[BfB(oG)] omygawd: "Politics is the Bargain of the Century"

[Jim Buell]

Egads, Biff. The new turks of $ilicon Valley just have no respect for old 
monaay.

(Would somebody please tell me this piece I just found in the Times is a 
satire?)

http://www.nytimes.com/library/magazine/home/20000813mag-dotcom.html
---------------------------------
The Nasdaq-ing of Capitol Hill

         Think big money rules politics? Wait until the new dot-com lobby
         makes good on its plan to hand out stock options as campaign
         donations. By SARA MILES Photograph by JIM GOLDBERG


             M ost of the
              Democrats
              gathering
         this week in Los
         Angeles for their
         national convention
         don't know yet who
         John Witchel is. But
         he and his friends
         are planning to
         crash the
         Democrats' party
         with a
         straightforward
         message: they
         want in. "We
         already drive every
         significant sector of
         the economy,"
         Witchel says. "The keys to the kingdom are squarely in our hands.
         I'm here to say there's a next generation of Internet executives, and
         we're ready to become national political players."

         John Witchel is a big, driven man, a former Stanford jock with a
         booming voice. At 32, he is running his third successful company,
         the San Francisco-based Red Gorilla, while serving on the boards
         of seven other Internet start-ups. But Witchel's current obsession is
         not business but politics -- an arena he feels is ripe for the 
attention
         of entrepreneurs. "Priced today," he says, sounding slightly
         surprised by his discovery, "politics is the bargain of the 
century. For
         $10 million you could do anything."

         Not that Witchel is interested in buying politicians. What he wants,
         simply, is to be a political somebody, "one of a small handful of
         trusted people," as he puts it, "who can be helpful when needed." So
         Witchel has just helped start a new enterprise, PAC.com, a political
         action committee aimed at centrist Democrats. Along with Witchel,
         the main organizers include his Red Gorilla colleague Wade
         Randlett, Tim Newell of E*Offering, Joe Kraus of Excite at home,
         Chris Larsen of E-Loan and E. David Ellington of NetNoir. While
         these power brokers lack the star power of Hollywood, they have an
         even more glamorous currency that they plan to start handing out:
         equity.

         For starters, PAC.com's 20 members will each contribute $1,000 a
         month in plain old cash to politicians who meet with them for dinner
         and conversation. (This year, they're focusing on Congress, where
         a small group has more "leverage," and not on the presidential
         race.) That's the traditional part; what's new is that members will
         also give stock in their pre-I.P.O. or newly public companies to
         PAC.com to put into a kitty and disburse over time. "We can cash it
         out and give it to a politician," explains Randlett, "and say 
here's five
         grand. Or we can say here's $5,000 worth of shares; you hang on to
         it and see where it goes."

                           This kind of equity could have vast
                           implications for the world of politics. If
                           Joe Kraus of Excite, for example, had
                           contributed just $1,000 worth of stock to
                           a senator right when the company went
                           public in April 1996, three years later,
         even after some scary losses and plunges, that senator would have
         had $15,992 to spend on campaigning.

         It's a pretty tempting proposition, though even tech-friendly
         politicians express reservations. Representative Adam Smith, a
         Democrat from Washington and the campaign chairman for the
         New Democrat Network, which has worked hard to forge links to
         high tech, believes that few candidates will be willing to play the
         market with their campaign budgets. After all, the stock could just as
         easily be eToys as Excite.

         Smith does believe, however, that the identification with PAC.com
         and its pool of stock might "help brand candidates a little bit 
further"
         by linking them to the New Economy. Senator Patrick Leahy of
         Vermont doesn't accept money from PAC's himself, but he, too,
         sees the appeal of the idea. "I think it's an intriguing way for young
         dot-com people to participate," says Leahy, who has long
         championed Internet issues. "It makes sense to them. As far as
         ethics, the bottom line is, whenever you take any donation, it's
         reported, it's public knowledge. Whether you take cash from or
         stock in Polluters-R"-Us.com, if you're voting against an
         environmental issue, the public will know."

         If politicians are cautious, campaign-finance
         reformers have already made up their minds.
         "A sweetheart deal in pre-I.P.O. stock has a
         back-room stench to it, even if it's legal,"
         charges E. Joshua Rosenkranz, president of
         the Brennan Center for Justice at the New York
         University School of Law, which has been
         studying campaign finance. "If you believe
         contribution limits mean anything, then making
         a contribution that explodes in value within a
         few days is a blatant subversion of them."

         Ronald Turovsky, a partner at Manatt, Phelps &
         Phillips in Los Angeles and the election-law
         specialist who is advising PAC.com, sounds
         unconcerned, however, and asserts that he
         has "no doubt" that it's appropriate for
         politicians to receive stocks. "There's nothing
         in the F.E.C. regulations or statutes that would prohibit it," he 
says.
         In fact, in correspondence with PAC.com, officials at the Federal
         Elections Commission affirmed the plan to give out stock.

         While PAC.com is a small, start-up operation, it is undoubtedly what
         its founders like to call, in Internet jargon, "scalable": other PAC's
         and individuals from around the country can borrow the idea and
         take it where they want to. For better or worse, the world of
         campaign finance is likely to change. Like so much else in American
         culture, politics will be pulled even further into the orbit of 
the stock
         market and the Internet economy. And along with it, the influence of
         men like John Witchel stands to grow.

              W hen Microsoft first got into trouble with the justice
               department, the established tech companies, who used to
               keep their distance from national politics, swiftly beefed up
         their lobbying operations and began playing the Washington game.
         PAC.com, however, represents a different trend; its members have
         little patience for doing government affairs by the book and tend to
         see the big computer companies as hopelessly old-fashioned. "The
         C.E.O.'s who ruled Silicon Valley five years ago are middle-aged
         and corporate," Witchel says disdainfully. "Our guys are in their 20's
         and 30's. They have 25 employees. They don't have lobbyists. They
         don't go to Business Roundtable meetings."

         Witchel and his allies don't even look like traditional Silicon Valley
         types; they're more frat boy than geek. At 40, Tim Newell calls
         himself "the old man" of the group; a husky Vermonter, he towers
         over most Internet executives like a football player among
         chess-club nerds. Newell, a former White House aide turned
         investment banker, runs E*Offering, which enables individuals to
         invest in I.P.O.'s online. Joe Kraus, a founder of Excite, is a 
goateed
         29-year-old; his company, begun in a burrito shop during his senior
         year at Stanford, had a market value early this month of $5 billion.
         David Ellington, the cigar-smoking, 40-year-old C.E.O. of NetNoir,
         runs the Web's leading black-oriented site. Chris Larsen, 39, a
         windsurfing enthusiast, is the founder and C.E.O. of E-Loan, an
         online lending service whose original interface he programmed
         himself. Wade Randlett, 35, who favors tailor-made suits, was a
         Democratic political consultant who helped found Silicon Valley's
         first PAC, the Technology Network, in 1997 -- hands-down the
         single person who defined high-tech fund-raising," says Newell.

         "We're like NASA was in the 60's," claims David Ellington. "Then,
         everyone wanted to hang out with the astronauts. Now everyone
         wants to be down with the future."

             hese self-styled "Astronauts" are largely Democrats. They
             made their fortunes on Bill Clinton's watch and became
             natural allies of his centrist, pro-trade, "New Democrat"
         agenda. Of course, plenty of Internet entrepreneurs remain
         Republicans; George Bush has raised millions in Silicon Valley, and
         Republican congressmen like J.C. Watts of Oklahoma have made
         pilgrimages there to court high-tech supporters. But Witchel and his
         fellow PAC.com members share a Northern California ethos that
         makes them culturally out of tune with traditional Republican values.
         PAC.commers say they care about choice and the environment.
         They don't want the Ten Commandments posted in schools. They
         love making money and are perfectly comfortable doing it alongside
         homosexuals and foreigners. What they see in Gore and the New
         Democrats are politicians who will not only respect their style but
         who will also make sure that their industry stays as unregulated,
         un-unionized and untaxed as possible.

