Featuring 580 Strategies
Read Time: 15 Minutes
Welcome to Episode 60 of Students vs. Startups. This week, moderator John Gilroy talks with Rusty Pickens, Founder of 508 Strategies. After eight years serving in the government, Rusty took what he learned and has applied it to his passion of making government run better through technology.
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John Gilroy: Welcome to Students versus Startups: Showdown on the Potomac. My name is John Gilroy. I'll be your moderator today. So a big round of applause for show number 60. Oh, yeah. Sixty, wow. Great, great, great. Just want to shout out to our friend, Al Gore. We always thank him for inventing the Internet and looking down on people like Vint Cerf and giving us the ability to have this little podcast here.
John Gilroy: If you've listened before, you know we sit in the offices of Eastern Foundry. We kind of took over a conference room. Big old table here. Students on one side of the table, startup on the other, and we have a little 26-minute conversation. We walk out of here fast friends.
John Gilroy: Our students are kind of an interesting group tonight. Mariam tell us about your background, please.
Maryam: My name is Maryam Sayyad, and I am a master's student at Georgetown University with a concentration in information security. I also have an undergraduate degree in information systems and operations management from George Mason University. And during the day I work as an IT professional and do a lot of project management related work.
John Gilroy: Okay. Great. And our other student is Matt Ledder.
Matt: Hello, I'm Matt Letter. I have an undergraduate degree from Georgetown University in finance from the McDonough School of Business. And I'm currently in my technology management master's at Georgetown University. In addition to this, I have experience in government and defense consulting, and I'm a member of the Georgetown men's soccer team.
John Gilroy: And our startup today is a company called 580 Strategies, and the founder and principal is a gentleman by the name of Rusty Pickens who I've known for several years. Our backgrounds kind of cross over this strange state called Oklahoma.
John Gilroy: And when I met Rusty, it's so funny, because we've had students here and two weeks later they wound up as startups sitting on the other side of the table. And Rusty's kind of like that. I first knew Rusty, we worked for this big, big, big organization, and now he's just a tiny startup, so we get both sides of Rusty. Maybe the title should be Both Sides Now.
John Gilroy: Rusty, tell us about your background and what you're doing now, please.
Rusty: Sure. Hi, John, and thanks for the opportunity to come on the podcast and talk about it.
Rusty: So, yeah, I one-man show startup 580 Strategies. So I am a former government appointee who's consulting services back to the government at this point, is the shortest version of that. But I do come from Oklahoma. Local boy from southeastern Oklahoma there, went to East Central University. I have an undergrad degree from our local college there in computer science, so sort of your traditional software development programming skill set, and then made the leap to DC to do Indian Affairs work on Capitol Hill. So I'm just a smidge Chickasaw Indian from back home.
Rusty: And then next thing I know I'm out waving signs and knocking on doors for this senator named Barack Obama, who was kind of disrupting the political space at that point, and got a phone call to go work for him in Pennsylvania. So I went and did the OFA '08 campaign in Philadelphia. And then the next thing I know, we won the election and he's president, and we're all coming to DC to sort of help make our impact on the world. And that was nine-ish years ago now.
Rusty: So I've done eight years in the government service side of the world as a political or as a technology subject matter expert across three agencies, so the US Small Business Administration, the White House in the middle, and then the State Department there at the end, and after that a really long hiatus for a year and a half just traveling.
John Gilroy: Yeah, I remember, after the election you said, "I gotta mellow out somewhere." Did you go to Tahiti, or where did you go?
Rusty: I went to India for a month and made my way back home through Hong Kong and Seattle, so it was sort of a little sojourn.
John Gilroy: But in spite of that background, his big claim to fame ... and ladies and gentleman, drum roll here, please ... is he was once in the FFA, which is the Future Farmers of America. Now, that's really, in Oklahoma FFA, that's a big deal.
Rusty: Southeastern Oklahoma without being in 4H and FFA.
John Gilroy: Did you have your blue jacket too?
Rusty: I did have a blue jacket.
John Gilroy: Oh, you see, yeah.
Rusty: It still fits. State farmer . . .
John Gilroy: He's a real Sooner, yeah. He's really a ... good, good, good.
