People and Technology: MicroStrategy Inc.
Home Base: Vienna, Virginia Year Founded: 1989
Monday afternoon in a ballroom at a Marriott in Falls Church, Virginia: This is the first day of boot camp, a grueling six-week introduction to MicroStrategy’s business model and technology. Forty such events are scheduled this year. The first day always ends the same way: with a welcome from Michael Saylor, the company’s 35-year-old CEO. “Heaven for me,” Saylor once quipped to the “Washington Post,” “is a microphone and a captive audience.” He walks to the front of the room. With his sweater-vest, open collar, and dark hair, he could easily pass as a boot camper himself. Or a young whiz-kid professor. He picks up the microphone and looks out on row after row of new hires. Heaven.
Walk into virtually any young, Web-based company, and you’ll find a dynamic leader, or someone who’s trying to be one. Saylor, however, is the genuine article. Employees feed off of his passion and dedication as well as his confidence in ideas — such as the one that he calls a “personal-intelligence network.” Saylor matter-of-factly describes a future in which an intelligent wireless network will tell you which way to turn to avoid traffic, or if your flight has been changed, or if a doctor has prescribed medicine that’s incompatible with another drug you’re taking. It will be, he says, like “a guardian angel whispering in your ear.” Sure those ideas sound far-fetched today, but what advance doesn’t seem improbable before it’s accepted?
His work ethic is legendary: the marathon hours, the weekends at work, the hundreds of prospectuses he read while preparing to take the company public in 1998. “He’s the most intense person,” says Sanju Bansal, 34, Saylor’s longtime friend and MicroStrategy’s COO. Bansal recalls the summer following graduation from college, when he and Saylor spent six weeks driving around California. “We debated George Will for 30 or 40 hours straight,” Bansal recalls. “Mike is a big Will fan. We debated like hell. The thing about Mike is that he’s very flexible mentally. After a while, he’d flip around and take the opposing side.”
The cardinal rule of marketing, the CEO tells employees, is never be boring. That’s not a problem for Saylor. He’s erudite, opinionated, and unafraid of being grandiose. He’s a voracious reader and a history buff. At MIT, he graduated with highest honors in aeronautics and astronautics as well as in science, technology, and society.
He’s a big believer in the enduring power of a mission — both for an individual and for a company. Small missions produce small companies, he says. But great institutions survive because their missions are “timeless, ethical, and imperative” like his personal favorite, the Roman Empire, whose mission was to spread civilization. The MicroStrategy mission isn’t to sell more products or to improve efficiency by a few percentage points. “Our mission is to make intelligence accessible everywhere,” Saylor tells the boot campers. “Call some friends tonight, and ask what their company’s mission is. Then ask yourself, Would I follow that organization to the ends of the earth? Or is it simply a place to spend 40 hours a week?”
The talk lasts a little more than two hours, which is brief for Saylor. He ends the boot-camp session with the story of a bridge in Alcantara, Spain that has been standing since the days of the Roman Empire — nearly 2,000 years. As the bridge’s cornerstone attests, Caius Julius Lacer, the architect, intended it to stand for all time. Now that’s an admirable mission. “We have the ability to turn the economy upside down, to enhance lives, and to drive the civilization forward — the same way that bridge was built to serve generation after generation,” Saylor says. “You have the power to make us succeed or fail.”
Strategy.Com — The Power of Personal Intelligence
Welcome, campers, to MicroStrategy Inc., a company that is setting the agenda for leveraging digital technology to create a fast, focused, and well-run organization; to strengthen relationships with customers, suppliers, and partners; and to cultivate new market opportunities. The MicroStrategy strategy: Convert all sorts of information into intelligence, then distribute it widely, anytime and anywhere, through wireless devices. By any standard, that strategy is working remarkably well. The company is one of the fastest-growing software developers around. Every year for the past four years, it has nearly doubled its revenues, reaching $205 million in 1999. And at last count, its workforce had reached 1,779. Its market capitalization is a stunning $11 billion, making Saylor (who owns 57% of the shares) one of the country’s youngest billionaires.
