Gavin Newsom wants to be the governor of California. Eventually. "But not now!" he laughs ruefully. "Let me wait until next year. Who the heck wants it now!"
Newsom, the famously hair-gelled, gay-marrying, hate-him-or-love-him mayor of San Francisco, has politely interrupted our conversation at Max's Opera Cafe, a favorite haunt near San Francisco City Hall, to check a text on his iPhone. Breaking news: Governor Arnold Schwarzenegger has just announced the layoffs of 5,000 state workers and proposed the sale of beloved state-owned landmarks, his most recent fist shake at the budget gods to stave off California's fiscal disaster. "Well, that's not surprising," says Newsom.
The state is bedeviled by plunging revenues, widespread foreclosures, failing schools, crumbling infrastructure, and a shaky credit rating, all being tackled by an openly loathed legislature with an 11% approval rating — and a governance system that seems frozen in a bygone era. By all best estimates, California, the eighth-largest economy in the world, is staring into a $20 billion black hole.
Over green tea and appetizers, Newsom does a perfect impression of the Governator, who had called to lobby for his support in the state-budget battle. "Oh, Gavin, come on. You got your rainy-day fund and San Francisco is doing well... ." Newsom concedes that California needs some of the things that Schwarzenegger proposed, "but not thrown together in the dead of night, just to make a deal." What the state needs, he says, is a revolution. And a little less democracy.
"We need to dramatically change the state's governance structure," he tells me, to do away with "turn-of-the-century rules and regulations that haven't been reviewed in relation to each other or in the reality of a modern world." One target: the requirement that two-thirds of the legislature approve the budget. "Arkansas and Rhode Island are the only two other states that have this requirement," he says. (He's only partly right. Arkansas has a three-quarters threshold for most appropriations; a handful of other states require supermajorities in some cases.) "If the rationale is that it is supposed to help the voters control spending — can anyone tell me that California has been restrained?" He also believes that shifting more decision making to a regional level would mean a saner conversation about how to allocate resources and make decisions. And, of course, there is tax policy, which, he says, is based in a manufacturing mindset, rather than the realities of a service economy. "Why do we have sales taxes on golf balls and not a round of golf? Why on pet supplies and not on vet services?"
Newsom, 41, is a walking, talking PowerPoint presentation, a blizzard of ideas, stats, and plans. He's a stunningly good broadcaster of information, but listening can turn into a battle of wills and attention spans. "I'm long-winded, I know. I accept that critique," he says, smiling. This is my second sit-down with him in San Francisco. I've also watched him testify before Congress on greening affordable-housing stock, lead a tour of a homeless facility at the annual meeting of the U.S. Conference of Mayors, and speechify before gay-marriage true believers at a D.C. funder — always without notes.
But for all his skills, Newsom is a polarizing figure. He has been hailed as a governance pioneer and burned in effigy. He's criticized for everything from his sartorial flair to his trips to Davos. The local media savage him, and his affair with his secretary — the wife of his campaign manager — gave them plenty of ammunition. He is known nationally as a poster boy for gay civil rights and an architect of the same-sex-marriage movement (and perhaps not known enough for his attempts to make San Francisco a greener city where everyone has a home and health care).
Now he wants to take on a massive leadership challenge. California may be too big to fail — but how can the state that's home to two sectors critical to the entire U.S. economy, tech and entertainment, be saved? It's the kind of transformation many legacy-bound corporations, from the auto companies to Wall Street banks, are struggling to achieve. In fact, California is so devilishly hard to run that it might make even some carmakers grateful for their comparatively simple task.
Currently, this pretty boy with baggage is a long shot to become governor; he would need to beat the likes of Democrat Jerry Brown and Republican Meg Whitman, the ex-CEO of eBay. But his ground game, a series of town-hall forums around the state, has been surprisingly successful, even in some conservative zip codes. The drumbeat is growing for a constitutional convention. California may be sufficiently broken to jettison its take-it-to-the-voters decision making and remake its governmental structure. Can Newsom advance that idea — as he did with same-sex marriage — even if he doesn't win?
