#127: Securing government contracts with Mike Melo
Aaron 00:05
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Thank you so much for tuning into America’s Entrepreneur. Again, I’m just so incredibly excited and privileged to be able to introduce just some amazing guests. And so whether it’s entrepreneurs, whether it’s people that have been very successful in business, industry experts, just so incredibly grateful for their time and for their ability to just share some of the nuggets of their journeys with me and with you. And so any feedback, any commentary that you’d like to add, any follow-up questions, any anything at all, drop me a line, aaron@boldmedia or boldstrategygroup.us. Either one works.
So I’m excited to introduce to you our guest for this week, Mike Melo. Mike comes to us from a career, a US Naval officer. He served over 20 years in the Navy. After completing service and retiring, he moved on to Old Dominion University where he’s the director for Virginia Troops to Teachers. And then for the last 20 years, he’s the president and CEO of company called ITA International. And I love the history of the naming convention there. I’ll let Mike jump into this too. But to give you a little bit of perspective on ITA International. So they’re a global service provider leveraging subject matter expertise, data analytics and technology, ensuring mission success for customers. And as the name is abbreviated, it’s In The Arena, which is that historic quote by Teddy Roosevelt. One of my favorite quotes of all time. And so, Mike, I’m just so excited to have you here, sir. Thank you for making some time to spend time with me today.
Mike 02:30
Well, thanks, Aaron. I appreciate it. I always like an opportunity to talk about ITA and business in general. So thanks for having me on the show.
Aaron 02:37
Yes, sir. No, it’s a sincere pleasure and it was great getting to meet you previously and just some of the conversation that we’ve had. And so you’ve had a really neat career. And I think there’s a lot of what you’ve accomplished and what you’ve done that I think can serve as a great model and as a great inspiration for others that may want to follow after you, right? So take us back to the beginning and give us a sense of what motivated you, what inspired you to first join the Navy? And we can just start there.
Mike 03:10
Well, it all started with the Jimmy Buffet song, okay? That’s why I joined the Navy. Now I love the water. I’ve always loved the water. And my dad’s retired Air Force and so military service was part of our life. And when it came down to the pick any service, I picked the Navy because I love to be on ships and water. Any day on the water’s a good day. And so I spent 23 years as a surface warfare officer in the United States Navy. Some of my best times in my life. I will always tell people that I love being a Naval officer. I wouldn’t change it for the world. And then as a business owner, I’ve always wanted to run a business. I I’ve been reading Inc. Magazine since I was a lieutenant in the Navy. And so when I had a chance, I started a business and haven’t looked back.
Aaron 03:57
Wow. That’s amazing. And it’s gotta be hard to believe too. I was like, I mean, you’ve been out for a while and I know that that time, it goes cruising by fast. I mean, you’ve been out now almost as long as you had been in.
Mike 04:10
I have. I have. It was in November of 2002. And I thought somebody that the other day, I mean, I’ve been out for 19 years now and it’s flown by. And just like my time in the Navy, like I said, I love being a Naval officer, but the time running the business has been really good too. I’ve enjoyed it.
Aaron 04:31
Yeah. Well, would love then to dive into your perspective. Because I’ll admit, I have not run into a crazy amount of retired military officers that have jumped out and then gone and started a business from scratch. Like it typically not – I mean, I don’t want to say typically, but either it’s a full-on legitimate retirement and maybe like a side job. And then for a lot of folks, you know, they’re sitting on a board or they’re doing some other work. You went into the entrepreneurship space and really hustled and got after. And so take us through a little bit of one, the Genesis of the name, of the business idea, the concept, and then how you started it and just made some initial inroads.
Mike 05:17
Okay, sure. I always say being an entrepreneur is a journey, okay? And it is a journey. And the last 16 years of business, that’s really been an eye-opening for me, but it all started. I always wanted to run a business. I was working at ODU, run the Troops to Teachers program. And I started a business called Chess Bay Marine. I’m going to get to ITA in a minute, but Chess Bay Marine, there’s mobile oil changing on boats between 25 and 85 feet. You know, I’d go to somebody’s house and change the boat. That business failed miserably, okay? So that was 2003. I decided, hey, I’m going to do something I know. I know the military. I’m going to go become a government contractor. So I converted Chess Bay Marine to ITA International. Knocked on doors for two years before I got my first contract and I was still working full-time at ODU. I was trying to get a contract doing some expertise I had in the Navy.
