South Australian Senator Nick Xenophon laid out his preference-leveraging strategy to the major parties over the weekend: pump in huge taxpayer subsidies to South Australia or I’ll preference against you.

The Turnbull government partially responded with this week’s submarines announcement, but Xenophon is also seeking to extract big government commitments to keep the Whyalla steel works open.

If Xenophon is given credit for the submarines announcement, there’s every chance his South Australian vote will rise even further — but the opposite could occur in the rest of the country, which will see little, if any, of that $50 billion coming their way.

Fairfax commentator Michael Pascoe produced this interesting comment piece on Xenophon last week lamenting his protectionist instincts and the lack of profile of any of his fellow candidates.

When combined with this Crikey piece a few days earlier on the resignation of Xenophon’s lead NSW Senate candidate Glen Frost, it does pose an interesting question: is Xenophon serious about running nationally? The key Frost comment to Crikey was as follows:

“Frost says his resignation came down to differences of opinion between himself and the party’s SA head office, headed by campaign manager Stirling Griff and Senator Nick Xenophon. The disagreements, he says, revolved around what issues to campaign on, as well as whether to run extra candidates in New South Wales. ‘NXT NSW [was] approached by two excellent potential candidates who wanted to stand for the House of Reps seats of Wentworth (Turnbull’s seat) and North Sydney — Griff and Xenophon said no.'”

One of the keys to any successful Senate campaign is to have good lower house candidates who can hand out how-to-vote cards that also promote the Senate candidate in that state. But this costs lots of money, and if you don’t crack the 4% threshold for public funding at $2.70 per vote, it can quickly become a financial disaster.

If NXT is standing candidates in all lower house South Australian seats but knocking back good candidates elsewhere, it suggests the focus is mainly South Australia, where the two party drivers, Xenophon and Griff, are both standing in the likely July 2 double dissolution.

As campaign manager and a financial contributor, there’s an argument that Griff is conflicted on the question of campaign resources. In an ideal world, the campaign director is independent of the candidates, not one of them.

This highlights some of the challenges for any start-up party around the incentive systems for the key players, the rationing of scarce resources, recruitment of credible candidates and the competing policy priorities that they bring to the table.

I discovered all of this the hard way in 2006 when co-founding and bankrolling the start-up party People Power, which contested all eight upper house regions and almost half the lower house seats in that year’s Victorian election. It was a disaster on  many levels.

Ultimately, start-ups have to focus on winning a small number of seats at the expense of others, but the trick is not lulling people into false hope. This is no different to the challenge of putting out an ASIC-registered prospectus, which accurately outlines the potential risks and rewards with the endeavour.

There have been so many start-up parties that imploded that Xenophon was right to build in some of the protective and control mechanisms he wields with Griff, as are clearly outlined in this document, which all NXT candidates must sign.

Crikey and InDaily have covered the internal workings of Team Xenophon better than anyone, and this piece on October 21 last year outlined how Griff was negatively disposed to candidates with a public profile, for fear it might undermine the focus on Xenophon.

Then again, the recruiting technique is true to the Xenophon philosophy of standing “ordinary voters”, such as nurses and business owners, rather than people already hardened by the politics industry.

Xenophon told Crikey that it was an expensive endeavour fielding lower house candidates and the party was doing its best across Australia but didn’t have the resources to roll out a national campaign featuring more than 100 candidates.

The brutal truth of politics is that the vast majority of candidates lose, and most of them are just cannon fodder for the greater good for the party.

The changes to Senate voting further undermine the rationale for running a true national campaign like Clive Palmer did as a start-up better than anyone in 2013, after spending $28 million.

Under the old system, you didn’t need hundreds of booth workers to give away your preferences in the states where you stood little prospect of winning, negotiating reciprocal flows in the state where you had the best chance.

This was at the heart of the preference whisperer Glenn Druery’s strategy of all micro-parties sticking together with a focus on success in just one state for each of them.

With some new candidates being rejected, anyone who thought the Nick Xenophon Team might effectively operate as a loose network of like-minded independents was clearly mistaken.

Stirling Griff is a former head of the South Australia retailers association who ran and owned a successful network of Vodafone shops in Adelaide. He knows all about the disciplines of franchise arrangements and the requirement for everyone to play by a strict set of rules. But politics is very different from business.

It’s a question of so far so good for NXT, but execution risk is high, resources are scarce and the major parties are hunting for chinks in the armour.

The media will remain a key determinant of success, but thus far they appear in with a fighting chance to secure a big chunk of the balance of power in the next Parliament.

And that will surely be better than having Clive Palmer play such a role.