Sacks is a very interesting and powerful figure. He started his tech career with PayPal, and it was Sacks, together with other PayPal founders, who organised the coup that got Elon Musk fired as PayPal's CEO. He went on to start up Geni.com and Yammer, selling Yammer for $1.2 billion dollars. He then set up a venture firm and has risen to prominence through the All In podcast, and then in 2024 was made President Trump's AI and Crypto Tsar. It is he who is advising Trump on the type and the amount of regulation required for AI — an extremely powerful and important position. So who is Sacks, how did he get to where he is? This is a cracking episode — enjoy.
David Sacks was born in Cape Town, South Africa, in May 1972. His father was an endocrinologist. In August 1977, when Sacks was five years old — the Soweto uprising had happened the year before, international sanctions were tightening — so the family left and went to Memphis, Tennessee.
At school, because of his accent and the fact that he's an outsider, he gets bullied. He has credited those early hardships with giving him this "self-reliance" and this tendency to question rules.
He excelled academically, and in 1990 he went to Stanford to study economics. And it's there where he meets Peter Thiel, who had founded The Stanford Review, the conservative-libertarian paper.
Sacks is appointed Editor-in-Chief. He frames The Review's editors and writers as the real radicals on campus. He targets political correctness, what he calls dumbed-down admissions, and the whole structure of campus multiculturalism.
The most controversial thing he produces at Stanford, though, is a book he co-wrote with Thiel called The Diversity Myth. You can tell by the title what it's getting at. It's fair to say that Sacks was anti-woke well before the term was even invented. And the book goes pretty deep into lots of different arguments that I'm not going to get into — anyone who listens to Sacks on his All In podcast will be familiar with it.
But one section of the book that came back to haunt Sacks was where he and Thiel asserted that date rape was simply "belated regret." Now, in 2016, Sacks issued a public apology: "This is college journalism written over 20 years ago. It does not represent who I am or what I believe today. I'm embarrassed by some of my former views and regret writing them."
Fair enough. I think it's nearly a right of passage to have beliefs in college that you look back on now and think, jeez, how stupid was I. I know I do.
After graduating from Stanford in 1994, he went to Washington to work as a legislative aide drafting policy briefs. But he found it stifling, slow-paced, saw that there was too much compromising in politics, and so enrolled at the University of Chicago Law School in 1996.
He finished that in 1998 and initially went to Los Angeles with a job offer, but decided "it was so brutally competitive; I didn't want to be another random producer with no resources." So stick a pin in that, because he does return to LA when he has resources — but for now he moves to San Francisco and joins McKinsey as a consultant.
But he stays in contact with Peter Thiel, and Thiel wants him to join his startup. It was initially called Confinity, but it becomes PayPal and I'm sticking with PayPal. And the whole story of PayPal is really remarkable — I think the best startup story ever. If you want a great read, then buy Jimmy Soni's book Founders, all about it. Myself and Keith did an episode on PayPal in June 2024, so I really recommend going back to listen to it.
Basically, PayPal were in the process of developing a product that would allow Palm Pilots to beam money to each other — that was their main product. But to enable people who didn't have Palm Pilots to transfer money, they also had a secondary email money transfer product. Now the founders of PayPal had very little interest or regard for this email transfer product, but Sacks saw straight away that this should be the focus — this should be the main product.
And so he said to Thiel that he would only join PayPal if the email product was going to be the main product. Thiel assured him that it would be, but this was kind of a fudge. For a while after Sacks joined, both products were given equal status, so Sacks initially annoyed a lot of people by being very vocal about what he thought of the Palm Pilot idea. In other words, it was a rubbish idea — and he was right.
So Thiel got a lot of pushback from others about hiring Sacks, but Thiel hired him because he knew that Sacks wasn't afraid of going against the grain and would always speak his mind. He also knew that Sacks was very focused and organised.
Anyway, Sacks was quickly proven right about the email money transfer product, because it was quickly adopted by eBay's users and sellers.
