Graduating from Set-Asides in Government Contracting: The Path to Sustainable Success | The Pair Program Ep56

Welcome to The Pair Program from hatchpad, the podcast that gives you a front row seat to candid conversations with tech leaders from the startup world. I'm your host, Tim Winkler, the creator of hatchpad, and I'm your other host, Mike Ruin. Join us each episode as we bring together two guests to dissect topics at the intersection of technology, startups, and career growth. Hello, everyone, and welcome back. I'm your host, Tim Winkler, alongside my cohost, Mike Gruen. Mike, uh, so before we, we dive in today's topic, I got a, a fun little fact, uh, that, that plays into today's topic. So, uh, did you know that the term graduating originally meant stepping forward in Latin? No, I did not. I

was totally prepared for you to ask me about UAPs and UFOs. I was not prepared for this.

So now you're going to need to answer a more serious question. So, um, you know, we're, we're, we're talking about the world of federal contracting, transitioning, stepping forward, uh, growth. What would you say is one of the, the, the more significant transitions you've had to navigate in your career? Oof.

Um, that's a good one. I mean, certainly the most significant was stepping from being an I. C. to being a manager, um, and I had, uh, it was a, like, there were a couple opportunities along the way where I did get into management, but probably the one that stuck was where I moved into a role where the company had the support necessary to give me, like, The support as a new manager on what man, like what good management looks like. I had a team lead who was awesome. I had an engineering team that was great and that, um, and I couldn't do what they were doing. So it really was a great opportunity, uh, sort of forced me to really learn how to manage people, uh, as opposed to previous sort of steps along that path where me sort of leading people where I could do the work that I was asking them to do. It was a little bit harder, um, of a transition, but yeah, I think that first real Matt, like that real management position was, uh, it's probably the biggest career transition

for me. Nice. Yeah, I think that's probably, I think we've run an episode on that at one point, but, uh,

yeah,

I think about, I think about my, my career and that, and the answer to that question, I'd say the. There's two that really stand out, but, you know, that first one from making the leap from being a, you know, a corporate kind of W2 employee to, you know, running a consult, but, you know, an independent consulting business, it was one interesting transition, you're kind of just taking a little, a little bit of a leap of faith, but then that transition from, um, You know, independent consulting to kind of formally starting a business, I'd say, and hiring your first employee. I was going to say hiring your first employee probably

was a big one.

Yeah, that was, you know, you've got to have a stable little client list before you take that. That next step, but, um, uh, but yeah, um, well, yeah, it's gonna kind of play into, uh, you know, a little bit of, you know, how these companies at large are graduating to the next stage and, uh, I'll, I'll bring it back into that. Uh, at this point. So today we, you know, we are going to be, uh, tackling, uh, a critical phase for businesses that are operating in the federal contracting sector that are transitioning from small business set asides to standing alone in the full and open market, uh, this move is, you know, it's like stepping into the big leagues, uh, there's quite a bit more competition. The stakes are higher than ever. Uh, and so joining us to unpack this are two, uh, seasoned, uh, you know, executive leaders here. Uh, we've got Rolf Holman, uh, chief strategy officer at Falconwood. Uh, Rolf brings over 30 years of global IT experience. He's built and developed teams across defense and security government and a few other industries. And most notably, you know, Rolfe has helped Falconwood make the transition from small business to full and open, uh, not too long ago. Uh, and alongside Rolfe, we have Greg Schaub, uh, CFO at Anika Systems. Greg's a senior finance executive bringing, uh, analytical, innovative approach to achieving long term growth, profitability, and operational soundness. Greg has over two decades in government contracting as well as a healthy blend of M& A experience. In the last six years, he's facilitated five acquisitions, one spinoff and numerous other acquisition evaluations. And then most relevant to this conversation, Greg joined Anika Systems, uh, this year to help evaluate the companies they're planning to graduate from small business status and heading into full and open competition. So Rolf and Greg, thank you both for joining us on today's conversation. Good to be here.

Thank you for having us.

All right. So before we dive in, uh, let's warm up with our favorite segment, pair me up. Uh, Mike, you always tee us off here. What do you, what do you got for us today? So,

uh, I had a friend come, uh, visit from out of town and, uh, we used to work together. We used to go to a barbecue place in Baltimore all the time that had this thing called the barbecue Sunday. Um, and, uh, so, so my pairing is, uh, barbeque and glasses, but it's like barbeque served in a glass, uh, it's just all mushed together, so you have the barbeque, you have the beans, you have the, um, coleslaw, and then a pickle, uh, the, the Barbecue sundae had the pickle, like, sticking out the top like a straw. There's a place not far from me that has, uh, they call it a, uh, a jar b que, and it's the exact same thing. It's a mason jar, but it's like the, it's a glass that you drink out of, but they put, they just jam all of the stuff in there, and it sounds disgusting, like, people are always like, that sounds gross, like, why, I don't want all my food mixed, but it is delicious. Um, so that's my, Uh, my pairing is just jamming barbecue into a glass that sounds, uh, kind of

odd and amazing

at the same time. It is so amazing. Uh,

but

yeah,

same thing. It's just barbecue. I got to ask Rolf, cause you know, Rolf, you're a Texan, what's, uh, have you heard of this before? Has this ever been something that you've,

