KeyW was never going to be another forgettable Washington-area contractor.
Founder Len Moodispaw set out to ensure it wouldn't blend in, naming it after Key West, FL, forever associated with his beloved Jimmy Buffett, and making its logo a parrot. Moodispaw adorned his office with Buffett memorabilia and used Buffett songs as office hold music.
The company’s filings with the Securities and Exchange Commission -- which are normally dry and serious legal documents -- were playful. In his biography in an early SEC filing, for instance, Moodispaw wrote that he was "growing older but not up."
But the company, which went public in 2010, also eventually began to falter under Moodispaw, as it became bogged down in an expensive effort to build a commercial cybersecurity business. As that initiative struggled, Moodispaw's health took a turn for the worse, forcing him to first step down. Within months, he had died, and the company needed a new chief executive and a new path forward.
Bill Weber, named CEO in 2015, is seeking to forge that new path, an effort that culminated in a deal this year to acquire Sotera Defense Solutions, making KeyW a much larger player. In many ways, the company now looks more like its core competitors than ever before. It has shifted away from commercial work, refocused on the defense and intelligence services market and gotten larger, just as many of its competitors have also made acquisitions to get bigger.
Now, Weber is focused on proving it can compete with those companies while retaining KeyW's unusual culture.
"Many of those people that came over in the first year to form KeyW -- they're still here," he told Inside Defense. "As long as . . . we can do that and grow and thrive, they deserve it to be a lot of what they helped make it."
KeyW's founding
Moodispaw, a former National Security Agency employee, had made his name in the industry through Essex Corp., an intelligence contractor that he began leading in 2000 and was acquired by Northrop Grumman in 2007.
With KeyW, he decided to make another go at it.
Moodispaw had met Caroline Pisano during the Essex days; they hit it off at a meeting when they both realized they were Jimmy Buffett fans.
When it came time to start KeyW, Pisano joined the board of directors. Kim DeChello, who had also worked with Moodispaw at Essex, became chief administrative officer.
The company started as an amalgamation of multiple contractors. It made two initial acquisitions -- intelligence contractors Integrated Computer Concepts and S&H Enterprises -- in 2008.
KeyW added three more businesses in 2009 and four more in 2010. In October 2010, the company went public.
DeChello said the company, even as it grew, had a unique feel. She recalled that the leadership team took votes on important matters and sometimes voted Moodispaw down. "Everybody had an opinion, and you got to speak it," she said.
Moodispaw thrived on knowing his employees. DeChello said he daily left his office to wander around and chat with employees, remembering the names of their spouses and kids.
The company continued to make acquisitions and grow. DeChello spearheaded an employee morale program that offered regular surprises for employees. One month, anyone who emailed her telling her what they wanted money for received a $250 gift card. Another month, she said, the company sent a "box of sunshine" -- every item in it was yellow -- to employees' homes.
In 2012, KeyW focused new attention on commercial cybersecurity, acquiring security intelligence business Sensage and forming a new operating unit. That sector became home to what KeyW called Project G, its new cyber product.
The next year, KeyW, which reported $244 million in sales in 2012, established Hexis Cyber Solutions and introduced its HawkEye products and services. Information security executive Chris Fedde became president of Hexis.
The Project G technology was renamed HawkEye G; the company also offered the HawkEye AP product, an analytics platform.
Moodispaw backed the new focus on commercial cybersecurity, investing significantly to advance it.
But analysts were less enamored of the attention to commercial work. Josh Sullivan, an analyst at SeaPort Global Securities, told Inside Defense the business had "zero traction."
"There was almost negative traction," he added. "Hexis needed to be closed, or it was going to bring KeyW down with it."
Pisano too acknowledged the commercial work wasn't going well. She said Hexis had great products and expertise, "but we kind of flunked on marketing."
Moodispaw tried to bring in the right people, DeChello said, but the initiative simply wasn't working.
"He was trying to take it to the next level, obviously taking the company to the next level, and brought in a big commercial team to do it," she said.
Fedde said Moodispaw understood the importance of keeping the commercial and government businesses separate. After all, they had different approaches to sales and marketing, different profit margins and different risk profiles.
But, he said, they could never really be separate, given that they had the same ownership.
"The vision for those two companies is simply different," Fedde said. "In hindsight, we can see how glaring this was."
Despite the unit's struggles, Moodispaw wasn't ready to call it quits. In a May 2015 call, he defended KeyW, telling analysts the "rumors of our demise have been greatly exaggerated."
"We are going to continue doing what we're doing," he added. The company's commercial cybersecurity unit that quarter reported a $10.5 million loss.
The government unit, on the other hand, posted quarterly profit of $3.2 million.
A change
Shortly after that call with analysts, KeyW announced Moodispaw was departing. "Mr. Moodispaw reluctantly decided to step down due to health reasons," the company said.
Only two weeks after that announcement, KeyW relayed news that Moodispaw, 72 at the time, had died. KeyW's founder -- who was so closely associated with his company that many couldn't quite imagine him without it -- would no longer lead it.
Pisano began seeking a successor. When she and board member Deborah Bonanni drew up a list of the required qualities of the replacement, the top item was charisma.
"We knew we were replacing this iconic guy, and we needed somebody with a personality," Pisano said.
Eventually, they landed on Weber, an industry veteran who was serving as chief operating officer of services contractor XLA. Where Moodispaw was jokey, Weber was more reserved. Moodispaw wore Hawaiian shirts; Weber was more likely to assume the buttoned-up wear of the Beltway contracting crowd.
