Trump AI and crypto ‘czar’ role is being scaled back as David Sacks clings to Silicon Valley commitments

Incoming President Donald Trump said earlier this month that Sacks, the South African born venture capitalist, podcast host, former Pay-Pal executive and Elon Musk confidant, would be in a newly created role of “AI and Crypto Czar,” and lead a new “Presidential Council of Advisors for Science and Technology.” Given Sacks’ decades of experience working and investing in tech, and his dedicated support of right-wing politics and Trump’s election, nearly a dozen tech and political insiders Coins2Day spoke with were not surprised by his appointment to such a role. 

Yet, over the last week, the intended scope of this role has changed, two people familiar with the inner workings of the transition team told Coins2Day. Although the “czar” position was initially expected to be a cut-and-dry leadership role, it’s now set to be more of a general advisory position, the people said. Sacks will, in a manner of speaking, be overseen by Michael Kratsios, a Scale AI executive who had served as chief technology officer during the first Trump administration. Kratsios is heavily involved in the current transition effort and is expected to stay on when Trump takes office, one of the people familiar said, leading all tech policy efforts with a tech co-lead in Gale Slater, who will focus on telecom and tech antitrust issues. These people and others Coins2Day spoke to for this story were granted anonymity as they did not feel comfortable speaking publicly about Sacks, his appointment, or the incoming Trump administration.

Part of the reason that Sacks’ role, which was created for him, has been scaled back into a more general advisory position over the last week is that he is not divesting from his investment firm, Craft Ventures, and does not want to become a full-time government employee, which would require a formal confirmation process, one of the people familiar explained. In past administrations, many so-called political and policy “czars” were in official government jobs, in specific departments, and were often confirmed by the Senate. If Sacks receives formal employment status, it is likely to be a “special government employee,” which Congress describes as a “temporary or intermittent consultant and adviser” who is not held to the same conflict of interest standards that a regular government employee is. In fact, there is little restriction on such a person continuing to do outside work or receive pay, whether they are paid for their government work or not.

“Not divesting, not taking a more formal government role, that makes it very complicated. Even if Trump and people in his administration usually see conflicts of interest as an afterthought, the situation with Sacks became an issue, even from a practical perspective,” one of the people familiar with the transition said. “They are really intent on hitting the ground running and in working toward that, there was a realization inside the transition team of ‘Oh, we really need someone who can be operationally in charge of tech policy, can manage a staff, and execute day in and day out.'”

That type of work is now expected to fall mostly to Kratsios, both of the people familiar with the transition said. Sacks, in his “czar” position, will be involved in policy ideas related to tech, but it will be Kratsios and the team he hires who will be doing the work of drafting and putting forward tech policy under Trump. It’s is still unclear what specific title Kratsios will have, according to the people familiar with the transition.

A spokeswoman for Craft and Sacks told Coins2Day, “David will comply with all relevant ethics rules.” She added that given the provisions governing an SGE that Sacks “can spend significant time advising the government without having to leave Craft.” Kratsios did not respond to emails seeking comment on his role. 

In a post on X, after this story published, Sacks wrote: “Some Legacy Media is reporting tonight that my role has changed. This is total nonsense. I expect to spend 50% of my time in D.C. Guiding policy and 50% in Silicon Valley staying on the cutting edge. This seems ideal for a tech policy role —and it’s exactly what I requested.”

Despite such a change in positioning, Sacks is expected to remain very influential within the Trump administration. He has spent most of his time since the election in Florida, going between Miami and Trump’s Mar-a-Lago estate, with shorter stints back in San Francisco where he has a home in the Pacific Heights neighborhood, a person familiar with his moves said. He’s also recently made the rounds on Capitol Hill, meeting with legislators like Rand Paul.

Things in the Trump transition team are still “a mess” and could easily change, one of the people familiar with the transition team added. But they noted that in the days following Sacks being announced as AI and Crypto czar, “everyone” in tech wanted to get a meeting with him – now everyone “wants details on what things Kratsios can enable on behalf of Sacks.”  

Pushing a tech agenda

Sacks is among a cadre of wealthy tech industry insiders who supported Trump’s campaign and have become key figures in the incoming administration. Most prominent is Tesla CEO Elon Musk, who will co-lead a new department of government efficiency (or, DOGE) alongside former pharmaceutical executive and one-time presidential candidate Vivek Ramaswamy.

