The Amazing Money Machine

How Silicon Valley made Barack Obama this year’s hottest start-up

Barack Obama was new to most Americans when he entered the presidential race, in February 2007. But he was familiar to Silicon Valley in at least one way: like a hot Internet start-up in the glory years, he had great buzz, a compelling pitch, and no money to back it up. He wasn’t anybody’s obvious bet to succeed, not least because the market for a Democratic nominee already had its Microsoft.

This being Silicon Valley, however, Obama was quickly embraced. A few days before Obama declared, John Roos hosted a fund-raiser at his home, attended by Gorenberg and many other prominent figures. This sent an important signal to the community and added to Obama’s local mystique. “There is a lot of good feeling for the Clintons in California,” says Peter Leyden, the director of the New Politics Institute in San Francisco, a tech-focused think tank that is neutral in the presidential race. “But once the community here experienced Obama, that started to break up really quickly.”

That early fund-raiser and others like it were important to Obama in several respects. As someone attempting to build a campaign on the fly, he needed money to operate. As someone who dared challenge Hillary Clinton, he needed a considerable amount of it. And as a newcomer to national politics, though he had grassroots appeal, he needed to establish credibility by making inroads to major donors—most of whom, in California as elsewhere, had been locked down by the Clinton campaign.

Silicon Valley was a notable exception. The Internet was still in its infancy when Bill Clinton last ran for president, in 1996, and most of the immense fortunes had not yet come into being; the emerging tech class had not yet taken shape. So, unlike the magnates in California real estate (Walter Shorenstein), apparel (Esprit founder Susie Tompkins Buell), and entertainment (name your Hollywood celeb), who all had long-established loyalty to the Clintons, the tech community was up for grabs in 2007. In a colossal error of judgment, the Clinton campaign never made a serious approach, assuming that Obama would fade and that lack of money and cutting-edge technology couldn’t possibly factor into what was expected to be an easy race. Some of her staff tried to arrange “prospect meetings” in Silicon Valley, but they were overruled. “There was massive frustration about not being able to go out there and recruit people,” a Clinton consultant told me last year. As a result, the wealthiest region of the wealthiest state in the nation was left to Barack Obama.

Furthermore, in Silicon Valley’s unique reckoning, what everyone else considered to be Obama’s major shortcomings—his youth, his inexperience—here counted as prime assets.

I asked Roos, the personification of a buttoned-down corporate attorney, if there had been concerns about Obama’s limited CV, and for a moment he looked as if he might burst out laughing. “No one in Silicon Valley sits here and thinks, ‘You need massive inside-the-Beltway experience,’” he explained, after a diplomatic pause. “Sergey and Larry were in their early 20s when they started Google. The YouTube guys were also in their 20s. So were the guys who started Facebook. And I’ll tell you, we recognize what great companies have been built on, and that’s ideas, talent, and inspirational leadership.”

This was the dominant refrain as I traveled around the Valley. From a policy standpoint, there are many reasons for tech-minded types to support Obama, including his pledge to establish a chief technology officer for the federal government and to radically increase its transparency by making most government data available online. “Barack recognizes that people in Silicon Valley are not just talking about a set of technical questions,” Lawrence Lessig, the Stanford law professor and noted Valley demigod, told me. “It’s a broader generational issue of how to architect and orient the government on important issues, from privacy to security to competition, in ways that open up the process to everyone.”

But more than any policy, the idea of Obama and the world he speaks for seemed to excite something deep within the limbic system of the Valley brain that manifested itself through the early and continuing financial support that was crucial to launching Obama’s campaign. Getting behind Obama, especially for those who did so early, appealed to their self-image as discerning seers. Though she ultimately went with John Edwards, Nadine North captured this better than anyone: “Obama was the new, new thing, and that’s what we’re all about here.”

When Gorenberg joined Obama’s national finance committee, he was pleased to discover an institutional culture eager to embrace new ideas about building user-generated networks. The effects of this type of thinking are evident throughout the campaign, but nowhere are they more fully embodied than in the person of Steve Spinner.

Spinner is a 38-year-old entrepreneur and media executive who, when we met at a Starbucks in Menlo Park, came across as a prototypical Valley figure: bright and enthusiastic, a born networker with a dazzling command of the latest industry lingo, and someone who is a zealous exponent, in roughly equal measure, of both Northern California’s business-venerating culture and Barack Obama.

Spinner had only recently become active in politics, through Gorenberg and North’s “Win Back the House” effort. Although he hadn’t intended to do more than write a check, he had gotten swept up in the excitement. “I know most of the VCs and entrepreneurs here,” he told me, “so when companies are thinking about doing their initial fund-raising, thinking about raising $3 million or $5 million or $10 million, I’m able to help a number of them by making introductions to the various VC firms that might find what they’re doing attractive.”

Raising money for a political cause seemed like a natural progression, though it was not without its challenges. Unlike other professionals in Silicon Valley, entrepreneurs are typically cash-starved, and therefore unlikely contributors. But as he called around to friends and contacts, Spinner was surprised to find many of them eager to give and thankful to have found an outlet for political expression. Things quickly took off. He hosted an event in his home in 2006 that was headlined by Arizona Governor Janet Napolitano. “I realized, ‘Wow, I can do this,’” he told me. “And so I got totally hooked. On election night, I had an ownership stake in the effort.”

Eager to get involved in a presidential campaign, Spinner accompanied Gorenberg to the February fund-raiser at John Roos’s house and, somewhat to his own surprise, found himself volunteering to raise $25,000. Like so many of his Valley colleagues, Spinner was instantly infatuated with Obama and certain that supporting him was the right play. “I’m a start-up guy,” he told me. “We take measured bets. We will place a lot of money on something that has a greater likelihood of failure than success, but there has to be a path—if you’ve got the right plan and the right leadership, the game can be won. That’s how I looked at Obama.”

Spinner began sending out e-mails, tapping into his network. He browsed friends’ profiles on LinkedIn, Facebook, and MyYahoo, trying to determine who might be a Democrat and donate. One friend also wanted to raise money for Obama, so Spinner brought him aboard. He soon exceeded his $25,000 goal.

This brought an invitation from Obama’s national finance chair, Penny Pritzker, to join the national finance committee and commit to raising $250,000. Spinner thought about it, and took the plunge. He’d been surprised by the excitement he’d encountered for Obama, but also by the lack of a forum to discuss it. So he established what Web denizens would call an affinity group, “Entrepreneurs for Obama,” to serve this untapped market. Obama appeared before the group by videoconference in May and was a smash hit. Almost overnight, a whole new network, which would yield its own spin-offs, had come into being and gone to work for the candidate. And in a period of weeks, Spinner, who had never raised a dime for a presidential campaign, had gone from neophyte to mid-six-figure Obama fund-raiser.

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Joshua Green is an Atlantic senior editor.

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