Tom Steyer's Bid for California Governor: A Billionaire's Balancing Act

For those concerned about the influence of Big Tech and billionaires on California’s future, Tom Steyer looks like an obvious choice. A billionaire who amassed his fortune after founding Farallon Capital Management, one of the world’s biggest hedge funds, Steyer quit the firm in 2012 and turned to philanthropy, political advocacy, and climate activism, among other pursuits. Now, he’s jostling for position among a handful of Democratic and GOP candidates looking to advance from a June primary and then win the California governorship this November.

Ahead of the midterms, I’m talking to candidates relevant to WIRED’s interests: A few weeks ago I spoke with Alex Bores, a candidate for New York’s 12th Congressional District, whose history as a Palantir employee and stance on AI regulation has attracted the ire of Silicon Valley–backed super PACs.

Steyer felt like the next obvious choice for a conversation: He’s running to lead a state where issues like AI, immigration enforcement, and climate change, among other core WIRED subjects, are paramount. Steyer’s posture in the race is also unique. He’s been described as a “class traitor” for ostensibly eschewing his fellow elites, voiced support for California’s controversial Billionaire Tax Act—which has everyone from Sergey Brin to Peter Thiel either making moves to or threatening to flee the state—and campaigned hard on affordability, climate policy, and the promise that he’s immune to corporate influence. (As a billionaire spending more than $130 million on his own gubernatorial campaign, I certainly hope he would be.)

As I said, for some Democratic voters, Tom Steyer seems to check a lot of boxes. Then he starts talking.

Steyer is adept, as politicians usually are, at toeing the line. But the line, in politics generally and California specifically, seems to be the problem: Steyer, or whomever is elected to the governorship this November, will be walking an exceedingly thin one. Taxing California’s billionaires without alienating them. Getting a grip on the state’s AI development without throttling it (or, again, alienating the billionaires building it).

I could feel Steyer’s reluctance to come down too firmly or dig in too deeply on issues, maybe to avoid alienating any potential voting block. Which made me wonder: Can Tom Steyer be a pro-billionaire governor who also taxes the hell out of them? Can he rave about the “mind-blowingly amazing” advances in AI while bringing the industry to heel? Can he learn the name of WIRED’s global editorial director (me) before she interviews him?

The third question is answered in the interview. The former two will be formidable challenges for anyone elected to California’s governorship—and I didn’t leave our conversation convinced that Steyer’s posture is a particularly coherent one. The minimum requirement for a California governor might be the ability to use Google.

This interview has been edited for length and clarity.

KATIE DRUMMOND: Welcome, Tom, thank you for joining us on The Big Interview.

TOM STEYER: Kate [sic], thank you for having me.

So, you’re a billionaire. You made your money in the hedge fund world. But now, in the last decade-plus, you’ve become a climate activist. Tell us about that transformation.

When I was growing up, when I got free time, either from school or work, I tried to go to wild places and get outdoor jobs. I worked as a ranch hand, I worked picking fruit. Before I went to business school, I spent the summer in Alaska, and I went to Alaska because I wanted to see what North America looked like before Europeans showed up.

I wanted to see the animals, I wanted to see the birds, I wanted to see the fish, I wanted to look at Denali. I wanted to see what it looked like, vast untracked North America, rich and fertile.

In 2006, I wanted my wife and four kids, none of whom had ever been there, to see it too. So we went up there for a week. I had a whole bunch of plans of what we could see, but what we could see was Alaska was melting. It was really obvious. It's one thing to read about it on a page when you're working away and thinking about a thousand things, but it's another thing to physically see where there used to be a mountain of ice and now it's a valley.

At what point, though, do you say, “I am going to say goodbye to running a hedge fund. I'm going to turn my back on this career, and I'm going to do something totally different. And a big part of that is going to be climate activism”? How did that happen?

Well, I didn't just leave specifically to do climate. You know, it was funny. I was talking to one of my best friends this morning, and he was saying, “Well, the whole point of life is to have a positive impact.”

