Sri Lankan American Entrepreneur Among Main Supporters of Recall Petition Against California Gov. Newsom
- Venture capitalist Chamath Palihapitiya also flirted with the idea of challenging the Democrat governor.
The petition to recall California Governor Gavin Newsom is in full swing with support from Silicon Valley techies, venture capitalists and entrepreneurs. Prominent among them is Chamath Palihapitiya, CEO of Social Capital, a Menlo Park-based venture capital firm. News reports say the Sri Lankan American businessman recently cut a $100,000 check to boost the recall effort.
Newsom’s term expires in 2013, but his critics are circulating a petition to try to get him out earlier. The New York Times reports that since March, 1.5 million Californians have signed a petition “to oust” Newsom, “enough to trigger an election for a new governor.” The petition needs 1.5 million signatures by March 17 to trigger the special election. According to Ballotpedia, if the petition qualifies, “the special election would include two items: a yes-no vote on whether to recall Newsom and a gubernatorial ballot to pick his replacement.” If enough of the signatures are verified, it will be the fourth recall election of a governor in American history., the Times report says.
A Berkeley IGS poll conducted in late January showed Newsom’s approval ratings have tanked as the Covid-19 pandemic has persisted despite lockdowns and business closures aimed at stemming the spread of the virus. The poll found that just 46 percent of California voters approve of Newsom’s job performance.
Newsom’s Strongest Critic
Palihapitiya has been vocal about his criticism of California’s Democratic governor. The Bay Area entrepreneur and Democratic Party mega-donor has taken to Twitter and news outlets to air his opinions on Newsom.
In previous interviews, he called himself an antidote to California’s economic and social problems, especially during the pandemic. In a Jan. 27 interview with CNBC’s “Halftime Report,” Palihapitiya slammed the Democratic governor for the state of affairs in California. “He has done a terrible job,” Palihapitiya told anchor Scott Wapner, adding, “First step is we need to recall Gavin Newsom.” This is a state that I think is just so absolutely incredible but right now is being run off the rails,” he told Wapner. “To the extent that we could recall him [Newsom] and to the extent that my agenda, which I just tweeted out and explained, resonates with people … I think you would see a renaissance in California that would be glorious.”
The political neophyte briefly contemplated running against the politician he’s trying to overthrow. The Democrat even tweeted a link to a ‘chamathforca.com’ website.
However, just a few days later, he announced that he’s not ready to run. “Let’s be really honest. I’m not ready to do any of that,” he said in his “All-In” podcast. Palihapitiya hosts the podcast with Jason Calacanis, David Sacks and David Freiber, which explores tech and politics.
“What I need to do is, I need to figure out a) My business and where it’s going and b) I do think it’s worth figuring out what are the conflict of interest laws and what do you have to do if all of this were to come to pass, because I cannot make a credible decision unless I do that. Because I just have things that I want to do.” He continued: “I’ll be really honest with you: I’m working on something in batteries that I think is important for a lot of places more than just California, and so if I have to abandon this battery project, I wouldn’t do it. It’s just that simple. So I have to figure that out.”
He told Bloomberg that instead of running for the state’s governor, “he’ll back candidates who share his centrist ideals and eventually plans to spend ‘hundreds of millions a year’ building a machine that can rival the conservative influence of the Koch and Mercer families.”
On his website, which is still active, Palihapitiya calls for zero state taxes, a minimum teacher salary, school choice vouchers and $2,000 for every kid born in-state. “California is a mess — it’s too expensive, our teachers are underpaid, and our schools aren’t good enough,” the website says.
Who is Chamath Palihapitiya?
Palihapitiya, 44, founded Social Capital in 2011 to invest in companies in fields being ignored by other venture capitalists, like health, financial services, and education. The firm has since expanded to also invest in tech companies like Amazon, Tesla, and Slack. In 2018, Palihapitiya shut his VC funds to new investors.
The company’s mission, according to the website, is to “advance humanity by solving the world’s hardest problems.” The company’s investments include Slack, Bustle, Survey Monkey and more than 50 other healthcare, education, financial and consumer services companies. Celebrity Net Worth says Palihapitiya is worth an estimated $1 billion.
Prior to founding Social Capital, Palihapitiya served on Facebook’s senior management team in several capacities, most recently as the vice president of User Growth, Mobile & International. During his four years at the company, Palihapitiya is credited with helping orchestrate the social media platform’s massive growth.
Prior to that, he worked at AOL and became the company’s youngest vice president while heading AOL’s Instant Messenger division. Palihapitiya first entered the venture capital world in 2006 as a principal at Mayfield Fund.
He has 1.3 million Twitter followers and has built a loyal audience as co-host of the “All In” podcast. He is a regular on CNBC as an analyst.
Palihapitiya has been engaged in political lobbying as well. In 2013, he was listed as a founder of lobbying group FWD.us, which pushes for immigration reform, improving education, and enabling technological innovation.
Newsweek says that while Palihapitiya was in Facebook, “on the side he invested in companies such as Disney and Peter Thiel’s Palantir,” which came under fire in 2019 for providing Immigration and Customs Enforcement (ICE) with the digital profiling tools. “Palantir earned more than $24 million in contracts with ICE during the 2020 government fiscal year,” Bloomberg reported. “Thiel, a cofounder of PayPal who was on Facebook’s board, became a business contact and early investor in Palihapitiya’s company, Social Capital, and introduced Palihapitiya to other PayPal executives,” the Newsweek report said.
