Draper’s plan to split up Cal­i­for­nia makes waves

Ven­ture cap­i­tal­ist’s ini­tia­tive qual­i­fies for Novem­ber vote

USA TODAY US Edition - - MONEY - Jes­sica Guynn USA TO­DAY

SAN FRAN­CISCO – Even in Sil­i­con Val­ley, where wildly im­prob­a­ble ideas are the coin of the realm, few peo­ple put much stock in Tim Draper’s rad­i­cal plan to break up Cal­i­for­nia.

But the icon­o­clas­tic 60-year-old ven­ture cap­i­tal­ist is sa­vor­ing vic­tory this week after his ini­tia­tive to split Cal­i­for­nia into three states got enough sig­na­tures to qual­ify for the Novem­ber bal­lot.

Draper, who made a name for him­self fund­ing Hot­mail, Skype and Tesla and as an out­spo­ken cham­pion of cryp­tocur­rency, says Cal­i­for­nia is fail­ing its cit­i­zens. He ticks off the ways one by one: de­te­ri­o­rat­ing qual­ity of life, crum­bling roads and bridges, an un­der­per- form­ing ed­u­ca­tion sys­tem, bal­loon­ing pen­sion obli­ga­tions, political crony­ism and un­friendly poli­cies that are driv­ing busi­nesses out of state.

The only an­swer, he says, is to start over with smaller states that can run more ef­fi­ciently and with less red tape. Greater com­pe­ti­tion would force gov­ern­ments to be more re­spon­sive to the needs of res­i­dents and busi­nesses. And, he claims, Cal­i­for­nia would get six Se­nate seats and more political clout in Wash­ing­ton.

If this sounds like an el­e­va­tor pitch from a starry-eyed start-up vy­ing to dis­rupt an es­tab­lished in­dus­try, that’s be­cause it is – but this one is squarely aimed at Cal­i­for­nia vot­ers.

“There’s a mo­nop­oly govern­ment in Cal­i­for­nia, and I’m a startup guy,” Draper told USA TO­DAY. “When there’s a mo­nop­oly in­dus­try or an oli­gop­oly in­dus­try where the ser­vice is bad and the price is

high, I look at that as an op­por­tu­nity for an en­trepreneur or some­body to come in and create a bet­ter ser­vice at a lower cost.”

His ar­gu­ments have not swayed Cal­i­for­ni­ans in the past. A pre­vi­ous ef­fort to slice up the state into six parts failed to make it onto the bal­lot twice.

In Septem­ber, Draper re­booted the cam­paign with a more tem­pered ap­proach to re­draw­ing state lines, with one state cen­tered around Los An­ge­les and the other two slic­ing up the coun­ties to the north and south.

Draper is tap­ping a rich vein of re­sent­ment in Cal­i­for­nia, be­tween the more lib­eral coastal pop­u­la­tion cen­ters and the more con­ser­va­tive moun­tain ar­eas and be­tween its cit­i­zens and the state’s sprawl­ing bu­reau­cracy.

But he faces hur­dles. Among them: it would prob­a­bly re­quire the ap­proval of the Cal­i­for­nia leg­is­la­ture and Congress, rat­i­fi­ca­tion by 38 states and the bless­ing of Pres­i­dent Don­ald Trump. There’s loads of op­po­si­tion, in­clud­ing the NoCABreakup group led by for­mer Demo­cratic As­sem­bly Speaker Fa­bien Nunez, and lit­tle pop­u­lar sup­port. An April poll found only that 17 per­cent of Cal­i­for­nia vot­ers sup­port the idea.

“Cal­i­for­nia govern­ment can do a bet­ter job ad­dress­ing real is­sues fac­ing the state, but this mea­sure is a mas­sive dis­trac­tion that will cause political chaos and greater in­equal­ity,” said Steve Mav­iglio, who is run­ning an op­po­si­tion cam­paign to Draper’s ef­fort.

Plus, Draper’s plan has com­pe­ti­tion from an al­ter­na­tive pro­posal – an­other group wants Cal­i­for­nia to se­cede from the U.S. in a “Calexit” move­ment. His­tory isn’t on his side, ei­ther: The last time the breakup of a state was ap­proved by the U.S. govern­ment was in 1863, when West Vir­ginia wanted to split with Vir­ginia dur­ing the Civil War.

Draper dis­misses talk that the odds are against him. Now that the ini­tia­tive is on the bal­lot, he says it’s catch­ing fire.

“Every startup has hur­dles,” he says. If it suc­ceeds, “this would be tremen­dous. You’d get a clean slate. You wouldn’t have all the bag­gage that’s keep­ing Cal­i­for­nia down. Each state would have its own way of gov­ern­ing and would be held ac­count­able by its cit­i­zens who might move from one state to an­other if they didn’t like what was go­ing on in that state.”

Yet de­spite dip­ping their toes in state pol­i­tics for pet causes, few if any tech­nol­ogy lead­ers have staked their per­sonal rep­u­ta­tions and mil­lions of dol­lars on a sin­gle ini­tia­tive in such a high-pro­file way.

A lanky man with a bari­tone voice and lib­er­tar­ian views, Draper is a third-gen­er­a­tion ven­ture cap­i­tal­ist who grew up rid­ing his bike on the dirt path that is now Sand Hill Road. He’s known for risk­tak­ing, whether it’s mak­ing mul­ti­mil­lion-dol­lar bets on un­proven tech star­tups, be­ing chased by a Cape buf­falo in Africa, hang­ing from a Cirque du Soleil trapeze at his 50th birth­day party or swim­ming across the frigid San Fran­cisco Bay with­out a wet­suit. One night in China a street ven­dor con­vinced him to down a cup of what al­legedly was snake blood to im­prove his brain.

For a mem­ber of the Sil­i­con Val­ley es­tab­lish­ment, Draper has al­ways thought pretty far out­side the box. In a place where ven­ture cap­i­tal­ists wear a uni­form (but­ton downs, Patag­o­nia vests and khakis), he sticks to suits. In­stead of con­cen­trat­ing his in­vest­ments, he has a scat­ter-shot ap­proach that has pro­duced a few huge pay­offs. And this denizen of all things tech­nol­ogy isn’t shy about ven­tur­ing into new are­nas. He co-owns two sa­fari camps and an is­land re­sort in Tan­za­nia and played Prin­ci­pal Schmoke on Nick­elodeon’s The Naked Brothers Band.

USA TO­DAY

1 – Pop­u­la­tion fig­ures are es­ti­mated. SOURCE Cal­i­for­nia's Sec­re­tary of State

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