard that grades U.S. senators and representatives, as well as many of their challengers, to reflect their support for cryptocurrency. The scores seem inevitably to be “A (strongly pro-crypto)” or “F (strongly anti-crypto),” though the data on which the scores are based is sometimes specious. “Most of them aren’t really on the same page,” another Coinbase employee told me. “So we look at a speech they gave, or who their friends are, and make a guess. If you’re friends with Elizabeth Warren, you’re more likely to get an F.”

Nevertheless, Lehan insists that Fairshake remain nonpartisan. The super PAC is careful to support an equal number of Democratic and Republican candidates and, at Lehan’s advice, plans to stay out of the 2024 presidential race altogether. A venture capitalist who advises the cryptocurrency industry told me that the group’s nonpartisanship is crucial because “if we want to get the right regulations, we have to get a bill through Congress, and that means we need a bipartisan vote.” Additionally, Fairshake aims to “create a nonpartisan cost for people who are negative about crypto and technology,” the venture capitalist added. “People need to know there are consequences for doing this.” ”

To drive the point home, Lehane and Fairshake wanted to find a race where the group’s spending was sure to draw national attention. Fairshake put together a list of high-profile races, and at the top of the list was the fight for California’s Dianne Feinstein seat. The obvious target was Porter, whose strongest opponent in the Democratic primary was Rep. Adam Schiff. California has long been a Democratic favorite, so if Fairshake helped defeat Porter, the group wouldn’t be blamed for handing the seat to the Republicans. What’s more, California’s primary is on March 5 — early in the campaign season — which means Porter’s campaign will receive a ton of attention, and Fairshake will have time to promote its involvement and scare off candidates in other states. And because Porter is friendly with Elizabeth Warren, she could be portrayed — fairly or not — as anti-cryptocurrency. Best of all, many polls showed Porter had no chance of winning the primary anyway, so if the super PAC “poured a lot of money, created a stir, and she lost, Fairshake could get a win no matter the outcome,” Coinbase said. employees said. The calculation was prescient: Fairshake’s spending cost Porter the primary, while Schiff (who gets an A for “pro-crypto”) seemed poised to win the general election. As another politician put it, “Porter was a perfect choice because she had crypto saying, ‘If you’re even slightly critical of us, we’re not just going to kill you — we’re going to kill your family, we’re going to end your career.’ From a political perspective, it was a tour de force.” Porter will step down from his post at the end of the year.

After Porter’s defeat, many politicians who were once dismissive or hostile to cryptocurrencies suddenly became fans of cryptocurrencies. In May, two months after Porter’s defeat, a bill supporting cryptocurrency was voted on in the House of Representatives. Similar bills in previous years have been killed by lukewarm support from Republicans and strong opposition from Democrats. The new bill, called the 21st Century Financial Innovation and Technology Act, was openly opposed by President Biden. But it passed the House of Representatives with near-unanimous Republican support and 71 Democratic votes. Senate Majority Leader Chuck Schumer recently joined a Crypto4Harris virtual town hall and promised that passing the bill this year is “absolutely possible,” adding, “Cryptocurrencies are here to stay. Democratic Sen. Sherrod Brown, a longtime crypto critic, is running for reelection in Ohio, and Fairshake has spent $40 million on ads supporting his opponent; Brown has recently been toning down his public criticism of the industry. Earlier this year, crypto donors signaled they might get involved in Montana’s Senate race, where incumbent Democrat Jon Tester, a onetime crypto skeptic, is facing an uphill battle. Not long after, Tester voted to weaken SEC regulation of cryptocurrencies, earning him an unusual “C” rating. It looks like Fairshake will stay out of Montana as long as Tester keeps voting the right way. A similar situation played out in Maryland, where both leading candidates declared themselves pro-cryptocurrency after a super PAC threatened to take sides in the state’s Democratic Senate primary. Overall, Fairshake and its affiliated super PACs have made $10 million in bets on cryptocurrencies in the 2024 Democratic primary. Fairshake has spent more than $100 million on political campaigns in 2017, including $43 million on Senate races in Ohio and West Virginia and $7 million on four congressional races in North Carolina, Colorado, Alaska and Iowa. Three and a half million went to help defeat two left-wing representatives who are members of the so-called "Squad": Jamaal Bowman of New York and Cori Bush of Missouri. In the forty-two primaries in which Fairshake has participated this year, the candidates it has supported have won 85 percent of the time. The super PAC's latest filing shows that it has more than $70 million left to spend in the remaining election cycle. Its contributions to political candidates are comparable to those of the oil and gas industry, the pharmaceutical industry and labor unions.

