Q&A: GTSI CEO Jim Leto On Company Changes

Two weeks after Chantilly, Va.-based GTSI announced that Dendy Young would step down as CEO, his successor, Jim Leto, took time to talk to GovernmentVAR senior editor Jill Aitoro about the changes at the company.

Leto: Ready to interrogate me?

GovernmentVAR: Yup. You've avoided it long enough. I know you must be incredibly busy at the moment, so I appreciate it.

Leto: Well, I did manage to find the men's room.

GovernmentVAR: That's a step in the right direction. So why don't you tell me a bit about your background. What about your experience makes [the CEO position at GTSI] an ideal fit?

Leto: Well, years ago I was director of the data-processing group at AT&T that figured out how to break up "Mother Bell." We prepared the case that got presented to Judge Green [who broke up the Bell system] and said it would take five years of data processing; he came back and said, "Do it in 18 months." Eighteen months later, we were done. AT&T then promoted and transferred me to Canada to take over AT&T Canada. We started out with almost no revenue and after three years had over $100 million in equipment sales and half a billion in cross-borders toll traffic. From there, I came back to start the AT&T Systems Integration Group. In three years, we won $9 million in contracts and ramped up to $600 million in revenue. After my stint at AT&T, I took over a company called PRC that was close to $650 million in revenue and got very profitable. Three years later, we were almost $1 billion. I sold PRC in three pieces, and then took over a dot com that was losing about $27 million a year; at the end of three years, we were profitable with a banking line of credit; I sold that company and retired. Eighteen months later, someone ran a plane into the Twin Towers, and I started getting calls from Washington to come back and make a contribution. I came back, and John Gioia talked me into running his company. In three years, we took that company past $100 million in sales.

GovernmentVAR: So what's the strategy you use for that kind of growth?

Leto: Empowering people--making sure that direction and strategy are clear and that everyone marches to the same tune. I get rid of all of the infighting within a company. I don't tolerate that. And have fun. My philosophy of management is hedonistic.

GovernmentVAR: It will keep people around. So how did GTSI lure you to this position?

Leto: Well, I was on the board for 10 years, so it was a company that I watched gradually change. We began to take a look at some of the products we were providing and the margins. Roughly 90 percent of our order base generates 10 percent of our revenue, and 10 percent of our orders generates 90 percent of our revenue. The significant difference in the margins is interesting, especially because the cost structure is not that different. It was obvious that we needed to become increasingly a high-end solution provider and move away from being an end-all to every customer for every known product that's in the technical arena. We represent 1,500 vendor products and have vendors we represent that we haven't sold a product for in years. There's a cost for maintaining those relationships. We'll be monopolizing the vendors that we have, increasing the services content of our contracts, and selectively bidding contracts that have high engineering content and high services content. We'll be more focused on providing the solutions than the commodity product.