Larry Besterman, CEO and president of TWD, on the rewards of being a mid-tier company

Larry Besterman, CEO and president of TWD, on the rewards of being a mid-tier company - top government contractors - best government contracting event

Larry Besterman, CEO and president of TWDMany mid-tier companies face their share of challenges: They“™ve graduated from the ranks of small business, but now face the task of competing against much bigger companies. No easy feat. But since 1986, TWD & Associates, a company of 250 employees that develops and maintains voice, video, and data systems, has been gaining ground. Last year alone, TWD did $68 million in revenue. And the future“™s only looking brighter. In the following Q&A, TWD“™s CEO and president, Larry Besterman talks about where his company“™s been, where it“™s going, and what trends the TWD team is charting in the ever-changing world of telecommunications.

Tell us briefly about TWD.

Larry Besterman: We are a technology company. We focus on the infrastructure part of the network. We provide voice, video and data capabilities. A lot of companies in our space do the IT component very well but we feel “” for a company of our size “” we bring a lot of capability in the video conferencing/multimedia area and telecommunications area. Typically we find a lot of the larger companies don“™t focus as much on those parts of the business so we find opportunities to form relationships with larger companies doing that kind of work, the telecommunications piece and the video conferencing/multimedia piece.

How large is your company now?

Larry Besterman: We did about 68 million dollars last year, in revenue. We now have about 250 employees.

Who are some of your customers?

Larry Besterman: Our big 3 customers are, in DoD, the Naval Sea Systems command, different components of the White House, including the White House Communications Agency and the Executive Office of the President and the Department of State, where we do mostly telecommunications work. Our 4th big customer is the Department of Homeland Security.

What is your biggest challenge?

Larry Besterman: As a mid-tier company, we face the challenge of being out of the small business size standard for most of the things we do, except telecommunications, so we have to compete against much bigger companies. Which is why, in our acquisitions, we increased our focus on telecommunications capabilities because that work typically has a 1,500 employee size standard.

And then like everybody else, we have the challenge of finding people with the right clearances, at the right dollar value when there is a lot of competition for cleared personnel. Being able to recruit effectively and efficiently to meet your contractual obligations is a very big challenge.

What are some of the hot trends you are tracking in regard to your customer base, in the last 18 months, in terms of telecommunication?

Larry Besterman: There is a lot of voice and video over IP activity, and we are also, via our most recent acquisition seeing an emphasis on applying the Federal Information Security Management Act (FISMA) compliance standards to voice systems. There has already been a lot of effort inside the government to get their data systems up to FISMA compliance and now they are turning their attention to voice systems and we just started some work with the Department of Treasury in that area. We see FISMA compliance support for voice systems as an important trend.

The continued consolidation of the government both in terms of the way they contract for services and the way they are consolidating their infrastructures is another important trend. Just like any other large organization the government has had a lot of stovepipe segments of infrastructure develop and there“™s a lot of effort to consolidate. Not only via the provider of the service, but also consolidation of the actual infrastructure.

We see more in the way of voice video and data convergence, something that“™s been talked about for a long time, but with voice and video over IP is now actually something that they can do. One other trend I would say although it“™s not new, is increasing focus on IT security. It“™s being ratcheted up every day. You can“™t read any industry publication with out seeing concerns about IT security. Obviously that“™s something that we need to be concerned about because assuring the customers we“™re supporting that we are doing the best job we can to secure their data increases in importance.

What“™s become of your recent acquisitions, how that worked out with both of them?

Larry Besterman: In 2006 we acquired a company that is principally in the business of cabling and wiring, We do a lot of integration projects, when we are putting in new or upgrading infrastructure and cabling is always a significant component of the project. Our subsidiary, James Communication, specializes in that type of work and they also do some telecommunications work for the National Institutes of Health including moves adds and changes, voice mail support, and help desk.

Integration of JCI with TWD has worked well. We have kept them as a subsidiary so in many ways they still have a lot of their own business processes: how they interact with their customers, how they win business and price it, and how they execute their business. We“™ve consolidated some functions in the back office areas of accounting HR and contracting, but they still do a lot of things in their own way, and connect with us on the management and executive level.

