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Coastal appeal
Jones taps friends from Silicon Valley, other tech hotbeds to give Daniels big boost in fund-raising race Sat. October 06 - 2007

Peter Schnitzler - pschnitzler@ibj.com

IBJ staff

Silicon Valley venture capitalist Jack Gill doesn’t know Mitch Daniels personally. Gill is not a Hoosier, and he doesn’t typically get involved in Indiana politics. He doesn’t even always vote Republican. Nonetheless, he’s got a strong opinion about Daniels’ job performance.

“I think Daniels is the best and the most qualified governor we’ll see in our lifetimes,” he said.

“Indiana is on the verge of playing at a new level. But we need Gov. Daniels to see it through and make it happen.”

Learn how the two men became connected and you’ll understand how Gill—and dozens like him—are being recruited from far beyond state lines to support Indiana’s incumbent governor.

On Oct. 9, Gill will be in the crowd at technology entrepreneur Scott Jones’ Carmel mansion. Jones, who organized the event, aims to collect $1 million for Daniels in a single day. Jones is billing it as the biggest political fund-raiser in Indiana history.

Hundreds of local leaders of the hightech business community will be on hand. But Jones is counting on wealthy friends from Silicon Valley and other technology hotbeds around the nation to put Daniels over the top.

“They’re putting in some serious cash, and they don’t have to,” Jones said. “They don’t live here. But they care about Indiana, like I do.” Tapping relationships

Like many who’ll attend the fund-raiser, Gill seems an unlikely sort to take sides in an Indiana election.

Originally from Texas, he spent the bulk of his career at the firm he co-founded, Palo Alto, Calif.-based Vanguard Ventures. Between 1981 and 2000, Vanguard raised $155 million in capital for speculative investments in high-tech startups. It’s one of the most successful firms in VC history. Over those two decades, Vanguard returned $1 billion to its investors.

Now semi-retired, Gill splits his days teaching entrepreneurship at Harvard, MIT, Rice and Stanford universities. He’s always kept a foot in academia, Gill said, because universities are where innovations most frequently occur.

Indiana University gave Gill his first and strongest connection to this state. He received a doctorate in organic chemistry there in 1962.

But in the subsequent decades, Gill seldom returned. That began to change in the 1990s, when two of Gill’s sons earned IU degrees. The cream and crimson crew in Bloomington has been cultivating the relationship since, making Gill an adviser to the business school, then a board member of the IU Foundation.

In 2004, IU persuaded Gill to teach a class on high-tech startups. He agreed to provide course content and promised repeat appearances. But he couldn’t make every session, so he recruited Jones to serve as his classroom proxy. They’d met at a Boston speaking engagement. And this year, on Jones’ recommendation, Daniels made Gill an IU trustee.

Jones’ and Gill’s friendship now goes beyond education. Gill is an investor in Jones’ human-assisted Internet search engine startup ChaCha. When ChaCha raised its initial capital last year, Gill said he put Jones in all the right rooms and in front of all the right people.

In much the same way, Jones is drafting support for Daniels from his huge network of wealthy friends.

Popular agenda

Networking is the catalyst for their contributions. But wealthy out-of-state entrepreneurs wouldn’t buy into the Daniels campaign unless they agreed with his policies and leadership style.

They call Daniels, a former Eli Lilly and Co. executive and aide to President Bush, innovative and aggressive. They praise his controversial decision to lease the Indiana Toll Road to a foreign consortium for $3.8 billion, and they say he’s created a business environment ripe for outside investment.

“[Daniels] has truly focused on [entrepreneurship], and we’ve seen signs he’s making a difference,” said Mike Hatfield, another Daniels contributor from the Silicon Valley. “That’s why you’re seeing such a strong interest.”

A Middlebury native, Hatfield sold his broadband communications firm Cerent Corp. in 1997 for $7.3 billion. He provided the foundation cash that set up the Indiana Venture Center, which helps Hoosier startups develop and grow.

John McIlwraith, managing director of Cincinnati-based venture capital firm Blue Chip Venture Co., travels in some of the same investment circles as Gill and Hatfield. McIlwraith considers a contribution to Daniels’ campaign an investment in the innovation pipeline.

“As far as governors who seem to get it when it comes to creating the right environment for high-growth tech companies, he’s high on the list,” McIlwraith said. “If Indiana is successful, it will give us more investment opportunities. It feeds on itself.”

Daniels campaign spokesman Cam Savage said the governor had $4 million in total contributions as of his last full campaign finance report. In his first race against Democrat Joe Kernan, Daniels raised $15 million. Savage expects the governor to top that figure for his 2008 campaign.

Not intimidated

For their part, Democrats aren’t intimidated by Daniels’ growing war chest.

Indiana Democratic Party Chairman Dan Parker said he expects an incumbent governor to raise a lot of money. But recent polling shows Daniels is vulnerable, Parker said.

