The Westly Factor Why a usually obscure state election might matter most for tech firms
Hal Plotkin, Special to SF Gate
Monday, December 17, 2001
Next year’s hotly contested race for governor is already beginning to grab the media spotlight. But many Silicon Valley tech leaders are already much more deeply involved in a far less conspicuous election that will be on the same ballot: the race for state controller.
For good reason.
The outcome of that usually overlooked contest could end up having a much bigger impact on Silicon Valley companies, and the overall health of the state’s tech sector, than anything else on next year’s ballot.
What makes the usually obscure race more interesting this time around is the candidacy of 42-year old Internet pioneer and Atherton resident Steve Westly, who amassed a $100 million-plus fortune by helping build eBay into the world’s most successful online auction and e-commerce site.
The early involvement of so many top tech executives in Westly’s campaign reflects not only personal support of a friend and colleague but also how much they and their companies have at stake.
Unlike in the case of most politicians, they say, Westly’s Silicon Valley roots have provided him with the technical savvy needed to blast away a moribund state bureaucracy that hasn’t kept pace with the times.
That, incidentally, could also open up some important new commercial opportunities for local tech firms, which may also help account for some of their early interest in the race.
What makes Westly different from the usual Sacramento crowd is his more intimate, hands-on understanding of how new technologies work and how they can most effectively be used to improve government efficiency in ways that would help put California’s overall economy back on track.
A high-tech activist serving as state controller would have plenty of opportunities to do just that.
In fact, Westly’s backers say it would be hard to find an expert better able to bring new tech-driven approaches to state government than someone who helped build eBay.
In California, the state controller has key responsibility for anything having to do with how the state spends public monies. He or she handles receipts and disbursements of public funds, performs audits of state and local governments and sits on roughly 60 state boards and commissions, including the state’s huge pension funds, its lands commission and the Franchise Tax Board, among many others.
Westly says the audit powers of the controller’s office can be used in some exciting new ways. He adds that performance audits, for example, which usually focus on basic accounting issues, could also be used to detail exactly how a wide variety of state agencies can make better uses of the Internet to be more efficient in everything they do, from purchasing goods and supplies to providing state services.
If elected, Westly would arrive at the scene in Sacramento at a time when some added technical expertise would come in pretty handy.
For example, many smaller businesses complain that it can take the state as long as 150 days to pay its contractors. Delays of that sort often discourage or eliminate many smaller businesses, including firms owned by women and minorities, from becoming state contractors. The long delays, instead, give the advantage to bigger companies that can better afford to wait for bills to be paid, even though they may not always offer taxpayers the best deals.
Westly says software can be used to bring all of California’s accounts-payable and accounts-receivable functions online to eliminate all that wasteful and time-consuming paper shuffling.
Beginning in 1997, Westly, eBay’s 23rd employee, held a succession of senior-leadership positions at the firm, including vice president of marketing, VP of business development, VP of mergers and acquisitions and, more recently, senior international vice president.
He’s not, however, just another rich business dude trying to buy his way onto some official government stationery.
Prior to joining eBay, Westly was best known for his career as a prominent political activist. When I first met him, when he was in his mid-20s, he was part of a group trying to open up the internal governing mechanism of the California Democratic Party to more public participation, particularly by women and members of minority groups.
Amazingly, by 1989, at age 30, Westly had won enough pledges of delegate support to nearly become chairman of the state Democratic Party. Then, former Gov. Jerry Brown (who had been in self-imposed exile in Japan) suddenly reappeared on the scene and used his star power to snag the job.
Westly didn’t retreat from politics entirely after that defeat, but he did devote more time to developing his business career, with an emphasis on technology. It was a decision that obviously paid off rather nicely.
Westly’s political chops will certainly come in handy. But, should he make it to Sacramento, the experience he gained at eBay will be far more crucial to California in the years ahead.
