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    Shannon Henry's The Download Live
    Discussion with Michael J. Saylor

    Thursday, March 18, 1999

    Shannon Henry Welcome to The Download Live. I'm your host, Shannon Henry. Today our guest is MicroStrategy's CEO, Michael J. Saylor.

    My weekly column, The Download, is a look at the latest deals, hires, and business strategies in the region's technology community. Every other week I host a discussion featuring guests making waves in the local tech scene.

    Vienna's MicroStrategy is a "data mining" software company. Read an August 1998 article on their "decision support" software for a clearer understanding of their business. MicroStrategy's first IPO in June 1998 was a huge success.

    Michael Saylor The company recently filed a secondary offering to sell 4 million more shares, taking advantage of the big run-up in its stock. MicroStrategy reported a 436 percent increase in fourth-quarter profits to $2.8 million. Founder Saylor (left) and other insiders hope to take advantage of the rapid growth and hot stock price by cashing in 800,000 of their shares.

    See how MicroStrategy's stock is faring this week and then read on.



    Shannon Henry: Hi Michael. Thanks for joining us today. Could you start off the conversation by telling us why one of MicroStrategy's slogans is "information like water"?

    Michael J. Saylor: Information Like Water means that we view our mission as something more than just "build a big company to make money."

    In western civilization, we believe that people have certain rights -- "we hold these rights to be self-evident"-- to life, liberty, pursuit of happiness, etc.

    The great business organizations made it their mission to provide a certain utilitarian entitlement to the masses: radios for everyone, telephones everywhere, a car in every driveway, etc.

    Our vision is that the information you need to make better decisions will be ubiquitous, cheap, and clean. Just like water. We will be done when everybody has access to all they need, every hour of the day, everywhere.


    Washington DC: What do you believe are Microstrategy's main competitive advantages that will make the company continue to stand out in the industry?

    Michael J. Saylor: We focus on providing the technology to build intelligence applications (i.e. applications that extract insight from large databases). Our competitive advantages in this market are:

    1. Hundreds of man-years experience building data warehouses with hundreds of gigabytes or terabytes of information. We probably have more experience here than any of our in-kind competitors.

    2. Strong insight into the types of applications and value that can be created throughout intelligence technology. We have been thinking about these issues for a decade, so we have a head-start.

    3. Strong Sales & Marketing: We have sales coverage throughout the US and Europe and hundreds of people in the field to help customers implement these applications.

    4. Strong Corporate Culture: 1000 employees dedicated to a common goal "Information Like Water" with a strong capital structure & balance sheet. This means that we can probably outlast most of our competition in this space.



    Washington, DC: Can you tell us more about DSS Broadcaster? What new advances do you plan to roll out for this wonderful program? And what solutions will they provide?

    Michael J. Saylor: DSS Broadcaster is a revolutionary product for us, because we see it as the solution to information glut. Broadcaster lets a user subscribe to receive personal information when they want it, where they want it. Thus, the burden shifts from the end-user to the central computer.

    This means you can take a vacation and leave an "intelligent agent" to watch your affairs. If anything pops up, it will broadcast to your cell phone, pager, etc. Instead of reading checking the paper or a web site every day to look for something you want to buy, you can subscribe to a service which will inform you when it is finally available.

    The future of DSS Broadcaster is to continually support richer formatting, more devices, and greater user volumes. Our latest version sends HTML/XML email, which means we can drop a list of "books you want to buy" right into your inbox, along with a one-button buy feature. We are also working to provide better support for two-way transactions via pagers and phones.



    Shannon Henry: You have to be a certain kind of person to start a company. What attributes are needed to be an entrepreneur? Which of your traits are particularly suited to the role? Which aren't?

    Michael J. Saylor: Key traits:

    a. Self-confidence and a passion for ideas
    b. Willingness to risk everything you have for something better (helps to have nothing at the point you start...I had -$4000, so it's not like I was worried about losing my house or anything).
    c. Lots of time and energy
    d. Friends who will work cheap :-)


    Arlington, VA: Can your technology be used on the internet or to enhance companies' e-commerce initiatives?

    Michael J. Saylor: Our technology allows plain vanilla e-commerce sites to be upgraded with "intelligence" features. The typical site lets the customer buy something, but provides little insight about what to buy, or security after the purchase.