John Gilroy: I had him on a radio show a couple of years back and we bound some ... we talked about the federal government and some of the challenges of being shackled by the restrictions in the federal government and developing software and talking about transition to the Cloud and agile software development and some of the strengths and weaknesses of moving to the Cloud. Rusty is very humble. He led an initiative that saved the government lots and lots of money, thousands and thousands of dollars by making a transition to the Cloud, and it was one of the first organizations that did that. Many, many agencies looked at Rusty, and said, "Hey, look what Rusty's doing, and we're gonna do the same thing," and they saved money as well.
John Gilroy: And so his claim to fame is that he worked with federal government, high level agencies, but he saved them tons of money. Other agencies looked at him and said, "Hey, I want to do what he's doing." So he has a real good skill set when it comes to making transition, understanding full concept of Amazon Web Services and Salesforce and everything else.
John Gilroy: So Maryam, I want you to jump in here and ask any question you want except about Oklahoma.
Maryam: So how have the recent political changes impacted your company?
Rusty: That's a great question. So I think at face value and especially if you're watching the news ... and full disclosure, I have to regulate my news these days, and maybe not check Twitter as often ... it seems very tumultuous and very difficult at the highest levels, and that may be true. But for us as IT modernization folks, I think we can just kind of set all that aside. At the end of the day, the common ground that I find is both civil service, foreign service, anybody working in the mid-level ranks of government, and the citizens expect government to work faster and better, and so you want your websites to look nice. You want to know where to find IRS form whatever. You want to know how to write to the President. Really simple things like that. So everybody kind of has that common ground.
Rusty: It seems to be very apolitical. If we can save money by moving to the Cloud and having better technology efficiency, why wouldn't we do that? And so regardless of administration, party, or even politics, I think we want the apparatus that is the executive branch or the entire federal government to move forward better and spend taxpayer dollars in a more smart, wise manner.
John Gilroy: Put that man on Meet the Press. Hey, take that Meet the Press on Sunday. It's a pretty good answer.
John Gilroy: Matt, jump in, please.
Matt: From what I know about the Cloud, I remember reading about Netflix, the reason Netflix switched to the Cloud was they had a fire in their data-
John Gilroy: Motivation, huh?
Matt: Yeah. ... in their data center, and they weren't able to ship out their DVDs for a while. So that's kind of a scenario of realizing maybe we need to hop into the future here. You led some initiatives about moving to the Cloud. Was there a moment of chaos that did that, or did you just know it was the better alternative?
Rusty: Well, so, I mean, gosh, I could tell stories about this forever, Matt, but the old state of the government, so think back at least to 2009 before we had a federal CIO, before there was a Cloud mandate and a full-court press to start doing this stuff. And even today still some of these big agencies, they spend hundreds of millions of dollars on mainframe servers and data centers and racks and racks and racks of hardware that is in a government building somewhere, and they feel safe because that's the way we've been doing it forever. But there's so much cost overrun, and that means you've got to own the thing soup to nuts.
Rusty: So like the Netflix example, if your data center caught on fire and burned to the ground, you'd better have a good backup strategy, and you'd better have some fault tolerance or maybe another data center and another way to get citizen data back online.
Rusty: I wouldn't say there's a particular moment of panic anywhere in my career, but there has been issues of data loss and things like that where the servers crashed and they went down and the backup failed. And as IT people, that's really embarrassing, and that's the number one thing we strive to avoid. And if you're running those servers on your own, you are completely responsible for that. If you're good at it, it's great. If you're bad at it, that's just you have to deal with the responsibility of it.
Rusty: In moving to the Cloud, it's not really cheating, but you put that responsibility on the Cloud service provider, so the Amazons and the Salesforce and the Microsofts of the world. And they're so much better at it. So their business models are built on never going down and never losing your data.
Rusty: So whereas, the government, I would say, is really bad at running technology platforms, because we should be in the business of serving citizens, right? I say we. No longer we. The technology providers who do this stuff for a living have really smart people and lots and lots of technology, and so they just handle that. So the backups and the uptime and all that stuff is sort of handled for you. Now, yes, you pay for it, but it's much less costly than a data breach or losing that stuff or being down for a month while you rebuild the data center because it burned down, right? So that's one of the primary drivers to get into the Cloud.
John Gilroy: I have a real practical question. There was a time when you worked for the federal government and you had a little check come in every two weeks and you had this thing called vacation and sick days and you had the liberal leave policy, and we just turned the world upside down. It's just you. You're seven days a week. You gotta worry about eating. You gotta worry about taxes. I mean, you flipped.
Rusty: Yeah. Yeah. It's a totally different world, John. So the technology part oftentimes I will tell people is the easy part, because it comes naturally and I know that, and I'm really skilled in that area. But I'm used to having lawyers and HR and benefits coordinators and security people and bosses and underlings and all this, contractors. And now I'm the contractor. I'm the one-man shop, so I've had to learn all that stuff. And it's a little bit nerve-racking. So it's quite anxiety inducing when you're deciding to step out there on your own and sort of hang out your own shingle and you know it's just you. So you don't have all that support stuff.
Rusty: Some things make that easier. I got really good advice when I was thinking about starting this up of hire a good lawyer and a good accountant, and that has helped a lot. So tax returns just came in last week, and it wasn't nearly as bad as it would have been otherwise if I had been doing those tax returns.
Rusty: So you kind of lean on people. But to your point of there's only so many hours in the day, and I was coming out of the government where they expect eight out of you, and as a political, we were working a lot more than that, right?
Rusty: And now the work-life balance I think is better, but you've got to go put in the hours. You've got to make the customer happy, and it's all on you. And so that's a little bit of a different perspective than I had before of you either make it happen or you don't. And if you don't make it happen, then the check ain't coming, and then you're in trouble, right?
Rusty: So there's always this motivation to just keep moving as quickly as you can to keep your customers happy, but also keep yourself sane.
John Gilroy: Mariam, you got a question for Rusty?
Maryam: Sure. So how would a client complete this sentence? I used to be able to do blank, but now because of your help I can blank.
John Gilroy: That's a good one.
Rusty: Okay. So I hope you're spinning that in a positive way. Right. So I would say if I were to leave a happy customer, they would say, "I used to take 40 hours a week, 60 hours a month, something like that, investing in time and technology overhead." Right? "And now thanks to 580 Strategies we have a digital practice that is better, that gives me much more efficiency."
Rusty: So complete the back end of that sentence in a lot of different ways. "I have more time for my staff to focus on citizen services instead of tech. I have the ability to ship software in two weeks or one month; whereas, it might have taken years before to do or it may not have been possible." Or "I can guarantee my staff or my agency that the system is gonna be online and the data is gonna be backed up." Right? So things like that that I think, depending on the subject of the agency, which specific one you're talking to, they might not be able to answer the question that way.
John Gilroy: Matt.
Matt: What exactly made you want to transform from all this government work to starting a startup, because like you said, it comes with a lot of new pressures, and a lot of new responsibilities? So what caused this change?
Rusty: Right. Well, so that's an awesome question, Matt. I think there's two different facets of it. So the first one was being my own boss. So able to control my own destiny, and that's been a really welcome and refreshing part of what I'm doing now in my work. Because oftentimes, especially if you're in an administration or in the little b bureaucracy of a government, there's a problem, and you've gotta go fix it. So it was very much like that's the biggest fire. Put on your fireman hat and go get it, and you can't question that. You just gotta do it like we're going for Team Obama, and we're gonna take that hill.
Rusty: Nowadays I get to pick who I want to work with. So oftentimes we were trying to persuade or lead or drag people kicking and screaming into Cloud modernization. And now on the other side of the fence it's not worth my time to try to persuade people as much. I can do a business proposal to them. I can give them my best advice, but if they're not willing to do it, I can't make them do it, and I couldn't make them do it as a political appointee either. But now from the outside I get to partner with people who are actually really interested in doing that work. And so they may have the money or the leadership and they want to go do this stuff, and there's that sort of natural alignment there. So given my sort of go-getter nature to just go take and make projects successful, now I get to pick who I work with, and that's really interesting.
John Gilroy: What's interesting for me is I teach a course in social media marketing at Georgetown, and I gotta ask you the marketing question, buddy. So do you do newspaper ads? Sign spinners? Where do you do your advertising, or how do you let people know what you do?
