Inside the final days of the $35 million startup meant to fix the Democratic Party

Alloy was once seen as Democrats’ next great hope. But an implosion was waiting to happen.

Just two weeks after Election Day, over two dozen staff members at the startup meant to be the next big thing in Democratic politics erupted in revolt. Four senior employees had been fired, and their colleagues were angry.

“Trust has been damaged,” the employees of Alloy wrote to the company’s board of directors in a letter obtained by Recode. “The explanation given for these organizational changes and terminations feels inadequate at best. And at worst, disingenuous.”

Just over 48 hours after that letter was delivered, the startup did something that few of the workers who signed it could have anticipated: Alloy’s board abruptly decided to shut the entire company down — dousing the insurrection, yes, but also the ambitions of Silicon Valley’s latest splashy attempt to fix the Democratic Party’s data machine.

The fall of Alloy was startling even for the world of campaign politics and startups. Only 96 hours passed between Alloy terminating those four employees and Alloy’s board announcing to a stunned staff that the company would close.

But interviews with two dozen people close to Alloy tell a more unsettled story that goes beyond just infighting over a few employee firings. Alloy seemed doomed to fail by this winter, people close to the company described to Recode, because of intense internal strife and sharp external mistrust. The staff coup just accelerated that conclusion, compressing what would have likely been a years-long reckoning over Democrats’ lagging data operation into a week-long combustion.

Backed with $35 million — half from Silicon Valley celebrity billionaire Reid Hoffman — Alloy was pictured as the left’s belated big money answer to the right’s supremacy in the world of political data. Hoffman and his aides wanted to build a sophisticated operation that could outmaneuver Republicans in the foxholes of the data wars. It was such a priority for Hoffman that it was his biggest public bet since he became involved in politics after Donald Trump’s win in 2016.

It didn’t quite work out as his team hoped, serving instead as a public study of how billionaires’ political experiments can fall short of expectations. Despite the efforts of Alloy and the Democratic Party, a gap stubbornly persists between Democrats and the GOP when it comes to the grueling work of political infrastructure.

In an election won on the margins, any group can plausibly claim to have made a key difference, and Alloy said that its internal analysis showed its partners’ work was “vital to ensuring close margins of victory in battleground states.”

Alloy stressed that it was “normal” for an organization to change directions after an election.

“The Board of Directors is proud of everything Alloy and its incredibly talented team accomplished this cycle. Alloy’s more than 80 partners helped turnout a historic number of voters in November, with many still working on the Georgia runoff,” Alloy’s board of directors said in a statement to Recode. “Reorganization or even a transfer of technology like we’re planning now are normal at this stage of an election cycle. There is a clear demand for the services Alloy provided to a diverse set of partners, which is why we are hard at work ensuring Alloy’s tools and technology continue to serve the entire progressive ecosystem.”

A $35 million political startup in search of a plan

The story of Alloy is a story about the gradual humbling of its once-grand dreams — all the while wasting precious time as it wandered in search of a unique angle into the Democrats’ data problem.

Alloy became something like a battleship roaming busy waters on the hunt for its own enemy, equipped with state-of-the-art technology and tens of millions of dollars but not sure what exactly to fire on. They ended up with the money before the plan.

The founders’ initial pitch of the startup in late 2018 centered on functioning as the principal way for the Democratic Party to legally “exchange” data with affiliated outside groups like super PACs — an arrangement that the GOP had plowed hundreds of millions to successfully develop in the aftermath of the 2012 election.

And more symbolically, the $35 million from Hoffman and others was meant to declare that Democrats were no longer going to short-change an overhaul of their outmoded data ecosystem, which Hillary Clinton had sharply criticized after her loss.

Asa Mathat

But the establishment struck back. State parties — which were sensitive to handing over their data that they typically sell for big money — resisted cooperating with these techy interlopers. The state parties ended up largely working with the national party on their own new data portal, the Democratic Data Exchange (DDX), which after many delays, eventually rendered the initial idea of Alloy largely duplicative, even though Alloy had a head start and more money.

Without realizing it, the scrappy startup was being blocked out by the powerful incumbent — a “monopoly” in the eyes of some Alloy allies — and was unable to execute the deals that would make the data portal work. Alloy had become just another vendor in a sea of them, struggling to collect the political buy-in to match their vision. And so the plan was scrapped.

