#sv50

Nate Silver at Silver Bulletin:

Over three years of reporting for On the Edge, I witnessed Silicon Valley’s increasing support for Donald Trump, beginning with what was usually passed off as classically liberal support for free markets and free speech — values, I should mention, that I largely agree with — and culminating with Elon Musk’s endorsement of Trump following the assassination attempt against Trump last July. You could say that Silicon Valley went “all in” in backing Trump — indeed, David Sacks, one of the hosts of the “All-In” podcast, is now the White House’s AI and crypto czar. But that isn’t really true. Silicon Valley isn’t a monolith, even though it’s subject to a particular sort of groupthink. Peter Thiel was a lone wolf when he endorsed Trump in 2016 — and although the Valley’s political attitudes have changed since then, it isn’t a complete transformation. Still now, there are plenty of “Silicon Valley types” who “like” tweets of mine that are critical of how Trump and Elon have conducted themselves during the first couple of months of the new administration. And if you surveyed the top founders and VCs, you’d find plenty who never boarded the Trump train.

However, the ones who got on board with Trump are often far more vocal than the dissenters. And in an industry where reputation is everything, the smoke signals that industry leaders send to one another matter. For instance, even Google CEO Sundar Pichai and Apple CEO Tim Cook attended Trump’s inauguration, while OpenAI CEO Sam Altman recanted his previous criticism of Trump. I have my doubts about whether any of these CEOs actually cast their ballots for Trump — instead, it was presumably a bottom-line decision. Altman’s tweet, for instance, came a day after Trump announced a joint venture that would invest in OpenAI and other companies. Contrary to the New York Times, however, I don’t think it’s hard to explain why some voices in the Valley — including Musk, who has signaled his displeasure with Trump’s tariff policy in increasingly unsubtle ways and reportedly pushed him privately, too— are now having second thoughts. (Some of Trump’s backers on Wall Street also want “backsies”.) They were betting on, essentially, a replay of Trump’s first term. After years of feeling piqued by California’s leftward cultural swing and heavy tax and regulatory burdens, they thought they’d get on the right side of a conservative vibe shift. But they also thought they’d get a good economy, run on free market principles — or better still, one where they’d be dealt into an advantaged position because of Trump’s predictable cronyism. Whether heartfelt or cynical, this willingness to play ball with Trump initially appeared to provide a strongly positive ROI. Shares in the top publicly-traded Silicon Valley firms — I’ll explain in a moment how I define that term — rose by 21 percent from the day before the election on Nov. 4, 2024 through their peak on Feb. 18, 2025, considerably outpacing major stock indices (including the NASDAQ, which also heavily weights many Silicon Valley firms). Since that peak through yesterday (Apr. 7), however — in barely more than six weeks — they’ve plunged by 27 percent, also more than the rest of the market.

Introducing the SV50 (Silicon Valley 50)

“Silicon Valley” is an ambiguous term because it both refers to a physical place — particularly Santa Clara and San Mateo Counties in California — and also (like “Hollywood” or “Wall Street”) serves as a metonym for the tech industry. Just as hedge funds in Connecticut are still considered a part of “Wall Street”, tech firms with headquarters in San Francisco, which the Valley itself has long had a love-hate relationship with, are a part of Silicon Valley for all intents. Whether firms elsewhere on the West Coast qualify — like Amazon in Seattle and Microsoft in Redmond, Washington — is more debatable. Social ties and agglomeration effects matter a lot in Silicon Valley, enough that constant threats to flee the Bay over taxes or wokeness have largely been idle — although there are important exceptions, including Musk’s Tesla, which is now HQed in Austin.

So, I decided to create a stock index for Silicon Valley that might be compared to others like the NASDAQ or the S&P 500, which meets both of these definitions. To qualify, firms must be in tech or “tech-adjacent” industries and located somewhere in the nine counties of the Bay Area. So, for instance, the discount department store chain Ross Stores doesn’t qualify even though it’s headquartered in the East Bay because it has nothing to do with tech. But Amazon and Microsoft don’t qualify either up there in Seattle. I did, however, decide to make exceptions for firms that have left California since 2020 but were founded in Silicon Valley. It would be strange to have a “Silicon Valley” stock index that doesn’t include Tesla or Thiel’s Palantir, for instance — and in recent years, the decision to relocate has often been correlated with Trump-friendly political attitudes. I also included two firms, Jack Dorsey’s Block (formerly Square) and Brian Armstrong’s Coinbase, that now claim to have no official HQ. Although not all Silicon Valley firms have embraced remote work, the declaration that you don’t have a physical HQ is also canonically Silicon Valley in its way.