Capitol Alert

Steve Westly’s apology and his pre-campaign for California governor

Steve Westly speaks at the Aviva Family and Children’s Services 100th anniversary celebration in May in Los Angeles.
Steve Westly speaks at the Aviva Family and Children’s Services 100th anniversary celebration in May in Los Angeles. The Associated Press

It had been eight years since he left Sacramento following a bruising, failed bid for governor, and at his home in Atherton one weekend in March, Steve Westly was charting a comeback.

At least two other high-profile Democrats were expected to run for governor in 2018, probably more. Lt. Gov. Gavin Newsom had started raising money for his campaign, and former Los Angeles Mayor Antonio Villaraigosa was on a “listening tour.”

But Westly, the former state controller and wealthy Silicon Valley investor, told friends and advisers he had an opening. If the Republican Party failed, as it did in 2014, to field a competitive candidate, two Democrats might advance to a runoff. And in a runoff against a more liberal Democrat, a fiscal moderate with Westly’s business credentials could draw support not only from conservative Democrats, but Republicans and independent voters, too.

In a general election, said founder Gary Kremen, who attended the meeting, “It’s good to be in the middle.”

Three years before the election, Westly, 59, is starting from behind. In a Field Poll last month, just 22 percent of registered voters said they were inclined to vote for Westly, a lower level of support not only than Newsom and Villaraigosa, but also three other potential Democratic candidates and one Republican, San Diego Mayor Kevin Faulconer.

In addition to Newsom and Villaraigosa, Los Angeles Mayor Eric Garcetti, state Treasurer John Chiang and billionaire environmentalist Tom Steyer all polled ahead of Westly. With Gov. Jerry Brown terming out, the race is expected to draw a crowded field.

Westly’s positioning reflects the possibilities that a new system of voting hold for Democrats outside the top tier. Their prospects rely on the uncertain dynamics of an election in which the top two vote-getters in the primary will advance to a runoff regardless of party affiliation. The 2018 election will offer the first test of that system in a competitive gubernatorial race.

“Yeah,” said Darry Sragow, a Democratic strategist who advised Westly on his run for controller in 2002. “I think he does have a path. There’s an incredible amount of speculation about who’s running for governor and a whole bunch of names being thrown around, and at this point in the discussion, all the candidates are basically starting off with voters in the same place, which is nowhere.”

Westly, who was once expected to announce his candidacy this summer or fall, suffered an early setback in September, when The Wall Street Journal reported he had tried to help minimize the impact of a domestic violence case against a business associate in 2013.

In that case, Gurbaksh Chahal, the founder of the digital advertising company RadiumOne, was accused of striking his girlfriend repeatedly at his home. Westly, who sat on the company’s board, suggested in an email to Chahal that Willie Brown, a lawyer and former state Assembly speaker, knew the district attorney and “may be able to ‘back him off,’ ” according to the Journal.

The San Francisco District Attorney’s Office denied any improper influence, and Brown told the Bay Area’s KCBS that he “followed all of the rules and regulations.” After a judge ruled video evidence inadmissible in the case, Chahal – who had originally faced felony charges – pleaded guilty to two misdemeanors.

Bob Mulholland, a Democratic strategist who advised Westly’s opponent, Phil Angelides, in the 2006 primary, called Westly’s advice in the domestic violence case “a big problem.”

“If you’re running for office,” Mulholland said, “you don’t want to be explaining that.”

Westly declined to discuss the incident in detail but said in an interview that he “clearly made a mistake here.”

“I should have done more due diligence before joining the RadiumOne board,” he said, adding that he has supported several organizations that help victims of domestic abuse.

I clearly made a mistake here.

Steve Westly

Westly made his early money at eBay, joining the startup when it was still known as Auction Web in 1997. But his political aspirations go back further. He was co-student-body president at Stanford University and active in state party politics in his 20s. By the late 1980s, he was the state Democratic Party’s vice chairman and appeared next in line for the chairmanship until Brown, who already had served two terms as governor, sought the position and defeated him.

Soon after the RadiumOne controversy aired this year, Westly sent signals that it would not deter him from running for governor. He announced in a blog item in The Huffington Post in September that he had changed his mind about the death penalty and no longer supports it. He followed up a month later with a post calling for increased spending on flood protection in California, with potential funding from federal grants, bonds or user fees, among other revenue sources.

Westly attempted to differentiate himself from Angelides in 2006 by saying he would raise taxes only as a “last resort.” Six years later, he supported Proposition 30, the ballot measure Brown championed to temporarily raise the state sales tax and income taxes on California’s highest earners.

