October 30, 2020

This billionaire built a big-money machine to oust Trump. Why do some Democrats hate him?

Democrats need Reid Hoffman’s money. But it’s not that simple. | Doug Chayka for Vox...

Democrats need Reid Hoffman’s money. But it’s not that simple. | Doug Chayka for Vox

Reid Hoffman symbolizes a bigger debate over whether Silicon Valley disruption has any place in our politics.

Open Sourced logo

Every few months, LinkedIn founder Reid Hoffman sends an invitation to some of the other billionaires who make up the Democratic Party’s big-money machine:

He’d like to add you to his political network.

Soon after, advisers to dozens of the party’s megadonors pile into rooms in Washington, DC, or Palo Alto, California — or, these days, on Zoom — for closed-door, Chatham House Rule sessions for some of the party’s most powerful fundraisers. They share notes, hear from people seeking big checks, such as Joe Biden’s campaign manager, and debate each other’s strategies to beat Donald Trump.

Hoffman and the other principals are not always there. But his invitations to this “donor table” have given him extraordinary agenda-setting power and made him one of the most influential Democratic donors of the Trump era.

These sessions, which started after Trump’s election and haven’t previously been reported on, are just the tip of the spear of Hoffman’s fundraising machine. To win this fall, Hoffman is personally spending as much as $100 million, which is as much as almost any other individual American. But Hoffman is also the hub of a new Silicon Valley big-money network: His aides privately boast that he has raised hundreds of millions more to oust Trump by guiding the donations of a class of newly politicized donors who are now bankrolling the left.

Based on that, you’d think the Democratic Party would embrace him. Instead, Hoffman has emerged as a polarizing figure in the party — as popular in San Francisco as he is despised in parts of Washington — according to four dozen interviews with friends, Democratic donors, operatives, and officials who have worked or spoken with him and his team.

The source of this tension: Hoffman’s team thought the Democratic Party was fundamentally broken and in need of well-financed disruption. So he and the donors in his orbit began pushing the envelope and funding risky and unorthodox projects, making mistakes and enemies along the way.

Hoffman has grown to symbolize a bigger debate over whether this Silicon Valley disruptive style has any place in politics. And so the election this fall will offer one answer. If Biden wins, Hoffman is poised to emerge as one of the sages of Silicon Valley’s new political moment. But if Biden loses, it’s not hard to imagine a world in which Hoffman becomes the political poster child for Silicon Valley disruption gone awry, a billionaire who ticked off too many and accomplished too little.

Hoffman declined interview requests for this story. And the people who spoke to Recode largely did so on condition of anonymity to offer their candid, complicated assessments of one of the party’s biggest donors. Because whether they love Hoffman or hate him, Democrats are scared to cross him — and lose access to his wallet.

Reid Hoffman has made himself one of the biggest fundraisers in the Democratic Party

The political awakening of Silicon Valley in the Trump era can be explained through the political awakening of Reid Hoffman.

Hoffman is not just any founder-cum-investor. Although not a household name, he is one of Silicon Valley’s foremost “thought leaders” — he has coined startup terms and aphorisms, launched one of its most popular podcasts, and intentionally cultivated an image as one of tech’s resident ethicists. “With great power comes great responsibility,” he likes to say, harking back to Spider-Man.

LinkedIn Debate Featuring Reid Hoffman & Tim O’Reilly
Kelly Sullivan/Getty Images for LinkedIn
Hoffman has intentionally cultivated an image as one of tech’s resident ethicists.

What the LinkedIn founder was not was an elite Democratic donor. He had “generally avoided politics,” he said in 2017. Before Trump’s rise, Hoffman had made only $2 million in total disclosed donations, mostly to longtime friends and, with some irony, to a super PAC that sought to reduce the role of money in politics. Then again, few in Silicon Valley were considered megadonors before 2016. Its billionaire class, especially those who actively run its companies, had long been reluctant to spend their booming fortunes on partisan politics, part of a broader chasm between the tech industry and a political system that, at the time, didn’t bother them.

But when Trump became the Republican nominee, Hoffman stuck his neck out further than most titans of industry — with a particular affinity for the gimmick.

When Trump won, Hoffman muscled up. He hired a consultant to build an all-purpose political shop, “an innovation fund for the resistance.” And not just for him, but for other billionaires in Silicon Valley.

Over the last four years, the tech industry, incensed by Trump’s hardline stances on immigration and climate change, among other issues, has politically mobilized. Its leaders have joined lawsuits against the administration, changed internal corporate practices to better handle the Trump regime, and financed the Democratic Party and its causes more aggressively than ever.

And it is Hoffman who has become the port of call for a new class of political neophytes who are brimming with Silicon Valley riches and anti-Trump fervor but have no idea what to do with either.

