MicroStrategy's Michael Saylor
Guest: Washington Post reporter Mark Leibovich
Wednesday, Jan. 9, 2002; 1 p.m. ET
Michael J. Saylor, co-founder and chairman of MicroStrategy, is perhaps the Washington region's best emblem of the 1990s technology boom and bust. Saylor led his business intelligence software firm to great success, resulting in a personal fortune of $13 billion. But accounting irregularities and the collapse of the broader tech sector took its toll. Today, Saylor's fortune is a fraction of what it once was, and his company has been forced by the recession to cut staff and postpone big plans for expansion.
In a four-part series, Washington Post reporter Mark Leibovich explores Saylor's rise and fall. Leibovich is author of a newly released book, The New Imperialists, which profiles five leading technology entrepreneurs: AOL Time Warner's Steve Case, Amazon.com's Jeff Bezos, Cisco Systems' John Chambers, Oracle's Larry Ellison and Microsoft's Bill Gates. He covers the national business and technology industries for The Washington Post and previously reported for the San Jose Mercury News.
The edited transcript follows.
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We'll be getting started in just a few minutes. Please keep your questions coming. Thanks
Mark, thanks for joining us today. You've put together a very detailed profile of Michael Saylor. To get this discussion started, can you tell our readers how much time you put into this project and, more specifically, how much time you spent with Saylor himself?
Mark Leibovich: I started the project in May, and worked on it since then, with some long interruptions in the middle (a 2-month book leave in June-July and about 6 weeks after Sept. 11th)...in sum, I porabably spent about 25 hours with Saylor over about 10 visits. Most of them were at the Capital Grill in Tysons Corner (downstairs from his office), and there were a few others in his office.
Mark, one thing which worried me about Saylor before was his inability to have a peer-to-peer conversation with anybody at work or outside. Saylor would barrage anybody he met with facts (the Alcantra bridge, the Timeless, Ethical and Imperative nature of his work, strategy/angel.com) like an automation. No two-way street... you either had to listen to him (and not get a word in edge-wise) or leave the company or were placed where you were engaged in non-dialogue.
Do you think he has learned from his experiences that he should treat other people (including Board of Directors down to his faithful "dogs" -- i.e. employees) with respect and actually listen to them? If he hasn't the company is doomed.
Mark Leibovich: Given what he's said recently, I think Mike has learned a lot -- namely, about humility. "I'm not as smart as I thought I was when I was worth $10 billion" he said to me recently. I think he is learning to listen to people, at least that's what he says. time will tell.
Have you heard from Saylor since the story's publication? What has his reaction been?
Mark Leibovich: No, I haven't heard a word from Mike since the series started. He's been in Acapulco for some sales meeting/event for the last week or so. But, I assume he's read it.
Congratulations on a very interesting article. I have a question about part IV.
Considering the way it was written, do you think it is fair for a reader to infer that Michael Saylor has a drinking problem?
Several other readers commented that Saylor's behavior, before and after the fall, is indicative of someone with an addictive disorder.
Mark Leibovich: Mike says he has no problem with alcohol, and insists that it has had no effect on his work. I guess I'd take him at his word. I think the larger point about his drinking is that this is a man who, in the last 2 years, has been changed radically...
I've been reading your series on tech CEOs over the past year or so and have enjoyed them very much. I see that you have a new book out. Is that book just reprints of your articles, or is there new material there?
Mark Leibovich: Thanks! There is plenty of new material in the book (the book, in total, is about 4 times the colective lenght of the series). It includes a lot of updated material on their lives and -- wink, wink -- a whole bunch of stuff that i could never get in the newspaper. So, order it now on amazon.com. and, i'm doing a reading/signing at politics and prose on Feb. 2 at 6 p.m. (that's on Connecticut Ave., near Chevy Chase Circle in D.C.). Be there!
What about the online university? IS the free school still in the works?
Mark Leibovich: He says the online university is a "long-term" plan...that, he says, is one of the reasons he is liquidating so much stock (15,000 shares a day since last Feb.)....
It isn't hard to take potshots at an arrogant billionaire boy. Yet you do it anyway. What value do you feel is added by your discussion of Saylor's alcohol intake, his butler, and his mannerisms?
Mark Leibovich: My purpose there was not to be frivilous -- but to provide examples of how one man's life has evolved in some weird and formative directions.
What do you think Saylor's view of the SEC is now that he has been through an enforcement action? Does he see the wisdom in the advice that Ralph Ferrara (his counsel) gave him?