He said that either former U.S. Rep. Jill Long Thompson or Indianapolis architect Jim Schellinger has a good chance to unseat Daniels, so long as the governor doesn’t outpace the Democrats’ fund raising by more than a 2-to-1 margin.

Both Democratic candidates are trying to position Daniels as an isolated autocrat who’s out of touch with everyday Hoosiers—and in the pocket of corporate fat cats.

“Hoosiers are not going to accept the average-guy act again. So he needs a lot of money to cast himself in another image,” Parker said.

“People want their governor to understand the realities of their lives and Mitch Daniels doesn’t get it. Hanging out with 500 entrepreneurs from the East and West Coast won’t put him in touch with their concerns.”

IUPUI political science professor Bill Blomquist said the impact of Jones’ $1 million fund-raiser will depend on how many of the contributors are new to the process, as opposed to folks who would have given money to Daniels anyway.

And despite Daniels’ financial head start, Blomquist said the Democratic nominee should be able to keep pace.

“There’s no reason for either one of them to bail out at this point because they’re intimidated by the money the governor can raise,” he said. “All this does is tell them what they knew anyway. Whichever gets the nomination, they’re going to be running against a very well-financed incumbent governor.” •

COMMENTS: ( Posts 1 - 7 ) out of 7

Indiana Jones
Indianapolis , IN - US

Posted on Wed, Oct 10 2007	# 1 \| Report as bad post. \| Reply
Tax abatements didn't begin 2-3 years ago I'm not a fan of tax abatements, but realize, Indiana, that awards of this nature didn't begin with Governor Mitch Daniels and his administration.

From one "Ignorant Hoosier"
Indianapolis , IN - US

Posted on Tue, Oct 09 2007

# 2 | Report as bad post. | Reply

Re: Small Business
Tell you what - you be a divorced parent, raise two children, work full time and try to go back to college (which I have done twice) then have to explain to the court system why you're going back to college doesn't take time away from your raising children. But I will say this - someone with 20 years high-level working experience should make more than $38k/year, which sadly is more than some teachers. You do realize that Indiana's salaries are not keeping up with the national cost of living, and that while other states are keeping pace, Indiana is not? You also don't need a college degree to realize that while some of the decisions that Mitch is making may be good for the Indiana economy (i.e., Toll Road, etc.) personal and property taxes continue to rise. Big companies continue to get tax abatements for 5, 10, 20 years - who do you think makes up the difference for the tax money the state isn't getting from these companies? I would think that you being a small business owner would be incensed over that, unless your company is one that was fortunate enough to receive a tax break.

Gary
Avon , IN - US

Posted on Mon, Oct 08 2007	# 3 \| Report as bad post. \| Reply
Mitch's net worth should be public Note, Mitch is worth perhaps between 100 and 200 million dollars. He has been a corporate executive or Washington politician or politically affiliated for over 20 years, maybe 30 years. Regards, Gary Gaunnac

Small Business
Indianapolis , IN - US

Posted on Mon, Oct 08 2007

# 4 | Report as bad post. | Reply

Small Business
Everyday as a small business owner I am just amazed at how ignorant most hoosiers really are. Their lack of understanding on how the economy really works is just amazing. You complain about making less then $40k, go to college and study something besides English or History and your starting salary will be more then that. And there is nothing wrong with bringing foreign money in to Indiana, Indiana didn't sell the toll road they leased it, and better yet got an up front payment over a payout over the next 75 years. No one complained about Honda or Toyota coming in to Indiana, they own land here and they are paying hoosiers, the toll road is no different. And learn how to turn your freakin clock back the rest of the world does it.

Indiana Girl
Indianapolis , IN - US

Posted on Mon, Oct 08 2007	# 5 \| Report as bad post. \| Reply
Re: Is He Our Man? I agree! Pretty soon, we won't be called "Indiana" 'cause "your man Mitch (he's not my man)" will have sold the entire state to a foreign company! Surely, there has got to be a better option!

Maggie
Indianapolis , IN - US

Posted on Mon, Oct 08 2007

# 6 | Report as bad post. | Reply

Is He Our Man?
When Daniels and his million dollar roundtable invitees can live a year on less than $40,000 a year, support two children and understand (and resolve) how overtaxed and underpaid the average Hoosier is, then I'll consider voting for him. Until then, I'll keep looking at other candidates. Additionally,if Gill and his California buddies put in a lot of money for Daniels re-election campaign, does that mean more and more external state contracts will go to out of state suitors?

Neil Pennies
Carmel , IN - US

Posted on Sun, Oct 07 2007	# 7 \| Report as bad post. \| Reply
Typical Democrats So having the staunch support of the brightest mind in the state is a bad thing? Didn't Democrats learn from O'Bannon's mistakes that backwards old boy politicians can't get the job done?