Now, at a time when many dot-com chief executives are scrambling to hold onto their jobs, the former Internet golden boy has relinquished his to seek a position well below the radar of most technology executives: Palo Alto City Council member.
"I have been getting more and more interested in the public sector, in issues that transcend the narrow business interest I've had," Edelstein, 32, said in explaining his shift from the high-powered world of a technology executive to the bottom rungs of a local Democratic political machine. "I'm interested in the quality of life in Silicon Valley, in elements of living in the Valley that have nothing to do with high-tech."
Edelstein, a Palo Alto, Calif., native, is hardly the first technology executive to become involved in politics. Most notably, Maria Cantwell in November was elected to U.S. Senate from Washington state, following her stint at RealNetworks. Before working for the Internet media software company, Cantwell was a member of the U.S. House of Representatives.
Technology execs have also made their muscle felt through advocacy groups such as TechNet or by funding candidates and ballot initiatives. In California, high-tech money was behind two competing efforts to overhaul the state school system.
But people involved with both the tech industry and the world of politics say they've rarely seen an executive give up a position to run for a municipal board.
"Alex is unusual because we have very few people moving from technology to local government," said Gary Fazzino, vice president of global community relations at Hewlett-Packard, a current member of the council Edelstein hopes to join, twice a Palo Alto mayor, and the founding chief executive of TechNet.
"I've seen a number of highly successful folks in the high-tech industry who enjoy being involved at the federal and international level because it's like show business," Fazzino said. "They can achieve the same notoriety in the public policy world that they have in venture capital or other technology fields. But the real tough slogging in public life goes on at the local level, and so far that has not had much appeal for tech types."
Painting on a small canvas
Reasons for that lack of interest may include the comparative youth of many high-tech executives, some of whom have yet to start families and put down roots in a community that would inspire them to join school boards and city councils.
In addition, Internet executives may feel that their work is "borderless," affecting people throughout the networked world rather than the denizens of a particular geopolitical community.
Edelstein says his interest in local politics stems from his experience growing up in Palo Alto and watching the area change dramatically over the last 25 years.
"The challenge is to preserve the good unique things while continuing to take advantage of the wonderful opportunity we have here with our technology base," Edelstein said. "That's a tough balance. It means weighing big, new office buildings against shops, the trees and redwoods and open space. What we need in government are people who understand both sides of that issue."
Edelstein has never made a secret of his interest in seeking public office, and his switch came as no surprise to former colleagues.
Earlier this year, he handed the reins of his start-up, San Francisco-based viral marketing company Viralon, to co-founder David Andrews--clearing his decks for a possible City Council run. He is currently a policy analyst for a county supervisor, for whom he walked precincts in the last election; a board member of the Page Mill YMCA in Palo Alto; and secretary of the Peninsula Young Democrats.
The potential candidate also contemplated a run in San Francisco, but hometown roots swayed him back to Palo Alto. In recent elections, San Francisco's political rhetoric has taken on an unmistakable anti-tech industry streak, another factor dissuading Edelstein from a run there.
Despite the fact that Edelstein has amassed considerable wealth at his stints at Microsoft, Netscape and Inktomi, he intends to fund his run with contributions from locals and friends as well as with his own money. Other wealthy candidates, such as Cantwell, have taken advantage of their financial position to self-fund their campaigns and avoid taking money from interest groups and political action committees.
But even in Palo Alto, where technology fortunes are a dime a dozen, Edelstein wants to avoid the appearance of spending his way to victory.
"If you spend too much in a city council race, the people in town start to wonder if you're trying to buy the election," Edelstein said. "I don't intend to try to do that, and I expect most of my money to come from contributions from locals."
Edelstein's technology experience has already made a mark on his political career. As part of his immersion into Palo Alto politics, Edelstein spent three months talking up residents and building support for a potential candidacy. From that experience, he launched the Palo Alto CityThink, a discussion forum for local issues.
After graduating from high school in Palo Alto, Edelstein attended Harvard. He worked at Microsoft until 1995, Netscape until 1997, and was general manager of Inktomi's search engine business until 1999, when he also collected an MBA from Berkeley. He still runs an angel investment fund called Gemstone-Edelstein Capital I, which has investments in Tellme Networks and Loudcloud. He remains chairman of Viralon, where he is the majority stockholder.
Currently a senior policy analyst for Santa Clara County Supervisor Liz Kniss, Edelstein says his campaign would also emphasize bringing more businesslike "efficiencies" to government.
But Fazzino, with one foot in the high-tech industry and the other in local politics, warns that an attempt to streamline government to make it resemble a well-oiled business could result in frustration.
"The democratic process is an imprecise one," Fazzino warned. "The biggest challenge for someone like Alex, who's very results-oriented, will be the democratic process. It's not very results-oriented. The process of government, of decision-making, has to be every bit as important to you as achieving success."
A dot-com executive accustomed to deferential treatment by employees and sober negotiations with peers may also find interpersonal challenges in the transition to local politics.
"The City Council is very accessible, so you have gadflies, malcontents, community-minded people, all sorts of people showing up at meetings," Fazzino said. "I get calls about barking dogs at midnight on a Saturday. It's not very sexy. That's the one thing I would ask of Alex: He's a fine and brilliant young man, but is he going to be patient enough? It's very different from a dot-com. It's not operating on Internet time, and by its very nature, it shouldn't."
Edelstein has only a few months to make up his mind about the City Council run. The official deadline is not until late July, but the realities of fund-raising and campaigning dictate that successful candidates have to commit to the race sooner.
Should he opt to run, Edelstein will not be the only Internet executive on the ballot. Chris Kelly, chief privacy officer at Excite@Home, has already declared his intention to seek one of the five open seats.
Faced with two candidates with Internet executive experience, Palo Alto voters should consider Kelly's experience in government, he said.
"I think my political experience is a clear plus and having had to do the hard work in public trenches makes a huge difference in terms of getting things done in public life," Kelly said.
While working on a master's degree in political theory at Yale University, Kelly began a stint on the Clinton administration's White House Domestic Policy Council, where he worked on education and job training policy. He also worked for the U.S. Department of Education.
Kelly subsequently graduated from Harvard Law School, clerked with a federal judge in San Diego, and worked on the antitrust case against Microsoft at Wilson Sonsini, the Valley law firm that represented Netscape and others in the antitrust suit. A job with marketing software start-up Kendara led to his current position when Excite@Home acquired it in 1999.
The 30-year-old Palo Alto resident and San Jose native is not putting all his eggs in the political basket, however. If he wins, he plans to keep his position at Excite@Home, which he says is supportive of his run.
Kelly, who serves with Edelstein in the Peninsula Young Democrats as its political affairs director, said he was seeking the City Council seat to work on education issues in Palo Alto, as well as to try to improve the city's electronic infrastructure.
As for his potential rival for the open seat, Kelly declined to sling any mud.
"The nice thing is that we can both win," he said.