It is becoming clear that the road to the White House in 2016 leads straight through Silicon Valley.
Once a bit-player in the political money game, the technology industry came in second behind the oil and gas industry among the top sources for political contributions in the 2012 presidential and congressional elections. The candidates have noticed and are courting the Valley's wealthy tech elite.
With 435 days to go until Election Day 2016, several of the major party candidates — including Hillary Rodham Clinton, Jeb Bush and Marco Rubio — have already made early pilgrimages to Silicon Valley, looking to drum up support and to build their campaign war chests.
The price of running for president will be steep: Informed estimates suggest that when the smoke clears 16 months from now, candidates and political organizations will have burned through between $5 billion and $10 billion. That would shatter the record set in 2012 when President Obama and Mitt Romney spent a combined $1.1 billion on their own campaigns, while third-party Super PACs spent more than both combined for a total of $2.3 billion, according to an analysis by the Cato Institute.
Silicon Valley's political awakening has come with maturity. The industry employs millions of people, accounts for some of the most valuable companies in the world — including Apple, Hewlett-Packard, Intel, Google and Facebook — and is finally demanding a voice in Washington on important policy issues such as immigration, education and taxes. Over the last few years, tech companies have hired an army of lobbyists intended to boost their reach in Washington.
"Silicon Valley has entered its political adolescence," said Dan Schnur, director of the Jesse Unruh Institute of Politics at the University of Southern California. "For many years its people were fascinated by bright, shiny objects, and over the last several years they've begun to get more sophisticated in how they have engaged with candidates and office holders."
The biggest contributions are not to the campaign committees themselves but to the Super PACs affiliated with the candidates. The differences between them are pretty simple but important to understand because contributions to and spending by these Super PACs is expected to skyrocket with the 2016 election.
Campaigns are run by the candidate, and they operate under strict fundraising limits. By federal law, no one can give more than the individual limit of $2,700 directly to a campaign.
Super PACs, third-party political action committees formally known as "independent expenditure-only committees," were created in 2010 to sidestep spending limits. Super PACs are allowed to advocate for or against a candidate or issue, usually by buying ads. They are a new hallmark of modern presidential politics, and each candidate has a personal Super PAC with which he or she is loosely affiliated and which is typically run by a longtime aide or political operatives. Under federal rules, they are legally separate entities from the official campaign committees and are technically not allowed to coordinate their efforts, but as the Washington Post reported last month, the rules can be a little loose.
But the most important thing to understand about Super PACs is that they're allowed to raise unlimited funds from individuals, corporations or other organizations. The Supreme Court ruled in 2010 that money spent on political advocacy is equivalent to speech, and therefore protected by the First Amendment, meaning Congress can't pass laws limiting this form of "expression."
The main effect of that Supreme Court ruling was that outside spending on political advertising more than quadrupled between 2004 and 2012. As of Aug. 13 there were more than 1,100 Super PACs, according to the Center for Responsive Politics, and they had raised more than $300 million.
What this means for the 2016 presidential race is that the real political money to watch will not be given to the official campaign committees as has been the norm before, but to the Super PACs. Another byproduct of unlimited Super PAC giving is that candidates who are weak in the polls can, with the help of a small number of dedicated, wealthy benefactors, stay in the race long after their campaigns might have otherwise fizzled out. Contributions to Super PACs of $1 million or more from super-wealthy individuals are already common.
That's why Republican Sen. Marco Rubio of Florida is leading the tech funding field by a wide margin, according to a recent analysis by Crowdpac, a nonpartisan political data and tech startup, of contributions to campaign committees and Super PACs by people in the tech sector (see chart below). How did Rubio, who tied for third place alongside Bush and Texas Sen. Ted Cruz in the closely watched Quinnipiac Poll released last week, get so much more money than every other major candidate? His Super PAC landed two contributions from software billionaire Larry Ellison totaling $3 million.
Large as they were, Ellison's contributions to Rubio don't even make the top 10 among supporters of presidential Super PACs overall. The biggest contributions to Super PACs — $10 million each — went to Super PACs linked to Cruz. (Cruz hasn't had much success in Silicon Valley; his Super PAC mega-donors are Robert Mercer, a billionaire hedge fund manager, and Toby Neugebauer, a private equity billionaire.)
So who has captured the hearts and wallets of Silicon Valley? Re/code dug through the filings with the U.S. Federal Elections Commission, which tracks individual contributions to both presidential campaign organizations and the Super PACs. We examined the filings for every major candidate and their related Super PAC. We emphasized large contributions and left off candidates who have yet to land big checks from the senior ranks of Bay Area tech firms. Bernie Sanders, for instance, has lots of donors from around Silicon Valley, but most contributions were for two- and three-figure amounts, and many were from people who listed their job as "not employed." (We also skipped Donald Trump, who is mostly funding his campaign out of his own pocket.)
