The Value of Vision Michael Saylor wants MicroStrategy to last as long as the Roman Empire and be as important as GE. Hubris? Sure, but his ambition infects employees and fires up customers.
(FORTUNE Magazine) – At four on a recent afternoon, Michael Saylor sat down to explain the history of MicroStrategy, his nine-year-old software company. By 7 P.M., the 34-year-old CEO had spun his company's story over a time line that encompassed explanations of how Roman war chariots begat the modern railroad, the mathematical predictability of Gorbachev's fall from power, the role of titanium in Oreo cookies, the entire plot of a Robert Heinlein book he'd read when he was 12, and the admirable qualities of the beaver. He detailed a future that spanned generations--reaching even to a time when his company might no longer exist. But what will exist, Saylor was sure, is the legacy of MicroStrategy's dedication to mankind. Concludes Saylor: "When people remember us, I want them to say, 'these guys automated saving lives.'"
Michael Saylor doesn't make software that saves lives. He makes so-called decision-support software: programs that sift through massive amounts of stored data to let companies like McDonald's evaluate which hamburger promotion attracts the most middle-class men during lunch hour, or lets the Nasdaq sift tens of millions of trades for signs of insider trading. More than 400 customers like General Motors, Kmart, and CVS Pharmacy have paid upwards of $500,000 each for the ability to ask their own databases complex questions and get the answers back in neat charts, grids, or maps that any executive can understand.
It's also software in an increasingly competitive market, featuring not just data-mining specialists but also the database providers themselves. Which brings us back to the Romans and saving lives. Because what Saylor sells, apart from the software, is membership in his vision of the future. It's a sales pitch that has made him very rich--his 60% stake is worth $370 million--and earned him cultlike devotion from his clients and employees. And it may be what keeps MicroStrategy a step ahead of its rivals.
Who, after all, wouldn't want to bear witness to the future? So sincere is Saylor's enthusiasm that it's hard not to believe you're tapping into the next big thing. Here's a classic Saylor moment, as he discusses his latest product, Telepath:
"What made Edison great?" he asks, sitting in his anonymous townhouse in Vienna, Va., and sporting a pair of heavily starched khaki cargo pants. "He gave us light. GE. We bring good things to life. They built the generators, and they built dynamos to pump electricity. I want to see a world where we have universal intelligence, and that will mean 10,000 intelligence dynamos. There ought to be dynamos everywhere, spinning data, always delivering the right information to the right person. I want to know when my wife's in the hospital or my boat is smacked or my equities are in trouble or the government's unstable and something has happened to my hometown. I think that people will surrender their personal information to a centralized intelligence dynamo...because the cost of not doing so is an early death, an accidental death, a lack of an opportunity, a lack of income, a lack of happiness."
Whew! It's hard to believe that the Telepath now is little more than a Web-based stock-portfolio program that talks back. A subscriber enters his stocks, and Telepath will call, e-mail, or page with updates and requested information, as when a stock hits its 52-week high or low, or when it achieves the highest P/E ratio in its industry. In lesser hands Telepath could sound boring. But in Saylor's world it's more than a killer app, it's practically a divine one--one destined to become a standard in the same way that today's railroad gauge is based on the standard set for Roman war chariots. Laughs David Folger, an analyst at industry watcher Meta Group: "He can make his products sound like they're the solution to world hunger."
In the short term--a phrase rarely heard around MicroStrategy's Vienna headquarters--the evangelistic sales pitch has worked wonders. Since MicroStrategy started selling its data-mining software in 1994, the company has gone from losing money on $5 million in sales to netting $6 million on sales of $106 million in 1998. The ninth-biggest vendor of decision-support software in 1995, MicroStrategy is now fourth, according to industry publication OLAP Report. Employee turnover is 10%, remarkably low for a software company.
Saylor's confidence even seeps into his legal documents. MicroStrategy's prospectus for last June's IPO takes the term "forward-looking statements" to new heights. In the Risk Factors section, Saylor lists some 39 different potential competitors, ranging from the legitimate (Microsoft and Oracle) to the optimistic (Sprint, @Home) to the bizarre (US Airways' Esavers, Mercury Mail).