Just as Airbnb tried to change the narrative around Proposition F by offering various concessions (taxing taxes and sharing data), it is also trying to change the narrative around Proposition F. As the crypto industry debates the issue of the coronavirus pandemic, the crypto industry has become an outspoken proponent of a seemingly solution-oriented solution: new regulation for cryptocurrencies and blockchain. Critics, however, say the proposals are self-serving. A core dispute between the crypto industry and regulators is whether cryptocurrencies are securities (similar to Apple shares, whose sales are governed by strict investor protection laws) or commodities (like a bushel of corn, which can be sold with little government intervention). Most fiat currencies (i.e., government-issued currencies) are primarily used to buy items like food and clothing, rather than to bet on the rise or fall of exchange rates. Cryptocurrencies, by contrast, are often difficult (or even impossible, in some cases) to use to buy physical goods, and speculators hold them simply to bet that their value will rise. There are currently several thousand cryptocurrencies. A handful of them are considered commodities, most notably bitcoin and ether. The status of most of the rest is controversial.

Many in the industry want Congress to pass regulations that would treat major cryptocurrencies as commodities, regulated by the Commodity Futures Trading Commission (CFTC), a relatively aloof agency that most people have never heard of and which tends to be less belligerent than the U.S. Securities and Exchange Commission (SEC). If the CFTC became the lead regulator of cryptocurrencies, the lawsuits and fines against big crypto companies might slow or stop. What’s more, selling Dogecoin (a cryptocurrency associated with the Shiba Inu), Dentacoin (“the only cryptocurrency developed by dentists, for dentists”), or CumRocket (a cryptocurrency for porn lovers) would be far less risky and more profitable.

Government figures think this would be a disaster. “To be frank, a lot of these tokens have no real utility, no real use, and they’re just there for gambling or scams,” an official familiar with the SEC’s thinking told me. “We’ve had regulations in place for decades to protect investors from situations like this. Cryptocurrencies just don’t want to follow those regulations. If your whole business plan is to ask, ‘Can we get Kim Kardashian to tweet about us?’ and then take people’s money, then the government needs to get involved.”

In fact, convincing average Americans that the cryptocurrency industry is a healthy, customer-friendly one has been hard to come by: Polls show that most people don’t think it’s a safe bet. So Lehan’s colleagues in the industry have changed tack slightly. Getting friendly legislation through Congress remains a priority, but the effort is now described as serving a loftier goal: protecting innovation, entrepreneurship, and America’s future.

In July, Marc Andreessen and Ben Horowitz of the Andreessen Horowitz venture capital fund produced a 91-minute video accusing President Biden of undermining the United States. “This is a brutal attack on an emerging industry that I’ve never experienced before. I’m very shocked by this,” Andreessen told Horowitz. “They’ve basically undermined the rule of law to attack the cryptocurrency industry,” Horowitz replied. These and other government actions, they say, threaten to destroy America’s economy, technological advantage, and military strength. And Biden’s refusal to embrace various tech industry proposals is letting China get ahead. “The future of technology and the future of America are at stake,” Horowitz declared. The two presidents are so worried, they say, that they have no choice but to support Donald Trump in 2024. (They also noted that billionaires like them might have to pay more taxes under Biden. But that issue didn’t get much attention.)

For those in the crypto industry, the video, which received a lot of attention and received online endorsements from Elon Musk and several other moguls, was a coup. As the Coinbase employee said, “Now Andreessen, Musk, and all the other rich and powerful people are saying that crypto is part of a larger debate. It’s an attack on American innovation and progress and the future of the country! It changes the conversation from ‘Is crypto a scam?’ to ‘Does Biden really care about middle-class entrepreneurs?’”

While Lehan’s opposition to Trump’s candidacy had nothing to do with the video, Andreessen and Horowitz’s move was entirely Lehan’s. Lehan is so good at teaching Silicon Valley how to play politics, and now others can follow his strategy. In July, Lehan joined the Coinbase board. “Lehan is a genius,” the Coinbase employee said. "I don't know how he comes up with these ideas, but he can change reality. He makes magic happen."

