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Sunday, May 25, 2008

Obama's Silicon Valley money machine

In politics, as much as anywhere else, it's all about the benjamins. Obama isn't just smart and charismatic, he had the savvy and vision to build a 21st century, digital social network-driven campaign that has obliterated all the records for fund raising: nearly $200 million raised from over a million donors. In February, the Obama campaign reported that 94 percent of their donations came in increments of $200 or less, versus 26 percent for Clinton and 13 percent for McCain.

This is real democracy in action!

No experience? Who in Silicon Valley wants to send a candidate to the white house with lots of beltway experience? Obama gets it, in a way that Clinton and McCain do not and can not.

The Atlantic Monthly: ...In a colossal error of judgment, the Clinton campaign never made a serious approach, assuming that Obama would fade and that lack of money and cutting-edge technology couldn’t possibly factor into what was expected to be an easy race. Some of her staff tried to arrange “prospect meetings” in Silicon Valley, but they were overruled. “There was massive frustration about not being able to go out there and recruit people,” a Clinton consultant told me last year. As a result, the wealthiest region of the wealthiest state in the nation was left to Barack Obama.

Furthermore, in Silicon Valley’s unique reckoning, what everyone else considered to be Obama’s major shortcomings—his youth, his inexperience—here counted as prime assets.

I asked Roos, the personification of a buttoned-down corporate attorney, if there had been concerns about Obama’s limited CV, and for a moment he looked as if he might burst out laughing. “No one in Silicon Valley sits here and thinks, ‘You need massive inside-the-Beltway experience,’” he explained, after a diplomatic pause. “Sergey and Larry were in their early 20s when they started Google. The YouTube guys were also in their 20s. So were the guys who started Facebook. And I’ll tell you, we recognize what great companies have been built on, and that’s ideas, talent, and inspirational leadership.”

This was the dominant refrain as I traveled around the Valley. From a policy standpoint, there are many reasons for tech-minded types to support Obama, including his pledge to establish a chief technology officer for the federal government and to radically increase its transparency by making most government data available online. ...

What ultimately transformed the presidential race—what swept Obama past his rivals to dizzying new levels of campaign wealth—was not the money that poured in from Silicon Valley but the technology and the ethos.

The campaign’s focal point is My.BarackObama.com, which has made better use of technology than its rivals since the beginning. As a consequence of this fact and the general enthusiasm over the candidate, Obama’s Chicago-based staff is constantly besieged by suitors offering the latest applications, services, software, and widgets. Since many are based in Silicon Valley, Spinner volunteered his services as a talent scout.

To understand how Obama’s war chest has grown so rapidly, it helps to think of his Web site as an extension of the social-networking boom that has consumed Silicon Valley over the past few years. The purpose of social networking is to connect friends and share information, its animating idea being that people will do this more readily and comfortably when the information comes to them from a friend rather than from a newspaper or expert or similarly distant authority they don’t know and trust. The success of social-networking sites like Facebook and MySpace and, later, professional networking sites like LinkedIn all but ensured that someday the concept would find its way into campaigning. A precursor, Meetup.com, helped supporters of Howard Dean organize gatherings during the last Democratic primary season, but compared with today’s sites, it was a blunt instrument.

Obama’s campaign moved first. Staffers credit the candidate himself with recognizing the importance of this new tool and claim that his years as a community organizer in Chicago allowed him to see its usefulness. Another view is that he benefited greatly from encouraging a culture of innovation and lucked out in the personnel department, with his own pair of 20-something wizards. Joe Rospars, a veteran of Dean’s campaign who had gone on to found an Internet fund-raising company, signed on as Obama’s new-media director. And Chris Hughes, a co-founder of Facebook, took a sabbatical from the company and came to Chicago to work on the campaign full-time.

When My.BarackObama.com launched, at the start of the campaign, its lineage was clear. The site is a social-networking hub centered on the candidate and designed to give users a practically unlimited array of ways to participate in the campaign. You can register to vote or start your own affinity group, with a listserv for your friends. You can download an Obama news widget to stay current, or another one (which Spinner found) that scrolls Obama’s biography, with pictures, in an endless loop. You can click a “Make Calls” button, receive a list of phone numbers, and spread the good news to voters across the country, right there in your home. You can get text-message updates on your mobile phone and choose from among 12 Obama-themed ring tones, so that each time Mom calls you will hear Barack Obama cry “Yes we can!” and be reminded that Mom should register to vote, too.

“We’ve tried to bring two principles to this campaign,” Rospars told me. “One is lowering the barriers to entry and making it as easy as possible for folks who come to our Web site. The other is raising the expectation of what it means to be a supporter. It’s not enough to have a bumper sticker. We want you to give five dollars, make some calls, host an event. If you look at the messages we send to people over time, there’s a presumption that they will organize.”

The true killer app on My.BarackObama.com is the suite of fund-raising tools. You can, of course, click on a button and make a donation, or you can sign up for the subscription model, as thousands already have, and donate a little every month. You can set up your own page, establish your target number, pound your friends into submission with e-mails to pony up, and watch your personal fund-raising “thermometer” rise. “The idea,” Rospars says, “is to give them the tools and have them go out and do all this on their own.” The organizing principle behind Obama’s Web site, in other words, is the approach Mark Gorenberg used with such success—only scaled to such a degree that it has created an army of more than a million donors and raisers. The Clinton campaign belatedly sought to mimic Obama’s Internet success, and has raised what in any other context would be considered significant money online—but nothing like Obama’s totals, in dollars or donors. John McCain’s online fund-raising has been abysmal.

The social-networking model provided Obama with something that insurgents before him, from Gary Hart to McCain, always lacked: a means of capturing excitement and translating it into money. In the 2004 primary, Howard Dean raised $27 million online. Obama is fast approaching $200 million.

...At a critical point in the race, this money had a dispositive effect. After “Super Tuesday,” on February 5, Clinton’s campaign ran out of money—a scenario that would have been unimaginable a year earlier. Obama, flush with cash, proceeded to win the next 11 contests, all but putting the nomination out of Clinton’s reach.

“What’s amazing,” says Peter Leyden of the New Politics Institute, “is that Hillary built the best campaign that has ever been done in Democratic politics on the old model—she raised more money than anyone before her, she locked down all the party stalwarts, she assembled an all-star team of consultants, and she really mastered this top-down, command-and-control type of outfit. And yet, she’s getting beaten by this political start-up that is essentially a totally different model of the new politics.”

...The alchemy of social networking and the presidential race has given Obama claim to some of the most fabulous numbers in politics: 750,000 active volunteers, 8,000 affinity groups, and 30,000 events. But the most important number, and the clue to how Obama’s machine has transformed the contours of politics, is the number of people who have contributed to his campaign—particularly the flood of small donors. Much of Clinton’s haul, and McCain’s, too, has come from the sort of people accustomed to being wooed in the living room, and Obama initially relied on them, too. But while his rivals continued to depend on big givers, Obama gained more and more small donors, until they finally eclipsed the big ones altogether. In February, the Obama campaign reported that 94 percent of their donations came in increments of $200 or less, versus 26 percent for Clinton and 13 percent for McCain. Obama’s claim of 1,276,000 donors through March is so large that Clinton doesn’t bother to compete; she stopped regularly providing her own number last year. ...

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