Californians love long-shot bets. Actors trying to make it big in LA, tech founders chasing unicorns in San Francisco, cult leaders trying to found religions in Pasadena. In Silicon Valley, VCs turn the long-shot bet into an art: if some new startup has a 5% chance of making a billion, that’s $50 million in expectation. Just a whole state full of people looking for weird opportunities.

…which makes it extra funny that the biggest opportunity of all came by a few months ago, and they all missed it.

My claim is that basically anyone with the slightest amount of fame or money - any B-list actor, any second-tier tech CEO, any successful blogger or influencer, maybe me, maybe even you - could have maneuvered themselves into a position where they had a 5-10% chance of becoming Governor of California.

Let’s start at the beginning.

Governor Gavin Newsom had a bad year. First he pissed off Republicans with his strong response to COVID. Then he pissed off the people who wanted strong responses to COVID by attending an unvaccinated unmasked dinner. Also, taxes are still high, homelessness is still high, rents are still (too damn) high, and parts of the state are literally on fire. Gavin Newsom didn’t cause most of this, but he also hasn’t announced any particularly inspired plans to fight it. Just a really, really bad year.

(also, his ex-wife is dating Donald Trump Jr, which has to hurt)

California has a long tradition of direct democracy. Citizens can circulate petitions, and if they get enough signatures, everyone has to vote on them. After several tries, Republicans finally got enough signatures on a “recall Newsom” petition to trigger an election. The way the election works is: there are two questions on the ballot. First, should Newsom be removed as governor? Second, if he is removed, who replaces him? Everyone gets to vote on both questions, so even if you want to keep Newsom you can still vote on who replaces him if he loses.

Several top California Republicans signed up as replacement candidates. But top California Democrats didn’t. The state party officially recommends voters say no to recalling Newsom (obviously), but also that they leave the question about his replacement blank. In keeping with this policy, no important Democrat has signed up as a potential replacement candidate. A few randos with (D)s next to their name signed up for vanity campaigns, but that’s it.

Maybe at some point this seemed like a defensible position? California is a deep blue state, so maybe Democrats thought they could just…not dignify the recall with a response? [EDIT: Commenters bring up that in the 2003 recall election, Democrats fielded a great replacement candidate, lots of Democrats who disliked the governor voted yes on recall because it was costless with such a good replacement, and then the governor got recalled and Republican Arnold Schwarzenegger won the replacement election. Now they want to try the opposite strategy of forcing Democratic voters to oppose the recall entirely.] But the mask mandates are lasting longer than expected, the wildfires are pretty bad this year, and Newsom supporters lack all conviction while his opponents are full of passionate intensity. For whatever reason, polls show the recall-Newsom question is 50-50 to pass right now.

That left Democrats under increasing pressure to unite around a Democratic replacement candidate. This wouldn’t mean abandoning Newsom - just telling voters “Please vote no on the recall, but in case the recall wins anyway, please vote for so-and-so as the replacement.” But since no real Democrats are on the ballot, they need one of the randos who ran a vanity campaign.

Right now the leading rando is Kevin Paffrath, a “YouTube landlord influencer”. I didn’t even know this was a thing, but apparently it is, and Kevin Paffrath does it. Also, at one point he was charged with disorderly conduct for running through a rival YouTube personality’s offices while dressed as a Christmas elf. Kevin isn’t anyone’s first choice for a Democratic standard-bearer. But apparently the other randos are even worse. So here we are:

Source here. It sums to more than 100% because of usual prediction market issues like fees, transaction costs, etc.

The markets give Paffrath about a 10% chance of becoming Governor of California.

I think this makes sense. Republicans might turn out to vote in higher numbers than Democrats, which would mean the recall passes. But they might split their votes among the many interesting Republican candidates, the Democrats might all vote straight Paffrath, and Paffrath might win. This isn’t the most likely scenario, but, again, 10% chance.

So my claim is: if you (or I or whoever else) had been thinking clearly six months ago when candidacy applications were open, you could have done what Kevin did. Sign up as a candidate to replace Newsom. Put a D after your name. Campaign under a banner of “Keep Newsom, but choose me as a backup”. If you didn’t have a history of elf-related misadventures, maybe the Democrats would have united around you instead of Paffrath. And then you’d have the 10% chance of becoming CA governor instead of him.

Are there any strong arguments against this claim?