The second acquisition that we completed in August of last year was an asset purchase of some contracts and that has been a much simpler integration as we“™ve hired the people and added the contracts to our accounting and contracting systems; operating those contracts as if we“™d won those contracts organically.

Do you have any plans for any more acquisitions?

Larry Besterman: Well we do, based on availability of capital. There“™s only so much you can finance purely with debt. And you have to make the acquisition and pay a little of the debt down before you have the financial capacity to do more. We are considering outside equity as a way of providing an additional source of capital for acquisitions. Essentially our acquisition strategy is to add greater depth in our current capabilities and greater breadth in our customer base. With the acquisitions we“™ve already done we“™ve added work with NIH and FDA which has given us our first exposure in the government health care arena which is a growing area for the things we do especially the use of video technology in delivering health care services. We have also added as a new customer, the Dept of Justice via new business wins at JCI and with the contracts we purchased we are now doing telecommunications work with the Defense Finance and Accounting Service and a couple of local governments.

What makes TWD great place to work?

Larry Besterman: A number of things that I think are employee related, first of which is TWD being employee owned; the employees really have a stake in their business. We emphasize it from day one, that the employee“™s ability to outperform our competitors, and form a relationship with our customers, is not going to benefit the executives in executive compensation, it“™s going to benefit them, because the shares they get through the ESOP will increase in value.

So, we really emphasize the idea that we all share in the increasing profits of the business if we do well. Employees also like the fact that it“™s a relatively small company and they have access to the Senior Executives and are able to state their opinions and their desires for change on a daily basis. They can send us an email and we“™ll respond to their emails directly. They can tell us what they like and what they don“™t like. I don“™t think you always get that in other companies, bigger companies or even smaller companies. We believe we have a fairly collaborative culture where people get to weigh in with what they think and what they think we ought to do.

I think we have an entrepreneurial spirit and can foster the ideathat we are a very small company and we can change faster and move faster than a bigger company. So if we see a need to change and an employee has an idea, we can take advantage of that. And they can see that, they have opportunities to grow and to learn.

What will your company look like in three years?

Larry Besterman: We hope that within 3 years we can grow to the $100M mark in revenue. At that size, we think we can have sufficient sales and marketing resources to be a more sustainable company that is able to withstand the normal cyclical ups and downs of our industry that comes with winning and losing contracts.

The desire to be large enough to be sustainable is to provide our employees greater employment stability. At our current size, when we lose a contract we wind up losing a lot of good people. As companies grow larger, they are better able to offer their employees places to move within the company rather than them having to leave just so they can keep a job.

When you recruit new partners, what is something people are surprised to learn about the company?

Larry Besterman: I think it“™s the breadth of services in the infrastructure area that we can do. We can not only do IT help desk, administer servers and things like that, which is fairly common, but we it is also all the video conferencing and multimedia things that we can do and we can also do the telecommunication things that we can do. It surprises a lot of the bigger companies that we work with where they will say to us “Oh you can do that too, well that“™s something good for us to think about so we can work with you in the future in that area as well.“

What is something most people don“™t know about you?

Larry Besterman: I don“™t tell a lot of people about being a Military Academy graduate. I don“™t wear my class ring and I“™ve never used any Military Academy connections to get a job or try to win business where I worked. It“™s not that I“™m ashamed of being an Academy graduate or anything like that. It“™s just that I“™ve always wanted to attempt to be successful without trying to trade on the so-called West Point network.

Anything else you want to add?

Larry Besterman: Just one other thing that I would mention, that most people probably don“™t know about us is our involvement with a mental health services company providing telemedicine services to residents of rural area nursing homes.

Using video conferencing technology that we provide, operate and maintain, our partner company conducts psychiatric and psychological counseling services in nursing homes. There“™s quite a shortage of psychiatrists in rural areas for servicing nursing homes and rural hospitals. We“™ve been involved in this work for three years now. To me it“™s an important concept; there“™s a real need there and when the systems get installed and when the services start to be provided , I believe residents in the nursing homes see the positive impact of them having access to these kinds of services. We think there“™s a lot of opportunity in the area of telemedicine and we“˜ve learned a heck of a lot about low cost, IP based video conferencing.

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Interview with Larry Besterman conducted by Lisa Singh

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