Think of Sen. Barack Obama of Illinois as an Internet startup that began small and then took off, suggests Joshua Green in the June issue of Atlantic magazine.
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“He had great buzz, a compelling pitch, and no money to back it up,” writes Green of the relatively unknown candidate who entered the race early in 2007 and now seems to have it all but sewn up.
“He wasn’t anybody’s obvious bet to succeed, not least because the market for a Democratic nominee already had its Microsoft.”
But the Silicon Valley venture capitalists were impressed by Obama’s enthusiasm and newness, and with their help and Internet savvy, Obama eventually out-performed the fund-raising efforts of his main opponent, Sen. Hillary Rodham Clinton of New York.
The difference between the two campaigns was apparent this week, after Obama scored a convincing primary win in North Carolina and Clinton came through with a narrow victory in Indiana.
The Obama campaign emerged with millions of dollars on hand. It raised $134 million in the first quarter of this year, $240 million since the campaign started. And it has plenty of cash on hand for the remaining primaries.
In contrast, even though it has raised $195 million overall, the Clinton campaign is almost running on empty. Clinton loaned her campaign $6.4 million recently, adding to an earlier loan of $5 million.
Green details how Obama’s fundraisers created a money machine that connected to an untapped army of small contributors but still reached out to monied people with monied friends.
Their first correct move was making a sustained effort to recruit Silicon Valley entrepreneurs and venture capitalists.
“In a colossal error in judgment, the Clinton campaign never made a serious approach (in Silicon Valley) assuming that Obama would fade and that money and cutting-edge technology couldn’t possibly factor into what was expected to be an easy race,” Green writes.
Obama’s relative youth and inexperience was not a negative in the minds of the California venture capitalists.
“No one in Silicon Valley sits here and thinks, ‘You need massive inside-the-Beltway experience,’” said Obama supporter John Roos, CEO of Wilson Sonsini Goodrich and Rosati, a Palo Alto firm that advises startups and venture capital firms. “Sergey and Larry were in their early 20s when they started Google.”
From the start, the venture capitalists did for Obama what they would do for any start-up; they hit up their friends for money.
Mark P. Gorenberg, managing director of Hummer Winblad Venture Partners and a fundraiser for John Kerry in 2004 and for Democratic Congressional candidates in 2006, early on committed to bring in $250,000 for Obama.
Like Gorenberg, Steven J. Spinner, an entrepreneur and CEO of Sports Potential Inc., also became a member of Obama’s national finance committee and pledged to raise $250,000. “I’m a startup guy,” he told Green. “We take measured bets. … If you’ve got the right plan and the right leadership, the game can be won. That’s how I looked at Obama.”
But Green stresses that in addition to money, the Silicon Valley connection carried with it “the technology and the ethos” that propelled Obama into the lead.
The campaign has used key Internet tools to reach hundreds of thousands of small donors. Social networking sites have been especially important to the effort.
My.BarackObama.com connects Obama supporters, not only raising funds, but also creating a vast community of sorts. Similar and larger groups have formed on MySpace and Facebook.com.
“The social-networking model provided Obama with something that insurgents before him … always lacked, a means of capturing excitement and translating it into money,” Green concludes.