And He’s Sell­ing the So­lu­tion to Both Sides.


Bloomberg Businessweek (North America) - - Focus On/ Retirement -

n early Jan­uary, Steve Is­rael of Long Is­land, a well­re­garded mem­ber of the House Demo­cratic lead­er­ship team and a pos­si­ble suc­ces­sor to House Mi­nor­ity Leader Nancy Pelosi, stunned his col­leagues by an­nounc­ing his re­tire­ment. Is­rael, who at 57 is young by con­gres­sional stan­dards, re­cently pub­lished his first novel and told the New York Times that he hoped to spend more time writ­ing. But he made no ef­fort to hide what re­ally drove him from a perch many politi­cians spend their whole ca­reer scram­bling to reach: the ab­ject mis­ery of rais­ing money. “I don’t think I can spend an­other day in an­other call room mak­ing an­other call beg­ging for money,” he con­fessed.

Any politi­cian who’s be­ing hon­est will agree. As money has flooded the sys­tem, the cost of run­ning a com­pet­i­tive race has soared, forc­ing law­mak­ers like Is­rael to raise ever-larger sums. The men­tal im­age of this process, as evoked by Bernie San­ders and other re­form­ers, is of a can­di­date glid­ing through lav­ish Ge­orge­town cock­tail par­ties, swirling a glass of Moët as bil­lion­aires and lob­by­ists slip checks into his pock­ets. The re­al­ity is far more pro­saic, even grubby: Be­cause elected of­fi­cials can­not use pub­lic of­fices for cam­paign ac­tiv­ity, they cram into off-site cu­bi­cles like boiler-room stock touts and spend hours each day di­al­ing for dol­lars. It’s the unglam­orous part of pol­i­tics you don’t see in House of Cards or The West Wing.

It could soon get eas­ier. For months some of Wash­ing­ton’s top cam­paign pro­fes­sion­als have been buzzing about a prod­uct with the po­ten­tial to tur­bocharge political fundrais­ing and pos­si­bly much more. The prod­uct is a piece of soft­ware—an al­go­rithm, ac­tu­ally—that is the dis­tilled essence of a pi­o­neer­ing ap­proach to fundrais­ing de­vel­oped by a few Sil­i­con Val­ley en­trepreneur­s dur­ing Barack Obama’s 2008 cam­paign, an in­no­va­tion that helped lift him to the pres­i­dency. The ap­proach grew out of a sim­ple in­sight: You can raise a lot more money if, rather than just ask for a check, you ask peo­ple to reach out to their own so­cial net­works and raise money them­selves.

The per­son who best ex­em­pli­fied this ap­proach for Obama was Steve Spin­ner, the young founder of a small sports sci­ence com­pany. In 2007 he at­tended an Obama fundraiser and be­came smit­ten. Then he hosted one. Then he ex­pe­ri­enced a trans­for­ma­tion, not un­com­mon in North­ern Cal­i­for­nia at the time, wherein Obama be­came not just a can­di­date, but a cause. A born net­worker, Spin­ner founded En­trepreneur­s for Obama (later rechris­tened Tech­nol­ogy for Obama), one of many un­of­fi­cial “af­fil­i­ate groups” that sprang up to sup­port the cam­paign. It raised a stag­ger­ing $26 mil­lion. By the time Obama was sworn in, Spin­ner—an or­di­nary, middle-class guy—had be­come his eighth-largest fundraiser, ac­cord­ing to a for­mer cam­paign of­fi­cial, putting him in a league with the Spiel­bergs, Gef­fens, and Soroses. In 2012, Spin­ner was top three. A year later he started a com­pany, Re­vup Soft­ware, to pour all he’d learned about fundrais­ing into a sin­gle piece of soft­ware. The tech­nol­ogy mim­ics the process Spin­ner de­vel­oped while rais­ing money for Obama, min­ing peo­ples’ con­tacts to iden­tify the best fundrais­ing tar­gets and the per­sonal de­tails that might help close the deal. “The idea,” he says, “is that the right tool can en­able any­one in the po­si­tion I was in—a vol­un­teer—to do the same thing I did.”

