Entrepreneur Gallops Into Field of Political Donors

He got the attention of the horse-racing world in September, paying $2 million for a yearling colt in a Kentucky thoroughbred sale.

David Shimmon, 41-year-old Silicon Valley businessman, outbid Dubai’s crown prince for the chestnut steed.

Earlier this month, California politicians pricked up their ears when Shimmon, chief executive officer of Kinetics Group Inc. in Santa Clara, emerged as the state’s leading campaign contributor, donating $200,000 to Gov. Gray Davis and a whopping $250,000 to state Treasurer Phil Angelides. Neither politician has an election in sight for more than two years.

Suddenly everyone with ambitions for Sacramento or Washington wants to know: Who is this wealthy wunderkind who invests in untested horses and off-season politicians?

Shimmon presents himself as an ordinary guy with $100 million who likes business, horses and sports, more or less in that order. “I’m a sports guy,” he said several times in an interview, sipping from a can of Diet Coke. Later: “I’m a business guy.” Later: “I’m a family guy.”

But Shimmon also seeks and enjoys access to state leaders, and he’s willing to pay for it. He admits that his money gives him extra access, but he insists that he has nothing to gain by it.

“I am just an investor in good people,” he said. “What I expect in return is a qualified individual who is going to perform well in the job.”

He is a Silicon Valley and California chauvinist. He thinks the Golden State should have more say in foreign affairs. He views political contributions as investments in California’s future.

New Class of Entrepreneurs

Shimmon is part of the new class of entrepreneurs and inventors in the Silicon Valley who in recent years have played an increasingly important role in political fund-raising. Listed earlier this month among the major donors to Davis’ $13.2-million campaign war chest were several of the valley’s high-tech firms, including Cisco Systems ($75,000 from three executives), Intel ($25,000) and Intuit ($25,000).

But unlike most of the computer nerds and MBAs who proliferate here, this grandson of Middle Eastern immigrants is not a political neophyte. Shimmon’s father toiled 37 years in the office of a Democratic politician before running three times (unsuccessfully) for a post on the obscure State Board of Equalization.

In fact, Angelides and others contend, the father is the key to understanding Shimmon’s political activism.

“David grew up in a family where political engagement is not a foreign notion--where politics is not viewed cynically but as an opportunity to engage in a free society,” said Angelides, who so far has been the main beneficiary of Shimmon’s largess.

Angelides said he first met Shimmon, father in tow, seven years ago at a fund-raiser attended by President Clinton. Since then, the treasurer said, he and Shimmon have built a “deep personal friendship” and regularly consult on issues. For example, when Angelides wanted an outside view of his proposal to ban tobacco investments by state pension funds, he called Shimmon for his “gut feeling.”

When Shimmon was growing up in the Sunset district of San Francisco, his father, John, was chief aide to the late George Reilly, a colorful San Francisco politician who was elected to a record 11 terms on the Board of Equalization. The constant campaigns, fund-raising, late-night political strategy sessions and liturgy of Democratic Party principles surrounded young Shimmon.

Reilly formed the Irish-Israeli-Italian Society. John Shimmon was the secretary. Reilly formed the 99 Club for supporters who donated $99--just under the then-$100 state reporting requirement. John Shimmon kept the books.

“Clearly the environment of having George Reilly and my father around gave me a preview into politics and the various things that come with it,” David Shimmon said.

Although he declines to be identified by any party label, preferring the word “progressive,” Shimmon’s liberal Democratic upbringing shows up in his political positions. “I believe that we can only remain a strong community, state and nation if we make sure we have some safety net for those left out,” he said.

Public education is big for him. His mother, Jeanne, is a retired schoolteacher. His brother, Steven, 36, teaches economics and political science at San Francisco’s prestigious Lowell High School, which is among the top state public schools this year with 24 National Merit finalists. David Shimmon graduated from Lowell in 1976 and earned a business degree from San Francisco State University in 1981.

“If you go to Lowell, which is really one of the fine schools in the state,” Shimmon said, “you find that many of its classes are being taught in temporary bungalows detached from the main building. How can you create a positive learning environment like that?”

Headquartered in the heart of the Silicon Valley on the same Santa Clara street as the giant Intel corporate headquarters, Kinetics Group was founded in 1973 as a food processing business, specializing in storage and shipment of strawberries.

In 1990, when David Shimmon, a CPA, joined Kinetics as chief financial officer with a relatively small equity investment, the company had an annual business volume of $38 million. Seven years later, establishing itself as a microelectronics services company with Shimmon as its CEO, Kinetics counted among its clients most of the principal high-tech firms of the valley.

By late 1997, when Kinetics merged with Palm Desert-based USFilter Corp., revenues were more than $400 million. Shimmon controlled more than one third of the equity. On paper, at least, he was worth nearly $100 million.

His fortune increased after USFilter was taken over last year by the giant French water treatment and service company Vivendi. Although he retains his title as president of USFilter, Shimmon says he now devotes all his time to running Kinetics.

After he got rich, Shimmon decided it was time to give something back to the political system.

“He’s been very successful,” said John Shimmon, 76. “He’s civic-minded. I think he feels as a citizen he wanted to participate in the political process.”

‘Liberating the Political Process’

David Shimmon’s first choice as a political investment was Angelides. Shimmon contributed modestly before the Kinetics-USFilter merger to the Sacramento native’s 1994 campaign for treasurer and more heavily, after the merger, to his 1998 reelection campaign.

Angelides, in a telephone interview, said his political patron, five years his junior, has never asked for anything back.

“He is one of those people who is liberating the political process because his engagement is a function that he’s done well in the society,” Angelides said. “He’s not one of those people pulling and tugging.”

Shimmon decided to back Davis after spending a weekend with the governor at Lake Tahoe in July. “We had a couple of dinners together and really just spent time getting to know each other,” Shimmon said. In August he gave the governor’s swelling campaign fund $200,000.

In the debate leading up to the recent U.S. Supreme Court decision upholding campaign finance limits, Justice David H. Souter worried aloud that big contributors expect big favors in return. “It seems to me highly plausible,” Souter said, “that making an extraordinarily large contribution is going to get something extraordinary in return.”

Shimmon, while admitting that his money gives him extra access, insists that he has nothing to gain personally or professionally from the political contributions.

“At Kinetics,” he said, “we don’t generate any money at the municipal or public sector level.”

As for horse racing: “I like horse racing for the horses and the racing. It is not a business where I want to generate a significant amount of income. So the business side that many would like to reform is not particularly important to me.”

Shimmon now owns two young, expensive horses: the chestnut colt he bought in September, sired by 1990 Kentucky Derby winner Unbridled, and a large black stallion that cost him $1.2 million.

Likewise, his main political investments so far have been limited to two men, Angelides and Davis. But he said he is not finished yet, with the horses or with the political investments.

“One thing I can tell you,” Shimmon said of the political donations, “is that we are going to continue to do it. You will continue to see the contributions, and you will continue to see that level of engagement.”