Tom Steyer Makes His Case for Billionaires

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2:16From WIRED, this is The Big Interview, where we get to know the people beyond the headlines in conversations that explore the intersection of technology, power, and culture. I'm WIRED's Global Editorial Director, Katie Drummond. Ahead of the midterm elections, we've been talking to candidates in key races across the country. Among the big ones to watch is the governor's race in California, where several Democrats and two Republicans are in the race to succeed incumbent Democratic Governor Gavin Newsom, who can't run again because of term limits. One of those hopefuls is billionaire climate activist Tom Steyer, who is largely self-financing his run.

2:52So far, Steyer's campaign says he spent more than$130 million in his quest for the governor's office, which is closing in on a state campaign spending record. The dynamics of the race have shifted, especially among Democrats, since one of the frontrunners, former California rep Eric Swalwell, dropped out of the race and resigned from Congress in April following allegations of sexual misconduct. The latest polling from Emerson College Polling and Inside California Politics shows a close race, with former Health and Human Services Secretary Javier Becerra just slightly ahead of Steyer and Republican Steve Hilton, who are neck and neck.

3:27Tom joins me now to talk about his campaign, climate activism, and California's role on the national stage. Thank you for joining us on The Big Interview. Kate, thank you for having me. So I want to start with your background because you are a billionaire and you like to tell the story of your transformation, right? where and how you made your money in hedge fund world to now and in the last sort of decade plus being actually a climate activist. Tell us about that transformation. In terms of climate, what happened was this. When I was growing up, I spent, when I got free time, either from school or work, I tried to go to wild places and get outdoor jobs.

4:06So, you know, I worked as a ranch hand, I worked picking fruit. And after, 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. And 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, you know, vast, untracked North America, rich and fertile. And in 2006, I wanted my wife and four kids, none of whom had ever been there to see it too. Like, this is what it used to look like. So we went up there for a week and we tried to, you know, I had a whole bunch of plans of what we could see, but what we could see was Alaska was melting.

4:51It was really obvious. And 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. It's amazing. And so you started sort of grappling with that realization. At what point, though, do you say, I am going to say goodbye to running a hedge fund, right? I'm going to sort of 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 mean, I didn't just leave specifically only to do climate.

5:29Sure. 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. Yes. Yes. And 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 – 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 numbers on a spreadsheet. But who cares? Nobody, including me. And so I felt somewhat desperate to get out and push for things that had meaning, including climate. I spent a lot of time thinking, how is it that...

6:16I always thought climate was this huge opportunity for us. Like, oh my God. A financial opportunity? No, an opportunity for America to be America. I see, I see, I see. Leave 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. And 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. I want to move to talking, actually, about your run for governor, but climate is a big piece of that.

6:51Obviously, Trump is in the office. He's the president of the United States, as he will be, presumably, for another few years. What kind of power does the governor's seat give you vis-a-vis climate policy, knowing that Donald Trump is the president of the United States? Well, 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. I mean, 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.

7:39We build a bunch of companies around it, get some great technologies going, all of which are happening, all of which are within our grasp, but which, you know, it's kind of like the president is desperately fighting to keep us on whale oil. The president is trying to outlaw color TVs. We need to stay with the black and white models that really work. I mean, it's nuts. Your commitment to being sort of, quote unquote, a good billionaire is laudable, I think. I have more questions about it, but sort of on its face is an admirable commitment. Your critics have questioned some of Faleron, your former hedge fund's past investments, right?

8:15The New York Times published a piece earlier this month questioning whether you still have financial ties to investments that include fossil fuels. And 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-a-vis that hedge fund? I did. The thing that I have left at Fairline 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, you know, that I could change that organization. People had signed up. Hundreds of people had signed up to run an organization a certain way.

8:55And I had moved on. yeah and you know you'd think i started it i was the head of it you'd think i could just 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 and 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 so no they that new york times article was silly and it's not true 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.

9:32When you think about the fact that you built your wealth in that world, how do you think about that and how do you grapple with that? And how would you urge voters to think about it? I think about it pretty simply. Yeah. 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. And therefore, capitalism is an engine. And Warren Buffett will say this better than I have. He said, basically, look, capitalism has produced all the advantage, the material advantage that people have got from all over the world.

10:24It 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. and it was kind of like that was the mantra and what happened was as I was there and started to examine it and think more independently I thought okay that's true a lot in a lot of ways it is true in a lot of ways and so I haven't rejected but it's also a case that it's not always true and when it isn't true it can be spectacularly not true. So I felt like, okay, it's no longer a blanket cover for everything.

11:11And in fact, therefore, 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. And 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 okay with. For the reason you just said, like, doesn't that seem hypocritical, Tom? It's like, yeah, it does. It absolutely does. And that's why I didn't do it.

11:49I was like, okay, it's got to stop. And it took me a long time to get out of there because everybody who I had hired, 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. And I felt like it's really important to get this transition to happen right. And it took a long time. But the truth was, 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 I would argue including some of the voters you're trying to court, don't think that billionaires should exist in the first place.

12:32That becoming a billionaire in and of itself is immoral. That there is not sort of an ethical route to being a billionaire and sustaining that level of wealth. That another Tom Steyer, in essence, shouldn't be able to exist in 20 years. What do you say to that? Well, I don't agree with that. And I'll tell you why. Yeah, tell me more about that. Look, we have ideas. 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. And 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.

13:12And, you know, 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 and we could go into all of what that entails. But 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.

