"Well?" Obama asked.
"Well," Margolis recalls replying. "I guess we're going to have to do it the hard way."
It was never going to be easy. Whatever happens in the general election, Obama's victory over Clinton after an epic 16-month battle for the Democratic nomination will go down as one of the great political upsets of all time.
Just three years out of the Illinois Legislature, saddled with an odd-sounding name and bearing the added burden of race, Obama beat a candidate boasting the party's most vaunted political operation, its premier fundraising machine and its most popular brand name.
It was a triumph of charisma and soaring oratory -- two of the oldest commodities in politics -- fused with a thoroughly modern campaign that harnessed the Internet like never before.
Obama could not compete with Clinton for the support of the political establishment, so he attracted hundreds of thousands of new voters. He could never out-raise Clinton among big donors, so he created an online network of small donors, stunning even his own advisors by raising more than $265 million. He couldn't overcome Clinton's name recognition in big states -- at least starting out -- so he focused on small ones, a strategy that proved decisive when the nominating contest became an incremental fight for delegates.
He started as an underdog, but that worked to Obama's advantage. His strategists felt free to challenge conventional thinking, like the notion that targeting young people and Republican-leaning states would be a waste of time and resources. Both proved crucial to Obama's success.
The freedom to fail buoyed the Illinois senator and his team when national polls last fall showed Obama trailing by as much as 30 points, leading many political pundits to write him off. "We didn't have the burden of expectations and a lifelong career path," said David Plouffe, Obama's preternaturally calm campaign manager. "We were very much, 'If it works out, it works out.' "
Obama also benefited from blunders committed by the Clinton camp, among them the failure to appreciate the importance of the Iowa caucuses; an expectation that the race would end quickly -- which meant the candidate was left flat-footed and broke when it didn't; and, perhaps above all, Clinton's decision to run as the candidate of experience at a time when Democratic voters were ravenous for change.
Sitting in his Chicago office, Obama's chief strategist, David Axelrod, pointed to his bookshelf and a copy of "Microtrends," a slice-and-dice examination of America by Mark Penn, his onetime counterpart in the Clinton campaign. "There's also such a thing as macro-trends, and they are often what define elections," Axelrod said, as elevated commuter trains rumbled below his window.
"Elections are generally defined by the incumbent . . . and rarely do people look for a replica. They almost always look for a remedy and, in [President] Bush's case, that was particularly so," Axelrod went on. "The question was, was Hillary Clinton really the remedy? It was our supposition, based on everything we could see, and intuition, that Barack represented the starkest departure from Bush and from the kind of politics that people were really recoiling from in Washington."
All winning campaigns seem brilliant in retrospect. The reverse is true for a losing effort: The mistakes are obvious with the clarity of hindsight. But in Clinton's case, many of them are still startling.
Despite its fearsome reputation, many of the Clinton campaign's decision-makers had never worked in a presidential primary. It showed not just in their underestimation of Iowa and other caucus states, but the attempt to run a general election campaign, aimed at the political center, in a contest dominated early on by liberal voters.
Penn's experience helping guide President Clinton to reelection in 1996 -- with the aid of a strong economy and weak GOP opponent -- was not like the tough 1992 campaign.
"You had some tremendously talented people, but not a lot who were seriously tested in battle," said one Clinton loyalist familiar with the inner workings of her campaign.
By contrast, key members of the Obama team -- Margolis, Axelrod, national field director Steve Hildebrand, communication strategists Larry Grisolano and Robert Gibbs -- had all worked in at least one presidential campaign. Plouffe knew the national landscape at a granular level from stints with the Democratic House and Senate campaign committees.
The Clinton operation, which prided itself on pugnacity, was rife with backbiting and turf battles: between the field staff and headquarters, among Penn and his fellow strategists. The tensions slowed decision-making and produced a constant struggle over the candidate's message, which shifted throughout the race. Clinton, the voice of Washington wisdom, gave way to Clinton the insurgent. Clinton's softer side was highlighted for a time, then Clinton became a fist-shaking populist.
The Obama campaign operated on a more even keel, like the candidate himself. His message -- boiled down to two words, hope and change -- never wavered. There were differences among advisors, mainly over how hard to hit back when their candidate was attacked. But disagreements rarely surfaced in public; there was a cohesion and mutual regard among Obama strategists that was sorely lacking in the Clinton campaign -- and, for that matter, those of the last two Democratic nominees, Al Gore and John F. Kerry.
"When we had low points, there wasn't someone who came in screaming, pointing fingers in 12 different directions," Margolis said.
