On a frigid day in early January, Barack Obama rode the three blocks from the Capitol to a nondescript, four-story, white-brick building where he had rented a spartan office suite.
Obama pulled out a folding chair and sat down with Julianna Smoot, the veteran Democratic fundraiser he had hired to raise the millions of dollars he would need for a presidential bid. Smoot thumbed through a thin list of potential donors that Obama had gathered during his 2004 Senate bid in Illinois and as he helped other politicians raise money for elections in 2006. She frowned.
"It wasn't much to work with," Smoot recalled. "But that was how we started. He asked me what he should do, and I said, 'Start calling. And don't forget to ask for their credit card numbers.' "
That was the beginning of a fundraising juggernaut that, perhaps more than any other single factor, helped transform Obama into a serious contender for the presidency. By the end of September, the senator from Illinois had raised more money for his primary bid than any other candidate in either party -- more than $75 million. He did it not simply by using the new possibilities of the Internet, for which he has received considerable attention, but by creating almost overnight a network of "bundlers" -- a core group of motivated supporters with the Rolodexes to bring along friends and associates.
But last week, for the first time, Obama was eclipsed by Sen. Hillary Rodham Clinton (D-N.Y.), who raised $22 million for the quarter to Obama's $19 million. Now, with Clinton widening her lead in national polls, Obama's ability to continue raising money will be seen as a crucial indicator of whether his candidacy can pick up momentum in time for the Iowa caucuses and the New Hampshire primary in January, or whether Clinton has become unstoppable.
Smoot, 40, the fast-talking daughter of a North Carolina golf pro, said she has never been fazed by the thought of competing with the most voracious Democratic fundraising team in recent memory, Bill and Hillary Clinton.
"I respect them. And I respect the people that work for them. But no, they're not intimidating at all," Smoot said last week.
Over the weekend, Smoot met in Iowa with more than 100 members of Obama's national finance committee, a group of bundlers she helped recruit. She and others with the campaign repeated what Obama's aides have maintained: Ignore the national polls and focus on Iowa and New Hampshire. Together, they mapped out a packed schedule of fourth-quarter fundraising events -- proof, they said, that the campaign is still on track. And they reminded the group that they consider the Clintons, while fierce opponents, visages of the past.
"All Democrats respect and admire the Clintons and are grateful for what they've done. But people want someone different now," Smoot said. "And you know what?" she added, her tone softening as if she was about to share a secret: "It's not a hard sell."
Wanted: 'An Honest Assessment'
The task of assembling a national fundraising operation has been compared to building a Fortune 500 company virtually overnight. For a candidate such as Obama, who began seriously considering a run for president only a year ago and had no experience in a national race, the challenge was that much more difficult.
Last November, three months before Obama announced his bid, two of his senior advisers quietly approached Smoot with a proposition: Write us a memo explaining how you would mount a presidential fundraising drive, and if we like it, we'll hire you.
"What we really wanted was an honest assessment," one of the advisers, Steve Hildebrand, recalled. "We told her, 'We'd like the ability to raise $12 million in the first quarter. We feel we need to do that.' "
Hildebrand and Obama's Senate chief of staff, Pete Rouse, had worked on campaigns with Smoot. Hildebrand was the campaign manager when Smoot raised a staggering $21 million for the failed 2004 reelection bid of Sen. Thomas A. Daschle (S.D.). As Obama started contemplating a White House run, Hildebrand had a feeling that Smoot's blend of Southern charm and brash straight talk might make a perfect counter to Obama's more languid approach to fundraising.
Obama had gathered a list of 15,000 potential donors, a number that might have been impressive for a statewide campaign in Illinois but not for a national bid. Although he had made important contacts while traveling the country in 2006 to stump for Senate candidates, there was no guarantee that these people would back him over other Democrats already aggressively courting donors.
Smoot returned to Hildebrand and Rouse with a detailed plan that described how the senator could build the foundation for a national campaign. She proposed a finance staff of 31, a minimum of 10 hours of call time by the candidate each week, and a first-quarter travel schedule to shuttle Obama to the party's traditional fundraising centers in New York, California, Texas, Florida, Pennsylvania and Massachusetts.