Mark Leibovich: I think he does. He's scared to death of the SEC, and rightly so. Unlike his board, unlike the press and unlike his shareholders (unless they all sellout at once), they can take away his job...the last thing he/Microstrategy needs is to have the SEC on their back as they are trying to re-build.
Mark: A great deal of the problem is the total control Saylor has to elect the board, even if he sells off a large amount of his stock. Did the SEC ever consider requiring him to convert his class B to class A stock which would have put him in the same ownership position as the other shareholders?
Mark Leibovich: I'm not sure the SEC would have the power to do that. I will say that the two-tiered system that Mike insisted on was VERY controversial (among many institutional investors, among others), for precisely the reasons that they would have feared: Mike holds total control over every important company decision.
What is Saylor's current status with the SEC? Does he still have legal problems pending or have they all been resolved?
Mark Leibovich: The SEC investigation and the class action lawsuits that followed the 3/20/2000 restatement have all been settled. There are other suits outstanding -- against other companies, etc., but not related to 3/20
As a psychologist, I see in Michael Saylor as someone with severe personality disorder and possibly dual-diagnosis, with the drinking problem. In your meetings with him, did you find that Mr. Saylor was more interested in exploring his experience separate from the company as a person, or did he feel that these experiences were intertwined with the success or failure of MicroStrategy?
Mark Leibovich: To a very unique degree, mike and his company have been utterly synonomous for 12 yrs. He has recently said that he's trying to nurture a life for himself outside of his company (making non-work friends, etc.) I think this is a healthy step for him.
I know of many lawsuits not covered in your article. Did you persue any of those? Why all the ink now on Saylor?
Mark Leibovich: There were some other lawsuits -- against some "screen names" on a Yahoo chat room; against some other companies -- but none of them were really on point (I'll save that for the book. :-)
San Diego, CA:
One wonders how you, as a reporter, felt in the presence of this deflated Elmer Gantry now that it's clear that what he was selling was megalomania mixed with snake oil--a year-and-a-half before, he would have implicitly believed himself to be on an entirely different plane from the likes of a mere Washington post reporter. I mean, in truth, can you deny a certain satisfaction in seeing this guy whittled down to, well, a mere $200 million?
Mark Leibovich: Nah, i just get satisfaction in writing the story.
From Part 4, I get the impression that he is trying to run his company into the ground. Comparing it to a "carburetor factory" and then actually telling others about it. I mean, where's the enthusiasm for selling your product and describing how life changing it is? The software changed because of a SEC investigation? I mean come on guy, it either was going to change the world or it was just a big farce to begin with. I get the impression he doesn't feel the same now.
Useful maybe, but not life altering.
Mark, many people are asking if you believe Saylor can rebuild MicroStrategy and take it to new and higher successes.
Mark Leibovich: I think the "carbueator" metaphor speaks to his new focus on non-sexy things. He is trying as hard as he can to stay focusesd in his business intelligence niche -- which, as much as anything, is reason to think the company can rebound. MicroStrategy does, by almost all objective accounts (tech "bakeoff, etc) make a very well-respected product. Mike seems commited to cutting costs, staying streamlined and keeping his "visions" as pragmatic as possible. Even his harshest critics -- and I talked to a lot of them -- would not bet against Mike Saylor making a comeback.
Mr. Leibovich, I read your series with great interest. You have obviously spent many hours with Mr. Saylor. I wonder, would you consider him to be a good friend? Or, perhaps, a "good friend?"
Mark Leibovich: I consider Juan Gonzalez to be a good friend (Now, go back to your language lessons, goodman!)
As a finance executive myself, I'm surprised that Lynch and Saylor were so surprised that their revenue booking proceedures were not so conservative afterall. And I can't believe that PWC would have signed off on them. I may have missed part of your article, but did management hide this from the auditors?
Mark Leibovich: PWC has cliamed in court testimony that they were misled by MicroStrategy on some deals. MicroStrategy has denied this; and, the SEC did not find any proof that MicroStrategy misled PWC about anything
Your series seems to describe Saylor as somewhat of a social misfit that has a difficult time relating to people --
Does he have close friends who are not business associates?
At the height of his success -- did he find it difficult to trust (question the motives of) those who wanted to get close?
What does he do for fun when not working?
He seems close to his mother -- but is he romantically invloved with anyone?
Mark Leibovich: He is trying to make new friends outside of work...as for his romantic life, i don't know.
