David Sachs, the influential Silicon Valley venture capitalist and close ally of Elon Musk, has found himself sidelined in Washington before Donald Trump’s second term officially begins.
Insax, who was initially introduced as the incoming administration’s “AI and crypto czar,” is said to have been appointed to the newly created Science and Technology Advisory Board.
Instead, his role has been reduced to an advisory position, raising questions about his influence on Trump's ambitious technology agenda.
His refusal to fully divest from his investment firm, Craft Ventures, and his insistence on maintaining his private sector ties have seriously complicated matters, the report says. “They realized they needed someone who could run the operations full-time,” said one insider.
The Rise of Kratsius: Filling the Operational Void
That person is Michael Kratsios, the former chief technology officer in the Trump administration, who is leading the administration’s technology efforts.
His experience during the first Trump administration makes him a natural choice to run day-to-day operations in the tech space, from AI policy to telecom regulations. He is assisted by Gail Slater, another key figure in the administration who focuses on telecom and antitrust issues.
Sachs’s new role falls under the category of “special government employee,” a designation that allows him to continue running Craft Ventures while advising the administration. That arrangement avoids the formalities of Senate confirmation but raises ethical concerns.
“Not divesting makes it messy,” said a source familiar with the situation. “Even in an administration that deals with conflicts of interest casually, this has become an issue.”
Despite the reduced responsibilities, Sachs remains close to power. He has been seen frequently at Trump’s Mar-a-Lago estate and on Capitol Hill, where he has met with lawmakers such as Rand Paul.
But the excitement that initially surrounded Sachs’s appointment has now shifted to Kratsios and his operational capabilities. “Everyone wanted to meet Sachs,” said one insider. “Now they want to know what Kratsios can offer.”
Silicon Valley boys are all over the Trump administration. Tesla CEO Elon Musk is leading the newly created Department of Government Efficiency (DOGE) with former pharmaceutical executive Vivek Ramaswamy.
But Sacks doesn’t have the celebrity status that Elon does in his own world. While he co-hosts a popular podcast focused on venture capital and boasts a $3 billion portfolio at Craft Ventures, his profile outside the tech bubble is much lower.
Geopolitics adds to the complexity. Sachs has long warned about China’s advances in AI and technology, arguing that the United States must stay ahead. His position is in line with Trump’s push for deregulation, but it raises questions about export controls, chip manufacturing, and the storage of sensitive AI data.
Sachs has also clashed with big tech companies over their operations in China, criticizing companies like Alphabet and Meta for abiding by strict rules in China while reaping benefits from U.S. markets. “In the long run, big tech companies will have to choose sides,” Sachs said in a 2021 statement.
His call for “decoupling” the U.S. and Chinese tech markets resonates with some, but alienates others who worry about the economic fallout.
Sacks’ tenure at Twitter, after Musk’s chaotic acquisition, offers a glimpse into his management style. Sacks was known for his surprise meetings and no-nonsense approach, and he often clashed with employees. “He didn’t understand how the platform worked,” said one former Twitter employee. “It was a disaster.”
During his time at Twitter, he focused on new revenue streams, like subscriptions and payments, but his lack of familiarity with existing models frustrated employees. “He had no idea about LinkedIn Premium or YouTube Plus,” one source said.
His role in launching the controversial "Twitter Files" has further polarized opinion, with critics accusing him of prioritizing ideology over career.