well, it's nothing that I've actually heard of before, but, uh, what, what I would relate it to is the, uh, mashed potato bar. That was at many different, uh, proms and cotillion events in Texas that you would expect to have, uh, desserts instead they had mashed potato bars, and you start with mashed potatoes, and then anything you like in your mashed potatoes, you'd serve in. Oh, no, that sounds fantastic. Sounds like

a great pairing. The that is the

cheese grits. Also,

man, it's always, it's always challenging having these episodes recorded pre dinner because then I'm starving and everything sounds delicious. But, um, Mike, you'll have to share that, that. That spot with me off, offline. Cause it sounds like a cool spot. Um, all right, good stuff. I'm going to, uh, I'm going to throw something out there for my wife, actually. She's the one that actually came up with this pairing. So I got to give her the credit. Uh, my parent today is Trader Joe's the grocery store and seasonal selections. Uh, so, you know, the holidays are upon us and, you know, folks, this time of year, always kind of stock stocking up on some sort of seasonal. Food and drink. And if you're looking for the best grocery store, I'd say best grocery store that caters to like seasonal selections, then Trader Joe's is, is the one. Um, you know, if you're fortunate to have one in your area, I know that they're not all across the country, uh, but now is the time to kind of take advantage of that for, for their food and drink. So they've got even, uh, they have like bloggers that will go out and kind of write through, you know, ranking the best, like Trader Joe's Christmas items. So having just, you know, gone there and picking up some, some items, I'm going to rattle them off for our listeners here. Uh, peppermint flavored mini ice cream cones are amazing. Uh, the winter wassail punch, really good, even better if you throw a little bourbon in it. Uh, German ice gingerbread, really good. And then most recently, uh, I'm not the most proud of, but probably put down about a half of this massive tin of this. It's called Jingle Jangle Holiday Mix Candy Treats, which is just these chocolate covered Like popcorn, pretzels, Reese's cups and everything else in between. So, uh, all that said, um, you know, check out Trader Joe's for the seasonal food and drink. So when did

we sign that, uh, contract with them? Yeah, no, they're not a sponsor,

not a sponsorship, not a plug, just a fan. Um, but it's not just on Christmas time either. You know, all throughout the year, they've got you, they've got you covered. So, uh, that is my pairing for today. Um, and I will pass it over at this point to, uh, our guests. So Greg, how about a brief intro and your pairing?

All right. So, yeah, I mean, you, you kind of hit the nail on the head earlier. I'm Greg Schaub. Um, you know, been in this GovCon industry for, you know, 20 some years doing all types of different financial, you know, you know, support. Items from pricing to FPNA now CFO for a few companies. So, uh, in terms of the pairings, um, you know, I was going to go something more traditional, but I've been inspired listening to your guys, uh, Examples, and this is going to be, you know, a weird one, maybe, or maybe you guys have heard of it. It's, um, hot dogs with jalapeno cream cheese.

I've not heard it. It is now on my list.

And, um, I mean, most people probably already think hot dogs are disgusting and you throw, you know, jalapeno cream cheese on it and you've just completely. You know, ruined a meal, but, um, I discovered this actually out in Seattle. So, you know, you hear about all these big cities with their, their hot dogs, the Chicago hot dog, New York style hot dogs. And they had this thing called the Seattle hot dog, the Seattle dog. And I asked what it was and they said, well, it's, it's basically a hot dog with onions and cream cheese. And I was like, well, I like hot dogs. So I'm going to try this, um, just for the sake of it. Um, and it was actually pretty decent. And I, you know, played around with it a little bit. Found, you know, I liked bagels with jalapeno cream cheese, the ogo, uh, bagels. So I tried it on my hotdog one time and it was amazing. Wow. That's, um, give it a go. You may, you may find a, you may find you like it. It works on any type of bratwurst or Italian sausage, anything. I

mean, that's a pro tip. I like hot dogs. I like cream cheese. I like jalapenos. I don't see how this doesn't work. Yeah, this is a

perfect pairing. A match made in heaven. This is. Appreciate it. Glad you went out on a limb with a non traditional. Yeah. All right. We're keeping with a lot of food traditions here. You know, can we complete it here with Rolf? Rolf, quick intro and your pairing.

So, Rolf Holman, I am Chief Strategy Officer here at Falconwood. I spent most of my 30 plus years in the IT business working for Fortune 50 companies. Um, not to bore you, but what was EDS that became HP, that became DXC, that became Perspective. I was part of all those streams, acquisitions. Whatever you want to call it, uh, and Falconwood actually was the company I sat across from as they were the seat of contractor for the Navy, uh, on the NMCI program. I tried to retire and our founder. Ali asked me to come and help her build out the strategy to grow because she knew she was going to be exiting the small business. World in 2022, I've been here roughly 4 years this coming May. Uh, and it's been quite a ride and we'll certainly talk to that. Uh, my pairing on the hot dog piece. Reminds me of 1st time I saw someone put mayonnaise on a hot dog. I was 6 years old and I was. I'm amazed by that and I tried it and I thought, well, this is great, but I, I am a, I'm a Tex Mex, uh, fan to the hilt. It doesn't matter. It's meat, cheese and dough period. I don't just prepare it. However, and it can be chicken or beef, whatever. Uh, and unfortunately, growing up in Louisiana, I'm allergic to all things that come out of the water. So, I never was able to, uh, enjoy the delicacies of, uh, Creole food growing up. So, uh, every crawfish boil I went to, they had a hamburger for me. Nice.

