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Silicon Valley VCs are at war with the 'far left radicals' running California

silicon valley supporing recall against newsom 4x3San Francisco Chronicle via Getty Images; Justin Sullivan/Getty; iStock; Steve Jennings/Getty; Kimberly White/Getty; Michael Kovac/Getty; Skye Gould/Insider

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David Sacks was in rare form. The special guest on his podcast had backed out at the last minute, leaving Sacks and his cohosts to ruminate about the decline of San Francisco among themselves.

"Chesa, Mr. District Attorney, you don't have to come on the show, but I will challenge you to a debate," said Sacks, a well-known internet entrepreneur and venture-capital investor, addressing Chesa Boudin, the San Francisco DA whose liberal prison-reform policies have become a lightning rod for criticism.

As Sacks spoke, one of his cohosts — a fellow tech VC — started clucking like a chicken in a schoolyard taunt aimed at the absent guest.

"Any time, any place, any format," Sacks continued. Cluck.

"On your policies in San Francisco." Cluck cluck cluck.

"So if you have the huevos" — cluck — "to engage in debate, I am ready." Cluck cluck cluck. 

The on-air antics are part of the "All-In" podcast, a highly produced (mostly) weekly conversation among Sacks, Chamath Palihapitiya, Jason Calacanis and David Friedberg, four of the most recognizable names in the venture-capital world. During the hourlong show, the four "besties" discuss current events in politics and tech with a mix of indignation and irreverence. They chat, they joke, they spar, and every episode ends with Calacanis telling each of his friends that he loves them. 

It's possibly the single most disruptive clique in California politics this year.

The men are among the most prominent supporters of a spate of recall efforts in California. Gov. Gavin Newsom is expected to fight for his job on the ballot this fall after a challenging year of relatively restrictive COVID-19 lockdown measures. Boudin, the controversial San Francisco DA, and his predecessor George Gascón, now the district attorney of Los Angeles, also face their own recall campaigns locally.

Silicon Valley kingmakers are hardly new in California, where the technology sector mints multimillionaires by the Google bus full. Venture capitalists made large contributions when Gov. Gray Davis was recalled in 2003, and Arnold Schwarzenegger won the job in that special election with financial help from partners at the firms DFJ and Kleiner Perkins. 

But this generation of venture capitalists is contributing more than just cash. They have made themselves the face of the recall efforts, using their own celebrity status within the tech industry to promote their agenda and leveraging the digital-communications tools developed in Silicon Valley — from podcasting to Twitter feeds — to drive the conversation and advocate their politics with gusto.

In the case of the "All-In" crew and some other prominent VC activists, an impulse toward iconoclastic contrarianism and self-assured sermonizing honed on social media has meshed with tech riches to create a potent new political force. Against the backdrops of liberal San Francisco and Los Angeles, the VCs have cast themselves as brave voices taking a stand against corruption and crime enabled by governments run by "far-left radicals."

According to analysis by Insider, venture capitalists accounted for 13% of the $3.3 million Rescue California campaign to recall Newsom and 22% of the total money raised to recall Boudin. Sacks and Palihapitiya are among the top 10 contributors to Rescue California, the Republican-backed effort to unseat Newsom. Sacks is also the second-largest contributor to the Committee Supporting the Recall of District Attorney Chesa Boudin, an effort led by the Republican former San Francisco mayoral candidate Richie Greenberg. 

"I donate my money and my time, and I speak out, because my heart breaks for Hanako Abe's mother, Sheria Musyoka's wife, and all the other victims as they futilely seek justice from this ideologue of a DA, who keeps breaking his oath to protect the public," Sacks tweeted on May 5, referring to the victims of two fatal hit-and-run car crashes, both allegedly committed by intoxicated drivers in stolen vehicles.

  A ballot measure put VCs on the defense

Since 1913, there have been 55 attempts at recalling the governor of California, but only one of those efforts led to a governor leaving office. That campaign, to recall Davis, a Democrat, in 2003, was funded largely by Darrell Issa, a Republican congressman from southern California who made his fortune selling car alarms. 

Issa aspired to replace Davis as governor, and personally contributed around $2 million to the recall effort. But he dropped out before the election once it was clear that Schwarzenegger, the actor turned Republican politician, had a chance of winning. 

Schwarzenegger garnered financial support from a handful of venture capitalist and wealthy techies including Tim Draper and his wife Melissa, and William Hearst, III, then a partner at Kleiner Perkins, but unlike in today's recalls, the Silicon Valley backers hardly made a dent.

Garry Tan and Tim DraperSeb Daly/Web Summit via Getty Images)

"I think the biggest difference was that Schwarzenegger had such an outsized presence in the race that he attracted a much broader base of financial support," said Dan Schnur, a former political strategist and professor of politics at the University of California, Berkeley and the University of Southern California. "There wasn't any particular sector that was especially heavily involved." 

By that point, venture capitalism had been thriving in California for three decades, but the industry wasn't active in politics until 1996, when a powerful (and now disbarred) plaintiffs' lawyer named Bill Lerach proposed a California ballot initiative to make it easier for shareholders to sue companies when share prices head south. 