As a business executive, Westly helped lead eBay through several particularly difficult challenges, including when the company came under heavy attack for preventing third-party uses of its online auction listings. Other companies wanted to use that data to offer search functions across different auction sites.
At the time, many observers, myself included, feared that eBay’s tactics threatened to undermine the Internet’s open architecture. As it turned out, however, eBay’s approach didn’t damage the Internet. Instead, just the opposite occurred, as eBay became one of the Net’s best examples of how an information-rich business can succeed by connecting buyers and sellers in new ways.
Unlike scores of other Internet operations, eBay made what turned out to be the right moves under more than a little pressure.
Westly says he wants to take that more businesslike approach to Sacramento, where state government does very little of the longer-term planning more typical of the private sector. (It was just a few years ago, for example, that California established its first long-term Economic Strategy Panel, which hasn’t even had a budget recently).
Drawing on his background as a corporate planner, Westly says one of his main goals would be to help create something California does not now have: a 20-year plan that anticipates future needs, including roads, schools, medical services, energy and telecommunications. He also says his experience working with and evaluating startups will help him make better use of the controller’s perch on the pension-fund boards to drive more carefully targeted investments toward the most promising high tech and biotech startups, which are the traditional growth engines of California’s economy.
In particular, Westly has pledged to pay special attention to finding better and faster ways to build out the state’s broadband telecom infrastructure.
In addition, Westly says, the Internet could revolutionize the usually mysterious and almost unfathomable subject of bond underwriting.
California’s state budget is tottering toward insolvency because of a stalled multibillion-dollar bond measure that is supposed to pay for the overpriced electricity state officials purchased last year. More recently, some Wall Street investment bankers (chosen by state officials without full public hearings, I might add) have been gumming up the works by demanding that state officials agree to prevent competition in key electricity markets as a condition of floating the bonds.
Westly says that process could be busted wide open by soliciting other proposals over the Internet more openly, which could lead to more socially constructive ways to service California’s debt. That’s just one of the ways the Internet can be used to reform and improve the state’s operations, he says.
“California needs to do a better job of opening up bidding processes across the board,” he says. “eBay shows that you can democratize a marketplace.”
“What we get from the state right now is, ‘Here’s what we’re doing,'” he said in a phone interview conducted last week between campaign stops in Southern California. “What we don’t get is, ‘Here’s 15 other things we could do, and an opportunity for competitors to present or suggest solutions we haven’t anticipated.’ The more knowledge we can gather, the more opportunities we’ll create to save money.”
California must retake the lead when it comes to experimenting with new tech-driven approaches to governing, he says.
It galls him to no end, for example, that the first state to make DMV registrations available online was not California, but Oregon.
Westly’s supporters include many of the people who founded Silicon Valley’s modern computer, Internet and biotech industries — people such as such as noted venture capitalists John Doerr and Brook Byers, PR guru Regis McKenna (who helped put Apple Computer on the map), Intuit founder Scott Cook and Handspring founder Donna Dubinsky, among many others.
It is, more important, a team of advisers that has the capacity to assist in the more rapid deployment of cutting-edge applications of technology that could turn our huge and often bumbling state government into a model of what is possible.
There is reason to hope that as that process unfolds, new jobs — perhaps even entire new industries — could be created in California to meet growing demands for similar solutions elsewhere around the globe. Put more simply, one way California can preserve and extend its lead in key technology markets is by making sure it stays ahead of the pack.
The gubernatorial slugout between Gov. Gray Davis and Los Angeles Mayor Richard Riordan (or Secretary of State Bill Jones) will no doubt be a riveting political skirmish, complete with all the usual partisan sniping. A winner will eventually emerge from that contest bloodied but probably no wiser when it comes to knowing how to use technology to improve California, or how to use California to improve technology.
That’s why, before they put their ballots in the envelope, the little piece of chad many Silicon Valley tech leaders plan to make sure they’ve completely removed will be the one near Steve Westly’s name.
With any luck, he might be the guy who finally helps us kiss that archaic system of voting goodbye.
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