Meat, cheese, and dough. I, I mean, can't go wrong. It's a, it's a power, power, power pairing there as well. And, um, you know, kind of wrapping that, that might be one of our, one of our rare, you know, four, four pairings of food. And no alcohol. No alcohol. That's, that's, uh, that's a rare impressive guys. This is going to be a good episode. I can tell already. Um, well again, thank you both for joining us. Excited to, to, to jump into the conversation and, um, let's go ahead and pivot into the, the core of, of the episode at this point. So, as I mentioned earlier, we're, we're diving into a, you know, this crucial transition phase for businesses that are. In the federal contracting world, um, you know, kind of stepping up from the protected realm of small business set asides to These more challenging waters of full and open competition. Uh, and so, you know, for folks that maybe aren't, aren't, you know, tuned into that space, you know, you might not know or be wondering why this shift is so significant. It's, it's. Consider it like this. So if you're transitioning, it's like moving from, you know, a smaller pond where you're a big fish with certain advantages to this vast ocean, where the competition includes the largest sharks in the sea, major corporations armed with, you know, raw resources and established market positions. And, um, so this change isn't just about, you know, facing stiffer competition. It's, it's about navigating through new regulatory environments and you kind of maintaining strong ties with. Your government clients, uh, and then continuously trying to innovate, to stand out. Um, so it, you know, it, it does require strategic foresight, robust partnerships, and, you know, some sharp operational tactics that, that will all kind of play a critical role in ensuring, you know, some sustained growth and profitability. And once you make that leap. So the way that I foresee this conversation flowing is to first hear from Rolf, who has successfully kind of navigated Falconwood through these, these waters, and, you know, hearing a little bit more about the strategic decisions and like those lessons learned during that transition. And then we can turn to Greg. Who's at the helm, you know, preparing, uh, Anika systems for, for this leap. Um, and focus a little bit more on like the financial strategies and the operational adjustments that you're kind of going through to thrive in this, this new competitive arena. Uh, so Rolf, why don't you tee us off? Uh, maybe a good starting point though, would be, you know, providing our listeners with what that criteria is, uh, To be considered a small business. Um, and then from there you can discuss how you kind of navigate that transition at Falconwood.

Yeah. So, uh, so we traditionally, uh, have mainly played in the, uh, DOD space. Uh, Navy Marine Corps was where we cut our teeth, uh, certain stipulations around, uh, growth with small business, uh, certain revenues, certain, uh, headcount. Um, and when I first got here, we were approaching going over the 5 year minimum of annual revenues that would cause us to move into, uh, not small. We don't call it large business. We call it not small. And the big thing is that you look at what your current customer base is, and you need to protect your base and your base is either made up of something you want full and open or something you make 1 that was. A small business, and you immediately look into how do I make sure I protect whatever that revenue is. But I can, because when the revenue, when the renewal comes around. It may stay small, so you need to have a plan, whether it's a JV, whether you get behind a small, whether you press that it's gotten big enough that it's full and open. So, you really look at your existing base business to make sure that you have a plan for every 1 of those. The 2nd thing that's really important. Is the culture of the company, the small business culture is very different than when you have to behave and or act like a large business. Uh, and that is probably 1 of the biggest. Failures of small business in going into that of it takes investment. It is not about just saying, okay, we can keep acting the way we acted. Uh, our founder and chairman, I give her a ton of credit. She opened her checkbook up and she built a business development team that was purely overhead. So that we had compliance, so we had pricing, so we had a capture manager. We have proposal manager. All those things in place so that we could compete the 2nd piece with me coming in is that I had a large network of people that I had purchased from. As a large company, and now that I'm a small company, I mean, either in the same boat with them, or as an example, value add resellers that we, as a large company used to get tremendous. Small business credit, because we could purchase so much hardware software through the small companies. That was very helpful. Those companies not to be named, but they knew who they are. They came to me, gave me project based business and project based business is. Is in quarter in year revenue, which is, is, uh, is joy to the CFO's ears that when you bring in quarter in year revenue, even though it may be six months, eight months, those projects end up sometimes becoming programs. So you don't just go after the same traditional contract opportunities, you try to go after the, uh, the project based business. So in my first two years here. We secured the base, we knew what was going to stay full and open. We knew what was going to stay small and we have strategies around that. We then started to do project based work that led to additional work outside of that. That project based work. Literally was what paid for my team to be built. So we were not taking from the company anything that was overhead wise from the base business. We were growing based on that project based business. And, you know, I encourage everyone don't be afraid of something. That's a 4 week project with 1 person to go do some cyber work. You, if you have good people and good, your reputation, it's going to grow. And next thing, you know, you have things growing from there. So that was really the approach on the front end. The tough piece has been. Where, um, I'm now competing against the people that used to give me business because I was a small and they got credit for me being a small and that balance of how do I have the coopetition with the Booz Allens, the Deloitte's, the GDIT's. Really having the relationships to understand how do I go after something? I know that they're not going after because their cost of sale or their budget isn't going to go after something like that and finding that mix. And then you've got the mid tiers that you really compete with the most. And so that's really the science around understanding what you need. But number 1, protect your base. Number 2, figure out how you can do project based work to help bring in the revenue while you're now starting to compete on those larger projects.