I would hope so, yeah.

I got very, very scared that I was going to have a life of no meaning. That's actually what it was. It wasn't that I felt like, “Oh, my God, I'm going to die and I've had no meaning.” It's like I've amassed a whole bunch of, you know, numbers on a spreadsheet, but who cares?

Nobody, including me.

I felt somewhat desperate to get out and push for things that had meaning, including climate. I always thought climate was this huge opportunity for us.

A financial opportunity?

An opportunity for America to be America.

I see, I see.

To lead the world, do the right thing, save the world, build businesses around it. But I wasn't trying to build businesses. I was basically trying to give everybody else a chance to say, "Wow."

It's sort of like the fascists show up and America stands up to them, and it turns out to be great for us. I thought it would be good for us, but I also thought that's how we express ourselves as a nation, by standing up for what's right and succeeding and showing the world how it's done.

So I thought, "Here's a great example. There's something clearly wrong here. We can do the tech. We can do the finance. We can do the global leadership. Let's do it, man. Let’s be Americans."

I want to move on to talking about your run for governor of California, but climate is a big piece of that. Obviously, Trump is in office. What kind of power does the governor's seat give you vis-à-vis climate policy, knowing that Donald Trump is the president of the United States?

I think it gives us a chance to show what success looks like. I think what Donald Trump is doing, he's showing the world what failure looks like. He's so scared of failure, and he's failing on an absolutely gargantuan scale. But success looks like moving rapidly to sustainable clean energy that's cheaper, proving to the world that doing this is actually the way to succeed economically as well as doing the right thing. We build a bunch of companies around it. We get some great technologies going, all of which are happening, all of which are within our grasp. It's kind of like the president is desperately fighting to keep us on whale oil. I mean, it's nuts.

Your commitment to being a “good billionaire” is laudable, I think. But your critics have questioned some of Farallon Capital Management, your former hedge fund's, past investments. The New York Times published a piece earlier this month questioning whether you still have financial ties to investments that include fossil fuels. I want to hear from you more fully on this, and I know that our listeners do too. What can you tell voters about the status of your investments vis-à-vis that hedge fund?

The thing that I have left at Farallon is some residual buildings, investing in real estate. I divested from all the oil and gas from there in 2012. That's one of the reasons I left. I didn't feel that I could change that organization. People had signed up, hundreds of people had signed up to run an organization a certain way, and I had moved on.

And, you know, I was the head of it, so you'd think I could just be like, "This is what we're doing." But that's not really how organizations work in my mind, and I'm not that person anyway. So I was like, "No, anything that's left there, you have to get me out of anything related to fossil fuels and a number of other things. I just can't have it." And that happened 14 years ago.

The reason I left was I didn't feel that I could be there and do what I'm doing now without people thinking I was a hypocrite.

What do you think about the fact that you built your wealth in that world? How do you grapple with that? How would you urge voters to think about it?

I think about it pretty simply, which is this: I worked in finance. I went to Stanford Business School. All of those worlds are premised on the idea, which I accepted, that basically the way that progress happens is through a combination of capitalism and democracy.

Mm-hmm.

Therefore capitalism is an engine. You know, Warren Buffett will say this better than I have. He said, basically, capitalism has produced all the material advantage that people have got from all over the world. It is the driving force for a more productive economy and one which produces goods and services at a level that is never before seen in the history of the world, and it is a huge force for good.

And I accepted that. It was kind of like that was the mantra. What happened was, as I was there and started to examine it and think more independently, I thought, "OK, that's true in a lot of ways." It is true in a lot of ways, I haven't rejected it, but it's also the case that it's not always true.

When it isn't true, it can be spectacularly not true. So I felt like, OK, it's no longer a blanket cover for everything. In fact, I felt like I had to lead my life differently, and I had to invest differently, and I had to change because I came to a realization that the basic premise that it's all good is not true.