And the interesting story about the company, ITA ,is that my dad gave me that quote when I was 12 years old. It’s the Teddy Roosevelt quote about the man in the arena who strives, who spends himself. And so I’ve always loved that quote. I use that quote throughout my Navy career. Our company philosophy is serving those in the arena. So it’s lined up with that idea. And so my dad gave me that quote. I named the company ITA in honor of my dad. In fact, I’m sitting at a desk right here in 1968. When he gave me that quote, we sat down at a desk and my dad had it for years. About 25 years ago, he gave it to me. He says, “Mike, when you start your company, I want that desk in your office.” So that’s the desk I’m sitting at right now.
Aaron 06:56
Oh my gosh. Man, that is so special. Wow.
Mike 07:01
In our 10-year anniversary, I got a picture of my dad sitting at the desk and I’m standing next to him. So it was pretty cool.
Aaron 07:07
Yeah. Man, you’re almost getting me choked up over here, Mike. That’s amazing. That is a really, really powerful story. And it’s really neat just to see the values and the vision being instilled to you from your father, right? And how that served as some fuel for you and then how that’s permeated, not just the name of the business, but like everything that you’ve been doing. And it permeates your mission, your vision, just all the different aspects of the business. And so it’s really, really cool. But two years knocking on doors, that’s gotta be crazy.
Mike 07:46
It is. But you know, I was still at ODU. I was working. I always knew I wanted to get a business. And so I will never forget the day. It was in August of 2005. I got a call from a former buddy of mine that was now a contractor and said, “Hey, Mike, I’ve got an opportunity for you. It’s one year of work for one person. Would you be interested in doing this?” I said, “Sure.” I came out and I saw my wife who runs the company with me. We co-run this company. I said, “Kathy, I got a deal for you.” You gotta remember, I’m a state employee. I work at ODU. I got complete ride on my schedule. I get seven weeks off a year. I got a pretty good life. I’m a retired Naval officer. I got a pretty good life.
And so I said, “Yeah, I would like to do this.” And so I came out and told Kathy and she says, “Okay. Let’s try this.” And I remember my daughter was a senior in high school at the time. We leveraged her college savings when we started the business, okay? Because I knew we’d be successful. And so we got one person for one year and I got a lot of credit for $25,000 from a buddy of mine, the banker. And then within a month, I got another eight billets. Another customer and I just got eight billets and I had to go back and ask for a bigger line of credit. And then within four months, I had another ten billets and it just started going from there. So I’ll start with one billet. And our philosophy is if you do a good job, you get more work. It’s pretty simple. That’s our marketing strategy.
Aaron 09:25
Yeah. Do good work and good work travels. Good news travels, right?
Mike 09:30
Yes. That’s the story of how we started – that one contract for one person.
Aaron 09:36
Wow. And I know I mentioned it in the run into the show, but just give everybody a quick overview of what the company does just so that they’re able to piece this all together.
Mike 09:46
Yeah. And so, like I said, I’m retired Navy. I started a company doing what we call a mission analysis for the Navy. And they didn’t have enough people. Because you know, I remember 2005 war’s going on. And so a lot of people were committed. And so they needed us to do some mission analysis for Anti-Terrorism Force Protection for Navy installation. So that’s what my one-year contract was. The Navy also stood up a brand new organization that required that same sort of skill set. And so when I first started the company, we did really analysis, planning, and training. Those are our core functions. We’d come in when the Navy would have a problem. And we were Navy focused, Navy would have a problem on some issue. We would do that analysis. We’ll figure out what the plan was. Most of the plans were involved training. So that’s why 65% of our work at that time was in the training arena. And you’re gonna hear me use arena a lot because I use it everywhere, okay? And so that was the training arena.
And so we grew that and we probably – well, after four years, we were number 19 on the Inc. 500. We had a 5800% growth rate. And I tell people if we had kept growing at that level, we’d be a $17 billion company. Well, we are not, okay? And so we took that small piece of work and we have grown at we’re about 328 people now. We’re in 25 states and five foreign countries. And the company is built into two different groups, okay? I have my global security group, which has really helped prepare DOD and DHS organizations to for global security mission. So we help them man train and equip the forces. And so we do a lot of training. We’re doing all analysis. We’re doing all the planning. That same kind of skill sets I talked about when I first started the company.
About 2014, I had on an engineering group to the company. So we started doing Marine engineering. Remember I’m a Navy guy. So it was Marine engineering. It was helping the Navy maintain their boats. So you’re helping the Coast Guard buy brand new cutters. And so I have some hardcore engineers in there that the Coast Guards in the process of buying three different cutters. And so we’re helping with the acquisition of those cutters. We help them maintain their small boats up in Baltimore. So it’s really all Marine engineering.