Compared to the DOGE duo, Sacks, 52, is not nearly as well known outside of Silicon Valley, where he co-hosts a popular VC-focused podcast as a side project to his investment activities.

“Sacks is going from niche tech celebrity to a national, even global tech leader,” a fellow VC said.

Whatever form the czar role ends up taking once Trump is back in the White House, it’s “going to be hugely beneficial for his firm in terms of being able to raise bigger funds and win competitive deals,” the VC said. Craft Ventures had more than $3 billion of assets under management as of a year ago, according to an announcement from Sacks at the time. Sacks serves as a director or observer on the boards of nearly a dozen startups, according to the Craft website. However, Sacks may give up those board positions going forward, likely putting someone else at Craft in any seats he may leave, one person familiar with his thinking told Coins2Day.

As with Musk, who has not said how he will handle his extensive tech industry holdings while working in the Trump administration, Sacks’ government role has raised plenty of criticism over potential conflicts of interest. By appointing Sacks and other active business people to work in or with his administration, Trump has made clear that he intends to push for the enablement of “emerging markets and technologies, and those funding them” says Chloe Autio, founder of Autio Strategies, an advisory firm focused on governance and policy for AI and emerging technology.

“The proactive engagement with the VC and tech community is new in this second Trump administration,” Autio said. “And there is a particular opportunity for the defense tech ecosystem. A lot of VC-backed tech has interested the military and national security communities, and this administration will likely want to explore those interests.”

A sigh of relief

Although Sacks’s role within the Trump administration is focused on AI and cryptocurrency, most of Craft’s investments since its founding in 2017 are in early stage software companies, with SaaS (software as a service) being a long-time area of investment interest for Sacks. There are only a handful of pure AI companies within the Craft portfolio (one of which is xAI, the Musk-owned AI company that Sacks earlier this year led an investment in), and just one named investment related to crypto — the crypto asset management fund Bitwise.

Still, Sacks’ czar appointment has been greeted with a certain sense of relief by many in Silicon Valley.

While Sacks’ outspokenness on politics has made him a divisive figure within the tech community, several tech insiders that Coins2Day spoke to gave him high marks for his perceived business prowess (one AI executive said, among founders, Craft has a better reputation at the moment than rival VC firm Andreessen Horowitz), and his support for startups in a market dominated by Big Tech. Ali Rohde, a general partner at Outset Capital, which focuses on early-stage investments in tech and AI, said there is hope among tech founders that they will have a better shot at gaining traction with a leader like Sacks influencing government.

“Large incumbents like Meta and Alphabet have huge government relations teams,” Rohde said. “It’s exciting for those in the startup community, regardless of political affiliation, that they will be represented at the very top.”

Zeb Evans, the founder and CEO of ClickUp, where Sacks was it’s first investor and currently sits on its board, said that he’s feeling good about Sacks’ new role, and not simply because he will have a fan in the White House. He described Sacks as someone who doesn’t “beat around the bush” and is “open to debate and can change his mind” with a work ethic that is efficient.

“There’s a world where the government can just overstep and really shut everything down — all that usually does is keep the power in the hands of large companies,” Evans said. “Of course it’s hard to say now exactly what he will do and what will change, but I’m very confident and very optimistic that he will do something that has great, broad, positive impact.”

Another plus for many tech leaders is Sacks’s belief that the U.S. Should not, under any circumstance, fall behind China in the development of AI or other technologies — a stance that favors loosening regulations that might hinder a company’s ability to develop and sell its technology.

“An important requirement is understanding the geopolitical situation with China,” a high-level AI industry advisor said. “I think Sacks understands that and has more technical knowledge than people in similar positions in the past.”

“China is absolutely a threat and hasn’t really been taken seriously enough,” one tech executive said. “He gets that.”

Sacks has been critical of Big Tech companies that subscribe to the “one company two systems model,” wherein American companies operate in China under strict rules mandated by that country, and China does not reciprocate America’s opening of its markets to the region. “In the long term, Big Tech companies are going to have to choose who they support,” Sacks said in 2021, arguing that a “decoupling” is inevitable.

“He’s bold and unafraid to do unpopular things and I think he has a reasonable chance of getting things done where meeker folks would fail,” another fellow VC said of Sacks.

Yet, this VC admitted that Sacks, although he has made a couple of investments in the AI space, is “not thought of as a stellar AI expert.”