Saylor doesn’t think of MicroStrategy (headquartered in Vienna, Virginia) as a consulting or software business, although it does consult and build software. MicroStrategy, he says, is in the intelligence business, specifically business and personal intelligence. And he believes in the power of that intelligence to improve how companies operate as well as how people live their lives. “I want to make sure that everyone gets real-time intelligence every hour, every day, every week, to make better-informed decisions,” he says. “We live in an ignorant world. Our mission is to purge that ignorance.”
MicroStrategy, which is one of the largest vendors of decision-support software, enables some of the world’s largest organizations to produce sophisticated, detailed reports on any facet of their operation. More than 900 companies — including CVS, Blockbuster, First Union, Glaxo Wellcome, MCI Worldcom, Nike, and the U.S. Postal Service — rely on its data-mining products. That’s because the software is sophisticated enough to navigate the ongoing explosion of virtual warehouses of information and to analyze terabytes of data. National and international retailers manage their inventories better because they know which products are selling where. Insurance companies reduce fraud because they can identify irregularities hidden deep within their own data. And dotcoms and e-business units can personalize services because they can profile shoppers.
Business intelligence is nothing new. But what’s different about this form of intelligence is its immediacy. Interactive intelligence, says Saylor, is information that you gather when you want to make a decision. Real-time intelligence — information that you need to know to make a decision — is far more valuable. It’s the information that you can act on the instant that inventory levels dip below a certain threshold, or the moment that one of your stocks drops by 10%. Instead of constantly monitoring the situation yourself, you receive only the relevant information. That’s the whole concept behind MicroStrategy’s Strategy.com: When a set of predefined conditions occurs, its software sends an automated alert to your pager, fax machine, or cell-phone, so you can respond instantly — by, say, changing travel plans or selling a stock — y just pressing a button. MicroStrategy calls that “closing the loop,” which is the logical and valuable next step. “If I can control a transaction, I can control the world,” says Saylor. “The transaction is the fulcrum of the economy.”
Strategy.com is also the name of the business unit devoted to making that vision a reality. Today, the unit is still in its infancy, and the content its software provides is limited to stocks, weather, and news. But Saylor believes so adamantly in its potential and in the value of real-time traffic, travel, crime, and health alerts that MicroStrategy is spending $100 million to build a personal-intelligence network. The success of the network depends on consumers’ willingness to provide personal information, which, in turn, depends on trust. Once consumers realize the network’s value and are assured of its security, Saylor believes that they will deposit personal data like medical records into the network much as they deposit money into a bank. The company predicts that between 1999 and 2003, the number of digital, wireless cell-phone users in the United States will nearly triple to more than 80 million. And because MicroStrategy wants to be ready for those customers, it’s assembled one of the world’s largest Dell NT server systems to store millions of subscriber profiles.
Strategy.com has signed up more than 50 affiliates, including Ameritrade, EarthLink Network Inc., Metrocall Inc., NCR, usatoday.com, and WashingtonPost.com. And 120,000 individual subscribers have signed up, mainly through those affiliates’ sites. As a result, Strategy.com sends more than 200,000 alerts or regularly scheduled reports a day, including messages to MicroStrategists who are following their company’s stock as it continues its meteoric rise.
Among those MicroStrategists is Saylor, who receives the local weather forecast on his bedside cell-phone every morning along with an email of personalized news (including links to stories that mention Saylor, MicroStrategy, or 18 of its competitors) as well as George Will’s latest column. “I’m embarrassed to say that I sometimes get messages saying, ‘You’ve lost $279 million,’ ” Saylor says. “Recently, I was in a morning-long meeting, and at 11 AM, I got an alert that our stock had risen by $8. People notice things like that. My job is to convince them to see the value in this sort of intelligence.”
Permission to Change the Game
The inspiration for MicroStrategy came from a course that Saylor and Bansal took at MIT during their junior year. The class, on systems-dynamics theory, taught them that social or business problems could be modeled using nonlinear math, a concept that forever shaped their view of business. In 1987, after graduating from MIT, each worked as a consultant: Saylor, at a small New York City firm; and Bansal, at Booz, Allen & Hamilton, in Washington, DC, where he grew up. Neither saw his current job as a long-term gig. After a couple of years, Saylor convinced Bansal to join him, and the two struck out on their own.
“We had similar views of the world,” says Bansal. “We realized that the information used by corporate decision makers was incredibly shallow. We believed that we had a better way: Set up a system that’s continuously being fed lots of information from a company’s operation, then apply rigorous mathematics to the data. To run a business successfully, you have to make better decisions than your competitors. And you can do that by applying carefully analyzed information to the process. We’ve never wavered from that belief.”
