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Document 23 of 27.

May 8, 1999

SECTION: CAMPAIGN FINANCE; VOL. 31, No. 19

LENGTH: 1818 words

HEADLINE: Searching for the Right Password

BYLINE: Neil Munro

BODY:

Silicon Valley's techno-libertarians are notoriously
stingy with their campaign donations, despite the great wealth
generated by their Wall Street stocks. But at least four
presidential hopefuls--two Democrats and two Republicans--hope to
reap big dividends from their high-tech ties:

* Vice President Al Gore has been mining Silicon Valley
for years, visiting California 54-plus times during his White
House tenure and holding frequent tete-e-tetes with industry
leaders. Gore's numerous trips to California are ''a show of
commitment,'' says John Witchel, a partner at USWeb/CKS Inc. of
Palo Alto, Calif., who has raised $ 30,000 for Gore.

* Former New Jersey Sen. Bill Bradley spent the last year
hobnobbing around the Valley, while teaching at Stanford
University. ''He took the opportunity to get to know Silicon
Valley and the issues of importance to the Valley and that went
noticed here,'' said John Hummer, a Bradley supporter and co-
founder of Hummer Winblad Venture Partners, who helped raise up
to $ 1 million at an April 13 fund-raiser for Bradley in San
Francisco. The San Francisco-based firm provides seed capital,
expertise, and business contacts needed by high-tech start-ups.

* Texas Gov. George W. Bush has enjoyed strong financial
support from high-tech firms in his home state and hopes to
replicate that success in California. Bush's high-tech
supporters, led by E. Floyd Kvamme, one of the 11 senior partners
at the Valley's most successful venture capital firm, Kleiner
Perkins Caufield & Byers, organized a $ 4,800 advertisement in the
San Jose Mercury News backing Bush. The ad was signed by a slew
of local notables, including Jim Barksdale, former CEO of
Netscape Communications; and Bob Herbold, chief operating officer
of Microsoft Corp. This show of support by top executives gives
Bush a leg up in the quest for donations from the very rich CEOs
and the just-plain-rich middle-managers who aspire to be CEOs,
say GOP fund-raisers.

* And Senate Commerce, Science, and Transportation
Committee Chairman John McCain, R-Ariz., whose panel has
jurisdiction over telecommunications issues, won support in
Silicon Valley with his recent decision to abandon his bill
curbing the export of data-scrambling encryption technology, and
instead offer a bill that would allow a board--which industry
will probably dominate--to grant or deny export licenses for
encryption products. Such exports have long been opposed by the
FBI and intelligence agencies.

The search for high-tech support is taking place on two
fronts. There are only a limited number of CEOs, company
presidents, venture capitalists, and name law-partners in the
Valley--but there are tens of thousands of middle-ranking vice
presidents, executives, marketing managers, chief programmers,
and salespeople. The trouble is, few of these managers have
contributed before, and few have any regard for East Coast
politicians. Indeed, these managers often espouse a libertarian
mix of unfettered free markets, personal autonomy, and impatient
optimism. It's a combination that guarantees disagreements with--
and sometimes contempt for--the slow-moving, compromise-seeking
establishment pols in Washington D.C. Their anti-government
attitude is ''naive at best, totally turned off more often,''
said one Washington-based lobbyist for the high-tech industry.

But Steven G. Papermaster, a Bush backer who chairs
Powershift Group, a high-tech venture capital firm in Austin,
Texas, said that this attitude is disappearing. Government is
affecting ''everything from antitrust to taxation, privacy to
encryption, so you have a lot of savvy managers who, like it or
not, have come to endorse candidates because their jobs and
companies are subject to a lot of activity by government,'' he
said.

So far, no candidate has made clear inroads into middle
management, although Gore can claim some success: Witchel, at
USWeb/CKS, and Steven Westley, vice president for marketing at e-
Bay Inc., persuaded 60 ''rank-and-file investment bankers and
project managers to write their first checks ever,'' for an April
6 fund-raiser that netted almost $ 400,000 for Gore, said Wade
Randlett, a member of the Valley's Technet lobbying group.

This leaves the venture capitalists--including Hummer and
Floyd Kvamme--as the most politically visible people in the
Valley. They know and care about policy, they have time to raise
money, and they have fat Rolodexes of business partners willing
to buy $ 1,000 tickets. The venture capitalists led the Valley's
first forays into politics in 1996, when they organized a $ 40
million ballot battle against law firms that specialized in suing
high-tech firms.

Here's a look at the matchmaking between some of high-
tech's leading players and the presidential candidates:
Gore

The Vice President's principal champion in Silicon Valley
is John Doerr, a senior partner at Kleiner Perkins. For Gore's
April 6 fund-raiser, Doerr rallied about 25 major Gore
supporters, including Sanford Robertson, president of the venture
capital firm S.R. Robertson & Co. Gore can count on many other
prominent supporters, including Halsey Minor, founder of the
Internet news service CNet; Eric Schmidt, CEO of Novell Inc.;
Regis McKenna, chief of the McKenna Group, a management-
consulting firm; and Marc Andreeson, who helped develop the
browser that rocketed Netscape Communications Corp. onto Wall
Street, and, most recently, into the arms of America Online.