Stop and con­sider for a mo­ment how such a tool might trans­form pol­i­tics. If vol­un­teers could raise money in any­thing like the sums Spin­ner brought in, politi­cians like poor Steve Is­rael would be freed from their call-room shack­les. The calls they did make would be more fruit­ful, be­cause the soft­ware ranks tar­gets by their propen­sity to give. Par­ties would love it, too, be­cause they could re­cruit bet­ter can­di­dates: Rais­ing enough money to run com­pet­i­tively wouldn’t seem nearly so daunting. And if com­mit­ted laypeo­ple were to tap into their own so­cial net­works, as Spin­ner did, they would bring new donors into a process whose old donors in­creas­ingly feel tapped out. A place like Wash­ing­ton that runs on money would re­gard such a tool as no less than a holy grail.

And, in­deed, Wash­ing­ton does: Re­vup has li­censed its soft­ware (prices start at $13,500 a year) to con­gress­men, sen­a­tors, and gov­er­nors of both par­ties, as well as most of the na­tional party com­mit­tees on both sides; it’s also at­tracted as part­ners and in­vestors the mar­quee tech firms on the left (Blue State Dig­i­tal, 270 Strate­gies) and right (Tar­geted Vic­tory, Red Curve So­lu­tions). “Mitt Rom­ney’s folks did a lot of what Steve’s tech­nol­ogy does,” says Zac Mof­fatt, co-founder of Tar­geted Vic­tory, who was Rom­ney’s dig­i­tal di­rec­tor. “But we did it man­u­ally, so it couldn’t scale. This was an op­por­tu­nity for tech­nol­ogy to take that in­tel­li­gence and weaponize it in an al­go­rithm.”

In early March, Re­vup an­nounced it had raised $5 mil­lion from such prom­i­nent non­po­lit­i­cal in­vestors as Pierre Omid­yar, Reid Hoff­man, Sean Parker, Evan Gold­berg, and even a pair of ex-san Fran­cisco 49ers, Ron­nie Lott and Har­ris Bar­ton. They’re bet­ting that the com­pany’s soft­ware can also be ap­plied to the much larger, but stodgier, sec­tors of non­profit and univer­sity fundrais­ing, as yet un­touched by the changes sweep­ing through political fundrais­ing. “Af­ter porn and gam­bling,” Spin­ner says, “pol­i­tics is the fastest adopter of new tech­nol­ogy.” Col­lec­tively, th­ese three sec­tors—pol­i­tics, non­prof­its, academia— rep­re­sent a $250 bil­lion mar­ket, so an al­go­rithm to make fundrais­ing even mod­estly more ef­fi­cient could pro­duce bil­lions in new money.

Spin­ner is an un­likely white knight for the Wash­ing­ton es­tab­lish­ment. Five years ago, Repub­li­cans were do­ing all they could to drive him out of town. Af­ter Obama’s elec­tion, he took a job in the U.S. Depart­ment of En­ergy, on the team charged with award­ing $30 bil­lion in stim­u­lus grants and loan guar­an­tees to promis­ing clean- en­ergy com­pa­nies. For a Sil­i­con Val­ley type such as Spin­ner, the moon­shot bid to rapidly ad­vance a crit­i­cal field of sci­en­tific in­quiry was a dream job, “like NASA in the ’60s,” he says. But in­vest­ing is risky. While the govern­ment’s port­fo­lio fared well over­all (it in­cluded a lit­tle startup named Tesla), Repub­li­cans seized on the in­evitable fail­ures. In 2011 the so­lar startup Solyn­dra went bust and de­faulted on a fed­eral loan guar­an­tee.

The DOE’S pro­gram was sup­posed to act like a ven­ture cap­i­tal firm, in­vest­ing in promis­ing com­pa­nies— only in­stead of tak­ing equity, as VCS do, the govern­ment’s aim was to ex­pand the clean­tech­nol­ogy in­dus­try and pro­duce jobs. What at­tracted Obama’s team to Solyn­dra (like Ge­orge W. Bush’s be­fore it) was that its so­lar tech­nol­ogy didn’t de­pend on sil­i­con, as other com­pa­nies’ did. When the DOE de­cided to in­vest, sil­i­con was ex­pen­sive, so Solyn­dra looked to have a se­ri­ous com­pet­i­tive ad­van­tage—big enough that in­vestors in­clud­ing Richard Branson had poured $1 bil­lion into the com­pany. But soon af­ter the DOE gave Solyn­dra a $535 mil­lion loan guar­an­tee, the price of sil­i­con plum­meted, elim­i­nat­ing the need for al­ter­na­tive tech­nol­ogy. When Repub­li­cans went look­ing for a bad guy, they found an e-mail show­ing that Spin­ner had ar­ranged a rib­bon­cut­ting cer­e­mony for Vice Pres­i­dent Joe Bi­den. They turned Spin­ner into a piñata—even though he joined the DOE af­ter the de­ci­sion to fund Solyn­dra had al­ready been made.

