Just before the 2016 presidential election, David Blumberg hosted a group of investors and entrepreneurs at a San Francisco restaurant for a business mixer. The conversation turned to Donald Trump.
The dinner guests tried to make sense of the reality-TV star making it to the general election. “Can you believe anyone would ever vote for Donald Trump?” Blumberg said he remembered hearing.
“And I’m just sitting there, not saying anything,” Blumberg said.
Blumberg would go on to vote for Trump, though he wouldn’t dare admit it before his peers, because he feared their bitter criticism.
“People often don’t realize how intolerant they are,” Blumberg, the managing partner of Blumberg Capital, told Business Insider.
“They just assume their view is right. I have strong views; I know that. I could even be considered opinionated, but I certainly respect other people’s views,” Blumberg said. “Being a minority, you learn that.”
He’s a white man in Silicon Valley, and still Blumberg is a minority.
In addition to being a Trump supporter, the venture capitalist is gay — he has two children with his partner — and Jewish, with a strong faith in God.
Blumberg said his right-wing politics had caused his social circle to shrink since coming out as a Republican, especially in the Bay Area’s liberal bastion, from where even the tech investor Peter Thiel fled after his political leanings came under fire from many in Silicon Valley.
“I don’t think I’ve lost deals” because of politics, Blumberg said. “I know that I’ve lost friends.”
A track record of success
Being an outsider has its pros and cons in the tech industry.
There’s more money than ever pouring into Silicon Valley startups, with venture firms from Palo Alto to Tokyo raising “mega-funds” that could make it difficult for small-time investors to compete for access to the buzziest startups. VCs are figuring out how to differentiate when founders have so many opportunities to raise capital.
Blumberg, whose firm invests in early-stage companies focused on enterprise, fintech, and commerce, believes his unique perspective allows him to spot deals that traditional VCs might miss or pass on.
“I often see things in a dynamic sense, as opposed to static. I like to say, ‘It’s a video, not a photo.’ Technology doesn’t stay the same, and neither do sociodemographics,” Blumberg said. “Today’s investments should be thinking about where things will be five to 10 years out.”
After working as an analyst in Montreal, Blumberg came to San Francisco in 1991 to start Blumberg Capital. He took money from high-net-worth people and family offices and cut nine deals in total, in exchange for a cut of the equity and bonuses.
Those investments saw four companies — “all unicorns for their day,” Blumberg said — go public. He used some of his earnings and leveraged his connections from those deals to seed his first institutional fund at Blumberg Capital. Today, the firm has $514 million under management with over 200 investments to date.
Blumberg Capital was the first investor in Nutanix, an enterprise cloud platform that made legacy infrastructure obsolete when it combined computing, virtualization, and storage into one solution. Nutanix went public in 2016 and has given Blumberg Capital $223 million in returns over the years, according to the firm.
It also led the Series A for DoubleVerify, whose tools let advertisers and publishers verify that their ads are seen and clicked on by real people, rather than bots. It solved a real pain point for brands, and the market rewarded the company for it. The private-equity firm Providence Equity Partners LLC acquired a majority stake in DoubleVerify in 2017.
Blumberg added that his experiences traveling to Israel as a high-school student and studying international relations in college gave him the confidence to place bets outside of Silicon Valley, into which most venture dollars flow. Since launching Blumberg Capital, he’s raised four funds that have backed emerging companies in the US, Europe, and Israel; one in three investments are outside the US.
‘When we came out as Republicans, we got dropped from a lot of cocktail-party lists’
Despite his track record of success, Blumberg has found himself ostracized from the Silicon Valley elite because of his politics.
San Francisco, where Blumberg and his family live, has a well-earned reputation as a strongly Democratic city. Less than 3% of its voting-age population cast ballots for Trump in the 2016 election, according to Curbed SF.
“When we came out as Republicans, we got dropped from a lot of cocktail-party lists,” Blumberg said. “There’s a number of friends who we just don’t see anymore because — we would be happy to see them — but they can’t deal with it. We break the stereotype.”
A proud Democrat through college, Blumberg now falls on the spectrum between conservative and libertarian. He seems to enjoy a lengthy rant about the media and the environmental movement. He also recommends the writings of Jordan Peterson, a Canadian psychology professor and right-wing celebrity who’s been described as “dangerous” for spreading conspiracy theories and “pseudo-facts.”
“Peter Thiel is a friend of mine,” Blumberg said.
In 2017, Blumberg donated $25,000 to America First Action, a super PAC dedicated to electing federal candidates who support the agenda of the Trump administration. Though Blumberg said he voted for the current president, he also made campaign contributions to Sen. Marco Rubio and former Gov. Jeb Bush of Florida, according to a federal campaign-finance database.
When asked to comment on these contributions, Blumberg said in an email, “I try to support candidates who I believe will address the free markets and free-people agenda that is important to me.”
But beyond giving this interview, he doesn’t often share his politics with the public. His staff has advised him to keep his views off Twitter, Blumberg said. It could discourage promising founders and co-investors from affiliating themselves with Blumberg Capital.
The feeling is familiar for Blumberg, who said he came out as gay at 30 years old and continued to keep his personal life private for many years. He wouldn’t go to parties or stay out late at bars with coworkers, he said, because he had trouble engaging in “locker talk.”
“The bro culture didn’t negatively impact me, except, I think, in self-censorship. I think I — and many people like me in those days — wouldn’t fully share their life,” Blumberg said, later adding, “I think that limits the relationships you can have with people.”
There’s a disturbing trend in Silicon Valley
Blumberg is speaking out about his identity now because he worries about the future of a homogeneous tech industry.
“There is a sameness about the Valley that I find troubling,” Blumberg said.
Members of the tech elite, namely Thiel, are starting to leave the Bay Area to escape the self-described groupthink and arrogance of Silicon Valley. Thiel, a libertarian billionaire investor who is also gay, became a social outcast after very publicly supporting Trump’s presidential campaign. In February, he announced he would leave the Bay Area and set up his venture firm and foundation offices in Los Angeles.
Thiel told The New York Times in March that the groupthink happening in Silicon Valley could have serious consequences.
“Network effects are very positive things, but there’s a tipping point where they fall over into the madness of crowds,” he said.
Blumberg agrees. He warned that such groupthink could result in too much venture flowing into the same tech sectors. It creates “too much competition,” he said, and “investors end up paying more for deals because they’re the deals everybody wants.”
“FOMO is alive and well, and many people want to invest in the same things as others and not be left behind,” Blumberg said.
He has no intention of being one of those people.