That could prove a point of consternation for tech leaders and executives. Other areas of unease among such people with regard to Sacks—and the Trump administration’s overall approach to tech policy—involve its position on open source versus closed source AI models, as well as the specific elements of regulation. What kind of export controls will remain or be handed down when it comes to chips and related manufacturing? Will there be new rules about where and how companies store the “weights” which help power their AI models?

“There is a lot of tension and concern and apprehension about what direction he will take, even if generally people are happy that there is a real tech liaison in play,” one executive said.

A rough edge

Sacks was born in South Africa, like his long-time friend Musk, but he was raised from a young age in Tennessee. Though the two initially worked together about 25 years ago at PayPal, from which Musk was ultimately ousted, the two remained friends. Over the years, Sacks has invested in several Musk projects, including in Tesla, Neuralink and Musk’s chaotic takeover of Twitter.

Like Musk, Sacks can be mercurial and unnervingly direct, according to people who have worked and interacted with him. He was at X’s now-closed headquarters in San Francisco most days following Musk’s late 2022 takeover of what was then Twitter. Despite having no formal title at the company, he was a key part of the transition team brought in by Musk, made up of friends, relatives and employees from other of his companies, referred to by Twitter employees as Musk’s “goons.”

Not everyone appreciated his involvement. Sacks would call abrupt meetings with Twitter workers of all levels, during which it became clear he “had no idea how the platform worked or how the business functioned,” one person who witnessed Sacks at Twitter said. He would hammer employees to explain or defend every statement they made, to the point where some people simply gave up or were at a loss of what else they could say, the person added. Sacks seemed to be heading up ideas for new revenue streams, like subscriptions and payments, yet he came off largely unaware of other popular platform subscription models like LinkedIn Premium and YouTube Plus, angrily demanding detailed explanations of those businesses from Twitter employees when they were brought up as business models that could potentially be replicated.

“He was pretty much clueless,” another person who witnessed Sacks on Twitter said. Another person who was at Twitter said Sacks was at the company when people were often sleeping at the office to meet Musk’s demands, “crying from stress” at their desks and in bathrooms. To have Sacks “yelling at someone about LinkedIn” was unbearable.

A person who is familiar with Sacks put a different light on his time at Twitter, describing his actions as what’s often referred to in tech leadership circles as “first principles thinking.” It’s a philosophy of problem solving that demands stripping away of any complexity. “He loves that stuff, Elon too, they all do,” the person said.

Sriram Krishnan, a fellow tech investor who recently left his role as a general partner at VC firm Andreessen Horowitz and also worked on the Twitter transition at the same time as Sacks, referred to Sacks’ work there at the time as coming from a “first principles perspective.”

“During the Twitter takeover, I saw David being an amazing operator, trying to roll up his sleeves and get things done,” Krishnan added.   

Ultimately, X’s success in creating a subscription or payments business is unclear at best. Sacks’ other work during the takeover, according to Twitter employees there at the time, was aiding in the release of what Musk called the “Twitter Files,” a ream of internal Twitter emails in which employees mostly discussed content moderation decisions. After a couple of months, Sacks essentially “disappeared” from Twitter — by then thousands of Twitter workers had been laid off or fired. The day of Trump’s election, Sacks wrote on X “We need a ‘Twitter Files’ for the entire Federal Government.” 

To some of his detractors, Sacks is someone whose actions cross the line, even by Silicon Valley’s ultra-competitive norms. Paul Graham, the wealthy entrepreneur and founder of revered start-up fund Y Combinator, this year publicly rebuked Sacks for his earlier treatment of Parker Conrad, the founder and CEO of Zenefits, which was funded by Y Combinator. Sacks, who became interim CEO of Zenefits in 2016 after Conrad stepped down, reportedly attempted to sabotage Conrad’s ability to raise money for a new company, Rippling. Graham called it one of worst examples he’d seen of an investor mistreating a founder, and blasted Sacks as “the most evil person in Silicon Valley” in since-deleted tweets. Sacks publicly denied any wrongdoing. 

Lately, Sacks has been critical of Sam Altman’s company, OpenAI, which initially counted Musk as a co-founder. He called it a “piranha” in reaction to reports that Altman plans to make the company a more standard for-profit entity, and has told investors of its latest fundraising round that they could not invest in rival companies. Sacks suggested OpenAI had done something “under false pretenses” by switching its structure after taking on billions of dollars in investment over the years.  

The one thing that’s clear about Sacks is that he has deep ties in tech, and plenty of professional relationships, good and bad. Now, he’ll have a direct line to the White House.

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