Rusty: Right. Sure. Well, so the easiest part of that in the beginning, John, was just word of mouth. So from our inner agency groups or some of my time within the government people knew of me and my skill set. And so sort of the minute that I flipped over my LinkedIn and started talking about this, one of my best clients at this point just came to me and said, "Hey, what are you doing, and why don't you come help me," and gave me the hard sell and kind of twisted my arm a little bit. It's like you can't really say no-
John Gilroy: Good position to be in. Yeah.
Rusty: ... when people want to work with you that much.
Rusty: But, yes, lots of blogging, lots of tweeting, and sort of trying to get the word out there. That's a full-time job almost. And so it's really crazy, just like the single business owner here wearing all these different hats. So doing client services for a certain amount of hours in a week. Business development, you always have to be doing your percentage of that. But there also has to be time to take the photo for Instagram, put the stuff up on Twitter, write the blog post, get it over to the editor. So I think it's just kind of full-court press, but also as just one person, it's pretty easy for me to get a full schedule, John. So hopefully that will be a better problem to have later when there's actually more folks on the team. Keeping them busy will be a more challenge.
John Gilroy: Well, Matt, we don't talk full-court press here. We talk soccer talk here, right?
John Gilroy: You want to jump in for a question here, Matt?
Matt: Yeah. In this transitional period what have been your biggest challenges so far? That's good that you have those connections that people that still want to work with you, but there's got to have been some challenges too, so-
Rusty: Yeah. So I guess the initial challenge would be how do you start a company? And so going out, type the thing into Google and start reading about all these different corporate structures. So I ended up with an LLC, figuring all of that stuff out, going and finding a law firm that could help me do all that and thinking through, what does this thing look like in six months or six years? And kind of seeing if that fit.
Rusty: I also mentioned the branding earlier. The hardest thing was creating a name out of nothing and coming up with a logo that is attached to it. And so oftentimes in the government we've got these fancy seals, and we've got all these color palettes, and there's US design standards for websites. There was none of that. So I paid a designer, "Help me with a color palette. Help me with these logos." And a lot of that was just trying to be creative right-brain throw a bunch of ideas at them and sort of pick through what else happens out there. But finding that logo was pretty tough for me as a techie left-brain guy, it was a little more difficult.
Rusty: And then more recently thinking through the business model and sort of pricing structure. So I'm sure you guys' MBA folks will appreciate this, it's like just an hourly wage is super easy, but maybe that's not the best way to do it for both parties concerned. So really thinking through, can I offer package deals or deliverable base pricing or the government, and especially Eastern Foundry here, firm fixed-price contracts really take the pressure off of some of that. It's like I will guarantee you 25 hours a month to do X, Y, and Z. And if you need more, that's okay. If we underburn sometime, that's okay too. But sort of that agreement with your client of this is gonna be regular for both of us so that you can budget for it and so that I know that I'm gonna get paid instead of just doing hourly, come in, and, oh, we only work 45 minutes. So that's .75 hours or whatever. That's been a challenge has been figuring out sort of the traditional business side of that. How do we price our services?
John Gilroy: When you said LinkedIn, it was music to my ears, because these students are gonna have a two-hour lecture on LinkedIn in two nights, and boy, they're gonna be sound asleep I know that much.
John Gilroy: So do you budget for advertising as a startup or is it word of mouth, or is it somewhere down the road, or how do you budget?
Rusty: So I'm just budgeting time right now, John, so that's it. I took and made a concerted effort as I was leaving the government to pay a professional to help me with resumes and the LinkedIn pages, so sort of spiffing that stuff up, trying to get some media out there in it so that if people are looking for you or they're associating my name with 580 Strategies, they ought to be able to find the stuff easily and get a little idea of the substance of what I can bring to bear.
Rusty: So that took a lot of time. And after that you sort of get settled, but then you've got to curate it too. So you've got to make sure and, okay, I need to write a blog post. A social media calendar is important to just think about what does the next 12 months look like? And are there any milestones or holidays where you want to write a blog post that means something to people? Those are the-
John Gilroy: Wait a minute. Has he been to our class? Hey, what's going on here? He's stealing my thunder. We gotta-
John Gilroy: Mariam, you gotta pick on him for something. He knows more than I do about this stuff.