After our conversation at Max's, Newsom is off to a fund-raising dinner in Silicon Valley, hosted by "Anne and Lucy," better known as Mrs. Sergey Brin and Mrs. Larry Page, respectively. He takes special care to note that, although plenty of boldface Valley names will be there, it's not an official Google event. "Wouldn't want to hear that on The O'Reilly Factor," he says.
Newsom needs to prove that he can garner the support of business titans both to fill his coffers and to help him make his case. One local CEO echoed a common refrain: "What's he done? He's never here, and when he is, he's grandstanding." And the venture capitalists I've spoken to aren't sure they've seen their candidate yet. "This is a leadership issue," says Mitchell Kertzman, managing director at Hummer Winblad Venture Partners. With the onerous budget-making process and the remnants of Prop 13 (which limits property taxes) creating funding logjams, "someone has to be courageous and modify these things." If California were a business? "I'd wipe the slate clean," says Kertzman, "bring the valuation down at near zero, and agree to start again. But this isn't Chrysler or a startup we're talking about."
Fixing government by making it run like a business is the strategy Newsom originally campaigned on, and it's the one Whitman seems to be sticking with. Long married and congenitally buttoned up, Whitman is emphasizing her "strong values" and business record while she formulates an expanding portfolio of views and solutions. "Growing the economy, creating jobs will be a big priority," she told me recently, reverting effortlessly to her talking points.
Newsom, who has business credentials of his own, concedes that in a campaign, "you can usually get away with the 'I'm going to run government like a business' thing. It's an applause line." And then, he says, you get into office. "It's a civil-service system. It's not just a right/left advocacy thing. It's nuanced. And it takes time not just to fire people, but to hire them." You can either legislate change or go to the voters. By then, new economic realities hit. "And you have to react to that," he says. "You have less influence outside your realm than you think."
"You can get away with the 'I'm going to run government like a business' thing," Newsom says — until you get in office.
A fourth-generation San Franciscan, Newsom grew up in a home of modest means run by a determined, divorced mother who worked two-and-a-half jobs to make ends meet, took in boarders, and fostered children. "She was a waitress," he says. "So I worked as a busboy." Hindered by severe dyslexia, he struggled in school. But his mother enforced a work ethic that kept him disciplined and focused. "I worked construction and had paper routes," he says. His sister, Hilary, once told the San Francisco Chronicle that her brother has been presenting himself as a power broker with slicked-back hair and tailored suits since he was a teenager. "I don't know about that," he says, rolling his eyes. "I'll say I was a focused kid."
His father, a judge famously associated with the Getty family, "was a great dad, but he wasn't there much," Newsom recalls. But through his father, he developed a relationship with Anne and Gordon Getty, who ended up investing in the wine store he opened in 1992. (They also paid for a hefty chunk of Newsom's first wedding.) Still, Newsom says, "When there was a heat wave and all my wine bottles popped, I was so undercapitalized that I had to tap the equity on my $179,000 condo. I know how hard it is for businesses that can't tap the credit markets now." The wine shop was the first piece of PlumpJack Associates, which he built into a successful business with 14 operations, including a café, two wineries, and two resorts; its 2007 revenue was reported to be in the vicinity of $50 million. (He retains an interest in the businesses that operate outside of San Francisco proper.)
But there's that baggage. He divorced his first wife, Fox newscaster Kimberly Guilfoyle, in 2005. The next year, his affair hit the news. He calls it a terrible personal mistake. While he reassures me that there is a part of the story that has yet to come out, he says, "I can reconcile everything but not the pain that I caused. I hurt two people, and that is my great regret."
