87+88 = A Review of SV-Backed California Initiatives

When you do an overview of Silicon Valley's involvement in California statewide ballot initiatives past and present, you start with with the VC firm on top of Sand Hill Road.  Kleiner Perkins Caufield & Byers has not only helped launch dozens of the tech industry's most successful companies, the firm is, at most, only one degree of separation from a vast majority of the top tech policy efforts.

One partner, one former partner and one beneficiary of early KP funding are key players behind two of the 13 initiatives on the California November ballot this year.

Mary Anne-Ostrom of the Mercury News looked at this over the weekend from Sacramento...

Two of the boldest electoral initiatives yet to emerge from valley interests will be on November's ballot: NetFlix founder and CEO Reed Hastings and Kleiner Perkins venture capitalist John Doerr are backing Proposition 88, an unprecedented statewide real estate parcel tax to benefit education; and Vinod Khosla, another Kleiner partner, is behind Proposition 87, a first-ever royalty on oil pumped from California to fund alternative energy ventures.

We've covered former Vinod Khosla's Clean Alternative Energy Act here. (BTW, he's now an "affiliated partner" of Kleiner and runs Khosla Ventures).  It's his first initiative, but the Merc notes that Doerr and Hastings have been down this road before and provides a Valley scorecard on statewide ballot efforts...(plus, our look back after the jump)...

Since 1996, when valley tech leaders and trial lawyers waged fierce battles over lawsuit reforms, each election year has featured at least one ballot measure that grew from the efforts of valley high-tech leaders, with the exception of 2002 and special elections. The scorecard: three wins, six losses.

Of the nine initiatives pursued by valley leaders since 1996, the key backers have spent at least $50 million of their own money. Hastings and Doerr and his family, frustrated by the slow pace of school reforms, have combined to spend about $25 million on initiatives. November's proposed parcel tax marks the third time the pair has committed several million dollars each to an education-funding measure.

Interesting.  Let's see if we can break this down and expand on it a bit....

1996

Proposition 201 (March).  Silicon Valley vs. Runaway Shareholder Litigation Suits.  Hard to believe that this was more than 10 years ago.  I (Sean Garrett) did press for it and two other legal reform initiatives that were (in retrospect, unwisely) conjoined to it in a odd liberal/conservative alliance.  Still, it was fun chasing tech industry arch enemy and shareholder litigation specialist Bill Lerach around the state with an ambulance and a guy in a shark suit (plus it got me on the TechNet ground floor).  Intuit co-founder Tom Proulx led the fight for 201 and gained scattered ad hoc support from Silicon Valley -- mostly because Lerach pledged to hit back with a counter initiative on the fall ballot and the Valley absolutely couldn't afford to lose that one.  Plus, most knew that 201 was never winnable.

Result:  Loss.  It went down 41% to 59%.

Proposition 200 (March).   This only gets lumped into "tech initiative" counts because it was tied to Prop 201 in the "Tough 200" package.  200 was about no-fault auto-insurance and was pushed by the quasi-liberal camp in the unholy alliance.  Not exactly a pressing Silicon Valley issue.

Result:  Loss (35% to 65%)

Proposition 202 (March).  The simplest of the three 200s.  It limited contingency fees of class action lawyer and would have probably have won if it stood alone.  It didn't.  Tech industry was (and is) at least philosophically behind the concept, but didn't organize around this initiative in any significant way.  More traditional and established business interests were the primary support.

Result:  Loss (49% to 51%)

Proposition 211 (November).  The fight against the Lerach initiative was simply the most important event in industry tech policy organization and collaboration to date.  This battle got John Doerr, John Chambers, Jim Barksdale, KP's Floyd Kvamme, former HP CEO John Young and others to agree to found and support TechNet so Silicon Valley would have a national vehicle to organize around key issues in a focused, proactive way.   CNET covered the launch of TechNet here.  Much more then spurring TechNet, the initiative got industry leaders involved and engaged in tech policy on both a personal, committed level and from a corporate organizational standpoint.  The initiative launched the careers of quite a few government affairs folks.

Result:  Win  211 lost by nearly 50 percentage points (26% to 74%).  The big defeat helped create momentum to pass federal uniform standards for shareholder suits in congress.

1998

Proposition 227 (June).  This successful initiative required that all public school instruction be taught in English.  The Silicon Valley connection was that it was driven by Ron Unz -- who had previously failed to win the Republican gubernatorial nomination 1994 and who had made millions in the pre-dotcom days running a financial services analytics company on Wall Street.  Living in Palo Alto in 1998 enabled Unz to be lumped into the hot and trendy Silicon Valley multimillionaire club.  Still, this was far from an "industry" initiative.

Result:  Win  (61% to 39%)

Proposition X (aka AB 544).  TechNet backed an initiative to start a statewide charter school program in early 1998 and then backed off putting it on the ballot when the group was able to successfully forge a bipartisan compromise in the California legislature.  The Chronicle commented at the time...

One of the key turning points (for the legislation) was a conference call between the top Democratic leadership and key TechNet figures, including co-chairmen John Doerr and Brook Byers.