VCs were particularly vexed because the initiative would have allowed lawyers to go after the personal fortunes of board members, "a nightmare provision" that threatened to scare investors away from the job entirely, Wired's Karen Donovan wrote at the time. 

Schnur said the initiative mobilized investors who had no choice but to defend themselves politically. "After the elections were over, they realized that being involved proactively would be a much smarter way to engage," he said.

The next year, Schnur joined forces with Kleiner Perkins partner John Doerr, a Democrat, and Cisco CEO John Chambers, a Republican, to launch TechNet, a trade association designed to advocate for federal and state policies on behalf of the industry.

The association has since centered its lobbying around causes that are good for business, including the recent effort to overturn Trump Administration restrictions on foreign work visas, and asking Congress to refrain from regulating which circuit boards can be used in products purchased by the Department of Defense.

Sacks and Palihapitiya wrote $100,000 checks

TechNet has not gotten involved in the Newsom recall, leaving anyone in the tech industry with strong feelings on the matter, one way or the other, to take up the cause on their own.

In a sign of how influential techies have become, a separate faction of VCs have come out and rallied to defend Newsom. More than 70 tech leaders, including investors Ron Conway, Reid Hoffman and Jessica Livingston, signed a letter in late March announcing their support for Newsom and warning that a recall election could set the state back on its fight against the coronavirus.

"A well-funded, politically motivated recall effort against Governor Gavin Newsom threatens to roll back our growing progress," reads the letter, which was published by Politico Pro. "We hope you'll agree now is the ABSOLUTE WRONG TIME to recall the Governor..."

The coalition against Newsom is smaller but louder. The seventh largest backer of the main committee is Palihapitiya, who personally contributed $100,000 and publicly weighed running to replace Newsom in January. His campaign website went viral before he demurred a few days later, and recommitted himself fully to his investment career.

Sacks and his wife Jacqueline contributed almost that much, as did Sequoia Capital partner Doug Leone and his wife Patricia, and ECM founding partner Dixon Doll and his wife Carol. GOAT Capital founder Justin Kan contributed $20,000, and the Blanton family, who run the Dallas, Texas-based Colt Ventures, contributed $16,000.

CEO of Zenefits David SacksSteve Jennings / Stringer / Getty Images

Contributions to specific gubernatorial candidates are capped at $32,400, but there aren't restrictions on how much money an individual can contribute to a broad initiative to recall a governor.

"Increasingly everything in campaign finance law is moving to a world without limits, just disclosure," said Jessica Levinson, a professor at Loyola Law School and expert in campaign finance. This means that anyone with a lot of money to spend has the opportunity to have influence in a recall or ballot measure, Levinson said. 

"Particularly when it's likely to be a low turnout election, the money can make a big difference because people are only looking at one or two ads. They're not flooded by looking at a lot of other candidates and a lot of other proposals," Levinson said. 

Anne Dunsmore, the campaign manager for Rescue California, is skeptical of the idea that tech investors have had an outsized influence on her campaign. She's raised over $3 million from 22,000 contributors, she said. 

In her eyes Newsom's fate lies in the hands of constituencies like teachers and California's Hispanic communities. If anything, she sees the tech money as a sign of bipartisan support for her cause. 

"That's supposed to be Gavin territory, so when people break like that it's newsworthy," Dunsmore said.

Venture capitalists are going direct

The Newsom recall was just starting to gain traction when Palihapitiya sent a tweet to his 1.5 million followers that briefly took over the election news cycle. 

"It's on," Palihapitiya wrote with a link to a makeshift campaign website, ChamathForCA.com. 

Running for governor is a time tested tradition for attention-hungry celebrities and activists in California, where it takes just $3,916.12, or alternately 7,000 signatures, to get added to the ballot as a recall candidate for a special election. The last recall included names like former child actor Gary Coleman and former porn star Mary Carey, among a list of 135 candidates. 

There was even a VC in the running in 2003 — Ask.com founder and Alta Partners investor Garrett Gruener, who spent more than $1 million of his own fortune on a campaign that reached voters through paid TV and internet advertisements. One month before the election, Gruener's campaign had bought a total of 12.5 million digital ads, his campaign told the San Francisco Chronicle.

Chamath PalihapitiyaREUTERS/Brendan McDermid

Today's VC influencers get that kind of attention for free. 

Palihapitiya hadn't even filed any paperwork when speculation about his candidacy made headlines, bringing the Newsom recall campaign front and center for a business audience that might not otherwise pay attention to state politics. 

He continued causing a stir until a week later when he once again took to his personal channels and told his co-hosts on the "All-In" podcast that he wasn't going to run for office.

"Let's be really honest, I am not ready to do any of that," he told his friends. 

Palihapitiya is hardly the only VC to use a direct relationship with his audience to advocate for causes he believes in.  Founders Fund investor Keith Rabois has turned his personal Twitter account into a one-man tourism board campaign to draw founders to the city of Miami. Cryptocurrency investor Anthony Pompliano advocates for bitcoin over YouTube and a daily email newsletter that he claims reaches 150,000 investors. 