Thanks for a great article series. Do you really think, deep down that Saylor has learned his lesson, or is he just doing what he thinks people need to see. Does he really believe that his company will survive after what it went through?
Mark, we've received quite a few questions echoing this theme.
Mark Leibovich: "Deep down," I'm not sure what Mike feels, but he certainly needs to say that he has learned a lot...I think he does believe that he can turn the company around -- and, based on what I've seen in recent months, that doesn't seem an unreasonable belief.
We're half-way through the one-hour discussion. Lots of great questions have been submitted. Keep them coming.
Do you think PWC should have been held more responsible?
Along these same lines, Mark, a lot of readers are asking if the SEC investigated or punshished the PwC auditors.
Mark Leibovich: The SEC is investigating PWC (according to source i've spoken to)...like MicroStrategy, PWC also settled a large class action lawsuit brought by shareholders. I don't have the exact figures handy, but they were big settlements..
Several readers have submitted questions about Mark's response to 'Taipei, Taiwan' above. The inside story there is that Washington Post reporter Peter Goodman is taking intensive language courses in Taiwan this year, and Mark believes that was a humorous question from him.
You still haven't responded to the issue of the gossip-style element in using unnamed sources in suggesting Saylor has a drinking problem. Very poor taste, on your part, to turn the series into a gothcha tabloid piece. What does this add to the story?
Mark Leibovich: If it were just one, or even three people who had brought up the drinking theme, I would have agreed that it was "gossipy"...but this was a very widespread issue, brought up by a lot of people -- many of whom are Mike's friends, who would have no reason to talk about this if it were frivilous. It is also an issue that has been raised with michael by high-level execs of the company, and at the board level, also (mike was also willing to talk about it with me)...therefore, I would say it's a legitimate and illustrative issue in this context.
I worked closely with Mike on a project in '98 and '99. He personifies the fine line between genius and insanity. One has to look at his upbringing to understand him. His father was an NCO in the Air Force. He was enlisted. That is the low-rung of the totem pole in the military. Mike has a chip on his shoulder, no doubt, from the treatment he received at the hands of officer's children. He has a lot to prove. When he got on the path of success, it went to his head...Mark Bisnow was the wrong man and the wrong time to come into Mike's life. It added fuel to the fire.
Mark Leibovich: Without putting mike on the couch here....Let's just say that many people have echoed your sentiments, or expressed similar ones...
In your fourth article of the series, you quoted Saylor as saying that he was trying to be "uninteresting." Given his personality, and the life he has led, is this even possible? Is it possible for Michael to not say too much about himself, his life, and his company?
Mark Leibovich: Mike has proven to be extremely bad at being uninteresting. Which, I suppose, is why people like me are still writing bout him.
Were you able to interview current and previous employees of MicroStrategy? Could you describe their general attitudes and behaviors during the boom and then bust? What type of employees have held on through the ride and how do they see their job security?
Mark Leibovich: I interviewed dozens of employees, present and former...their reactions, as you'd expect, run a wide gamut: bitterness, weariness, defiance, lingering respect for the man/company. I will say, in fairness, that I didn't talk to many current employees who felt as if they were on a sinking ship.
What happened to co-founder Sanju Bansal? He kind of gets dropped from your story midway through and I'd think his response to a lot of what was happening to MicroStrategy would be interesting given that he was a co-founder?
Mark Leibovich: I would have liked to have explored Sanju in more detail too. His role in this company, and in Mike's life, has obviously been huge. He's the "been-to-charm-school" half of the duo with Mike. Their friendship, which was once close, has evolved into something very "business-like." They seem not to communicate very much.
In the end, though, I decided to keep the camera on mike as much as possible. As far as the supporting cast, there were other players (Mark Lynch, for instance) who I found to be more relevant to Mike's saga, at least in the last few years. But, I agree, the Sanju piece is interesting. Again, maybe in the book. :-)
New York, NY:
Michael Saylor has remained CEO of MicroStrategy, but he did relinquish the role of President to Eric Brown. This was not discussed at all in the articles, why did you decide to leave it out?
Mark Leibovich: Did that not make it in? I guess it was been cut at the last minute (editors, editors, sigh)...Eric, by all accounts is a very solid young executuve. He's another former frat brother of Mike and Sanju's at MIT.
You mention the house that Saylor was suppost to have built. Have these plans been scrapped? Were does he reside now that he is not going to build that "compound"?
