On December 19th, 2014, the President of the United States signed into law a bill in which I, and others, had put a tremendous amount of effort. This bill, the Small Business Efficiency Act (SBEA), provides Federal statutory recognition of the professional employer organization (PEO) business model. This is the industry in which I had been involved with for 16 ½ years as the Co-Founder and Co-CEO of Ambrose Employer Group, a PEO based in New York City. While I was in the industry, I was passionate about the passage of this bill. I believed that Federal, statutory certainty would benefit the whole industry and our customers.
Now that the bill has finally been enacted into law and that I have exited the industry (we closed on the sale of Ambrose to TriNet on July 1, 2013), I thought it would be helpful to share my experiences, and what I learned, in my endeavor to pass Federal legislation. This blog post is written for entrepreneurs and industry leaders (and I use this latter term broadly) with grit, perseverance and vision, because that is what it takes to pass a bill in Washington.
Our three most formidable obstacles in Washington were a dysfunctional Congress, which had a proclivity for not passing legislation (we needed a larger legislative vehicle, and there were few); the slow, arcane and laborious legislative process, which provided the labor unions with plenty of opportunities to foil our efforts; and our own industry, which was hobbled by petty politics, malicious gossip and small mindedness. As to the last item, the industry itself was one of its largest obstacles!
Up until my election as the president of our trade association in 2008 (thankfully only for a one year term), I was not involved at all in our Federal lobbying efforts. In fact, very few in our industry were involved in this critically important effort. The effort was entrusted to a very technical, and expensive, Washington DC tax lawyer (i.e., a lobbyist), a mid level government affairs director at a comparatively stagnant PEO where leadership had lost interest in the industry, a founder of a small, local PEO, and a series of transient, mediocre trade association “government affairs” people.
Our industry, through our trade association, had been funding this small group for over a decade without accountability, transparency or results. Each year they would report to the trade association board that they were the right “experts”, they didn’t need anyone’s help, especially from their industry colleagues “unfamiliar with the ways of Washington”, that these things take time, and that the labor unions, and thus the Democrats, were blocking our efforts (the last two points were true; the first two were not). Does this sound like a recipe for success? Absolutely not. Einstein said this is the definition of insanity. The same tactics, over and over again, whether feeble or heroic, were not going to get our bill passed in Washington.
If we continued to allow this small, insular group to retain sole responsibility for the passage of the bill and continue with its myopic more of the same strategy, it just wasn’t going to happen. I knew we had to change our strategy and this became one of my primary agenda items while leading our trade association and for some time thereafter. We needed a larger tribal effort. We needed more people in our industry involved, more people heading to Washington, and more capable people advocating our value proposition for America’s small businesses and their employees. The people in business who were successfully selling our services to America’s small businesses were the people who could sell our value proposition to our elected Members in Washington, of course with the help of skilled lobbyists. This strategy ultimately prevailed.
What was astounding, however, was the juvenile blow back from the small group of technical “experts”—they didn’t want any help at all! They refused, pouted and then, very late in the game, finally, and reluctantly, cooperated. It took a tremendous amount of energy to work around this petulant group and dodge their petty, disruptive shenanigans. I think they spent more time trying to undermine and stop others who were joining in the effort than on the passage of the bill. This was total insanity and, something as a leader of a highly functional growth company, for which I was not prepared.
Their first argument, which they relentlessly peddled to our industry, was that only they could advocate on behalf of our industry because they were the “trained professionals” and they knew how to talk to Members of Congress and their staffers. This is one of the biggest lies in Washington. Banal lobbyists and government affairs folk routinely perpetuate this lie. Do not succumb to this nonsense. The truth is that elected Members prefer to talk to entrepreneurs and people in industry, and to the contrary, they generally loathe talking to middling government affairs people and second-rate lobbyists. In fact, our trade association’s “professionals” were rather inept in advocating on our behalf. On one memorable visit, the trade association “professional” told the congressional staffer the reason we needed this bill was so more of its members could go public. The Democratic staffer was flabbergasted with this rationale. This was an embarrassment. This bill was for America’s small businesses and its employees! Not for us. The other “trained professionals” involved similarly failed in articulating our compelling value proposition. At this point, while the technical had its place, I knew we needed more people in our business involved in conveying our value proposition for America’s small businesses and their employees and we certainly needed top-tier lobbyists who shared, and agreed with, this broader strategy. Just like in business, in Washington, you must clearly and relentlessly articulate a compelling “why” to Members and their staffers (see Simon Sinek’s work).
After this small group reluctantly retreated from this argument, that only government affairs “professionals” can lobby, they then spent a year or so arguing to trade association membership that individual companies were prohibited from directly engaging in any lobbying activity in Washington pursuant to an implied trade association rule and thus any such activity had to be approved and controlled by the trade association (they insisted that one of their “minders” had to accompany me and others on any “approved” Hill visits and then they proceeded to bring me before some trade association “disciplinary” committee to have me sanctioned for “unauthorized” lobbying). This was a royal distraction to our advocacy efforts in Washington and was finally dropped simply because I refused to participate in their kangaroo court. I just stayed focused on the prize, continued my trips to Washington, and clearly articulated our why.
