When it comes to the top business donors to Democratic Party causes, venture capitalist Andy Rappaport hardly commands the name recognition of financier George Soros or Progressive Corp. (PGR) Board Chairman Peter G. Lewis. That soon may change. Rappaport, general partner at August Capital in Menlo Park, Calif., and his wife Deborah have contributed some $5 million in the past year to Democratic and progressive-oriented groups, including John Kerry's Presidential campaign. Early this year, they put together a series of Silicon Valley dinners to connect donors with fledgling political organizations, spawning an informal group they call the Band of Progressives.
In a recent interview, Rappaport talked with Rob Hof, BusinessWeek's San Mateo bureau chief, about how he's trying to use venture techniques to build more support for progressive causes. Here are edited excerpts of their conversation:
Q: How long have you been donating to political causes?
A: We have been active politically for our entire lives. We didn't always have a lot of money to give, but we would give time, or we'd give a little bit of money. Our involvement has been growing as our means to give have been growing, but also as our sense of urgency about not only supporting things we believe in but also trying to restructure and contribute new thinking to how progressive causes are being promoted.
Q: What has pushed you to up your contributions lately?
A: One, of course, is that the Bush Administration has set the country on a course that's so opposed to anything we ever imagined might happen. This is a moment in time when we have to push back absolutely as strongly and firmly as we possibly can.
Second, the conservative movement has been far better-organized and far more effective over the last 30 years than liberals and progressives and Democrats have been. So the ability of the current Administration to do many of the things they're doing -- even despite the fact that they're at odds with the perspective and will of most of the country -- is a function of the fact that conservatives have managed to control the dialogue to a great degree.
We really need to use some of the energy that we can harness now just because of the degree of dissatisfaction and anger at what's going on in the country. We need to harness that in a way that hopefully will allow us to build institutions that are longer-lasting and that can do things differently than the way we have.
Q: Have any issues in particular galvanized you to action?
A: [Laughs] Where to start.... Quite purposely, our activity has never been around particular issues. We believe very strongly in the power of representative government. Our political work has always been to help elect and now increasingly to create an environment where they can be effective -- that is, lawmakers who we believe embody a set of values that fairly represent where we are and where we think the country is.
Q: So you avoid issue-based groups?
A: One of the things we have seen as a weakness in Democratic politics is that we as progressives have been divided by our focus on individual issues more than we have been united by our core values. That's one reason we have tried to keep individual issues out of the bigger landscape of what we're trying to do.
Q: Is there a real groundswell behind John Kerry, or is it simply "anybody but Bush"?
A: There is a groundswell of interest behind John Kerry. What we're doing isn't particular to the election of John Kerry. We're working as hard as anyone to defeat the current Administration. We're feeling increasingly comfortable with and confident about John Kerry as a candidate and hopefully as a President. But legally, the things we're doing can't be connected to the Kerry campaign.
We view a Kerry victory as being only a first step in reversing what has been the course of politics in the country. So we're focused much beyond simply John Kerry's election.
Q: I gather you're taking a venture-capital approach to giving. What does that mean?
A: I think the system has been broken, and most of what the Democratic Party has been doing has been ineffective in laying a long-term foundation. So my natural instinct as a venture capitalist is to see that as an opportunity and to do what comes naturally: Bet on people with new ideas, sprinkle support around a little bit to nurture some new ideas, and as those new ideas start to become powerful and demonstrable, then you increase support. I've been shocked to learn the degree to which that is unconventional thinking in the political realm.
Q: So you think this is an unusual path to take in politics?
A: People have donated to candidates and campaigns and the party and the things that have scale. Partly as a result of campaign-finance reform and partly as a result of increasing disaffection with many of those institutions that have scale, there are a few people like us who are starting to think what we really need to do now is to be stock-pickers and take a little bit more risk in each of our individual investments.
George Soros and Peter Lewis are investing in things that have massive scale, but they have stepped up to things that are new and outside the party infrastructure, such as John Podesta and the Center for American Progress. So there are pockets of individuals that are starting to think and act that way.
Q: How formal is the Band of Progressives?
A: It's really informal. It's so informal that I never expected that word of it would get out. We have not formed a formal entity. It's not that we tried to keep it secret. In Silicon Valley in particular, and around the country, a lot of people want to know what to do, where to put their money, where to put their energy.
If we have a community of people who want to support something but don't yet know what to support -- and we have a community of [political] entrepreneurs who have very good ideas but don't yet have as much support as they need -- then what we really need is a marketplace that matches entrepreneurs and investors. What better place to begin that than in Silicon Valley?
Our model for this was the Band of Angels [a group of wealthy individual investors in Silicon Valley that invests in technology startups]. We said, let's do that for politics. So we started inviting people to dinners in February or March. It has become successful and popular not only in Silicon Valley, but we're also talking to people elsewhere in the country about doing similar things in other places.
Q: What happens at these dinners?
