Nick Hanauer: TED Head

Private jet-owning operative in the Democracy Alliance vows to fight inequality

Nick Hanauer / Second Avenue Partners
September 18, 2012

Nick Hanauer, a multi-millionaire venture capitalist, caused waves in May when he delivered a five-minute lecture on income inequality at the $6,000 per ticket, invitation-only Technology, Entertainment, and Design (TED) Conference. The Sapling Foundation, which sponsors the conferences, refused to put his speech on the official TED website because of its overtly "political" nature.

That should come as no surprise: The man behind the most controversial "TED Talk" to date is also a leading mover and shaker in the liberal money machine known as the Democracy Alliance.

Hanauer, who owns a private jet, claimed tax cuts for businesses and wealthy individuals would hurt the economy rather than spur growth. He compared low-tax policy to the idea that "the earth is the center of the universe."

"Rich people don’t create jobs, nor do businesses, large or small," he said. "An ordinary consumer is more of a job creator than a capitalist like me…calling ourselves job creators isn’t just inaccurate, it’s disingenuous."

Some observers noted that TED punished the wealthy liberal for playing fast and loose with the facts.

"It was just a case of the TED organizers deciding that this particular presentation was categorically mediocre," Forbes columnist Bruce Upbin wrote.

Fellow Forbes reporter Tim Worstall agreed, adding that Hanauer misrepresented the U.S. tax code to assert that investors are taxed at lower rates than average workers.

"The economics of taxation seems to be a subject he is deeply ignorant of. Which isn’t really a great advertisement for the sort of informative talks by experts that TED likes to broadcast," Worstall said.

While Hanauer is now a champion of raising taxes on the rich, he made his millions undermining the government’s ability to tax private commerce. He was the first non-family investor in Internet retailer—an opportunity he seized in part because it would help consumers dodge sales taxes in his native Washington.

"[Amazon founder Jeff Bezos] wanted a majority of his customers to not have to pay sales tax," he told The Seattle Times.

Amazon’s success catapulted Hanauer in emerging online ventures. His venture capital firm, Second Avenue Partners, has since made billions of dollars financing startups and selling them to larger companies, such as Microsoft and

TED is not the only elite, invitation-only group that has sought Hanauer’s input. He also sits on the board of the Democracy Alliance, a secretive group of wealthy liberals, who pump at least $200,000 into an assortment of Democratic causes and campaigns each year. As vice chair of the group, Hanauer helps to select the groups eligible for Alliance donations, including the Center for American Progress and Media Matters.

The Alliance leadership is increasingly focused on President Barack Obama’s reelection campaign. In 2011, the group decided to begin pumping money into the pro-Obama Super PAC Priorities USA—a move that led insurance billionaire and cofounding member Peter Lewis to renounce the group.

"The Democracy Alliance is very involved in elections," campaign finance expert John Samples said. "Many of their members are business people, looking for ways to measure the effect of their multi-million dollar contributions—elections are an easy measure."

Neither Hanauer nor the Alliance returned emails seeking comment.

Hanauer has broken ranks in recent months with conventional liberal doctrine concerning the 2012 election and school reform. A supporter of charter schools and teacher accountability, Hanauer may endorse Republican state attorney general Rob McKenna in the Washington gubernatorial race, after concluding that state teachers unions are "strangling our public schools to death."

"I do not want to be a prisoner of orthodoxy," he said. "Time to bust out."