Initially, MicroStrategy built huge, customized decision-support systems. In 1994, it released its first data-mining software, DSS Agent. Because data mining was so new, the company held classes to teach potential customers about how the software could improve inventory management, sales, and customer service.
MicroStrategy also helped customers that didn’t have a database to build and feed one. But more often, the company queried existing databases to find out how fast products were selling, which products were selling in New York but not in Chicago, which products were selling in some New York stores but not in others, and which items should be displayed together, because consumers buy them at the same time. Answers to those questions used to take a team of analysts days or weeks to answer, assuming the information could be calculated. Now a store manager just clicks on a Web site and generates a robust report within seconds.
“You are not only looking at what happened but also at the nature of what happened,” says Bansal. “Knowing what’s selling and how fast it’s going lets you plan ahead of the competition. The beauty of that kind of information is that it eliminates the inefficiencies of any process: You don’t order products that aren’t selling. You don’t advertise items that are out of stock. You control your system.”
But even more valuable than understanding your inventory is understanding your customers. The newfound intelligence that MicroStrategy enables creates a new phenomenon in business. Rather than throwing money into a massive ad campaign, a store can solidify its bond with existing customers — and still improve the bottom line. How? Bansal explains: “Let’s say that every Friday evening, I buy Chips Ahoy, Golden Grahams, and milk. If the store where I shop knows that, it can send me an email saying, ‘May we suggest our brand of cookies? They’re larger and less expensive, and here are the opinions of five shoppers who’ve bought them. We also have a free bag waiting for you at our nearest store.’ ” What’s more, consumers aren’t bombarded with unwanted promotions because the system is permission based, meaning they control the volume.
The degree of customization is even greater online. Instead of a home page with a static storefront, a business can customize its look for each customer, based on purchases, interests, or previous mouse-click trails. Product manager Christian Hernandez, 24, describes a demo that his team produced for an online toy store. The more information customers provide in their profiles, the more personal the shopping experience becomes for them. Suppose a customer reports that he has a five-year-old daughter and is interested in educational toys that cost $25 or less. He also wants to know when items are marked down at least 20%, and he only wants to hear from the retailer once a week, unless something is half-price, in which case he’d like an immediate alert on his cell-phone. “Instead of being just a retailer, that toy store has become an information broker,” says Hernandez.
Although dotcoms represent the newest and fastest-growing market for MicroStrategy, traditional companies have used instant intelligence to reinvent the way they work. GE Capital Fleet Services, based in Eden Prairie, Minnesota, leases and manages fleets of vehicles for such companies as AT&T and Honeywell. MicroStrategy’s data-mining software monitors a quarter of a million vehicles for about 5,000 companies. Customers can log onto a customized Web site to view mileage, fuel, repair, and accident reports for the entire fleet, or by department, type of vehicle, individual vehicle, or driver. The analysis is as detailed as the fleet managers want it to be. And the software can even manage the fleet for them. If it identifies a vehicle that hasn’t had an oil change in 3,000 miles, it sends a reminder to the driver’s pager. Or if drivers saved the company money by using a preferred vendor, it can send a thank-you message.
The Transparent Organization
Bansal calls it the “five-minute rule”: Any MicroStrategy employee should be able to find any piece of information on the company or its employees within five minutes, whether it’s a colleague’s technical qualifications, a briefing on a competitor, or sales activity in the south of France. Usually, those five minutes are more than enough time, because MicroStrategists go straight to Enterprise Solutions, the company’s internal Web site. If they can’t find it there, it probably doesn’t exist.
MicroStrategy owes much of its success to its high level of information transparency. Using one integrated, central information portal, employees in different departments and locations, including sales offices and client sites around the world, can monitor which deals are in the works, which recruits are in the pipeline, and which technical solutions are currently being tackled. When MicroStrategy issues an important press release, all of its employees are sent a copy. “Why should they have to look for company information elsewhere?” asks Joe Payne, 35, chief marketing officer.
