A few years back, I got a note from a couple of Israeli software entrepreneurs who wanted to talk political technology. Turns out, they’d sold a software startup and were looking for new worlds to conquer. Naturally, they’d decided that “political campaigns in America are ripe for disruption.”
I laughed, and they were taken aback. They’d consulted people in the Silicon Valley world, and everyone said it was a great idea.
Don’t get me wrong. Campaigns and consultants are hungry for ways to do their jobs more effectively and efficiently, and they’ll adopt new tech as quickly as it helps them get more work done. AI may hog the eyeballs right now, but political data, cookie-targeted advertising and peer-to-peer texting once had their moments as the hot new thing in “internet politics.” Were they disruptive in the Silicon Valley/revolutionary business model/destroy-the-news-industry kind of way? Not quite.
As we talked, I realized that those software guys had no idea how many firms, organizations, activists and software developers work on political technology every day. They had no clue how many rounds of iteration the then-current generation of digital campaigning tools had already undergone, or how many ideas had been tried and found wanting. They assumed a couple of hotshot software dudes could just swoop in and figure it out right away, no sweat. And get rich doing it.
Their naïveté felt familiar, since digital politics has seen waves of outside entrepreneurs come rushing in for some of that sweet campaign cash. The political side of the Dot-Com Boom got me to DC in the first place, and those years enjoyed some truly crazy practices, like small startup websites being mushed together and “reverse mergered” into a shady IPO.
If I recall correctly, here and there a couple of people went to jail. As an aside, my father and I once spent an hour or two with two guys from Enron, who boasted about having lost $200 million from their investment fund to date. When they lost a couple of hundred more, it helped bring down the company. I kid you not.
Anyway, that level of business insanity doesn’t come around as often these days. The “disruptors” I talked with that afternoon weren’t really out to fool anyone, but themselves. They just didn’t understand that most political businesses either grow up in the industry or come from a larger vendor that serves the broader marketing world.
Other tech investors who’ve taken a dive into the business of politics have made that same mistake and many more, some of which have recurred regularly and painfully. I’ll pull out three of my favorites for your consideration, but let’s stick to historical examples. Any comparison to present-day actors is left as an exercise for the reader.
There’s Not As Much Money in Politics as You Think
Yes, there’s a lot of money in politics. But the bulk of it gets spent on media, from broadcast TV to digital ads. Much of the rest goes to cover little things like polling, staff, consultants, transportation and pizza for volunteers. Perhaps direct mail is ripe for disruption. Some consultants do become rich, of course, often because they’re able to take a percentage of a stream of advertising money as it flows by. Likewise, some political startups do get acquired — a few lucratively so.
Still, Silicon Valley types usually want 5x or 10x back on their money within a few years, and the political industry rarely has that much room to grow. Investors will often try to juice the game through rapid expansion, frequently into “new verticals.” When the actual rate of growth of those verticals turns out to be horizontal, said expansion is usually followed by contraction. Layoffs ensue, and while some companies do survive this cycle, I suspect that the investors often take a bath along the way.
Yellow Stripes and Dead Armadillos
One specific business model has taken quite a few disastrous turns around the track over the years. Here’s an idea: Let’s create a web portal/online community/app to bring people from the right and left together. We can talk about the issues, learn about our other people’s beliefs and dreams, and start calling each other Nazis in about five minutes. I consulted friends to build a partial list of erstwhile political portals that have popped up over the years, which currently includes Vote.com, Voter.com, Votizen.com, Politics.com, Policy.com, Grassroots.com, Democracy.com, Speakout.com, Causes, HotSoup and Ruck.us. I’m sure we missed a few.
Most of these sites launched with a load of hype and a dollop of fawning press coverage, but few lasted long. None are with us now in their original incarnation, though No Labels may serve as a tragic echo next year. People may tell pollsters they want us all to come together to solve the nation’s problems, but most of us aren’t really looking for a conversation across the aisle when we go online for politics.
Some political junkies want news, but most of us want to have our beliefs affirmed, which less often happens on a site that hews to the mushy middle. I got my start in Texas politics, where it is said that “there ain’t nothin’ in the middle of the road but yellow stripes and dead armadillos.” Pro tip: don’t end up on the bumper of a semi on a dusty Texas highway.
Politics is Built on Relationships
Sales is a relationship-based business, as Elon Musk recently found out when he fired his ad-sales team and his ad sales plummeted. And what is a campaign if not a giant sales job?
More seriously, political campaigns usually come together fast and with a short deadline. And while this next observation may hurt the sensibilities of our more-innocent readers, not everyone in the political world is necessarily that honest, competent or reliable. When early voting’s right around the corner, who can I count on to get that field program off the ground? Someone I know can do the job.
For our own protection and sanity, political people tend to go with who they know. But like Musk, some political investors seem determined to destroy as many of those relationships as they can, as soon as they get control.
When an equity fund bought into the prominent progressive advocacy and campaigning platform Salsa a decade ago, they promptly fired the founders and ran most of the long-time employees out the door. Of course, many of Salsa’s customers and the consultants who recommended Salsa’s products were loyal because of their relationships with the founders and those long-time employees. Hilarity did not ensue, and saddled with ownership turnover and an aging product, the ghost of Salsa eventually sold to EveryAction before the pandemic.
With these cautionary tales in mind, how should investors approach political technology? More like the Democratic Higher Ground Labs or the Republican Startup Caucus, which invest in practical campaigning technologies. They’re run by people with experience in the field, who aren’t likely to get snowed by somebody packaging commonplace tools as “revolutionary.” They understand the practical complexities of growing a business in a cyclical sector, and they’re not likely to push companies to expand too fast, too soon.
Though if you do have a ton of cash to burn and suffer from a lack of common sense, I’m sure I can find a domain name to sell you. Just send me the money first — in Bitcoin.
Colin Delany is founder and editor of the award-winning website Epolitics.com, author of the new 2023 edition of “How to Use the Internet to Change the World – and Win Elections,” a veteran of more than twenty-seven years in digital politics and a perpetual skeptic. See something interesting? Send him a pitch at email@example.com.