Meet David Sacks, Trump’s AI and Crypto Czar

Summary

WSJ Tech News Briefing: Meet David Sacks, Trump’s AI and Crypto Czar
Release Date: December 16, 2024
Host: Belle Lin

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1. Google’s Quantum Computing Leap with Willow Chip

Introduction to Willow
Belle Lin opens the episode by highlighting a significant development in quantum computing. Google has unveiled its new in-house quantum chip, Willow, which has notably boosted Alphabet's stock by nearly 12% in the previous week.

Understanding Quantum Computing
Dan Gallagher, a columnist for WSJ's Heard on the Street, provides an in-depth explanation of Willow:

“[Dan Gallagher, 01:39] It’s a chip that’s designed to essentially do quantum computing, which is this complicated concept of using quantum mechanics to build like a type of supercomputer that’s far beyond the computational capabilities of anything we have today. Just as a case in point, in one of their test modules, they’re able to perform like a series of calculations in a matter of minutes that would have taken something like millions of years using today’s standard computing.”

Potential Applications and Implications
Gallagher elaborates on the vast possibilities and challenges posed by quantum computing:

“[Dan Gallagher, 02:17] Theoretically, quantum computing has potential applications in being able to design things like drugs and medicines down to the molecular level. You could like theoretically perform hyper accurate weather forecasts much further out because you need that kind of computing power to take in all the data about weather patterns and atmospheric and so forth. One darker aspect is quantum computing could probably break current encryption algorithms. So it’ll have if we ever get to the day where quantum computing is kind of out there commercially, there’s going to be a lot of interesting debates and applications and probably scary stuff too.”

Skepticism Surrounding the Stock Surge
Despite the impressive announcement, Gallagher advises caution regarding the stock jump:

“[Dan Gallagher, 03:36] I don’t think it’s amazing so much to be skeptical on the bed. It’s a big bounce, like it’s about 250 billion in market cap for them on something that’s years away from any sort of commercial application... it was kind of a pretty big jump considering that this is not something that’s gonna be even close to being nearer midterm for the business.”

Conclusion on Quantum Developments
Gallagher concludes that while Google’s advancements are promising, quantum computing remains in its nascent stages with commercial applications years away.

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2. David Sacks: From Silicon Valley to the White House

Introduction to David Sacks
Belle Lin transitions to the main feature of the episode: David Sacks, appointed by President Elect Donald Trump as the White House’s AI and Crypto Czar. Ralph Winkler, the reporter, delves into Sacks's background and potential influence on tech policy.

Early Life and Career
Sacks's journey begins in South Africa, moving to Tennessee at a young age. His early connection with Stanford University and the Stanford Review, a conservative libertarian newspaper co-founded by Peter Thiel, shaped his conservative provocateur persona.

“[Rolf Winkler, 06:15] He came here pretty young, probably around five years old. He was born in South Africa, really... he really, you know, started honing the Persona of a conservative provocateur that we’ve seen ever since.”

Reputation in Silicon Valley
In a typically liberal stronghold, Sacks stands out as a prominent Republican voice. His success and wealth have made him influential, especially among conservatives in the tech industry.

“[Rolf Winkler, 06:49] You know, he’s Republican in a place where it’s often been taboo to be Republican. Some of that has changed in part because of him this year, certainly when Elon Musk jumped on the Trump bandwagon and then Andreessen Horowitz... He co wrote a book with Peter Thiel when he was in law school, and then they were among the founding team of one of the two companies that became PayPal.”

Personal and Professional Style
Contrary to his public combative image, Sacks is described as introverted and prefers solitude for deep thinking, often working away from the typical Silicon Valley buzz.

“[Rolf Winkler, 08:05] He’s an introverted guy and somebody who’s not the open plan, Silicon Valley type. David would prefer to sit and think in his office is how he’s been described to us at.”

Controversial Stances and Influence on Policy
Sacks is known for his outspoken views, particularly against U.S. involvement in the Ukraine war and advocating for a friendlier regulatory environment for crypto and AI under a Trump administration.

“[Rolf Winkler, 08:48] Well, one big thing is the Ukraine war. He is very opposed to the US Involvement in supporting the Ukrainians. He thinks it’s a lost cause... They want a friendlier regulatory environment than they feel they were going to get under Biden and then a Harris administration. They think they can get a friendlier environment, certainly for crypto under a Trump administration.”

Potential Conflicts of Interest
Winkler highlights concerns regarding Sacks's extensive investments in AI and crypto, which could intersect with his governmental role, potentially leading to conflicts of interest.