“Alloy tried to avoid playing politics and didn’t realize they were being boxed out,” said a person close to the company. “I think Alloy’s leaders understandably thought everyone would come on board as they made progress, but they may have lost the field in the meantime.”

After all that wandering, Alloy eventually pivoted and its trademark offering essentially ended up being another voter file — a spreadsheet of voter information — with a focus on 120 million unregistered Americans that Alloy claimed to be the “largest unregistered potential voter dataset in the ecosystem.” Alloy also felt its data was updated more often than those companies and that it “significantly expanded” Democrats’ contact information on registered voters. But while it was substantially cheaper, sources say it wasn’t a fundamentally different product than voter files prepared by long-standing Democratic competitors like TargetSmart or Catalist, which already had financial and political ties to the party.

Some important potential clients, most notably the Democratic National Committee, also found Alloy’s list of unregistered voters was riddled with errors when they tested it this summer, sources say and as first reported by Protocol. The DNC declined to work with Alloy, which some sources see as the final nail in its coffin.

Its 80 clients ended up largely being small liberal groups that wanted data on the cheap — “progressive organizations who are often denied access to this data,” Alloy said. For sure, some clients like the advocacy group 5 Calls found Alloy’s file an “incredibly good value.”

“We’re just a small nonprofit so it would be impossible for us to do the same via Catalist or TargetSmart,” said co-founder Nick O’Neill.

But Alloy didn’t recruit big enough clients or unlock enough new voter data, sources feel, to fulfill that initial grandiose dream for a visionary, $35 million tech company. And even though Democrats now have their own data portal with a similar initial aim as Alloy, Democrats somehow still feel they lag behind Republicans in the volume of their data and how well they share it.

An extraordinary 96 hours before Thanksgiving

With all of those setbacks, some close to Alloy believe that it was only a matter of time before it died.

But its proximate cause of death? An extraordinary sequence of events before the Thanksgiving holiday.

Alloy was weighed down from the start by a big rift between its political sales team, led by CEO Haley van Dyck, and its technical team, led by Mikey Dickerson. It was a bitter conflict that sources say dated back to their days working side by side in the United States Digital Service, when the pair fixed former President Barack Obama’s Healthcare.gov. Each had ample internal and external critics who could find them difficult managers. And people close to Alloy believe the turf wars between van Dyck and Dickerson ultimately hurt the product and prevented the company from improving its data and from signing more customers.

Richard Mcblane/Getty Images for SXSW

Dickerson declined to comment. An Alloy spokesperson declined to make van Dyck available for an interview.

“What objectively happened is that the tension between Mikey and Haley ultimately damaged the company irreparably,” said one person close to the company. “The forces of division in the company just ultimately succeeded.”

But things spiraled out of control after the election. Alloy’s leadership had repeatedly told employees in the run-up to Election Day that they could guarantee all of their 50 or so employees jobs through at least February. Few thought that the company was in jeopardy.

But then van Dyck suddenly fired four technical leaders early in the week before Thanksgiving. All four of the fired female employees had made complaints about a pattern of comments made by a senior colleague, sources say, which fueled suspicions from some that those complaints played a role in their termination. Van Dyck told the fired employees it was a “restructuring,” although she had told them just days prior that they would be sticking around and now reporting directly to her.

Dickerson and the technologists on the team were blindsided and livid. And just like that, the tinderbox had been lit.

Some with ties to the company blame the hard-charging Dickerson for sowing this dissension among his team that week, part of what they see as a pattern of constantly seeking to obstruct and undermine van Dyck. By the Wednesday of that week, at least 25 employees from the company’s technical side of the shop were going over van Dyck’s head. In a letter to board members including multiple Hoffman aides and allies like board chair Todd Park — the country’s former chief technology officer who committed the other half of the money for Alloy — the employees called for answers.

“We are confused and concerned that leadership has failed to reveal a strategy or operational plan for Alloy’s next chapter while executing far-reaching organizational changes,” the employees wrote.

Later that Wednesday, the board held a heated meeting to discuss the letter and the chaos. A tense staff meeting followed on Thursday. And by that Friday, the board had decided: Not only was van Dyck resigning as CEO immediately, but the entire company would shut down after the Georgia runoff elections. That next Monday, Recode reported the company’s closure.