Born in Sri Lanka, he moved with his family to Canada at age 6. He attended Lisgar Collegiate Institute and graduated at the age of 17. After graduating from the University of Waterloo in 1999 with a degree in electrical engineering, Palihapitiya worked for a year as a derivatives trader at the investment bank BMO Nesbitt Burns.
He moved to California to be with his then-girlfriend, Brigette Lau, and they later married. In 2018, Palihapitiya filed for divorce. Palihapitiya currently lives in California with his girlfriend Nathalie Dompe, an Italian pharmaceutical heiress and model.
Palihapitiya is also a minority stake owner and board member of the Golden State Warriors. A poker player of international repute, Palihapitiya has three World Series of Poker (WSOP) and two World Poker Tour (WPT) wins. In 2011, he finished 101st out of 6,865 entries in the World Series of Poker’s Main Event.
King of SPACs
Palihapitiya is making headlines not just for his support to the recall petition. He is one of the main proponents of SPAC (Special-Purpose Acquisition Companies), one of the hottest trends among dealmakers in Silicon Valley. According to the Economic Times, SPACs are “investment vehicles, which have been around for decades,” and “have emerged as a popular alternative to the traditional IPO, or initial public offering, for several private startups.” The Wall Street Journal reports that “SPACs are raising more money and outnumbering traditional IPOs.” This year alone, SPACs have raised $38.3 billion since the start of 2021, compared with $19.8 billion by traditional IPOs, the Journal says. They are also known as ‘blank cheque’ companies, and are shell companies created with the sole intention of merging with a private business.
Through his SPAC group Social Capital Hedosophia, Palihapitiya has sponsored six such companies, raised a total of $4.34 billion, and acquired businesses across several sectors including space travel, health insurance, financial services and real estate. Last month, he invested in two companies — smart lockmaker Latch and solar lender Sunlight Financial -— going public via blank-check vehicles. Through his Social Capital Hedosophia Holdings I, he took Virgin Galactic public and made it the first listed human spaceflight company. Last week, Palihapitiya’s SPAC group Social Capital Hedosophia filed for seven new SPACs, the Economic Times reported.
In a recent Bloomberg “Front Row” interview, Palihapitiya described himself as the Warren Buffett of the new generation. He dismissed the chairman and CEO of Berkshire Hathaway. “Nobody’s going to listen to Buffett,” he told the “Front Row,” adding: “Buffett doesn’t have the energy to say what he said 30 and 40 years ago in 2021. And that’s OK, he’s basically earned the right to chill out and be the GOAT, but there have to be some other folks that take that mantle, take the baton and do it as well to this younger generation in the language they understand.”
And that language is social media. Twitter is his preferred platform. “I am a byproduct of my generation and media culture, which is faceted,” he told the “Front Row,” adding, “Not always great facets, but multifaceted. And so you have to speak in the language of the times in order to get your point across.”
He is a player in the bitcoin surge. In a Feb, 9 tweet, he revealed that he spent $1.6 million of bitcoin on some land in 2014. “Loss porn: In 2014 I bought an empty lot in Lake Tahoe for $1.6M….in Bitcoin,” he wrote. “Price adjusted for today, I paid $27.5M for it.”
Last month, Palihapitiya became a staple on news channels. Newsweek says he became “a viral sensation after he weighed in on the shakeup on Wall Street over GameStop and other ‘meme stocks,’ which retail traders coordinating on Reddit pumped up in value to stick it to hedge fund short sellers.” In a CNBC interview, he defended Reddit and its users. “I think what you’re seeing is a pushback against the establishment in a really important way,” said the venture capitalist.
However, Palihapitiya has received criticism for his SPACs, political policy and tweets. The Financial Times said Palihapitiya is a “shilling risky reverse-mergers to retail investors on an almost bimonthly basis.” And Newsweek said, “Whether or not he ends up running for public office, Palihapitiya represents a counter to the resurgent progressive wing of the Democratic Party: a corporate-friendly Third Way centrist, with a sprinkle of social justice rhetoric but also an intense devotion to libertarian free-market triumphalism.”
Trouble Brewing
Clover Health, the healthcare company that Chamath Palihapitiya took public last year, is currently under investigation by the Securities and Exchange Commission. Palihapitiya took over the New Jersey-based Medicare insurance company in October in a $3.75 billion deal, the Financial Times reported. On Jan. 8, he took the company, founded by Vivek Garipalli, public.
The Clover Health investigation comes after Hindenburg Research, an investment research firm, released a report on Feb. 4. “Today, we reveal how Clover Health and its Wall Street celebrity promoter, Chamath Palihapitiya, misled investors about critical aspects of Clover’s business in the run-up to the company’s SPAC go-public transaction last month,” the report said.
Palihapitiya began having problems with Social Capital in 2018. Axios reported then that there was a massive decrease in Social Capital fund’s operations. A lot of the top management in the company, including venture capital partner Arjun Sethi resigned. “Chamath Palihapitiya burns down what he built,” Axios reported. “Social Capital no longer will raise outside capital, and instead convert itself into “technology holding company that mostly invests CEO Chamath Palihapitiya’s own money,” the report said.
Despite the ups and downs, Palihapitiya told Bloomberg he wants to follow his strategy: That “he has no plans to ‘cut and run’ like the other billionaires fleeing his state, loyal, stay on brand, hide nothing. I make better decisions when I am authentic and transparent,” he said. “The best way to do that is just to be living my life out for everybody to see.”
Bhargavi Kulkarni has been a journalist for nearly two decades. She has a degree in English literature and French. She is also an adventure sport enthusiast, and in her free time, she likes to cook, bake, bike and hike.