“Reid’s point of view is that there’s a lot of stuff that’s not going to get done unless he does it,” said John Lilly, a close friend of Hoffman’s.

Take the fundraiser held this month for the Democratic Party in Wisconsin, one of the country’s key swing states. The state party inked Hoffman as its special guest on the invitation, and then Hoffman went to work. He began personally emailing and calling major Democratic donors, including software executive Sage Weil and venture capitalist Chris Sacca, and putting together a star-studded roster of Silicon Valley billionaires who gave as much as $25,000 a head. The final host list eventually included some of the Democratic Party’s most well-heeled givers, such as former Google CEO Eric Schmidt and Silicon Valley investing legend Ron Conway. It raised more than $500,000 for the state party.

Hoffman can pull off something like that because of a core asset he has in spades, something that can’t be bought: credibility.

Fundraiser invitation for the Wisconsin Democratic Party featuring Reid Hoffman’s name.
Invitation obtained by Recode
Getting Reid Hoffman’s name on a fundraiser invitation — in big, bold letters — can lead to a windfall.
Reid Hoffman fundraiser invitation for John Hickenlooper
Invitation obtained by Recode
“We hope you consider donating up to $17,800 — as I have,” Hoffman wrote his network when he passed along this invitation.

In some calls with Silicon Valley leaders, Hoffman tells them that for all the giving they do to social causes, it won’t accomplish nearly as much unless they change who sits in the White House. At other times, Hoffman uses his own huge gifts as an example, stressing how deep he’s digging before flipping the script and asking them to similarly not be cheap. In an email last week, for instance, in which he invited friends to a fundraiser for Colorado’s Democratic Senate candidate John Hickenlooper, Hoffman wrote: “We hope you consider donating up to $17,800 — as I have.”

Jeremy Liew, a venture capitalist famous for investing in Snapchat, served as a chair of the Wisconsin event. And he credits Hoffman, among others, for helping him navigate the world of politics.

“I’m new to political giving and have taken advice from a few people more experienced than me on where my donations can have the most impact,” explained Liew.

It is not, though, inside the party establishment but outside it — in the more opaque and lawless corners of this country’s convoluted campaign finance system — where Hoffman truly exerts his influence.

Hoffman mainly influences other donors’ decisions, even if only implicitly, at the private get-togethers his team hosts, one of which was held this week. Hoffman aides set the agenda, offer funding recommendations, and sometimes invite people they have vetted, like Biden’s then-campaign manager Greg Schultz, to make their case. Hoffman’s team on occasion will challenge the other teams — which includes as many as 70 invited advisers to leading Silicon Valley givers like Schmidt, Facebook co-founder Dustin Moskovitz, and philanthropist Laurene Powell Jobs — to match Hoffman’s gifts to favored groups (many of which don’t disclose their donors).

Getting in front of the confederation is a priority for Democrats who need big money. Advisers ask groups they’ve backed to write well-crafted memos for the data-driven group, knowing that their fleeting moment on the billionaires’ radars can lead to a windfall. Some groups have flattered and courted second-tier Democratic donors just because they are known to be in touch with Hoffman’s team.

“He in a lot of ways has the stature, credibility, and connections to really play more of a David Koch role on the left,” said one Democrat in touch with Hoffman, drawing a comparison to the conservative megadonor.

These sessions are just one way Hoffman’s opinions are shaping the Democratic Party.

Hoffman’s team has helped usher in a renewed focus on what “return” these donors can expect on their “investment.” The team likes to ask grantees for a proposal with an estimated “cost per vote,” part of a new, cold-blooded diligence that many Democrats say is welcome and that they credit to Hoffman.

Behind this all has been Team Hoffman’s belief that the Democratic Party is, or at least was, broken — his team has said publicly that the establishment has told them it was “not going to take” their advice on how to fix it. In a six-page memo to other donors earlier this month, Hoffman’s team recommended donations to 16 groups that they said addressed “the blind spots within the Democratic establishment.”

So Hoffman has been trying to fix his political party from outside the party’s walls. He’s poured almost $20 million into Alloy, a data exchange program he started to repair the Democratic Party’s woeful infrastructure, without the party’s help. He’s also sent more than $10 million to Acronym, an advertising powerhouse focusing exclusively on digital ads — unlike the TV-focused Democratic establishment.

And when Hoffman invested $3 million to help Democrats win seats in the Virginia legislature in 2017, he routed most of his money through an outside group rather than through the state Democratic Party.

Hoffman’s team heralded the victories in Virginia as an early proof point of their model. And while they are supporting some state parties these days — Hoffman is, after all, now fundraising for Wisconsin’s — Hoffman’s chief political adviser, Dmitri Mehlhorn, drove home a different point at one post-election debriefing in 2017 that reflected an earlier point of view.

