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Now that Election 2000 is over (well, technically at least) the political maneuvering isn't limited to the newcomers in Congress. On the Internet, there's a shakeout under way among the political dot-com companies that all had hoped to turn the election into profits. It's a brutal winnowing. But Grassroots.com looks like it will be one of the survivors. Through a partnership with the League of Women Voters, it provides free information about elected officials, from your local school board members to the resident of the White House.
But the site's biggest draw is a "Take Action" button that lets like-minded people all across the Internet connect and organize. Now Grassroots is building on that trademark offering. Beginning next spring, the site will offer trade associations and other groups help getting their voices heard in Washington.
On Nov. 15, the company appointed former White House Press Secretary Mike McCurry to be its CEO. The company also announced a partnership with Issue Dynamics Inc., a Washington-based public-affairs group with a reputation for its grassroots organizing skills. McCurry, who admits he never once visited the White House Web site while he worked with the Clinton Administration, says Grassroots wants to change the "old politics" way of doing business in Washington by providing citizens, trade associations, and other interest groups with Internet-based tools to make themselves heard. He outlined the company's vision during a Nov. 15 visit to Business Week's Washington bureau. Here are edited excerpts from the conversation:
Q: Party divisions in Congress are worse than ever. And fallout from the Presidential race is making things even worse. So where does Grassroots.com come in?
A: Now that the political community is divided down the center, the ability to get your message across in Washington is going to be more important. The need to advocate and get the attention of policymakers is going to be what everbody is trying to figure out how to do. With a new Administration, a new Congress, it's very uncertain what the balance of power will be. Lo and behold, we come out with something that's going to be a very important tool for trade associations, corporations, groups that are trying to lobby.
Q: Who are your clients?
A: Trade associations, basically. We just got done [helping] the California Teachers Assn. [defeat] Proposition 38 [which would have allowed for private-school vouchers in the Golden State.] It was kind of a textbook case of how you use viral e-mail to take the message and propagate it among a group of allies. The other thing we're discovering [is that] managing data and helping these organizations use their existing databases for this type of advocacy function is a whole business in and of itself. Our products are going to help people and groups manage their own internal affairs more effectively.
Q: Mobilizing large groups of people is nothing new -- labor groups have been doing it for decades. How does it change with the Internet?
A: The more I've thought about this and learned about it, the more I've learned what the real potential is for the Internet. Look at K Street: So much of the industry of lobbying and consulting in Washington is based around phoniness. This technology identifies real people and gets them involved and interactive with elected officials.
Q: In Washington, more and more groups are emphasizing their grassroots organizations. In some congressional districts this year, the candidates were outspent by special-interest groups and their own political parties. Does Grassroots.com's outreach try to get around that sort of carpet bombing?
A: It's partly that, but it's different in this respect: Advertising is an enormously inefficient way to spread your message. Most races in this country -- candidates and [special-interest] causes -- were spending millions and millions of dollars, and half the money was wasted. Why? Because only 50% of people voted. So if you think about the advantages of the Internet and its targeting features, you're sending your message much more directly to the people you want to see engaged.
Q: Isn't this just another avenue for special interests to exert their influence?
A: You can say this is just more special-interest money because all these special interests are going to buy [Grassroots'] products. So my answer would be yes, but these products are successful in the hands of the customer...only if the customer has a cause that really provokes people to want to get involved. What you're going to get, instead of a lot of very clever advertising, are messages that force people to take some kind of action themselves.
Q: Does this sort of progress exacerbate the digital divide? In other words, do people who already are disenfranchised become more so?
A: No. Well, that's a good question. I said no too easily. If you're not participating in a cause or not part of a company or a group that has some reason to want to get you involved, maybe you will get left out of that conversation. More and more people are going to try to attract folks to their cause to build coalitions and constituencies. That's the only way we're going to be able to do business when things are so fractured.
Q: And yet the Internet wasn't much more than a side note to this election. With the exception of Arizona Senator John McCain, few candidates seemed to make great use of it.
A: The collective judgment about the Internet in this campaign was, ho-hum: It didn't really make much of a difference, nobody really used it. But if you go back, I think you'll find the Gore campaign, the Bush campaign, and their affiliates used it extensively for get-out-the-vote campaigns. It really was, because of the closeness of the election, a pretty important change in the way campaigns worked. That's the same theory that drives our business model and our planning as we think about what people are going to want to do the day after the election to be more effective as they advocate their cause.
Q: You're still flush from a $30 million round of venture capital Grassroots.com received last spring. Is this new business model designed to position you for the 2002 congressional elections?
A: No. This whole change was a recognition that we better not be dependent on an election cycle, although I think by 2002, the product line that we have is going to be very attractive to campaigns.... The key insight is: This isn't about who got the big buzz going into Election Day, November, 2000 -- it's about who owns the turf the day after.
Q: Meanwhile, gridlock in Congress could present an opportunity for you?
A: Yeah, but that sounds like it's an unholy alliance with the forces of evil. It's more about someone's going to win, even in the gridlock. Someone's going to break through. So what this is about is making sure that everybody has an Internet tool they can use to drive their army forward.
Q: Originally, Grassroots.com had promised the League of Women Voters stock options in return for Grassroots' use of the League's massive database of candidate information. But under your latest business model, the candidate information site isn't a revenue producer. So how do things stand with the League?
A: We're having really good conversations with them about what to do to capitalize on our success. [The stock options idea] doesn't really match up to [the new business plan] that we've been talking about for the last half-hour, and I think everyone recognizes it. On the other hand, the League's database is an enormously important thing...because it draws candidates and other [potential] clients.
Q: So there are no plans to go public within, say, the next two years?
A: I've been taught you're not supposed to answer that question.
Edited by Douglas Harbrecht
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