The PayPal mafia is at war again, and this time it's over AI policy. OpenAI investor Reid Hoffman just jumped into a public spat with White House AI czar David Sacks, defending Anthropic as "one of the good guys" after Sacks accused the AI startup of regulatory fear-mongering. The clash exposes deep fractures in Silicon Valley over how aggressively to regulate artificial intelligence.
The tech world's most influential alumni network just became a battleground. Reid Hoffman and David Sacks, two titans from the legendary PayPal mafia, are trading barbs over AI regulation in what's become the most public Silicon Valley political fight since the election.
Hoffman fired the latest shot Monday, calling Anthropic "one of the good guys" after Sacks, now serving as President Trump's AI and crypto czar, went after the AI startup last week. "Anthropic, along with some others (incl Microsoft, Google, and OpenAI) are trying to deploy AI the right way, thoughtfully, safely, and enormously beneficial for society," Hoffman wrote on X, according to CNBC reporting.
The clash started when Anthropic co-founder Jack Clark published an essay called "Technological Optimism and Appropriate Fear" that advocated for careful AI development. Sacks pounced, accusing the company of "running a sophisticated regulatory capture strategy based on fear-mongering" and being "principally responsible for the state regulatory frenzy that is damaging the startup ecosystem."
But this isn't just about AI policy - it's personal. Hoffman and Sacks both joined PayPal in 1999 and helped build what became known as the PayPal mafia alongside Peter Thiel, Elon Musk, and other tech luminaries. They've since become public antagonists, primarily over politics.
Hoffman emerged as a major Democratic donor, pouring millions into Kamala Harris' unsuccessful presidential campaign. Sacks went the opposite direction, hosting a Trump fundraiser at his San Francisco mansion and eventually landing his White House role overseeing AI and crypto policy.
The stakes couldn't be higher. Anthropic was founded in 2021 by former OpenAI executives who left over safety concerns. The company has consistently pushed back against Trump administration efforts to block state-level AI regulation, including a provision that would have prevented such rules for 10 years.
Hoffman's defense isn't without conflicts of interest. He sits on Microsoft's board since 2017, shortly after selling LinkedIn to the software giant. Microsoft is OpenAI's key investor and partner. Hoffman was also an early OpenAI investor and remains a shareholder. On Monday, he revealed that Greylock Partners, where he's a partner, has also invested in Anthropic.
"In all industries, especially in AI, it's important to back the good guys," Hoffman wrote, despite typically avoiding direct commentary about companies in his portfolio.
Sacks and Musk - who owns competing AI company xAI - quickly fired back. "The leading funder of lawfare and dirty tricks against President Trump wants you to know that 'Anthropic is one of the good guys,'" Sacks wrote. "Thanks for clarifying that. All we needed to know."
"Indeed," Musk replied.
The exchange devolved into typical Silicon Valley Twitter drama. "Shows you didn't read the post (not shocked)," Hoffman shot back. "When you are ready to have a professional conversation about AI's impact on America, I'm here to chat."
Jason Calacanis, co-host of the All-In podcast with Sacks, jumped in to invite Hoffman back on the show. Hoffman appeared in August, roughly two months before the election, but said "this week is packed" when asked to return.
The feud exposes the fundamental tension in AI development between safety-first advocates and move-fast-and-break-things accelerationists. Anthropic has positioned itself as the responsible alternative to OpenAI, emphasizing AI safety research and constitutional AI approaches. Critics argue this messaging is really about gaining regulatory advantages over competitors.
What makes this particularly messy is how intertwined these players are. Hoffman backs both OpenAI and Anthropic through different vehicles. Sacks now wields government power to shape AI policy. Musk competes with both companies through xAI while maintaining influence in the Trump administration.
The timing is crucial. The Trump administration is moving quickly on AI policy, with Sacks leading efforts to roll back Biden-era AI safety regulations. State governments, particularly California, are pushing forward with their own AI oversight rules despite federal pressure.
This PayPal mafia feud isn't just Silicon Valley gossip - it's a preview of how AI policy battles will be fought in Washington. With Hoffman defending safety-focused approaches and Sacks pushing deregulation from his White House perch, the dispute reflects broader tensions between Democratic and Republican visions for AI governance. As the Trump administration moves to reshape AI policy, expect more of these high-profile clashes between tech's most connected alumni.