Anyone spending any time with Democratic state parties, Mehlhorn told attendees, is a complete waste of time.

Reid Hoffman has also made himself plenty of big enemies in the Democratic Party

Democrats in Virginia remain incensed to this day, telling Recode that they feel Hoffman bullied them with his money so he could do things his way. And that speaks to the bind that Reid Hoffman poses to his Democratic Party.

“In the tech world, it’s seen as positive,” one operative who has talked to Hoffman’s team said of his brand. “In the political world, it’s a bit toxic.”

The missteps reflect two central criticisms of Hoffman: that he has been so myopically focused on collecting the 270 electoral votes needed to defeat Trump that he is failing to invest in a long-term national infrastructure to support the progressive movement. And that to win those votes, critics feel, Hoffman is willing to play dirty. Hoffman’s defenders see this agitation as worth it — and if Democrats win, it could validate a more provocative form of political combat.

“They are much more knife-fighters than I am,” said one adviser to a different major Democratic donor.

You’re prone to get more than a few eye-rolls or laughs when you mention Hoffman’s name to party strategists. Some of the complaints seem rooted in jealousy and frustration from those he declined to back financially. Similarly, other criticism of Hoffman comes from the professional class that constitutes the Democratic establishment, which often competes with Hoffman’s startups and therefore has a vested business interest in their failure.

And some of the animus toward Hoffman is driven by unpleasant interactions that some in politics say they have had with Mehlhorn, Hoffman’s heavily empowered aide. Some Democrats say Mehlhorn’s team has a tendency to insist that they are more knowledgeable about a field than are the operatives who work in it daily, or to “ghost” a prospective group after requesting copious materials and effort from it. One group estimated that it had met with Mehlhorn’s team as many as 20 times but had somehow not secured a donation.

There can be no mistake about all the stress that Hoffman wars have inflicted on the Democratic Party — “years off all of our lives,” as one operative put it.

A brief catalog: One of Hoffman’s first initiatives out of the gate was a quasi-challenger to the Democratic National Committee structure, called Win the Future. It effectively folded a year after it started in what an operative involved in it, Donnie Fowler, described as a “failure” and a “perfect example of how Silicon Valley makes mistakes.” A digital firm Hoffman backed with $15 million called MotivAI has been accused of spreading fake news. And Acronym — one of Hoffman’s single largest bets — has drawn substantial fire from within the party both for its brand of advocacy journalism and for its extensive ties to the startup that fantastically bungled the Iowa caucuses.

Two other moves have rankled the party the most: His Alloy project has been widely panned by many Democratic data operatives who feel he has largely created a duplicative vendor to the Democratic Party’s own data program. The state parties once saw Hoffman as an existential threat — and “Reid” is still a four-letter word among many party officials, although tempers have cooled in the past year.

And then there’s Hoffman’s decision to indirectly fund a disinformation campaign in Alabama during the 2018 election against Roy Moore, a decision Hoffman was eventually forced to apologize for. (In the aftermath, Hoffman promised that he’d publicly release a new disinformation policy for his political work — he still hasn’t done it.)

Democratic Senate Candidate Doug Jones Holds Election Night Watch Party In Birmingham
Justin Sullivan/Getty Images
The drama involving Roy Moore and Alabama continues to dog Hoffman — and seared his team.

That searing news cycle burned Hoffman’s team, making them fearful of future controversies that could sully his name.

Now, as Hoffman nears the end of his four-year mission, those two central criticisms — the obsession with 270 electoral votes and the ends-justify-the-means tactics — are rearing their heads again.

Some progressive movement groups, especially outside presidential swing states, have been disappointed by their inability to receive large amounts of funding even if they feel the money would help the Democratic Party and communities of color over the long term, according to sources. Hoffman has indeed backed more than a dozen organizations led by people of color, such as the NAACP and Stacey Abrams’s Fair Fight. But Hoffman aides have also told groups seeking funding that they are exclusively focused on efforts to oust Trump, given that they see him as a fascist threat.

Compounding that frustration, for instance, has been Hoffman’s willingness to work with a whole slew of anti-Trump Republican groups, such as the Lincoln Project, that have no interest in supporting Democrats over the long term. When Hoffman announced that he’d be spending millions to produce meme-generated content alongside the Lincoln Project, a senior Democratic official reached out to Recode to say that money could have been better used to transform the fortunes of many Democratic groups.

To many Democrats, those short-term decisions can be explained by a suspicion that Hoffman will lose interest in backing Democratic efforts at scale whenever Trump is out of the White House. Hoffman’s advisers have told other Democrats that they themselves do not plan to be working in politics full time after the 2020 election.

“Win or lose, we’re not doing anything past 2020,” Hoffman’s team told one operative, who said they felt this comment was “incredibly shortsighted.”