Mark Leibovich: The plans for a compound have been scrapped. Michael Saylor currently lives in a large brick colonial home in McLean.
I thoroughly enjoyed your articles! It would be great to see a series on the former employees of MicroStrategy that road the rollercoaster along with Saylor. As a former MicroStrategist from 1999-2001, I would certanly enjoy someone hearing our story and our view of the situation. From our blind faith in Saylor's vision, to our realization that greed and arrogance was destroying our company from within.
It wasn't just Saylor who was stung...the execs of both MicroStrategy and Strategy.com were so swept up in their own arrogance and greed that they allowed their comany's to crumble the ground, taking many innocent, hard-working, loyal, and faithful MicroStrategists with them. It's a sad story, no doubt, but I hope you find that many MicroStrategists, including myself, have moved on to bigger and better things. Furthermore, we learned the tales of how greed, money, arrogance, and power can corrupt and destroy everything. This will make us stronger, smarter, better business people in the future.
Mark Leibovich: I talked to many people in your category...and, yes, there is definitely a story in the former Microstrategists...maybe next year..good luck to you..m
Old Town, VA:
I have seen Michael out socially. I have noticed that he has been very loyal to his friends. Though he knows many of them through business, it seems he still has these same core group of friends as he did in '99. Did you interview any of these people?
Mark Leibovich: Yes, I interviewed a lot of people who Mike would have considered his good friends in 1999. Let's just say that, in many cases, the feeling is no longer mutual, if it ever was. The friends Mike seems to be spending most of his time with these days are people he has met in the last 2 or 3 yrs or so...Mark Ein (a DC venture capitalist), john masson (a real estate developer, a few others.
Just a few more minutes left in the discussion. Thanks for all the great questions!
Mark, the series is fantastic. Still, I couldn't help remembering the Post's coverage of Saylor over the years -- including a number of stories by you -- and how much it played a part in building up his image. Do you think that the Post was an active participant in the rise of Michael Saylor? Any regrets?
Mark Leibovich: That's a very good and fair question. I wrote a big, front-page story that followed Mike on his IPO roadshow in June 1998. It was a great opportiuninty to show readers how the anthropology of an IPO works. And, the story would never have been possible if Mike didn't insist on it (his lawyers, bankers, etc. wanted no part of having a reporter along on what is usually a very private process (there is very little that is public about a public offering). Whether this contributed to the "build up" of Mike, I don't know: I saw it more as an explainer for readers rather than a cannonization of Mike.
Alas, i think we were proabbly guilty of falling for the Saylor phenomenon in the late 90s. He was mentioned in the Relaible Source column and the Parties column in the style section about 15 times in 1999, early 2000 (David Carr, the former media critic for City Paper, called the Post Saylors "ever-attendant paramour"). So, while a lot of media fell for Saylor, we were proabaly as guiltiy as anyone.
Mark, Did you ever consider interviewing his family assuming their permission?
Mark Leibovich: I would have loved to interview his familiy. Mike initially agreed to let me speak to them -- I was all set to fly down to interview his parents at their home in Florida -- but then Mike changed his mind..
Great series. What would you state is the main lesson one can dervice from Saylor's experience?
Mark Leibovich: Many lessons, too numerous to mention. I guess it's an object lesson on how to lose $13.6 billion, if that's ever relevant to your life...:-)
Regarding Saylor's epiphanies, did you find them genuine or do you think he was simply trying to spin you for the benefit of the company and his legacy?
Mark Leibovich: Both.
Very compelling story, Mark! I really enjoyed reading it and feel like I learned a lot, not only about MicroStrategy and Saylor, but also the industry.
But inquiring minds want to know: What IS the deal with Queen Noor?
Mark Leibovich: He claims he's never met Queen Noor...I think that was a Bisnow creation, but i could be wrong.
My company, when faced with the decision of which business intelligence software to buy for our use (and we aren't a small company), decided against Microstrategy not based on the merit of the technology but because (a) we weren't sure they'd be around for long and (b) that Mike Saylor. I am not kidding. Have you found this to be the case with any other prospective customers of theirs?
Mark Leibovich: I'm not sure, but sophisticated software customers don't generally make purchasing decisions based on personality...they make it on technology, and most customers that i spoke to seem pretty satisfied with the product.
This may sound petty but how did Saylor avoid serving in the Air Force after it paid for his $50,000 MIT education? I understand that his heart murmur kept him from flying but wasn't he required to serve in a different area?
