Decision MediaWorks

The New Market for Political Startups

Last week, Democratic tech company NGP VAN announced it was acquiring start-up NationalField (read about it here). Here are three reasons why this is a significant event in the political world.

1. The ability to build and sell a scalable business will attract entrepreneurs and innovation to politics. Previously, the only models that worked in politics were pure “professional services” business models. The trouble with professional services like consulting and lobbying is that they do not scale.

N.B. Think of scale as the cost associated with every client or account. A political consultant can only take as many clients as he has time to service. In essence, it is very expensive to scale a consulting firm because each new client requires new allotments of time from the consultant. A tech company, however, scales cheaply because it can automate many of its services.

The result of the political start-up market should be a lot of new online services and tools for campaigns and office holders.

2. NationalField shows that innovations on the campaign trail can be commercialized to the private sector. NationalField provides whats called a Customer Relationship Management System (CRM) to manage contact and interactions with voters. The CRM market is very large as almost every company on the planet deploys some type of CRM solution.

NationalField, however, is unique because it has overcome a challenge almost all campaigns face; the NationalField CRM had to be dummy proof so it could be used by any volunteer with minimal training.

NationalField succeeded in making their product so simple to use that they attracted companies looking to reduce their CRM training costs. In essence, making a CRM easy for volunteers to use with voters resulted in a CRM that was also easy for customer service staff to use with customers in business environments.

3. The NationalField acquisition shows that user experience and preference matter. NGP VAN could have built a competing platform but instead opted to purchase the platform preferred by progressive operatives and volunteers.

The GOP method in the past has been to hire contractors to develop software in-house. The trouble is that these GOP projects usually result in slow and unstable products which frustrate users. In response, GOP operatives gravitate to an array of independent platforms (like WebElect in Florida) which are not designed to share and sync voter data with each other. The result is that information gained from voters by one campaign is not shared to other campaigns. Without this master database, it is impossible to do the advanced data analytics pioneered by the Obama campaign.

Check back next week for the factors that are key to building a successful political start-up, as well as some companies in Florida that may be attractive acquisition targets (or maybe even acquirers themselves).

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