Maryam: All righty. So sounds like you have a great skill set. And as John mentioned, you've helped a lot of people and kind of inspired them to figure out how to save money. How long do you think it will be before somebody offers to buy out your company?
Rusty: Oh, gosh.
Maryam: Or would you be bought out?
Rusty: That's a question I hadn't really seriously considered. It's always been about just running my own thing for a while. And full disclosure, I would love to build a team, so I'd love to put together a team of smart, technical folks who could go solve some of these Cloud problems for the government. But I haven't thought about an acquisition offer. And hopefully maybe that's a great problem to have six or seven, ten years from now, and I don't know. I think that's a question for a different time really far in the future, so-
Maryam: All right.
John Gilroy: Matt, jump in.
Matt: I'm looking at your keywords here, and I see Amazon Web Services. I'm wondering what your relationship is for that?
Rusty: Well, so primarily a consumer of their product. So whenever I was at White House, we run whitehouse.gov on their infrastructure. We ran whitehouse.gov on their infrastructure. But we used an open source product called Drupal, put that on top of Amazon Web Services. And honestly they wrote the book on Cloud, so they have been infrastructure as a service forever.
Rusty: And I don't know if you know much about their history, but the only reason Amazon Web Services exists, period, is to sell books on the Internet. And so out of the book-selling business, they decided they needed an Internet presence, and so they created this virtual server infrastructure that could run on the Internet. And then they had the idea of, oh, my gosh, this is really valuable. And so now when you think AWS, that's what you're thinking is, I can do the same thing that Amazon does for their web pages.
Rusty: But it's really, really flexible. It's pretty cost effective, and it's really powerful if you know what you're doing with it. And so we had it set up for whitehouse.gov to handle all that traffic that people would throw at us. I mean, you can imagine if a press release went out or some newsworthy event, people are gonna hit your website like crazy. We needed AWS to be able to handle that, and then down under the covers a little bit, some of that fault tolerance. So when you asked about Netflix and their data center burning and the DVDs going up in smoke, you can prevent that with AWS. So they have data centers all over the world. A lot of them in the US and some of them overseas, and you can just backup your data into another data center somewhere and sort of know that it's safe and spin it up quickly if you need it.
John Gilroy: Love the topic of keywords. A keyword also in your LinkedIn profile is Salesforce. So it looks like you have a little shelf. You have five or six tools here. And so Matt walks into your office. Nine-sixteenth wrench. That's not gonna do. Ball peen ... oh, drill. And so you can pull Salesforce off it. You can pull AWS or you can look at the architecture and decide ... you walk on ... wrong place. Go next door, because we can't help you. So a lot of different tools you can handle.
Rusty: Right. Absolutely. So I would say that's another benefit of running my own company now is that I am sort of platform agnostic. So there are lots of tools in the toolbox, as John is saying, and they're not always the right fit for every job.
Rusty: So Amazon Web Services is infrastructure as a service, so if you need server space or computing power, they're great for that. If you need a CRM system that tracks people and maybe cases that are coming in from citizens to the government, Salesforce is your answer for that stuff, right? And then Microsoft and others. There are a lot of players in those spaces, and some of them are similar. There's a lot of overlap there because Cloud is generally the same sort of underlying concept. But way up on top of that on the software is the service side they get radically different.
Rusty: And so for me, I don't try to go into a new client meeting saying, "You must use X sort of software. Pay for these licenses." It's, "What kind of business problem are you trying to solve? How can this infrastructure help you?" And maybe I can guide them to finding the right one or moving off of one that was a bad fit and into another one.
Maryam: Do you have a defined target market? Do you just work with the government, or you're open to private organizations too?
Rusty: Great question. So I'm starting with federal government, because that is close and easy and I live here in DC and most of the customers are federal agencies. But I would love to diversify it, and so state, local, federal government, international governments too. So there's been some interesting opportunities that may be bumbling around for other countries, because they're all sort of solving the same problems. Every government has citizen services they need. Everybody's doing simple things like case management and correspondence. Those are some universal things that people need help with. And if we solve that problem here in the US, we could easily take it to some other country. So definitely not putting the blinders on too much for that. I'd love to grow into some of those other markets.
