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Chamath Palihapitiya, Silicon Valley SPAC King, Wants to Be Governor of California
“California is a mess — it’s too expensive, our teachers are underpaid, and our schools aren’t good enough.”
Chamath Palihapitiya, Silicon Valley mogul turned SPAC kingpin, wants to add a new title to his CV: governor of California.
“It’s on,” Palihapitiya tweeted late Monday night, adding the hashtag #RecallGavinNewsom. The tweet linked to a website, “chamathforca.com” which was titled “Chamath for California Governor.”
“California is a mess — it’s too expensive, our teachers are underpaid, and our schools aren’t good enough” was the provocative tagline.
California’s difficulties in dealing with the Covid pandemic and the wildfires that threaten residents in Northern California, along with its high costs and taxes, have led to a lot of grumbling among its citizens — and an exodus of Palihapitiya’s cohorts in the tech and investment world. These include people like Elon Musk, who is relocating himself and his Tesla electric car company to Texas.
Although some have questioned (on Twitter and to Institutional Investor) whether another billionaire is what the public is clamoring for after four years of the Trump presidency, that doesn’t seem to faze Palihapitiya, whose firm, Social Capital, is based in Palo Alto. For weeks, he has been tweeting about the state’s woes and hinting that he’d run for governor before apparently pulling the trigger.
The entrepreneur’s announcement quickly got 15.4 thousand likes. Among those applauding him was SkyBridge co-founder Anthony Scaramucci, the former Trump official and now Republican Party gadfly, who gave it the “on fire” emoji.
But others aren’t so sure. “He’s running in a recall election that doesn’t yet exist,” said Carson Block, the Muddy Waters Capital founder who is also critical of California Governor Gavin Newsom. Block said he has gone so far as to investigate the likelihood of the success of a Newsom recall and says he found there have been “dozens of recall attempts against California governors. Only one resulted in a recall election. That was Gray Davis.”
Block, who said he now plans to move his family to Austin, Texas, after aborting plans to move to New York City because of Covid concerns, said of Palihapitiya, “If he’s really serious about running for governor, I’d want to hear about the 2022 plans.”
Palihapitiya doesn’t say whether he is running as an independent or a Democrat, but he donated heavily to Democrats during the 2020 election cycle.
Finding out exactly what Palihapitiya stands for is another matter. His platform includes the elimination of the state income tax (whose highest marginal rate is 16 percent) and paying teachers a minimum annual salary of $70,000.
“Is there a f------ footnote on how this works?” asked Block. “We all want it. How do you get there?”
Palihapitiya did not return a request for comment.
On his website, Palihapitiya suggests that his plans to “drive growth” will increase the state’s revenue from $15 billion to $30 billion, solving the problem.
But his view on taxes seems at odds with what he told II in an interview last May. At that time, he said he was unfazed about plans for a wealth tax, then promoted by two Democratic presidential candidates, Senators Elizabeth Warren and Bernie Sanders.
“Taxes are going up,” he said. “It doesn’t matter whether it's called the wealth tax or not, for both companies and for individuals… This is a grand 40-odd-year experiment in trickle-down economics, and it's coming to an end.”
[II Deep Dive: The Unusual Ambitions of Chamath Palihapitiya]
At that time, he also said Alexandria Ocasio-Cortez would win the Democratic presidential nomination in the future, ushering in universal healthcare and free college tuition. “I think that she is masterful and she kicks ass,” he said, in admiration. Palihapitiya, a Canadian citizen who was a refugee from Sri Lanka and grew up on welfare, has praised that country’s progressive policies.
“I am a by-product of an enormous number of progressive ideals — universal health care, almost-free basic education, a social welfare policy to take care of the lowest rungs of society but give them a path of upward mobility,” he told II.
To be fair, the “Chamath for California Governor” platform also includes an end to student loans, a $2,000 credit to every child born in the state, and free school vouchers, plus a pledge to make California a global center for tech and climate jobs.
But other California hedge fund managers remain skeptical of Palihapitiya’s intentions.
“We’ve become a country obsessed with social media influencers,” said one hedge fund manager based in San Francisco. “That’s how we end up with an incompetent and dangerous president.”
“Maybe Chamath runs, maybe he doesn’t, but in the interim he’s gotten a whole new set of fan boys on WSB [WallStreetBets, the Reddit forum] that are going to buy up his SPACs,” he suggested.
Indeed, a few hours after Palihapitiya announced his run, the investor said he had also bought options on GameStop, the heavily-shorted stock that the Reddit users had been buying — almost taking down a $12 billion hedge fund along the way
Palihapitiya tweeted around noon Tuesday that he had bought February $115 calls on GameStop, and the stock took off anew. GameStop shares jumped more than 90 percent on Tuesday, closing at $147.98.
“It's not Reddit vs Ken Griffin,” tweeted Zero Hedge on the news, referring to the bailout of Melvin Capital by Citadel announced Monday. “It's Chamath vs Ken. We have a billionaire vs billionaire rumble in the jungle.”
“We will win,” retweeted Palihapitiya, who has also launched a number of SPACs (special purpose acquisition companies) that have taken off.
Such a win might be easier than becoming governor.