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Unscaling politics

TechCrunch TechCrunch 6/06/2016 Hemant Taneja

It’s the end of politics as we know it. And no, Donald Trump doesn’t get all the credit.

America’s two major political parties are in the process of being unscaled. They’re being pulled apart and disrupted like so many other industries and institutions today.

Pundits blame Donald Trump for the turmoil plaguing the Republican party and Bernie Sanders for the Democrats failing to pave a smooth way for their establishment choice. But there’s something less obvious and much bigger at play here.

The economics of unscale, as I call it, are hard at work dismantling all large-scale, vertically integrated, mass-market institutions. New forces driven by technology are disrupting and reshaping everything from transportation and education to energy and finance. There’s every reason to think unscaling is having the same impact on the two major American political parties.

Prediction: Trump and Sanders are only the beginning. In coming years, our two-party system will break into a constantly changing mix of multiple issue-oriented parties.

There are two key aspects of unscaling that are acting on the two parties right now.

First, while in the past a powerful company or institution could wield scale as a strategic advantage, technology is commoditizing scale by making it rentable. Over the past two decades, ubiquitous platforms have emerged that everyone can play on. The internet, mobile and social networks, online payment systems, cloud computing and open-source software have together created a world where a lean startup can now rent or freely use the tools they need to compete against global giants.

The second aspect at play here is data. Newcomers, whether in the private or political sectors, have access to the data needed to tear down and reinvent just about anything. They can improve on a message or tailor a platform to make it more appealing to a specific set of customers.

New forces driven by technology are disrupting and reshaping everything from transportation and education to energy and finance.

Today we have two big tents — Democrat and Republican — that try to pull in as many voters as possible. Their platforms are broad, aggregating opposing positions on dozens of issues, nearly assuring that neither party fully aligns with any citizen’s views.

Like that 350-channel cable package that’s fast losing commercial appeal, unscaling of the political parties means it’s possible for upstarts to unbundle issues and repackage them to appeal to a narrower, but significant slice of the electorate. Now, with digital platforms and data at the ready, a startup party or candidate can develop a better “product” that’s more specific to what a segment of voters want. (Example: The fiscally conservative, socially liberal sect. Or unionized social conservatives.)

Scale is no longer needed to have the reach to be a viable candidate. Social media is a platform available for free. Trump has more than 7 million Twitter followers, and his tweets get amplified by traditional media, which repeats them. Ted Cruz can rent computing through the cloud and rent sophisticated analytics to crunch data and find voters he’d appeal to — no need for great scale to do that.

Barack Obama pioneered the use of micro-donations and social media as a political craft. Sanders (micro-donations) and Trump (social media) have perfected these tactics. With the infrastructure in place to solicit donations via platforms like Twitter and HubSpot the second an opportunity arises, the importance of the mega-fundraising arms of the big parties is quickly fading. Super PACs and $100,000-a-plate dinners will not be able to compete with instant donations of $5 here and $50 there from millions of enthusiastic supporters.

Starting from a place of scale, especially within the major parties, is no longer necessary for a politician to create a national brand. Republican or Democratic validation used to matter — it would get candidates in front of newspaper editorial boards and on TV, access to phone banks and help draw the live crowds. Today, YouTube stars have bigger audiences than most TV shows, blogs cut out the media middleman and Meetup groups and Twitter get the crowds organized.

The major parties will not go down without a fight. As we’ve seen with unscaled disruption in industry, it often runs afoul of old rules and laws that were set up to protect the old guard (see Uber and Airbnb). In politics, unscaling is already running headlong into election laws and rules set up for a two-party system. The delegate system, especially the seemingly opaque super delegate allocations and the Electoral College, are being called into question.

When unscaling hits industry, politicians can be convinced to evolve laws to allow progress.

When unscaling hits industry, politicians can be convinced to evolve laws to allow progress. In this case, the politicians who would be disrupted are the ones who would have to change the laws. Hence, a problem.

But let’s say the laws get out of the way and politics can take its natural course. The economics of unscale predict that many startup parties will challenge the big parties and steal their members. Some will catch on, re-bundle voters around issues they care about and reach enough scale in a new way to have influence.

In fact, some of the outcomes of an unscaled multi-party era seem like they have to be an improvement. If all this is true, it’s the end of Super PAC clout, because money will matter less. And startup parties will have better product-market fit, making their constituents feel better served and more involved. Today, most people feel their party only represents some of their beliefs.

To get anything done — like, to get enough votes in Congress — startup parties will have to build coalitions. Maybe that sounds difficult, but then again, it can’t be less effective than the gridlock in place today.

The two-party system has been challenged before. Theodore Roosevelt and Ross Perot ran as third-party candidates and won significant followings. But after those elections, things went back to normal. But those were the days before rentable scale and software infiltrating everything — before unscaling became the rule.

Some argue that Trump and Sanders will prove to be anomalies and disappear. But I believe their traction and popularity is instead is a symptom of an unscaling of politics; the movements they engendered are only a taste of what’s to come.

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