Silicon Valley's Emergence as Political Mecca


Silicon Valley might be on the top of an engineer's itinerary, but until recently, this swath of high technology in northern California rated barely a nod from politicians.

Now it seems candidates are thicker than transistors on a computer chip. The politicians come in search of the endorsements - and the money - of the high-powered entrepreneurs who are etching their fortunes in silicon.

The emerging political influence of the owners of the thousands of firms in the Valley is a reflection of this region's role as the most vibrant economic force in California, a state whose electoral votes remain the greatest prize in the presidential contest. But candidates also come here in the hope that they can share in the aura of Silicon Valley as the land where the future is being shaped.

Republican vice president nominee Jack Kemp showed up this week at Netscape, where fortunes have been made almost overnight by producing the popular software for cruising the Internet. "We know this country can compete with anybody in the world and you're proving it here in Silicon Valley," Mr. Kemp told the assembled crowd, among them some of the 225 executives who endorsed the Dole-Kemp ticket last week.

Kemp sounded themes that warm the hearts of Valley entrepreneurs - cutting capital gains taxes in half, supporting securities litigation reforms that would make it harder for lawyers to sue firms, and freeing companies from government regulation.

But when it comes to visiting Silicon Valley, the Republican candidates are a distant second to President Clinton. As the Democratic nominee in 1992, Mr. Clinton came here and gained the backing of some of the leading entrepreneurs, a first for any Democrat. As president, he has carefully cultivated the relationship, in part through numerous trips designed to highlight the claim that his administration is the most cyber-savvy ever to hold office.

In a typical stop here in mid-September, Clinton sat down for dinner with a small group of executives from some of Silicon Valley's powerhouse firms. The menu was crab soup and steak, but the talk was strictly high-tech, ranging from how to use the Internet to reform tax collection to lifting government controls on export of encryption software.

"Clinton's not intimidated by this stuff at all," recounts the evening's host, entrepreneur Regis McKenna. "He didn't back away from asking tough questions."

The courting has paid off to some degree. In August, 75 Valley executives, many of them Republicans, endorsed his candidacy. And Silicon Valley has become a source of significant campaign funds - though not yet at Hollywood levels - from the cyber-rich.

Valley chiefs stay true

But such well-publicized events have also irked the usually silent majority among Valley chief executive officers who, like their corporate brethren elsewhere, are true Republicans unswayed by the president's talk of the future.

"[Clinton] hasn't delivered anything - the only thing he's done for Silicon Valley is visit," venture capitalist E. Floyd Kvamme said at a press conference held last week to unveil a longer list of executives endorsing the Dole-Kemp ticket.

Silicon Valley executives have traditionally been proudly nonpolitical. But they have been mobilized in recent years by issues such as securities litigation to become active. High-tech firms have been a target of lawsuits on behalf of shareholders claiming fraud when their volatile stock prices drop dramatically. Last December Clinton, under pressure from trial lawyers, angered firms when he vetoed a federal law to restrict those suits.

The veto was overridden, but some executives here also blame Clinton for opening the door to attempts to get around the federal law by filing suit on a state level. Valley firms are now spending millions to defeat a lawyer-backed initiative on the November ballot to ease California's securities laws.

Mr. McKenna claims credit for getting the president to come out against the ballot proposition, despite advice from his staff "to stay out of it." But Republican presidential candidate Bob Dole strikes a chord here when he asks, as he did in a telephone address to the Netscape rally, "Who do you trust to stand up to the trial lawyers?"

Federal controls over the export of encryption systems used to encode data are also a hot Valley issue. The technology is vital to opening the Internet for banking and other commercial transactions, but defense and security agencies in Washington fear it will be used by terrorists and others to conceal their activities.

For Jim Barksdale, CEO of Netscape who claims his firm is losing tens of millions of dollars in business to foreign competitors, this was the deciding issue. He attended two dinners with Clinton in the last six weeks where they discussed the issue. While crediting the president with listening with "genuine concern," Mr. Barksdale, along with many others in the software industry here, remains unsatisfied with the latest version of this policy, partially easing export controls, unveiled this week by the Clinton administration.

So he turned down a White House request to come to Netscape, lending the stage instead to the Dole-Kemp ticket, which has endorsed the executives' plan to completely lift controls.

But even if Clinton loses the battle for executive endorsements, the vast majority of votes are likely to go his way, as they did in 1992. Even at the Netscape rally, while the CEOs dressed in suits energetically cheered Kemp, the software programmers and other employees wearing the Valley uniform of khakis and sneakers were noticeably less enthusiastic.

Grumbling via e-mail

Among Netscape's 1,600 employees there, was more than a little grumbling over Barksdale's decision to host the campaign rally at the company campus. E-mail had been posted to a discussion group complaining that it was "going over the line to make it look like the whole company is endorsing a candidate," one engineer reports.

More than talk about capital gains tax cuts, which would benefit start-up companies relying on venture capital, the twentysomething engineers and programmers credit Clinton for being more in touch with their lives. They talked about issues like the environment, protection of free speech on the Internet, and abortion rights. In general, they see Republicans, under the influence of the Christian right, as hostile to the atmosphere of tolerance that many see as essential to Silicon Valley's open culture.

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