“Too Quiet for Comfort”: Did Silicon Valley Botch the Recall?

Photo by Brian Ach/Getty Images for TechCrunch
Chamath Palihapitiya at TechCrunch Disrupt 2013
Theodore Schleifer
September 2, 2021

When I last wrote about the rift in Silicon Valley over recalling Gavin Newsom, I predicted that the campaign would be a frivolous late-summer distraction, enabled by the toxic cocktail of a bored post-Trump media, a healthy dose of G.O.P. hubris, and the occasionally irresistible instinct of the Republic of California to lurch for the recall button. So let me begin this column with a big-hearted, old-fashioned, Mark Zuckerberg-style mea culpa: I promise to do better, Senator.

Back in June, Newsom seemed safe and secure, denying voters and donors much of a reason to worry about the race. But the calculus has since changed. The Delta variant has unleashed new waves of infection and misery, a charismatic challenger has emerged, and the Newsom campaign has been decidedly uninspiring. Some polling has Newsom sitting prettier than others, but Silicon Valley is belatedly nervous that the golden boy of San Francisco could be replaced by a Los Angeles shock jock, Larry Elder, bringing full blown Trumpism to California.

Over the last few days, I’ve been talking and texting with about 15 fundraisers and donors across the tech industry, and almost all of them agreed that Silicon Valley heavyweights have underinvested in this race—perhaps to Newsom’s peril. “Completely disengaged,” as one tech leader active in Democratic politics described it. The truth is that Newsom was never as beloved among the ascendant tech set as Kamala Harris, or even Pete Buttigieg. Now, as Elder consolidates Republican support, many of those same donors are downright angry at Newsom for letting the recall get to this point in the first place. And yet, for all of Silicon Valley’s newfound political energy in the post-Trump era, their response has been strangely muted.


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The industry may come to regret their disinterest. The investing giant Ron Conway had attempted to rally Silicon Valley behind Newsom in March, convening 75 of his fellow tech elites to publicly denounce the recall effort. Yet as of this week, only 15 of them ultimately donated to the cause. Public records show nada from letter signatories like founders Reid Hoffman of LinkedIn, or Paul Graham of Y Combinator, or Mike Krieger of Instagram“From the donor perspective, I’m getting ‘Wow, it’s a lot closer than we thought it would be,’” one donor-adviser told me, “but nobody that I know is rushing to fund him.”

Conway, I hear, has been relentlessly browbeating and emailing his network to hunt down checks, to say nothing of the emergency Zoom he organized for Newsom and his donor network in May. But absent Conway, my sources witness no real effort by other Silicon Valley heavyweights to marshal their resources. Half of the $6 million or so that has come from the tech industry to defeat the recall has hailed from a single donor. As one former aide to Newsom put it to me: “It does seem too quiet for comfort.”

In theory, Conway’s co-pilot in the tech fundraising cockpit has been Netflix co-C.E.O. Reed Hastings, who gave $3 million to the governor’s effort, a sum that until recently made him Newsom’s single biggest donor. But even Hastings is not doing all he could: He’s not whipping other donors privately, or pressing the case publicly. (He declined my interview offer to do just that.)

To some extent, that’s because Hastings, unlike many other power brokers I cover, is mostly a single-issue voter—he cares primarily about expanding access to charter schools, so much so that he’s building a luxury retreat in Colorado for like-minded activists. Hastings, in the words of one Democrat who has raised money from him, is “not as connected as much with the Silicon Valley types as I thought.” His $3 million check also represents less than half the amount he spent on a group backing Newsom’s Democratic rival, Antonio Villagroisa, in 2018.

That group absolutely torched Newsom, and the governor hasn’t forgotten it. And so the recall has offered Hastings the chance to make amends. That’s true for Conway, too, who was known to have a once frosty relationship with Newsom when he was mayor of San Francisco. Now, as tech-bundler-in-chief for the governor, Conway has a bid at penance.


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But where is everyone else? Many tech leaders who took a pass tell me their priorities are simply elsewhere. Part of the industry’s apathy derives from a belief, now outdated, that Newsom had this in the bag, or at least that the Reeds and Rons of the world had this taken care of. Part of it is donor exhaustion after four years of fighting Trump tooth-and-nail. And then there is the unspoken truth: The pro-recall faction, led by venture capitalists Chamath Palihapitiya and David Sacks, never spoke for a majority of the tech industry. But many Newsom supporters also acknowledge, in candid moments, that the enthusiasm is just not there.