The abruptness of Alloy’s closure turned heads in Silicon Valley and Washington, DC. Alloy declined to answer a question from Recode about why that decision was made. But sources say Park told the staff privately that the company was being shut down because it was “too divided” and because it would no longer have its two leaders (Dickerson, who took time off this summer to work on a non-Alloy project — a move that frustrated colleagues — had been telling people internally that he planned to leave by the end of the year.)

Park told staff that keeping Alloy going would be “impossible” given the internal dysfunction. Park didn’t return a request for comment.

Alloy’s leadership also didn’t think the company had solid footing in the Democratic data ecosystem given all the competition, according to a person who spoke with Alloy leadership. And so they decided to shut it down now — when they still had around $10 million in reserves — in part so they could pay out hefty severances.

And given all of its struggles and false starts — especially with the amount of cash and buzz Alloy had earned in the early days — some people close to the startup believed that it would have trouble raising more money, a process that it had already begun. Park told the staff that the only two people who could lead Alloy were van Dyck and Dickerson, in part because he felt that fundraising would be very tough without them.

Big money likely wouldn’t have come from Hoffman, people close to Alloy believe. The shutdown of Alloy has been the first domino to fall in the world of Democratic billionaires and their political passion projects after the election. Silicon Valley’s wealthiest have launched sweeping plans over the last four years to oust Trump. But questions abound over whether or not these donors — especially Hoffman — will remain big funders once Trump leaves office.

Hoffman’s team was disappointed by the lack of a true repudiation of Trump and surprised about the muted impact of their money in some states where they had invested heavily, according to a person who spoke with his representatives in the aftermath of the election. A post-election presentation from Hoffman’s aides obtained by Recode said the results were not what “the polls or our hopes led us to believe.”

As of this fall, Hoffman’s aides were privately expressing frustration with Alloy’s leadership and track record, according to another person who spoke with them then, although it’s not clear if they were speaking in their personal capacities. After much convincing, Hoffman even ended up cutting a late check to Alloy’s original competitor, the DDX, which stirred some consternation at Alloy, his original bet.

Hoffman was unavailable for comment.

Kelly Sullivan/Getty Images for LinkedIn

The big lessons for the Democratic Party

Both of Alloy’s leaders — Dickerson and van Dyck — are no longer working there full time, which the company hasn’t announced. (It is being led in the final months by Kendall Burman, its general counsel.) Many of its employees remain furious and are spending their days looking for new jobs. Alloy is finalizing talks to hand over its assets to another Democratic tech company with which it worked closely, Civitech, which could choose to hire some of them.

Amid this drama, Burman said in a statement that “it is notable that we’ve continued to sign new partners the last couple of weeks” and that Alloy had just delivered an updated voter file to clients that included data on newly registered Georgia voters.

To some, Alloy is an example of the downsides when Silicon Valley billionaires try to start their own political projects. Some donors in political tech have recently brought up Alloy in talks with party officials as something of a cautionary tale, a mistake not to be repeated, according to a person familiar with the conversations.

“This whole thing was incredibly short-sighted,” said Julia Rosen, a Democratic digital strategist, in the aftermath of its closure. “Donors who aren’t in this work for the long haul are incredibly disruptive. And no, that’s not a good thing.”

To others, it’s a lesson in how slow it can be to transform politics, and the need for Democrats to be patient and wait multiple cycles before judging any product’s impact and pulling the plug. Not even the DDX, Alloy’s one-time rival, is yet seen as a smashing success. Some believe Alloy could have accomplished its vision if it simply had more time.

What is shared — even among Alloy’s allies and own clients that found the product helpful — is a sense of marvel at just how money was sunk into a single tech product. Yes, Alloy notched some achievements, they say, but $35 million’s worth? An organization that had long-term ambitions to “contribute to true, lasting change in progressive data” was moribund after two years — hardly the initial plan.

“Are there things that I wish that we had done that we didn’t get to because of the challenges with the operations? 100 percent,” said one of the people close to Alloy. “But reflecting on all of this, I think it’s a miracle that we accomplished anything in the face of [it.]”