Stabilized Success

Stabilized Success

MANAGEMENT by Mark Gordon | Managing Editor

All it took was two years - and a crafty $20 million risk - for Ken Sanborn to turn his company from a $5 million small business to a $150 million-plus juggernaut. Up next: Managing it.

Ken Sanborn's company that builds stabilized surveillance cameras for use on military and law enforcement vehicles was so lean earlier this decade, he personally took on a wide variety of tasks, from poring over payroll figures to making the daily FedEx run.

But Sanborn carved out some time to plan a few cunning risks, too.

And no gamble was bigger than the one Sanborn took in late 2005. That's when the company, Sarasota-based Gyrocam Systems, went up against experienced technology giants such as L-3 Communications Corp. for a $43 million contract to build and install stabilized camera systems for U.S. Marine vehicles. Sanborn spent $20 million of borrowed money and funds from a private investor to buy up parts and equipment used to build the cameras, which, when completed, sell for about $350,000 each.

The buying binge served the dual purpose of allowing Gyrocam to stock up on the materials for internal use while preventing its competitors from getting them when they needed to bid. "It put a strain on their chances," says Sanborn, "because they couldn't get the parts they needed."

After a tense 15 months of waiting and hoping - this was, after all, a federal government contract - Sanborn's big risk paid off. Gyrocam, the Review's 2006 Technology Innovation Award winner for the Sarasota/Bradenton region, won the Pentagon contract. It built 27 cameras the first month and 30 the second month, a frantic pace for a company that had been assembling as few as 20 camera systems a year.

"There was no other company in the world that could have done that," says Sanborn, who adds that he always considered his buying binge more of a strategic move than a calculated risk.

Gyrocam's success obtaining and completing that project still reverberates. For starters, Sanborn, 55, and his team are no longer thought of in Pentagon circles as the kooky outsiders who tried to put an infrared surveillance camera on the roofs of trucks.

The success has also led to more lucrative contracts. The latest, and biggest, came in early May, when the U.S. Dept. of Defense awarded Gyrocam a $302 million contract to build and install up to 500 mast-mounted camera systems on U.S. Army vehicles in Afghanistan and Iraq.

Indeed, the initial risk paid off so well Sanborn can no longer be the guy who checks the FedEx box or handles the payroll. Over the past three years, the company has gone from $5 million in annual revenues to more than $130 million and from 25 employees to more than 110.

What's more, it recently converted a 28,000-square-foot warehouse down the street from its headquarters near the Sarasota Bradenton International Airport into a manufacturing facility. The expansion doubled the company's total space. Now Sanborn and Gyrocam's biggest challenges are shifting, from technology to management. Says Sanborn: "There's a whole hierarchy that wasn't here two years ago."

'My baby'

Sanborn made his first big decision within that new hierarchy early last year. That's when he hired a chief executive officer, someone who could run the day-to-day operations of the company as it bid on, and won, more lucrative contracts.

Sanborn asked his friend, Darrell Egner, a former Tampa police officer who worked in the department's surveillance and air services unit, to fill the position. Egner's involvement with Gyrocam has been one of steady progress, starting in 2003 when his Tampa-based aviation services company, Southern Air Systems, became one of Gyrocam's biggest vendors.

By 2005, Egner was running a Southern Air subsidiary that served as Gyrocam's on-the-ground field service group while Sanborn's crews were installing cameras directly onto vehicles in Iraq and Afghanistan. Egner also joined Gyrocam's board of directors that year.

Even though Sanborn choose a trusted friend to be his first CEO, the move was still painful, akin to first-time parents hiring a nanny. "It isn't easy," says Sanborn. "This is my baby."

More executives and department heads have since been hired, an obvious necessity for a company that has grown its employee base more than 350% in two years, as Gyrocam has done. New positions at the company include a director of manufacturing, a customer service boss and a chief of engineering. A former NASA scientist recently filled the engineering position.

Sanborn and Egner have split up their roles based on skill sets. Egner uses his administrative expertise to run the company, doing the things that Sanborn used to do, such as managing budgets and other backroom activities.

Sanborn is using his new found time to focus more on the company's long-term vision and meeting with clients.

Passionate beliefs

Even through Sanborn is moving away from Gyrocam's daily grind, he hasn't lost his entrepreneurial drive. For instance, he is still known in the company for asking employees one key question when they come to him with an idea about a new product or a thought about a client issue: Do you believe in it enough to stake your job on the outcome?

"If you don't believe in it and aren't passionate about it, you're dead," Sanborn says. "It's just never going to go anywhere."