“Seeing other folks at $50,000 or $100,000 is a fucking joke,” one Democratic bundler fumed, forecasting what might happen if California’s 88-year-old senator died and Elder got to appoint her replacement. “This is the governor of your state. This is the governor of the biggest state in the country, holding in his pocket Dianne Feinstein’s Senate seat. This is the whole enchilada.”

There’s also anger in some corners that Newsom allowed this race to become competitive at all, with some donors privately voicing “frustration that we have to spend money on this,” one advisor to major Bay Area contributors told me. “It’s really hard for people to be super excited about Gavin,” one of the tech leaders who signed the Conway letter sighed, recalling with chagrin Newsom’s ill-fated, unmasked trip to the French Laundry. “You know that within your company there’s large pools of people who are just mad in general,” this person added, while “the people who might agree with you are lukewarm or milquetoast.” So if you come out against the recall, “you’re not going to get a whole lot of pats on the back.”

A prime example of this blasé sentiment arose during the fundraising Zoom that Conway organized with Newsom back in May. As I reported at the time, several tech donors dramatically attempted to one-up each other by unveiling their financial pledges before the governor. But what I didn’t know, until another person on the call told me later, was that the donors also seized the opportunity to vent their personal grievances to Newsom about everything from school closures to homelessness. Even the people who were the governor’s biggest financial supporters wanted to lodge their parochial complaints. When the call ended, this person recalled thinking, “This is going to be hard for him.”


Newsom isn’t short on cash, to be sure. Led by San Francisco fundraising chief Stefanie Roumeliotes, Newsom and his committees have raised almost $70 million, or three times as much as all of his Republican challengers combined. He’s slated to spend at least $6 million on television and radio ads over the final two weeks of the recall battle. A large percentage of Newsom’s war chest comes from organized labor groups, which have ponied up about $23 million—almost quadruple what the tech industry has delivered—so Newsom’s fate isn’t attributable to Silicon Valley alone. But the former mayor of Boomtown has always enjoyed a social affinity, if not political alignment, with elite families like the Gettys and the Swigs, or the whiz kids like Napster founder Sean Parker, who invited Newsom to his legendary fantasy wedding. Newsom himself has directly petitioned some tech billionaires for donations in one-on-one chats, I’m told, telling one contributor that the race was going to be “closer than anyone thought” and that he needed the donor to step up.


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Whether these eleventh hour entreaties make a difference remains to be seen. I was intrigued to see that Zuckerberg’s wife and the co-head of the Chan Zuckerberg Initiative, Priscilla Chan, who has never before made a major political donation in her own name, made a late contribution of $750,000 to Newsom. But there are diminishing returns to more television ads, even in an expensive media market like California. And Newsom already has a massive financial advantage over the pro-recall forces. Would the election be that much different if Hastings added another zero to his checks? Some donors who raised money for Newsom in 2018 told me with some amazement that they hadn’t been approached this time. “Their issue right now is not money,” said one person who talks regularly with the Newsom team.

But you know that Newsom’s troubles run deep because the blame game has already begun. My notebook is full of friendly fire among Democrats for not doing more, and recriminations toward conservative tech leaders for allowing Elder to rise to the top of the polls. One agitated Democrat expressed exasperation with Palihapitiya, who misled some people into thinking he was running himself, and with Sacks, who stoked the recall fires without a viable alternative on the ballot. “I think even David Sacks will not want to be known as a Larry Elder Republican,” this Democrat argued. “As one of the most followed guys on Twitter beating the drum on the recall, if we get Larry Elder, Chamath co-owns that outcome … The fact that they’re not trying to influence who the pick is is one of the greatest pieces of evidence of the nihilism of these contrarians that I’ve ever seen.” (Palihapitiya declined to comment. Sacks, who dropped another $50,000 on the pro-recall effort on Thursday, said he didn’t care to respond to “anonymous potshots.”)

Will the anti-Trump moneytrain arrive as an Elder governorship creeps closer to reality? Hastings could add another $3 million tomorrow if he really wanted to. There’s no doubt that the stakes, and the potential return on investment, are enormously high. Some of the pro-Newsom tech leaders I spoke to over the last week are convinced that their guy will lose, despite his moderate lead in the polls. Some of those same people also haven’t donated a nickel, which is a neat snapshot of the Silicon Valley zeitgeist this summer.

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