He is now remarried to Jennifer Siebel Newsom, an actress and aspiring documentary filmmaker who, when I meet her in May, is imperceptibly pregnant with their first child. Cynical murmurs have suggested that this is a made-for-TV marriage, complete with camera-ready spawn. But watching Siebel Newsom wow the crowd at the recent Professional Business Women of California's annual conference suggests that she has some heft of her own. She's friendly, talking policy and women's issues without any handlers. She shows an eight-minute teaser of Miss Representation, her documentary on images of women in popular culture. "We're in our own fund-raising crisis right now," she says of her unfinished film. "I'm ready with my elevator pitch anytime."
"It seems that all my friends are running for governor," says Marc Benioff, CEO of San Francisco — based Salesforce.com. Benioff, whose grandfather was a city supervisor largely responsible for the BART transportation system, says gubernatorial candidate Jerry Brown is a family friend; they have the same yoga teacher. "And Meg is a friend. I'll be contributing to both campaigns." (He adds, however, "As a CEO of a company in San Francisco, I have trouble supporting a candidate who is pro — Prop 8 [which banned same-sex marriage in California]. It's just too difficult for me. I have so many employees and friends who are gay, and I've seen how that proposition has just ripped them apart.") But Benioff sees a winner in Newsom. "He is incredibly bright and understands the issues," Benioff says, noting that, unlike previous mayors, Newsom has made a serious effort to address the city's significant homeless problem. He concedes that the controversies around the mayor's personal life have been a distraction — "but he deals with them really well." Where others criticize Newsom's trips to Davos, Benioff sees an upside: "He works well with other leaders around the world. They support him."
Newsom has begun tapping a committed fan base outside the state. In early May, he attended a fund-raiser at Halo, a gay bar in D.C. Hailed as a "straight ally" for gay civil rights, he told a story about a time not so long ago when it was illegal in 16 states for blacks and whites to marry. "The history of the rights movement has never been defined because the majority decided casually the fate of minorities," he said. "It's been decided historically because the courts have protected the rights of the minorities from the whims of the majority." It's not hard to imagine similar rhetoric about the tyranny of the California voter — mandating funds for specific programs, blocking taxes to pay for other essential services, and, in Newsom's view, taking away the rights of minorities with initiatives like Prop 8 — being melded into his stump speech.
This is one of the ironies of San Francisco politics: Many of the same people who adore Newsom now hated him just a few years ago. The first fight was over the controversial Care Not Cash program he proposed as a city supervisor, which limits cash payments to the poor, providing services instead. "My idea was that we were hardly solving anybody's problems and abdicating responsibility by handing over cash and walking away," he says. "That hardly seemed compassionate." The outcry from mostly liberal (and gay-activist) camps was swift. He was accused of turning his back on the poor. "People forget that they literally shut down the streets and burned my body in effigy," he recalls. Fliers were distributed with his address, and he was harassed at all hours of the day and night. "I had to sell my home!" The program, which had its fifth birthday on May 3, has had mixed results, but, says Newsom, "We've seen an 82% decline in the [homeless] caseload." Some 2,600 people have been housed, and some 700 more have found housing on their own. (San Francisco remains a mecca for the homeless; according to the most recent city survey, 40% of the homeless have been there for less than three months, and total numbers, down dramatically since 2002, have edged up over the past two years.) Recalling the bitter fight to get Care Not Cash approved, Newsom re-creates his rallying cry, one that will surely come in handy in the days ahead: "I kept saying, 'Don't assume me wrong; prove me wrong.' "
Shortly before I met with the mayor in May, the Civil Grand Jury, an annual performance review peculiar to San Francisco and conducted by citizen volunteers, tried to do just that. Among other things, the Grand Jury urged him to start "managing the city by the numbers, rather than just publicizing those favorable to him." Newsom is still incredulous at the criticism, pointing to his insanely detailed State of the City address, seven-and-a-half hours' worth on YouTube, as proof that he shares all information, good and bad. "We use statistics and measurements, and organize our department meetings around real-time information," he explains, something he calls his "accountability matrix," which he says he stole from New York's Mike Bloomberg. "And we grade ourselves first." Ultimately, he says, bristling, "I don't think they understand how you govern a city."