For context, back then eBay was the hottest and one of the most popular websites, and there wasn't a convenient way for people to pay for goods on the site until the email money transfer product came about. So PayPal's growth suddenly took off. For example, in November 1999 PayPal had 1,000 customers — three months later they had 100,000 customers. So the Palm Pilot idea was dumped and everything was focused on the email money transfer product.
Sacks is credited with getting the team to focus 100% on making sure they got it right. Here's a quote from him: "If you didn't have a good product, you didn't have anything, and that shaped my entire subsequent career."
Then enter stage left, Elon Musk.
Musk had founded X.com with far bigger ambitions than PayPal. He wanted to build a one-stop shop for all of your financial needs, and just like the PayPal team, he had developed an email money transfer product almost as a side thought. But the same as with PayPal, once the eBay community started to use it, it became the main product, and for a few months PayPal and X.com were caught up in a huge and very expensive battle with each other. They soon realised that it made sense to merge.
That happened in March 2000, and on the same day that the merger was announced, they closed a $100 million round of financing. The timing couldn't have been better — just a few weeks later the dot-com bubble bursts.
So now they have $100 million dollars in the bank, and they are the dominant company in the money transfer market because, as a result of the burst bubble, most of their competitors were now gone.
But internally, the company was not a happy camp.
There was a huge amount of tension and infighting between the X.com team and the PayPal team. There were arguments over what type of technology to use, what the name of the company should be — Musk, unsurprisingly, has always been fixated on X.com and wanted to keep it — because he still believed that they should continue with his vision of building a huge, all-in-one banking platform. Sacks and the PayPal team were dead set against that. They wanted to stick with the PayPal name and focus on the money transfer product that was growing at a huge rate.
So Sacks, together with Thiel, Reid Hoffman, and Max Levchin — PayPal co-founder — organise a coup.
They waited until September 2000, when Musk left to go on a delayed honeymoon to Australia.
And while Musk's plane is still crossing the Pacific, they send a letter of no confidence in Musk to Sequoia Capital, their main backers. The board sides with the conspirators. By the time Musk lands in Sydney, Peter Thiel has been installed as the new CEO. Musk is out — though he remains the largest individual shareholder. And despite the acrimony, Sacks and Musk always got along really well, which I think is testament to Sacks' overall capabilities, because Musk never has time for people who aren't good at what they do.
So with Musk gone, PayPal is now focused on a single product, but it's facing a crisis that could kill the company. International fraud rings had figured out how to exploit the system, and the losses were running into millions of dollars a month — bad enough that the business might not survive.
This is where Sacks' focus on the product combined with his operational rigour comes to the fore. He develops what he'll later call "The Cadence" — a disciplined quarterly operating process that gets product, engineering, finance, marketing, and customer support all pulling in the same direction.
To get a feeling for what it's like to work under Sacks, here's a quote from a former colleague: "There's masters and there's slaves. He doesn't have partners. You do what I tell you to do, or you're one of the few people that tell me what you want me to do. Part of his drive is that he believes he is one of the small number of elite people who really get it and are capable."
And I think that anyone who has listened to Sacks on his podcast will understand that. Sacks has a huge amount of self-belief, and rightly so, but there's a lot of arrogance there as well.
Anyway, while Sacks is getting PayPal into shape operationally, the engineering team under Levchin is building sophisticated fraud-detection systems and pioneering tools like CAPTCHA to defeat the fraudsters.
The combined effort works. By the end of 2001 PayPal is thriving. Revenue had grown from about $14 million in 2000 to $105 million in 2001. And in February 2002, it went public, and at the end of its first day it was valued at roughly $1.2 billion.
To celebrate, they got some beer kegs and had the party in the car park of their office. And Thiel took on ten players in quick succession in games of speed chess, beating nine and losing only to Sacks. And there's a great photo of Sacks celebrating that win — just Google "David Sacks beats Thiel in chess."
And then in October 2002, eBay acquired PayPal for $1.5 billion. Now it's never been revealed how much Sacks made from this, but the best estimates are that he would have had maybe about 1% to 2% equity, which would give him something between $15 million and $30 million.
