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SMALL BUSINESS
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| CONCEPT FIVE McLean Internet consulting |
The BusinessConcept Five is a 150-employee information technology company based in McLean that helps companies quickly and securely offer their business services over the Internet. The PlayersCEO Barry Horowitz, former president of The Mitre Corp. The Problem How to build a client base in the private sector with a new company that has deep roots in the world of government contracting. |
 artwork by Chris OBrion |
The Background Concept Five was started in 1996 as a for-profit division of Mitretek, a research center that applies information technology in such areas as law enforcement, postal services and telecommunications. Mitretek was formed that same year out of The Mitre Corp., a federally funded nonprofit research and development center that does work for the Defense Department and the Federal Aviation Administration. |
| Concept Five was formed because Horowitz and
others at Mitre realized the federal government
was going to spend less money on research and
development. "We felt that one answer would
be to form a commercial company and keep part
ownership with these nonprofits," says
Horowitz. "We started with 100 people and no [clients] -- a very unusual business proposition," he says. The shift to private-sector work was a big change, Horowitz says. In government contracting, Mitre's reputation attracted clients. "[We] never [had] to prove we were capable." The Solution Horowitz started with technology workers from Mitretek who had technology skills but didn't know much about sales and marketing. "We really had to build that infrastructure." Horowitz hired experienced hands like Peter Privateer, formerly with Axent Technologies, now Concept Five's senior vice president for marketing. And the company sought out experienced sales representatives. The initial emphasis, says Horowitz, was in what employees knew best -- creating systems. Using that expertise, Concept Five was able to convince companies that depend on security that its services were credible. Plus, employees did security analysis. That gave them a chance to look for other areas where they could do work for a client "and in that way, grow a relationship," Horowitz says. "Security was a good starting point in that regard." Concept Five leaders also saw an opening for the company's expertise in building worldwide communications networks, Horowitz says. They also anticipated a trend away from customized integration and toward product-based integration, with more prepackaged software. That allowed Concept Five to provide services more quickly and at a lower cost. Revenues in fiscal 1998, which ended in October, were $17.5 million. Current revenues are running at an annualized rate of about $20 million, Horowitz says. In March the company secured $25 million in financing, which included funding from private equity funds ABS Capital Partners and JMI Equity, both out of Baltimore. Mitretek, which was the original owner of Concept Five, now owns about 5 percent. "Now the big challenge for the company is having the capacity to grow," Horowitz says. "We're in that phase of what I call capacity expansion, as well as continuing to try and get a stronger market presence." Virginia Business collects tales of innovations from small businesses statewide. If you have a case study in problem-solving, e-mail lugincius@va-business.com or call (804) 649-6232.
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