David Sacks, the venture capitalist with Silicon Valley clout and a close ally of Elon Musk, has already found himself sidelined in Washington before Donald Trump’s second term officially begins.

Sacks, initially introduced as the incoming administration’s “AI and Crypto Czar,” will reportedly no longer lead the newly established Presidential Council of Advisors for Science and Technology.

Instead, his role has been cut down to a mere advisory position, raising questions about his influence in Trump’s ambitious tech agenda.

The report says his refusal to fully divest from his investment firm, Craft Ventures, and his insistence on maintaining his private-sector ties have seriously complicated things. “They realized they needed someone who could run operations full-time,” one insider said.

The rise of Kratsios: Filling the operational void

That someone is Michael Kratsios, Trump’s former Chief Technology Officer, who is stepping in to lead the administration’s tech efforts.

His prior experience during Trump’s first administration makes him a natural choice to manage the daily grind of tech operations, from AI policy to telecom regulations. Assisting him is Gale Slater, another key figure in the administration, focusing on telecom and antitrust issues.

Sacks’ new role falls under the category of “special government employee,” a designation that allows him to continue managing Craft Ventures while advising the administration. This setup avoids the formalities of Senate confirmation but raises ethical concerns.

“Not divesting makes this messy,” a source close to the situation said. “Even in an administration that treats conflicts of interest casually, this became a problem.”

Despite the reduction in responsibilities, Sacks still enjoys proximity to power. He’s been frequently seen at Trump’s Mar-a-Lago estate and Capitol Hill, where he’s met with legislators like Rand Paul.

But the excitement that initially surrounded Sacks’ appointment has now moved to Kratsios and his operational capabilities. “Everyone wanted to meet Sacks,” an insider allegedly said. “Now they want to know what Kratsios can deliver.”

Tech billionaires, profits, and politics

The Silicon Valley boys are all over Trump’s cabinet. Tesla CEO Elon Musk will co-lead the newly created Department of Government Efficiency (D.O.G.E.) with former pharma executive Vivek Ramaswamy.

But Sacks doesn’t have Elon’s household name recognition. While he co-hosts a popular VC-focused podcast and boasts a $3 billion portfolio at Craft Ventures, his profile outside the tech bubble is far lower.

Geopolitics adds to the complexity. Sacks has long warned about China’s advancements in AI and tech, arguing that the U.S. must stay ahead. His stance aligns with Trump’s deregulatory push but raises questions about export controls, chip manufacturing, and the storage of sensitive AI data.

Sacks has also clashed with Big Tech over their operations in China, criticizing companies like Alphabet and Meta for adhering to China’s strict rules while reaping benefits from U.S. markets. “In the long term, Big Tech will have to pick a side,” Sacks said in a 2021 statement.

His call for a “decoupling” between U.S. and Chinese tech markets resonates with some folks but alienates others wary of economic fallout.

Sacks’ tenure at Twitter, following Musk’s chaotic acquisition, provides a glimpse into his management style. Known for abrupt meetings and a no-nonsense approach, Sacks often clashed with employees. “He didn’t understand how the platform worked,” one former Twitter employee said. “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 staff. “He had no clue about LinkedIn Premium or YouTube Plus,” one source reportedly said.

His role in releasing the controversial “Twitter Files” further polarized opinions, as critics accused him of prioritizing ideology over functionality.

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