Rom­ney, cam­paign­ing to deny Obama a se­cond term, made Solyn­dra’s bank­ruptcy the cen­ter­piece of his in­dict­ment— a sym­bol of the pres­i­dent’s sup­posed per­fidy and in­com­pe­tence. The me­dia went berserk. An ABC News cam­era crew stalked Spin­ner at the 2012 Demo­cratic Na­tional Con­ven­tion in Char­lotte, he says, at one point chas­ing him through the sta­dium halls. A steady stream of threats poured in from en­raged par­ti­sans. And though the GOP dropped the at­tack once Rom­ney lost, Spin­ner had to hire a search en­gine op­ti­miza­tion firm to re­pair his on­line im­age.

It’s a de­li­cious irony— one Spin­ner un­sport­ingly chooses to down­play— that the same Repub­li­cans who howled about Solyn­dra now rank among his most ea­ger clients. “I’m flat­tered they thought I was worth go­ing af­ter, and I hold no grudges,” is all he’ll say. Repub­li­cans con­cede that, yes, it’s all a bit awk­ward. “Look, I went in know­ing how this would look,” Mof­fatt, Rom­ney’s dig­i­tal di­rec­tor, says. “Do I wish he hadn’t worked on [Solyn­dra]? For sure. But I owe it to my clients. If I didn’t be­lieve this prod­uct would help them, I’d stay out of your story.” That so many Repub­li­cans are sign­ing on with Re­vup re­veals a lot about Wash­ing­ton—about the hypocrisy of most political at­tacks and the un­re­lent­ing pres­sure to raise money, but above all about the be­lief that an al­go­rithm could al­ter the fi­nan­cial arms race of pol­i­tics.

$100,000.’ ” Spin­ner put up his hand. And be­cause he was steeped in so­cial net­works—and through them con­nected to a tech class ca­pa­ble of writ­ing $2,000 checks— that’s where he turned to raise money. No­body had yet thought to do this. “I re­mem­ber por­ing over my friends’ pro­files, try­ing to fig­ure out if they were Repub­li­cans or Democrats,” he says. His method was time- con­sum­ing and ar­du­ous be­cause this, along with other cru­cial facts, wasn’t easy to dis­cern. “Ev­ery day in 2008, half the peo­ple I reached out to told me I was an ass­hole for back­ing Obama over Clin­ton,” says Spin­ner. “I lost friend­ships over it.”

Many friends, how­ever, were in­trigued by Obama and glad to be asked to help. Some were ea­ger to do more than write a check, and so, en­cour­aged by Spin­ner, they turned to their own net­works to raise money. Col­lec­tively, this ex­pand­ing net­work of rais­ers pro­duced a tsunami of cash for Obama that ul­ti­mately over­whelmed Clin­ton and rat­i­fied the value of the model. “When I was on Obama’s Na­tional Fi­nance Com­mit­tee,” says Rusty Ru­eff, an en­tre­pre­neur Spin­ner re­cruited to run Tech­nol­ogy for Obama, “the amaz­ing thing was you’d be sit­ting next to a CEO who had maxed out and on the other side next to a school­teacher who had raised maybe 10 times what the CEO had. The school­teacher is more im­por­tant than the CEO, be­cause the school­teacher is out there rais­ing and bundling in larger mag­ni­tudes.”

When Spin­ner re­turned home from his bruis­ing stint at the DOE, he started think­ing about how the fundrais­ing process could be made more ef­fi­cient. The an­swer, he de­cided, was to com­bine what he knew about fundrais­ing with what he knew about data sci­ence and tech­nol­ogy. A friend in­tro­duced him to Aaron Redalen, an en­gi­neer with joint de­grees in com­puter and li­brary sci­ences, and to­gether they es­tab­lished Re­vup and set to work writ­ing code.

