From the Ground Up and Up
Washington Post Staff Writer
Monday, July 15 1996; Page F12
Michael Saylor is an intense guy. On weekends, friends say, Washington's 1996 high-tech entrepreneur of the year has taken a date to the office, handed her a book and asked her to read all day while he works. A couple of years ago, Saylor flipped his red Toyota sports car several times on an icy highway, escaped with cuts and bruises and headed back to his job, DuPont Co. executives recall. For fun, Saylor himself says he reads two-inch-thick tomes on the history of Western civilization after he gets home from work -- at midnight.
Such is the legend of MicroStrategy Inc.'s tireless 31-year-old chief executive, who friends and colleagues maintain would rather spend weekends building "the next Oracle" than pursuing a love interest or playing golf at the country club.
"Michael recently decided women are an incredible time sink," Saylor's best friend and business partner, Sanju Bansal, said with a laugh. Bansal met Saylor 12 years ago when they joined the same fraternity at the Massachusetts Institute of Technology. "Work is more enjoyable for him in that it is a growing experience. Dating's a fluff experience for him."
Although his social life may leave something to be desired, Saylor's incredible intensity and sharp mind have made him one of the Washington area's rising business stars.
"Mike is an innate business person. He was born with a sense of what what to do and how not to waste time while doing things," said Terry Priebe, who worked with Saylor during his days as an internal consultant at DuPont.
Saylor's Vienna-based company has pioneered a line of software that helps businesses carve out a niche in their industries. His decision-support software works like an automated consultant, analyzing vast computer "warehouses" of data to assess company strengths.
MicroStrategy's goal is to "put a crystal ball on every desktop," Saylor said.
For example, the giant household products company SC Johnson Wax relies on MicroStrategy's software to show retailers that its products, including Raid, Pledge and Drano, sell faster than the competition.
Shopko Stores Inc., based in the Midwest, also counts on MicroStrategy. The retailer combines prescription data with a health care company's patient data to determine the best and most cost-effective products. As a result, customers and the health care company, American Medical Security, save money. Shopko gets a value-added service.
"In the marketplace, MicroStrategy seems to stand out. We're maximizing profits and making sure that inventory shortages are minimized," said Bonnie Peterson of Sara Lee Direct, a Sara Lee Corp. division that uses MicroStrategy products to find out which of its clothing apparel sells faster in different areas of the country.
According to MicroStrategy, its roster of 150 companies includes such names as Crestar Financial Corp., Giant Food Inc., AT&T Corp., Johnson & Johnson, Merck & Co. As it has added clients, the privately held company's revenue has increased by 100 percent in each of the past six years, to a projected $25 million this year, according to company figures.
But rapid growth has become the norm in today's exploding software industry. What differentiates MicroStrategy from its many peers is its claim that it has remained profitable throughout its history. It also says it has no debt and a 25 percent profit margin.
This track record has led analysts to predict a $40 million windfall for MicroStrategy if it has an initial public offering of stock. Analysts confirm the company already has received half a dozen buyout offers from other software firms.
"I don't think he'll sell this thing. His ambition is to have fun and build it. So I would have to say it's pretty much inevitable that he will come out" with an IPO, said Bob Moran, who follows MicroStrategy for Aberdeen Group Inc., a Boston-based consulting firm.
For his part, Saylor says he will not sell his firm to a larger competitor, no matter what the offer. "I can't hedge [against the probability of future problems]. I'm going to go to extremes. I have $50,000 in the bank, $7 [million] to $8 million in the company. Either we're going to make it big or lose it all," he said. "I'd rather lose $100 million and take my shot at greatness than sell out and become a millionaire."
A Dream That Crashed
Saylor's single-mindedness can be traced to his early years. The son of an Air Force sergeant, Saylor lived all over the world before his family settled in Dayton. While in high school there, Saylor recalls, he won an award as the outstanding newspaper carrier for his area and scored 1,540 out of a possible 1,600 on the Scholastic Aptitude Test.
Saylor enrolled at MIT rather than the Air Force Academy, though he said he first had to persuade his father that he could receive a better education there. He also promised his father that he would join the military reserves. At MIT, Saylor double-majored -- in aeronautics and astronautics, and science, technology and society. He finished in the top 1 percent of his class with a 4.8 grade-point average on a five-point scale, according to Saylor's senior thesis adviser, John Sterman. Sterman still remembers his thesis: a theoretical model of issues in political theory having to do with the classical city- or nation-state of Plato. "Mike stands out for his focus, discipline and work ethic," Sterman said.
To pay the college tuition bills, Saylor said, he joined the Air Force Reserve Officer Training Corps and was selected to the corps' prestigious jet pilot program.
"I loved it. That was my life. This was the time of Tom Cruise and `Top Gun,' and the best thing you could be in life was a jet pilot in the military. You were built up to be the king among kings," Saylor said, his bluish-green eyes gleaming.
But a routine physical exam crushed Saylor's dream of a career as a pilot. During the physical doctors detected a benign heart murmur, and the military grounded him. And when defense cutbacks sent him to the reserves rather than to active duty, Saylor found himself with no job and no plan just two months before graduation.
With Sterman's help, he found a job consulting with a software integration company focusing on computer simulation modeling, his college minor. He lasted just more than a year with the start-up company.