Yeah, that's that's great feedback. And I think the, um, that other piece that you talked about of, you know, from a cultural perspective too, and how that, uh, evolves throughout the organization. I think that's one thread that we can pull on, uh, a little bit more, uh, in this conversation. Um, and, and real quick before I do pass it over to, to Greg, um, you know, you kind of mentioned this, uh, revenue threshold. Do you have specifics on what that, Um, Number is what it looks like and then how long that that that goes for before you're considered to have to graduate.

Yeah. So it's, it's different for every what I'd say, uh, Mac or, uh, contracting, uh, vehicle. So seaport is the biggest for the Navy. And you have to be it's 49Million dollars annual revenues. And once you go over that, uh, in a 5 year period, it used to be 3 year. It's now 5 year period of time since cobit. So, they, they gave some breaks, which actually helped Falcon would out 2022. Um, and then some are associated with some of the nays codes. We still qualify because we don't have 1 of the threshold is 1500 employees and below. You're considered a small, but most times it's associated with what your sam dot gov reads and what your, um. Seaport, uh, if you really, whichever vehicle you're on, they have thresholds. And so for that, it's the. Believe it's 49Million dollars a year annual revenues over a period of 5 years. And if you, if you exceed that, you then have to register in and you're no longer considered small. You still have the opportunity to bid on those contract vehicles. You're just now. Not looking at the small business set asides, which was a big hurdle for Falconwood on the front end.

I'm just generally curious on, on, from a headcount perspective, you know, what, what's the, the size of Falconwood?

So we started in the year 2002 with two people and, uh, we grew to just over 300 now. Um, most of our business has been organic, um, up till the 2022, uh, Uh, year, um, our founder and CEO cut her teeth originally on CETA contracting on acquisition of technology for what was the NMCI network and. From that, she recognized how the acquisition piece actually needed a technology advice too. So she started hiring technology advisors, engineers, solution architects, so that the Navy, whoever they're sitting across from as their prime, they could negotiate to make sure. And the evolution of what is to now the engine Smith contract has evolved 24 years of going from what it was 24 years ago to today. And, uh, that's, that's the main growth of Falconwood. And from there, that help. Allow organic growth from other command saying, hey, we need you to do this, but now we're truly competing in a, in a full and open market.

Yeah, I'll have some more questions about that, but, um, to be a good chance to, uh, pivot over to Greg and, um, just kind of hear this from your perspective, Greg, um, maybe just kind of fill us in a little bit more on how, you know, Anika Systems is preparing to transition into this, you know, full and open competition, like what are some of the primary strategic focuses that you're dialing in on to ensure that you're going to remain competitive?

Yeah, so we're definitely in a kind of a tough spot right now, but in one hand, it's a good spot to be in because we've had some rapid growth. I think, uh, 6 years ago in 2019, I think we were doing about 8 million in revenue, and, uh, we've been having, you know, some rapid growth the last few years to the point now where we're getting ready to graduate, uh, as Rolf said, you know, our, uh, Our area is a 34 million dollar annual average over 5 years that we're coming up against that will graduate after at the end of 20. we're projected to graduate at the end of 2025. so we've gone from being a very small company to now we have over 150 employees. And like I said, we're. We're getting ready to graduate our, our focus as a company is more on the civilian side of government contracting the smaller agencies that don't typically have the biggest budgets. But our company, what we do is technology modernization, AI automations and these are these are the agencies that really can use. Uh, our support, um, because again, they don't have the budgets. They need to be able to do more with less. Um, and, uh, so we've been focused on these areas, uh, getting, you know, to know that, you know, getting in well with the customer, them knowing us, us knowing them, us knowing their needs and trying to support them on that. Um, the frustrating, the frustrating part now as a small business graduating, uh, and Ralph mentioned it is protecting your, your revenue is the agencies are, uh, they have small business goals that they need to meet. They have these, uh, every, every agency has a different goal, anywhere from 20 to 25 to 30%. Uh, they need to give to small businesses. And that may be through a prime award that could be through subcontracting on a large business award through subcontractors on that contract. So, the problem with us as a small business, trying to go into the large business and protecting that is. For the customer to move that from the small business to full and open, they need to replace that with something. And a lot of times these projects that they focus for small businesses, they do that for a reason. They, they want, it's a smaller level contract. Um, a lot of times small business or the, you know, the, the companies that are on the cusp of development, they got a niche that they're focused on and they want to kind of pull that thread within their agency. Um, but they like, they want to keep those dollars in small business. So, as we graduate, you know, we have to look at, can we move things to full and open? Do we need to, uh, work with them to see how they want to continue the work? Are they going to. You know, um, do we need to form certain relationships to keep it if they want to keep a small business that we can keep performing, or at least compete to continue performing. So, as a company, um, we've been doing a lot of in house maturation of the company. You know, bringing in new systems that are the accounting system is 1 that we've implemented this year. Um, going to, um, you know, I don't mean to name drop, but, you know, unit is the company that we've we've transitioned to. Um, they are known for their gov con. Software, there's so many, there's a, there's a few, there's only so many providers that are really built around GovCon. Other ones that are available are built and can be customized into the things that you need in government contractings for large business that will stand up to a DCA audit or various reporting. Requirements, so we've been doing some upgrades on that in house audit tax team benefits, taking a look at all these things ways to be competitive in the phone open. Um, and, uh, as, as Ralph mentioned to the key part of it is also trying to build out our business development arm. Um, you know, these, these, once we go into large business, um, you know, we're going to be competing against the multi billion dollar businesses that we compete against them, but I mean, we're in the same boat as Lockheed Martin and Northrop Grumman and, uh, and those, those ones who have hundreds, if not thousands of people working on their teams to develop business, and we have. You know, a handful, so it's it's those sort of things that we need to be focused on bringing a good team, um, with, you know, good relationships and knowing, um, who to talk to to understand the needs of the customers that we're targeting.

