If there was any point at which Hillary Clinton came close to losing the race for her U.S. Senate seat, it might have been in December 1999, when her report on donors was due to the Federal Election Commission. A software glitch nearly brought her down.

On a tip, she called in campaign-software guru Nathaniel Pearlman and his company, NGP Software, to clean up the data on the thousands of donors, who’d contributed a total of $30 million. If a single entry was off, it would mean financial penalties—something Clinton’s opponent, Rudy Giuliani, could use as fodder for countless attack ads. And as any D.C. operative will tell you, Clinton is famous for her long-term memory; a botched job could sink a budding firm’s reputation around town. “The race was so high-profile that we had no room for failure,” Pearlman recalls.

The report was finished just in time to make the deadline, and it was perfect. Clinton stuck with NGP’s software on her way to a comfortable victory. “That 2000 race was a pivotal one for us,” Pearlman says, looking back. “It proved that we could play in the big leagues.” The move paid off for Pearlman personally as well—he’s now serving as the Clinton presidential campaign’s chief technology officer, in charge of its I.T. operations.

Today, NGP Software, the campaign software company Pearlman founded in 1997, has moved from the attic of his home to an office near the White House, with 40 employees and $4 million in 2006 revenue. All the major Democratic presidential candidates rely on NGP, including senators Barack Obama and Joe Biden and Governor Bill Richardson. NGP is “simply the gold standard,” says Eric Carbone, the online director for Biden’s campaign.
 
It’s no coincidence that NGP’s base of customers is primarily Democratic. Pearlman markets his product exclusively to Democratic candidates and liberal organizations. “I don’t think Democrats have a monopoly on good ideas or virtue or all the best candidates, but I am a partisan person and believe in my party,” he says. And among high-stakes political campaigns, such fealty is essential. “When we’re talking about data, when we’re talking about financial records, and when we’re talking about vote goals, we want loyalty based on partisanship,” says Jason Linde, a former Democratic campaign manager who now lectures at George Washington University’s Graduate School of Political Management.

The 42-year-old Pearlman, whose jeans-and-T-shirt attire and persistent 5 o’clock shadow make him look more like a tech geek than a political operative, is doing more than just creating good software, however. He’s helping revolutionize campaigning itself. The smoke-filled rooms of yesterday are now slick, high-tech operations, powered by blogs and microtargeted money pitches. Candidates are eager to tap into data that reveal information on who voted, what issues they care about, where they live, and even what they buy. But it takes software like NGP’s to slice and dice those data into hyperpersonalized emails and letters, which translate into more money, volunteers, and, ultimately, votes.

When Pearlman started NGP, he found that a lot of campaigns were still managing their data with outdated, off-the-shelf software programs that were ill-fitted to the complexities of American politicking. (One even relied on WordPerfect.) At the same time, the amount of data available was burgeoning as computer databases became more comprehensive and sophisticated and the list of rules for election-law compliance grew. There were a couple of software programs built specifically for campaigns on the market, but they were slow, unwieldy, and far from user-friendly—a big liability for a project that might have a life span of less than a year.

“A great campaign is going to have a suite of programs that allows it to track all donors and all volunteers,” Linde says. “An even better campaign will have a voter file for each state, but you’ll have it cross-referenced by prior voter years and campaign issues.”

NGP’s software crunches voter lists into highly segmented, data-rich groups that are then used by campaigns to home in on their targets. Donor lists are obtained by campaigns from state and local governments and, increasingly, from private companies (including magazines and clothing retailers). The data—name, location, purchases, and political interests—are merged then sliced into groups and subgroups of potential voters and donors. This information helps to shape plans for mass emails, snail mails, and even “walking sheets,” which guide volunteers as they go door-to-door hawking their candidates.

There’s followup too: When supporters make contributions online, at a campaign event, or by mail, NGP’s software not only processes the transaction but also makes a note of it in the donor’s file, which helps future outreach efforts. And when quarterly deadlines for compliance reports come around, the software smoothly tallies the campaign’s contributions and expenditures.

Looking ahead to 2008 and beyond, Pearlman says that campaign software will inevitably get better at helping candidates market and track voter information. “One innovation that will continue to be developed is tracking the interactions of voters and donors with each other and with staff,” Pearlman says. “Campaigns will find it easier to use the social networks of their supporters”—working their way into everything from Facebook circles to blogging communities to raise money and build support.