Obama insisted that his campaign work that way. "We're all in this together," Axelrod recalled the candidate telling his top strategists at an early organizational meeting in January 2007. "We're going to rise or fall together. No sharp elbows. No big egos. I want us all to be a team."
If there was a crucial point in the race, it was the Iowa caucuses. Obama's victory didn't win him the nomination. But it can be strongly argued that Clinton's third-place finish marked the beginning of the end of her candidacy, which had always been predicated on a string of early wins. That was how Gore captured the nomination in 2000 and Kerry in 2004, starting with victories in Iowa.
Obama's win in the overwhelmingly white state was crucial in sending a message to black voters, particularly in South Carolina, another early-voting state, who were initially skeptical of his candidacy.
"Iowa helped reinforce the notion that Obama was a real candidate who had a chance of victory," said Bill Carrick, a Democratic strategist and South Carolina native, who stayed neutral in the nominating fight. "That took what everyone presumed would have been a Clinton asset -- the support of the African American community -- and turned it into an Obama asset."
From the beginning, it was Obama's goal to finish ahead of Clinton in Iowa; anything less, Obama strategists believed, would have likely ended his candidacy. "It was a very sketchy deal going forward," Axelrod said. "We thought we could navigate that, but we weren't confident."
Initially, the campaign set its sights on second place. The presumption was that former North Carolina Sen. John Edwards, who never stopped running after his 2004 try for president, would win Iowa. But Edwards, overshadowed by the Obama-Clinton duel, began to fade, and by late fall Obama was narrowly leading in some state surveys. (Edwards would come in second, just ahead of Clinton, and quit the race by the end of January.)
While the Obama campaign was single-minded about Iowa -- investing so much time and effort in the state that he began slipping in national polls -- Clinton strategists were much more ambivalent. Some suggested she skip Iowa, given its left-leaning electorate and the face time voters demand; former deputy campaign manager Mike Henry was among those strategists. He wrote a memo arguing that Clinton's efforts would be better spent elsewhere. Iowa, after all, was one of the few places where Clinton's husband had never seriously campaigned, denying her the built-in advantage she enjoyed in other states. (In 1992, when Bill Clinton made his first presidential bid, Iowa Sen. Tom Harkin was running, so the rest of the Democrats ceded the state.)
But after Henry's memo became public in May 2007, Clinton rejected his advice. "I'm unequivocally committed to competing in Iowa," she told Radio Iowa.
Despite that, however, insiders describe a constant fight over resources and the time Clinton would spend in the state. "They didn't know what they didn't know, and they didn't come to understand that until very late," said one of her key Iowa supporters, who requested anonymity to speak candidly.
The New York senator spent more than $20 million in Iowa and devoted more than 60 days of campaigning. But Clinton, 60, could not top Obama's organizational effort -- and not just because he outspent her or visited more often. Obama, 46, was a political phenom, a captivating speaker who drew tens of thousands of Iowans to his events, starting with his February 2007 announcement swing. To attend, participants were asked to provide their phone numbers and e-mail addresses; within days the campaign followed up by asking them to volunteer.
It was a strategy replicated across the country, providing the "human capital," as Axelrod put it, to build a national grass-roots network at a relatively low cost. Even better, many of the same supporters went online to contribute to Obama's campaign, paying for the professional organizers the campaign dispatched to lead its volunteer army.
Obama "overwhelmed her from the bottom up," said Joe Trippi, an Edwards advisor who made pioneering use of the Internet as manager of Howard Dean's 2004 presidential run.
Most critical was the campaign's focus on small states, particularly those holding caucuses. Clinton strategists believed that caucuses, which require a commitment of several hours and tend to draw the party's most liberal activists, were unlikely to attract voters taken with Clinton's more centrist message. Instead, they expected to steamroll through the big states, where the former first lady's establishment support and household name offered a huge advantage -- and they spent accordingly.
But that overlooked a crucial thing about the way Democrats choose their nominee.
The Republican Party awards its delegates on a winner-take-all basis. The system is designed to quickly winnow the field and swiftly settle on a nominee. Under those rules, Clinton almost surely would have beaten Obama.
But the Democrats allocate their delegates on a proportional basis, meaning even a losing candidate is guaranteed a share. Although Obama lost most of the bigger states to Clinton, he often walked away with a healthy chunk of delegates by keeping competitive; under party rules, his big wins in small places paid off much more than Clinton's smaller victories in big states.