One thing you mentioned that, and also Rolf mentioned, um, I'm curious your opinions on, so that Rolf, when you were talking, you're talking about, uh, getting behind a small, which is, I think, um, Greg, also what you, you sort of alluded to with like, maybe establishing a partnership, getting, having someone else who now they're the small, they're essentially the prime, I'm guessing. And I don't know if you want to speak a little bit to that. I'm sure there's risks and things that come along with, you know, now you're sort of giving up that business. I'm curious, like, is that. A common tactic of how to sort of maintain some of these small business.

I'll go first. I mean, yes, I've worked. I've worked on both sides of it for, you know, companies that were large and companies that were graduating into had graduated into large. So for us, Anika systems, um, you know, we have certain technology, certain focuses that we have, but we're supporting customers that have a lot of needs. So we do team with other small businesses that bring another capability to the team that gives a very full. Picture to the customer, um, they become sort of our, uh, you know, tried and true partners. And when we start looking at going, you know, the next iteration of a contract, um, we start to prop them up as. You know, the heir apparent, um, you know, and we want to keep the team together, which is just going to be a different name on the contract. And, uh, those are sort of the relationships. Um, you know, we look at, um, another thing we do is, you know, commonly returned to referred to as sort of the over under, um, you know, where. We, uh, you know, we'll bring a, you know, company on and, you know, as a, a sub on a contract, that may be a little bit of a stretch for them. If they bring us on a contract after, you know, it goes the other way. So having those relationships and, and the key is to have that relationship. It's not just a, you know, having a, a sub to have a sub. It's really working as a team. So. I

echo those same words and it also helps with finding that company that that company would be the right formula for a JV and the JV aspect gives the larger company a little bit more percentage of revenue share when you bid as the JV and. JV meaning joint venture, right? Is that just to make sure that folks. Okay. Yeah. And, and, uh, I've talked to so many people it's there, there's more bad JVs than there are good JVs out there. Uh, and it's about finding that good over under relationship

that, that can lead to that. But. I mean, I think it's also interesting as a small business started, like, because I've done government contracting, I've been civilian and, uh, dot and Intel. Um, and the number of sort of these small businesses that their entire business model is will be the prime for some big contract. Like they're just a pastor and all they're doing is taking a little bit of revenue. And, um, and it's funny, I don't think that's how they, some, maybe some of them started that way, but I think there's some companies that start off as small businesses that. That they get so much revenue from that, that that's, you know, they don't, they're not prepared for what's going to happen when that runs out. Like, you can only do that for so long. And I'm curious, like, you know, have you seen the same things? Um, you know, and the dangers of maybe working with those types of places.

Yeah, I've definitely seen it. And there's a, besides just the joint venture approach, there's another, uh, program called the, um, uh, mentor protege joint venture, um, that you may be probably aware of, um, it's, it's governed by small, the SBA. Um, so there are some rules and, and, and they do monitor. It's not just the throwaway, but that is, that is definitely an avenue graduating small business looks at needs to look at. And it's a great program if done correctly, because it gives an opportunity for us. A growing company and I'm talking like a small business to really learn from a large business. And there's the requirements in it is the small business has to provide a certain amount of people towards that joint venture. It's not like a large business can come in and. Uh, just, you know, give you a couple of people and they take a 100, um, you know, the small business does have to have some control. They're the managing partner of the mentor protege. So JV, so, um, it is a good way to grow a company. It's a good way. And under under that, um, all the awards are still small business set aside. So you, as a large business can still keep work. Through that mentor protege JV, um, you know, you keep the work and, um, you qualify the company grows. And, um, you know, I think in those cases, everybody wins, but there's definitely been use. I'm sure you've seen this as well, but, uh, there's definitely been some abuse. That's been, uh, um, you know, been called out. And I know SBA is starting to crack down a little bit more. We've been seeing.

Our folks taking advantage of government contracting is abusing it. That sounds odd. Yeah, we've seen it from, uh, you know, folks that are, uh, more so, you know, maybe on the building, on the product side of things, like obtaining these sober grants and kind of staying in these, they call them silver mills where they'll just kind of. Staying in a certain phase, a low phase with never intention, no intentions of ever getting it to a scale like serve large service contractor or phase three, they just want to kind of milk those little small, you know, one mil, five mil grants and never really take it any further. So that's just one small example of some companies that have taken advantage of. Some of the, uh, processes of government contracting, but, um, I've got a question that I wanted to ask this might be more relevant for you, Greg, just because it's going to be a little bit more dialed into the financial side of things, but, um, you know, from an M and a perspective, you know, you know, so you were kind of brought in strategically and part of that was in preparation for this. Transition phase, right? It sounds like, well, if you were also brought in strategically to, so, you know, when, when they're looking at a background for someone like yourself, um, you know, what, what are some of these talking points where, you know, is there, is there an evaluation between growing independently or is there, are you exploring potential M and A opportunities at this transition point before or right after?

