Several big investment banks advised Leonard E. Moodispaw that he shouldn't do it — but the CEO of KEYW Corp., a cybersecurity company in Hanover that's been in business for just two years, wouldn't listen.
Restless and eager to expand quickly, Moodispaw took KEYW public last month — after canning the Wall Street naysayers who told him to wait for a more hospitable stock market. The company, with the help of smaller investment banks, raised $89 million on the day of its initial public offering. Within weeks, its market cap rocketed to about $300 million.
"We fired the big guys and did just fine without them," Moodispaw said in a recent interview.
The company now has extra money to make acquisitions and plans to build on its relationship with the federal government's defense and intelligence agencies. It has acquired eight companies since it was formed, including Sycamore, a Frederick-based cybersecurity provider it bought this month for $27 million.
For Moodispaw, the 67-year-old former National Security Agency senior manager, trial lawyer and seasoned corporate executive, guiding the growth of KEYW is a second act to the success he experienced with its predecessor, Essex Corp., a signals processing and systems integration firm. That company was bought in 2007 by Northrop Grumman for $580 million.
"I'm never going to retire," he said. "I enjoy what I'm doing. I feel like I'm 40."
Despite working closely with buttoned-up government agencies, Moodispaw is known for encouraging an easygoing corporate environment that intentionally evokes the laidback attitude of the denizens of Key West, Fla. — his favorite place to relax.
The company's name and stock ticker symbol — KEYW — is a reference to Key West. He and other corporate executives dress casually — no ties — even when going on road shows to investor conferences and Wall Street.
In the Securities and Exchange Commission filing that detailed KEYW's public stock offering, Moodispaw is described as "still growing older but not up, enjoys Rock 'n' Roll, chocolate and Key West, Florida."
The parrot, the unofficial bird of Key West, is part of the company's logo. Stuffed parrots and fake palm trees are scattered throughout the company's squat headquarters in a Hanover office park. Many of the parrot artifacts are gifts from friends and colleagues who know about his affinity with Key West.
Playfulness aside, Moodispaw is using his decades worth of connections and experience to quickly assemble a nimble company in the top-secret world of cybersecurity. But he and others at KEYW don't use the word "security;" instead, they replace it with "superiority." Cyber superiority means being able to conduct both defensive and offensive operations, according to KEYW officials.
KEYW is riding the wave of government spending on cybersecurity that is fueling other defense-related contractors in the Baltimore, Washington and Northern Virginia regions. The national intelligence budget, which includes an unspecified amount for cybersecurity needs, is slated to grow from $49 billion last year to $53 billion this year, according to the Office of the Director of National Intelligence.
KEYW doesn't fully disclose what it does for customers, which include the NSA and other defense and intelligence agencies. But officials will say the company focuses on engineering and technology solutions for its customers.
One of KEYW's main assets is its work force. Eighty percent of its 600-plus employees have high-level security clearances, which are intensely coveted in the federal contractor labor market.
The company has largely grown through acquisitions and could make more this year, according to analysts. In its most recent third quarter, revenue nearly tripled to $29 million, and KEYW posted a $4.4 million profit compared with a $1.7 million loss in the same period last year.
Before going to the public stock market for money, Moodispaw tapped "friends and family" to invest in KEYW, including investors who had been happy with their investments in Essex.
Formed in August 2008, KEYW, over a span of two financing rounds, raised $53 million from investors, including funds from Corporate Office Properties Trust, a major commercial real estate developer in the Baltimore-Washington area. COPT owns a 20 percent stake in KEYW, according to an SEC filing.
Moodispaw has quickly ensconced KEYW in the secretive and increasingly lucrative world of federal cybersecurity with the help of a core group of about 60 former Essex employees, who left Northrop Grumman with Moodispaw as part of a deal he struck to launch the new company.
"This is not just Len; this is a cadre," said Mark C. Jordan, an analyst with Noble Financial in St. Louis who followed Essex and now tracks KEYW. "It is a team and it's clearly a group of folks who enjoyed working together in the previous company."
Edwin M. Jaehne, the company's chief strategy officer, said that is focused on staying small relative to other larger defense contractors, and providing quick solutions for its government clients. Whereas its competitors might take longer to deliver solutions, KEYW wants to develop a reputation for being agile and nimble, according to Jaehne.
"Large companies have a very, very tough time being agile," Jaehne said. "Their business model is built on more traditional methods, and cyber space is different than that. It is the quintessential asymmetric environment of engagement."