David Sacks, who now serves as President Donald Trump's White House AI and crypto czar, is making a public push for Y Combinator to plant a flag in Austin, Texas. And he's not being subtle about it.
For context, Y Combinator is the startup accelerator that's launched thousands of companies, from Airbnb to Stripe. It's basically the gold standard for early-stage tech funding. But according to Sacks, staying put in Silicon Valley might be a strategic mistake.
Why Austin? Why Now?
On Thursday, Sacks took to X (the platform formerly known as Twitter) to directly call out YC partner Garry Tan, urging him to reverse the decision not to open an Austin office. His argument? Austin's startup scene is exploding, and Y Combinator could accelerate that growth while diversifying away from the Bay Area's increasingly concentrated tech ecosystem.
"@garrytan I would urge you to reconsider this decision and open YC Austin," Sacks wrote.
But here's where it gets interesting. Sacks, who made his name as a Silicon Valley insider and former Chief Operating Officer at PayPal Holdings Inc. (PYPL), suggested that by staying solely in the Bay Area, Y Combinator would essentially be admitting that Silicon Valley's network effects can't be replicated anywhere else. That's a bold claim from someone who helped build that very network.
"If you don't start diversifying now, you won't have any leverage," he warned.
A Broader Prediction About Tech Migration
Sacks didn't stop at Austin. In a follow-up post, he made an even bolder prediction: Miami will replace New York City as America's finance capital, and Austin will dethrone San Francisco as the tech capital. His reasoning? A reaction against what he calls "socialism"—which in this context appears to mean progressive taxation policies.
This isn't just theoretical musing. There's real momentum behind the exodus from California, and it's being driven in large part by the state's proposed billionaire tax.
The Billionaire Tax Backlash
California's potential wealth tax has become a lightning rod for tech elite discontent. The proposed measure would tax extremely wealthy residents on their total wealth, not just income—and several prominent figures have suggested they'd pack up and leave if it passes.
The list of critics reads like a who's who of Silicon Valley: tech investor Peter Thiel, Google (GOOG) (GOOGL) co-founder Larry Page, and Sacks himself have all indicated they might relocate. Meanwhile, Galaxy Digital Inc. (GLXY) CEO Mike Novogratz and Reddit Inc. (RDDT) co-founder Alexis Ohanian have called for a broader federal conversation about wealth inequality, suggesting the debate extends beyond any single state policy.
The tension here is real: California has been the undisputed tech capital for decades, but high costs, regulatory pressure, and now aggressive taxation are pushing founders and investors to reconsider. Austin, with its no state income tax, lower cost of living, and growing tech infrastructure, has become the obvious alternative.
What This Means for the Tech Landscape
If Sacks is right and Austin does become the new tech hub, the power dynamics in Silicon Valley—and American tech more broadly—could shift dramatically. Y Combinator backing Austin with an official presence would be a massive symbolic and practical vote of confidence in the city's potential.
Whether Garry Tan and Y Combinator take Sacks up on his challenge remains to be seen. But one thing is clear: the conversation about where tech happens is no longer settled.