Why you should care
Because in politics, it helps to speak softly and carry a big checkbook.
Ted Cruz may be among the most outspoken presidential contenders, one not known for championing science or silence. But behind his booming political presence lies someone quieter: an überprivate data mastermind and megadonor named Robert Mercer.
A reclusive Long Island hedge fund magnate and former IBM programmer who made his fortune applying advanced algorithms to the stock market, Mercer, 69, made headlines last year as the primary bankroller behind a network of super PACs supporting Cruz that brought in more than $30 million to jump-start the Texas senator’s campaign. And though he’s quiet, if we believe that money is indeed speech — as a majority of the U.S. Supreme Court claims — then Mercer’s has already done plenty of talking. “Mercer sees Cruz as a kindred spirit in redirecting the role that government plays in American society,” Darrell West, the director of governance studies at the Brookings Institution, tells OZY. But quantitative Mercer, we’d venture, is not just a spirit-driven donor. He’s surveyed the market, gathered the data and found himself a smart investment.
Mercer is indeed quiet, and declined comment through a spokesman. He admits his taciturn nature. “I don’t usually talk about myself, so it’s not a comfortable thing,” he said in a rare public appearance last year when he received a lifetime achievement award from the Association for Computational Linguistics. Ten minutes into his acceptance speech, which was far more about computing than himself, the soft-spoken, gray-haired, clearly ill-at-ease billionaire paused for a sip of water. “I’ve just reached one week of speaking,” he said, “so I have to take a little drink.”
Backing a candidate often comes to resemble a hobby more than an investment.
Born, raised and educated through undergrad in New Mexico, the programmer turned co-CEO of Renaissance Technologies (RenTech), a Long Island–based hedge fund, Mercer — who attended a state school and got his Ph.D. in computer science from the University of Illinois — would not quite make the cut for membership in Cruz’s elite study group at Harvard Law School, which did not even accept students from “minor Ivies” like Brown or Penn, one former Cruz roommate told GQ. (The Cruz campaign didn’t return requests for comment.) But Mercer did make it into a less sexy, lesser-known elite squad: a research team at IBM, where he and colleague Peter Brown, now the other co-CEO at RenTech, worked on bolstering the ability of computers to recognize speech and language, paving the way for the likes of Google Translate.
In 1993, the two men took their coding skills to RenTech, a company using big data before it was Big Data to analyze patterns in the stock market to inform trading decisions. The company, just as shrouded in secrecy as Mercer himself, has been wildly successful, its flagship fund (for employees only), averaging, according to The New York Times, a whopping 35 percent annual return over the past two decades. Mercer’s personal net worth remains unknown, but he reportedly pulled down more than $100 million per year from 2011 to 2013. Sebastian Mallaby, who profiled the company in his book on hedge funds, More Money Than God, writes of Mercer: “He was an icy-cold poker player … his IBM boss jokingly called him an automaton.”
Labeled as a “Tea Party conservative” by The Washington Post, Mercer has donated more than $15 million to GOP candidates since 2012 and was the second-largest donor for the party in the 2014 midterms. His money has helped Republicans nationwide, from Oregon to New York, who oppose raising new taxes or regulations on investors. He also seems to have a soft spot for those, like Cruz, skeptical of both climate change and the IRS.
But how do donors pick their lucky racehorses? For one, they’re “smart businessmen,” who are probably “skeptical of giving large sums of money to relative strangers,” says Trevor Potter, a campaign finance lawyer who once chaired the Federal Election Commission. Still, for many megadonors, backing a candidate often comes to resemble a hobby more than an investment. And if Mercer is relying on data as much as shared political affinities in backing the likes of Cruz, then he is an even more unusual donor specimen indeed. What is clear: Mercer and Cruz share an interest in translating big data insights into aggressive campaign tactics, including micro-targeting voters based on psychographic analyses of their attitudes and interests. Both men, says West, “understand that digital technology enables new forms of voter outreach that can help candidates identify support and turn them out at election time.”
Of course, programmers love little more than systems, and Mercer is almost certainly not considering Cruz in isolation but as part of a much larger political data set, one bigger than one race or election cycle: one that begins a domino effect to change the future of American politics.
In his speech to the assembled computer scientists, Mercer diagrammed a large “decision tree,” a tool with branches modeling predictive outcomes; each node represents a decision point, each radiating branch leading to a leaf that represents the final outcome of a given path. Big picture: Mercer’s grand political algorithm — if there is one — may never reach a President Ted Cruz result, but it doesn’t have to in order to beat the market.