Crowdstrike breaks the world as anti-Trump VCs find their voice
Welcome to Cautious Optimism, a newsletter on tech, business, and power. Modestly upbeat.
The Rundown
📈 Trending Up: Global chaos … Netflix, after earnings … startups building war boats … the Coalition for Secure AI … hopes for domestic consumption … heat deaths … US manufacturing … CEOs losing it in public … US GDP expectations …
📉 Trending Down: The price of leading AI models … The price of Google’s Maps API … digital freedom … Indian infra integrity … fraud returns …
🤔 What Else?
Crowdstrike did a boo-boo, bringing the global economy to its knees today.
After sending its customers “a defect found in a single content update for Windows hosts,” many Windows machines worldwide are down. My spouse’s workplace is a hot mess, for example.
Shares of Crowdstrike are off 12% in pre-market trading. Microsoft is off less than 2% since, well, this isn’t its fault.
Before the grounded planes, shuttered businesses, and healthcare mess, Crowdstrike was the world's most richly valued software company in forward revenue multiple terms. Probably not after this.
🙋♂️ A Question: Everyone loves Polymarket. Instead of waiting for polls, folks can watch real-time betting on global events to weigh market sentiment. But are Polymarket-style predictions actually accurate? Respond to this email if you have a study, or data that sheds light. Thanks!
The contra-Trump pushback is forming — slowly
Cautious Optimism dug into what newly minted Silicon Valley Trump supporters hope to get from the former President in a second term. At that time, I wrote that not all VCs are lining up behind Trump. Backing up that point, VCs that are not in favor of another Trump term are starting to make more noise.
That it seems safer to come out in favor of Trump in tech today than the opposite speaks to the influence that some of the erstwhile national executive’s backers have. And it says quite a lot about the current temperature in the Valley, writ large. What it says, of course, depends on your personal politics.
Why are the voices coming out in favor of Trump succeeding in making so much noise? As always, there’s more than one reason. But venture concentration is part of it. Here’s PitchBook on the situation (emphasis added):
Established managers have been more successful at capturing available capital, securing 77% of fund value YTD, the highest concentration in the last decade. LPs usually prefer established managers, as experienced firms have raised over 60% of the total fund value nearly every year for the past decade. This year’s recent uptick reaffirms that LPs are now prioritizing experience to a greater degree. Over 63% of capital raised in 2024 so far is in funds of $500 million-plus, which is the second-highest percentage in the last decade, surpassed only by 2022.
Venture is contracting to the largest, best-known firms. And some of those voices are coming out in Trump to a notable degree. Venture capital concentration is leading to venture capital influence concentration.
But the response to the tech-venture vibes shift is forming. This tweet from Kindred Ventures’ Kanyi Maqubela is a good example. Matt Schaar from Accion Venture Lab responded, giving him props for speaking out. There are others.
I want to share one message I received this week. After stating publicly that I would rather pay higher taxes than put my LGBTQ friends at risk — a non-subtle argument that choosing a candidate over pet issues doesn’t obviate their other views — a founder reached out to me privately.
They said something that has had me thinking since:
I do not matter, and my tweets also do not matter. Please do not take the above share—anonymized, clearly—as about me. Instead, read it again and realize how some founders feel in the current venture political climate.
It doesn’t help when tech CEOs like Ryan Selkis physically threaten anyone who won’t vote in their preferred direction. These two tweets from the executive led to him getting a Stern Talking To (screenshots via CoinDesk):
If one of his employees had said something equally shitty about Trump getting shot, the Trumpy VC types would have called for their resignation. And gotten it. As far as I can tell, Selkis is just being told to be quieter in public.
Just to be clear, this sort of keyboard warrior-ing is incredibly embarrassing. And dangerous.
I got my first gun at 12. I grew up next to cows. I was in 4H. I did Boy Scouts. I was confirmed in a church that spurned science, including evolution. With that in mind, let me say this: Fuck all this chest-thumping from wannabe testosterone cowboys.
My daughter has a book that she won’t let us stop reading to her called “Kindness Makes Us Strong.” I have no idea who gave it to us, but she loves it, so I’ve read it dozens of times. And it’s right. Kindness does make us strong. Pretending that you’re the next militia member ready to mass-deport folks doesn’t make you tough. It makes you an asshole and a poser.
Finding optimism
When I started this newsletter, I wanted to be upbeat because I find that it’s easy to focus on errors over progress; both matter, but the latter usually makes up for the former in time, and I am pro-progress (economically, socially, and technologically). But what I am finding utterly dispiriting is how appealing strongman bullshit is to folks who are otherwise intelligent.
I think that I understand how business interests and authoritarian government can find temporary harmony better than ever.
The optimistic point for us today is that lots of folks are still interested in building a secular, diverse, democratic society. And they are starting to make more noise. That’s something worth holding onto.
Next, this newsletter has an interview with a venture capitalist about a recent startup deal. Here’s hoping that the political landscape can quiet itself long enough for us to get back on topic. — Alex
Seeing how some of the big names in tech have responded is embarrassing (as a member of the tech community). But the thing that gives us confidence is the next generation coming up, the one made up of your daughter and my son who are disgusted by it and speaking up. They lead with kindness, love, and compassion. They give me faith that all is not lost.