Sanborn says it was that steadfast belief in himself, and his product, that has led to Gyrocam' success. That, plus the deep pockets of Jagen Investments Pty Ltd., a billon dollar Australian private equity firm that was the source of much of the money behind the parts-buying binge. A pair of Jagen executives currently sits on Gyrocam's board.

Sanborn estimates he has also put an additional $3 million of his own money into the company. The result of all that money and risk has not only been revenue and profit increases for Gyrocam, but a product that can do good for American troops and their allies fighting the War on Terror. No less than President George W. Bush commented on just that when he personally visited Gyrocam's headquarters and factory floor in 2006, when he was campaigning for U.S. Rep. Vern Buchanan, R-Longboat Key.

Gyrocam's core product is its Triple Sensor camera, which is mounted on heavily-armored military trucks known as Mine Resistant Ambush Protected vehicles. The camera can rotate 360 degrees and can be stabilized up to 30 feet above a vehicle. It also combines high-resolution color, heat-sensitive thermal imaging and night vision to provide three kinds of views.

Troops can use the camera to check a pile of debris up to 200 yards away to see if it's really debris or if it's a hidden Improvised Explosive Device (IED). "You now have taken a person and given him a bionic eye," Sanborn says. "And he can do it on the move."

While the military's use for the product is carrying Gyrocam now, Sanborn realizes it won't always be that way. He doesn't want the company to overly rely on those contracts. So Gyrocam has also been marketing its cameras to police departments and other federal agencies that fall under the homeland security umbrella - another untapped market for the company.

Says Sanbron: "That's a bigger market than the Defense Department ever was."

Entrepreneurial beliefs

Ken Sanborn tells all of his employees at his company, Sarasota-based Gyrocam Systems, that the best way to succeed through adversity is to never stop believing in yourself - or the idea or the product.

It's a belief that's likely genetic. Sanborn's father, Dan Sanborn, owned a cable TV station in Lakeland, where he also was a well-known commercial airplane pilot and businessman. And Sanborn's grandfather on his dad's side, Harold Sanborn, was the ultimate risk-taking entrepreneur.

Harold Sanborn ran one of the largest military clothing businesses in the country during World War I, outfitting just about the entire armed forces. He lost the entire company in the Great Depression though, so he packed up his family and decided to drive from New York to Miami to start over.

But the family ran out of gas, and money, when it reached Wauchula in Hardee County. Desperate, Harold Sanborn struck up a conversation with a local ranch-owner, who agreed to loan the New Yorker money and land to build homes in the area, so he could entice his fellow New Yorkers that once worked for his clothing company to move south.

Ken Sanborn followed his father into the TV industry; his first job was as a reporter-cameraman for WFLA in Tampa in the 1970s. He went on to work for ABC News and the channel's 20/20 program, where he worked with Barbara Walters and Hugh Downs, among others, and was behind the camera for several famous interviews, including one with Libyan leader Muammar al-Gaddafi.

Sanborn would later start his own aerial photography business, a company that later became Gyrocam. And he says his unwavering belief in his ideas was the fuel that kept him going through lean times.

Gyrocam is now going through a massive growth spurt, including recently winning a $302 million contract from the Pentagon to build and install up to 500 mast-mounted systems on U.S. Army vehicles in Afghanistan and Iraq.

Good governance

Stories of government hurdles slowing down business progress or outright halting it abound on the Gulf Coast. Some of the entrepreneurs and executives on the wrong side of those stories have been voicing their concerns lately, including in the pages of the Review.

But Gyrocam Systems founder Ken Sanborn takes the contrarian approach to local government, specifically with the Manatee County Economic Development Council: Sanborn reports a positive experience there.

When Sanborn was seeking to move the predecessor company to Gyrocam from New Jersey to the Gulf Coast, he initially looked into Lakeland and other areas closer to Tampa. The Lakeland native said officials there gave him the brush off, so he looked further south.

He ultimately was introduced to Nancy Engel, executive director of the Manatee County EDC. Sanborn says Engel introduced him to other local officials and helped him with permitting and other paperwork.

"Nancy and her group at the EDC have been phenomenal," Sanborn says. "Nancy is the reason we're here."

BY THE NUMBERS

GYROCAM SYSTEMS

Year Revenue % change

2005 $6 million

2006 $110 million 1,733%

2007 $130 million 18%

Source: Gyrocam Systems

REVIEW SUMMARY

Business. Gyrocam Systems, Sarasota

Industry. Technology

Key. The company has grown its annual revenues by more than $150 million and its employee base by more than 350% over the past two years.