Rand Paul Backer Trades Trash Contacts for Political Cash

Photographer: Pete Marovich/Bloomberg

Senator Rand Paul, a Republican from Kentucky. Close

Senator Rand Paul, a Republican from Kentucky.

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Photographer: Pete Marovich/Bloomberg

Senator Rand Paul, a Republican from Kentucky.

Senator Rand Paul, a free-market disciple who prides himself on bucking the Washington establishment, is preparing for a 2016 presidential run by courting the Republican Party’s ultimate insiders: Wall Street bankers and other deep-pocketed donors.

To open those wallets, Paul is relying on fellow Kentuckian Nate Morris as a pitchman.

The 33-year-old’s Rolodex includes investors in his waste-management company, Rubicon Global, and donors from his days as President George W. Bush’s youngest major bundler of campaign cash, a task made easier after he ran a phone line into his mother’s attic in a Louisville suburb.

Morris even married into a noted Republican political family -- his wife is the granddaughter of President George H.W. Bush’s secretary of Commerce, Bob Mosbacher.

“When you’re building a company, you meet a lot of these investment and big-banker types,” Morris said in an interview in Washington. “I’ve typically tried to introduce Rand to people who aren’t otherwise familiar with Rand World, whether that’s the ‘establishment,’ so to speak, or financial types.”

Morris’s effort could transform Paul from a junior senator who relied on small-dollar Internet “money bombs” and his father’s libertarian base to a presidential contender friendly with wealthy donors who can turn to their own networks to help him raise money.

Different Path

Their partnership also is the latest indication of Paul’s decision to cut a path different from his Senate race and his Republican rivals on his way to the 2016 primary. In addition to diversifying his financial base, he has appeared before the U.S. Hispanic Chamber of Commerce, historically black Howard University in Washington, and at the Institute of Politics at the University of Chicago, which is headed by David Axelrod, President Barack Obama’s former political adviser.

Recent Morris phone calls have led Paul, 51, to a Guinness-filled happy hour in Silicon Valley with Internet startup founder Garrett Johnson and 40 other techies, and to a quiet lunch at the Fifth Avenue office of New York billionaire-in-waiting and investor Herb Allen III. Both were impressed enough to write campaign checks.

Morris’s largest Paul event yet was a January fundraising dinner timed to coincide with a Rubicon investors’ conference in Atlanta. About 50 friends and associates of the company dined at the $1.3 million Buckhead neighborhood home of its chairman, Lane Moore, who’d met Paul through Morris in November. The junior senator from Kentucky talked about how his party must become more inclusive if Republicans want to win the presidency. He left with a $150,000 haul in campaign cash.

‘Go-Getter’

“He’s a go-getter who really differentiates himself. A lot of people offer to help, but then they wait for you to tell them exactly what to do. Nate just went out and started doing it,” Paul said in an interview. “He’s just connected us to some great people.”

As a boy, Morris was witness to the union politics of his grandfather, who ran the United Auto Workers shop of Louisville. His relatives, like a majority of Kentucky residents, are registered Democrats, who voted for Ronald Reagan and then the Bushes.

He gravitated to what he saw as the core Republican philosophy of empowering people to make their own decisions and chart their own course. By the time Morris met President Bill Clinton during an American Legion Boys Nation conference before his senior year of high school, he admired the Democrat’s political skills -- while finding his policies wanting.

Capitol Hill

As a political science student at George Washington University in Washington, Morris mixed classwork with jobs on Capitol Hill. By graduation day, he’d worked for then-Kentucky Representative Anne Northup, Senate Minority Leader Mitch McConnell, former Labor Secretary Elaine Chao, who is McConnell’s wife, and the newly formed Department of Homeland Security. He used an internship to help elect Ernie Fletcher, Kentucky’s only Republican governor in the past four decades.

In his final semester at George Washington, Morris talked his way into a graduate-level course taught by Jack Oliver, the George W. Bush finance chairman who had become a legend among Morris and his political junkie college buddies.

