Tech tries to get Trump's ear after shunning him during campaign

SAN FRANCISCO — For the past year, the tech industry shunned Donald Trump, and he shamed it. Now, the president-elect and the $2.9 trillion sector find themselves thrust into a shotgun marriage.

"Much of the business is in a wait-and-see mode," says Meg Whitman, CEO of Hewlett Packard Enterprise, one of the largest tech companies in the world and a Hillary Clinton supporter.  "We adapt and make the most of the situation."

Many in tech supported Hillary Clinton, and they expected her to win. With Trump as president-elect, they are hastily revising plans.

One difficulty: Trump has no discernible tech plan nor has he openly courted tech executives. For those in Silicon Valley and beyond, he is the great unknown, and his potential cabinet is creating fears of restrictions on skilled immigrant workers, weakened cybersecurity, punishing tariffs on products made in China, and unrelenting pressure to bring more manufacturing jobs to the U.S.

“Most of the planning (by tech companies) had been done under the assumption that Hillary would win,” says Deven Parekh, managing director at Insight Venture Partners. “There was a big transition team for her ready to go, which included technology-related issues."

It's made for an uneasy climate, but tech executives and trade associations say they've accepted the election results and want to work with Team Trump.

"Most of Silicon Valley is moving from the 'surprised and in denial' phase to accepting the change that's coming," says Semil Shah, general partner at Haystack Fund in Menlo Park, Calif. "Some of that change, such as immigration, creates anxiety and uncertainty. Some of that change, such as potential for economic stimulus at a national level, gives some folks business confidence."

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Gary Shapiro, CEO of the Consumer Technology Association, voted for Clinton after supporting Republican candidates in the last four presidential elections. He welcomes working with the Trump administration, but doesn't know what to expect.

“We reached out to Trump and Clinton, and we didn’t get a response from him. Am I concerned? Of course I’m concerned,” says Shapiro, whose trade organization represents more than 2,200 companies, including Amazon, Uber and Apple.

“The people he reached out to were not in tech, but in flyover territory,” Shapiro says.

Still, there is overlap between Silicon Valley and Trump's transition team, with its ties to real estate, venture funding and other businesses. A main connector? Peter Thiel.  The influential venture capitalist and Facebook board member donated $1.25 million to Trump's campaign. He was a delegate for Trump and spoke at the Republican National Convention. 

Thiel doesn't have a formal role during the transition but has spent nearly two weeks advising the Trump team.

The investor isn't the valley's only link to Trump, but he appears to be its strongest one. Joe Lonsdale, founding partner at 8VC, a Silicon Valley-based tech investment fund, and co-founder of software and services company Palantir Technologies, has his own connections to the Trump camp as well as strong ties to House Speaker Paul Ryan (R-Wisc.).

A Trump spokesperson was unavailable for comment.

Driving tech executives to find a receptive ear in the Trump administration is a platform that was generally unfriendly to the tech industry.  Trump's populist message of restrictive immigration, manufacturing in America, privacy and hard-line stance on trade agreements is of paramount concern. Conversely, his views on reduced taxation and regulation could benefit an industry with which he is a stranger.

"Absent a tech plan, we need to look at his stances on immigration, taxation and privacy, and extrapolate how it applies to tech," says Lee Tien, senior staff attorney for the Electronic Frontier Foundation. "That's a risky proposition."

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Along his improbable journey, Trump has blasted Amazon for not paying enough taxes and a surrogate of his skewered Facebook CEO Mark Zuckerberg for perceived anti-Trump comments.

Apple, in particular, could be in the cross-hairs of a Trump administration. Over the past year,  Trump has chastised Apple and other hardware makers to build more products in the U.S. instead of China. As a candidate, he demanded a boycott of Apple when it didn't cave to the FBI's request to hack the iPhone of one of the San Bernardino, Calif., shooters.

Or, as has been the case with Trump the candidate vs. Trump the president-elect, was it just posturing in a preemptive negotiating tactic?

Trump said Apple CEO Tim Cook and Microsoft co-founder Bill Gates called him after his election but declined to say what they talked about, according to a meeting he had with the New York Times last week.

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The underlying contempt for elitism, as personified by West Coast-based companies with high-intellect founders and socially conscious CEOs, was articulated by White House chief strategist Steve Bannon in an interview with The Hollywood Reporter.