Maybe it was impossible to realize things would be this close back when applications to become a candidate were open? But those didn’t close until July, and in July the prediction markets were already giving Paffrath a 10% chance. Granted, the argument was a little different (Newsom was looking stronger, and popular Republican talk show host Larry Elder hadn’t declared his candidacy yet), but 10% is 10%, right?

Maybe Paffrath is a stronger candidate than I think? His YouTube has 1.9 million subscribers, compared to (eg) only 35,000 ACX subscribers, so maybe he’s actually a really big Internet celebrity, such that minor Internet celebrities can’t compete? But I think YouTube subscribers are just really easy to get. Google Trends shows pre-campaign Paffrath gets about 5-10x times higher search volume than I do, which I guess is a lot. But I have infinity times fewer elf-related misadventures than he does, so I still think it’s pretty even. There is another Democratic candidate named Patrick Kilpatrick who doesn’t seem clearly worse than Paffrath but hasn’t gotten the same level of name recognition; maybe you would end up in the same place? I’m not sure. My guess is Kilpatrick just didn’t spend enough money.

Maybe in fact Paffrath is rich and able to outspend everyone else? But here’s the graph of campaign spending this cycle…

Source is here. I know he’s a dark horse, but I think it would be kind of fitting if ERROR got elected California governor.

…and it shows Paffrath spending $250,000 or so. There are 1.1 million millionaires in California, any of whom could presumably outspend him if they wanted.

Maybe if you joined the race after Paffrath, you and Paffrath would split the Democratic vote and a Republican would win? I think this is the strongest objection. But Paffrath isn’t getting lots of attention because he’s organically running a great campaign. He’s getting attention because the media is looking for some Democrat to tell people to vote for, and he’s the best they can find. If you had been around as an elf-related-misadventure-less Democrat for the media to unite around, maybe you could have just trounced him.

Maybe you should actually be scared of the California Democratic Party and its demand that no Democrat stand as a replacement for Governor Newsom? I think this makes sense if you want a future career in California state politics; probably they can blacklist you forever if you cross them. But I wasn’t expecting to have a future career in California state politics, neither were you, and probably neither was Kevin Paffrath. That’s why we would have been able to take this weird opportunity that all the real politicians turned down. Also, given the level of competence they’ve shown here, having the California state Democratic Party out for your head is probably the surest path to a long and healthy life.

Maybe becoming governor isn’t as cool as it sounds, because you’d only get to serve out the last year of Newsom’s term, then get replaced in 2022? But in 2022, you’d be the Democratic incumbent, and even if the rest of the party tried to remove you, you’d have a strong platform to fight back from. Also, even if you didn’t care at all about governing California, it would be a heck of a way to shape the national conversation. I would never have heard of Paffrath if not for all this. How many more landlords do you think are watching his videos now?

Maybe subjecting yourself to the misery of a campaign for a mere 10% chance of becoming governor isn’t worth it? I think this is true for a lot of people. But I’m reminded of this profile of billionaire Sam Bankman-Fried, which says:

Though it may sound like a stretch — lots of billionaires have boundless ambition — both Singh and Barbara Fried firmly believe that Bankman-Fried’s risk-tolerance stems from his effective altruism.

Barbara Fried puts it this way. “If you’re earning money for personal consumption, there is a very steep, declining marginal utility of income. After your fifth Porsche, do you really need a sixth? . . . But if you’re earning money to give it away to charity, there’s no diminishing marginal utility to money. The last life you save is worth as much as the first life you save.”

In the same way, if you don’t have diminishing marginal utility to power, a 10% chance at the California governorship looks fantastic. The point of VC funds is to help people who do have declining marginal utility to money act as if they don’t. The point of movements and ideologies ought to be to do something similar with power. But this time, nobody bit.

My conclusions are:

1. A lot of people in California like to think that we are Very Smart, but in this case a YouTube celebrity landlord beat all of us.

2. There have been a lot of fights around here about whether you can really get power just by being intelligent, able to predict things accurately, etc. I think this is a point in favor - sometimes there are big opportunities just waiting for someone to notice them. But also a point against - intelligence did not, in fact, help anyone notice this opportunity. Overall kind of a wash.

3. Californians are lucky Peter Thiel isn’t a Democrat, because his mind is minmaxed for spotting opportunities like this, and you can bet he would have gotten involved here if he could have. The rest of us should keep re-reading Zero To One until it penetrates our thick skulls.

4. The most likely outcome is still that Newsom manages a razor-thin victory and all of this stays hypothetical.