John Gilroy: Matt.
Matt: I'm wondering, where do you see yourself expanding? You become very established, and what would you want to expand upon yourself now? You're doing what you're doing right now. What are your goals for the future?
Rusty: Right. Well, so the very first goal was pay the bills. Make sure that I can still live in my house and keep myself fed. So I've sort of stabilized on that. We're actually coming up on the one-year anniversary of incorporating, so I'm still in the first year, just barely. So I'm sort of proving to myself that this thing can pay the bills.
Rusty: In terms of growing, though, I really want in 2018 to find another contractor too that provides a little more long-term stability, and then start adding some smart people. And I don't have grand designs to add hundreds of people and make this a huge company, because I think the services market, I'd rather be smaller and kind of smarter and really narrowly tailored to a certain type of skill set. And I think if you were to look at it in five years, I'd be happy if I had double-digit employees out there helping me do this stuff and not really some kind of rigid top-down hierarchy, and maybe we could be working all over the country and doing the same thing for state governments.
John Gilroy: Okay. Mariam, give your final question for Rusty, please.
Maryam: Sure. So if you could select only two methods to reach out to your target market, what would they be?
Rusty: Oh, gosh. So I got to whittle all those down. I do have to be honest. It gets a little schizophrenic sometimes because there's too many ways. I'm gonna go a little bit old school and say email marketing still works really well.
John Gilroy: He did take the class.
John Gilroy: He did take the class.
Rusty: I also spent two years teaching the State Department how to do that too. Open rates on emails and email lists still reach customers, right? So just being able to do that from a citizen services perspective or as a startup, people will open those emails and look at them if you give them the opportunity. But you gotta make it worth their while too. Put some good content in there.
Rusty: Second, I think it's gonna have to be Twitter. So Twitter is pretty wide open and pretty thoughtful, and if you curate your lists properly and you're sort of in the right spaces and you use the right hashtags, you can pop up really quickly in, no pun intended, birds of a feather, right? So like-
John Gilroy: Oh, that was really bad.
Rusty: ... Salesforce people or transformation people. Yeah. But Twitter helps a lot.
John Gilroy: Matt, last question, please.
Matt: So right now you're working with the federal government and you have your experiences from there, and I'm wondering if while you were working in the federal government if you ever saw something that you thought needed to be changed that your company could provide if you ever got big?
Rusty: Right. So that's a really good question. So I would say that after eight years of having worked in the government and pushing so hard for Cloud stuff and writing policies and helping with things like FedRAMP, right, that make it easier for the government to do this stuff, working with procurement professionals to figure out how to buy technology better. We did so much work, and I feel like we only started to crack the surface of this thing. We did not get full, large digital transformation across the government.
Rusty: And so honestly that's a big factor into why I'm doing this now is that I feel like we've done all this work. We kind of have the tools in the toolbox. We've got some demonstrated success here and there, but there's so much more to do. I mean, there's so many systems out there. There's so many IT dollars spent on agency systems that need to be modernized. And so trying to help with that. And then a little more selfishly and closer to home, there's also a little bit of a vacuum for the types of skills that I'm offering on the small business level and especially in the SBA minority disadvantaged space. So there's lots of stuff out there, but I don't know that a lot of it is really high quality and what you'd be looking for. So in the immediate short-term, trying to be a subcontractor to people who can use my expertise that help them with those things.
John Gilroy: Well, Rusty, if people are listening to you want more information, what website should they go?
Rusty: Right. So 580Strategies.com, 580Strategies.com.
John Gilroy: Easy to remember. If you would like to have show notes, links, or transcript, please visit theoakmontgroupllc.com. I'd like to thank our founding sponsor, Radiant Solutions. If you are interested in getting involved in geospatial projects, contact Radiant Solutions. We are hosted by Eastern Foundry, a community of government contractors who are bringing innovative solutions to the government marketplace. For more information, go to Eastern-Foundry.com. If you'd like to participate as a student or startup, contact me, firstname.lastname@example.org. And thanks for listening to Students versus Startups: Showdown on the Potomac.