A New Billionaire Feud in the Valley

SV Angel Co-Founder and Managing Partner Ron Conway
Photo by Steve Jennings/Getty Images
Theodore Schleifer
June 17, 2021

In early May, Ron Conway decided it was high time to hold a little virtual soiree for his longtime friend, Gavin Newsom, who had learned just a week before that he was going to face a recall as the governor of California. Conway, whose inimitable network is legend in the Valley, sent out word to his high-dollar donor pals, and on May 6, about 30 of them—Sean Parker, Reid Hoffman, Marissa Mayer, along with up-and-comers like Tony Xu of DoorDash—piled onto a Zoom to chat with Newsom and his political brain trust, Juan Rodriguez and Sean Clegg.

The event wasn’t technically a fundraiser, but rather an “in-depth briefing on the plan to defeat the Republican recall,” according to the invite I obtained. Newsom made a soft pitch to the crowd. Then Conway came with the hard sell. He was in for an initial commitment of $200,000. Would others match, he asked?

No, said another major donor. Instead, this person insisted that they would throw down $500,000—and asked the fellow Zoomers to match that. The hat was passed around the virtual pews, with some donors volunteering just how deeply they would dig to support their governor. “Hand-to-hand combat is very much within his wheelhouse,” said one person who has watched Conway raise money for Newsom over the last few months. “He is the kind of guy that calls, emails, and texts, and does not take no for an answer.”

This private conclave explains a lot about how the next few months are going to go down in my home state of California, where some titans of the technology industry (David Sacks and Chamath Palihapitiya) are fighting to recall Newsom just as others (the Conway crew and Reed Hastings) are fighting to keep him in office. And while there are very few signs that Newsom is in any real political trouble after his uneven policy response to the pandemic and infamous French Laundry dinner, the process is almost assuredly going to be a spectacle—aided in part by a bored post-Trump national media amid an off-year. And we love spectacles, especially when they reveal how our spectacular billionaire class goes about their business.

Newsom’s billionaire cabal is doubly advantaged thanks to California’s byzantine campaign-finance laws, which are somewhat stacked against the anti-Newsom moneymen—or at least stacked against whomever they want to replace him. Since the recall is technically a “ballot initiative,” Newsom’s campaign is technically a “ballot committee,” which under California law means it can raise checks of unlimited size. So that’s how Hastings, for instance, who just three years ago donated $7 million to keep Newsom out of the statehouse, was able to write a check for $3 million to keep him in it—a contribution that made him the single biggest donor in the campaign. (Some view Hastings’s check as penance, but others wonder whether it’s actually a message to Antonio Villaraigosa, his Democrat of preference in the 2018 primary against Newsom, to stay out of the race this time.)

Sacks and Palihapitiya have a popular podcast on which they have stoked recall fires to their cult-like followings. But politics often comes down to money. And Sacks and Palihapitiya, unlike Hastings, cannot cut a $3 million check directly to a challenger like Caitlyn Jenner. Due to campaign finance laws, they would be capped at an amount about 100 times smaller—$32,400, the state limit for individual candidates.

Independent analysts, like the fastidious researcher Rob Pyers, bet the recallers will be tremendously outspent. Anne Dunsmore, the lead pro-recall fundraiser, expects she’ll spend $8 million to $10 million on the effort, but agrees that her side will lose the money war. Even the Sacks and Palihapitiya families have only donated about $100,000 each, and they haven’t been very involved in fundraising to date beyond their own checks and speaking the good word on their podcast, Dunsmore told me.

It isn’t surprising that big donors are all over this election. But Ron Conway has turned this race into such a flex—explicitly seeking to one-up the podcast buddies who had quite successfully created the impression that the tech industry had turned hostile to Newsom.

So after Sacks and Palihapitiya started volubly attacking Newsom, a pissed Conway and Mark Gorenberg, the celebrated California bundler for John Kerry, recruited 75 boldfaced Silicon Valley names to sign a letter publicly denouncing the movement. And yet it’s a testament to how much the facts have changed even since that March announcement that some of those signers haven’t even bothered to donate to support Newsom. After all, they didn’t have to. “Gavin seems to be out of the frying pan,” as one of them put it. Maybe six months ago, in the throes of the pandemic, the outcome was in doubt.

And so one of the biggest winners of this California story is poised to be Conway himself. In the aftermath of that Newsom not-a-fundraiser-fundraiser, Laurene Powell Jobs emerged with a $200,000 check of her own. Eric Schmidt dropped $100,000. Newsom is secure, yes, but more importantly Conway has reminded us all that he is the consummate insider and political maestro.

I’m hearing that Conway isn’t done with his power plays, either. He has told people about a possible Bay Area fundraiser later this year, like the one he hosted for Newsom-appointed Senator Alex Padilla this spring, perhaps at Conway’s historic 15,500-square foot Villa Belvedere across San Francisco Bay. Now in Newsom’s big-money circles, you’re hearing the dulcet tones of something else when you ask about the recall: an opportunity.

“Sure, being recalled is not what he would want. But once you file for it, he can now run $40 million of positive ads about how great he is rolling into his reelection,” said one Newsom fundraiser. “He’ll get a bunch of huge checks in unlimited amounts and say ‘Happy days are here again.” A sunny point, but one that has a logic to it. Newsom is up again in 2022.

Maybe Newsom can ride the Silicon Valley money train far enough to turn a failed recall effort into an even bigger platform. After all, a decade ago, Scott Walker capitalized on an over-aggressive opposition to win three elections in four years, a brag that successfully carried him to the Republican nomination for president in 2016.