Welcome back to The Stratosphere.

Silicon Valley sources and friends who have received my midnight texts and emails already know that I’m darting across various time zones this week. While I’m on the road, however, I connected with Puck’s executive editor, Benjamin Landy, to discuss the current mood in political and philanthropic circles following a tech-stock meltdown that has drained the fortunes of some of the nation’s most powerful donors. Our conversation has been lightly edited for clarity.

And, as always, if you’d like to get in touch (or want to pass along a confidential tip), you can reach me by replying to this email.

Teddy

Teddy Schleifer: Yes. I just returned from two weeks in Washington and New York, and the almost-unanimous fear of everyone in the Democratic fundraising universe is that the high-dollar spigot is not flowing like it was during the Trump era. That’s true on the center-left and the far-left alike. Some mega-donors love politics, and they’ll stick around. Others only engaged in politics because they felt that Trump, unlike, say, Mitt Romney in 2012, posed an existential threat to democracy. There is this broader concern that if a non-Trump Republican like Ron DeSantis is the 2024 nominee, that center-left Silicon Valley donors wouldn’t be as agitated as they were during the last election—even though, of course, Trumpism is here to stay in some form or another.

I am a bit incredulous, however, of the notion that the market correction is the driving force here. Multiple people I’ve spoken with in donorworld recently have offered a similar explanation, but I suspect asset values are only a factor among the decamillionaire set who are trying to decide whether to donate, say, $500,000 or $1 million this cycle or next. For the highest level principals, does it really matter whether your net worth is $20 billion versus $30 billion when weighing a $10 million donation? Certainly some business titans have more economic distractions right now than they did last year, but it’s not a monetary issue.

If you want more evidence that this shift is being driven by politics more than market forces, just look at where the energy and excitement in Silicon Valley political fundraising is right now. Republicans are deeply pessimistic about inflation and the U.S. economy, but right-wing tech moguls are more engaged than ever in fundraising and political activism. Peter Thiel, Larry Ellison, Elon Musk, David Sacks—all of these guys are active in G.O.P. circles in a way they never were during the Trump era. I tell Republican fundraisers and prospective donor-advisors that they’re making a mistake not now shuttling out to S.F.O. more than they have over the last few years.

What about the philanthropy-industrial complex? The world’s most successful people have all become a lot poorer this year, but presumably that doesn’t matter much to MacKenzie Scott, say, or to Bill Gates.

A market correction or two doesn’t change the fundamentals that practically guarantee that, over the long term, these fortunes will compound faster than they can be given away. Donors like Gates and Scott oversee philanthropic empires with ten-figure commitments and potentially multi-generational time horizons. (Hence the looming battle over which foundations will be the beneficiaries of Warren Buffett’s $100 billion fortune when he dies.) It typically takes armies of staff just to figure out what to do with it all.

So it’s worth zooming out and taking the long view here. I do believe that eventually almost all of the great fortunes being built in this age will go toward philanthropy in one form or another—the tax code incentivizes billionaires to give away money while they’re alive, to offset gains, and practically requires it on their deathbeds, if for estate-planning strategy alone. That’s one reason there’s so much criticism regarding the velocity with which these donors actually send money out the door, which represents a fairly small percentage of their overall net worth. It’s also what makes the Scott story so fascinating—she is an anomaly in that she isn’t waiting to disburse billions of dollars each year.

Speaking of MacKenzie, I noticed that Elon took a shot at her recently, blaming “Mackenzie’s donation to PACs posing as charities” as an explanation for why “The Dems turned negative over the past ~12 months.” What’s the backstory there?

You know, I thought about posing this question to Elon a few weeks back, to see if he would take the bait. To some extent, that tweet came out of nowhere—delivered in the small hours of the morning, and poking at a fairly beloved figure by partisans of both sides. You just don’t see many people attacking MacKenzie these days.

