Interview transcript
Terry Gerton So this is a really interesting case. You started as a language services firm, and now you’re a mid-tier government contractor with a pretty broad portfolio. Tell us how you evolved the company from its origins to where it is now.
Julian Setian So my mother, who was a professor of applied linguistics, she founded the company originally to provide skilled expertise for a lot of the low-density languages … for the federal law enforcement agencies. We were kind of this sleepy little company that nobody was paying attention to for several years until 9/11 happened, and that was kind of a big turning point for us. When suddenly it became starkly obvious that the government just didn’t have enough foreign language expertise organically to meet the demands in the post-9/11 era. So we started out essentially becoming the largest supplier, among the largest suppliers of foreign language expertise to the federal government. That just put us into a lot of really unique spaces that we then use as a platform to grow and diversify the business from there. So fast forward to today, we’ve got essentially four core business units, then two subsidiaries. We have a technology and engineering business. We have an overseas logistics and supply chain business. We have a professional technical services business supporting the intelligence community, so we’ve become quite diverse since then over the course of the last 25 years.
Terry Gerton Was there any particular turning point on any of those additions that you made that helped you scale SOSi in a particular intentional way?
Julian Setian So we became acquisitive in the 2016 time frame, and that was thanks to, in no small measure, to the banks that finance us. I mean, to this day, J.P. Morgan has been an extraordinary partner for us, helping us to grow and diversify our business. But that was really kind of the big turning point. I had made a commitment in 2016 to make a major acquisition each year from that point onward. We’ve come close to holding that commitment since then, but really, in this industry, this is the ultimate roll-up industry. If you don’t factor M&A into your growth strategy, it’s really hard to scale and become a $1 billion+ business.
Terry Gerton So you really grew SOSi without small business set-asides or outside equity. You grew that internally. What holds all of those lines of businesses together for you?
Julian Setian At the end of the day, it really doesn’t matter if the government’s buying F-16s or services. There’s a certain methodology to doing business with the government. Once you master that methodology, you can not just grow, but you can diversify very, very quickly. And so at our core, we’re a national security contractor. We follow the budgets very closely, but we make sure that our capabilities and the solutions we offer are very closely aligned to whatever the national security imperatives are of the nation. And so, what really kind of binds it all together is that we’ve got this sort of mission-oriented focus that permeates just about everything we do. And, you know, we’re national security contractors first, everything else second.
Terry Gerton As you think about the space that you’re in, it’s very competitive. There are major primes, lots of folks trying to get in on the small business side. You sort of sit in the middle. How would you say SOSi differentiates itself? Is it agility? Is it depth? Is it special technical knowledge? What sets you apart?
Julian Setian You know, I tell our people all the time, it’s not what we do that sets us apart, it’s who we are. You know, we are the largest privately held company in the space that has no outside institutional capital in the business. What that basically means is that our planning horizons tend to be a lot longer. We take the long view on almost everything that we do. You know, there just aren’t that many companies like us out there and we’ve been in business for 30 plus years with essentially the same ownership. I’ve run the business for the last 25+ years personally myself. So it’s really kind of the personal touch and just sort of this family-oriented atmosphere. So yes, we’re a family-owned business. We really try to push that culture down to the very last person within the organization.
Terry Gerton Let’s explore that culture for a minute because you’ve described a very unique ownership structure in this environment, family owned, family operated, and yet in the national security space, you’ve got to work with folks who are highly technical, highly cleared. How do you keep current in the job market and at the same time hold to that family culture?
Julian Setian Again, I think, you know, we’ve never had a hard time selling ourselves, as it were, to the talent pool. People are generally attracted to us if they have an entrepreneurial mindset. If they want to be close to the customers, we tend to have, you now, our intimacy with customers and their missions tends to be a lot greater than I think the ownership structures of some of our largest competitors in the space. And so we’ve never really had a hard — we attract a certain type of talent and we’ve ever had a time finding the right types of people to work for us. They’ve gotta be mission oriented, they’ve gotta entrepreneurial, really wanna break new ground and actually make a difference and at the same time be held accountable for results.
Terry Gerton I would imagine your workforce is fairly distributed as your clients would be, so how do you keep that culture streamlined and focused when folks are out in all different kinds of places?
Julian Setian So we’re in 16 countries today. We’ve operated in close to 40 around the world over the course of the last 25 years. You know, keeping, maintaining a common culture across distributed work locations is an age old challenge in this business because so many of our employees work in customer spaces. You know, I make myself very accessible. I spend a lot of time on the road. We hold regular town halls with employees, you know, really genuinely. And then of course, you know, over the course of the last 10 years technology has become such that it’s become a lot easier to communicate key messages and themes with a distributed workforce. And so really it’s just about staying engaged, staying plugged in, keeping a very flat organizational decision-making structure and really spending time out in the field in the trenches with your employees.
Terry Gerton You mentioned that one of your lines of business is tech integration. How do you keep SOSi on the front edge of technology adoption and then how do you bring that technology through to your client?
Julian Setian So I think the industry is at an inflection point right now where innovation really does matter. It’s not just empty talk. What’s really made a difference for us is in the last handful of years in particular, establishing partnerships with non-traditional technology companies that are outside of the government contracting space and really becoming a facilitator or channel into the government space. Forming strategic partnerships with pure tech firms that are not government contractors first, or tech firms first, government contractors second, particularly those with tried and proven commercial industry capabilities. You know, that’s really an important part of the growth process. And I think what’s really set us apart in the last couple of years, we’ve — a lot of the changes that are taking place right now in the federal acquisition world so far, FAR 2.0, which a lot people have made a lot, you know, a lot a lot those changes really play to our strengths as an innovative entrepreneurial business.
Terry Gerton You mentioned the FAR. There’s certainly a lot of change happening in how the federal government is acquiring everything from products to services, and especially in the national security space. If you were to look ahead five years or so, what would you say are the biggest challenges and opportunities out there in the acquisition space? And how are you positioning SOSI to take advantage of those?
Julian Setian Wow, that’s a big question. I mean, a lot of companies are grappling with that right now. I think you’re going to see a lot less FAR Part 15 acquisitions. The way the FAR is evolving, there’s going to be a preference placed on companies that offer commercial solutions. So in other words, technologies and approaches that have already been tried and tested in the commercial space. And the use of OTAs has become extremely prevalent. I think it’s close to $30 billion of awards been made on OTAs this year to date alone, which is greater than it was in the prior year. Undoubtedly that number will start to increase. You know, again, this is when innovation really matters. And so, you know, I think you’re going to see an increase in FAR Part 12 acquisitions, you know, unique capabilities that are brought to the forefront that have already been tried and proven in the commercial sector, and then scaled through best-in-class vehicles through FAR Part 8. The way we are adapting to the new marketplaces. We’re looking for opportunities to productize things that we do. So we have a collection of products, a real, no-kidding IP that we own, that we’ve developed in-house, or that we have acquired through acquisitions, that we’re really kind of leading with technology at this point, leading with those products. And also looking for opportunities to identify clusters of services that really genuinely are differentiating. So, things that we do that other competitors don’t do that we can then productize, build some brand awareness around and then lead with those as we approach the marketplace.
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