“Fundraising was the glamorous side of politics,” he said. “And Jack had this real glitz. We all looked up to him.”

Top Student

In a class of about 20 students, Morris stood out to Oliver. “You can tell some of these young guys are into it,” Oliver said in an interview.

Oliver told Morris he should try his hand at raising money for Bush’s 2004 presidential re-election.

Morris took the unpaid assignment seriously, camping out for seven months in his mother’s attic, which he converted to a fundraising studio. He sometimes made calls from sun-up to sundown, pulling in more than $50,000 in increments of just $2,000 a check because of campaign-finance limits. He was a Bush “Maverick,” the term for a check bundler under age 40.

Although his friends laughed at him for working so hard without pay, Morris said his time as a Bush Maverick shaped him.

“More than anything, that has been helpful as an entrepreneur,” he said. “I can make a pitch.”

In 2007, while doing graduate studies at Princeton University, Morris decided to try his hand at business. A high school pal, Marc Spiegel, had an idea: trash.

Trash Business

Spiegel’s family had been in the garbage-hauling trade for more than a century. Although there are more than 7,000 operators, most of them mom-and-pop shops, the industry is dominated by two publicly traded giants, Waste Management (WM) Inc., based in Houston, and Republic Services (RSG) Inc., based in Phoenix.

The resulting enterprise, Rubicon, doesn’t collect trash. Rather, it uses data to analyze how a client can optimize waste disposal, with an eye toward recycling. Rubicon matches those companies with smaller disposal businesses and then manages the contracts.

The company, which is seeking its second round of capital investment and is closely held, can tap a network of about 4,000 waste haulers and has contracts with hundreds of clients including several Fortune 500 businesses, Morris said. He declined to name any.

Morris said he thinks of Rubicon as the Uber of garbage, referring to the mobile-phone application-based taxi service, because it is disrupting a market.

Courting Investors

About a year after founding Rubicon, Morris called his fundraising mentor, Oliver, in search of corporate cash.

Oliver made an investment and put him in touch with Matt Blunt, a Republican at the time wrapping up his term as Missouri governor. Blunt took the idea to Bush’s former attorney general, John Ashcroft. The three now are members of Rubicon’s advisory board, something that Morris said has given the company “tremendous credibility” with other investors.

As Morris was building his business, he was eager to meet his state’s newest senator. Daniel Bayens, a field director for Paul and childhood friend of Morris, made the introduction to the Kentucky lawmaker in July 2012.

The entrepreneur and the senator chatted in Paul’s Capitol Hill office. Morris explained his business and “Rand got it immediately. It’s the same kind of out-of-the-box thinking he loves.” Paul asked Morris and his wife to accompany him on a weeklong trip to Israel in January 2013, a journey that forged a friendship.

After that, Morris started introducing Paul to friends, family and business acquaintances, including Allen in New York and Johnson in San Francisco.

Software Supporter

Johnson, 30, worked for then-Indiana Senator Richard Lugar and other Republicans before decamping to California to start SendHub. It’s a software company trying to replace legacy landlines for business needs.

“Your average senator doesn’t necessarily follow tech policy, but he clearly does,” Johnson said, adding that Paul was a hit at the happy hour. Johnson had to turn people away to keep it small enough for conversation.

Paul seemed most impressive on National Security Agency privacy issues and on Bitcoin, a digital currency not backed by any central bank. Techies cheered when Paul said he was looking into how his campaign could begin accepting the virtual currency as donations.

These are young business people “who have had success but also have seen some of the trouble with regulations and tax law,” said Doug Stafford, a top Paul strategist. “They haven’t necessarily been political donors before. They’re not 20- 30-year Republicans, so they want to be convinced by the issue and the person, not the party.”

Morris has already begun changing the makeup of Paul’s donor base, according to the Center for Responsive Politics, a Washington-based group that tracks political giving: He’s the top Senate recipient of waste-management industry contributions.

To contact the reporter on this story: Julie Bykowicz in Washington at jbykowicz@bloomberg.net

To contact the editors responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net Mark McQuillan

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