Sacks, along with other PayPal executives, initially works at eBay, but in one of his first meetings, eBay's consultants give the PayPal team a 137-page PowerPoint deck. Sacks looks at it, turns to his colleagues, and says: "If we stay here, you're going to have to build a whole PowerPoint team, because that's the only way to communicate with these people."
He leaves, relocates to Los Angeles to start Room 9 Entertainment — a film production company. And I really love and admire this move. He loved movies, and while he had initially thought about a career in Hollywood back in 1998, he knew that if he wanted to be in control, he'd have to have his own resources. So he went off to work, got his money from PayPal, and makes the movie he wants. Kudos.
Now he also gets some investment from Thiel, Hoffman, and Levchin — essentially the PayPal Mafia — because these guys had now become well known as angel investors. And indeed Sacks becomes an early investor around this time in SpaceX as well as Palantir.
Anyway, back to the movie. Sacks sets his sights on Jason Reitman's adaptation of Christopher Buckley's satirical novel, Thank You for Smoking. It's about an unscrupulous, sharp, funny tobacco lobbyist. And fair dues to Sacks, because he resists the standard studio instinct to soften the main character, and it's all the better for it. It really is a very good movie — I watched it a few years ago. The Guardian wrote that it's "a witty, cynical, spin-doctoring masterclass." It gets a Golden Globe nomination, and not only that, but it's a financial success. Not a blockbuster success, but it was made for just $8.5 million and it takes in $39.3 million globally.
But despite the success, the experience put Sacks off Hollywood. He grew bored with the slow pace and realised that he preferred the speed and control that comes with startups.
So in 2006 he co-founds Geni.com — a website that helped people build their family trees online and connect with relatives.
As Geni grows, internally the team runs into a problem that a lot of fast-growing companies ran into back then. Email wasn't any good for the kind of rapid, cross-functional communication they needed. They look for a tool that would give them quick updates, visible across the company, but completely contained — think of Slack — but it didn't exist at this stage. So Sacks and his team built their own system in 2007. It's meant to be for their own use, but it works so well they spin it out as a separate company called Yammer.
It was launched at TechCrunch50 in 2008, and it won the top prize — beating 52 other startups — with TechCrunch describing it as "Twitter with a business model."
On the very first day it launched, 10,000 people signed up.
And the reason it spreads so fast is the strategy that Sacks uses to get sign-ups. Here's how it works. Any employee with a corporate email address can sign up for free. They invite colleagues. Conversations start. Before long, business discussions and institutional knowledge are living on Yammer. And then eventually the CIO or CTO discovers that hundreds — or even thousands — of employees are using a platform, i.e. Yammer, that the company never officially approved. If management wants security controls, compliance tools, administration features, and so on, they have to buy the premium version. The IT department doesn't choose Yammer. They get dragged to it by their own employees.
Essentially, Sacks creates a product that spreads organically from the bottom up until management has little choice but to embrace it. It's a classic land-and-expand strategy — establish a beachhead inside the company.
By 2012, Yammer has over five million corporate users spanning 85% of the Fortune 500. It had raised $142 million and had $60 million in annualised revenue.
Now, also by 2012, Microsoft is in a difficult position. Its core enterprise intranet product, SharePoint, has no real-time social layer. And the whole Office franchise is under growing pressure from cheaper cloud alternatives like Google Docs. So Microsoft approached Yammer early that year to discuss a potential deal.
And Sacks plays a very clever game. He doesn't appear too eager. He raised $85 million in early 2012, which gives Yammer a valuation of about $600 million. And he uses some of that money to buy a company that strengthens Yammer's product offering. Essentially, what he's doing here is sending a signal that Yammer has enough cash in the bank while also signalling that it intends to become a full standalone document-collaboration suite — so he's making clear that he's not desperately looking for a buyer.
Again, very clever, and it works. Microsoft agrees to pay $1.2 billion in cash in June 2012 — double what Yammer was valued at just a few months previously. Again, we don't know exactly how much Sacks made from this deal, but it's estimated that he cashed out at least $150 million and possibly as high as $300 million.
