New Shop on the Square

Franklin Square Group Hits High-Tech Clients

Posted February 6, 2009 at 4:48pm

Down the hall from the Democratic über-lobbyist Steve Elmendorf’s plush Chinatown office is a series of dimly lit rooms, no more than 100 square feet each with little more than a scribbled-upon whiteboard adorning the walls.

It’s the type of space where most law firms would stash filing cabinets, or place interns. But for Franklin Square Group’s tech lobbyists, the drab office space is home — and emblematic of their attempt to bring the bare-bones, post-partisan culture of a Silicon Valley startup to K Street.

“We didn’t just want to cobble together every little piece we could and make it up as we go,” says Matt Tanielian, 39, a former Democratic Hill staffer, Federal Election Commission lawyer and co-founder of the one-year-old firm. “We wanted to build a team culture, an entrepreneurial culture, a culture like our clients that is about innovation.”

For the three-person shop, that means no titles and low overhead, perhaps borrowing the latter from one of their best-known clients, Apple, which famously began some 35 years ago in founder Steve Jobs’ parents’ garage.

The furniture is secondhand and other than the whiteboard and a vague clutter, there is only a video game console and map of Silicon Valley.

Not dissimilar to the countless techies who work for his clients, co-founder Josh Ackil, 36, appears preoccupied with work and attracting clients, rather than the minutiae of running an office.

Once a staffer to ex-House Majority Leader Dick Gephardt (D-Mo.), former Senate Majority Leader Tom Daschle (D-S.D.) and former President Bill Clinton, Ackil exudes a nerd’s delight for gadgetry and techno-speak — and convincingly plays the part.

“It took me a week to realize we didn’t have a trash can,” Ackil recalled of the firm’s early days in an interview last week. “I kept looking to throw something away.”

The firm, named for the downtown park that is ringed by the technology industry’s Washington, D.C., outposts, hung out its shingle on Jan. 2.

Last week, the firm brought on its first new lobbyist, former Sen. Mike Enzi (R-Wyo.) staffer Kara Calvert, 30.

Calvert was poached from the Information Technology Industry Council, where her two new co-workers once worked as well.

Since opening its (interior) doors a year ago, the shop has landed some top clients and lost none, according to lobbying disclosure statements filed with the Secretary of the Senate.

So far, the firm’s roster includes Silicon Valley giants Apple, Google and VeriSign, an Internet security services provider, in addition to the Coalition for Patent Fairness and Akeena Solar, a Los Gatos, Calif.-based energy company.

All told, public records show that the firm was grossing at least $210,000 in the fourth quarter of 2008. In recent weeks, the firm also signed US Oncology, semiconductor parts maker Applied Materials and Cisco Systems, Tanielian’s former employer.

At first, however, Ackil said that the firm was running on “fumes,” with no clients and a cash flow consisting of an American Express card. The urgency to sign clients became immediately apparent to Ackil on his first day on the job, when he and his wife found out they were pregnant — ultimately with twins.

“You generally don’t tell people that you’re pregnant for the first few months, so I was coming to work and saying, ‘Hey, Matt, we got to get going here,’” Ackil said. “Then I found out after a month or two that we were having twins and I really had to tell Matt, ‘OK, my wife is pregnant with twins — we got to go.’”

The two quickly went to work hitting up their more than two decades worth of industry contacts for business, signing three of their existing clients within the first few months: Apple, VeriSign and the Coalition for Patent Fairness. At that point, Ackil resolved that the firm was “going to make it.”

But like new small-business owners everywhere, the two upstarts soon experienced the headaches of venturing out on their own.

For example, although they had signed some top-name clients, multinational corporations don’t exactly cut checks to their vendors the way a homeowner pays a neighborhood kid to mow the lawn.

“To get paid by big companies, you have to go through this whole payment process, procurement offices. … It’s crazy,” Ackil said. “They ask all of these questions and on one of the first forms we filled out they asked, ‘Where you have your business insurance?’”

“I said, ‘Hey, Matt, what the hell is business insurance?’” Ackil joked.

The firm declined to provide details of its financial arrangements, other than to say that “we’re structuring the firm like our companies, where [employees] have ownership.”

“Everyone has a part in making the firm grow,” Ackil said. “When we grow as a firm, everyone grows, and in doing that — in creating everyone at the principal level — employee X’s interest in the company is there.”

Ackil also said that he and Tanielian originally decided against forming a traditional law firm-esque partnership, which can create antagonism in smaller shops. Still, he agreed that their business model may change “if we’re going to get 50 clients and try to go into a million different industries.”

“What happens in a law firm is that you build silos within the firm: Eat what you kill and bring in what you can,” Ackil explained. “And then you bring in another person and say, ‘Eat what you kill, bring in what you can’ — people have no incentive to work together.”

“This is going to be a different model,” he continued. “That probably means we’re not going to be the next Van Scoyoc and have 6 gazillion clients, but that’s OK.”

When Ackil and Tanielian signed three new clients at the end of 2008, they decided to bring on Calvert, whom they both knew from ITI. In a newly all-Democratic town, they admit bringing on a Republican may seem counterintuitive, but “the [tech] industry itself is bipartisan.”

With Calvert’s fluency with innovation-related policy issues, the two co-founders decided that she “offers our clients something more.”

Calvert jokes that she’s “the only Republican on the floor.”

Elmendorf said that he spoke with his closet dwellers before they set off on their own, warning them of the “perils, the upsides and the downsides.”

Of the arrangement, Elmendorf, Gephardt’s one-time chief of staff, also said he enjoys “having the synergy of other people around,” adding that as many as four other firms have operated out of his shop.

“If you’re used to sitting in a busy Hill office and there’s 15 of you yelling at each other, it’s just nice to have more people around and it’s nice to have people that you like,” he said.