The annual meeting of Bitcoin enthusiasts doesn't usually feature politicians. The event usually draws more than 25,000 people, many of whom distrust government. Wandering among the many booths, you can get a free shot of vodka at 10 a.m. or discuss "tax avoidance strategies" that fall somewhere between fraud and fantasy. People sell Edward Snowden T-shirts and crypto-themed board games. It's a haven for "panties for bitcoin" enthusiasts. But when the event was held in Nashville in July—just a few blocks from the Redneck Riviera bar, where women are willing to lift up their shirts in exchange for some "trinkets"—it was packed with political luminaries. There were eight senators, nearly a dozen representatives, and countless candidates for national and state office, some of whom launched into impromptu speeches during pauses in the electronic music. The biggest star attraction, however, was Donald Trump.

The event came on the heels of a presidential campaign in which Trump was willing to spend a day campaigning in a state he was certain to win, confirming that the cryptocurrency movement that Lehan had started was having an effect. In his speech to a packed standing room only crowd, Trump promised, “On my first day in office, I will fire SEC Chairman Gary Gensler.” This drew a standing ovation and a chorus of Trump supporters. A man standing next to me was talking to his wife via FaceTime and insisted that she watch his speech, even though she was in the delivery room with their grandson about to be born.

Trump has done a U-turn on cryptocurrencies. While president, he tweeted that he “did not like” cryptocurrencies because they were “not money” and “facilitate illegal behavior, including the drug trade and other illegal activity.” He went on to say, “There is only one real currency in the United States. It’s called the dollar!” Later, he said Bitcoin “looks like a scam.” But after leaving office, Trump has sought new revenue streams, such as selling non-fungible tokens, a type of digital content hosted on a blockchain. This reportedly netted him $7.2 million in 2023. Trump was convinced. His current presidential campaign was one of the first to accept cryptocurrency donations. He recently announced — presumably in exchange for a payoff — that he would become the “chief cryptocurrency advocate” for World Liberty Financial, a company headed in part by an entrepreneur who allegedly once sold marijuana and weight-loss products. Before Trump took the stage in Nashville, he hosted a “roundtable” fundraiser with cryptocurrency investors, many of whom paid more than $800,000 to attend. Conference organizers said Trump raised $25 million there.

As Trump spoke at the conference, it was clear that he had been “indoctrinated into the orange pill,” as Bitcoin fans would say. He promised that, if elected, he would instruct the federal government to hold billions of dollars worth of cryptocurrency reserves. The United States, he declared, would become “the cryptocurrency capital of the world and the Bitcoin superpower of the world!”Trump began to echo the arguments of the cryptocurrency movement. “If we don’t do it, China will!” he said.

You might think that Trump’s newfound adoration for Bitcoin would please Lehane. But it didn’t. Instead, it suggests his campaign may have been a little too successful. Like Airbnb, Lehane doesn’t want the crypto industry to be closely aligned with either the Democratic or Republican parties, because it would be impossible to pass legislation. And almost any policy Trump advocates would become a partisan issue by default.

President Biden’s announcement in July that he was dropping out of the race seemed to offer the cryptocurrency industry an opportunity to reset relations with the Democratic Party. The possibility of balancing the partisan scales was raised by the inauguration of Vice President Kamala Harris, a Californian with a tech-friendly record. In a September speech on her economic plans for the presidency, Harris promised that the United States would “maintain a leading position in artificial intelligence and quantum computing, blockchain, and other emerging technologies.” The de-escalation appears to be working: On Oct. 4, Ben Horowitz, a venture capitalist who has appeared in videos attacking Biden, told his staff that he and his wife would make a personal donation to “entities supporting the Harris Waltz campaign” — in large part because some of his personal exchanges with Harris and her team made him “very hopeful” that she would abandon Biden’s “very destructive” crypto policies as president. Lehane donated thirty-five thousand dollars to Harris’s campaign (and nothing to Trump’s).

But meanwhile, the crypto coalition that Lehane helped build began to unravel, falling victim to the partisan divide plaguing the rest of the country. In August, Ron Conway, a California powerbroker who had given $500,000 to Fairshake, emailed the super PAC’s other funders, including Anderson and Armstrong, to complain that the campaign was alienating Democratic lawmakers. “How shortsighted and stupid you all are,” he wrote. Conway said Fairshake’s donation to unseat Ohio Senator Brown was “a kick in the ass” to Schumer. “Not a single person bothered to notify me that you were doing this,” he continued, proving that billionaires can ignore spell check. “We have two factions: the moderates and the Donald Trump faction (Brian and Mark). … I have worked with people who do not share my values ​​for too long, and it is unacceptable.” He continued, “Because of your selfish hidden agenda, it is time for us to separate… I will no longer undermine my own interests by associating or helping.”