Increasingly VC firms like Greylock and Andreessen Horowitz eschew traditional media, instead managing their brands and promoting their investment portfolios with blog posts and podcasts that enable them to keep a firm grip on the narrative, an approach known simply as "going direct."

Part of going direct means espousing an antagonism towards traditional news media. When Insider reached out to Sacks for comment on this story, the VC responded by publishing the questions on Twitter and alleging that a "hit piece" was in the works. The queries about his funding and involvement in the California recall efforts — lauded by some of his Twitter followers as having "skin in the game" — were evidence that Insider journalists are "unwitting shills," Sacks wrote.

Going direct also means the lines are easily blurred between areas in which investors have influence because they are experts — as might be the case with scaling a startup or selling enterprise software — and areas where they have influence because they have large platforms.

The significance of this change became clear on a Thursday evening in January, when a group of tech VCs and entrepreneurs, including early-Uber and Postmates investor Cyan Banister and Founders Fund partner Brian Singerman, gathered on the popular, invite-only audio app Clubhouse to discuss the future of San Francisco.

The discussion, led by Life School founder Michelle Tandler and Founders Fund Vice President Mike Solana, quickly turned to crime in the city, and consensus grew among speakers that Boudin was the man responsible.

Suddenly Boudin, who had been tipped off to the conversation by a friend, appeared in the chat room and spent the next hour sparring with some of the participants and defending his policies to the group of techies.

San Francisco's fight over Boudin is personal

The fight to unseat Boudin is smaller and more personal than what's happening with Newsom.

Boudin, the son of Weather Underground members convicted of murder when he was still an infant, was elected by a slim margin in November 2019 on the promise of restorative justice and ending mass incarceration. His biggest financial supporters include Instagram cofounder Mike Krieger and his wife Kaitlyn.

But the DA has come under intense scrutiny following the New Years Eve deaths of two women who were hit by an intoxicated driver in San Francisco's South of Market neighborhood. The suspect, Troy McAlister, was on parole for robbery at the time of the crash. Police alleged that he was driving a car stolen from a woman he was on a date with outside of San Francisco a few days earlier. 

Critics say Boudin was responsible for the deaths after his office failed to prosecute McAlister, who had been arrested for multiple non-violent crimes in the months leading up to the December crash.

The issue took on new life a few days later when "All-In" cohost Calacanis launched a Go-Fund Me to pay an investigative journalist to exclusively cover Boudin's office. Though Calacanis only donated $500 himself, the campaign has raised almost $59,000 from nearly 500 donors, including $10,000 from Banister, the tech investor who was on the Clubhouse chat in January.

In December, Banister's 9-year-old son was at her house in the city when it was burglarized, she told the local TV news channel ABC 7. After being caught on camera stealing $30,000 in items, the burglar returned to Banister's house, where he confessed and apologized. The man told Banister that he wanted to find everything he had taken, and promised to return, but when he didn't come back, she called the police.

Soon after, Banister started tweeting about recalling Boudin. She changed her display name to "Recall 欺善暴丁" – Chinese characters chosen for their similarity to Boudin's name when said out loud, and a response to violence against Asian elders that gripped the Bay Area in the wake of the coronavirus. Translated into English, the characters read "Deceive."

"If Chesa Boudin wants to keep his position, he can start caring about victims of crimes," Banister tweeted on April 2. "Innocent law abiding citizens deserve justice. He doesn't say anything that makes us felt heard, just more skewed stats and lobbing insults at us." 

cyan bannister founders fundKimberly White/Getty Images

Greenberg, the organizer of the leading effort to recall Boudin, reached out to Banister after hearing about her burglary. As of April, the campaign has raised around $180,000, including a $25,000 donation from Sacks and $5,000 from Banister. 

Banister said she opted against making a larger donation because she doesn't think it's wise to be the sole donor to a cause. She's waiting to see whether another Boudin recall committee gains more traction before deciding where to focus her resources.

"It's a marketplace and we've got to see what other donors think too," Banister told Insider.

A second committee, San Franciscans for Public Safety, has raised around $15,000, including $10,000 from Initialized Capital investor Garry Tan.

"This is simply yet another power grab by a group that hasn't been able to win elections so will target any public official in California with the threat of recall to get their way," said Julie Edwards, a spokesperson for Boudin's camp.

Sacks sought out Greenberg's anti-Boudin campaign on his own, leading to the single largest donation at the time.

"I didn't solicit him at all," Greenberg said. "He came to us, and I gladly accepted."

Since then, Wall Street has also entered the fight. Now Greenberg's largest contributor is Daniel O'Keefe, a Chicago-based public markets investor at Artisan Partners, who wrote a check for $50,000. 

Around 15,000 people have since signed a petition to get a Boudin recall on the ballot, but the committees still have a long way to go. They must collect more than 51,000 valid signatures from San Francisco voters before August 11 to launch a special election.

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