Then there are the unconventional tactics: One aborted idea, for example, that Hoffman’s team had explored last year was an earned-media campaign against the Senate Banking Committee members that called on them to protest if the Federal Reserve lowered interest rates in response to pressure from the White House, Recode is told. The Federal Reserve is supposed to be independent of political pressure, but lower interest rates would also stimulate Trump’s economy, which could conceivably hurt Democrats, too.

“A lot of people make money and then decide they should get involved in politics,” said Bradley Tusk, the strategist who worked on the effort with Hoffman’s team. “Not a lot of people use data, logic, creativity, and innovation in the way that Reid and Dmitri do.”

As part of their attempt to encourage more progressive nonprofits to use Alloy, Hoffman’s team has even offered to essentially repay some groups if they used the data service.

Hoffman’s team has also told people they are exploring some initiatives that sources feel could prove to be legally dicey, Recode is told: They have looked into what a donor could legally do to help with the collection and delivery of mail-in ballots, expected to be at record highs this year. They have also considered whether Hoffman’s team could directly pay activists who convince others to commit to vote in North Carolina — rather than funding a go-between, like an outside group, as donors traditionally do.

And Hoffman’s team recently urged Democratic donors to vividly picture various nightmare situations — so they don’t get complacent with Biden’s polling lead.

“In all of these cases, the most obvious solution is to win by more,” Mehlhorn wrote to his network last month in a memo obtained by Recode. “The bigger the margin, the harder it is to cheat.”

A détente to the Hoffman wars?

The hope in the Democratic Party is that its battles with Hoffman have ended. Democratic operatives across the board have detected a less hard-line tech billionaire after around 2018. Democrats feel his aides are less condescending and naive when it comes to the party establishment and are taking more of an interest in movement groups, even if they can’t quantify their “cost per vote.”

In Washington, things have gotten better between the DNC and Hoffman in recent years thanks to intentional efforts from both sides to smooth things over. That relationship has recently borne fruit: Hoffman and Conway talked up Hawkfish, the data firm started by Hoffman friend Mike Bloomberg, to both Biden and the DNC, which eventually awarded a small contract to the Bloomberg firm. And when the DNC began planning for a virtual convention, the DNC sought out Hoffman’s team for his expertise in the world of digital organizing.

And while Hoffman was not an early supporter of Biden during the primary, he has been welcomed into the nominee’s fold. Hoffman has served as the star attraction on Tech for Biden conference calls. He’s written blog posts on why all business leaders need to come out for the Democratic nominee, and even suggested that politics is a higher priority for him right now than his own startups. It’s not hard to imagine a scenario where Hoffman, the consummate networker, seeds his allies into a Biden administration as he did during the Obama years.

Obama Participates In Linkedin Town Hall
Stephen Lam/Getty Images
Barack Obama appears at Reid Hoffman’s company, LinkedIn, in 2011.

But Hoffman is still outside Biden’s inner orbit — and that’s maybe in part because it’s not good politics for Biden to be publicly palling around with a Big Tech billionaire and Microsoft board member amid today’s techlash.

“For the Biden folks, it’s nothing about Reid,” said one Silicon Valley fundraiser for Biden. “It’s much more: Don’t have the optic of being too close to Silicon Valley because, ‘Oh, by the way, we have to message about what we’re going to be doing about Silicon Valley, too.’”

Behind the scenes, though, it is a far different story. Hoffman is needed. And that, in many ways, is the complicated story of Reid Hoffman and the Democratic Party in a nutshell.

When Barack Obama began stepping out of the wilderness to host fundraisers for the Biden campaign, for instance, it was Hoffman who the DNC chose to host the invite-only confab, a sign to some that the establishment and Hoffman had finally buried the hatchet.

“Next week, I’m hosting a high-commitment Zoom fundraiser with President Barack Obama,” Hoffman wrote to his network in mid-June, promising a “private, off-the-record conversation with President Obama, hosted by me.”

He wasn’t speaking colloquially about a “high commitment.” The minimum ticket price for the Zoom turned heads, even among the uberrich of Silicon Valley: $250,000.

Open Sourced is made possible by Omidyar Network. All Open Sourced content is editorially independent and produced by our journalists.


Will you help keep Vox free for all?

The United States is in the middle of one of the most consequential presidential elections of our lifetimes. It’s essential that all Americans are able to access clear, concise information on what the outcome of the election could mean for their lives, and the lives of their families and communities. That is our mission at Vox. But our distinctive brand of explanatory journalism takes resources. Even when the economy and the news advertising market recovers, your support will be a critical part of sustaining our resource-intensive work. If you have already contributed, thank you. If you haven’t, please consider helping everyone understand this presidential election: Contribute today from as little as $3.

Source link