In each locale, she identified scores of people who could become the core of a robust network of bundlers. Still, "without an extraordinary time commitment to fundraising from the candidate on the front end of this endeavor," she warned, "the finance team can only do so much."
If everything went perfectly during the first three months, she told them flatly, they could expect to raise $9 million. Rouse and Hildebrand were sold.
During the first week of December, Obama flew to New York, where billionaire George Soros had gathered wealthy executives in his office to meet the senator. Among those attending was Robert Wolf, the chief executive and chairman of UBS Americas, who had helped raise money for Sen. John F. Kerry's 2004 presidential bid. They talked presidential politics, Wolf said, "but at that point there was no ask." As he left, the banker handed his card to an Obama aide, and the senator called him early the next morning to invite him to dinner.
During the second week of January, with Obama's announcement still a month away, the two dined alone at Olives on K Street for more than two hours. "We talked about things important to me, and to him, and the future of the nation, and family values, and our ideas on health care and the war and the economy," Wolf recalled. "At this point, it was certainly clear that a presidential bid was much more likely."
They had a second dinner a few weeks later. This time Obama, Smoot and a small group of New Yorkers joined them to talk about how they would tap Manhattan for campaign funds. Wolf was on board and was on his way to becoming one of the senator's most prolific fundraisers.
As Obama's announcement neared, his outreach intensified.
Smoot began traveling regularly with the senator so he could work the phones as he drove to events. It got so that Obama would grimace every time she got in the car with him, she said. Smoot's previous job was with Sen. Charles E. Schumer (D-N.Y.), an aggressive fundraiser who worked the phones fanatically and who had no hesitation about making "the ask."
Obama worked more slowly, she said, and resisted her efforts to have prospects stay on hold so he could jump briskly from call to call. "He's nice like that -- not like Chuck," Smoot said with a smile. "Last week in the car, we got through four or five [calls] in 45 minutes. He chats with them a lot longer than Schumer does. I'm just, like" -- snapping her fingers -- " 'hurry up, hurry up.' "
On Jan. 24, when Kerry announced he would not run, Smoot called all regional staffers and urged them to pounce. "We were all over it," Smoot's deputy, Ami Copeland, said. "You just knew if someone hasn't gone with Hillary, there's a reason."
By early February, Obama had recruited billionaire hotel heiress Penny Pritzker to head his national finance team. The two had met when Michelle Obama's brother was coaching her children's basketball team, and they became friendly before Obama launched his political career.
When Obama broached the idea of running for Senate, Pritzker recalled, she had her doubts. "We decided we would put aside political assessments about odds of winning or losing," she said. A similar reluctance gripped her in the face of a presidential bid against a Clinton, but she said her husband convinced her that "you have to find a way to do this."
Obama also landed several Kerry bundlers, including Silicon Valley venture capitalist Mark Gorenberg, and lured two former fundraisers of Bill Clinton's, Boston financier Alan Solomont and New York investment manager Orin Kramer. Solomont said he was surprised by the notice his decision received. "I wasn't looking to make a statement about the Clintons," he said. "My decision wasn't in any way based on less affection or respect for her. [Obama] just had this energy. I could tell this was going to be something different."
Smoot knew Obama was not alone in pursuing potential fundraisers. Some were getting daily calls from presidential candidates. One potential bundler contacted by Smoot was Norman Hsu, one of the most reliable donors from her tenure as finance chair for the Democratic Senatorial Campaign Committee. Hsu would later become mired in scandal as a top bundler for the Clinton campaign, but he was regarded at the time as a prime target because of his reputation for producing a steady flow of campaign cash.
In an interview -- before it was reported that Hsu was a fugitive trying to outrun a 15-year-old conviction for running a Ponzi scheme -- he recalled his call from Smoot. She asked what he thought of Obama's bid and whether he might consider helping. "I told her, 'You're asking for an unbiased opinion from someone who is very biased.' She knew I was loyal to Senator Clinton. I told her she was asking the wrong person. We both respected each other well enough not to talk about it after that."
Two key donors in Philadelphia, lawyers Richard L. Shiffrin and Mark A. Aronchick, took weeks to decide between the two campaigns. A key Clinton aide invited the two men and their wives to Washington. "It was one of the most unbelievably thrilling and well-organized days of anything I have done in all my years in politics," Aronchick said. "And I don't get dazzled easily."
