A quarter-century of big names in business
By Abha Bhattarai,
The very first meeting of the Economic Club of Washington began with an invocation. It was a black-tie affair at a Ritz-Carlton in the fall of 1986. Attendees ate vichyssoise and veal medallions, and smoked cigars in the foyer after dinner.
Roger Smith, then chief executive of General Motors, addressed the crowd.
“His speech was dreadful,” said Ken Sparks, the secretary of the Economic Club at the time. “Harry McPherson told me he didn’t know whether we’d ever be able to have a second meeting because the first speech was so terrible.”
He need not have worried. A quarter-century later, under the leadership of Carlyle Group founder David Rubenstein, the Economic Club has become a cornerstone of the Washington business community, a place where the late Harry C. McPherson Jr., a powerhouse lawyer who was once counsel to President Lyndon Johnson, could break bread with Sparks, a local economic development leader.
The club’s success stems as much from its exclusivity as its appeal as a forum for speakers wishing to bend Washington’s ear, whether it’s Republican House Speaker John Boehner touting the merits of his debt proposal or Dan Akerson, the latest chief executive of General Motors, proclaiming the company’s return to the stock market 16 months after a government bailout.
“It’s widely thought that the Economic Club is the place where the rubber meets the road when it comes to business and government,” said Julius Genachowski, the chairman of the Federal Communications Commission, who addressed the club last year. “It’s a terrific audience to have the chance to speak to.”
It’s also an audience that tends to more reflect the region’s suit-and-tie establishment than its open-collar — and increasingly diverse — entrepreneur class.
President George W. Bush has spoken to the club, as have Bill Gates, Ben Bernanke, Hillary Clinton and Ted Turner. On Tuesday, Warren Buffett, chairman of Berkshire Hathaway, plans to address members for the first time as part of the Economic Club’s 25th anniversary celebration (Capital Business is a media sponsor).
“It has become the ultimate forum in the Washington area for businessmen to have an intelligent discourse about the economy,” said Vernon Jordan, who served as the club’s president between 2004 and 2008.
The mid-1980s were a tumultous time for Washington business. The savings and loans crisis was beginning to take shape, and transportation and energy deregulation was in full swing. The influence of the D.C. Bankers Association, which had long served as the area’s premiere meeting ground for business leaders, was waning as the economy began to take a turn for the worse.
There were other changes, too. More and more companies were leaving downtown D.C. for the suburbs. Software companies began cropping up in Maryland and Virginia. The local banks and retailers that once ruled Washington were being sidelined by newcomers.
“With all of that going on, we thought maybe there was a role helping Washington find its place in this new world,” said Sparks, who was then chief executive of the Federal City Council, an organization of business and civic leaders who worked behind-the-scenes to affect Washington policy.
Local executives such as Donald E. Smith, vice president of Exxon, and Nancy Clark Reynolds, a partner at the public affairs firm Wexler, Reynolds, Harrison & Schule, signed on. Robert Linowes, a lawyer and civic leader, became the Economic Club’s first president.
“It took them six or eight months to put this thing together,” said Mary Brady, executive director of the Economic Club. “They sent out the invitations — their original intent was to start with 100 members. The 100 members came in en masse — everybody said yes — and joined, and that started the Economic Club.”
Chris Simmons had one question for the region’s business leaders when he moved to Washington in 2007: If he were to join only two organizations in the area, which two should they be?
The answer was always the same.
“Everybody told me, ‘The Economic Club is the first place you should get involved,’ ” said Simmons, a managing partner at PricewaterhouseCoopers. “I’m not stupid. I said, this is what the people who have the right position in the community tell me, so I’m going to get involved. And then I did.”
Simmons, now the club’s vice president of membership, says he attends as many Economic Club events as he can — both to meet new people and to further relationships with existing clients.
“One of the hottest tickets around the office is getting your client a spot at our table,” Simmons said. “It’s not that often that the normal C-suite executive gets to hear [JPMorgan CEO] Jamie Dimon up close and personal or [GE chief] Jeff Immelt or the treasury secretary, so they love it. And as [our clients] spend more time with us, we do more business with them.”
A few years ago, the club did away with assigned seating at its events. That move in itself has been great for business, said Kathleen Matthews, an executive vice president at Marriott International.
At one luncheon, Matthews happened to sit next to Elizabeth Littlefield, the president of the Overseas Private Investment Corp. Small talk quickly turned into a discussion about their organizations’ plans to be more eco-friendly.
“And suddenly we realized this was a whole new way to do business together, partnering on green hotel development in emerging markets,” Matthews said. “So now we’re in the midst of a project we’ll be launching together.”
If economics is founded on the principles of supply and demand, so too is the Economic Club’s membership. The constant challenge, Brady said, is to strike a balance between expansion and exclusivity.