A few months later, in November 2012, Geni.com — the genealogy platform — is sold to MyHeritage. Now Geni.com was a private company and we don't know how much it was sold for. Crucially though, Sacks converted his Geni.com founder's equity into MyHeritage shares, and MyHeritage was sold in 2021 for $600 million, so he likely walked away with tens of millions from that deal.
So by the end of 2012, Sacks has had a very, very good run.
But, as in every entrepreneur's career, there are always bumps along the way, and for Sacks it came in 2014, when he made what he said at the time was "his largest investment to date in a private company." This is when he invested in Zenefits. I couldn't get the exact amount of his investment, but it was in the millions, not tens of millions.
Zenefits was a human resources software startup started by Parker Conrad. After investing, Sacks became COO. By mid-2015, the company had raised more than $500 million, with a valuation of $4.5 billion.
But then in late 2015, investigations revealed that Zenefits had been allowing unlicensed sales reps to sell health insurance, and that Conrad, the founder, had written a custom browser extension that let Zenefits' sales agents fake their way through California's legally mandated pre-licensing training course, so that unlicensed employees could operate as insurance brokers.
In short, the company was violating state insurance laws across the country.
Now Sacks had nothing to do with these infringements, so Parker Conrad resigns and Sacks takes over. And again, big kudos must go to him for the way he managed what must have been a very pressurised and tricky situation.
In one of his first major decisions, Sacks slashed the company's valuation from $4.5 billion to $2 billion. This meant that the last round of investors would see their equity increase from around 11% to 25% without putting in any new money, and they agreed not to pursue any legal action. Of course, in doing so, Sacks massively diluted his own shares. Next, the company laid off more than 350 employees. Then Sacks changed the product itself. The old Zenefits made money on insurance commissions. The new product is a pure SaaS subscription model. And finally, Sacks reached settlements with regulators across 17 states.
He steadied the ship and then set it on the right path, and steps down in 2017.
Zenefits is eventually sold privately. It's likely that Sacks either lost money or at best broke even. But Sacks has to be given a lot of praise for stepping up to the plate and saving the company — it was a textbook example of crisis management.
After leaving Zenefits in 2017, Sacks co-founds Craft Ventures. The strategy is pretty straightforward: take everything he's learned and apply it systematically to early-stage investing. The focus is B2B SaaS, developer infrastructure, and marketplace platforms.
Craft Ventures and Sacks have backed or held positions in more than twenty startups that go on to achieve billion-dollar valuations, including Airbnb, Uber, Slack, Reddit, Affirm, and Vanta. Craft and Sacks are also heavily invested in AI, crypto, and cybersecurity.
Now, most of you will know about his involvement with Twitter. When Musk took over, Sacks got heavily involved in the early stages and put some of his own money in — though not a huge amount, which turned out to be the right call. Because Twitter is not in a good place. Revenue has fallen from $5.1 billion just before the takeover to an estimated $2.9 billion based on the last known figures. And Musk saddled the company with thirteen billion in debt, which translates to around $1.5 billion a year just in interest payments. Ouch.
But Sacks is in a good place. In terms of his overall net worth, it's really difficult to find an exact answer — somewhere between $300 million and over a billion. And his public profile has grown substantially since 2020, firstly with the massively successful All In podcast.
The podcast started almost by accident. In March 2020, the COVID lockdowns hit, and Sacks, along with Chamath Palihapitiya, Jason Calacanis, and David Friedberg, decided to take the arguments they'd been having at their weekly poker games and just broadcast them. It's mostly tech and politics. I've listened to it a good few times. If you want an insight into Silicon Valley, into bitcoin, AI, or any kind of tech investments, these guys do have great insights — this is their speciality and they are very good at that. But the politics? No thanks. Just not my cup of tea.
And then his public profile went up a good few notches when in December 2024, Trump announced that Sacks would serve as White House AI and Crypto Czar.
As you know, I try to stay out of politics as much as possible on this podcast, but I have to talk about it here because Sacks has put himself into the political sphere in a very big way.
