Andy Kroll reports:

One day in 2013, a knockabout Republican political consultant named Mark Block and his colleague boarded a flight from Los Angeles to New York. As the plane took off, they got to talking with the man seated next to them, an ex-military officer who mentioned he worked as a subcontractor for a company seeking US political clients. “They do cyberwarfare for elections,” the subcontractor said. Block dozed off as his colleague and her seatmate continued to chat. When they landed, his colleague told him excitedly that they needed to talk to a guy named Alexander Nix.

Not long after, they met with Nix in a conference room in the Willard InterContinental hotel, a stone’s throw from the White House. The meeting lasted more than six hours, Block recalls, as Nix described how they could use personality data and psychographics in American campaigns. “By the time he was done, I’m going like, ‘Holy shit,’” Block told me. “I had been aware of what Obama had done…But this seemed to be light-years ahead.”

At a subsequent meeting Block attended, Nix was introduced to Rebekah Mercer, who was quickly becoming one of the biggest donors in Republican politics. Bekah, as she’s known to friends, is the middle daughter of Robert Mercer, a billionaire computer scientist who pioneered the use of algorithms in investing at the Long Island-based hedge fund Renaissance Technologies. Bekah is the political animal of the Mercer family, and in the late 2000s and early 2010s she plowed $35 million from her family foundation into conservative groups such as the Heritage Foundation, the Federalist Society, and the Heartland Institute. The Mercers also invested a reported $10 million in Breitbart News in 2011. They’ve donated millions to Republican candidates and super-PACs, from Mitt Romney and Herman Cain to a congressional candidate in Oregon named Arthur Robinson, who caught Robert Mercer’s attention with a pseudoscientific newsletter in which he argued that small amounts of nuclear radiation have health benefits.

The Mercers had attended the semiannual donor retreats organized by Charles and David Koch and had, according to a source familiar with their political work, invested in the Kochs’ data venture, Themis (named for the Greek goddess of wisdom and order), which was supposed to close the gap with Democrats in the data arms race. But after Romney’s loss in 2012, the Mercers were fed up. Bekah Mercer turned heads at a 2012 postmortem event at the University Club in Manhattan when she excoriated the Romney campaign for its lackluster data operation. According to people familiar with the Mercers’ thinking, Bekah and her father set out to find their own data geniuses.

Over lunch in Manhattan, Bekah listened intently as Nix gave his pitch. When he finished, she said, “I really want you to tell this to my dad.” She gave him an address with instructions to meet later that day. At the appointed time, Nix and Block arrived at a grungy sports bar on the Hudson River, north of the city. “We’re going like, ‘What the fuck?’” Block says. Bekah texted to say she and her father would soon arrive. Moments later, Sea Owl, the Mercer family’s 203-foot superyacht, pulled up to the dock behind the sports bar.

Aboard the yacht, Nix took a seat next to Robert Mercer, opened his Mac, and launched into his spiel again. Bekah sat next to her father on the couch. Behind them stood Steve Bannon, the investment banker turned Hollywood producer and conservative activist who took over Breitbart News after the death of Andrew Breitbart. Whatever Nix told the Mercers that day in 2013, it worked: They agreed to invest a reported $15 million in a new company that would be the face of SCL’s American political work. Bannon was given a seat on the board and a stake in the new company to help, as Nix later said, the firm navigate the US political scene. Nix installed himself in Mercerworld, presenting himself as Bekah Mercer’s political guru and taking meetings at the Breitbart Embassy, the Capitol Hill row house that served as the conservative website’s offices and Bannon’s crash pad. The company was incorporated in Delaware on December 31, 2013. The name was a mix of old and new: Cambridge Analytica.

But if the Mercers had paid closer attention to a test run of Nix’s venture in the 2013 Virginia governor’s race, they might have reconsidered going into business with SCL. A PAC, the Middle Resolution, had paid Nix’s company several hundred thousand dollars that year for a list of persuadable voters to help elect Republican Ken Cuccinelli, who was running for governor. Months passed, and the list never arrived. When the group’s founder, Bob Bailie, demanded the list, Nix asked for more money and Bailie cut bait. Another Virginia-based group, Americans for Limited Government, then paid SCL $100,000 to create a list of suburban female voters who traditionally supported Democrats but might be swayed to vote for Cuccinelli if shown the right message. Late in the race, the group’s canvassers took Nix’s list into the field and returned with a perplexing result: The people on it were already Cuccinelli supporters. The higher-ups at Americans for Limited Government asked another firm to analyze the list. It turned out SCL had handed them a roster of die-hard Republicans. [Continue reading…]

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