McBee Strategic, which launched as a small advocacy firm a decade ago, is now a flourishing, broad-based business consultancy.
The firm’s evolution echoes that of Washington, which has emerged as a global financial center, drawing companies and whole lines of business that didn’t used to exist here. And its success is evidence that chief executives are looking beyond narrow policy agendas in the capital and paying increased attention to their reputations and broader corporate interests.
Steve McBee — a snowboarding former Hill staffer who didn’t finish college — talks like a Silicon Valley entrepreneur and urges young tech companies to build their Washington presence well before they have a product to sell. He is a relentless networker, even forging a friendship between his adoptive parents and his biological parents, whom he recently located. He gives clients big-picture advice and this year wants to begin to leverage the shop’s expertise into investments in private deals.
When McBee launched the business in 2002, Washington was chock full of “access lobbyists,” paid mostly for their ability to open doors. McBee, 45, said he wanted to do something else — and he has pushed into public relations, digital marketing, investor research and consulting on government contracts.
Working with tech start-ups taught him “that you can make your own rules,” he said. “You can compete asymmetrically and you can build your business in a totally different way.”
Some competitors roll their eyes at McBee’s formulation, and even some satisfied customers say it is hard to pinpoint precisely what the firm has accomplished for them.
“He’s a very savvy businessman, and he clearly has good connections with Wall Street and Silicon Valley,” said the leader of a big Washington lobbying practice who spoke on the condition of anonymity to be candid about a competitor. “But a lot of it tends to make you want to ask, ‘Is there a product here?’ ”
Even so, his shop’s fast rise has drawn interest.
“We keep an eye on them because they’ve grown quickly and they have a nice spread of clients,” said a leader of another top lobbying firm, who also spoke on the condition of anonymity. “The question is, where are they going ultimately?”
McBee’s approach has been vindicated by the decline in total reported lobbying spending since 2010. That drop has also pushed other lobbying shops to expand beyond their usual fare of trying to influence legislation and regulation, adding services such as communications and grass-roots organizing.
“They really operate as a strategic advisory, and that separates them from a lot of the other firms out there,” said Gail MacKinnon, the head of Time Warner Cable’s Washington office and a client since 2009. “They understand the inside-the-Beltway audience very well, but they also understand very well what’s going on outside Washington.”
Drawing comparisons across Washington’s influence industry is difficult; although firms are required to disclose income from traditional lobbying, details about earnings from other work are usually closely held.
McBee Strategic Consulting has been adding clients and staff, and while McBee was reticent about details, he said total revenue for 2013 was up 8.4 percent over the previous year. That growth came despite a 10 percent drop in lobbying revenue, to $10.4 million — a bigger hit than the nearly 3 percent decline in total spending on federal lobbying — ranking the firm 23rd among Washington lobbying practices, according to a tally of federal records by the Center for Responsive Politics. For 2014, McBee is projecting 24 percent growth, which he said is more in line with the firm’s historical performance.
“When you get somebody who you think is all flash-in-the-pan, the thing to do is watch the results,” said former Rep. Al Swift (D-Wash.), McBee’s first Washington boss, who remembers the stylish shoes worn by his young Hill aide. “Steve has certain qualities that suggest he could be more flash than substance, but the records don’t show that.”
‘A bunch of type-A folks’
Despite its loft-like look, there’s plenty about McBee Strategic that resembles an old-school lobbying firm. The staff helps clients get bills introduced — even if their prospects of passage are dim. And most top lobbyists at the firm have passed through Washington’s revolving door.
“We’re a bunch of type-A folks who worked on Capitol Hill who like to get things done,” said Rob Chamberlin, who was hired in 2004 after being chief counsel on the Senate Commerce, Science and Transportation Committee, under Chairman John McCain (R-Ariz.).
It was the arrival of Chamberlin and then Sam Whitehorn, who worked with the committee’s Democrats, a few years later, that got the attention of American Airlines. “Once Rob and Sam left the Hill, somebody was going to hire them,” said Will Ris, who runs the airline’s Washington office. “I wanted to be the one.”
American spent $4.43 million on lobbying last year, of which $280,000 went to McBee Strategic, according to federal filings, for work on aviation safety, airspace congestion, taxes, bankruptcy, energy issues and security.
Chamberlin and Whitehorn also helped build support on Capitol Hill for American’s merger with US Airways, which closed in December, Ris said. But the airline works with about a dozen outside lobbying firms, and “it’s always hard to say how any one thing ended up happening,” he said.
Also in keeping with their K Street peers, staff members make healthy contributions to political campaigns. McBee employees gave about $220,000 to federal candidates and PACs in the 2012 election cycle, according to Federal Election Commission filings, favoring Democrats over Republicans by a modest margin.
A firm at work
McBee and his staff talk a lot about how companies need to do more than push a policy agenda. It’s about “risk management,” and “how you’re branded in Washington, how you’re perceived, how you’re treated,” McBee said.
And they talk about the merits of collaboration — drawing on the firm’s advocacy, communications, digital and research staffs, as well as its “government capital” business, which helps clients competing for grants and contracts. “The lines should be blurry,” he said.
