Can SaaS principles transform political campaigns as we know them? – TechCrunch
In life, they say you get what you pay for. That is no less true in politics, which is fueled by campaign donations and lobbying dollars that move policy on every important issue under the sun. The disclosed expenditures of the DC lobbying industry are more than $3 billion per year, while just the presidential political campaigns spent more than $1.5 billion in 2016.
Despite the key role that money plays in American politics, almost no one actually donates to a political campaign. According to the campaign finance watchdog OpenSecrets, just 0.68% of American adults donated more than $200 throughout the 2016 campaign cycle.
A $200 contribution may sound like an extraordinary sum, but it’s roughly $8.33 per month throughout the two-year election cycle. Compare the 1.67 million people engaged with politics against the subscription numbers elsewhere in the economy: The New York Times is approaching 3 million digital subscribers while Spotify and Netflix had 70 million and 118 million subscribers respectively in January this year.
Watching House of Cards is certainly more fun than funding the real House of Cards, but the lack of engagement from voters in the money side of campaigns has serious, deleterious effects. As The New York Times pointed out, just 158 families donated roughly half of the early dollars in the 2016 election, giving this remarkably small sliver of the American people extraordinary influence over the course of policies that affect all of us.
Unsurprisingly, the report cards for political institutions remain near their historical nadirs in the United States. Gallup polls show that just 15% of Americans approve of the work that Congress is doing, and cynicism increasingly runs rampant about the government’s ability to improve the quality of life for citizens.
At their heart, political campaigns are no different than any other organization: they need to raise revenues and then spend it to meet their objectives. Organizations are responsive to who pays them, and therefore, the only way to connect politics back to the everyday lives of people is to connect more pocketbooks of voters directly into the revenue model of DC.
Lawrence Lessig, in his book Republic, Lost, believed such a system would likely tamp down the passions that exist in the present system. He wrote, “Yet in a system that was exclusively a small-donor system, candidates could not afford to fund their campaigns from the extremes only. Instead, with, for example, a voucher system, they would need to reach a much wider range of citizens. That breadth would preclude extremism. Like a mandatory voting system, a small-donor-funding regime would put constant pressure on representatives to hew to the mainstream.”
Small donations have become popular on both the left and the right. Bernie Sanders raised tens of millions of dollars from donors giving less than $200, and Donald Trump has effectively leveraged his various platforms to drive Republicans to the highest small donor numbers in the party’s history.
Yet, it’s not just small donations that are needed, but reliable streams of small donations, so that politicians could start to transition from dialing-for-dollars around-the-clock to actually doing the actual work of politics. It’s the difference between selling songs one at a time, and a subscription service that has dedicated customers paying every month. In short, it is SaaS, but for politics.
That’s where startups like GiveMini become interesting. GiveMini, the product name of Progressive Labs, was started by Joel Aguero as a progressive-focused platform to help people donate their spare change to progressive candidates. Inspired by apps like Acorns and Digit, which help users save money for retirement, GiveMini’s algorithm looks at your credit card transactions using Plaid, and then rounds up each transaction to a whole dollar, aggregates all this change, and sends the check to a campaign.
In others words, it is change for change.
“All of these little purchases are small acts of civil engagement,” Aguero explained. His model works as follows. The average person has 32 transactions a month, and his rounding algorithm averages about 45 cents for each of those transactions. That comes out to about $14.40 a month, or just shy of $350 across a two-year election cycle. GiveMini scrapes a fee of 10% to cover its costs.
The typical victorious congressional campaign spent $1.3 million, so if campaigns could sign up about 4,200 people for the entirety of an election cycle, they could cover all of their costs without resorting to tapping high-net-worth individuals at all.
Aguero, who studied product design at Stanford, worked at such startups as Coursera and Nextdoor, as well as corporate behemoth Palantir. The 2016 election was a surprise to him, and he decided to find new ways to engage in politics using his background as a product designer. He was inspired by Bail Bloc, a cryptocurrency miner developed by The New Inquiry that generates money for people who couldn’t pay their court bail. “What if we did that, but for progressive political campaigns,” Aguero asked. He proceeded to build a prototype over the next few months that would become GiveMini.
The platform targets progressives, which as a term doesn’t necessarily mean any Democrat. Its website says that “GiveMini is for progressives. This includes many Democrats and Independents, and potentially some Republicans. We assess fit on a campaign-by-campaign basis and reserve the right to cease support for any campaign, candidate, or individual at any time.”
The platform has built its first partnership with the campaign of Bryan Caforio, a Democrat running in California’s 25th congressional district, which is located to the north of metro Los Angeles and is currently represented by Republican Steve Knight. “They are really excited about it because normally small donor donations go after existing supporters, and this has the potential to unlock an entirely different subset of donors,” Aguero said. As the 2018 election heats up, “I’d like to get 100 campaigns on the platform by summer,” he said. GiveMini has joined the most recent batch of Higher Ground Labs, which bills itself as an accelerator for progressive startups.
One hundred campaigns is an ambitious target in an industry where the idea of small dollar subscriptions remains anathema. Candidates, particularly those running for national office, need to prove that they can raise large checks from large donors early on to be “viable,” in what is commonly known as the money race. Strong early money will often be leveraged with additional campaign committee dollars from DC, making it of critical importance to electoral success.
Aguero understands that success around these new models of campaign financing may not pan out right away. “We have to be intentional about who we can really support and make sure it is a positive experience for them,” he said. “If we can walk out of this with some really compelling case studies, even if they are not very favorable,” then GiveMini will have met its goals.
Long term, Aguero hopes that “we can build an open source model among progressive campaigns.” He’s also not limiting his focus to politics, but hopes to include relevant non-profits on the network in the future, saying that “A lot of the lessons we take from politics can be applied to the non-profit world as well.” He thinks non-profits could be an important opportunity in the downtimes between elections.
Washington’s current expertise in stroking the egos of plutocrats will have to be replaced with more consumer-oriented marketing chops. Changing the capital’s spending habits is not going to be easy, but reliable subscription revenue could change politics just as much as it has changed software business models. There is an opportunity to bring Silicon Valley’s SaaS knowledge into DC, and in the process, affect lasting change that could transform our current political challenges.