May 21, 2001, Monday ,THIRD EDITION

SECTION: BUSINESS; Pg. C1

LENGTH: 1388 words

HEADLINE: TECHNOLOGY & INNOVATION; SEN. DOT-COM MARIA CANTWELL FINANCED HER VICTORIOUS CAMPAIGN WITH HER REALNETWORKS WEALTH. NOW HER STOCK HOLDINGS HAVE SHRUNK, AND SHE'S TURNING TO THE POLITICAL DONORS SHE ONCE SHUNNED.

BYLINE: By Anthony Shadid, Globe Staff

BODY:

WASHINGTON - Politicians and donors sipped white wine and nibbled hors d'oeuvres under a white tent in the backyard of Senator Hillary Clinton's mansion just off Embassy Row. They listened to good words spoken about a new colleague from across the country.

The guest of honor at the $1,000-a-person fundraiser: freshman Senator Maria Cantwell of Washington state. Just a year ago, Cantwell, a former executive at Seattle-based RealNetworks, wouldn't have wanted or needed to be there. She had made the run for the Senate largely on her own fortune.

Back then, her RealNetworks stock was dancing with $100 a share. But it had fallen below $9 and, at events like the Clinton fundraiser last month, she was scrambling to raise the money to pay off more than $1 million in debt.

Was it worth it? Maybe not. If she had it to do over again, she says, "I might have decided not to run."

Cantwell's story mirrors the rise, fall and lingering uncertainty of the high-tech sector. A one-term congresswoman voted out of office in 1994, she went from being a legislative footnote to staging a triumphal return, spending her own millions to finance her campaign against a three-term incumbent and bringing to the Senate an expertise in technology and the Internet lacking among colleagues.

But like many in the dot-com world, she fell victim to the exuberance of the go-go '90s. With much of her RealNetworks stock value gone, critics relish the fact that she must now spend time soliciting money to pay off her debts. "She charged the election, and now she can't pay the bill," said Chris Vance, chairman of the Washington state Republican party.

Cantwell hints at the frustration in acknowledging that, had the market fallen sooner, it might have given her pause.

"You could say that I might have decided not to do it because of that," Cantwell said in an interview in her Senate office, decorated with photographs of Washington state and a board updated with the latest scores and stats from her favorite baseball team, the Seattle Mariners.

"I cared a lot about the company that I had been a part of for a long period of time and I don't know that I would have left if the stock was at whatever - $9 or $10 a share - because I would have cared about that, building that up, that process, just as somebody who had been a part of that."

In her five-year tenure, Cantwell rode the dot-com boom as well as anyone in the business.

Rob Glaser, a former Microsoft vice president who founded RealNetworks, hired her as vice president of marketing after she lost her suburban Seattle seat in the US House of Representatives.

Despite admitting next to no expertise in software, Cantwell had worked with Glaser and other executives in persuading the Clinton administration to loosen controls on encryption devices.

At RealNetworks, she won a reputation for toughness. Colleagues described her as bright, focused, and hard-working. And at times, her intensity in the company's "warrior culture" alienated her charges.

"I think some people found her challenging to work for and challenging to satisfy as a boss," said Mitch Kapor, the founder of Cambridge-based Lotus Development Corp. and a board member of RealNetworks since the company's inception. "I don't think she was trying to run a day care center."

RealNetworks was a New Economy high-flyer, making the software that allows Internet users to get music and video off the Web. In a tribute to timing, its stock peaked right around the start of her candidacy, creating a share-driven fortune of $40 million or more.

She used some of that money - $10.3 million - to outspend her opponent, Republican Slade Gorton. Her wealth allowed her to eschew soft-money support from the party and donations from political-action committees.

In the end, she won by just 2,229 votes, giving the Democrats a 50-50 tie in the Senate. Just before her swearing-in, her stock dipped under $10.

"She spent what she needed to," said Paul Berendt, chairman of her state's Democratic Party. "There wasn't much of a margin of error."

Four months into a six-year term, Cantwell has gotten off to a quick start in the Senate, capitalizing on the instant cachet she had by virtue of her background and the stand she took on soft-money donations.

Within minutes of being sworn in, she approached Senators John McCain and Russ Feingold, offering help on campaign finance reform. Feingold recalled that "she wanted to be a soldier for this effort."

She succeeded in getting named to two key Senate committees, Judiciary and Energy and Natural Resources. She has already demonstrated an expertise on Napster, broadband, and Internet privacy, and won kudos from groups like the Center for Democracy and Technology. She quotes Lawrence Lessig, a former Harvard law professor and Internet author, and carries a BlackBerry handheld device.

Cantwell certainly sounds the part of high-tech prophet.

"There are thousands of people who are paid just to hold the bottom line here (in D.C.), that's the job, hold the bottom line, don't let anything pass," she said. "That's a very different world than the 20- and 30-year-olds that I was working with live in. They're all about getting information, finding new solutions, getting them dispersed."

Cantwell still speaks like a fast-moving Internet executive, with clumps of words that don't always finish a thought. In her lexicon, "access" is a verb, and she cites the need to "incentivize." Her anecdotes about constituents can come across as forced; her prediction of broadband's potential is more convincing.

"I say we're in the third inning of this ballgame, of this technology and this information explosion," she said.

"Think about it when broadband service into your home really does allow - whether it's to your desktop or to your television or to whatever - real broadband content. And think of it when applications and devices take something one-third the size of this," she said, grabbing a reporter's bulky tape recorder, "and you're walking around a store and you go, 'Oh, that song, I want it,' click, 'Oh, I just ordered it and it's going to be at my house tomorrow.' "

Money, though, is no longer a luxury for Cantwell, even though her office says she is still probably a millionaire.

Her campaign was more than $4 million in debt after the election, including a $3.2 million loan that was due in March. She was unable to repay it all and had to restructure the loan. She still owes about $300,000 to campaign consultants and others, putting her debt at about $1.1 million.

Adding to her troubles, a conservative watchdog group, the National Legal and Policy Center, said she may have received a sweetheart deal from a bank and disclosed the terms of loans she received months too late. The center is calling for an investigation by the Federal Election Commission.

Cantwell denies receiving a sweetheart deal and says her campaign disclosed what was required.

"I think that we have complied with what we were supposed to do," she said. She does acknowledge missing the deadline for disclosing the loan but, through a spokesman, says that was an inadvertent oversight.

Others criticize the way she's dealt with her debt, relying in part on fundraisers by Clinton, Senator John Edwards of North Carolina, and others to collect about $800,000. While she still refuses PAC money, opponents say the same lobbyists and PAC directors show up at her fundraisers to help.

"That was her selling point - 'I'm beholden to no one, there will be no contributors knocking on the door after the election,' " said Larry Noble, who heads the Center for Responsive Politics, which tracks campaign finance. "Now she has to invite those contributors in after the election."

But even while dealing with the fallout from her changed financial status, she may be representative of thousands of other dot-com refugees groping in the morning after.

"The world is turned upside down in an economic sense," said Berendt. "In normal times, people might think Cantwell should have managed her financial affairs differently. But this is at the end of the '90s in Seattle, and just about everyone experienced a boom and a bust."

Anthony Shadid can be reached by e-mail at ashadid@globe.com.

GRAPHIC: PHOTO, 1. GLOBE PHOTO/LESLIE E. KOSSOFF/ Maria Cantwell at work during a Senate committee on Energy and Natural Resources hearing. 2. GLOBE PHOTO/LESLIE E. KOSSOFF/ After just four months, Cantwell (right) has already won kudos from groups like the Center for Democracy and Technology.

LOAD-DATE: May 22, 2001