Palihapitiya Eyes a Political Prize That Eluded Many Rich Peers

(Bloomberg) -- Billionaire venture capitalist Chamath Palihapitiya’s potential bid to unseat California Governor Gavin Newsom would likely face long odds given that the political novice would be pursuing a prize that has eluded many a wealthy Californian.

In a tweet this week, Palihapitiya, a former Facebook Inc. executive and serial blank-check dealmaker, suggested he was backing the effort to recall Newsom and hinted he might like the governor’s mansion for himself. He launched a website, “Chamath for California Governor,” that included a few policy proposals, including a call for cutting all state taxes and raising salaries for public school teachers.

Palihapitiya declined to confirm a bid for governor in a Wednesday interview on CNBC, and didn’t respond to emails seeking additional comment.

Replacing Newsom would require Palihapitiya, chief executive officer of Social Capital, to craft a message with broad appeal and surround himself with political talent to build a statewide campaign. So far he’s called for higher teachers’ pay as well as an end to end student loans, both nods to progressives, while reassuring Newsom’s conservative critics that he won’t raise their taxes.

Palihapitiya, 44, has donated more than $1.3 million to Democratic candidates since 2010. He made one contribution to a Republican: $5,000 to Ted Cruz’s first Texas Senate campaign in 2011.

Mostly, he would need to overcome the track record of other wealthy Californians who sought the California governor’s office with little political experience -- and failed.

The list includes former Hewlett Packard Enterprise Co. Chief Executive Officer Meg Whitman, who spent a reported $144 million on her campaign; former Northwest Airlines Co-Chairman Al Checchi; and businessman William Simon.

“A number of rich people have looked into the mirror one day and decided they wanted to be governor of California. They’ve all fallen flat on their face,” said Garry South, a Democratic consultant and past campaign manager for Newsom.

Celebrities have had more luck. Action-movie star Arnold Schwarzenegger was elected as a Republican after the ouster of Governor Gray Davis, the state’s only successful gubernatorial recall to date. And Ronald Reagan, also an actor, was elected on his way to the White House.

The move to recall Newsom, a 53-year-old Democrat, centers on his management of the Covid-19 pandemic. He’s twice imposed stay-at-home orders and later relaxed them. And some county health officials have complained that the state’s vaccine roll-out has been chaotic, causing California to lag behind many other states in administering the shots.

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Organizers say they’ve gathered about 1.2 million of the required 1.5 million signatures to put a recall measure on the ballot. They acknowledge, however, that they’re short of the 1.9 million or more they may need to account for various disqualifications before submitting to the California Secretary of State by March 17.

Removing Newsom from office may prove difficult, even if a recall measure qualifies for the ballot, if his approval ratings remain strong.

In a survey conducted in November by the nonpartisan Public Policy Institute of California, 58% of California adults said they approved of the way the governor was handling jobs and the economy.

Since November, though, California’s daily Covid-19 cases rose to new, much higher levels, far exceeding the previous peak from summer, and while new infections have fallen sharply this month, average daily deaths are still rising.

A spokesman for the governor has said the recall campaign is a waste of taxpayers’ time and money.

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“Gavin Newsom was the nation’s first governor to take bold action to combat the pandemic,” said Dan Newman, the spokesman. “Californians appreciate his decisive action, and support his current focus on distributing vaccines so we can safely reopen schools and businesses.”

Newsom appeared frustrated at a press conference this week when asked whether his decision Monday to lift the latest stay-at-home order and allow many businesses to reopen was motivated by the recall campaign.

“That’s just complete, utter nonsense,” he said.

Palihapitiya could build a viable campaign if he brings in a seasoned political team and isn’t outflanked by some better-known celebrity candidate, actor or activist, said Cooper Teboe, a Democratic fundraising strategist in Silicon Valley. In the 2003 recall election there were dozens of names on the ballot and Schwarzenegger won on name recognition, Teboe said.

And he has some high-powered friends.

He was scheduled to appear Thursday on Twitch with Representative Alexandria Ocasio-Cortez of New York to talk about Wall Street and GameStop Corp., in which he had invested, although he wasn’t part of the broadcast in the end.

David Sacks, a technology executive who supported Newsom’s 2018 campaign, said on Bloomberg TV Tuesday that he thinks the governor has mismanaged the pandemic and now supports the recall effort. He said he backs Palihapitiya’s possible bid, referring to the investor as a “centrist Democrat.”

Palihapitiya said he’d closed out his position in GameStop and will donate $500,000 in profit from the investment to a group that supports small businesses hurt by the pandemic.

But whether a tech industry billionaire who made much of his fortune at Facebook can woo the state’s overwhelmingly Democratic electorate remains an open question.

When Davis was recalled, California Democrats had an 8.4% edge over Republicans among registered voters. The advantage now is 21.9%.

“I don’t think Newsom is going to get blamed for the whole pandemic as much as Gray Davis was tagged with the electricity crisis in 2003,” said Bill Carrick, a Democratic consultant and longtime adviser to California Senator Dianne Feinstein. “There are too many actors involved in it -- the new president, Dr. Fauci, county health officials. It isn’t all about Gavin.”

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