Now, listeners will know I'm not a fan of Trump, but I'm also not going to criticise anyone for supporting Trump when they've been open and honest about their support for him — listen back to my episodes on Palmer Luckey or Dana White.
The problem I have with Sacks isn't his politics. There's plenty I disagree with him on — his relentless war on woke, which I find a bit boring at this stage, his stance on Ukraine where he basically blames NATO for the war — but fine. I've always believed that people should be able to disagree on politics and still be respectful towards each other.
My problem is the contradictions.
First, let's go back to the January 6th riots. These are Sacks' own words, from his podcast: "What Trump did was absolutely outrageous. He will pay for it in the history books, if not in a court of law." He deleted up to 20 tweets that he posted after the riots, including where he said that Trump had "disqualified himself from being a candidate at the national level again."
So what changed? This is what Sacks says now: "January 6th was a psyop designed to make President Trump look bad. As I learned the truth, I updated my views."
Now look, I understand some of my listeners also believe this psyop narrative. I don't believe it, but that's beside the point. My point is that when it comes to Sacks, it's really hard to know what he actually believes and to trust what he says. And I'll explain what I mean in a minute. But regardless of whether or not Sacks believes January 6th was a psyop, it served its purpose — he got the job he wanted: AI and Crypto Czar.
You could argue this is realpolitik — a calculated move to maximise Silicon Valley's influence in Washington. And it's working. Sacks has become genuinely effective at pushing through a largely unregulated AI agenda, which I think is kind of scary. Look, I believe the EU over-regulates when it comes to technology, but when it comes to AI — such a transformative, revolutionary, and disruptive technology — I think it's very dangerous to have a business person in charge of regulation, especially when you take into consideration Sacks' framing of "let the private sector cook." He's essentially arguing that the people who stand to profit most from AI should also set the rules for AI. That is just such a flawed structure.
Just a few hours before I started recording this episode, Anthropic came out and suggested a global pause on building the most powerful AI systems because they are saying that the latest models are beginning to show signs they could escape human control. Folks, this is one of the best AI companies in the world. Most of us use and love Claude. And the people behind Claude are telling us that it could escape human control. They are being the grown-ups in the room — being cautious and responsible. They've also said: "Without a global coordination mechanism, companies and governments will have to make difficult decisions about safety while under competitive and geopolitical pressures."
I agree with that 100%. We need to listen to responsible AI experts, and going forward I do believe that there needs to be global cooperation.
Now, getting back to why I find it hard to trust what Sacks actually believes. He has been a lifelong libertarian. Libertarians oppose tariffs — this is a core principle. And yet here is David Sacks defending tariffs. And just to be clear, people will argue that Trump is using tariffs as a negotiating tactic. Sure he is, but he also believes in them 100% and has done for decades, and is using them as an economic tool even outside of negotiations — a principle that is denounced by libertarians.
Libertarians also oppose foreign interventionism — again, a core principle. But in the last year we have Sacks supporting Trump's proposal to buy and/or simply take over Greenland. Again, these aren't fringe libertarian positions. They are core principles.
Sacks would be well able to defend himself and provide a reasoned argument for why he's willing to set aside principles he's held his whole life. He's brilliant at arguing. But brilliance in argument is not the same as honesty. And for all his intellectual firepower, what he has demonstrated is a willingness to contort his values into whatever shape gets him a seat at the table.
That's why I don't trust him.
But look, I'll leave the final word to someone who knows him far better than I do. This is a quote from a good friend of his, referring to Sacks: "Some libertarians care about the freedom of only one person." And the friend who said that? Peter Thiel.
Anyway, whatever your thoughts on Sacks, he makes for a very interesting business story, and that brings us to listeners' emails. This one comes from Anthony, who'd love me to do an episode on Calvin Klein, and that actually wasn't on my list — I think I might do that next week or the week after. So thanks a million for listening, Anthony, and for the suggestion.
And remember, if you have any comments, any corrections, or any story you'd like us to cover, email me at info@gbspod.com. All the best, folks.