Friday, May 25, 2012

El Dorado, Short-cuts, and the Music Man

Several recent events have caused me to re-visit those who think they can find what no one else has found before: the ultimate short-cut to doing business with the government.   El Dorado- the lost city of gold sought by the Spanish Conquistadors is now sought by would-be government contractors who envision themselves in heavy armor finding the elusive city.

The myths of the successful short-cuts to government contracting persist because people want to believe them, in part because of phone scams from those selling the concept of a GSA Schedule as a panacea for gov-wealth, and in part because the government itself puts out some questionable information on federal small biz programs. A GSA Schedule can be part of your B2G strategy, but it is not a strategy itself.

Let me briefly address the latter issue first. The government, through recent proposed legislation, is once again making it seem as though there is money for the taking by small businesses. Increasing set-aside goals does not help small business. Putting teeth in the current rules would be better.  Political methane, not useful business ideas, is the major product of Washngton, DC, especially during an election year.

Now, let’s move on to El Dorado, figuratively speaking. Most of us have a tendency to believe, if only for a brief moment, that there is a pot of gold at the end of the rainbow. Why else would so many people buy lottery tickets, especially when the jackpots go into the stratosphere? Many of us think we offer something truly unique with a value beyond the ability of mere mortals to determine.  Regardless of what I might tell them, the refrain to this chorus is “Yes, but we’re different…”

Regardless of the validity of that thought, the government rarely buys the truly “unique” product as it tends to be untried in the commercial world. If it were tried, it would no longer be “unique” as someone would replicate it if it proved of value.

And the phone scams seem to have replaced the travelling joke of a seminar which touted itself as the sole-source of instant wealth through government contracting. Yet people lined up and then complained when contract dollars did not occur.

The phone scam starts with a 5 second pause (the auto-dialer has to connect a human when a phone is answered), and then someone asks to speak with the “president or business owner” regarding the value of a GSA Schedule.  It seems it would not matter what you sell, the GSA Schedule is the answer.  This would be a good time to hang up. But don’t worry, like a whack-a-mole, they’ll call again.

Then we have the generic consultant syndrome, where someone who advises business owners on other unrelated matters says, when the topic arises, “Oh, government. Yeah, I can do that too.” One size does not fit all.

Al a Professor Harold Hill, it seems to me that anyone, anywhere, can pick up a little musical instrument and get a parade going to…..nowhere.

Wednesday, May 16, 2012

Irrational Exuberance vs Rational Expectations: Facebook or GovCon

So in the next days few Facebook goes public and investors are poised to exhibit the same irrational exuberance that was rampant in the 1990s. Needless to say, I will be on the sidelines of this IPO.

I am not a Facebook fan for many reasons, but I understand some of the excitement around the IPO, except the price.

Once again, many are looking for the immediate 'home run", the proverbial long ball that will save their financial butts, give them bragging rights, whatever -  without having done sufficient due diligence.

Often we see the same irrational exuberance when a company enters the government contracting (GovCon) arena. Thinking that registering with CCR or getting a GSA Schedule will automatically generate income is nothing less than self-delusion. A small company walking into an OSDBU office expecting a contract is a similar but frequent occurrence.

Rational expectations are predicated on market knoweldge, historical persepctive, patience and applying lessons learned to your current situation. Money can occur either in the stock market or the government contracting arena, but only when you really are a student of the respective market and apply lessons learned from the front lines.

Operating on rumor, innuendo, myths and outright falsehoods propogated by cold callers selling the idea of a GSA Schedule being your personal panacea will lead to massive disappointment.

Monday, May 7, 2012

A Few Thoughts on the Purchase of GTSI

GTSI, the grand-daddy of government resellers, today was purchased by Unicom Systems of Los Angeles. Initial news is sketchy, as Unicom is not a publicly traded company, but here are a couple thoughts.

This is big news for the government reseller community for many reasons, not the least of which is that GTSI is among the oldest (if not the oldest) of the IT resellers targeting the feds. For many manufacturers in the 1980s and early 1990s, it was the first and often the only stop for market entry.

As most know, GTSI has had some problems over the past few years: lower sales, sagging stock price, problems with the SBA over ANC relationships, and more. I have no interest in rehashing these.

So here are a few thoughts regarding Unicom's opportunity.

First, market entry can be accomplished organically or by purchasing an established company, and there are thousands examples of each. For Unicom, this could be a great market entry strategy. This moves them from obscure to very much on the radar.

Second, when companies with a long tradition get purchased it is usually not a good idea to change the name, as the brand equity usually means a lot to the market. In this instance, there is so much baggage with the GTSI name that it is probably better to apply the Unicom name. For many people and for a variety of reasons, GTSI was the company they love to hate.

Third, Unicom is in LA and GTSI is in Northern Virginia/DC.  Who is going to drive the Federal bus? Unicom has a GSA Schedule, but it does not seem to be very active. Now they have a TON of contracts, so they need someone who can manage these who has demonstrated success to maximize the value of each these vehicles.

Fourth, GTSI is a reseller, regardless of what the press releases say. That means they need great manufacturer relationships. They also need to make a huge decision on whether or not to continue representing hundreds of companies or to narrow the focus to maybe 25-50 companies.

Fifth, if they are going to revitalize this company, regardless of the name, they need a great spokesperson. When CDWG made the successful run toward the top of the VAR category in the mid 2000s, Max Peterson was the "face" of the company. he was a capable, credible and available spokesperson. In my opinion, this was one of several critical factors in the CDWG growth curve.

This is a huge opportunity for Unicom Systems. Purchasing a company with a wide array of contractual vehicles, a solid installed customer base and a recognized brand name is always a plus. But in this market we have seen this before, and it is never a given that success will occur.

The unasked question is will this significantly impact the government VAR landscape?  That remains to be seen.

Stay tuned..............