Amid Chaos in Iraq, Tiny Security Firm Found Opportunity tells a story about making money admidst the chaos of war:
In July last year, Scott Custer and Michael Battles, two former Army Rangers in their mid-30s, found themselves in charge of a $16 million contract to guard Baghdad’s airport. Barely funded with credit cards and money borrowed from a friend, their nine-month-old company had neither guns, accountants nor guards. It had to hire Nepalese Gurkhas to staff the project. Since then, the company has squabbled with corporate clients and Pentagon auditors. Four employees have been killed
Yes, their names are Custer and Battles, and they named their company Custer Battles:
The company that became Custer Battles could hardly have sprung from shallower roots. In late 2002, it was still in search of a name. Its co-founders considered Azimuth Partners, after the name of a compass point, but instead chose to name the company after themselves. Mr. Custer, 35, a distant relation of the ill-fated Gen. George Custer, concedes they draw giggles in Iraq, where it’s often noted that Custer was defeated by the locals. “We don’t really have a comeback,” he says.
With the company’s payroll on credit cards, Mr. Battles borrowed $10,000 for an exploratory trip to Iraq. Custer Battles won a contract to provide security for the Baghdad airport:
Custer Battles’s bid was cheaper, but more important, it promised to have 138 guards on the ground within two weeks, faster than the others.“We got that contract because we were young and dumb and didn’t know better,” says Mr. Custer, a former Army captain who studied at Oxford and Georgetown universities. “Anyone with experience would have said they’d be there in eight weeks.”
Frank Hatfield, the senior U.S. airport official in Iraq at the time, says speed — not cost — was the deciding factor. All he wanted, he says, was an assurance Custer Battles could handle the contract.
Custer Battles lacked more than experience. No banks would lend it money. In the end, the U.S.-led Coalition Provisional Authority lent it $2 million in $100 bills that Mr. Battles stuffed into a duffel bag and personally deposited in a bank in Lebanon.
They had only two weeks to set up the project. In mid-July last year, new hires mustered in Jordan and had to be convoyed across the desert. The company had to buy all its equipment from the U.S. with only three full-time employees in its Virginia office to help.
It found half of the guards it needed in Nepal, a common source of private security guards, and the rest in the U.S., mostly ex-soldiers hired through word of mouth. Mr. Custer flew in an accountant from Deloitte & Touche LLP, who immediately bought a safe.
The airport facilities were littered with broken glass and human excrement. Expecting to stay indefinitely, Custer Battles rehabbed the offices with carpet and wallpaper, installed showers in the bathrooms and added a wireless Internet connection. A short distance away, the company built a trailer park to house employees, complete with swimming pool and pool table. This was done partly to demonstrate Custer Battles’s seriousness to potential clients.
They got the men in place two days early but had to sacrifice basic logistics, such as payroll systems. Mr. Custer says the company didn’t figure out how to pay people until well into the next month.
Less than 10 miles from the city center, Baghdad International Airport quickly emerged as perhaps the safest and best-placed real estate in Iraq. The company took full advantage. Custer Battles built kennels for 18 bomb-sniffing dogs beside the camp and has parlayed the animals into $16 million in Army contracts. It also used a terminal to house 40 Filipinos brought in to provide catering services.
Incidentally, “salaries can run as high as $20,000 a month for top ex-soldiers” in Iraq. “Most of the guards hired by Custer Battles came from a Kurdish subcontractor who paid its employees less than $200 a month.”