From the out­set, Spin­ner opted to make Re­vup po­lit­i­cally ag­nos­tic, like Google or Face­book, rather than an ex­plic­itly Demo­cratic com­pany. Why would some­one who la­bored so hard to twice elect Obama—at no small rep­u­ta­tional cost—willingly team up with his one­time Repub­li­can op­pres­sors? Why not keep it in the fam­ily? Spin­ner in­sists he’s sick of par­ti­san­ship and mo­ti­vated by a de­sire to break the grip of wealthy donors on both par­ties. But he’s also mo­ti­vated by the busi­ness op­por­tu­nity: Be­ing seen as merely a political com­pany would limit his en­tree into the much larger mar­ket be­yond pol­i­tics that in­cludes academia and non­prof­its. “There’s $4 bil­lion to $8 bil­lion in op­por­tu­nity for com­pa­nies in this sec­tor,” he says. While clients on the left who knew him from the Obama cam­paigns were ea­ger to sign on, Spin­ner worked hard to court right-lean­ing in­vestors and clients whose only as­so­ci­a­tion with him, if they had one at all, was the vil­lain­ous por­trait cooked up by the Rom­ney cam­paign. “Ob­vi­ously, I knew of him be­cause we’d at­tacked some of his stuff,” Mof­fatt says. “I took a meet­ing with him be­cause some­body asked me to, and as we went through it, you could tell that he was le­git. He was solv­ing a lot of the things we [Repub­li­cans] were try­ing to solve.”

Af­ter a year of beta test­ing, Re­vup re­cently launched its data an­a­lyt­ics soft­ware, into which any­one— can­di­date, staff, vol­un­teer fundraiser— can up­load a list of per­sonal con­tacts from Gmail, Out­look, Linkedin, or other sources, along with the can­di­date or cause for which he is rais­ing money. The soft­ware then spi­ders through records ag­gre­gated from thou­sands of pub­lic and pri­vate web­sites and data­bases, check­ing the names against ev­ery­thing from dozens of pub­lic- elec­tion data­bases ( such as the Fed­eral Elec­tion Com­mis­sion’s), to political groups (the Fed­er­al­ist So­ci­ety, the Sierra Club), to thou­sands of char­i­ties and non­prof­its ( Boys & Girls Clubs, the Ms. Foun­da­tion for Women), even to col­leges and univer­si­ties. The in­for­ma­tion this jour­ney yields is rich enough to de­ter­mine a per­son’s political lean­ings and even past sup­port for spe­cific can­di­dates, thus elim­i­nat­ing the pos­si­bil­ity of awk­ward, friend­ship­wreck­ing phone calls. What spits out the other end is one’s con­tacts ranked by their abil­ity and like­li­hood to give, whether or not they’ve do­nated to a cam­paign be­fore. “For me, the key to fundrais­ing is re­spect,” says Spin­ner. “You not only know who to call and what to talk about, but who not to call. It changes the whole dy­namic.”

Yet get­ting peo­ple you know to cheer­fully part with their money and al­low them­selves to be con­scripted into a cam­paign en­tails know­ing more than their party or pat­tern of do­na­tion. It’s part sci­ence, part se­duc­tion. Spin­ner of­ten forges bonds over non­po­lit­i­cal sub­jects—a shared alma mater, an em­ployer, an eth­nic­ity, a child’s school. It’s less a strat­egy than a mode of be­ing. But he rec­og­nized the util­ity this holds for fundrais­ing and built it into the soft­ware. You may know that your col­league drives a Prius and seems like she might sup­port San­ders. Re­vup can tell you that she also went to Stan­ford, joined the Sierra Club, loves ski­ing and poo­dles, and wrote Bernie a $500 check last fall. You’ll have plenty to dis­cuss. “What Re­vup re­ally is,” says Joe Rospars, an Obama cam­paign vet­eran who founded Blue State Dig­i­tal (a part­ner and in­vestor in Re­vup), “is a soft­ware ver­sion of Steve him­self. He’s put his per­son­al­ity and ex­pe­ri­ence into code.”

Smooth­ing the ap­proach for vol­un­teer fundrais­ers helps. But the soft­ware’s

ef­fects that reach far be­yond the world of pol­i­tics. Re­vup’s in­vestors hope univer­si­ties and non­prof­its will be the next sec­tors to feel them. Both have fundrais­ing struc­tures that re­sem­ble the way na­tional political cam­paigns op­er­ated un­til not long ago: They rely heav­ily on a paid staff of pro­fes­sion­als to cul­ti­vate a list of fa­mil­iar donors. In the­ory, lim­it­ing them­selves to this model leaves a lot of money on the ta­ble.