Yeah, so I know for us, um, we are, we are not actively at the moment, you know, coming up on any acquisition, but I think you're always as a company needing to take a look at that. And as a graduating small business, that is a key turning point. You know, is when you, when you graduate in and you become a, you know, let's just say, you, you, you know, you're a 45 million company coming into it. 50 million is your target for next year, but you can go out and acquire a company. That's maybe doing 30 million also coming up on graduation in a year or so. And overnight become a 80 to 90 million company, uh, with, with, um, uh, customers and capabilities, you, you definitely can become a bigger player in the market instantaneously. Um, for us, you know, one of the things that we've done that we've, you know, has helped us become successful is we've invested in ourselves, um, by having an R and D arm to our company that is completely self funded, building new technologies. And for us, that's what we have to kind of look at is, do we want to spend money on going and acquiring a company with revenue already out there that has, uh, past performance and new customers, or do we want to continue developing this? This technology that could grow exponentially in the next few years and put that money there with our customers that we already have and take it to the next level. That will transcend a small business set aside. And those are those are the sort of the tug of war that we were having. I think overall, an investment needs to be made. You can't just sit idly wait for more contracts to come in. You have to invest. It's just Is it in acquisition? Is it in self development? Is it, you know, you know, in business development, even sure that we just before. So,

yeah, I mean, I could see the, I could see the, the angle as well. Like, you know, Ralph, you described having to hire an entire sales and BD team, like, A potential aqua hire, right, where it's really strategic to, you know, gobbling up a, a team of, you know, five to 10 sales BD folks who've already been penetrating these markets for some time and have those relationships in place, uh, to, you know, hiring is not easy, uh, hiring good sales folks is really not easy. And so making that a, a part of that strategy, Ralph, did you guys do any sort of M and a, um, you know, shortly before or after your transition?

So, uh, so the, the, the real piece there was. Having grown organically, we were very used to being in the room when, hey, can you do this and the task order is created and ceiling is there. We can make it. Or introduced to a customer that has something not saying it wasn't a competition. It was still work to be done, but that kind of growth compared to actually having to put a compliant bid in. Was two different worlds. And so the investment. Of the front end when I got here was putting people in Falconwood that could actually produce a compliant bit so that you're not sending in a security letter that's dated 2 years ago. That should have been dated 90 days from the release of the competition get kicked out for compliant. Um, and from from that standpoint, no, we were not we were not looking for. We were not in any active. M& A role our our focus was. We have now graduated. What do we need to look like 1 year from now, 3 years from now, 5 years from now, and that had everything to do with market that we were going to portfolio, which was another piece I didn't mention earlier is the, you know, the culture of the company, but also the portfolio. Our portfolio of what we focused on 5 years ago is very different than what we are today. And it's mainly because of the technology. So, most of our investment has been more towards the portfolio, what we're going after. And now it's a part of, uh, coming across supporting smalls and a big chunk of our, uh, pipeline is I'm a sub to small businesses that want my past performance. And that's that's a big chunk of our pipeline today. We're very prescriptive of what we're going after as a prime only because I need to know who's going after that. And so we're, we're really selective on that aspect. Okay. Um, And then, as, as the, as the market, you know, changes, and, you know, a lot of small businesses are exiting the government space. They're, they're, they're just, they, you know, cost plus fixed fee, you got 8 percent that you're looking at, and you're giving 5 percent to your, your subs that you have on there, and then you've got to try to manage how you're going to make that money. And I'm not the finance guy here. If I understand that, Okay. You know, it's, it's probably most people that will be listening to this to hear me quoting finance pieces right now. They'll be falling off their chair. But no, so to answer your question, the look for any mergers, it was only if we had a specific technology we were going to pivot to. So, to 2 areas, we really have pivoted to that. We were there cyber. We were there, but we've really pivoted towards what cyber has grown to. And then on the data sciences piece, we've really pivoted to what we do in our data science base and have hired people in that area. And and luckily for us, you know, as the seat of contractor, we have the world's largest network outside of the Internet. To harvest data off of and, and we have that intellectual property that I'm walled off from that customer, but it doesn't keep me from being able to take the intellectual property of what we've learned and how we do things to, to go. It transcends across all of government and quite frankly, all of commercial.

Yeah, and I, I, just for folks that maybe aren't, uh, privy to, you know, the ins and outs of some of the government contracting. Uh, terms, acronyms as well. Uh, so from what I understand, it's, it's a systems engineering or technical. Advisory advisory, and that we are agnostic to

we're agnostic to any technology. We help the government choose the right technology to run on a specific program. Okay. And that that that is our largest contract that we have. However, we have shifted and we now can actually do the systems integration for the same technology. On other contracts, and so we're, we're completely walled off from that one customer, um, and, and, and have a tremendous amount of intellectual property around the entire IT stack. When it comes to the evolution of what MMCI was in the year 2000 to what Engine is today. Is, is pretty amazing.

