Paul Strasser, COO of Pragmatics, on managing growth

Paul Strasser, COO of Pragmatics, on managing growth - top government contractors - best government contracting eventBack in high school, Paul Strasser was a pole vaulter. “There aren't too many pole vaulters out there!“ he tells us. These days, Strasser is helping Pragmatics, a McLean, Va.-based company with over 400 employees, vault from one level to the next. The year he arrived at Pragmatics as chief operating officer, they closed the books at $31 million. This year, they’re going to bring in around $82 million. In the following Q&A, Strasser discusses that growth and how he is helping the company manage it.

What's the company's size “” in terms of employees and revenues?

Paul Strasser: We are about 400 employees, and we are going to do around $82 million this year. The good news is that we just won some important new business, including one very significant contract called Vanguard 1.0. These wins will lead us to approximately $120 million in revenue in our next fiscal year.

What's your biggest challenge in business right now as you manage this growth?

Paul Strasser: It actually is managing the growth. I've been here since 2004; one month after I joined the company, we closed the books at about $31 million. So if we achieve $120 million in fiscal year 2009, that's quadruple the growth. We will have a compounded annual growth rate exceeding 30 percent per year “” in this business that is quite good, organically. Along with this growth comes an infrastructure growth responsibility, a staffing challenge, and then there is the ever-present need to ensure customer satisfaction and to have the right strategy in place to continue to grow at that pace.

What trends will impact your customers over the next 12 months?

Paul Strasser: Obviously the change in administration will be a big challenge. We had a strategy going into this fiscal year to win a lot of new business to prepare for what will happen during and after the election. There is going to be very little new money until at least the May 2009 time frame. So we have to work to win contracts from current incumbents on operations and maintenance (O&M) work. In other words, if the money is already in O&M, then it's going to be preserved going into next year. The issue is how you win work from people who already have it. It's really about a focus on gaining market share by unseating incumbents.

Another trend is negativity towards federal contractors right now, particularly on the Hill; I think that could also change with the new administration. There is a lot of legislation right now that you have to be aware of if you are in this business. For example, task order protest is now in effect. And there's the pending new e-verify rules. So there are many things going on that you have to be aware of to stay ahead of the curve and be compliant.

What is your view of the new SBA recertification rule that came out last year?

Paul Strasser: I don't think it was very good for current small businesses, and it really affects the current mid-tier market. Pragmatics is now a mid-tier company. We want to go public in three to five years “”- that is our goal. We want to be a billion-dollar company in ten years. Having said that, this recertification rule changes how, in the past, small businesses have grown into mid-tier and large businesses; that is, through acquisition. The new rule causes small business credit to cease upon change in ownership, making it less desirable as a means of growth. Previously, this was not the case, and many a large company was built through merger and acquisition (M&A). Furthermore, the rule potentially decreases small companies' valuations in the M&A market. I actually think it is going to drive a lot of smaller companies to sell sooner and at a lower price. Mid-tiers will have a tough time becoming large. In summary, I think it's going hurt the overall portfolio of companies out there by polarizing the market into small and large; and the government has derived much benefit over the years from the mid-tier companies.

Being a mid-tier company is a lonely place; many of your counterparts are being acquired. Pragmatics doesn't have a plan to sell in the short term. What's your approach to keep the company successful over time?

Paul Strasser: We are going to continue to do what has gotten us this far. Our market approach is to go out and win large ID/IQ multiple award contracts “” it's amazing how much business is running through these ID/IQ contracts these days, and they have really been a blessing for Pragmatics. Winning these contracts gives us the ability to engage ourselves with agencies' missions and their decision-makers, as well as with the opportunities at the agencies. We then put resources in place to gather an understanding of the agencies' environments and the opportunities that are available and then pursue and win those opportunities. We have been able to win prime contracts and task orders through focusing on quality delivery of best practices, hence past performance. Pragmatics is extremely rare in the industry in that our best practices are externally assessed at SEI CMMI Level 4. In the near term, we are working to get to Level 5.

We also have a tremendously strong in-house program to get personnel certifications. Last year we rolled out CBT-based technical training courseware that allowed our employees to get training in thousands of different areas to achieve personal certifications. Furthermore, we have an in-house program to get our project managers, and anyone who is interested in becoming one, Project Management Professional (PMP) certified through the Project Management Institute. We have solidified our business by certifying our practices, certifying our people, and then continuing to deliver on the customer side. If you have those three legs of the stool “” good practices, good people, and good performance “” the sky is the limit.

How would you describe your leadership style?

Paul Strasser: I describe my style as “collaborative management“ rather than “consensus management.“ I don't pretend to have the right answers all of the time; I like to discuss and collaborate with my peers and try to come up with the right answers. But while I see myself as highly transparent and highly collaborative, I don't have to have a consensus to make a decision. The other thing I do is focus on metrics and performance; then I hold people accountable for goals based on past performance and what we see going forward.

What book has had the most impact on your business life?

Paul Strasser: Wikinomics by Taft, Scott and Williams “” I actually got copies of the book and passed them out to my general managers. I like books like that make you think about things you really hadn't considered before and that stimulate you to make some changes.

What is something people would be surprised to learn about Pragmatics?

Paul Strasser: Most people don't realize that Pragmatics made some large contributions to the global war on terrorism. The specific area we are working in is called biometric-enabled intelligence, and the concept is that in a world where you have the asymmetric threat of individuals rather than large national armies, you must be able to trace people and identify them individually as perpetrators. Biometric-enabled intelligence is a focus and technology area that enables identification and as a result, is really important in the global war on terrorism.

What is something that people are surprised to learn about you?

Paul Strasser: Two things come to mind: I was a pole vaulter in high school and did pretty well “” there aren't too many pole vaulters out there! Also, I really love astronomy; it's my true love. Although I have a degree in meteorology and a minor in oceanography, my other minor in astronomy is my true passion. I own two telescopes and spend a fair amount of time outside at night looking at the stars.

Interview with Paul Strasser was conducted by JD Kathuria

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