I’m not sure what Elon has in mind when he says that “Dems turned negative” because of her donations, but he isn’t wrong to highlight the reality that the line between politics and philanthropy has indeed become blurred, especially on the left, as philanthropy got more political to take on Trump. MacKenzie's most recent list of grantees, receiving nearly $4 billion combined, includes nonpartisan groups like Blue Star Families and Boys & Girls Clubs, but also plenty of more obviously left-leaning organizations like Planned Parenthood and Operation Praxis. If anything, one thing I hear some progressives argue that if Scott really wants to tackle issues like abortion access and climate change, maybe her donations aren’t political enough.

But, as I wrote back in April, there’s a major backlash to big philanthropy rippling through conservative intellectual circles, and Elon’s critique is part of that. The same logic applies to his recent tirades against Bill Gates, some of whose donations feed into a larger pool of money that supports both nonprofit and more political work. Or look at the semi-coordinated Republican effort over the last year or so to turn Arabella Advisors, a philanthropic consulting firm that oversees some major philanthropic vehicles for liberal donors—The Atlantic called Arabella “the left’s dark-money manager”—into a Soros-style bogeyman. I don’t know what precise charities Elon is referring to, but MacKenzie has also donated to some Arabella-sponsored groups.

The simpler backstory? Elon clearly ingests a lot of right-wing media these days—his attack on Gates highlighted a Breitbart story about Gates-funded organizations opposing his plans for Twitter—and he is looking for right-wing allies. I don’t want to say he has a persecution complex, but…

You broke the news that Sam Bankman Fried was getting into the media business—about a week before we learned he had invested in Semafor. Of course, he’s also lost something like two-thirds of his fortune since the crypto market peaked, and is now worth less than $10 billion. Any sense of whether his political and media goals may be downsized, too?

No. S.B.F., as he is now known by initialism, has enormous ambitions, as evidenced by the enormous number of people on his payroll: I’m aware of at least ten operatives or so who advise him on various matters across politics and philanthropy. I don’t know just how liquid he is, but talking with his aides regularly, you get the sense that he is unencumbered by the normal conventions of wealth accumulation, multi-generational planning and political caution. He is basically just going to go for it. As I wrote the other week, the Semafor investment is just the beginning—expect a bunch more media investments to come in both for-profit and nonprofit journalism.

I can’t really overstate how much of an object of fascination Bankman-Fried has become to the fundraising world—largely because, at a time when so many donors are retrenching, here comes this 30-year-old talking about effective altruism and revolutionizing the financial system who spent $12 million in an attempt to win a congressional seat, failed, and is now talking about spending $1 billion on 2024. He’s one of the few mega-donors on the left who is truly leaning into politics in the post-Trump era. I’d agree with your point if S.B.F. were more… normal, but I don’t see it yet.

Teddy, I had to pinch myself when I read that Eric Schmidt has teamed up with Peter Thiel—as well as Ash Carter and H.R. McMaster—to headline a bipartisan, multibillion dollar effort to rebuild America’s semiconductor manufacturing capacity. What’s the backstory of how that came together?

This whole story has been somewhat exaggerated, which says a lot about how media reporters and billionaire critics portray their subjects these days. I’ve been hearing about this group, called America’s Future Fund, for a few months now. I was initially interested in the possibility that it represented a new passion project for Schmidt, who is of course an important person in my orbit. But while the group was co-founded by a then-Schmidt Futures executive named Jordan Blashek, Schmidt only donated a few million dollars to help set it up, part of a broader capital-raise for the nonprofit, and he isn’t involved at all operationally. Schmidt Futures didn’t incubate the project either. And Thiel is even less involved, I’m told—just one of several investors.

So while the odd-couple billionaires got the headlines, it was Blashek who actually teamed up with the former C.E.O. of In-Q-Tel, the C.I.A.’s de facto venture arm, to build the nonprofit. Next up they plan to raise a In-Q-Tel-like investment fund backed by U.S. government agencies to support technologies that are critical to national security, such as microchips.
The group has assembled an impressive board, with members from across the military and technology world, presumably with the help of Schmidt’s imprimatur. But it’s also worth marinating on the media story behind this story. Both journalists and the behind-the-scenes players who help to package these announcements love to get a “celebrity” name in the headline, even when that person is only marginally involved, which helps to draw interest in the business. That’s especially true for Schmidt, who has a fairly sprawling enterprise full of many, many projects, some more significant than others.