Business | Innovation and electioneering

The Obama start-ups

Techniques from the president’s election campaigns have spawned one lot of young firms

|NEW YORK

AT THE inauguration ball held for staff of Barack Obama’s campaign team in January 2009, the new president “told us all that we should spread the methodologies of the campaign into other organisations, including outside of politics”, recalls Edward Saatchi, who took him at his word. NationalField, co-founded by the young Briton, sells private social networks similar to one used by the Obama campaign. It now has contracts with WPP, Kaiser Permanente, Britain’s National Heath Service and Medtronic.

The firm is just one of several fast-growing “Obama start-ups” launched by members of the 2008 campaign team. NationBuilder, which provides software for political campaigns, boasts 1,600 clients (from Cory Booker, the mayor of Newark, to the independence-seeking Scottish National Party). In March it raised over $6m from two of Silicon Valley’s best-known investors, Ben Horowitz, of Andreessen Horowitz, and Sean Parker. In November, Amicus, a firm that aims to reduce fund-raising costs for universities and non-profits by finding friends to nag people for donations, raised $3.2m.

Optimizely’s “A/B testing” software helps clients review different web pages and e-mail appeals to work out which have most impact. Its technology came out of the 2008 election, when it crunched data to discover that when the campaign’s website was emblazoned with an image of Mr Obama and his family and a link labelled “learn more”, people were 40% more likely to sign up. For 2012, Optimizely took Mr Obama’s instruction to diversify so literally it even worked for Mitt Romney. Its corporate customers include Starbucks, Salesforce.com and Crate & Barrel.

An election campaign may be the perfect incubator for new companies. “The political process has many similarities to the world of start-ups,” says Seth Bannon, a founder of Amicus. “It is fast-paced, there’s lots of uncertainty, and anyone working in it has to be comfortable doing what they do without much oversight, for long hours and not much pay.” After working in a freewheeling campaign in 2008, “the last thing I wanted to do was take on less responsibility in a more controlled environment with less pay…with the new administration,” explains Jeff Coleman, a founder of Organizer, which sells mobile software for organising campaigns.

Sometimes the management techniques of a political campaign are ahead of what goes on in companies, and so can be transferred later to the business world, says Joe Green, one of NationBuilder’s founders. Eagerness to master new technologies fast has also been a feature of both Mr Obama’s campaigns—with an emphasis on social media in the first and on big data and analytics in the second.

Now a second wave of Obama start-ups is keenly expected to emerge from the 2012 campaign. (As was normal for both parties until 2008, the Romney campaign relied largely on outside consultants for its technology, rather than developing its own.) However, the prospects for this are complicated by the fact that Mr Obama’s team was much cleverer in its use of technology second time around.

In 2008 much of the tech innovation happened from the bottom up, such as when Mr Saatchi and his colleagues came up with their private network. In 2012 the direction came from the top. People were hired to solve specific technical problems and the campaign was determined to retain as much intellectual property as possible. In part this was due to a realisation that the election cycle imposes heavy costs on political parties, which have to build new technology every four years, only for it to vanish when the election is over.

Guarding the recipe

According to Sasha Issenberg, author of “The Victory Lab”, a new book about the “secret science of winning campaigns”, to try to preserve a working election machine the Obama campaign is considering transferring its technology and intellectual property to the Democratic National Committee (DNC) or another institution, perhaps Mr Obama’s presidential library.

However, few of the young techies who served on Mr Obama’s team will fancy shifting to the stodgy bureaucracy of the DNC. In 2012 the team had a policy of recruiting software engineers and others from small start-ups, who from day one were thinking, “What am I going to do next, after the election?” says Harper Reed, the campaign’s chief technology officer. Mr Reed expects a crop of new start-ups run by former staffers to sprout—including one to be launched by himself and Dylan Richard, the campaign’s director of engineering. This will probably involve some big data analytics, but beyond that Mr Reed isn’t saying what he has in mind.

None of these start-ups has yet achieved the scale of Blue State Digital, an online marketing firm, which made its name with Mr Obama in 2008 but in fact was created by members of Howard Dean’s ill-fated campaign for the presidency in 2004. In December 2010, it was sold to WPP, a global advertising giant, for what was reportedly a nine-figure sum.

This article appeared in the Business section of the print edition under the headline "The Obama start-ups"

Survival of the biggest

From the December 1st 2012 edition

Discover stories from this section and more in the list of contents

Explore the edition

Discover more

Making accounting sexy again

The profession needs a makeover to attract newcomers

A marketing victory for Nike is a business win for Adidas

The contest of the sportswear giants heats up


The pros and cons of corporate uniforms

A quarter of the American workforce wears one. Why?