And then probably about two years ago, I added a data analytics capability to the company. Because as we were growing, you know, remember, analysis and planning was a core business as a company? And it was all a bunch of old guys like myself and we’d sit around and we’d figure out courses of actions. And here’s a good plan. And as I started to see data grow as a tool and a decision support tool, I said, “This is an area we want to take the company in.” So we added a data analytics company about two years ago. We made an acquisition last year for a data analytics company. So we have grown the company. So when you talk about our mission statement, I got those subject matter experts in the global security business unit and I got my data scientists in my data solutions group. We bring those two components together to solve our customer’s problems. That’s ITA in a nutshell right there.
Aaron 12:57
Oh, man. I mean, that’s fantastic. That’s a great overview. And what I like too is how you’re very focused. Like there’s a very clear focus. And I think that’s one area that I think a lot of businesses have to grapple with early on as you’re getting started. Like, you know, again, people may have different philosophies on this, by the way. But you may want to decide to focus on a very specific type of customer, master or gain a high degree of competency and a little bit of a track record. And then as you do really well, then you’re able to kind of broaden your horizons. And so for you, it seems like – again, you’re a career Naval officer, right? You’ve got a lot of connections. You’re there in the area, the headquarters of your company. You’re kind of where a lot of the action can be, or you’re relatively close anyway. And so you’re able to kind of maximize your opportunities there before you start broadening. And then you’re just responding to either client demand or what you see as another opportunity to continue to serve your clients by bolting on some of these other things, right?
Mike 14:07
It is. And actually, you know, our customer base has grown from being a hundred percent Navy up about 2014. So it was seven years ago. It was a hundred percent Navy. Now Navy is still our largest customer. Coast guard’s our second largest customer. Air Force’s a third. Air Force Special Operations, National Guard Bureau, and DHS. And so we’ve really diversified our client base. We have all prime contracts and only a couple of subcontracts, which I’m very proud of.
And you know, our skillsets – for the Air Force, we’re actually doing cybersecurity work for the Air Force out here at Langley Air Force Base. We’re doing some electronic warfare type of work down at Eglin Air Force Base now. We’re doing tactical weapons training for the Air Force Special Operations Command down at Hurlburt Field. So, you know, we’ve gone from that analysis and planning company, Navy focused, to really diversified client base with diversified skill sets, global security and data analytics.
And what I will tell you is the company that we are today is different than the company I started in 2005. I tell people all the time. You gotta constantly reinvent yourself, keep adjusting to the marketplace. And the best example, if you look at somebody, is Netflix. I mean, they’ve done a super job changing the marketplace. ITA, much smaller scale, okay? I’m not comparing myself to Netflix. I think as businessowners, you have to recognize the market changes, you change, you keep adapting. And we’re in a transition now from being a small business to a mid-sized company. So there’s a whole different set of problems you’ve got to deal with. So you just gotta keep adapting as the market changes.
Aaron 15:52
Wow. I mean, that’s just some awesome insight and advice because I think there’s a lot of folks out there that may get a little frustrated. Like what you said, I think it should be an encouragement to a lot of people. Because I think there’s a difference between redirecting and abandoning a given course of action. And so what I hear you saying anyway is you’ve gotta be responsive to the market and what your client’s needs are. And they may change or they will change with time and so what you think is going to solve it today may not solve it tomorrow. So you’ve got to constantly shift and see where that’s headed, right?
Mike 16:28
Yep. No, it’s accurate. When you think about ITA, we started as a commercial Marine boat maintenance company to operational services company to an operational services company and data analytics. And I tell people that we do data enabled services. That’s what we do as a company. We provide those same services I’ve been providing for the last 16 years. We’ve just added a data component to provide those services better.
Aaron 16:54
Yeah, that’s great. I mean, that makes total sense. Well, let’s go back for a second real quick and go back to those first two years where you are knocking on doors to secure contracts and then you’re able to secure line of credit. So as I understand it, the minute you secured the contract, you’re not necessarily getting payment upfront, right?
Mike 17:14
No.
Aaron 17:14
Which necessitates the line of credit. So help people understand who may not be as well-versed in the government contracting world and the things that they need to be considering and thinking about as they go to pursue that as an option.
Mike 17:28
Well, we call it the bathtub, okay? Because what happens is you get this contract from the government and you bring on all your people, you start working. And that was 31 October 2005 when I brought on eight people, okay? And so you have to pay those people for that 30 days and then you don’t get to bill the governmental until 30 November. So now you billed the government and the government pays you 30 days later. And so now you’re talking to them in December. For those 60 days, you have to pay your employees. And our first year in business, my wife used to joke, and our girls did not know this, but she used to call me and say, “Okay, I’m going to Costco. Can I write a check? Have we made payroll?” “Yes, I think we’ve made payroll. So you can write a check.”