Gore has also been reaching out to the burgeoning biotech
industry, which is closely intertwined with computer companies
and venture capital players. Gore's most prominent supporter
there is Art Levinson, president and CEO of Genentech Inc., based
just north of Silicon Valley in San Francisco.
Bradley

The former New Jersey Senator has also assembled a fair-
sized fan club in the Valley, including venture capitalist
Hummer; his business partner Ann Winblad; Larry Sonsini, a
partner at a leading law firm in the Valley, Wilson Sonsini
Goodrich and Rosati; and Ted Schlein, another partner at Kleiner
Perkins. This group helped raise nearly $ 1 million at an April 13
fund-raiser in San Francisco, about half of which came from
Silicon Valley, Hummer said.
Bush

The Texas Governor's most outspoken champion in the
Valley is venture capitalist Floyd Kvamme, who has already raised
several thousand dollars and said he would invite at least 50
more executives to a Bush fund-raiser in late June or early July.
This event should be well attended, partly because Kvamme and his
allies have already lined up a lot of support for Bush. It is
expected to bring in at least as much as the $ 400,000 raised by
Gore. Another prominent Bush supporter is Charles Schwab, CEO of
the San Francisco-based Charles Schwab & Co., a leader in
Internet-based stock trades. The company does not develop
technology, but is one of its leading users, handling billions of
dollars in electronic trades per day for a few million clients.
While the firm is not part of Silicon Valley's inner circle of
technology developers, it is a leader among the many firms
promoting pro-Internet policies, such as the Internet Tax Freedom
Act, which bars out-of-state collection of Internet sales-taxes.

Bush can also count on some home-state support. For
example, Austin venture capitalist Steven Papermaster and his
allies in Texas' high-tech sector--including Michael Dell,
founder of the nation's leading computer-manufacturer, Dell
Computer Corp.--raised somewhat more than $ 1 million for Bush's
gubernatorial run in 1998 and expect the national industry ''to
do much, much more than that'' during a presidential race,
Papermaster said.
McCain

While Charles Schwab is backing Bush, co-CEO David
Pottruck of Charles Schwab & Co. is supporting McCain. McCain, a
free-market hawk, also enjoys support from senior executives at
the Bell telephone companies, television broadcasters, and
satellite operators, all of whom are increasingly intertwined
with the Valley's Internet industry and many of whom have already
donated to McCain's Senate re-election fund.
And Also . . .

Other Republicans face an uphill climb in winning high-
tech support. Elizabeth Dole's champion is John Heubusch, vice
president for government relations at Gateway 2000 Inc., a major
computer manufacturer based in South Dakota. Heubusch has some
experience with fund raising; he helped run the Republican Senate
campaign fund in 1995 and 1996, when it raised $ 80 million.

Rep. John R. Kasich, R-Ohio, had a Valley fund-raiser in
late March and raised just over $ 20,000, and plans another soon
to highlight his message of ''managing America from the bottom
up,'' said one of his chief backers in the Valley, Mark Kvamme,
chairman of CKS Group Inc., a prominent Valley-based marketing
company that owns USWeb/CKS. Mark Kvamme is the son of Floyd
Kvamme. Kasich is also supported by Scott Cook, founder of Intuit
Inc., a leading software firm.

Meanwhile, Steve Forbes counts Craig Barrett, president
of chipmaker Intel Corp., among his supporters.

Despite the rivalries between the various fund-raisers,
they all expect great success in the high-tech sector, if not
now, then in a few years. The executives' youth and staggering
wealth, the importance of their companies, and their personal
ambitions will guarantee them enormous clout over the next few
decades. As Gateway's John Heubusch said, ''It's phenomenal the
potential of political power that they could hold.''
John Doerr
Age: 47
Address:Silicon Valley
Work: A partner with Kleiner Perkins Caufield & Byers, one of the
Valley's top venture capital firms
Politics: In 1996, he identified himself as a Republican who
supported Bill Clinton and Al Gore, but since then has been
Gore's most visible supporter in the Valley.
E. Floyd Kvamme
Age: 62
Address:Silicon Valley
Work: A partner with Kleiner Perkins Caufield & Byers, one of the
Valley's top venture capital firms
Politics: Rallied Valley support for Bob Dole in 1996 and for
gubernatorial candidate Dan Lungren in 1998. Now he is George W.
Bush's leading supporter in the Valley.
Steven G. Papermaster
Age: 40
Address: Austin, Texas
Work: Chairman of the Powershift Group, a venture capital firm,
and CEO of Agillion Corp., an Internet firm
Politics: Supported George W. Bush in 1994 and 1998, and is now
building business support for Bush's presidential race.

LOAD-DATE: May 10, 1999

Document 23 of 27.


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