Therefore, I didn't want to live that way, and I wanted to change the way I invested. I did want to completely change what I was doing, so it wasn't just about investing. I very much wanted to do that, but I also felt like the investing itself, I wasn't as OK with, for the reason you just said. Like, doesn't that seem hypocritical, Tom? It's like, yeah, it does.

It absolutely does.

I was like, “OK, it's gotta stop.” It took me a long time to get out of there. Every single person in that firm was the primary breadwinner for their family. Every single person. And we had the trust of hundreds of pension funds, endowments, and foundations, and I just didn't feel like we could leave them in the lurch. I felt like it's really important to get this transition to happen right, and it took a long time.

But the idea that I haven't made that transition is a decade and a half out of date.

You know, a lot of progressives, and I think some of the voters you're trying to court, don't think that billionaires should exist in the first place. That becoming a billionaire in and of itself is immoral, that there is not an ethical route to being a billionaire and sustaining that level of wealth. What do you say to that?

Look, California is about innovation and ideas. It's about imagining and creating the future. That's what we do. That's what this state is about. Frankly, that's what WIRED magazine is covering.

It is.

People who come up with an idea that's never been thought of before and changed the world.

That's much more possible now for a whole bunch of reasons involving software, information technology, the ability to expand infinitely. So if you say to me, "If someone comes up with an idea that can be turned into a business that can change the world, that can actually do immense good, should we just put a lid on that? Should we not give the incentive there?"

I have a different attitude. My attitude is this: There's a reason people come to California to build a business, because we have the ecosystem to build a business. Most of what that entails is a bunch of people fighting to build a system over a thousand years that involves rule of law, democracy, freedom.

Now, if you look at California, this state runs because of very hardworking, very skilled people who are paid not very much at all.

Mm-hmm.

So when someone says to me, “I'm going to come to California, I'm going to build a business,” great. “It's going to change the world,” great. “And then I'm going to try and rip those people off, not be a good citizen, not pay my fair share, do everything I can to basically extract from that system what it has without being a part of that system,” that offends me.

The extraction you're referring to, is that how you see the current ecosystem in California now? Do you think there is exploitation happening?

No. I think that to a large extent, people come here, they build these great businesses, and mostly they stay, they pay their taxes, they're good citizens, they do a whole bunch of things. There are a bunch of people who don't do that. They come and they're worried that, in fact, they never have to share anything that they made. “It's all mine.”

It is not all yours, by the way. You came here because there was a system that let you succeed. You could have gone to 190 other countries. You could have gone to 49 other states, but you came here for a good reason, ’cause this is the best place to start and build a business. So you should be part of that ecosystem, and you should take pride.

You might call it shared prosperity. You should take pride in the prosperity that you're creating, and you should take pride in sharing it, because this whole system doesn't work with the kind of inequality that we're seeing. I mean, I know you know this, but the inequality is more than the Gilded Age.

Being in San Francisco, for me, for the last 10 years has been a very strange experience. I mean, it is visceral. You can see it when you walk down the street.

One of the issues that you’re being asked to chime in on and that potentially, as governor, you would inherit is the California Billionaire Tax Act. Which is what you were just talking about in terms of shared prosperity. You've said you're in favor of it. You've also said it doesn't go far enough. Tell me more about that, because this is not the most popular idea among some of the prominent billionaires who currently call California home.

Look, I said if it’s on the ballot I will vote for it, and I said it doesn't go far enough. It's a one-time tax. It takes the money, and it puts it into a very specific use that doesn't specifically include education, and one of the things that I'm saying is we need to be much better at education in the state of California.

We really need to refocus on it, because we used to be the best education state. To a very large extent, there are issues with the way that bill is written and designed that I think are very imperfect, but the basic point is this: We have the highest percentage of people in poverty in the United States of America. We have the greatest inequality. We have an incredibly high average income, but that average includes some off-the-charts incomes. The majority of Californians are re