And people don’t see that now. They see where we are today. But those first days, we didn’t take much money from the company. We left it all in the company. My wife stayed on as a school teacher. I have my retirement check. We were just trying to keep the company going, okay? Our daughters had no clue what was happening because we we’re managing it. But interesting to think about cashflow I always tell people is I learned cashflow early on because I wasn’t a prime, I was a sub. And so I worked for 30 days. So now the end of November, I invoiced my sub. I didn’t get paid until it was a net ‘95.
Aaron 18:54
Oh my gosh.
Mike 18:55
And so, you know, I had a $25,000 line of credit when it was just me. I got a $225,000 line of credit when I brought on eight people. I figured out that would survive the bathtub effect. But not being paid for 95 days, you gotta think about – that’s actually 120 days because I’ve been paying those people for the first 30 days. You finally invoiced. Net ‘95 is from that time of invoice, not from the time you pay your people. And so it’s 120 days. And so I was down to 200, 000. I used $215,000 of a $225,000 line of credit.
Aaron 19:29
Wow.
Mike 18:55
I called my prime and I said, “I just want to know when I’m going to get paid.” And you know, I’d never forget. She told me, “Mike, you know, running a company is not for the faint of heart.” I said, “Just pay me.” And so then they mailed me a check. And so I could service the debt, I can meet payroll, but you still got this line of credit that you got to pay off. It took us ten months to pay that line of credit off. So Kathy and I said, “Hey, we’re not going to borrow money in this company. We’re only gonna use our profits from the company and then grow the company.”
And so we didn’t borrow. Another time we borrowed money’s at the end of the year when we’re trying to prep for taxes. We finally borrowed money in 2020 when we made an acquisition. We leverage bought on acquisition. But we, Kathy and I, have funded the growth of this company with the revenue from the company. We don’t borrow money unless we have to. And I tell people all the time who just started a company and they said, “Mike, I got two months of salary. I can run this.” I said, “You gotta take a longer timeline than that. You gotta think about it’s gonna take time to get you paid and you gotta be able to pay your people and so think longer.” And you can do it and everybody can do it, but you just have to plan, of course. And I actually say business is really simple, okay? You gotta have more money coming in than going out. It’s a simple rule of business economics, okay, right?
Aaron 21:00
That’s right. Well, and I think this is a great reality check for people as well that are contemplating the government contract world. Because it’s a totally different beast. I don’t have experience in that. And it’s something I’d looked at previously, but I mean, it really does – what I’ve seen is that companies that are the most successful in that space are essentially dedicated a hundred percent on that space because it just consumes a massive amount of resources. And there’s a lot of expert knowledge that you have to acquire. And either you got to hire someone who knows how to navigate that entire jungle, or you’ve got to hack through the jungle on your own. And so as you’ve worked through the contract piece, so you said that you got your start as a subcontractor to a prime, and then at some point then you were able to bid on prime contracts. So help people understand. We won’t spend an enormous time on this topic. But I would like to just give people a sense of what is that like, what is that process like of trying to really get some work secured with the government.
Mike 22:04
I tell people it’s tough. And if it was easy, everybody would do it. But no, I subcontract, and yeah, I always believe that if you’re getting in the government contracting space, the best way to start is subcontracting. Because you can’t really win a contract in the government space unless you have past performance. You can’t get past performance unless you work for the government. And so it’s that catch 22. But by going in and being a sub to a company, I also got past performance. And then I got my first prime contract was for $75,000 doing this study for the Navy Expeditionary Combat Command here in Little Creek, which I was supporting already, but they had to do a study on expeditionary security. And so I got this $25,000 line of credit.
And then the next contract I got was we were an ADA company. So I got a directed award for $4.4 million. And then I competed on a competitive award for $14 million. And so it just sort of builds on. But every experience you have, it adds to your experience. In 2014, we won this contract called OASIS. And most of your viewers might not have heard of it, but it was a large indefinite delivery, indefinite quantity contract, where they put task orders on it for all the government. And so that allowed us to branch out outside. We leveraged our past performance in the Navy. We branched out to other government customers, the Air Force and the Coast Guard and Customs and Border Patrol. We branched out in those market sectors and allowed us to diversify as a company.
And so the thing is you gotta get those contracts, those prime contracts, so that you can build your past performance. And you can either do it or sub or prime. I always tell people, I was a sub to this company I shall not name. And you know, I had been working with the customer and I got this. They wanted me to provide 22 bodies and I only had ten people in the company. They wanted me to provide 22 bodies in support of this effort. And so I go to my prime and say, “Hey, you know, I got these 22 bodies.” And they said, “Mike, that’s great. You can have eleven; we’ll take eleven.” I said, “oh God, that’s how this works.” And by the time, I think after four years, I had zero of those eleven bodies left.