But Pisano said she saw that Weber, well prepared during his interview, would be able to roll with the punches.
"We didn't want to just pick somebody who did it by the absolute book and didn't have any type of personality to be able to deal with issues that might come up," she said. "I think there's some people in this world that don't laugh enough in a day, and I don't know if I can work with those type of people."
Weber, for his part, was acutely aware of Moodispaw's outsized role in the company.
"It was absolutely Len's company -- no question about it," he said in an interview from KeyW's Falls Church, VA, office. "There were very few things that didn't have his thumbprint on it. Len's way, Len's vision, Len's thought was used to describe pretty much everything you would ever talk about with KeyW, from the logo and the name down to where the company was headquartered, how we faced the market."
Weber decided not to make any immediate changes. But within months, he began putting his own stamp on the company.
The first step was to sell the company's systems engineering and technical assistance business. By early 2016, KeyW had lined up a buyer.
Later that year, KeyW announced two separate transactions to sell off the products of Hexis, the commercial cyber business.
Weber said that sale would have been tough for Moodispaw to complete. "Len was so close to it that it was going to be very difficult for him to turn from that goal," he said.
But Weber said he had given the businesses time to improve their performance.
"I said openly, 'Look, if it's turned the corner, if it really is sustainable, then we should see that in very short order, but, if not, then we'll look for alternatives,'" he said. "I saw all I needed to see in those two quarters. It was just not a business that was going to succeed and allow us to put the proper focus on the intelligence business that was our real special core fabric."
With Hexis and the SETA business out of the way, KeyW now needed a new identity, one that wasn't tied up with commercial cybersecurity or with Moodispaw.
"That was a problem, and it had this thing that was very real in Len's passing that was just kind of hanging there," Weber said. "I don't want to say it was an, 'Oh my gosh, what do we do,' but it was palpable. You could tell."
Selling the commercial and SETA businesses made room for KeyW to figure out a path forward, he contended.
"We are an organization that can collect, transport, store and analyze, take information, turn it into intelligence," Weber said. "When we got that down and that drumbeat, that cadence started to resonate with the employees . . . it served the purpose of we know who we are, we know the market we're serving, the management team is focused on it."
Weber made additional changes, hiring Mike Alber to serve as chief financial officer and establishing a new business development organization. He said KeyW hadn't had a business development organization because Moodispaw didn't think it was needed.
By summer 2016, KeyW executives were thinking about acquisitions. "We started turning outward, instead of just an inward focus," Weber said.
The company had a list of about 40 companies, large and small, under consideration. It began to zero in on Sotera, a private equity-owned defense contractor based in Herndon, VA. The company, purchased near the peak of contracting valuations in 2011, had watched the federal budget shrink in the subsequent years.
KeyW announced its plan to acquire Sotera -- which had about $225 million in anticipated 2017 sales -- in March. The deal increased KeyW’s work with Pentagon organizations and other agencies to 17 percent, up from 13 percent. The rest of its work is with intelligence agencies.
As part of the plan, DeChello and Mark Willard, who had also been with the company since the early days and was serving as chief operating officer, agreed they would depart.
Shortly after KeyW closed on Sotera, it announced the arrival of John Sutton to serve as COO and Marion Ruzecki to serve as chief people officer.
The acquisition of Sotera created a far larger company with about 2,100 employees and 2017 sales of about $535 million.
Looking forward
As Weber advances the new KeyW, he said he remains cognizant of the cultural piece. Employees, he said, have asked whether he will strip the company of the touches that made it feel different. They worried about the parrot logo, wondering if it will be eliminated.
"What they really wanted to know is, 'Are we going to become one of those lifeless, soulless [companies]?'" Weber recalled.
While he acknowledges he wouldn't have chosen a Key West theme and a parrot, Weber said those pieces have meaning to employees.
At a recent new-employee lunch, he said he went around the room, asking each person why they joined KeyW.
"Almost to a person, they just say this company feels different than the last place that I worked at -- the way you recruited me, the way it felt in the in-processing, the way I'm treated," he said. They say, "'It feels like in the appropriate time and the right form, I can have fun here.' So I am all for that as long as that does not connote sloppy."
Weber said he has sought to respect the company's quirky culture, but that there has to be a focus on the work. "We do nobody any favors if it's a fun place to work and we're going out of business," he said.
Key to success, Sullivan of Seaport Global said, is for KeyW to demonstrate it can grow without buying more companies.
"In order for us to get excited, we’ve got to see organic growth," he said, noting that both KeyW and Sotera have had their challenges. "Can the two together find some common ground? Maybe."
Tobey Sommer of SunTrust Robinson Humphrey agreed. To expand, KeyW needs to take advantage of the new batch of customers Sotera brings, he said.
"Having a customer relationship and past performance should allow KeyW to bid for work at those new agencies," Sommer added.
Weber has said the Sotera purchase puts KeyW on a path to grow its annual sales to $750 million or even more.
At its current size, he said, KeyW remains a place where he can have personal relationships with the company’s employees.
"I know there's a size where it's too big, and I know there's a size where fun goes to die," he said. "But I don't believe that it's a billion dollars, I don't believe it's double the amount of employees we have."
"I have no doubt in my mind that KeyW as a billion-dollar company looks the same from a, 'Is this place fun? Is it different? Are we like the others? No, we're not,'" perspective, he said. "Past that? We'll assess that beyond that, but I think we've got our work cut out for us now to take this business and start moving it toward a billion dollars."