Similar complaints have begun to come from Republican leaders. When Andreessen and cryptocurrency executives attended a Republican congressional retreat in Jackson Hole last summer, attendees expressed anger that Fairshake had spent money on ads supporting Democratic candidates in Senate races in Arizona and Michigan—two races that are likely to determine which party will control the Senate.

Whether or not Lehane’s alliance survives, one thing is clear: Silicon Valley has become part of a tradition that dates back to Boss Tweed. The tech industry has learned how to play politics. To paraphrase Ronald Reagan, the industry is mastering the world’s first oldest profession by learning the techniques of the world’s second oldest profession. The tech industry’s money and emerging political savvy mean its interests—cryptocurrencies, the sharing economy, unregulated social media—are here to stay. For the SEC, Silicon Valley’s shift has inspired something approaching terror. “If crypto wins, you’ll see financial firms suddenly say their products are on the blockchain, and they’ll throw billions of dollars at this loophole,” an official familiar with the SEC’s thinking told me. “We’ve seen this happen with savings and loans, mortgage derivatives, and regional banks, and it always ends badly. Things will blow up, and a lot of people will get hurt.” Even those who have worked on Lehane’s campaign aren’t sure they’re doing the right thing. “Yes, Silicon Valley is more mature now, but that doesn’t mean it’s good for the public,” the Coinbase staffer told me. “The public doesn’t care at all whether cryptocurrencies are securities or commodities. What really matters to them—how do I protect myself? How do I know which currency is a safe bet?—isn’t part of the discussion. This is not open-minded debate and discussion. This is bullying people with money so that everyone knows you’re the scariest person on the playground.”

There are two ways to look at Silicon Valley’s new political maturity. The first is that it embodies how modern democracy should work. As Peter Ragon, a prominent Democratic consultant, puts it, “I’d rather have people involved and hands-on — willing to talk about regulation and speak out publicly — than have all the rich people behind the scenes doing deals, as has been the case in the past.” Many of America’s most vaunted political fights — for marriage equality, universal suffrage, environmental protections — succeeded only because they were supported by deep-pocketed, resilient supporters, and the tech industry has those advantages. No amount of money can determine elections unless voters agree with the agenda. “No matter how rich you are, you can’t get into office unless there’s a majority or a near majority that agrees with you,” Ragon says. Viewed in this light, tech’s supporters, like many Americans, have simply learned to advocate for a cause, build coalitions, and make sure their voices are heard.

Another way to view Silicon Valley’s political efforts is as a symptom of systemic corruption — proof that American governance and lawmaking have been warped by money, making it nearly impossible for anyone other than billionaires to advance their agenda. This dynamic is particularly dangerous given that the U.S. economy has dumped vast sums of wealth on a small group of disgruntled, unaccountable tech workers. As many Silicon Valley critics see it, today’s startup founders and venture capitalists, like the nouveau riche of previous eras, are using their wealth for selfish ends. In doing so, they reveal themselves to be as callous as the robber barons and industrial tyrants of a century ago—not coincidentally, the last time income inequality was as extreme as it is today.

Lehan acknowledges that our political system is flawed, but he believes he is making it better. He told me that he has succeeded only because he, along with many talented colleagues, has devoted his career to building a better, more equitable world. “For me, the question has always been, ‘Can you give the little guy a bigger knife so that he can cut a bigger piece of the economic pie?’ ” he said. In his view, Airbnb took on the big hotel chains so that teachers and nurses could earn extra income by renting out their vacant bedrooms. Coinbase offers people a way to avoid the big banks and their onerous fees. Many entrenched industries use politics to advance their own interests at the expense of the public. Lehane believes it’s only fair to let the internet’s upstarts fight for their agenda; his advocacy, he says, is rooted in a passionate belief that tech, if judiciously regulated, can help disadvantaged groups get their share.

That mission, of course, has also made Lehane very rich. (He declines to say exactly how rich.) “But at the risk of being extremely arrogant, there are a lot of places I could have gone to make money,” he says. What motivates him, he adds, is a fight for the good. His X profile features a photo of him wearing boxing gloves, looking pained as he throws a punch.