Aaron 24:31
Oh my gosh,
Mike 24:32
You got to understand that. And it’s not right or wrong. It’s just business. And they have business models. They have hurdles they gotta deal with. They have different drivers than a small business. A privately-owned business have different drivers. And so once you understand that then you can navigate the space.
Aaron 24:54
Oh, sorry, Mike.
Mike 24:54
Just one point. I was going to agree with you on though, Aaron. And I think that it’s real hard to be both a government contractor and a commercial contractor. Because, you know, our accounting, the way we do accounting in the government space, it is general accounting practices, but the defense contract and audit agency has things that allowed you to charge against and unallowable expenses. You know, like for example, you know advertising, marketing, you know, those are very quantified things that you can’t charge against. And so, you know, you have to be able to show the government the cost that you spend, that they allow that as a cost. Commercial space, you don’t have those problems. And so if you’re company dealing both of those, you almost got to have two separate entities. One in the commercial and one in the government space, I believe. Because it is different like you mentioned earlier.
Aaron 25:45
No, that’s great. That’s great for people to understand that. So that way, if they’re contemplating making a run at working in the government contract space, then yeah, it’s like, hey, just go all in on that and build your systems around that, for sure. And I’ve actually gotten those questions from a few people. And it’s funny because again, I don’t have government contract experience, but it’s been asked of me. So I’ll relay this because I think there’s several people that have this question is how do you avoid – because I think there’s a little bit of apprehension and I don’t know where it comes from. Maybe cause it’s these contracts are so gargantuan and there’s just so much written into them.
How do people – or one, there’s a fear. There’s a fear that people are going to get into a contract and they’re not gonna be able to perform it. Or there’s some type of clause or something in there that’s going to get them somehow where maybe they mispriced something and now they’re upside down. I would like to understand – if I didn’t ask the question good enough, let me know. Have you seen that? Is there is a real concern for people that are getting the space if they’re not paying attention to this one sentence in this one paragraph in this one page somewhere that it could bury their company?
Mike 27:03
No. And that’s a real concern. And I mean, I’ve been on a kickoff on a contract and the government says, “Hey, this is…” It was live virtual constructive training, okay? So it’s modern simulation and live training and there was one small line and said, “Hey, you’re going to support this.” And we’d been supporting it for four or five years now. We knew what that meant. Somebody new came in there said, “Oh no. You have to build up an entire model in simulation network,” which is in the tens and twenties of millions of dollars. And I think it was only like a three and a half million dollar contract. So I said, “Well, no, that’s not how that works,” but we were able to talk with the government and come to an agreement.
And you know, I have been on receiving end of contracts where I listened to somebody else and we underbid the pricing on it. And it comes back to haunt you and you have to go to the government and talk to them. And what I found is most government organizations will work with you. If you really mess up, and I have – we just lost a contract where the competitor totally underbid the contract on us. They are now having trouble executing that contract because they didn’t understand the work, okay? And so the caution I give you is, and I tell our people, we have to know the customer. We have to know the market. We can’t rely on our subs to give us that information because I did that twice and twice it came back on me. And we’re serving those in the Marines as our quote. We’re going to execute that contract. And if we lose money on that contract, we will do that, but we’re going to execute that contract.
And so I think it goes back to my mind, it goes back to your sub, you have more flexibility, okay? So you can understand the market better. You can build your past performance. You can understand the pricing and all those different components. You can cut your teeth on being a sub in the government space. I think that’s probably the best way to describe it. So you can learn the market so you don’t make the mistakes. The other thing is I was very fortunate in a guy. He actually just retired from me after 14 years in the company. And he was a retired Navy captain that had, you know, he is probably one of the five smartest contract officers in the government. I’m going to tell you that right now. No doubt in my mind.
And we used to have a government contract that people call Mike up and ask him questions because he was so smart. And so you really need to have a smart contracting person and then you actually don’t have to have that person when you first start out. I didn’t have that person. We had a lawyer that had government contracting experience. We could bounce questions off of that person. There’s several different industry groups and councils that you can develop relationships and ask questions on things. So there are people will help you in that space. Especially if you’re a sub to a larger company, you can always build a relationship with that contracting person at the larger company and you can ask them questions as you move forward. And in some cases, we’ve had a point where we were a sub to a large company. The government decided to go small business when we were a small business and a large company comes under us as a sub.
Aaron 30:25
Oh, wow.
Mike 30:25
We got to work. And so I think as anything, Aaron, I think it’s all about relationships. You got to build positive relationships with your customers and your partners. Here at ITA, we call it a three-legged stool. Our company is built on this three-legged stool and there’s three legs of that stool. Any one of those legs are out of balance then that stool is going to fall over. And those three legs are our employees. We got to take care of our employees. We got to take care of our customers. And we got to take care of our partners. If we do those three things, our stool is going to be solid. It’s not going to fall over. If you don’t take care of your employees, they’re not going to take care of the customer. If you don’t take care of your partners, they’re not gonna take care of the customer. You gotta do all three things to be able to grow a company.
