Yet Silicon Valley venture capitalists and entrepreneurs increasingly have been investing their money in California initiatives, a way of sending ballot measures directly to voters without going through the state legislature. Of course, wealthy individuals everywhere get involved in politics. Investment banker Jon Corzine personally financed his victorious campaign for a U.S. Senate seat from New Jersey. Microsoft cofounder Paul Allen backed an unsuccessful charter schools initiative in Washington state. But with its wide-open initiative process and unprecedented concentration of money and power, California is leading the trend toward giving to causes in which the funder can directly influence the outcome.
New money is more likely to use the cutting-edge initiative process because it's a quicker fix.
In some ways, the initiative process resembles the risk-investing model to which VCs and entrepreneurs are accustomed. But it's the differences such as the need to forge consensus among diverse groups that cause trouble for Silicon Valley's political neophytes. Since 1996, out of 10 initiatives supported by Valley money, just two have passed. Political insiders and observers are attentive to the impact of Silicon Valley wealth wielded by just a few individuals on the California and national electorates. As a bellwether state, California has ignited such grassroots causes as tax rollbacks, term limits, ending racial preferences and bilingual education, and reforming drug policy.