The Housing Chronicles Blog: Can former eBay CEO Meg Whitman save California?

Wednesday, March 25, 2009

Can former eBay CEO Meg Whitman save California?

I've always been a fan of eBay -- I've used to sell cars for my family, bought out-of-print sheet music and a studio-quality keyboard, so it's interesting that former CEO Meg Whitman, who has also worked with Bain & Co., Disney and Hasbro, has thrown her hat into the ring to run such an unwieldy state. Many voters have grown apoplectic with Governor Schwarzenegger, who has broken many promises but has basically said, "I can't run again for anything, so what are you gonna do?" So what would she do differently? From a Fortune magazine article:

One reinvention is California, which is more critical to the recovery of the U.S. economy than any other state. Twelve percent of Americans live here. Ten percent of Fortune 500 companies have headquarters here. California's GDP, at $1.8 trillion, makes it the eighth-largest economy in the world. In the past year more people have lost jobs here than in any other state. More homes have gone into foreclosure. More banks have failed. And as Whitman notes, businesses are moving out at an alarming rate, most often citing excessive regulation and intolerable taxes. For top earners, California's taxes are the highest in the U.S. And to what end? California's credit rating is the lowest in the nation.

The other reinvention is the businesswoman who wants to be CEO of the state. Meg Whitman, 52, wasn't born in California - she's from New York's Long Island, and went to Princeton and to Harvard Business School. But she has spent almost half her adult life here. She worked for Disney in strategic planning in the '80s, moved back East, and then returned in 1998 to become CEO of a tiny e-commerce startup. With her big-business knowledge base (from stints at Bain & Co., Procter & Gamble, and Hasbro), she built eBay from 30 employees and $4.7 million in revenue to 15,000 employees and almost $8 billion in revenue.

Her experience growing a large organization and coming to know some of the company's 300 million registered users - 12 million in California alone - fortified her belief that "less government is simply better," she says. She's appalled that California has nearly doubled state spending during the decade through 2008. And she abhors the new budget that Gov. Arnold Schwarzenegger, a fellow Republican and a tarnished model of reinvention himself, muscled through the Democrat-controlled legislature a few weeks ago.

A deal had to get done because California was broke and overdue on $2.8 billion in taxpayer refunds and payments to state contractors. But the new budget that Schwarzenegger signed imposes $12.5 billion in tax increases and $5.4 billion in additional borrowing, along with $15.7 billion in spending cuts...

As for Schwarzenegger, he took office in 2003 after voters recalled Gov. Gray Davis and won reelection in 2006, but he can't run in 2010 because of term limits. His public-approval ratings have tumbled to 38% as he's lost favor mainly with his own Republican Party.

The flailing GOP isn't likely to help Whitman if she makes it past the primary (California's voters are 31% Republican, 44% Democrat). The general election would involve Democratic heavyweights in an era when the party's brand is riding high. The rival nominee could be San Francisco Mayor Gavin Newsom, Los Angeles Mayor Antonio Villaraigosa, or attorney general Jerry Brown, an energetic campaigner who was governor from 1975 to 1983. Brown displays a mix of ridicule and respect when he describes candidate Meg's positioning this way: "'I ran a business. I can buy my campaign. I have zero experience in government. I want to take on the most difficult state government job in America. Therefore, make me governor.' That's her campaign....

Click here for full article.

No comments: