The last time Rick Marcotte, president and CEO of DLT Solutions, spoke to ExecutiveBiz, he had a goal in mind ““ to realize $500 million in revenue in five years’ time. The company ended up blowing that goal out of the water and ahead of schedule too. Now, he shares his goals going forward, how the firm navigated through the recession to come out stronger on the other side and secrets to successful leadership. (Hint: There's no silver bullet, Marcotte said.)
ExecutiveBiz: We did a spotlight interview with you in 2006. What's changed for you and the company since then?
Rick Marcotte: I'm pleased to report we've had considerable growth and business success since then. Early in my tenure, we constructed a really strong strategic plan to follow. The company has executed quite well over the five years since then; all aspects of the business have improved, which is great. We closed 2009 at $612 million of revenue, which is significantly more than we had expected back then when we first spoke. I think in this year, 2010 — we haven't closed the books yet – we will be well north of $750 million.
ExecutiveBiz: In that first interview, you talked about your position and you said the CEO was kind of like being chief cheerleader, chief motivator and chief drill sergeant. I wanted to know if, after settling into your leadership role more, your thoughts on leadership have changed or not.
Rick Marcotte: I think my leadership principles have remained firm as the business evolves. However, we now have 235 employees so it's a little harder to know them all by name compared to the 2005 time frame. I've got a strong leadership team in place, and we've built a substantial business systems and process backbone. The company is operating nicely in a very controlled way instead of requiring the daily CEO intervention which was more frequent in the early days. I'm still a cheerleader and big motivator ““ that hasn't changed. I spend a little more time now on strategy and enhancing the culture at DLT to make sure we stay on the right path to become a great company; not just a good one.
ExecutiveBiz: In our first interview, there was a very big goal that the company had set — to realize $500 million in revenue in five years, which the company did ahead of schedule. You have a pretty good track record with setting big goals and realizing them, so what's the big goal now?
Rick Marcotte: I'm pretty proud of the fact that we blew past that target one year early. What's particularly gratifying is how we did it. There was no ‘Hail Mary’ pass. It was good old-fashioned sales and marketing fundamentals . . . day in and day out. We have a lot to be proud of there. We solve customer problems by selling them the right products, services and support, which enable us to grow our business. The big goals have matured to reflect the new reality. Fundamentally, we are and will continue to be a value-added reseller. We want to get better every day at what we call the blocking and tackling of our business.
Another piece of our strategy is to expand and build our engineering competencies, so we can bring some added technical excellence to our customers which increases the services component of our business. We also want to expand to new and evolving segments, which increase our addressable market – things like geospatial, communications, optimized ‘stack appliances’ with combined database and applications onboard, cloud computing… those kinds of things. And, I think it's fair to say that with all of those initiatives that a $1 billion top line with a higher services mix is well within our reach by the end of 2014. That's about 10 years from when I started here, and I think that would be a great milestone for the company.
ExecutiveBiz: The first interview took place in 2006, which was before the recession really took hold. Since then, we've had this kind of lingering downturn and a gradual bounce back. Do you have any advice, or what you could tell other companies about how DLT Solutions navigated through the recession and how you wound up on the other side?
Rick Marcotte: It's a great point. About 98 percent of our business is public sector, so the recession that hit the commercial sector was a little less severe in our core federal markets, but it was extremely painful on the state and local side which is about 25 percent of our business. It certainly did create more competitors, because the firms in the commercial sector came searching for that golden goose, which I guess they perceived as the U.S. government's IT spending when their markets froze up.
What we did during that period is ‘double-down’ on what got us here in the first place. We focused on the fundamentals — what we call proactive demand generation. For example, in 2009, we touched 4 million potential customers that translated into 27,000 leads in our business, which we were able to manage through every step of the pipeline and ultimately converted those leads into $95 million of incremental business for our vendor partners. That's what I mean when I talk about value. We maintained fast, flexible responsive support. We added a 24/7 technical support center. We had very prudent financial management. We used our scale and market expertise as a competitive weapon.
We made incremental investments and adjacent market bets. We did not deploy a ‘Field-of-Dreams’ approach where ‘if you build it, they will come.’ We started building it (making the investments), made sure the payoffs were coming, and when they started coming, we built faster. We really did a good job of managing through a really tough time. We communicated heavily with our employees to make sure they understood what was going on in the marketplace and how things were changing and how we were responding.
ExecutiveBiz: Cloud computing is getting a lot of buzz these days. Do you have any thoughts you would like to share, particularly about security?
Rick Marcotte: It's a logical component of the federal data center consolidation initiative. Every major vendor that we support has a cloud strategy, and they are actively working to be a relevant player in this evolving market. I think it's going to gain traction faster in the SMB space since there are less obstacles compared to the federal sector. There are plenty of challenges to contend with related to Cloud Computing. You mentioned the biggest one ““ the elephant in the room, data security. There is also information archiving; common applications across agencies/departments; the IT management of the thing; shared platforms and infrastructure; the reality of group decision-making in government; congressional budgets and appropriations and how all of that works. I think you are correct; anybody will be making a mistake if they believe that it is not coming in a big way. It will continue to gain share and attention. I think the traditional software licensing and support model is going to decline over time. However, like most things in public sector, it is going to take a long time to happen.
ExecutiveBiz: Do you have any other broader kind of predictions for what federal IT in 2011 and beyond look like?
Rick Marcotte: The administration has certainly defined a path forward. The mere fact that there is a federal CIO and CTO who wake up every day pursuing a focused IT agenda has really changed the way the federal sector operates. The data center consolidation initiative is really going to drive the number of data centers down from somewhere around 2,400 today to some order of magnitude less. It is also going to spawn a huge amount of enabling technologies like application performance management, cloud computing, virtualization, multiple levels of security, backup and restore capabilities and things like that. And the cybersecurity initiative will continue to play a prominent role since at the end of the day, securing the data and information is the foremost requirement within the public sector in 2011 and beyond.
ExecutiveBiz: What do you think the government contracting community is going to face in 2011?
Rick Marcotte: There are a variety of things. There are going to be cuts in DoD spending; we are going to start feeling those. There will be a freeze on nondiscretionary spending. There's going to be more in-sourcing of jobs that are currently done in the private sector. I think that's especially true in the Intelligence Community. There are lots of changes on the procurement side, more ID/IQ awards as opposed to these mega-contracts with a single awardee; delays in some of the GWAC RFP awards being reviewed; and a shortage in procurement personnel within the federal sector. All of that will ripple through the GovCon community.
ExecutiveBiz: What do you think is the secret, if there is one, to successfully leading a large company?
Rick Marcotte: There is no silver bullet. Ultimately, you have to assemble a good group of people and work with them to perform at peak levels. As a CEO you have to define the vision, build and motivate that leadership team, create a role model of behavior and really facilitate a culture and organization that allows your people to thrive.
ExecutiveBiz: In our last interview, we learned that you were bit of a budding rock star throughout high school and college. Is there anything else that you would like to share that people might not know about you, or be surprised to learn?
Rick Marcotte: It's kind of funny ““ thanks in part to that interview in 2006, some of the DLT folks encouraged me and a couple of the members of the executive team to dust off our musical talent and take another shot. We played three songs a couple of years ago at the company holiday party under the band name ‘Aged and Confused’, which was a twist on the Led Zeppelin song ‘Dazed and Confused.’ Oddly enough, we've been asked back for an encore performance in 2011, so I guess we weren't horrible. But I won't be giving up my day job and heading for ‘American Idol’ anytime soon.
ExecutiveBiz: Is there anything else you would like to add to our conversation?
Rick Marcotte: I'm pleased with the performance of the company. I think the government space is a dynamic one. We are succeeding the old-fashioned way: solving customer's problems, staying true to our business vision and our strategy. I'm very optimistic and confident that the future is going to be bright for DLT and our best days are ahead of us.