14:05Now, if you look at California, this state runs because of very hardworking, very skilled people who are paid not very much at all. And 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. And that offends me. That extraction you're referring to, is that how you see the current ecosystem in California now? Do you think that there is sort of an exploitation happening?

14:51No. I think that to a large extent, I feel like people come here, they do 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. You know, they come and they're worried that, in fact, that 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 because this is the best place to start and build a business.

15:27So you should be part of that ecosystem and you should take pride. You know, I 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. Obscene. Being in San Francisco for me for the last 10 years has been a very strange experience. I will say that. I mean, I think it is visceral. I think that you can see it when you walk down the street. I think it is appalling in many respects.

16:01And I'm curious, you know, one of the issues that you are being asked to chime in on and that, you know, potentially as governor, you would inherit is this California Billionaire Tax Act, right, which is what you were just talking about in terms of sort of shared prosperity, I think ties very cleanly into that issue. 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. And I'm wondering about how you grapple with that as, you know, a potential governor of the state.

16:39Look, I said, if it's on the ballot, I will vote for it. And I said, it doesn't go for, 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. And so 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.

17:19We have the greatest inequality. We have an incredibly high, you know, average income, But that average includes some off-the-charts incomes. The majority of Californians are really struggling to make ends meet. Really struggling. I mean, millions of people giving up their health care insurance so that they can make rent. People who have worked, been fully employed for 20 years, working for UC, living in their cars. I mean, that doesn't make any sense. And so what I'm talking about is how do we redress this? And part of that is we need to have a sense from everybody of shared prosperity. You said, am I against billionaires?

18:03No. I want people to come here and change the world. And there's some stuff going on that is absolutely mind-blowingly great. Honestly. I want us to be the generator of ideas and innovation that changes the future for everyone in the state, builds great companies, and changes the world. I just want it to be done in the context of a system that doesn't forget our teachers, doesn't forget the nurses, doesn't forget the people who are working in the schools, doesn't forget the custodians. There's a sense that somehow these people are ripping off the system. That is the absolute opposite of the truth.

18:45These are the people who make the system run, and they are really at their wits end. And that's why I'm running. Look, it's not right. This election is about do you think we need change in California? If you think that this extraordinarily unequal system, which is getting more unequal all the time, should go on exactly as it is, there are a lot of people to vote for. But if you believe that it's impossible for most people to afford California and that we need to stand up for working people, then honestly, I'm the only game in town, which I find ironic, too, that the billionaire is fighting for working people and the career politicians are fighting for billionaires.

19:26I find that ironic, but it happens to be true. We're going to take a quick break and we'll be right back.

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22:08I mean, look, it's a tough equation for anyone to need to solve in the sense that, yes, it is very important that San Francisco and California remain engines of innovation, right? That the people leading these companies stay, that the companies themselves stay, right? I mean, we've seen some technology companies, Tesla comes to mind as one example, that have relocated out of California. I can't imagine that is something you would want to see continue. So it's how to retain that sort of innovation edge, right, which is what so many of the people who are opposed to this act say, that California will lose its edge when it comes to innovation and invention because people will go elsewhere.

22:48How do you preserve that while also creating a more egalitarian society, a more egalitarian order in California? I don't envy anyone trying to solve that dilemma, but do you worry about losing the tech billionaires, right? Do you worry about losing the companies? I want to make sure that we remain the center of innovation. I want to make sure that we remain the place where the companies that are changing the world are begun and grow and stay. Absolutely. In my mind, the reason that California is what it is, is, and you know, you work at Wired Magazine, Kate, so I'm sure you've thought about it.

23:31I run Wired Magazine, Tom. You do? I sure do, yeah. Do you know Katrina Herron? The only other woman who's ever run it? Old friend of mine. Oh, wow. You didn't know that? No, I didn't know she was your friend, but I know that she is the only other woman other than me who's ever run it in 33 years. She's an old friend, but that's beside the point. I remember back in the tech wreck of 2000, 2002, and I was talking to an old friend of mine who's a venture capitalist. And he said, the stocks come and go, but the technology, the innovation, the real creativity happens here. And I said, well, why is that?

24:11He said, take a look. It's not happening anywhere else. I said, tell me what? And he said, you want to start a tech company in the Bay Area? You have your choices of CFOs. You have your choices of CTOs. You have your choices of all the different things. Anyplace else, you don't. So this is the place where there's actually the human capital. That's the key part of this. You can't build these companies because companies are built around people. And as long as we have the ecosystem of people, that's really the secret sauce. And that's why I'm such a maniac about making sure we have this great higher education system.

24:51That's why I'm a big believer. I think immigrants have built California. I love immigration to California. I want people to come here who want to, you know, work their tails off and really change the world. So to a very large extent, I'm upset, though, that someone who comes here and really takes advantage of a great system that, as I said, people have worked on for a thousand years and thinks that they did it by themselves. It's not true. If that were true, you could go over to Slovenia and start a company and see how that goes. On the subject of immigrants, you have publicly called for abolishing ICE.

25:26California, of course, is a sanctuary state. So that puts you potentially right at the center of a fight with the federal government, coming back again to President Trump. How do you make sure California maintains its sanctuary status if you're elected governor? How do you go head to head with the federal government on this? I think we enforce our state laws. You know, we have to prosecute people who racially profile in the state of California. It is illegal. We have to prosecute people who use violence against the people of California, and including the people who send them to do violence. We have to inspect the detention centers because clearly they're closed for a reason.