                         Already, PAC.com has established what
                         Randlett calls "a strategic co-marketing
                         agreement" with the New Democrat
                         Network, a group of pro-business Capitol
                         Hill Democrats who borrow freely from the
                         metaphors and values of the New
                         Economy in their quest to modernize their
                         party and wean it away from the labor
                         unions and old-line liberals. In just four
                         years, billing itself as "a venture capital
                         fund for the Democratic Party," the group
                         has become the largest caucus in the
                         House, with 65 members. It now has 14
         New Democrat Senators as well, and it runs its own PAC and
         recruits, promotes and finances promising centrist candidates.
         Simon Rosenberg, 35, the president and founder of the New
         Democrat Network, has made alliances with Silicon Valley a central
         part of his political strategy from the beginning. Rosenberg
         recognizes that Internet entrepreneurs need politicians, as Newell
         says, in order "to be in the conversation." They want access,
         relationships and connections in Washington.

         There are plenty of issues on the table in Washington right now -
         Internet taxation, privacy regulations, export controls, visas for
         high-tech immigrant workers -- that Witchel and his group might
         want to weigh in on. But the PAC.commers insist that they're less
         interested in short-term lobbying for a specific agenda than in
         building networks of influence. "Look at where the great power
         bases of the world are," argues Witchel. "One is in venture capital.
         Another is in Washington, D.C. Just as I spend an enormous
         amount of time getting to know investment bankers before I actually
         need their money, I do the same with politicians."

         Behind Witchel's approach is a firm belief that Internet businesses
         are models for how all social and political institutions can work more
         effectively. The young entrepreneurs of PAC.com tend to use the
         buzz words of the Internet economy to describe every facet of life.
         They want to "disintermediate" political go-betweens and substitute
         their own networks for established political machines. They want to
         "identify an expanded target market" and then "aggregate
         high-net-worth individuals" to change the base of support for the
         Democratic Party. As Newell boasts, PAC.com's modest goal is to
         "transform the business of politics and the politics of business."

         In the end, Newell says, politics is the same as investment banking:
         "You have a product, you have to go out and raise money." He
         chuckles. "PAC.com is just old-fashioned grass-roots politics --
         grass-roots organizing of millionaires."

         PAC.com, for the moment, eschews soft-money donations -- the
         uncapped gifts to political parties rather than individual 
candidates --
         but other high-tech figures have begun experimenting with the
         system. Marc Andreessen, the 29-year-old founder of Netscape,
         chairman of Loudcloud and ber-geek, is part of PAC.com's broader
         network. He has been hanging out with Vice President Al Gore for
         years and recently dropped a quarter of a million dollars on the
         Democratic National Committee. It is, Andreessen admits, "a lot" by
         the standards of politics. "But in my world," he adds, "if I invested
         just $250,000 in a new company, they might think I wasn't all that
         serious."

         The difference between the value of money in Silicon Valley and in
         Washington -- what Andreessen calls "arbitrage" -- gets the
         attention of young entrepreneurs.If you think there's a lot of 
money in
         politics now," Andreessen says, "you haven't seen anything yet."

         In the world view of PAC.com, that's nothing to be afraid of;
         politicians are merely the last ones to get dealt into the game. After
         all, in the New Economy, argues Witchel, everyone from
         receptionists to C.E.O.'s is getting paid in stock already. "It's 
just the
         way we do business," he declares. "Doesn't it make sense for
         everyone to participate in the same system?"

         Campaign-finance watchdogs certainly don't think so. At a time
         when the market's reach into every corner of civic life seems almost
         unchecked, critics ask, why make politics, too, dependent on stock
         prices? "Candidates are already treated as commodities to be
         invested in; we might as well slap logos on them," says
         Rosenkranz. "Contributing stock is the perfect completion of the
         circle."

         Witchel himself is torn. He'll exalt the power of skyrocketing stock
         options one minute, then turn around and critique the culture that
         has grown up around them. "The thing about Silicon Valley that's a
         problem for me," he says, "is when it's just about money. It's
         spiritually bankrupt. People get rich, they start to smell like money,
         dress like money. It makes the whole culture ugly and hollow."

         Perhaps that's what politics offers to the callow entrepreneurs of
         Silicon Valley: a spiritual dimension, a meaningful, civic-minded
         pursuit beyond the world of business and money. But first they have
         to buy their way in.

Jim Buell
jbuell at uiuc.edu
graduate student in Ed Psych, UIUC

The Prairie Greens: http://www.prairienet.org/greens/
Why Nader anyhow?: http://www.salon.com/comics/tomo/2000/07/24/tomo/index.html