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She ran EBay, can she run California?

Meg Whitman says she would make trade-offs as governor to put the state's financial house in order. She hopes to open voters' minds to a former corporate CEO after a run of movie stars and professional pols.

February 16, 2009|MICHAEL HILTZIK

I may be projecting a bit here, but I wonder if a certain desperation among the electorate won't be Meg Whitman's biggest advantage in the forthcoming race for governor of California.

We've tried professional politicians (Pete Wilson, Gray Davis). We've tried a Hollywood action star and a melodrama second banana (Arnold Schwarzenegger, Ronald Reagan). We've tried a colorless nobody (George Deukmejian) and a publicity magnet (Jerry Brown). And after all that, here we are, bankrupt and uncertain, saddled with another state budget that everyone knows is really a fraud, next year's problem masquerading as this year's solution.

Is it time to hand the statehouse over to a corporate CEO?

Whitman, who retired last March after 10 years running EBay, believes her experience makes her "uniquely qualified to be the chief executive officer of California in these economic times," as she told me last week, shortly after announcing her candidacy for the GOP nomination for governor.

"I managed and led very large and complex organizations," she said. (Before EBay, she held executive positions at Hasbro, FTD and the investment consultancy Bain & Co.) "I balanced the budget throughout my entire career. I have prioritized projects and made trade-offs. This is something that the state is going to have to learn how to do."

Whitman certainly has an impressive record. She pulled off perhaps the hardest feat of entrepreneurship -- building a new business model almost from scratch. When she joined EBay in early 1998, it was an online service for hobbyists, with fewer than 50 employees, 300,000 users and $4 million in revenue. When she retired it employed 15,000, brought in $8 billion a year, and with 246 million regular users reigned as the dominant auction marketplace on the Web.

Whitman imposed MBA-style order on EBay's nerdly culture, led it to a spectacular initial public offering only a few months after joining, and managed it through growing pains involving such issues as how to beat online fraud, whether to allow the sale of guns and ammo (answer: no), and how to meet competition from Yahoo and Amazon.

Yet there's reason to wonder whether she can overcome the lesson of history, which tells us that it's very hard for a successful CEO to morph into a successful politician.

The list of would-bes is long. It includes H. Ross Perot, whose "my way or the highway" creed attracted lots of attention in the 1990s, until voters concluded that the people you meet on the highway are a little less, well, insane. Investment executive Mitt Romney -- a Whitman mentor at Bain, as it happens -- served one uneven term as governor of Massachusetts, during which the Legislature overrode his every attempt to veto a budget item. Then he ran for president/CEO of the United States and flamed out.

The list of contemporary success stories pretty much begins and ends with Michael Bloomberg, the notoriously tough-minded founder of a financial data company, who has become popular enough as mayor of New York to push through a rule change allowing him to run for a third term.

Recently I asked Fred Smith, the founder of FedEx, why he never considered running for office. He said he didn't think the skill sets for successful politicians and executives were identical. "It's not enough to be a great executive and have great managerial skills," he said. "You have to have those political skills." (He was not talking about Whitman, whom he knows and admires.)

When I suggested to Whitman that a corporate executive suite might not be the best place to acquire the common touch essential in modern politics, she replied that EBay's executive suite was out of the ordinary. The EBay user community she dealt with was "incredibly diverse," requiring her to learn that "you could not please all of the people all of the time. . . . The analogy isn't perfect, but people used to say, 'Meg, you're the governor of the EBay community.' "

She also said it was wrong to think that all CEOs operate by ordering people around, which doesn't work in politics. "When you're running a large organization, the best way to not have people do what you hope they do is dictate. You've got to negotiate; you have to bring your executives along."

The unanswered question is what Whitman would do differently from any of her predecessors. Every governor of a revenue-strapped state talks about prioritizing and making trade-offs. For 5 1/2 years the Schwarzenegger administration has been lecturing us about balancing the budget, living within our means and cutting wasteful programs. Schwarzenegger hasn't achieved any of that because slogans don't help you actually trade things off. In real life, all programs on the chopping block have constituencies that are perfectly capable of fighting one another to a draw.

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