It's also important to note that the Silicon Valley elite have yet to fall in love with a single candidate: Campaign contributions currently lag those of the finance, health care and media industries, according to research from Crowdpac. It's still early days and these numbers are likely to change significantly the closer we get to Election Day.
The Florida senator has not only attracted game-changing checks totaling $3 million to his Super PAC from Oracle's founder Larry Ellison. His official campaign has also won the backing of Oracle CEO Safra Catz ($2,700), Cisco Systems Chairman John Chambers ($2,700) and Seagate CEO Steve Luzco ($2,700). He also landed an early contribution from Facebook CEO Mark Zuckerberg ($2,600) in 2013.
Rubio may have more of Silicon Valley's money, but Jeb Bush has more money period. His Los Angeles-based Super PAC is nothing less than a financial juggernaut and has been described by the Center for Responsive Politics as "the mother of all presidential super PACs." Of the 24 contributions to Right to Rise of $1 million or more, only one came from Silicon Valley: Tom Stephenson, the former partner at Sequoia Ventures who served as George W. Bush's ambassador to Portugal. The rest came from people and entities connected to the energy, finance and health care industries. Other Silicon Valley-based supporters include venture capitalists Mary Meeker of Kleiner Perkins Caufield & Byers ($25,000) and James Breyer of Accel ($100,000) and one software executive, Workday President Mike Stankey ($25,000). Meanwhile, contributors to the Bush campaign committee include Yahoo CFO Ken Goldman ($2,700), SendHub and Lincoln Labs co-founder Garrett Johnson and his wife, Candace Johnson ($2,700 each), and Activision/Blizzard CEO Robert Kotick ($2,700). Kotick has also given to Chris Christie's Super PAC (see below).
Among the top 10 contributions to Clinton's Priorities USA Action Super PAC are two sourced to the Bay Area tech scene. Stephen M. Silberstein ($800,000) made his fortune on Innovative Interfaces, a software company founded in the late 1970s to computerize the management of university libraries, and has since retired to Marin County. Another comes from a PAC (yes, PACs can give to Super PACs) called Progressive Women Silicon Valley ($750,000), whose largest benefactor is the Bay Area philanthropist Laure Woods; The group is a regional local affiliate of Emily's List, a PAC that advocates and supports women running for public office. Other individual contributors to Clinton's Super PAC include Herbert Sandler, the San Francisco banking billionaire ($1 million), and tech investor Mark Heising ($100,000). Also backing Clinton's Super PAC are the "Star Trek" and "Star Wars" film director J.J. Abrams and his wife, Kathleen McGrath ($500,000 each).
Supporters of the Clinton campaign include:
With her deep ties to Silicon Valley dating back to her days as CEO of Hewlett-Packard (1999-2005) and as an executive at Lucent Technologies before that, you might think Carly Fiorina would have a fundraising edge among the tech elite. It hasn't worked out that way, though there are a few who have written her checks. Notable people backing Fiorina's Super PAC (Its formal name Conservative Authentic Responsive Leadership for You spells out "CARLY.") include venture capitalist and letter-writer Tom Perkins ($250,000); Charles Munger Jr., the wealthy Stanford University physicist and frequent Republican donor ($100,000); and Larry Sonsini, partner at the Silicon Valley law firm Wilson Sonsini Goodrich & Rosati ($25,000). Smaller checks have come from former Intel CEO Paul Otellini ($5,000) and Jerry Sanders, the founder and former CEO of chip maker Advanced Micro Devices ($8,000.) One notable contributor to Fiorina's campaign committee is longtime HP executive and director Ann Livermore ($2,700).
California voters first got to know the New Jersey governor in 2010 when he campaigned for Meg Whitman, CEO of Hewlett-Packard, during her unsuccessful 2010 run for governor. Whitman is returning the favor, having recently signed on as national finance director for the Christie campaign. She also wrote a $100,000 check to Christie's America Leads Super PAC. Also backing Christie's Super PAC is Activision CEO Robert Kotick, ($50,000), who has given $2,700 to the Jeb Bush campaign.
While his libertarian leanings and hackathons have won the Kentucky senator some Silicon Valley buzz, he hasn't yet parlayed that into significant financial support. One major supporter of Paul's America's Liberty Super PAC is Scott Bannister ($1.25 million), the former PayPal director and founder of Ironport, a security company acquired by Cisco Systems for $830 million in 2007. Also backing Paul's Super PAC are Overstock CEO Patrick Byrne ($60,000) and AngelList co-founder and CEO Naval Ravikant ($25,000). There are at least two other Super PACs backing Paul, though the head of one was indicted by a federal grand jury earlier this month on charges of violating campaign finance laws.
Clarification: Our claim that Silicon Valley-sourced political contributions were second only to the oil and gas industry in 2012 included contributions given to Congressional candidates too.