“[Rolf Winkler, 09:26] ...you need to divest yourself of investments where there’s a clear overlap between the area you’re regulating and the area where you’re investing or you need the President to give you a waiver... it seems unlikely that he’s going to divest himself of all the various AI and crypto investments he has. So we’ll see how that plays out.”

Implications for Tech Regulation
Sacks’s appointment signals a potential shift in tech regulation, moving away from the Biden administration's approach. The tech and crypto communities anticipate a less combative regulatory stance.

“[Rolf Winkler, 10:25] ...Gary Gensler, who was running the SEC under the Biden administration, was somebody who was not well loved by the crypto community... It’s indicative of the approach Trump is going to take to put people like Sachs in a position to influence policy. It’s certainly going to be less combative than it was with Gensler and the people in the crypto community. They favor that.”

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Key Takeaways

• Google's Willow Chip represents a significant, albeit early-stage, advancement in quantum computing, with potential applications ranging from drug design to weather forecasting, while also posing risks to current encryption methods.

• David Sacks’s appointment as the White House AI and Crypto Czar underscores a strategic move towards a more conservative and business-friendly regulatory environment in the tech sector, though it raises questions about potential conflicts of interest due to his substantial investments in related fields.

• The episode emphasizes the continuous interplay between technological innovation, market dynamics, and political influence shaping the future of the tech industry.

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Produced by Julie Chang with supervising producer Katherine Millsop.

Transcript

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[Belle Lin]

It's Monday, December 16th. I'm Belle Lin for the Wall Street Journal. One of Google's science projects is paying off in a big way, albeit way early. We'll find out why its parent company Alphabet, saw its stock jump nearly 12% last week on the back of a new in house chip that's designed to power quantum computing. And then who is David Sachs, President elect Donald Trump's new pick for White House artificial intelligence and crypto czar? Our reporter Ralph Winkler tells us who the tech investor is and how he could influence tech policy in the White White House. But first, quantum computing is still a long way off from any commercial use. But that didn't stop Google from making a major announcement in the form of a new in house quantum chip called Willow last week. For more on Google's big bet in quantum computing, we're joined by Dan Gallagher, a columnist for WSJ's Heard on the Street. Call him Dan. What exactly is Google's new in house chip Willow used for?

[Dan Gallagher]

It's a chip that's designed to essentially do quantum computing, which is this complicated concept of using quantum mechanics to build like a type of supercomputer that's far beyond the computational capabilities of anything we have today. Just as a case in point, in one of their test modules, they're able to perform like a series of calculations in a matter of minutes that would have taken something like millions of years using today's standard computing.

[Belle Lin]

And what are some of the other things that Willow or other quantum computers could be used for?

[Dan Gallagher]

Theoretically, quantum computing has potential applications in being able to design things like drugs and medicines down to the molecular level. You could like theoretically perform hyper accurate weather forecasts much further out because you need that kind of computing power to take in all the data about weather patterns and atmospheric and so forth. One darker aspect is quantum computing could probably break current encryption algorithms. So it'll have if we ever get to the day where quantum computing is kind of out there commercially, there's going to be a lot of interesting debates and applications and probably scary stuff too.

[Belle Lin]

Oh, I can definitely imagine that. So it's kind of a good thing that quantum computing isn't quite commercially available yet, right?

[Dan Gallagher]

Yeah, it's still a long ways off. Think of it this way. Google made their last big announcement related to Quantum computing in 2019. So it's been five years since they had a breakthrough there, and then this was another kind of technical breakthrough. It's still very much something that's in early concept. We're years away from seeing anything remotely commercial about it.

[Belle Lin]

Dan Alphabet's stock jumped nearly 12% after Google announced its new chip last week. But what reason do we have to be a little skeptical about Google's bet on quantum computing?

[Dan Gallagher]

I don't think it's amazing so much to be skeptical on the bed. It's a big bounce, like it's about 250 billion in market cap for them on something that's years away from any sort of commercial application. An important bit of context is that Google stock has been in the dumps for a while because of concerns about the problems the company's having with the Department of Justice and worries about generative AI and other things. So it was kind of low already and maybe primed for a little any sort of good news, but it was kind of a pretty big jump considering that this is not something that's gonna be even close to being nearer midterm for the business.

[Belle Lin]

That was Dan Gallagher, a columnist for WSJ's Heart on the Street. Coming up, David Sachs has had a reputation for reveling in controversy since the 1990s when he was still an undergraduate at Stanford University. What else we learned about the tech investor turned White House AI and crypto czar after the break.