Smoot had an aide call and propose that Obama meet the two lawyers at the Philadelphia train station. They could ride with him to a fundraiser. Later, she asked Pritzker to reach out. But both enlisted with Clinton and say they have since bundled more than $650,000 for her.
Smoot and Pritzker soon began talking about another, less glamorous component of the Obama fundraising machine.
"It seemed to me, consistent with the grass-roots nature of the campaign that Barack had envisioned, that online fundraising ought to be successful," Pritzker recalled telling Smoot. "The question was, could we execute?"
Smoot had hired Meaghan Burdick, 31, to coordinate fundraising online and through the mail, the same job she had been doing for the Democrats' congressional campaign committee. The prospects looked uncertain, at best, Burdick said. "The senator didn't do much mail in his Senate campaign, and he really didn't do a whole lot of fundraising, period," she said. But Joe Rospars, Obama's Internet guru, thought he saw potential in the grass-roots approach the campaign seemed to be taking. He wanted to design a Web site, he said, that would "take it to the people."
Burdick's first appeal through the mail was shipped out to a list of 800,000 people she had cobbled together using addresses collected during Obama's earlier campaigns and ones rented from unusual sources, including Sojourners magazine and the Martin Luther King Jr. Library in Atlanta. The three-page letter evoked themes of "hope" and "change" and closed with a quote from King: "The arc of the moral universe is long, but it bends towards justice."
More than 17,000 donations came back, Burdick said -- about double what she had expected.
The campaign launched the finished version of its Web site on Feb. 10, and five days later the first e-mail went out, timed with Obama's formal announcement in Springfield, Ill. Close to $500,000 came gushing in.
"It was overwhelming," Burdick said. "You just don't see that strong of a response. I anticipated we could build a program and it would be good, but there was just no way to possibly gauge that it was going to be that big."
Solomont recalled thinking that while the appeals he had made on behalf of Bill Clinton were aimed at wealthy donors, this effort could target just about anyone. "We had decided we weren't going to focus just on raising big bucks," Solomont said. "We were going to go after people paying $2,300 but also students paying $23."
After having initial success with a low-dollar event in Kentucky, they decided to try a Friday night kickoff event on April 20 at an arena in Boston, where they would open the doors to as many people as they could draw. Solomont was nervous -- "It was a gamble," he said. When the doors opened, they had a line, blocks long, waiting to get in. In all, 5,700 people turned out, and more than $750,000 was raised.
"I think that was the moment for us," Solomont said. "I think people really got a sense that we could do this differently."
Keeping It Going
Obama's campaign offices are spread across the entire 11th floor of a Chicago high-rise. The finance team's desks are scattered around a Ping-Pong table. Tabloid headlines -- "Record Haul for Obama," "Run for the Money" -- are taped to the walls.
As the summer wore on, Smoot sat in the middle, tracking dozens of events around the country on her laptop. In a rolling series of phone calls with her regional fundraisers, she pushed and prodded them to hit their goals, then updated her spreadsheets so she could keep tabs on the quarter's target.
By mid-August, she had a good sense that Obama would have another $20 million when the third quarter ended on Sept. 30. What she did not know was that Clinton, for the first time, would have raised decidedly more.
"I don't like getting beat," Smoot said last week.
The impact of the latest numbers remains unclear. Clinton has used that successful quarter to solidify her position as the front-runner -- a move that could persuade fence-sitting donors to get on board and produce an even more bountiful fourth quarter. Obama's money team, meanwhile, will try again to capitalize on the continuing grass-roots interest in his candidacy, and a pool of smaller-dollar donors who continue to have room under the legal limits to give.
Steve McMahon, a Democratic political strategist, said it has at least become clear that neither candidate will be able to substantially outspend the other as the two campaigns face voters for the first time. Both camps say they have enough to compete not only in New Hampshire and Iowa, but on Feb. 5, when they will compete in costly primaries in several large states.
McMahon thinks Obama's success will no longer boil down to how much money he has. "At this point, it's all about strategy," he said. With Smoot's help, Obama "achieved critical mass."