Out on the New York streets at the age of 23, he considered himself a failure.
"It was kind of embarrassing," Saylor said. "I was voted most likely to succeed. I was the valedictorian of my high school. I couldn't go home. I was $5,000 in debt, living in Manhattan. I was a wreck."
But Saylor's luck soon changed. He had one business card in his pocket, that of DuPont executive and former client Kent Quisel. After hearing Saylor's story, Quisel brought him to DuPont's headquarters in Wilmington, Del., said Priebe, Quisel's business partner at DuPont. Saylor worked there as an internal consultant, developing computer simulations that would help DuPont plan for the future in its key markets. He was known as a bright consultant but also a frustrated one who sometimes rubbed colleagues the wrong way, Priebe said.
"Mike does not deal well with incompetence in organizations. He might be viewed as a little bit sharp at times, but it's just the intensity that he brings to a project situation," Priebe said.
Saylor displayed that drive when he predicted a 1990 recession in many of DuPont's markets after doing computer simulations. According to Saylor, his superiors sent him back to his desktop to consider other factors, such as currency exchange rates. Eventually, he said, DuPont enlarged the computer model 10 times, forcing him to transfer the information from a mainframe computer to an Apple Macintosh, which could run the program at a faster speed and with graphics. "I basically got an education in software on DuPont's money because they were too stubborn to admit that a recession was coming," he said.
Eventually, Saylor's software acumen so impressed DuPont executives that they hired him as an independent contractor, Priebe said. They paid him $250,000, with $100,000 upfront so he could set up his new company. DuPont gave him free office space and telephone services, and did not ask for an equity stake in the company. In exchange, Saylor agreed to build a global business "war game" that could predict trends in DuPont's Lycra, fiber, Freon, imaging and pharmaceutical businesses.
Saylor's friend Bansal soon joined him in Wilmington. The two began building MicroStrategy "brick-by-brick," with DuPont serving as its unofficial venture capitalist that first year.
MicroStrategy, initially a consulting and services firm, introduced its first software product in 1991. A year later, the company stumbled into a $10 million contract with McDonald's Corp. MicroStrategy agreed to build applications that would help the fast-food restaurant chain analyze the effectiveness of its promotional campaigns.
Until then, Saylor had built custom decision-support software for each client. But after securing the McDonald's job, Saylor said, he realized he could build a nonproprietary product. This product, Saylor envisioned, would help buyers of the software create competitive advantages in their markets "MicroStrategy entered the market just as demand for these kind of products was growing enormously," said Aaron Zorns of the Meta Group, which follows the data warehousing industry.
Putting Out the Fire And Brimstone
In 1994, Saylor and Bansal moved the company to Tysons Corner and began hiring employees to build DSS software. For the first three months, he slept on Bansal's couch. Eventually, Saylor bought a house in Vienna, though both Bansal and Saylor report that he still has no living room furniture.
Saylor has begun to relax a bit since the move to Washington, Bansal said. "He used to yell and scream and rant and rave the first couple of years [at the company]. Everyone seemed to him to be an obstacle rather than a potential helper. But he now realizes `fire and brimstone' motivation is not effective."
Instead, at work, Saylor said, he has planned events to improve company unity. He took employees on a week-long Caribbean cruise. He started an annual family weekend, spending $200,000 to bring the families of employees to the Washington area for three days of bonding. This year's event takes place next weekend.
Saylor also established a six-week "boot camp" for all MicroStrategy employees . During camp, groups of "cadets" work 12 to 15 hours a day learning the decision support software business, MicroStrategy's technology and its competition. More importantly, the recruits get to know one another.
Saylor said he modeled the MicroStrategy method loosely on his readings of ancient history: "We're trying to create an army of citizens [like the Roman Republic's] rather than an ar\my of mercenaries. We want people to stay with us five to 10 years, not five to 10 months."
MicroStrategy's citizenry continues to innovate, analysts said. In February the company unveiled a line of products to take advantage of the World Wide Web. DSS Web has no front-end costs -- no client hardware, software or technical support is needed to run the program. This makes it cost-effective for companies to open their data warehouses to clients, suppliers and maybe even consumers, analysts said.
From a World Wide Web demographic database, a concert promoter could determine the top cities in the country ranked by 35- to-45 year-old single females with a college degree, and schedule concerts accordingly. A Chinese restaurant chain could obtain a list of cities with more than 50,000 Chinese professionals using that same database and MicroStrategy's World Wide Web decision support software. And a firm could discover how much time its customer service people spend with its top 20 customers each month using a telecommunications company database and MicroStrategy's DSS Web.
Analysts say this new Web product will help MicroStrategy fend off challenges from large database companies like Oracle and Informix, whose recent entry into the market threatens MicroStrategy's share.
MicroStrategy is "already at a place where [its] competitors want to be," said Teresa Wingfield of Giga Information Group in Cambridge, Mass., which tracks the data warehousing industry.
Saylor, however, will not be satisfied until he reaches more of MicroStrategy's potential customer base.
"Nobody has really grasped yet the great wealth that can be made selling data over the Web," Saylor said. "There are 100 million potential customers out there."
© Copyright 1996 The Washington Post Company