Yeah. And MCI was a client of ours back in like 2005, 2006. It was a long time ago, but, um, um, I'd also need to give a quick shout out because we had a. We had a Fal, uh, a Falcon Wood, uh, employee on a previous episode, uh, Katie Wildman. Um, and, uh, you know, she was there because, you know, she was kind of this intermediary between, you know, a commercial entity and the government customer with the, the Navy was, was the, the customer here. But, um, you know, her, her kind of knowledge and uh, just. Savviness was, was really, was really, um, uh, uh, a breath of fresh air to see when you, when you think about how some of this gets translated to, to folks that maybe aren't as technical. So it was really interesting model, um, that, that you guys have there. You know, you know, we work with a few, uh, uh, small, small businesses, the bulk of, of our partners, when we talk about from a talent and recruiting perspective, right. You know, these are companies that are anywhere from 25 to, you know, 100, 150 in headcount. And they're thinking about these things. And so I, you know, in prep for this, I asked, you know, some of our partners and clients, you know, what, you know, what are, what are you really, you know, most planning for? And I think the number one thing that consistently came up was, you know, ensuring that they diversify their client base. Um, you know, if you're just stuck in. You know, you're only, you know, defense health agency and that's all you do. Um, you know, having a little bit more of a, uh, uh, a network into some other areas before you hit that mark, because. You know, starting from scratch is going to be a lot more difficult once you make that transition. Um, what, what would you say, Greg, in terms of like what some of those, so one of the more, more important things that you all are thinking of is it, and how you're weighing that between diversifying your customers or, you know, diversifying your service offerings or your capabilities.

Yeah, so I, I think you're exactly right. It's, it's getting, it's trying to diversify your, your customers and as a small business, you know, you only have so many customers, uh, hence why you're a small business. So, it's, it's, it's sort of what Ralph was kind of saying before about getting some of that project based, uh, the contracts where you can. You know, with a teammate, get in with some, a new customer and get the experience there. They get to know you a little bit. Uh, you mentioned, uh, you know, with the 1 customer. Um, the problem is in government, there is turnover. There's people get promoted. People move on to others and overnight. Somebody new comes in to the, the area that you're really focused in and. They're coming from somewhere else and they may already have somebody that they a couple of teams that they're more familiar with. They feel more comfortable working with, um, that that work and evaporate pretty quickly. So, yeah, I, I think you, you have to be looking at that looking at ways, um, you know, whether it's, you know, tangent, uh, agencies, or just something, somebody completely different on the other side of the spectrum. Um, but that's where we we're focused on as well right now.

So, you know, we've got a new administration, uh, coming into play here very soon. And, um, yeah, there's all sorts of, uh, you know, white noise back, back, back in the background of what's going to happen. Everybody's got some ideas and, um, there's certainly going to be some changes. Uh, Are there any emerging trends or, or things that you all are really dialing into, um, with the new administration coming in that you would say, you know, you'd recommend as maybe something top of mind for, you know, other small businesses that are entering the space or, or also, you know, graduating that's open for anyone.

I mean, from my perspective, I feel like it's so unknown right now. What's what it's really going to look like, because they're throwing a lot of ideas out there right now. I've been to a couple of conferences in November, right after election with some big names, and they've been trying to speculate as well. Um, I think overarchingly what the sense obviously we're all getting is they're looking to be a more efficient government going forward. Um, you know, whether it's going to be the initiative with the doge. Mhm. Group or just, you know, initiatives within agencies. Um, and with that, I think that's where industry, where we can really help in that regard, bringing technologies, bringing best practices we as corporations, especially a small business have to work efficiently because, um, we only have so much revenue, so much capital. We have to, you know, wear multiple hats. And, um, I think. I think that's kind of a key for, you know, small businesses or even large businesses in the small realm is, is how can we support that initiative and bring that forward?

Any closing remarks, Rolf, before we transition to the final segment? I

would just say that I'm staying focused on what I know is going to be in the next 3 to 6 months that has budget behind it. And that when things, you know, shake out the way they shake out and we are not in the oil and gas business. So that's the only area that I know is going to see a spike. Outside of cyber. So,

all right. All right. Well, I know there's a number of other things that we could probably get to, uh, not not going to make it on this, this episode, but maybe a follow up. But, um, I wanted to take some time to transition to the final segment here in the last few minutes that we've got here. Uh, again, this is the, the five second scramble. Uh, we'll be asking each of you a series of questions. You try to give your response within five seconds, a little rapid fire Q and a some business, uh, some fun. Uh, Mike, why don't you kick us off with, uh, Rolf and then I'll get around to Greg. Sure. Sounds good. Uh, you ready to go?

Here we go. All right. Explain what a chief strategy officer does as if I'm a five year old. I help somebody make money. Uh, what's the most important skill you look for in a new hire? Communication. What's the best piece of advice you've ever been given know what you don't know. I love that one. My sixth grade teacher had a thing on her desk that said a man who knows what he knows and knows what he doesn't know is a man who truly knows and stuck with me all these years. Anyway, love it. Um, uh, what's your favorite part of the company culture at Falcon? Uh, there are tremendous amount of caring people here. Aside from AI, what is an emerging technology that you're excited about? Uh,

AI pretty much is the top of my emerging technology after seeing my son's new Apple, uh, phone that he just got

and what it does. Uh, uh, what, uh, what did you want to do when you grew up? When you were a kid. I wanted to be a sportscaster.

Any particular sport? I was a broadcast journalism, broadcast journalism major in college. And that was my intent to be on ESPN. And I went to work for a bank. In their data processing center while I was interviewing for jobs and EDS hired me. There you go. Uh, what's your favorite app on your phone? Uh, my favorite

app on my phone is probably, uh, the flight tracker. Uh, what's something you dislike doing but are really good at? Uh, getting up at five o'clock in the morning. Uh, what's a charity or corporate philanthropy that's near and dear to you?