In August, the AI ​​giant OpenAI announced it had hired Lehane as vice president of global affairs. Unlike the battles he fought at Airbnb and Coinbase, where ideological lines were easily defined, the political fight over AI is murkier and more nascent. The tech industry is home to many stakeholders with conflicting interests. Marc Andreessen, for one, has called for little or no additional regulation of underlying AI technology because, he wrote in a lengthy essay last year, holding back technology that could benefit humanity “is murder.” In other words, “any slowdown in AI development will cost lives.” He didn’t say that regulations might also make it harder for him and other venture capitalists to find fast-growing companies to invest in, depriving them of profits.

On the other side is a group of AI engineers who believe their inventions will soon be powerful enough to wipe out most of humanity. Regulations are urgently needed to ensure that only the most enlightened technologists can practice this mysterious alchemy. Technologists who push these arguments inevitably place themselves in the ranks of the enlightened minority, whose “more responsible” visions for AI development often align with the business plans of their own startups.

In the middle are Lehane and OpenAI. In July, the company led the charge. With Lehane’s support, its CEO Sam Altman wrote an op-ed in The Washington Post that portrayed the fight over AI regulation as a battle between democracy and dictatorship. “The bottom line is that democratic AI is ahead of authoritarian AI because our political system empowers American companies, entrepreneurs, and academics,” Altman writes. But that lead, he goes on to say, is not guaranteed and can only be protected if Congress passes regulations that encourage important software advances (like OpenAI’s ChatGPT chatbot) and prioritizes “rules of the road” and “norms for developing and deploying AI.” Altman says OpenAI is prepared to accept substantial restrictions on data security and transparency, and supports the creation of a government agency to regulate the development and use of AI.

Such rhetoric may sound condescending, but it’s not surprising that Altman’s stance is also somewhat self-serving. The company’s smaller competitors may find these rules and norms more difficult to comply with than OpenAI, as they are expensive and cumbersome. The op-ed is also an example of a Lehane-style reframing: Instead of talking about big AI companies competing against small startups, or the inevitable tension between rapid technological leaps and slower but safer advances, Altman recasts the battle for AI as a battle between good and evil. And in this storyline, Silicon Valley is home to moral superheroes.

Some A.I.-industry observers find this view cynical. Suresh Venkatasubramanian, a professor of computer science at Brown University and a co-author of the White House’s “Blueprint for an AI Bill of Rights,” which urges regulations on data privacy and transparency and protections for algorithms from discrimination, told me, “You’ll notice that OpenAI doesn’t want to talk about its alleged theft of copyrighted material, which is absolutely anti-democratic and, if true, absolutely anti-American.” (ChatGPT was developed by sucking text from the internet without paying authors—or in most cases attributing them; OpenAI claims this is fair use.) More importantly, Altman’s recasting ignores important questions about which democracies might disagree, such as what kind of privacy regulations should govern A.I. and who should pay for the environmental costs of A.I. data centers.

But Lehane’s strategy of promoting Altman as a powerful political voice guarantees that OpenAI and the A.I. industry as a whole will continue to influence the American political conversation for years to come. “The goal is to have a seat at the table, because then you can influence how things turn out,” Venkatasubramanian told me. The AI ​​industry’s influence is already being felt in state capitals. Workday, a large HR software company, has been lobbying in several states to add a potentially subtle loophole to legislation regarding “automated decision-making tools” in the workplace. Companies like Workday that sell AI-enhanced software to recruit employees are largely immune from lawsuits alleging racial discrimination or other bias unless litigants can prove that the AI ​​was a “controlling” factor in rejecting a candidate. “It all comes down to one word in legislation,” Venkatasubramanian said. “One word can make a big difference, and if you’re at the table and involved in the conversation, you can get that word in or out of legislation.”

Even Lehan acknowledges that it’s still early days for the AI ​​movement. Exact pressure points are unclear. Alliances and animosities are constantly shifting. What is certain, though, is that Silicon Valley will continue to use money (and its massive user base) as both bait and weapon to bully and co-opt politicians.

Things may change: The robber barons of the Gilded Age were eventually brought down; the industrial tyrants of the twentieth century retreated in shame over time. The most prominent tech companies—Google, Apple, Meta, and Amazon—have become thorns in the side of both the left and the right. (So far, though, that doesn’t seem to have hurt profits much, or scared off executives.) Democracy, in all its messiness and splendor, may prevail. The only immutable truth about technology is that change is inevitable. Most of the tech industry, Anderson writes at the end of his declaration of political neutrality, has “stayed aloof from politics throughout our careers.” Going forward, he’ll work with candidates who disdain tech. In Anderson’s view, he has no choice: “As the old Soviet joke goes, ‘You may not be interested in politics, but politics is interested in you.’ ”