- The Washington Times - Monday, June 4, 2001

Richard Kay talks about his decision 15 years ago to investigate technology business opportunities as one of the most momentous events in his life.

At the time, he was working at his father's printing shop in Wheaton, Md. He had graduated from the University of Maryland with a business degree in 1979 and was uncertain what he would do with the rest of his life.

Last month, the Technology Council of Maryland selected Mr. Kay as its Entrepreneur of the Year. His company, Bethesda-based OTG Software, has offices in 15 states, partnerships with some of the computer industry's giants and international contracts. Next month, the company plans to triple its office space with a move one highway exit down the road on Maryland's I-270 Technology Corridor to a new 100,000-square-foot complex.

"I had a little bit of luck, a little bit of timing and a little bit of money," he says. His publicly held company, which provides online computer data storage and management for customers, holds about $100 million in financial reserves.

Marketing also helped. Mr. Kay was able to identify niche markets in the computer industry that represented big growth potential. "It was a high-margin, fast-growth area that I wanted to be involved in," Mr. Kay says.

For the past five years, OTG Software has grown at the rate of 50 percent per year. Mr. Kay's greatest concern about the recent slump in the technology industry is that it will slow his company's growth expectations.

A main criterion for becoming Entrepreneur of the Year was "weighted on someone's ability to foresee an opportunity, then take the opportunity and assume the risk to make it happen," says Dyan Brasington, president of the Technology Council of Maryland. "Clearly, we felt that Richard had done that."

His philanthropy roles as funding chairman for Best Buddies, a mentoring program for mentally retarded persons, and a board member of Venture Philanthropy Partners, which helps fund nonprofit organizations, also helped, she says.

"I think he's an astute businessman," says Gabe Battista, chief executive officer of Reston-based TalkAmerica Holdings Inc., a local and long-distance telephone service provider. "He has the ability to look at the desired result and then translate it into the steps necessary to achieve that result."

Regular guy

Unlike some businessmen whose arrogance grows with their success, "He's just a regular guy," Mr. Battista says. "He's got the same interests as everybody else. He has an interest in sports. He has an interest in family. The same Rick Kay you see today is the same guy he was 15 years ago."

Like other people, Mr. Kay admits to failures. Unlike some, however, he says he's managed to learn from them.

"I think any entrepreneur has had failure in his life but never looks at it as a failure," Mr. Kay says. Instead, he says, he tries to convert his setbacks into "a steppingstone to be more proactive in correcting the failure."

OTG Software is the second business success for the 45-year-old entrepreneur. His first was National Operator Service Inc., a Bethesda-based telephone service reseller company that he co-founded in 1987. National Operator Service has become one of the nation's largest telephone service resellers.

While he still ran National Operator Service, he realized that many of his clients had unfulfilled needs to store and manage data about their customers, products and software. The versatility built into Microsoft Corp.'s Windows NT software in 1992 opened the door for complementary computer functions like those offered by OTG Software.

At the same time, Mr. Kay recognized the untapped potential for the storage software National Operator Service used for its own computer data files.

Bingo. OTG Software was born. The OTG stands for Online Technologies Group, the name of the original company before "Software" was added in 1999. With the money and experience National Operator Service provided him, Mr. Kay says he wanted "the challenge to do it again myself."

For the first three years, he hired business managers to run the start-up company. As its client base grew, so did the needs of the company. Mr. Kay left National Operator Service in 1995, took over full-time with OTG Software, and began seeking new frontiers.

"I was trying to hire people to run the organization and recognized that unless you do it yourself, because it's your own money, you can't get the kind of commitment you want," he says.

A buyout offer from competitors tempted him in 1995, but he rejected it. In 1998, Baltimore's ABS Capital provided the venture capital that helped pave the way for a public stock offering. (OTGS on the Nasdaq.) On the first day of the initial public offering on March 10, 2000, the value of the company's stock more than doubled.

Like many computer industry companies, some of OTG Software's competitors are its partners. Veritas Software Corp., for example, uses OTG Software's products for data storage but competes with its e-mail messaging systems. IBM and Hewlett Packard resell some of OTG Software's products to its own customers.

Finding good people

Staffing for high-tech services like OTG Software's can be a problem. The company uses contractors for some of its software engineering, some in distant countries who have never even seen OTG Software's offices.

"One of the ways we're getting around the shortage is by going to offshore development," Mr. Kay says. "India is the perfect place to get expert, offshore talent."

The only communication Mr. Kay has had with most of his counterparts in India has been through e-mail.

When not bouncing between board rooms and investor meetings, Mr. Kay likes to bounce basketballs at local gymnasiums.

He works out at a health club on weekends. He also likes to attend games of the Redskins, Wizards and Capitals. He makes his home in Potomac with his wife and four children, ages 7, 5 and twin 2-year-olds.

His family, he says, is part of his formula for success, which includes recognizing a business opportunity, developing a plan, bringing in the right people "and all along the way have a very supportive family."


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