The organization currently has 570 members, up more than four-fold from its original cap of 135. Of the club’s founding members — 11 women, 124 men — 16 remain in the organization. The rest are newer inductees who reflect the changing realities of Washington’s business scene: they incresingly work for technology companies, are younger and more likely to be affiliated with up-and-coming companies like LivingSocial.
“Initially [the club] was started by some of the larger, more mature companies in D.C.,” said Steve Case, a member and chief executive of Revolution. “But it’s broadened — it’s broadening — and I hope that will continue.”
The club’s members include university presidents (Steven Knapp of George Washington University, Teresa Sullivan of the University of Virginia), media publishers (Katharine Weymouth of The Washington Post, Sharon Percy Rockefeller of WETA), law firm partners (Stephen Porter of Arnold & Porter, Elizabeth Lewis of Cooley), as well as CEOs (Jeffrey Becker of ING Investment Management, Kenneth Samet of MedStar Health).
A membership committee reviews between 20 and 25 nominations every month, and existing members are reevaluated for admission when they switch jobs, Brady said.
“If you go from being the CEO of one company to director of development at another company, you might not get readmitted,” Brady said. “The most important thing is that we seek out the highest level of business leader.”
But while the Economic Club caters to the area’s established leaders, many say it does not speak for the larger business community.
“I’ve got to be honest. I didn’t even know the Economic Club of Washington existed,” said Rob Clapper, president and chief executive of the Prince William Chamber of Commerce, the largest chamber of commerce in the Washington metropolitan area.
The region is awash with groups such as the Northern Virginia Technology Council, the Women Business Owners of Montgomery County and dozens of chambers of commerce that provide specialized networking opportunities.
“[The Economic Club] doesn’t advocate on behalf of the region’s business community, nor does it lobby or speak for the broader business community,” said Barbara Lang, president and chief executive of the D.C. Chamber of Commerce, who is also a member of the Economic Club.
“But what it does do well is bring in very key business leaders from around the country to give us their perspective on the economy, how things are changing, how their businesses are faring.”
David Rubenstein hadn’t given the Economic Club much thought before Vernon Jordan called him up in 2008 to offer him the presidency. Rubenstein had addressed the club once in 2004, but that had been it.
“When Vernon asked me to be president, I told him I wasn’t even a member,” Rubenstein said.
The two arranged to meet in New York, where Jordan made his case.
Rubenstein said “ ‘Are you serious about my being your successor?’ ” Jordan recalled. “And I said, ‘Absolutely.’ He said, ‘Who is my competition?’ I said, ‘You have no competition.’ ”
“Then he shook my hand,” Jordan continued, “and God bless, he was only in [my office] less than five minutes.”
Rubenstein said his first order of business as the Economic Club’s president was to learn as much as he could about the organization.
“I realized early on that the essence of the club was to get about four speakers a year,” he said. “Then I thought, let me try to make that a bit more lively. And I also felt strongly that we should give away more money.”
Under Rubenstein’s leadership, the club has begun hosting as many as 11 speakers a year. It has doled out more than $500,000 in scholarships to graduating high school seniors, and has created a leadership training seminar for promising students. At Tuesday’s 25th anniversary gala, the club will donate an additional $500,000 to 10 local nonprofits.
“We’ve got to think larger than just our own businesses, and I think the Economic Club is a good example of how business leaders are stepping up to do just that,” said Chris Caine, president and chief executive of Mercator XXI.
Much of the Economic Club’s success in recent years, members said, is a testament to Jordan’s and Rubenstein’s knack for snagging interesting and timely speakers.
“The events are just terrific,” said Stu Solomon, a managing partner at Accenture. “It’s a high-quality organization that focuses on the right topics and the right people.”
Jamie Dimon, the JP Morgan Chase chief, addressed the Economic Club on March 12, 2008, four days before the bank’s emergency purchase of floundering investment bank Bear Stearns. Case, a member of President Obama’s jobs and competitiveness council, spoke to members earlier this year to drum up support for the Jumpstart Our Business Startup Act.
“It feels like the Economic Club is now in the news cycle,” said Matthews of Marriott. “It’s making news and it’s digging deeper into what’s happening in the news.”
As the Economic Club gains ground as a destination for newsmakers (C-SPAN now broadcasts many events live), government officials and business leaders are beginning to approach the club in hopes of speaking to its members.
Shortly after Larry Summers, then director of the National Economic Council, addressed the Economic Club of Washington in 2009, Timothy Geithner called up. He wanted to speak there, too. Less than two weeks later, the Treasury secretary took the stage at a breakfast event to talk about the global financial crisis.
At the inception of the Economic Club in 1986, the board of directors drafted a list of 27 speakers they most wanted to invite to the club. The list included Margaret Thatcher, T. Boone Pickens, Paul Volcker and Warren Buffett.
Not much has changed, Brady said. She added: “It only took us 25 years to get Warren Buffett.”