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July 2003
Entrepreneur Richard Kay is out of work, nursing a bad knee, dreaming about the Washington Capitals and the Washington Wizards, and having the time of his life. Rick, a VPP founding investor and board member, is redefining his life after the sale of his Rockville-based data storage company, OTG Software.
In today’s economy, Rick’s situation is enviable. He owned about 40 percent of OTG when Legato Systems bought the company last year for $403 million. He has had the luxury of experiencing some of the surprises and complexities of life with young children—his are ages 9, 7, and 3 (twins!). He recently began setting up a new business, Strategic Management Consultants, LLC, where he will provide business consulting services. He says he is particularly interested in helping people who are developing new businesses. There’s a good deal they can learn from his success as well as his mistakes, he says.
Last month, in jeans and a sweatshirt, Rick organized books and pictures in his new White Flint office and looked back on his last ten years. He readily admits that he has just been in the right place at the right time. He has acted more on his gut than on any formal training. “No one ever thought this kid was going anywhere,” says Rick. He was born in Washington, DC, and raised in Montgomery County, Maryland. After graduating from the University of Maryland, he went to work at his father’s printing company and then at a telephone service reseller. A friend introduced him to the software business in 1992. They realized that increasing reliance on computers and the explosion of data on the Internet meant that people needed a way to store and access a great deal of information offline. Their new company landed an early contract with GTE and Microsoft to develop a Windows storage product. OTG was able to adapt the software to work with hardware from leading manufacturers like IBM and HP. “The market requirements assisted in our growth,” Rick said. “It was a combination of luck, timing, a little bit of money, and great people.”
The business grew to 450 employees with 12,000 customers, including more than 1,000 credit unions and over 500 hospitals. The company went public in 2000 on the day that the NASDAQ reached an all-time high. “For six months we were floating,” Rick says with a chuckle. Their IPO that day, and subsequent offerings, raised $100 million in capital, enabling OTG to make three acquisitions. Then, in 2002, Legato, an international data storage company, stepped in to acquire OTG. Rick joined Legato’s board and provided strategic direction to help the organization through a transition period.
Now he’s on to other things, including nurturing his interest in nonprofit organizations. He credits his involvement with VPP for what he has learned about nonprofits to date. He is intrigued by the “hands on” approach to helping organizations build capacity. And “if Jack Davies has anything to do about it, I’ll end up on a board soon,” he says of Davies, one of his most enthusiastic investment partners in both VPP and Washington sports. Rick and his wife, Rebecca, are also focusing more attention on their family foundation, which funds youth literacy and programs that help children with learning disabilities.
Rick also has more time to focus on his investment in the Washington Capitals and the Washington Wizards (Lincoln Holdings). Raul Fernandez, the colleague who introduced Rick to VPP, also convinced him to buy into the sports partnership. “He told me it would be an opportunity to be in a special sports ownership club and that the Lincoln Partners were all passionate, competitive, and fun. He was right. Ted [Leonsis] is the best partner you could have. He created a real belief that we each have value to offer and he respects each of our investments.”
Rick looks around at the vintage photographs and posters he’s begun to hang in his new office and shakes his head slowly, still surprised by his own story. “I remember every day how fortunate I am.”
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