TCS Daily

Is Arnold Good for Silicon Valley?

By Sonia Arrison - September 30, 2003 12:00 AM

The political theater produced by California's recall election is fitting given that one of the serious contenders to replace Governor Gray Davis is a Hollywood mega-star. Arnold Schwarzenegger is famous for hi-tech movies such as "Terminator" and "Total Recall," but the question many are asking is whether Arnold would be good for Silicon Valley.


It will take more than playing the lead in science-fiction films to pull California's tech sector out of its slump. Mr. Schwarzenegger, however, has managed to convince many in the Valley that he is just what they need.


"He is a pro-growth, pro-business, low-tax guy and this is what the Valley thrives on and needs," says Chris Alden, entrepreneur and founder of Red Herring magazine.


Michael Mahoney, a managing director at EGM Capital, a hedge fund that focuses on technology and telecommunications, agrees. The Valley appears convinced, he says, that Arnold "will get the state back on the right track with regard to finances and regulation."


Issues most important to tech firms that the governor could influence include skyrocketing workers compensation premiums, taxes, the budget, and electricity policy. Indeed, Schwarzenegger's web site says he "plans to unchain business from over-taxation and over- regulation" and "issue a clear energy strategy that focuses on attracting new investments in California."


Schwarzenegger is known for his admiration of free-market economist Milton Friedman, but some have pointed to Arnold's inconsistency in having Democratic billionaire and technophobe Warren Buffett on his board of economic advisors. A successful businessman, Buffett might not be so worrisome if he weren't in favor of expensing stock options and increasing property taxes. But Valley insiders play down Buffett's influence.


Tim Draper, a Republican venture capitalist who recently hosted a huge Arnold fundraising dinner where half of the guests were Democrats says, "Warren Buffett speaks for Warren Buffett. I am confident that Arnold will be on the right side of the stock option argument."


Draper is not alone in his thinking. T.J. Rodgers, the libertarian CEO of Cypress Semiconductor, says Buffett is "a carpetbagger. His thinking is completely alien. I doubt he could have any impact on California politics." But of Schwarzenegger, Rodgers says, "He's a personal success story, an American dream." And that's one of the reasons people in the Valley can relate to him.


California's technology community is a multinational group that connects with Arnold's personal story of making it in America. And another thing they like about him is his liberal take on social issues. This is important to the Valley, not only because many agree, but also because it could be key to re-invigorating California's Republican party which is typically pro-business. But not everyone in the Valley is convinced that Arnie is the best leader for the state.


Alyson Abramowitz of the High Tech Dems says that "Arnold does more for Silicon Valley when he's on-the-set rather than in-office. His big-budget action movies have been good for the tech industry throughout the Bay Area." And James Hong, founder of the Internet dating site echoes a concern that many were willing to say only off the record: "I don't think he has exposed enough of his viewpoints on some of the issues that I think are important to us."


One of those viewpoints might be his stance on intellectual property. In the war between Silicon Valley and Hollywood over how to protect digital goods, it's hard to guess whose side Arnold would take. And while it's clear where Buffett stands on stock options, Arnold has been silent.


The challenge Arnold will have in the next week, at least as far as Silicon Valley voters are concerned, is being more clear about how he will put California back on track and how he would deal with issues close to the Valley's heart.


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