A: They're not fund-raisers. We've made them free to anybody who wants to come. We've told people to invite others, too. We want to create as efficient a marketplace as we can. We've been really gratified by the number of people -- well over 200 people who have attended one or more. We've had five or six events.
They're informational sessions. Sometimes it's groups coming in and explaining what they do. We want to maintain our flexibility in terms of the people we get there and get as broad a distribution of information as possible.
We've created some relationships that have helped spawn some new programs. One is Project Billboard, which has been controversial [in its attempts to post an antiwar message on Times Square during the Republican Party convention]. Some of the people, including my wife, who got involved met through the Band of Progressives. We've also had some folks who said, "I want to do my own fund-raisers about environmental issues and Kerry himself."
Q: How would you characterize Silicon Valley's political leanings now?
A: There is unprecedented support for a Democratic Presidential candidate here in the Valley. When we first moved here almost 10 years ago, the Valley was overwhelmingly Republican, at least at the Presidential level, with pockets of support for a Democratic candidate. I'm getting calls almost daily saying, "You know what? I've been a Republican my whole life, and I never thought I'd ever vote for a Democrat, but I am so angry at what this Administration is doing that I'm not only going to vote for John Kerry, but I want to have a fund-raiser for him."
Q: Yet prominent Valley executives such as Cisco Systems (CSCO) CEO John Chambers publicly support President Bush.
A: There will always be people who are active in supporting Bush. The Valley would be a boring place if everyone agreed on everything. There's a very strong Libertarian streak, which typically allies with the Republican Presidential candidate. And a lot of people in the Valley are driven by economic issues, also usually lining up with Republicans, who traditionally have been pro-fiscal discipline and pro-free trade, both things which are very important to businesspeople here.
Well, now we have an Administration that is not only fiscally undisciplined and doesn't have a coherent policy on trade, but is also demonstrably anti-science and has led us into a war that a lot of people are uncomfortable with. So a lot of folks who have been Libertarian or Republican are saying, "Whoa, I'm not sure I want to abandon the Republican Party, but I certainly want to abandon this Republican Administration."
Q: Aren't a lot of folks here worried about Kerry's populist appeals, especially on trade and jobs?
A: This particular battle is transcending individual issues. This really is a referendum on the overall direction of the country. I'm increasingly finding people who may be uncomfortable with the Democrats on trade issues, but nonetheless can't support the current Administration.
Q: You sound pretty confident about Kerry's chances.
A: Well, certainly he's going to carry California. But we have a ton of work to do. I wake up every morning asking, "What could go wrong? What do we have to do today to assure that it doesn't?"
Q: Which of the groups you're supporting do you feel might have the best chance to sway the election and the country's direction?
A: One of our favorite programs is focused on Hispanic populations in certain key states. It's called the Hispanic Project, and it's being run by the New Democrat Network. Hispanic voters are vitally important in a number of key states, but they haven't been targeted effectively by Democrats over the last couple of cycles. They have been targeted effectively by the Republicans, especially in the 2000 Presidential election.
Because of their physical concentration and because of the characteristics of Spanish-language media, it's relatively inexpensive to reach them. So NDN sponsored a program to exhaustively test and research extraordinarily effective media in Spanish, targeted to Hispanics in several key places, such as Florida. It has been extraordinarily effective, according to the polling data.
Another is young people. Nonvoting young people represent one of the largest swing-voter blocs out there, and we better get more effective at how we target them. Conventional wisdom says young people are apathetic and they're not going to vote, but the war in Iraq has really mobilized them. The degree of activity of young people is likely to be much higher this year than anticipated.
Q: Is that why you've invested so much in the group Music for America?
A: This group of people had terrific ideas about how to reach young people in a context already integral to their daily lives. They were really focused not on just getting people to vote this year but really on creating a habit of political and social involvement on the part of young people.
Their insight was, if you have a huge rock star in an arena one time touching young people, that's not really going to drive the message home. The rock star is too removed from them, the arena is too big, and it's not their peers touching them. What you really need is repeated reinforcement of the idea that it's socially acceptable to be politically involved.
So they said, "Let's go to the small clubs and to the bands that are moving through those small clubs and really talk to people and interact with them, over and over and over again." Their mantra is, "We want to use clubs like the Religious Right uses churches." It's a place where people have an emotional connection and where they come over and over again. That really got us excited. That's the biggest single investment that we've made.
Q: What have you put into such groups in total?
A: We've committed $3 million to so-called 527 groups, and we've committed a little over $5 million to the combination of 527s and 501(c3)s [groups named for the federal tax-code sections granting them exempt status] and other activities, including direct support of candidates.
Q: Why so much?
A: This is our way of doing estate planning. We're eager to make charitable contributions to social and philanthropic organizations and make the world a better place and leave a safe and good world to our children. These days, influencing the political realm is probably a more important way of ensuring that we leave our children a world we want them to live in.