    Using our software, a firm might, for instance:
    a. allow a customer to determine the exact % of customers that liked the hotel they are about to check into
    b. implement a service that pages their customers when their stock portfolio is moving rapidly in a certain direction
    c. provide banking customers with alerts when strange activity is occurring within their accounts
    d. allow medical insurance customers to pick the hospital most likely to successful treat them


    Shannon Henry: Tech executives in Washington complain endlessly about the technology worker shortage. Can you tell us about your recruiting strategies, like turning lawyers into techies and the helicopter rides?

    Michael J. Saylor: We offer them "infinite money". :-)

    Just joking. Our key to recruiting is:

    a. Offer a compelling mission:
    We intend to make intelligence ubiquitous and improve the world in the process. Think about a world without electricity, light, or water. People that join our firm are engaged in something that is "timeless, ethical, and imperative" and I think that is the number one requirement to attract and retain great people.

    b. Offer a rich culture:
    We invest in order to create an environment that is much more than a job. We take everyone on a cruise for 7 days once each year. We fly their families in for a weekend to see the company and find out more what their loved-ones do for a living. We spend 15% or so of our energies training our employees in new skills so that they can grow professionally.

    c. Make a long-term commitment, and ask for one:
    The founders began this firm 10 years ago. We expect to be here 10 years from now. Only 1 in 100 software firms can say this. None of our competitors can. This makes a huge difference with intelligent people of high integrity. They expect promises to be made, and promises to be kept.


    Shannon Henry: What kinds of technologies do you personally use? Which ones could you not live without?

    Michael J. Saylor: Nextel i1000 phone:
    I love this thing because of the built-in speaker phone, voicemail, pager, digital clarity, and nationwide roaming.

    Toshiba sub-laptop:
    3 pounds, large color screen, 90 Megs of RAM...

    Palm V:
    not much more functional than a Palm III, but I am a sucker for sleek, sexy, new electronic devices, and this one definitely fits the bill. Like the screen & form factor...

    Bose Wave Radio:
    what an amazing device...Bose is a genius and this desktop radio/alarm/CD player is really quite a work of audio art.



    Washington, DC: In connection with raising capital, could you outline the various sources of capital typically available to a start up business and the pros and cons to each such source?

    Michael J. Saylor: 1. Your time: best source of capital...allocate lots of it.

    2. Your friends time: hire them for nothing, promise them the moon, get them to work 90 hours per week with you.

    3. Your standard of living: don't live in an expensive home if you want to minimize your capital requirements. When we started out, we lived with roommates in apartments, slept on floors, lived with our parents.

    4. Your money (and friends/family): you don't have much...cut your own salary to bare subsidence and spend what cash you have on essentials like telephone, copier, and computer.

    5. Customer money: offer to consult for customers...this got us our first $10 million.

    6. Angels & Venture Capital: lots has been written about these sources of capital...I would exhaust 1-5 before approaching them.

    7. Strategic investors (Customers & Partners): probably a better choice than venture capital, because these people can give you revenue, advice, leverage, and operational aid.


    ARLINGTON, VA: Mr. Saylor,

    My name is Ben and I am a Navy Senior Chief Petty Officer and I must say what you have accomplished is truly commendable. Can you explain what your initial basic structure or process was in bringing your idea to some sort of identifiable form? Thanks and keep "aiming high."

    Michael J. Saylor: You are "what your read & think".
    You become "like those you surround yourself with"

    I read all the time, everything, wherever I am. I shove just about everything I can think of into my head. When trying to solve a problem or think creatively, I find that the more you know, the easier it is to avoid getting stuck in a rut.

    Often, I will draw from political theory, Roman history, architecture, engineering, military theory, chemistry, etc. to solve a business problem. Thus, keeping an open mind is critical.

    At MicroStrategy, we have collected a brilliant set of individuals (there are hundreds of people here who have stronger academic backgrounds than I have) who are continually challenging everything we do, looking for a better way. All those doctors, lawyers, MBAs, etc. keep driving up the quality of our organization, and I think that is one of our secrets.


    DC: What are the skill levels of people is MicroStrategy looking to hire? Can your human resources effectively sort through all the applicants, or is a prospective employee better off going through a technological recruiter?

    Michael J. Saylor: We hire everyone from high school grads to people with PhDs, MDs, law degrees, MBAs, etc.

    Please check out our web site "www.strategy.com" for information on job openings.

    We want to hire 800 people this year, so there are lots of interesting positions. Feel free to submit your resume directly to our recruiters.


    Shannon Henry: What's your favorite part of your job?