So, uh falconwood is heavily involved in warrior canine connection and Uh, our founder and ceo is actually trained two dogs. She had one For a good year and a half, and that just went to a vet, and now has another one. The first one was named Rocky, after Rocky Blyer, and they're named after veterans. And that particular, uh, um, litter of puppies was named after athletes. And then the current is, uh, named after, Thundercat is the code name for a. Air Force, uh, fighter pilot that actually owns a small business called Thundercat. Yep, I'm very familiar with that, actually. I know him. Anyway, go on. So, uh, that is very near and dear. And because I'm up here and resting quite a bit, I get to, uh. Take the dogs for walks and, and, uh, do some of the training. So it's great. Very cool.

Has, uh, has Rocky Blair ever met the real Rocky Blair?

Uh, we actually have a picture of Rocky when, uh, Rocky was six months old in Rocky's arms in Heinz Field. Uh, okay. Yeah,

he's, he's very big in the US. So up here in Northern Virginia, he does a lot of events. So I know he's, he's very involved in a lot of the military. Yeah.

All right. And last question, uh, if you could live in any fictional universe, which one would you choose? Fictional? Uh, in Whoville.

Oh, good. Timely.

Yeah. Yeah. I've watched The Grinch 15 times with my grandson in the last year.

I just watched it for the first time with my, my two year old daughter, and I really wasn't sure if she was going to be scared or not the Jim Carrey version and a little scared at first, but then you got

the old one. You've got the, the, uh, Cumberbatch one and you've got Jim Carrey. That's right. Nice. Epic.

All right, Greg, are you ready? Sure. All right. Describe the culture at, uh, Anika Systems.

Oh, we are a fun bunch to work with, uh, open and, uh, constructive with the criticisms, but you know, we have a good time doing it.

What type of technologists would you say thrives at Anika Systems?

Uh, really, I would say a developer who's looking to, you know, get into something they've never been before.

What kind of roles are you hiring for at the moment?

Um, just all of that. Anybody who is looking to, you know, develop something that they have never experienced before. Um, looking, people are looking to, you know, be part of that evolution of AI.

Aside from graduating from a small to not small, what, what would you say is one of the biggest challenges that's facing Annika heading into the next couple of years?

Uh, I think it's the transitioning the mindset inside the business of what it's like to be a small into more process, um, repeatable functions. Um, like I mentioned before, a lot of us wear multiple hats and we've gotten good at it, but you start to have to break that off and focus. Uh, like a large business would

outside of AI. Is there an emerging technology that you're excited to see evolve in the next five years?

Oh, I don't know. It seems like everything is AI these days, whether, whether it's the front end or not, I'm still waiting for the flying cars to become a thing. So I would like to see that technology. Eventually. I think it's getting closer than it did. I mean, I was promised it 20 years ago, but

I don't know. People can't drive in two dimensions. I can't imagine they can handle. I just

want back to the future. I want to hoverboard from back to the future. Um, what, how would you describe your, your morning routine?

Oh, gosh, my morning routine is, you know, getting up at six in the morning, trying to get the kids off to, to school and, um, you know, getting my coffee and getting on the computer usually by six 30, um, while they're working in the background. Um,

do you have a favorite app on your phone?

Reddit. Nice. Love Reddit.

What is a charity or corporate philanthropy that's near and dear to you?

Uh, I'm big on the dog rescue groups and actually I support, I have a foster right now from a beagle rescue group here in Virginia, Maryland area called brew, uh, beagle rescue and education. Um, so those, those are the. Yeah. Anything, you know, animal rescue related is near and dear.

Same. Yeah. We'll give it a shout out in the, uh, show notes as well. Uh, if you could have dinner with any tech icon past or present, who would it be with?

Oh, wow, um, I have 5 seconds, right?

Yeah,

you know, I think, um, you know, Steve jobs always comes to mind 1st. I know he was a bit prickly. You know, he has a reputation, especially, you know, posthumously. But, you know, he was successful for a reason, um, the way his mind work. I would love to hear more about that. I mean, there's been books written about it, but to hear it from the source would be great.

Yeah. I mean, I think from impacting the amount of consumers, just humans that have been impacted by his technologies are impressive. Um, what is the worst fashion trend that you've ever followed?

Oh, but I followed, oh my gosh, uh, there was a, it's gotta be the mullet. Uh, there was, there was a, there was a brief part back in the 80s where, you know, I, you know, I got on board with that and, uh, luckily there's only a few pictures with me, but they come out quite frequently, but,

yeah, well, we'll be sure to get one of those for your headshot on the, uh, thumbnail for this episode. Uh, last one. And what was your dream job as a kid?

Oh, I was I was destined to be a baseball player. I love baseball. Um, you know, I played competitively. I mean, I was 1 of those guys that you hear about time and time again that the story glory of the song glory days was written about, you know, you know, that that high school pitcher that was scouted. Um, to only have his arm blown out and reconstructed right at the end of his high school years and, uh, you know, down the drain it went, which in retrospect, I often say it's a blessing because I probably wouldn't have made it, um, very far into the, you know, especially not the major league level, but, uh, I probably would have messed around too long. Uh, instead I was able to focus on a, you know, a real career that I was probably more suited for.

Nice. Awesome. Well, that is a wrap. Uh, thank you both so much for, for joining us. You've been excellent guests. Uh, thanks for sharing your insight on this topic. I'm sure that this is a conversation that will help a number of, of our listeners that are either planning on making this leap or this transition in the future. So again, appreciate you taking the time to join us here on the pod.