Westly said he did so “because we were in the midst of a massive recession” and the measure was necessary to protect school funding. Now, with the economy improving, he said he does not support extending those higher taxes or raising any others.

He is also critical of California’s $68 billion high-speed rail project and Brown’s plan to build two tunnels to divert water around the Sacramento-San Joaquin Delta to the south.

Though California voters have rejected a series of wealthy gubernatorial candidates in previous elections, including Westly, personal wealth could become an especially significant asset if a large field of Democratic candidates divides the loyalties of party donors.

Several contributors who gave to Westly in 2006 have already given thousands of dollars to Newsom, including Jeff Skoll and Eric Schmidt, of eBay and Google fame, respectively.

Paul Byrne, a San Francisco-based employment lawyer who donated to Westly in 2006 and is now supporting Newsom, said, “Gavin has had more of a platform being lieutenant governor … Westly just hasn’t been doing much.”

Westly, whose venture capital firm invests in green technology, spoke last month at a clean technology conference in Los Angeles. He traveled recently to Fresno, and in the Bay Area this week he addressed a roomful of students sitting in bean bag chairs at the venture capitalist Tim Draper’s Draper University.

“If I decide to run, we’ll focus on three things: education, creating jobs and building infrastructure for the 21st century,” he said.

Westly concerns other Democrats less for his policy positions than his financial resources. In his 2006 campaign, he raised more than $46 million, some $35 million of it his own money. Following his defeat, he nurtured financial connections in the Silicon Valley as a major bundler of campaign contributions for President Barack Obama.

In a speech to the Democratic Party’s national convention in Charlotte, N.C., in 2012, Westly called California a place where “we dream big, we think different and we invest in a future filled with possibility.”

Westly’s supporters expect him to pour millions of dollars into his campaign, if necessary, and Westly said that in addition to fundraising he “would certainly not rule out some level of personal finance” if he runs.

In the gubernatorial race in 2006, Westly confronted a candidate who enjoyed major Democratic Party support, including from U.S. Sens. Barbara Boxer and Dianne Feinstein. He lost to Angelides, then the state treasurer, by about 5 percentage points. Angelides went on to lose to then-Gov. Arnold Schwarzenegger.

Garry South, the political consultant who served as Westly’s senior adviser in the 2006 campaign, said Westly erred, among other missteps, by pledging not to not initiate negative advertising – a pledge Westly broke in the final weeks of the campaign.

“To be honest, we should have won that primary,” South said, “aside from some bad strategic decisions that were made and, you know, those bad decisions were actually made by Steve.”

South said, “One thinks that when a candidate goes through a campaign like this and does a replay that they’ve learned lessons, but you know, that remains to be seen.”

One thinks that when a candidate goes through a campaign like this and does a replay that they’ve learned lessons, but you know, that remains to be seen.

Garry South

Westly’s position on negative advertising appears to have evolved, falling in line now with the preponderance of candidates for major elected office.

“It’s just hard to get beyond hard-hitting campaigns,” Westly said. “And that is the way of the world.”

He said he wants to “run as positive a campaign as possible” but suggested he will not offer another pledge to forgo ads that offer “a chance to draw distinctions between candidates.”

Rich Gordon, a Menlo Park assemblyman who has known Westly for about 25 years, said last week that in a race with Newsom and Villaraigosa, Westly “will present a very interesting case and alternative to the voters,” with experience both in public service and the private sector.

Gordon is supporting Westly. But he acknowledged California will see a “hell of a field” of Democrats running for governor.

“My God,” Gordon said. “I think with John Chiang, Gavin Newsom and Antonio Villaraigosa, and you put Steve Westly in that mix, you’ve got four of the top Democrats in the state … If that’s the four, it will be a fascinating race.”

David Siders: 916-321-1215, @davidsiders

Steve Westly

Party: Democrat

Age: 59, born Aug. 27, 1956, in Arcadia

Occupation: Investor

Education: Master’s degree, business administration, Stanford University Graduate School of Business; bachelor’s, history, Stanford

Experience: Founder, managing partner, The Westly Group, 2007-present; state controller, 2003-2007; eBay, vice president for marketing, 1997-2000; WhoWhere? Internet directory, vice president, 1995-97; city of San Jose, deputy director of Office of Economic Development, 1991-94; Stanford University, instructor, 1991-96; Codd & Date, database consulting and services firm, president 1988-91; California Democratic Party, various posts, 1981-89; Bridgemore Capital, investment banker, 1986-88; Sprint Telecommunications, new business manager, 1983-86

Residence: Atherton

Family: Married, two children