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[Belle Lin]

Though he comes with a reputation as a combative contrarian, the tech investor David Sachs is now closer to the center of political power as the newly appointed White House AI and crypto czar. With his over 1 million ex followers in tow, Sachs has been one of the loudest Silicon Valley voices supporting Republicans. And he's put his money behind President Elect Donald Trump. Now, with even closer proximity to Trump, Sachs could shape policies key to both Silicon Valley and his own interests. Our reporter Rolf Winkler joins us now with more. And before we get into it, we should note that David Sachs did not respond to requests for an interview. So, Rolf, you write in your story that Sachs grew up in South Africa and moved to Tennessee as a child. What are some of the other highlights of his childhood and earlier life?

[Rolf Winkler]

He came here pretty young, probably around five years old. He was born in South Africa, really. Our reporting starts from his time at Stanford University, where he entered around the early 90s. And he very quickly connected with the Stanford Review, the conservative libertarian newspaper that was founded by Peter Thiel. And that's a place where he really, you know, started honing the Persona of a conservative provocateur that we've seen ever since.

[Belle Lin]

And what would you say his reputation is like in Silicon Valley?

[Rolf Winkler]

You know, he's Republican in a place where it's often been taboo to be Republican. Some of that has changed in part because of him this year, certainly when Elon Musk jumped on the Trump bandwagon and then Andreessen Horowitz. And David Sachs wasn't on the Trump bandwagon right away, but he was supporting DeSantis. He's also given money to RFK, but really, he and some others made it less taboo to speak publicly about being conservative in Silicon Valley. The other thing that makes him really influential is he's very wealthy. He's achieved success in a number of different areas. He co wrote a book with Peter Thiel when he was in law school, and then they were among the founding team of one of the two companies that became PayPal. As you'll recall, PayPal was two companies, one started by Peter Thiel and other started by Elon Musk that merged. But David Sachs, who knew Thiel, was part of the PayPal team, and that was really his first big monetary success, and he had many others since.

[Belle Lin]

Let's talk a little bit about what David Sachs's peers have said about him. How have they described and what did they tell you about his, say, style of debate or maybe his investment strategy?

[Rolf Winkler]

He's an introverted guy and somebody who's not the open plan, Silicon Valley type. David would prefer to sit and think in his office is how he's been described to us at. When he worked there, he would escape to an apartment across the street to work, use the bathroom, et cetera. So that's his kind of his personal style is a bit introverted, which contrasts with his public profile, which is very combative. He is not shy about taking it to the people he disagrees with. He's not shy about going on the offensive.

[Belle Lin]

And what has he gone on the offensive about, especially when it comes to regulation in areas that he's directly involved in, like crypto and technology.

[Rolf Winkler]

Well, one big thing is the Ukraine war. He is very opposed to the US Involvement in supporting the Ukrainians. He thinks it's a lost cause. And he's had some winning crypto investments. He's also invested in artificial intelligence. They want a friendlier regulatory environment than they feel they were going to get under Biden and then a Harris administration. They think they can get a friendlier environment, certainly for crypto under a Trump administration.

[Belle Lin]

Right. But Rolf, at the same time, it seems like David Sachs's fund overlaps with his new government position. How might it create a conflict of interest?

[Rolf Winkler]

My colleague Angela Young, she spoke to a former Bush administration official who talked about a law that basically says you need to divest yourself of investments where there's a clear overlap between the area you're regulating and the area where you're investing or you need the President to give you a waiver. That's not an easy process. And this isn't like an official Cabinet position. And it's a good question, like, what do White House czars really do? That's an open question, too. It's a part time job. Is he going to influence policy? Is he going to. It's not clear he's going to have anybody reporting to him. Even so, we were told that, look, you still need this waiver or you need to divest yourself. It seems unlikely that he's going to divest himself of all the various AI and crypto investments he has. So we'll see how that plays out.

[Belle Lin]

What do we know so far in terms of what Sachs appointment might mean for regulation in crypto and AI and in technology broadly?

[Rolf Winkler]

You know, we don't know a lot. Gary Gensler, who was running the SEC under the Biden administration, was somebody who was not well loved by the crypto community, to say the least. And everybody in the crypto world is very excited to see somebody that's going to take a different approach. Now, of course, the AI and crypto czar is not the head of the sec. These are different jobs. But it's indicative of the approach Trump is going to take to put people like Sachs in a position to influence policy. It's certainly going to be less combative than it was with Gensler and the people in the crypto community. They favor that.

[Belle Lin]

That was our reporter, Ralph Winkler. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Katherine Millsop Logging off I'm Belle Lynn for the Wall Street Journal. We'll sign back in this afternoon with TNB Tech Minute. Thanks for listening.

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