Mark Leibovich: Good question. I don't know.
How did you approach this daunting task? You seem to have done a terrific job.
Mark Leibovich: Thanks...baiscally I kept a few rules in mind: keep an open mind, talk to as many people as possible and be as open as possible about my intentions (with Saylor, other key figures)...
New York, NY:
It seems that there is a bigger lesson to be learned here for young techies to whom success comes too quickly and furiously. While Saylor is an anomaly in his utter social ineptness, don't you think immaturity played a huge role in his demise?
Mark Leibovich: Probabaly...he'd likely admit that his singular focus on his company for 12 years has stunted him in other areas of his life (socially, emotionally). But he's a very complex charater, many factors at work.
Mark, a few readers have written in asking WHEN your Saylor book will be done. Any timeline?
Mark Leibovich: Actually, there are no plans for a Saylor book -- at least for now. although it would seem a natural topic, and i proabably have enough material. I have a pretty full plate right now, anyway (i'll be moving to the style section soon to write about national politics) however, my colleague shannon henry has a book coming out in November on a group of local tech titans (Saylor among them) - which i expect will be must reading for Saylor-watchers everywhere.
Have you ever or do you currently own any stock in MicroStrategy? If not after writing this story would you personal buy, sell or hold MicroStrategy stock?
Mark Leibovich: I have never owned MicroStrategy stock, nor would I be allowed to (under our ethics/conflict of interests rules)...if I did, however, I would have sold at $333 in March 2000 and bought at $1.13 in october :-)
Oil City, PA:
Mark, Michael Saylor certainly has a personality different than most. But it seemed well-suited for the technology revolution of the 90's. Do you think that this personality will work for MicroStrategy during a more depressed economic period, and does he have the ability to run a business as a solid company, rather than loosely during a rebuilding period?
Mark Leibovich: Oil City, PA!! I've been there..fascinating place! Alas, whether the late-1990s vintage of leadership transfers to now -- and whether Mike can adjust - -seems to be one of the many $64,000 questions hanging over Mike's and his company's future...
Do you think the SEC was too "easy" on Saylor and the others at the top of Microstrategy?? If the SEC hoped to deter other companies from accounting "irregularities", I would have thought the SEC would have made more of an example out of the Microstrategy Case.
Mark Leibovich: there is definitely a school of thot that the sec was easy on saylor. his fines were relatively small, given his wealth; but large, though, the fines/disgorgement that was demaended of saylor, bansal and lynch were the largest ever handed down by the sec in a non-insisder trading case..
Love the series, thanks. You reported well on facts and Other People's Opinions. What is your opinion of this man?
Mark Leibovich: Right now, let's just say i'm a little burnt out on the topic.
Why write such an article now about MicroStrategy and Michael Saylor? The article seems ill timed given that MicroStrategy and it's stock have really stayed out of the limelight recently. Would the article not have been better suited for 6-8 months ago?
Mark Leibovich: In writing this piece, I was less concerned about timeliness than I was about taking a "snapshot" of history. In that sense, Saylor is a perfect and enduring vehicle. He lived both extremes of the bubble economy which remains an incredibly perplexing phenomenon....it seems like the "ancient history of the new millenium," to be sure -- especially after Sept. 11, the recession, etc. But, it's amazing when I think that this wasn't even 2 years ago. So I think the story remains fresh and formative.
San Francisco, CA:
Were there any women AT ALL working there? The stories (fascinating, by the way) seem to give off the aroma of a boys' locker room, totally self-referential and self-obsessed.
Mark Leibovich: I don't think any women came anywhere close to being in Mike's top circle (say, top 8 executives or so and 8 board memebrs -- all men)...one of the top women executives at the firm was Betty Lauricia, who was VP for HR for a while. But she left under bad circumstances and is currently involved in a lawsuit with the company...don't have the details at my fingertips, but there was a gender discrimination component. Again, no room to go into that, but it's part of the story.
Do you have any future plans (besides your book) to write about other "Tech Titans" from the DC area? I know there is a series on Bezos, Gates, Case, etc. but none are as in depth as yours. Any up coming plans?
Mark Leibovich: Actually, I'll be changing jobs in the near future, to cover politcs: a whole new body of money, power, influence and ego. Should be fun. As for now, my hands are about to fall off and I need lunch. So, thnx so much for the questions. Mark
Thanks everyone for so many great questions. We'll try to get Mark back for another discussion soon.
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