Maybe, just maybe, Al Gore and the Democrats would win the White House and Congress.
Reveling in the promise of newfound wealth, the group, which included former Red Gorilla executives John Witchel and Wade Randlett and Excite@Home founder Joe Kraus, set out to make their mark on the world of politics. They formed Pac.com, a political action committee that planned to collect money and stock from flush dot-commers and divvy it out to candidates who supported a Democratic, tech-friendly vision.
Two weeks ago, the lobbying group finally won approval from the Federal Election Commission, paving the way for Pac.com to accept stock donations to be put into a pool, cashed in, and doled out to politicians. The novel approach could position the group as a major fund-raiser--that is, if the economy ever takes off again. At the least, it shows the growing interest among a new generation of tech executives in jumping into the political fray, rather than leaving it to the folks inside the beltway.
"I think you're going to see more of that happening in years to come," said Simon Rosenberg, president of the New Democrat Network. "There's a lot of new wealth in the Valley despite all the problems."
Pac.com's FEC approval comes as campaign-finance reform has become a hot topic in Congress. On Monday, the Senate passed a bill that would ban soft-money contributions, which are the unlimited donations individuals can make to political parties for "party building" activities, and which are supposedly unrelated to specific elections. The House is considering the issue, but the bill shouldn't affect the lobbying group because it doesn't accept those types of contributions.
Shortly after Pac.com's formation last summer, The New York Times Magazine ran a cover story about the lobbying group, featuring a GQ-like photo spread of the Silicon Valley's young bucks, poised to parlay their riches into political influence.
"We already drive every significant sector of the economy," Witchel told the Times in the August 13 story. "The keys to the kingdom are squarely in our hands."
But fast forward to 2001, and it looks like someone has changed the locks. Things these days aren't quite so rosy for the dot-commers turned wanna-be politicos. Red Gorilla has crashed and burned, the stocks of many Internet companies have plummeted into penny territory, and George W. Bush and a Republican Congress are holding the country's reins.
That doesn't mean Pac.com is down and out.
"It may not be as sexy as it was a year ago," Rosenberg said. "But Pac.com is a good idea. I think you'll see other efforts like this around the country."
The group did suffer one setback while trying to clear regulatory hurdles. The FEC rejected Pac.com's plan to give stock directly to politicians--a move critics worried was designed to get around campaign finance laws.
"Instead, Pac.com must sell the stock and deposit the proceeds into committee depository accounts--and then it may contribute the funds to the authorized or other political committees," the FEC wrote in its ruling.
Rosenberg said the decision is not too big of a blow for Pac.com. "Some candidates wouldn't have accepted it anyway," Rosenberg said, because of the appearance they were in the pocket of the companies in which they owned shares.
The nixing of the stock donations was the result of long rounds of negotiations between Pac.com and the FEC, according to Randlett, one of the founders of the lobbying group.
"I don't see anything wrong with it," he said. "But it was more of a comfort level thing. They said, 'We're not comfortable with this,' so we said 'OK.'"
But even the acceptance of stock donations into Pac.com has raised some eyebrows among campaign-finance watchdog groups.
"My concern anytime you see something like this is to make sure it's not a way to get prohibitive or excessive contributions to a candidate," said Larry Noble, executive director of the Center for Responsive Politics and former general counsel of the FEC. "It's something that has to be watched."
Exponential growth but...
Donations in the form of stock have the potential to infuse much more money into Pac.com's coffers than a simple cash contribution. For example, a $1,000 stock donation, especially in a pre-IPO venture, could grow exponentially if the company takes off. Under FEC guidelines, that donation is valued on the day it's accepted, meaning it's still only recorded as $1,000, even if the stock increases tenfold by the time it's cashed out.
That phenomenon could put Pac.com on the radar screens of many politicians looking to mine the Silicon Valley for campaign contributions. But, as tech workers found out the hard way during the past year, the stock contribution also could crumble to just a fraction of its value from the time it's donated.
"Pac.com has some of the same traits other dot-coms do," Noble said. "It may fluctuate wildly."
So far, Pac.com's members have been donating $1,000 to politicians who come to their roundtable discussions. In the coming months, they plan to focus mainly on the 2002 Senate races by picking a handful of tech-friendly Democratic challengers and incumbents with a good chance of winning. The group is focusing on the Senate because it sees that as the best forum for Democrats to tip the scales in their favor.
Pac.com's policy ambitions are somewhat vague. "Our goal in life is to support pro-technology, moderate democrats," Randlett says when trying to sum up the group's point of view.
The No. 1 focus of the group--no surprise here--is the economy. Pac.com members don't necessarily support cutting taxes. Instead, they'd like to see the capital markets stabilized, which would open another window for the initial public offerings that created much of their members' wealth last time around. In addition, the group would like to see an overturning of the Alternative Minimum Tax, a convoluted tax scheme that requires people to pay taxes on money they never actually earned and has put many a dot-commer into severe debt. They also embrace a liberal social agenda while being pro-business.
But some Washington insiders say groups such as Pac.com must focus on single issues. For example, the group's claim that it's a supporter of moderate, pro-technology candidates prompted this response from a Washington-based tech trade group representative: "Who isn't?"
Still, Pac.com is one of just a handful of tech-focused political efforts with roots in the Valley instead of Washington. And it could be a harbinger of the young tech executive's influence on politics. Already, former RealNetworks executive Maria Cantwell, D-Wash., has won a Senate seat after using some dot-com riches to finance her campaign. Derek Smith, founder of iEngineer.com, defeated an incumbent to win the Republican nomination for a Utah seat in the House during the last election (though he eventually lost to Democrat Jim Matheson). And Steve Westly, a former eBay vice president, is waging a race for California's Controller in the 2002 election.