Then he dismisses the Grand Jury report with a wave. "You walk down the street and six out of seven folks are going to be saying, 'What's up, Mayor? Thanks for everything!' And the seventh says, 'You make me sick to my stomach. I can't believe you're the mayor.' It used to be the other way around." Pointing out the window, he says, "I can give you 10 public-policy things we did in this square block alone."
Newsom has just come from a budget negotiation gone sour — the Service Employees International Union Local 1021 rejected some $38 million in wage concessions. (Shortly after our meeting, Newsom announces 1,000 job cuts to help close a $438 million budget deficit. The hardest hit will be the Department of Public Health.) But he has also had some recent successes. He broke ground on a water-system-improvement project outside the city limits that will help create 28,000 jobs in the Bay Area. "Our bond rating went up; we were able to sell our bonds," he says. The state's rating, in contrast, has slipped.
Newsom's campaign embraces all the bells and whistles of modern stumping. He announced his candidacy on Twitter and had his first official appearance at Facebook headquarters, in Palo Alto. "We're picking up where Barack left off," he says.
The combination of technology, entrepreneurialism, and data crunching, Newsom says, could offer a blueprint for change around the state, as it has in the city. He points to an extended survey of San Francisco done by his administration that revealed that "the vast majority of our challenges arose within seven street corners." The area, near Bayview — Hunters Point, has been a picture of despair, plagued by toxic waste dumps, high crime, and persistent poverty, and mired in development-related litigation. The study provided a literal road map of community need and inefficiently delivered services. "There was no system, no way to coordinate what the city was doing," Newsom explains. From that survey came $4 million in grant money and a program called Communities of Opportunity. It has been slow going and residents remain skeptical, but Newsom insists that the seeds of progress are there: "We are creating a businesslike approach that gets agencies to work interdependently."
If it is this difficult to turn around a single neighborhood, could it be that California, like, say, Citigroup, is not only too big to fail, but also too big to manage? Newsom argues that the size and diversity of the state make local control of money and priorities driven by data essential: "I understand how specific the issues are to each region."
Yet today, Sacramento controls the purse strings. And that, according to Jim Mayer, the executive director of California Forward, a bipartisan group hoping to influence a total overhaul of the state's governance system, is an unintended consequence of Prop 13. "What most people don't realize is that in addition to capping property taxes, Prop 13 consolidated power into silos of programs and layers of bureaucracy in Sacramento," he says. "We have 8, 9, possibly 10 major economic regions with vastly different needs. We should decentralize." Mayer believes that there are easier ways to fix California than a constitutional convention. "Some of it will be legislative, some ballot-oriented, but a lot will come from cultural change," he says. "This is where new systems of local governance can make a difference."
This speaks to Newsom's point. Local insight and related action is what people want, he contends. "We have patience for government when we can see it work in our lives." Politics "is about stop signs and street corners, as much as anything else."
"We have patience with government when we can see it work in our lives," Newsom says. "It's about stop signs and street corners."
That focus has made Newsom a favorite son within the U.S. Conference of Mayors. I learned that the hard way. Last year during the annual conference in Miami, I accompanied a gaggle of mayors, led by Newsom, the co-chair of its Task Force on Hunger and Homelessness, to a meeting and tour of a homeless facility. As usual, he spoke knowledgeably and without notes to a rapt crowd. Afterward, I spied him rushing back to the conference venue in his own motorcade, instead of taking the minibus with the rest of us. I asked where he was going and took out my notebook. Suddenly, three dozen mayors turned on me. "Hey! Leave Gavin alone!" one shouted. "He's amazing!" Angry murmurs, then the kicker: "Anyway, he's riding in a hybrid!" Getting California voters to share this enthusiasm will require a gargantuan effort — second only to the task of saving the state.
A version of this article appeared in the July/August 2009 issue of Fast Company magazine.