Online Extra: The Business of Online Campaigns
Scott Heiferman, 31-year-old co-founder of Meetup, runs one of the most dynamic political phenoms since the birth of the Internet. Politicians of all stripes are flocking to his two-year-old site, meetup.com. It provides a Web service for like-minded people to schedule get-togethers in the real world. Meetups were crucial for the Howard Dean campaign, which saw some 180,000 people sign. And now Democratic candidate John Kerry, along with scores of other state and local politicians, is counting on Meetups for grassroots support.
But ride the tiny elevator to Meetups' sparse headquarters in lower Manhattan and ask Heiferman about politics, and the first thing he does is pull out a dog-earred photo. It's a group of people carrying Chihuahuas. His point? Politics is just one aspect of the Meetup business and represents about one-third of the site's activity. "It just landed in our lap," he says. And even as political Meetups spread, Heiferman is anxious to keep the company's nonpolitical side, from canine clubs in Kansas City to Russian-language Meetups in Spokane, growing every bit as fast.
Most of the hot companies providing political service on the Web come out with the same refrain: "Politics is just a piece of our business." Convio, the Austin (Tex.) software company that provided Dean with e-commerce, e-mail, and database technology, says it's far more focused on nonprofit organizations than on politics. San Mateo (Calif.)-based startup Biz360 produces software that can read thousands of newspaper articles and give politicians a read on trends. But for Biz360, too, politics is a sideline to its core corporate market.
Don't any of these tech companies want to focus hard on the political market? The short answer: Very few. For all the excitement politics generates in an election year, it's an up-and-down market that can leave businesses -- and especially startups -- in the lurch. The trouble with politics, say tech execs, is that lots of a company's customers fall to defeat every November. That effectively puts them out of business.
"We don't actively market to campaigns," says Convio CEO Gene Austin. "You sign up for five, you're going to lose four." He says the entry into politics was a "fortuitous event" for Convio but still represents only 5% of revenue.
The business logic may be sound. But the upshot could be bad news for politicos. While other industries benefit from a broad selection of specialized software and services, politics often settles for tech hand-me-downs. Campaigns typically must hire tech consultancies to adapt and stitch together these Internet tools. Some even bring in software developers to build programs from the ground up.
CHEAPER THAN TV.
"We had 15 people doing all the tech stuff," recalls Josh Lerner who headed the tech team for retired General Wesley Clark. "It was insane." The result? Clark, who started very late, never managed to build the powerful Web presence of a Dean. This muffled his message and hindered his fund-raising efforts.
Carrying a campaign to the Web is hard work, and costly. Sure, it's not as pricey as running TV ads. But the Dean campaign spent a bit more than $1 million on tech, says one former campaign staffer. And putting together a world-class Web site, like the Bush campaign's (georgewbush.com), costs some $200,000 to develop, estimates Geoff Brookins, CEO of Beachead Technologies, a New York company that created the Web site for the Republican National Committee (gop.com).
For a campaign like the President's, which will likely raise $200 million, the Web site is a bargain. It can cost an estimated $800,000, according to Brookins, to service the site: answering mail, harvesting e-mail addresses, processing donations, and loading it with a steady diet of news, photos, and video. But for thousands of politicians battling for state and local posts, mounting a Web strategy is still a stretch.
"Campaigns shouldn't be building technology and writing software," says Lerner, from the Clark team. "They do it because they have to."
Now, Lerner and a few colleagues from the Clark team see opportunity in this nascent political market. They developed Clark's applications as open-source projects. And now they're hoping that the same open-source community that built Linux into a leading operating system will hone a suite of these political programs into a cheap downloadable package.
It's a long shot. But the Web isn't likely to transform politics from top to bottom until all the candidates have a lively online presence. If established tech companies continue to treat the campaign market as a sideline, maybe the open-source movement will find a place in politics.
By Stephen Baker in New York