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12.31.15 5:01 AM ET

The Myth of Silicon Valley Libertarianism

There’s a reason why the Silicon Valley libertarian revolution hasn’t materialized: They’re actually an entirely new type of Democrat.

Silicon Valley has become one of the most powerful lobbying forces in America, but it’s bewildered the political establishment with its unconventional loyalties.

Tech CEOs are arguably some of the Democrats’ biggest fan-boys: In the 2012 presidential election, 83 percent of employee donations from some of the nation’s top tech firms went to Obama. Among the tech elite, 64 percent of all political donations from investors and startup founders since 2008 have gone to liberal candidates and causes. Perhaps the most brutal statistic of all: Only 3 percent of tech startup founders identify as Republican.

“Most of Silicon Valley, most of the executives, tend to be Democrats,” the famously libertarian PayPal billionaire Peter Thiel told me (for The Daily Beast) last year.

But before the Democratic National Committee gets too excited, it’s not so simple to lump them in with their liberal peers. Tech titans are the archnemesis of labor unions on a variety of battles, from high-skilled immigration to free trade and union-less public charter schools.

It’s Silicon Valley’s unabashed love affair with unregulated free-market capitalism that gets it branded as a hotbed of libertarianism (by many, many critics). When libertarian icon Rand Paul made a fundraising journey to San Francisco, cultural critic Susie Cagle said, “Rand Paul is exactly what San Francisco needs: a personification of the unregulated market idealism that’s so rapidly remaking the Bay Area region.”

But politicians who attempt to exploit this stereotype as a political strategy get a rude awakening. Paul’s widely publicized pilgrimage to San Francisco was actually lightly attended: The small crowd fit into the ground floor of a cramped downtown startup shop—a small showing compared to the large crowds that Bernie Sanders and Hillary Clinton can draw.

And when Paul opened his campaign speech with a line that usually garnered him cheap applause among libertarians, it backfired in San Francisco.

“Who’s a part of the leave-me-alone coalition?” Paul cried, expecting a big response. Only three people in the audience clapped. It was so awkward that Paul had to make a joke to shake off conspicuous bomb. “Not that many, huh?” (video below).

To understand this curious mix of beliefs, I conducted the first systematic political opinion poll of the tech elite, using a randomized sample of an exhaustive database of startup founders (called Crunchbase) and found that the Silicon Valley ideology rejects the very heart of libertarianism: individualism and small government (see research methods here).

On the issues, startup founders overwhelming resoundingly oppose the Keystone XL pipeline and overwhelmingly support an individual health-care mandate.

At their core, the tech elite are more communitarian than libertarian: Sixty percent say that nearly every personal decision a citizen makes, including what they eat, impacts enough of society to justify government involvement (compared to just 20 percent of libertarians).

“We are an interdependent society — one’s obesity and/or diabetes affects how much I pay for health care,” wrote Andrew Fischer, one of my survey respondents and founder of Choozle.

We’ve been conditioned to assume that a love of free-market capitalism is always wedded to individualism. But Silicon Valley, and a growing demographic of “creative class” urbanized liberals, are supporting policies that are very much pro-capitalism and pro-government at the same time.

They view the government as an investor: funding education, scientific research, and entrepreneurship. Rather than protect citizens from the whims of capitalism, the state either invests directly in industry to ramp up the speed of disruptive innovation or makes government agencies function more like businesses themselves.

This helps explain the Valley elite’s obsession with public charter schools, which are often parent-led, union-less, and run like an experimental startup. Not coincidentally, the same principle is true for companies like Uber and Lyft, which substitute mass private carpooling for public transit.

In other words, the Valley is uniquely optimistic that citizens are the solution to social ills, whether they act as entrepreneurs, principals, or taxi drivers.

So when it comes to the 2016, who will the Valley support? This month, I conducted another (smaller) sample poll of Internet founders and their support for Republicans was little more than an asterisk. Zero percent supported Trump. Rubio and Cruz split the ticket at 8 percent each. Hillary Clinton was the clear favorite (51 percent), a statistically significant margin from the second favorite, Democratic socialist hero Bernie Sanders (26 percent).

“Despite the extremist weirdos, America deserves to be professionally managed by someone who is not a complete lunatic or psychopath,” wrote Chris Jensen, founder of website domain startup Left of the Dot.

Despite some high-profile flipflops from Clinton, she’s still the biggest friend to immigration, public education, the environment, and government investment in technology. Silicon Valley is wary of a committed socialist (Sanders) and the Republicans are too anti-government and immigration. Clinton is their reluctant choice—for the moment.

No, Silicon Valley is not a libertarian hotbed; rather, we are witnessing the rise of an entirely new type of Democrat. As Silicon Valley and urbanized liberals gain power, they will transform the government in their vision for a brighter future—whether we like it or not.

This story is part of a series on Silicon Valley’s political endgame. See all chapters here. Quotes have been edited for clarity.