Still, Saylor is no crackpot. In person he seems neither delusional nor didactic, just incredibly focused. He simply knows that he has the answers, and his intensity rubs off on people he needs--even customers. Metrocall, the second-largest U.S. paging company, inked a seven-figure deal with MicroStrategy in December to distribute Telepath over its network. Getting details about the service is almost impossible. All the companies give you are breathless visions of Ticketron selling tickets over Metrocall pagers, or users paying for instant updates on how their Congressperson is voting. "The applications are limitless," hyperventilates Tom Matthews, senior vice president of corporate development at Metrocall. "The ones that will be the most successful haven't even been thought of." Even competitors concede the power of Saylor's pitch. Says Larry Ford, CEO of a MicroStrategy competitor, Information Advantage in Eden Prairie, Minn.: "They're a marketing machine."
Saylor's been driving this hard for years. The Air Force brat graduated at the top of his 1983 high school class in Dayton before enrolling at MIT on an ROTC scholarship. (MIT was the school attended by the protagonist of the Heinlein book read by the 12-year-old Saylor). He won degrees from two schools: humanities and social sciences, and engineering. He even wrote a thesis for MIT's Sloan school of management. (The thesis, a computer program that mathematically plots Machiavelli's Discourses, is what could have helped Gorbachev.) A benign heart murmur kept him out of the Air Force.
Instead, Saylor signed on with a small company that built computer simulations. Nine months later he jumped to Du Pont to build a global financial computer model for Du Pont's titanium business. (Titanium: the element that makes the white stuff in the middle of Oreos white.) After finishing the project in 18 months, Saylor asked Du Pont to keep him on as a contractor. The company agreed, paying him $250,000, which he then used to start MicroStrategy. With his MIT roommate and frat brother Sanju Bansal, another MIT friend, and one buddy from ROTC, Saylor began making business-strategy software and in 1994 turned the company's focus to data mining.
This odd mix of MIT and Air Force defines the vision that MicroStrategy employees now live by. The atmosphere at work is collegial in an MIT kind of way: Egghead kids learn intense amounts of information and freely question authority. COO Bansal--the micromanager for macrovisionary Saylor--hires mostly from top schools like Dartmouth and, yes, MIT. Top jobs are doled out on merit: The two heads of Telepath are 28 and 24. Every quarter, MicroStrategy shuts down for company outings: in the summer it's a MicroStrategy university, where heads of business lines teach courses on company offerings. In the winter, it's a cruise. This year, Saylor and 925 employees sailed the Caribbean on Celebrity Cruises' 815-foot Century. Spouses were forbidden.
Then there's the military side. New techies are sent through a six-week, six-day-a-week, 16-hours-a-day boot camp. Even customers are urged to go to boot camp, though theirs is a scaled-down version lasting just three weeks. The camp seems to weed out the weak and to make Army-like followers of the rest.
Such devotion is easier when everyone knows the general has no life besides Microstrategy. Single, Saylor decorates his townhouse with awards from the trade press and framed articles about the company. To prepare for the public offering, he read 500 prospectuses before deciding on a structure where insiders get ten votes a share to common shareholders' one. Goldman, the original underwriter, balked at that deal, so Saylor went to Merrill.
"The more I studied, the more I realized that there were two types of IPO," says Saylor. "There's the IPOs that the entrepreneurs do when they want to get rich really quick, and then there's the IPOs done by the billionaires, the moguls, like Murdoch, Malone, Redstone, Craig McCaw, Ralph Lauren. If [Goldman] let us go out with this capital structure, not only do they have less leverage over us, including not having the ability to merge us out of existence, but also they set a precedent, and now another company can come along and say, 'look at what MicroStrategy did.'" See, his IPO was designed to do more than just make MicroStrategy strong; it would also serve as a model for other entrepreneurs.
Saylor's goal, after all, is not so much to beat competitors but to build a better world. Which brings us back to the admirable qualities of the beaver. Although the beaver is destined to be "cougar bait," in Saylor's words, it finds a stream, builds a dam, creates a pond, and builds a lodge in the middle of the pond. Continues Saylor: "And then in that pond live all sorts of other creatures. Fish, ducks, waterfowl, whatever, you name it.
"And they're alive because of what that beaver engineered...and I feel that this company is a dam. And we created a habitat for not just 1,000 people but for the 5,000 that depend upon them, and a few thousand customers. It's an oasis in the middle of a world of chaos."