Aaron 31:08
Yeah. Wow. No, that’s solid. And I appreciate a little bit of that insight because unless I’m mistaken, I mean, it is typically like you’ve got to have the work experience requirements met. You’ve got to have those terms, that history, that those qualifications. You got to build to meet those, but then also your prices got to be competitive. By competitive, lowest. And in the spirit of that, in some of the examples that you shared, I mean, you’ve got people that were going to – they will underbid it just to get the contract and then they realize, “Oh crap, I can’t actually do this.” And so what I hear you saying then is, again, knowing who your customer is, but then also developing that relationship. But the other part of that I think, too, is you probably need to understand what you’re signing up for, what you’re bidding on, and have a good understanding of what it is. And if you don’t understand it, maybe get some clarification. That way, you aren’t putting yourself in a potentially horrible situation.
Mike 32:13
Well, I tell people we have – the three things I worry about is execution risk, financial risk, and reputational risk, okay? So those are the three things when we look at something. And I told you we were number 19 in Inc. 500. And we had the fortune of having the top 20 companies got to have lunch with Jim Collins, you know, Good to Great. And so I imagine a bunch of entrepreneurs sitting around a table and asking Jim Collins questions. So that was pretty exciting. My wife and I sat there, Kathy and I sat there and talked.
And I remember somebody asked him a question and I thought, I’ve always used this as an example. He says, “So how do you know if it’s too much risk?” I mean, you’re going to ruin everything. How do you know if there’s too much risk? And his example was – remember, I’m a Navy guy. So he says, “If whatever you do is gonna sink your ship as a below-the-waterline-hits kind of sink the ship, that’s too much risk.” If whatever you do and it’s above the waterline, and you know, it takes out, you know, you lose revenue or somebody, it takes up around the ship, but it doesn’t sink it, that’s okay. Because business owners have to take risks. If you don’t take risks, you’re not going to grow a company.
And I use an example. I got a great example of that because let’s see, 2010, I decided that offshore wind and oil and gas was going to come to the East Coast of the United States. So I said, “I’m going to start a dive company, a commercial dive company.” I hired a former Navy diver, just one of the smartest guys in Navy diving. He actually led the rescue of the Cole that got hit in Yemen, you know, took a big blast. And so he built me this state-of-the-art dive unit. The only problem was I didn’t do my market research. The market in Hampton Roads was four dive companies that, you know, they’ve been doing it for 40 years. The government wasn’t gonna pick anybody but those four dive companies. Oil and gas did not come to Hampton Roads.
And so after I lost about three and a half million dollars, I said, “Okay. I got to shut this thing down.” So I shut it down. That’s above the waterline hit. It didn’t sink the ship and I learned a lot of valuable lessons from it. I didn’t sink the ship. And I keep telling him – he still works for me, okay? He’s my Navy engineer guy. But I said, “Hey, we’re still gonna get that dive company back. Trust me.”
Aaron 34:37
Oh, man. That’s awesome. I mean, that’s some great wisdom in terms of just when you’re faced with a decision and you know it’s going to introduce risk to the company, how to kind of evaluate that risk. And so you kind of actually segues perfectly into the next question I had for you, which was then, you’ve been growing the company steadily over the last 20 years. And so what challenges did you maybe not expect looking back on? It’s probably crystal clear to you now. But at the time, what were some challenges associated with growing and scaling the business as gracefully as you possibly could?
Mike 35:18
I don’t know if graceful is the word. You know, I’m a big Teddy Roosevelt fan. The company’s named after Teddy Roosevelt’s quote. Another quote from Teddy Roosevelt is because a man that has never made a mistake has never done anything. And so I’ve done a lot. I keep telling people all the time. I’ve done a lot. So yeah, I think the lesson is I can look back on three contracts that I didn’t have customer intimacy. I didn’t understand the market. And I trusted somebody else outside my organization to give me the information. And those all lead to bad outcomes for me. And so what I’ve learned is that customer intimacy. And I think it’s any business. You know, any business you’re in, whether you’re in the government space or the commercial space, you have to understand your markets. You have to understand your customer. You have to understand how they buy things.
And you know, when I retired from the Navy, I had never done any government contracting at all. I wasn’t even a contracting officer in the Navy or a contractor’s officer representative. I always thought, okay, a contract came out 30 days. Everybody been on it. The best company won. That’s my expectation. Well, it doesn’t work like that, okay? And the sell side for the government is no different than anybody else. You have to go visit the customer. You got to talk to the customer. You got to find out what they want. You got to build trust with them. So that when you write that proposal, you understand what you’re looking for and you can provide that service to them.