Re­vup’s in­vestors be­lieve there’s an­other way. Univer­sity and col­lege cap­i­tal drives are sim­i­lar to political cam­paigns—the goal is to raise as much money as pos­si­ble for a dis­tinct cause in a set pe­riod of time. Sim­i­larly, most non­profit foun­da­tions are like politi­cians in that they prob­a­bly would ap­peal to a uni­verse of peo­ple be­yond their ex­ist­ing donors. “Ev­ery dis­ease, body part, and so­cial prob­lem has its own foun­da­tion,” Rospars points out. There’s no rea­son be­yond tra­di­tion that vol­un­teers armed with Re­vup’s soft­ware couldn’t do for spina bi­fida or the Hu­mane So­ci­ety what Spin­ner did for Obama.

Last year, Ru­eff, a Pur­due Univer­sity alum­nus and cab­i­net of­fi­cer for the school’s Day of Giv­ing cap­i­tal cam­paign, per­suaded Pur­due’s de­vel­op­ment of­fice to give Re­vup’s soft­ware a try. It was, he ad­mits, a bit per­plex­ing to a but­toned­down staff of univer­sity fundrais­ers ac­cus­tomed to do­ing things in their own way. “I was a bit of a John the Bap­tist, cry­ing from the wilder­ness, ‘There’s an­other model!’ ” he says. Al­though the role the soft­ware played shouldn’t be over­stated, Pur­due raised more than $13 mil­lion, the most any school has ever raised for higher education in a sin­gle day. “It opened their eyes,” says Ru­eff, “to the pos­si­bil­ity that a non­de­vel­op­ment of­fi­cer—a layper­son like me—could use soft­ware to raise money on be­half of the school.”

Even so, the political world will make use of it first. But to what end? One con­se­quence of Obama’s cam­paigns was to de­moc­ra­tize money in pol­i­tics by bring­ing in mil­lions of small donors to di­lute the power of the large ones. A sim­i­lar dy­namic is play­ing out in San­ders’s cam­paign. To Spin­ner, who’s suf­fused with the full mea­sure of Sil­i­con Val­ley utopi­anism, his soft­ware has the po­ten­tial to strengthen the demo­cratic process by free­ing up the Steve Is­raels of the world to do the civic-minded work we elect them to do. There is some ev­i­dence for this view­point. “For me,” says Dave Calone, a Demo­cratic con­gres­sional can­di­date in New York’s 1st District, “it’s re­duced the amount of time you need to spend rais­ing money, so I can fo­cus more time on what re­ally should mat­ter: meet­ing vot­ers, dis­cussing the is­sues, com­ing up with so­lu­tions.”

Old Wash­ing­ton hands like Rospars, how­ever, be­tray a slightly more jaun­diced view of what the in­flux of still more money into pol­i­tics will yield— though he, too, of­fers a pos­i­tive gloss: “The less that a group of peo­ple smok­ing cigars on South Capi­tol Street think they’re Masters of the Uni­verse that can con­trol ma­jor political par­ties, the bet­ter for all of us.”

Whether any of this comes to pass, it does ap­pear that Re­vup’s soft­ware could make a lack of money less of a de­ter­rent to run­ning for of­fice. One of the early sur­prises of this elec­tion cy­cle is the Repub­li­can cam­paign of a re­tired U.S. marine, David “Bull” Gur­fein, for a con­gres­sional seat on Long Is­land. “I’m an out­sider, not a politi­cian,” he says. “So I don’t have the re­la­tion­ships with wealthy donors.” Gur­fein didn’t ini­tially give much thought to how he would raise money. “When you think about get­ting in­volved in pol­i­tics, you mainly think about im­pact­ing the coun­try in a pos­i­tive way. The last thing you think about is fundrais­ing. Then all of a sud­den, it slaps you in the face.”

His cam­paign man­ager signed on with Re­vup in an ef­fort to level the play­ing field. Within the first 20 days of his cam­paign, Gur­fein raised $132,000. “All of a sud­den,” he says, “peo­ple took us very se­ri­ously.” It was es­pe­cially grat­i­fy­ing be­cause even friends had ex­pressed doubts when he told them he was plan­ning to run for Congress. “Ev­ery­body laughed,” he says. “They said, ‘Are you out of your mind? You’re run­ning against an eight-term in­cum­bent.’ ”

But here’s the funny thing about fundrais­ing in pol­i­tics: It can be as un­pleas­ant for an eight-term con­gress­man as it is for an up­start. And as it turns out, it was. The eight-term con­gress­man who ap­peared un­beat­able sud­denly quit and gave Gur­fein a clean shot at an open seat. His name? Steve Is­rael. <BW>

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