The call convinced the Democrats that this group of business executives was genuinely interested in enacting legislation -- that they had a nonpartisan interest in education and that they would be willing to lobby and, more important, make compromises to get their bill passed...

The charter schools success comes at a point in TechNet's political evolution when it has begun to attract open criticism from Right Coast insiders, most notably a New York Times columnist dubbing the industry ``techno-nothings.''

The members of TechNet, as individuals, have poured money into politics, spending what is estimated to be as much as $10 million in donations to candidates, officeholders and the national political parties.

The group has led everyone into the pool of hands-on politics, holding dozens of meetings in Silicon Valley, Washington and Sacramento with the top political officials of the day.

Result:  Win, Win.  Legislation got passed without an expensive initiative fight.

2000

Proposition 26 (March).  If it passed, it would have allowed localities to pass school bond measures with a majority vote instead of a two-thirds vote.  It narrowly failed.  It teamed-up Democrats Hastings and Doerr, Republican John Chambers and others on an initiative that was sponsored by the teachers union. It received enough support to raise $23 million, but added energy and effort was seemingly reserved by the Valley for the fall's Proposition 39 that would require a 55% vote to pass a school bond.

Result:  Loss  (49% to 51%)

Proposition 39 (November).  As noted, this was the second try on Prop 26 but with a 55% standard.  It won.  With broad TechNet membership support, the initiative's backing was Prop 211-esque.  CNET noted at after its victory...

Campaign co-chairman, state board of education member and NetFlix chief executive Reed Hastings said the campaign spent $31 million in its drive to pass the initiative.

Doerr had campaigned hard for the measure, racking up a roster of endorsements that read like a directory of California's high-tech companies and executives. In addition to Doerr's co-chairman, Cisco Systems chief executive John Chambers, Proposition 39 supporters included Adobe Systems, Advanced Micro Devices, Autodesk, Broadcom, Chase Hambrecht & Quist, Hewlett-Packard, Intel, National Semiconductor, Novell, Qualcomm, 3Com, the Silicon Valley Manufacturing Group, the Software and Information Industry Association, Barksdale Group partner and former Netscape chief executive James Barksdale, Handspring chief executive Donna Dubinsky, and Marimba chairwoman Kim Polese.

Doerr put in more than $6 million into this campaign.  Hastings gave more $1 million.

Result:  Win (53% to 47%)

Proposition 38. (November) Like the Unz initiative, this was pretty much a one man show.  Though, in this case, the proponent, VC Tim Draper, is a true Valley insider.  Draper is from the libertarian side of the SV spectrum and put in more than $23 million of his own money to the measure that would have provided a state scholarship of at least $4,000 per child to families who opted to send their children to private schools.  TechNet didn't take a position on the initiative and Hastings was openly opposed to it.

Result:  Loss (29% to 71%)

2004

Proposition 71.  (November) With its  victory, the Stem Cell Research initiative established the California Institute for Regenerative Medicine and will be providing it with an average of $295 million per year for a decade.  John Doerr and his wife gave nearly $4 million of the roughly $25 million raised.

Result:  Win (59% to 41%)

Breaking out the scorecard in other ways, we find:

• When the tech industry really unifies around an initiative, they are two for two (211 and 39).  Three for three if you can count the charter school legislation.

• Individual efforts that had only pockets of Valley support were one for two (227 won, 38 lost)

• Including the charter school effort, the Doerr/Hastings team are two for three on education battles.

What does this all mean for 87 and 88 this fall?  That that the more unanimity that Kleiner-connected crew can muster within the Valley will make a difference. 

It's always easier to defeat an initiative than pass one -- especially when taxes (of any form) are concerned, so the proponents will need a lot of said muster.

We couldn't find any polling data on the education parcel tax initiative, but we did see this from a very recent survey of Californians on the environment by the Public Policy Institute of California....

When read the ballot title and a partial summary, 61 percent of likely voters say they would vote yes on Proposition 87, 23 percent would vote no, and 16 percent are undecided. More than six in 10 Democrats (67%) and independents (63%) and a bare majority of Republicans (51%) favor this initiative. Majorities of likely voters support this measure across the state’s major regions (San Francisco Bay Area, 66%; Inland Empire, 64%; Los Angeles, 61%; Orange/San Diego, 59%; Central Valley, 55%). Latinos (66%) are more likely than whites (60%) to say they would vote yes on Proposition 87. There are few differences across education, gender, or income groups, however, support for Proposition 87 declines with age (ages 18 to 34, 71%; 35 to 54, 62%; 55 and older, 57%).

That's a good start, but the oil companies haven't started spending their money yet and they have already out-raised the supporters by two to one -- despite nearly $2 million from Doerr and Khosla together for the Yes of 87 side.

One of the chief hurdles for any proponent of an initiative on this fall's ballot is that self-styled taxpayer advocacy groups are already suggesting that voters may well vote no on all of them.  That is a risk for 87 and 88, but, more often than not observers are pleasantly surprised by the average voter's ability to discern between initiatives.  We also find it impossible to ever bet against John Doerr -- who embodies Silicon Valley optimism at its best.

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