And the other thing is I always tell our guys is, hey, just because we’re the prime and they reread the statement of work, don’t assume that we’ve got an answer to the statement of work, not what you know what the customer wants. So you have to have enough customer intimacy to understand that, hey, this is what the customer wants. So we put in the proposal. So you ask those questions like you talked about there and ask the questions to the government and try to clarify them. Sometimes they do, sometimes they don’t. But then you gotta make that risk analysis of whether it’s worth it or not. Do I factor in? And then what happens? From a contractor’s perspective, you have to factor in the risk and your price. And so I tell the guys, we’re never going to make those kinds of mistakes again. So I’m not sure I answered your question.
Aaron 37:49
No, no, that’s great. No, it’s great. I mean, this is real. I mean, this is anybody who’s wanting to get into government contracting should play this podcast back a couple of times and take notes because this is really good. I appreciate how willingly detailed you are with some of these answers because it really gives a lot of insight. And I guess the other thing that you’re kind of provoking here then is you talked about the business development side of that. And so to clarify – and again, this just shows my ignorance on this topic, but to clarify, when you’re doing what we call business development and building those prospect and customer relationships, is your primary interface is with the contracting officer or is it the end using unit? And who are you courting in that relationship? And who do you need to be really developing a good working relationship with?
Mike 38:46
Well, that’s a great question. I’ll tell you that right now. And I think it really depends on the buying agency, okay? In the Coast Guard, the program management people have a lot of influence on the contracting people and the DOD in some spaces that the program people have a more influence in the contracting people. They drive with requirements. Theoretically, the programming people should always drive the requirement, but once they drive a requirement, they give it to the acquisition professionals. And, you know, they have a different set of grading criteria from what the program people are trying to do. And, you know, because they have socioeconomic goals, they have to hit, you know, there’s guidance there. Theoretically, they’re not supposed to be doing low price, technically acceptable contracts unless they’re buying widgets or something.
And so, I mean, I think it depends on – I hate to say that, but it depends on. And so I think that goes back to the customer intimacy piece. So you have to go talk to the program people and find out exactly what you’re looking from a program perspective. You got to visit the contracting officer and see what they’re doing. We even look at – because we use government as a business intelligence tool for us and we’ll go back and look at a contracting officer and look at four or five proposals they’ve submitted and you get a feel for what their grading criteria is. Because there’s sections of the contract that are evaluation criteria for your proposal. And so you gotta make sure those are aligned. And so it’s up to us to go. As a government contract, it’s up to us to go visit both of those parties. Because most of them have a different perspective and you have to understand both of their perspective to make sure you can give the government what they want.
Aaron 40:30
Yeah, yeah. So yeah, I didn’t realize – I mean, it’s a fair answer because I mean, it really does depend. And again, I know that’s the answer that can drive people nuts, but it really does, right? I mean, it depends on a myriad of factors and circumstances. But at least that gives people kind of a target or at least a direction to focus their energies on. And I think as they go through the process of discovering those needs, maybe clarifying questions, maybe starting to dig into the details of those contract requirements, then they’re able to understand, okay, is that something I take to the contracting officer or program manager? Like who is that? And I think people will start to discover that for that given situation or scenario.
Mike 41:16
I tell our guys that the first time you’ve talked to the contracting officers or the program officers, when you’re asking questions after the RFP has been released, it’s too late, okay? You have to be out there ahead of them and understand, you know, what they’re going to be looking for. Some contracts are, you know, they’ve been for 20 years and they just keep rolling over, and you know, the same company wins it or somebody unseats them because the government’s not happy with that customer. Some of them are, you know, the government is always generating new requirements. So some of them are brand new requirements that are never had contractor supporting them at all yet. And so that’s when you gotta start looking ahead for what’s out there and what the government is doing or the Air Force, the Navy, whatever they’re doing. Anticipate they’re going to do a contract, start talking to the program people and figure out how they got a bid that with their acquisition strategy.
The other thing I always tell companies when they’re first starting off is the way the government does market research is they do a request for information. They submit, you know, just like there’s a request for proposal. Prior to the government figuring out their acquisition strategy, they’ll submit a request for information to the industry and then industry can draft up a response to that request for information. And then government takes that responses back, digested that, and that helps them form their acquisition strategy from a business perspective and identifies who the contracting officers are going to be and identifies who the program manager is going to be. And you can talk to the government till that RFP’s on the street. You can talk to the government, try to influence acquisition strategy. So start engaging them early. If you have an opportunity to respond to the RFI, respond to the RFI that hopefully drive the government in a direction that is best for you to compete. I have to take a sip here. Sorry.