In truth, I ignored this nonsense because I recalled from my law school days (where I read the United States Constitution) that Article I of the Bill of Rights states, “Congress shall make no law…abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for redress of grievances.” This is exactly how our Founders intended for our government to work. Citizens travel to Washington and petition our government. Thousands upon thousands of people travel to Washington each year with this sole intent. When you go to Washington, and walk the halls of Congress, you will meet your fellow citizens everywhere. Washington has worked this way for over 200 years. So, if you have an issue that is important to you, go to Washington! Don’t let some middling government affairs functionary or lobbyist tell you otherwise. They do not have an exclusive right to petition Washington, although some will tell you this with a straight face and with absolute conviction. Do not let these naysayers intimidate you. On the contrary, our Country’s Founders expressly gave you the Constitution right to advocate to Members of Congress and Members know this. This is one of things that make our Country great, so go to Washington and state your case!
Now, once I started visiting Washington (where there are some exceptional hotels, I love the Willard, and a number of awesome restaurants), thinking of Einstein’s maxim, I quickly learned that we also needed to make political contributions to increase our access to Members. This is just how it works in Washington. The math is simple. Four hundred and thirty five House Members are up for re-election every twenty-four months and the average house campaign cost close to two million dollars per cycle (in 2012, each House Member on average raised $1,689,580 per cycle, $2,315 per day; Senators, on average, each raised $10,476,451, $14,351 per day.). Campaign reform limits the amount they can raise from any one individual, and if a Member is in the minority or not a chair of a committee, it is extremely difficult and time consuming to raise this amount. So while I was the president of our trade association, in 2008 I created a political action committee (PAC) and raised $329,439 from my industry peers over the following four-year period. I also supplemented this with tens of thousand of dollars of my own personal political contributions (I was rather dismayed when I learned that political contributions are non-deductible). Unfortunately the PAC was also stymied by petty trade association politics (the business people raised and contributed the money but then the government affairs “experts” wanted to spend it!), so my personal political contributions were a necessary work around.
Because Members spend an inordinate amount of time raising money in drips and drabs, there are a myriad of opportunities to meet Members in small group settings. Although important, I did find the fundraisers back in their home districts larger and less intimate. Fundraisers in Washington, on the other hand, where often small gatherings and generally attended by DC lobbyists. This was a great advantage for an entrepreneur—you will stand out. For better or worse, political contributions, to both sides of the aisle, are just a necessity in Washington. It is how our system works.
With this in mind, I picked up the pace and started flying to Washington once or twice a month visiting with Members and staffers in Longworth, Cannon, Rayburn, Russell, Dirksen and Hart (the office buildings for Members). I also made political donations and attended fundraisers for Members. I did this for five and half-years (from 2008 through first half of 2013). In total, I met with close to 200 Members and their staffers in Washington and a dozen or so visited with me and toured our operations in New York City. I quickly learned that Members would much rather talk to an entrepreneur or someone from business than a technical lobbyist or mid-level government affairs director. Building relationships with Members was a lot of fun, and I can honestly say that every Member I met, whatever his or her politics, was a patriot. The House is definitely the “people’s house”—a reflection of American society.
I often found myself at many events, where I was the only entrepreneur, with a dozen or so lobbyists, and the Member of Congress, and the Member would invariable spend more time with me than anyone else. I also quickly learned that I was also way more capable of advocating our value proposition for America’s small businesses and their employees than hired lobbyist or government affairs people. I had sold and closed our value proposition and stood behind the delivery of the service. The lobbyist and government affairs people had not. I had credibility, and the Members, and lobbyists, knew this. In fact, the better lobbyists in Washington are not threatened by industry leaders but are skilled at leveraging industry’s entrepreneurs and leaders. Find these lobbyists! They are worth their hefty monthly retainer. While political contributions can be used effectively to gain access to Members to advocate on your behalf—be sure that weak and ineffective government affairs “experts” and lobbyists do not squander these face-to-face opportunities. This is a royal waste of money.
I was fortunate in that one of our larger competitors had a very talented in-house lobbyist based in Washington DC, who I consider a tenacious industry leader and excellent political strategist and tactician (he also lived near the airport and was gracious enough to meet me curbside even when I took the 6 am shuttle! :-)), and together and with others we executed on this collaborative journey. We went outside of the trade association and directly hired two exceptional Democratic lobbyists. Another large competitor had also retained several exceptional Washington DC lobbyists who then also joined our collective efforts. Other entrepreneurs joined in as well. Over the vociferous objections of our trade association, a few of its members, and its small group of “trained professionals”, we continuously refined and coordinated strategy and tactics, while trying our hardest to avoid the petty politics and malicious gossip which was debilitating the trade association. We tried to get them to focus on, and work towards, our agreed to prize: the passage of our bill. We adopted the maxim: lead, follow or get out of the way. They reluctantly followed. Six years after adopted and implementing a broader and more sophisticated strategy in Washington, in December 1014, the Republican controlled House and Democratic controlled Senate passed a tax bill that included our industry’s legislation. Unlike the past, where labor had been successful in blocking our legislation, labor’s objections fell on deaf ears because we had tirelessly articulated our compelling why to so many Members and their staffers, especially on the Democratic side of the aisle. Shortly thereafter the President signed the bill into law. Success!
So, in sum, here is what I learned on my visits to Washington. If you want to pass legislation in Washington, avoid the petty politics, malicious gossip and small mindedness that seem to consume trade associations. Find a group of similarly minded, driven companies and industry leaders, and find and hire top rate lobbyists and government affairs people who aren’t threatened by your involvement but will enthusiastically compliment and leverage your involvement. Work hard, go to Washington (at lot), make political contributions to both sides of the aisle, and make a lot of friends. Finally, remember, it isn’t about you but about making America better (e.g., your “why”), and every no is one step closer to yes. You need grit, perseverance and vision. I wish you Godspeed on your trip to Washington.