    Michael J. Saylor: I love creating new things, introducing new technology to the world that will change the way people live.

    I also like the chance to make a few constructive changes in the way people live. (Example: take 900 people on a cruise with their friends for one week).


    College Park, MD: The increase in information has created a bevy of devices to handle it, but many cannot communicate with each other, so users end up developing redundant (wasteful) databases. Are you working to integrate information sources such as telephone, internet, PDAs, and others?

    Michael J. Saylor: I think that the internet will cause a number of databases to centralize over time. Example would be Amazon.

    It is becoming easier to implement business strategies where the consumer inputs information into one database that then talks to others via tcp/ip.



    Austin, TX: The receipt of personalized information from various web sites, like yahoo!, seems to be a big trend. How personalized can information delivery get while not bombarding the end-recipient with too much information?

    Michael J. Saylor: The key to avoiding information glut is to give the customer control over what information they wish to receive. As long as you can turn the TV on/off and change the channel, you don't mind that there are 500 channels flowing in from the satellite. In fact, you probably prefer 500 channels with an on/off switch to 1 channel that is always on and LOUD.

    Our software excels in allowing the individual to fine-tune the filter on the information services they wish to receive.


    Arlington, VA: Is there a point in a company's growth where it becomes too expensive to maintain the company culture (i.e. Caribbean cruises and Friends and Family weekends), and what does one do, as CEO, to try to keep that culture alive as a company grows so large (while maintaining profitability)?

    Michael J. Saylor: The expenditures we make on our culture are an investment. Thus, we will never be too big to keep doing them, as long as we are competent in our execution and rational in our planning.

    When does the country get to big to celebrate Christmas and Fourth of July?

    My job is to guard our culture from the bean-counters :-) and remind everyone that eliminating weekends WOULD NOT increase productivity by 40%.


    Alexandria, VA: Mr. Saylor:

    The privacy debate is becoming such a big issue in the United States and the European Community. Even Microstrategy has acknowledged this as a possible threat in your public offering documents.

    Has your company considered ways you might actually *capitalize* on the privacy concerns -- perhaps by creating products to ensure that certain data can be walled off, perhaps even by customer choice?

    Your vision for the company seems to be about controlling data -- would you agree that this concept fits with that vision?

    Michael J. Saylor: Information is like money.

    You put your money in a bank because
    a. you trust the bank not to give it away
    b. you expect some return/interest to accrue

    You will deposit your data with an information service provide if
    a. you trust them not to give it away
    b. you get some value (insight) from your deposit

    If there is no value for the consumer, they will keep their data.

    If their trust is violated, there will be a "run on the bank"


    Shannon Henry: What are some of the lessons you learned in taking your company public? What surprised you about the process or the markets?

    Michael J. Saylor: Lesson learned:

    Measure twice, cut once:
    The IPO can really help a company, but it can also permanently stunt its growth if it is mismanaged. Ours worked out well, but we had many chances to royally screw it up.




    Shannon Henry: You value education highly, and you hire smart high schoolers. More kids seem to be skipping college to go into lucrative high-tech careers. Are they missing anything? Or are they reaching their goals faster?

    Michael J. Saylor: I think it is a mistake to skip education and go right into business. Everyone would benefit from a decent classical education:

    a. Math, Science, and Engineering
    b. History, Literature, Philosophy
    c. Music, Theater, etc.

    All of these disciplines are useful in business, and although there is room to debate whether you need 1, 2, or 3 degrees, I think that skipping your undergraduate degree because you want to drop-out and start a company is a mistake.

    Obviously, Gates & Ellison proved you can be successful without a degree, but I think both would be even more successful with a degree.


    Fairfax, VA: There are a lot of risk involved in startups. What is the single thing you would advice to new startups or people thinking of starting?

    Michael J. Saylor: Don't structure your life such that you are unable to take that risk. i.e. don't have three kids, a mortgage, a two parents that depend upon you and then decide to start a company with no capital.



    Wash. DC: What is the average age of a Microstrategy employee? I currently work for a consulting firm and the vast majority of my co-workers are 20-30 years older than me. They are all very nice people, but I feel as if an important part of my work environment is missing.

    Michael J. Saylor: I think our average age is about 30. Most people are probably in their mid-late 20s.


    Shannon Henry: Well, our time's up. Thanks everyone for your provocative questions and thanks Michael for the thoughtful answers. Bye!



    © Copyright 1999 The Washington Post Company

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