On a recent afternoon, McBee took off his jacket and settled in. He quickly reviewed with his staff the points to make during a conference call that was about to start. Once the clients got on the line, the conversation veered another way as an executive described a recent visit to Beijing and his hopes of taking the company’s emissions reduction technology to China. McBee mentioned a banker he knows who is doing business there. “Maybe what I might do is send you a list of three or four people so you can talk with them,” he said.
The McBee team pivoted back to the agenda. They wanted to raise the company’s profile and proposed setting up a few meetings on Capitol Hill, at the Environmental Protection Agency and with some outside groups. “Now is the time to bring you to Washington,” said Jeff Markey, who runs the advocacy practice at the firm. The CEO sounded like he was game.
They talked about how to counter skepticism the new product might meet, and they explained how the company might be able to benefit from recent regulations proposed by the EPA, even at a relatively late stage in the process. “Who knows what is going to happen to that rule,” Markey said. They also talked about keeping an eye on federal programs that could be a source of funding and about possible partnerships between the client and bigger companies where McBee has ties.
Patricia Splinter, chief operating officer at VantagePoint Capital Partners, said McBee has also made connections between Fortune 100 companies and some of the young companies in the venture fund’s portfolio. She recalled meeting McBee when she was interviewing lobbyists in 2008, and said he seemed like a West Coast guy “trapped in a 202 area code.” She credits the firm with helping to secure government money for some of the fund’s companies and with providing an early read on Washington’s shifting interests in energy technologies.
McBee talks about the need to “clear the regulatory brush” so innovators can launch new products without getting slowed by government roadblocks, and about starting conversations that policymakers didn’t know they needed to have.
His shop lobbied for two of the biggest names in the energy technology — Tesla Motors, the high-end electric car maker, and Solyndra, the California-based solar-panel maker that went bankrupt after receiving $535 million worth of loan guarantees from the Obama administration. A spokesman for McBee Strategic said the firm worked on broad policy issues, and was not involved with Solyndra’s loan guarantee application or renegotiation.
For Time Warner Cable’s MacKinnon, what stands out is a 2012 conversation with McBee about proposals to offset a lowering of the corporate tax rate. One possibility was limiting the amount companies could deduct for interest payments, a valuable tool for companies like Time Warner Cable that have long-term debt.
“The investment community on Wall Street is going to have a very negative reaction to that,” she recalled McBee saying — a perspective, MacKinnon said, that wasn’t offered by any of the other outside lobbyists she uses. She passed that warning on to her senior management, she said, and Time Warner Cable honed the talking points it used for meetings on Capitol Hill — and with some of its other lobbyists.
McBee and his wife, Jennifer Noland, the firm’s general counsel, live in a $2 million house in Cleveland Park. He grew up in Bellingham, Wash., and, despite dreams of being a PAC-10 quarterback, was a student at Western Washington University when he got a job in Swift’s congressional office. He went on to work for two other Washington state Democrats in the House, Maria Cantwell and Norm Dicks, and did not return to school.
His professional path is a familiar one: After about seven years on the Hill, McBee went to work with Denny Miller, a traditional Washington lobbyist who also had ties to Washington state, before setting out on his own. In December, Miller closed his shop after 30 years in business.
But McBee’s personal story is far more remarkable. He said he had a strong relationship with his adoptive family and no interest in tracking down his biological mother — until the birth of the first of his three sons, about nine years ago.
He found her pretty easily, living in Utah, and discovered that she and his biological father had been married for 37 years, with two kids of their own. His biological grandparents were alive, too. Today, his two sets of parents have become close friends, even vacationing together, he said.
The firm, on Massachusetts Avenue NW, about a mile from the Capitol, has 66 employees and 112 clients — including Google, Boeing and Citigroup — and its growth has been especially rapid over the past year. McBee Strategic signed its first foreign government client, the embassy of Nigeria, last summer, and it is being paid $28,500 a month for communications work to boost the country’s profile. Gibraltar Associates, a communications agency with revenue of $6.4 million in 2011, joined the firm in 2013, and some of its work has nothing to do with Washington, like helping GN ReSound, a large hearing-aid maker based in Denmark, with the U.S. launch of its made-for-iPhones hearing aids, down to details like its booth at January’s Consumer Electronics Show in Las Vegas.
A new digital unit — led by Ray Glendening, whose father, Parris N. Glendening, was governor of Maryland — launched in October, helping clients with social media campaigns, micro-sites to highlight new products, and other services.
A competitor questioned whether clients would turn to McBee’s firm for its array of services, or prefer to go to specialists for some of them, like communications and digital strategy. And he warned that sustaining a business that is so focused on one person, and that serves so many masters, can be difficult.
But McBee said his experience with his unlikely extended family has reinforced his belief that it is important to go with “things that feel right . . . and not worry so much about what could go wrong, or that there’s no model for this.” It’s an approach he’s relying on for his business, too. “You don’t have to do it one way.”
Alice R. Crites contributed to this report.