"The globalists gutted the American working class and created a middle class in Asia. The issue now is about Americans looking to not get f—ed over. If we deliver," said Bannon. "That's what the Democrats missed. They were talking to these people with companies with a $9 billion market cap employing nine people. It's not reality. They lost sight of what the world is about."

The thinly-veiled swipe at unicorns offers another layer of uncertainty in Silicon Valley, tech pockets throughout the U.S. and the Beltway.

“He’s spent a lot of time on Twitter, but hasn’t said much about tech during the campaign,” says Rep. Suzan DelBene, D-Wash., a former Microsoft executive. “We need a conversation about tech and government’s use of tech. It won’t happen without input from the tech community.”

DelBene, who has worked closely with Rep. Darrell Issa, R-Calif., another tech alumnus, is hopeful the new administration does not derail progress on bipartisan tech issues such as privacy and Internet of Things.

The concern is palpable from an industry that has felt the wrath of Trump's tweets and unpredictability..

ITI CEO Dean Garfield, whose organization represents more than 60 tech companies, including Apple, Microsoft and Facebook, is optimistic about Trump’s vow to invest up to $1 trillion into infrastructure. It could be a boon for Internet of Things devices such as sensors for roadways that enable driverless cars to interact and communicate.

A much-rumored bipartisan infrastructure plan that could bring jobs to the Rust Belt might involve tech companies, say Garfield and Shapiro. Last year, SpeakerRyan supported an infrastructure plan by Sen. Charles Schumer (D-N.Y.) in which hundreds of billions of dollars would be raised through a one-time "repatriation" of profits from big companies' overseas earnings in exchange for lower tax rates.

Immigration. Trump has been insistent about deporting undocumented immigrants, but has since narrowed emphasis to those with criminal records, as President Obama has done.

Skilled guest-worker visa programs such as H-1B, which admit 65,000 workers and another 20,000 graduate student workers each year, could be curtailed at a time when the tech industry wants it expanded.

"Tech has received great contributions from immigrants, who have started companies like Google and created jobs," DelBene says. "Immigration reform is a high priority for me, but we just don't know what may happen."

A diminished H-1B program would "hurt us," Whitman says, "but we will adapt. We should know in six to 12 months."

Privacy and encryption. Civil libertarians and trade organizations cringe at the thought of Sen. Jeff Sessions, R-Ala., ascending to Attorney General and unleashing the National Security Agency and other intelligence-gathering operations under a law-and-order administration that Trump has promised.

Rob Atkinson, president of Information Technology & Innovation Foundation, is bracing for a more aggressive push for data from tech companies to fight terrorism. Such a stance could undercut the flow of data between the U.S. and other countries, he says, out of fear of NSA snooping.

Meanwhile, Issa and others worry about someone already in office: FBI Director James Comey, who publicly clashed with Apple over cracking the iPhone of shooter Syed Rizwan Farook.

“Expect the FBI to double-down on a situation similar to Apple’s,” says Christopher Dore, a partner specializing in tech issues at Edelson PC in Chicago.

Trade agreements. Trump's hard line against imports from China — he's proposed a 45% tariff — and Mexico (35%) would have far repercussions for companies like Apple, whose iPhone and other products are assembled in China.

“If we go down a protectionist path and spurn (trade agreement Trans-Pacific Partnership), it will be a transformative change that favors China," Shapiro says. "Leaving NAFTA would be a strategic mistake that hurts Ford and General Motors.”

The nomination of South Carolina Gov. Nikki Haley (R) — who has negotiated global economic deals the last few years — as U.S. Ambassador to the United Nations could hint at greater flexibility.

Taxation and regulations. HPE Chief Financial Officer Tim Stonesifer says the Palo Alto, Calif.-based company and others would benefit from a corporate tax rate reduced to 15% from 35% and a plan that “will provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent,” according to Trump's website.

Moves to lower rates, simplify the tax system, maintain R&D tax credit and ease decades-old regulations to raise capital benefit small businesses, says Karen Kerrigan, CEO of The Small Business & Entrepreneurship Council, an advocacy organization with more than 100,000 members in the U.S.

Lighter regulations could accelerate the market for drones and driverless cars which, in turn, could help the Internet of Things, says Atkinson.

"A pro-business executive could add momentum to an IPO market that is starting to show signs of life," adds Michael Moe,  CEO of GSV Capital.

For now, however, it's wait and adapt.

"Judge Trump by who he appoints to his cabinet," Issa says.

Contributing: Jessica Guynn in San Francisco.

Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.