Take hard-fought Pennsylvania. Clinton won 55% to 45%, netting 12 delegates. Obama, by contrast, netted that many breezing through Idaho, which he carried, 79% to 17%. With scant effort he won Kansas, 74% to 26%, netting an additional 14 delegates.
Overall, Obama's caucus wins in 17 states and territories accounted for most of his lead over Clinton in pledged delegates, or those awarded on the basis of election results. That, in turn, helped Obama win over a majority of what the Democrats call superdelegates, the 800 members of Congress and party insiders who enjoy automatic votes at the nominating convention in Denver.
After winning Iowa on Jan. 3, Obama strategists were counting on a victory five days later in New Hampshire to propel him into Feb. 5, the biggest day of primary balloting in history. Voters in 22 states and American Samoa were heading to the polls, and Clinton looked to be a strong favorite.
Obama lost New Hampshire -- and perhaps deserved to, Axelrod now says, after taking what amounted to a victory lap around the state. But he bounced back Jan. 26 with a big win in South Carolina.
Luck helps in politics, and one of Obama's biggest breaks came from an unlikely source: former President Clinton. The results of the South Carolina primary were magnified, Obama strategists believe, by Bill Clinton's headline-grabbing performance in the state.
He chewed out a reporter and also suggested Obama's growing black support could cost his wife victory, a not-so-subtle way, some thought, of injecting race into the campaign. Afterward, the former president outraged many African Americans -- his loyal supporters as president -- by comparing Obama to Jesse Jackson, who won South Carolina during his quixotic 1988 campaign. The publicity drew heightened attention to Obama's 28-point margin, Plouffe said, and soured many voters on the Clintons and their combative style of politics. That underlined Obama's promise to bring a fresh approach to Washington and "gave us added velocity heading into Feb. 5," Plouffe said.
In their private calculations, the Obama camp strategists expected their candidate to end that day trailing Clinton by about 100 elected delegates. Instead, he won 13 of the 23 contests -- six of them caucuses -- and finished with a lead of 30 elected delegates.
Clinton's quick-kill strategy had failed, and proved to be one of her costliest mistakes. Worse, she was experiencing money problems. On Feb. 6, it was announced that Clinton had lent her campaign $5 million and that some staffers were working without pay. (Despite raising more than $215 million, she would eventually lend her campaign more than $11 million to keep the lights on.)
"I think the Clinton camp's basic attitude was that the whole calendar was set up to deliver the knockout blow on Feb. 5," Obama told reporters the day after. "We've got many more rounds to fight."
Obama, with his national grass-roots network and Internet-fueled fundraising, was ready in a way Clinton was not. Over the next month, between Feb. 5 and March 4, he won 11 consecutive contests and expanded his lead among elected delegates to more than 150. Although it was not clear at the time, the race was essentially decided.
The two fought to a draw in March in Texas, Clinton winning the primary and Obama winning its caucuses. Clinton took Rhode Island, Ohio, Pennsylvania, West Virginia, Kentucky, Puerto Rico and South Dakota. Obama won Vermont, Wyoming, Mississippi, Guam, North Carolina and Montana, and barely lost Indiana.
A flap over Obama's incendiary ex-minister, the Rev. Jeremiah A. Wright Jr., scared away some voters in the last few states, but not superdelegates.
Undeterred, they steadily streamed toward the presumptive nominee. The only thing left was for Obama to run out the calendar and for the party to resolve a dispute over Florida and Michigan, two states that broke the rules by voting early. Clinton's fight to recognize their delegates was her last stand; she suffered a final setback Saturday with an agreement to seat them with half a vote each, dashing her last chance of significantly cutting Obama's delegate lead.
The delegates he added Tuesday in South Dakota and Montana, along with an outpouring of superdelegate support, finally allowed Obama to claim the nomination and become the first African American to win a major-party presidential nomination.
Speaking to supporters Tuesday night in New York City, Clinton praised Obama and his campaign, but stopped short of conceding. She said she would spend the next few days deciding "how to move forward, with the best interests of our country and our party guiding my way."
Axelrod remains a Clinton fan. In the office at his consulting firm, about a mile from Obama headquarters, he keeps a framed picture of the senator, an old acquaintance, taken a few years ago with his wife and daughter. She was a good candidate, he said, a strong debater and a compelling personality. But her strategy was flawed.
She campaigned too long as a lofty front-runner, following the old rules of politics, emphasizing the past, downplaying her own attempt to make history as the nation's first woman president. It was no match for Obama's message of hope and change, embodied by his breaking of racial barriers and the new blood he drew into the political system.
"She just wasn't well-positioned," Axelrod said, "for the year this was."