Aaron 43:09
It’s all good.
Mike 43:11
It’s Chick-fil-A. I just kinda want you to know.
Aaron 43:14
Yeah, that is not a paid product placement. But Chick-fil-A, if you’re watching, I mean, let’s do this. No, that’s great. So again, those are great tidbits that I wasn’t aware of. So, you know, but using the RFI process as a way of gauging where their head is on certain ideas, and then it reveals who your points of contact are and who you really need to be investing time for relationship. And whether it’s over the phone or in person if you live close enough, I’m sure that’s a lot more complex if you’re a government contractor based out of Norfolk and you’re trying to talk with somebody in Colorado Springs, right? Unless you’ve got a distributed sales force across the country. But I’m thinking more – my mind is more for the startup where, you know, capital and resources are a lot more constrained and their teams are smaller. So focusing on a geographic radius, I guess, of wherever you are and see what lands in that radius and then just really get after it.
Mike 44:19
Yeah. That’s a good point. Not just for business development for management though. So, you know, it’s always – I would pick a couple of whatever service you’re offering, who is buying that service in the federal government and those are the customers you would focus on. And you know, especially in a regional area, you know, we focused on the Southeast, we’ve expanded beyond that right now. But sort of build that thing and then you can start building past performance. You can develop a relationship with the prime. And so all those kinds of things I talked about earlier on, you can do that as you start to work that piece.
Aaron 44:56
That’s great. Final question, final thoughts here before we wrap up, before we close this out. But I would love to just hear from you what have been the best – and I think you may have actually already addressed this a little bit, but some of the most important guiding principles that you believe that you can point to that really has attributed a lot to your success and the progress of the company?
Mike 45:23
Yeah. I would just say like my desk I’m sitting at, nothing fancy. It’s just a good solid company. That’s the ITA. I’m talking about my three-legged stool because I think in our business, people are the economic engine, okay? And so if you don’t hire good people and take care of the people then that economic engine is gonna fail, okay? And then that customer intimacy. Those are the critical pieces. And you know, Aaron, I’ve made a lot of mistakes over the last 16 years in business and I think you always learn from your mistakes. And you know, you might start off your business thinking how I’m gonna do this and I think I can sell this. And as you go to the customer and start talking to the customer, you might say, well, that’s not the right thing. I need to adapt. And you gotta adapt to the customer because the customer is paying your bills.
And I’ll just leave with this. And I think business can be a force for good and I’m gonna get on a soap box here, but business can be a force of good. You know, entrepreneurship is a great way to it help the common United States and also help your family’s wealth and wellbeing. And I always tell people, you know, I’m a free market guy all the way. A hundred percent free market guy. And if you have people, whether you’re big government or big business, it doesn’t matter if you have people that don’t have a strong moral compass leading that, okay? You got to believe in what you’re doing. You got to follow your compass, follow your integrity, and you can make a difference.
In our company, we actually have a just cause in our company. I stole Simon Sinek. I’m a big Simon Sinek fan. Lots of companies should have a just cause. Our just cause at ITA is working for a secure, stable, and sustainable world. And it’s an infinite game. We’ll be there forever working at it. My daughter grow the company by the time we get that goal but we’re trying to make a difference as an organization.
Aaron 47:35
No, that’s terrific. That’s true. And no doubt, you are. And I really do just want to thank you. I’ve really enjoyed this. Time has flown by. We could sit here and talk for hours, I think, and just really have some great conversation. But this has been amazing. I appreciate you kind of unpacking some of the history and being so open. Because I really do think people can have a perception of business ownership as it being, you know, what I like to joke, it’s not a straight line. It’s a very jagged crazy, crazy diagram. And I appreciate you. I do. I appreciate you kind of welcoming, bringing us into that, and showing us a little bit of that. And I’m excited for you and all that you’ve done so far and you got so much more to go, you know?
Mike 48:24
I always tell people I think Jeff Bezos has it right. Every day is day one. Don’t ever think you’ve made it. Because as soon as you make it, someone’s going to come and take you down. So never assume. I think I just started this company yesterday.
Aaron 48:38
Right. Yeah, that’s awesome. Okay. Well, Mike, thank you, sir. I really, really do appreciate you spending the time with me today. Thank you.
Mike 48:46
It was my pleasure, Aaron. Thanks. Have a good day.
Aaron 48:50
Yes, sir. Thanks for listening to America’s Entrepreneur. If you enjoyed the show, please leave a review or comment on your preferred social media platform. Share it out with friends, family, coworkers, others in your network. And of course you can write me directly at aaron@boldmedia.us. That’s aaron@boldmedia.us. Until next time.