The company’s intranet technology also saves time. Let’s say that Lisa Nolan, 37, director of corporate communications, wants to schedule a meeting with Joe Payne. She can electronically pull up a copy of Payne’s schedule in Microsoft Outlook, choose an open time slot, and enter her name and meeting topic. He’s automatically emailed the meeting request, which he can accept or reject. His response then generates the appropriate reply, which is sent to Nolan. “If you don’t use Outlook, you miss meetings,” says Payne.
MicroStrategists understand firsthand the value of their software products because they rely on them to do their jobs more effectively. For instance, the technical-services department uses the software that analyzes purchasing patterns for customers to guide its engineers (as well as its partners and customers) toward solutions. When they open an existing tech note, which outlines a fix, the system recommends other documents, based on what previous users have selected. Engineers can see their colleagues’ research paths — very valuable intelligence, considering the complexity of the problems and the urgency of their customers’ deadlines. “Sometimes you go into organizations and find that they don’t ‘eat their own dog food,’ ” says Payne, who receives daily, automated reports on visitors to the company’s corporate Web site. “We definitely do.”
The technology lets an organization that’s growing rapidly and becoming increasingly dispersed tap into its collective brainpower. Employees share what they know with Enterprise Solutions, which, in turn, makes that knowledge accessible to the entire company. “In a company like ours, everyone should write about and publish what they do,” says Bansal. Which is why, after attending a conference on health care, Hernandez wrote a paper outlining what he’d learned. Employees who receive health-care documents got an email containing a link to Hernandez’s report.
Rich Brown, 30, manages the Enterprise Solutions Site, so he sees the company getting smarter every day. By mid-January, for instance, the site had 23 contributions, mainly from the sales and consulting staff, along with 8 new tech notes and 24 revisions to existing tech notes. Brown is working on a new feature that will alert employees whenever a document or a specific page that they subscribe to in Enterprise Solutions is updated. The corporate overview changes frequently, and the sales staff needs to know whether it has the latest version. “You have to have quality control,” Brown says. “Otherwise, you wind up with information glut.”
To encourage people to learn in different ways, MicroStrategy offers 12-month overseas assignments to employees who’ve been with the company for at least a year. It also urges employees to work in different jobs and departments. “You find people here who’ve had six jobs in four years,” says Vince Gabriele, 37, head of global staffing. “The more exposure you get, the more valuable you become.”
Then, during a week in July, most of the company shuts down for University Week, when employees attend classes similar to their boot-camp experience. That gives workers an opportunity to broaden their skills or to explore new interests in such areas as programming, management, sales, or marketing. “For me, the class that I took is paying off right now,” says Pedro Arellano, 24, a technical-support leader, who took an in-depth course on the latest version of MicroStrategy’s platform. “Without it, I wouldn’t be able to answer the questions that I’m getting from customers.”
Work Hard, Play Hard
But what employees talk about the most is the week in January when virtually the entire company — this year, 1,600 employees — goes on a cruise in the Caribbean. The cruise is something that MicroStrategy has been doing for years, to review the previous 12 months and to recharge for the next 12, as well as to relax. Alison Andrews, 28, vice president of global information services, has been on six such cruises. She remembers her first, when the 50 or so MicroStrategists were the youngest passengers on the boat. She recalls Saylor saying that one day the company would be big enough to have an entire boat all to themselves. “Yeah, right,” she thought skeptically. This past January, when the cruise ship Century left Florida, every passenger was a MicroStrategist.
In many ways, the week reflects the company’s “work hard, play hard” attitude that its employees relish. Despite the Caribbean setting, there are still daylong planning sessions, team meetings, and demos of the latest products. But there are also events like a talent show and “beach olympics,” featuring kayak racing, a tug-of-war, and a sand-castle-building contest. “People tend to work together better after they come back from the cruise,” says Andrews. “It’s easier after you’ve shared a piña colada or two with a coworker.”
Saylor considers the cruise not a reward but an entitlement. Still, it’s quite a perk. Total cost to the company: $3.5 million. But the payoff in morale is immeasurable. Then there’s Friends and Family Weekend in April. Employees receive a $750 stipend to fly in those closest to them for an inside glimpse of MicroStrategy. At the tech-support open house, Arellano’s mother, sister, fiancée, and friends flew in from Mexico to see what he does. In past years, festivities have included performances by the Temptations, the Supremes, and Penn & Teller. “My family left with a better appreciation for why I spend so many hours here,” says Andrews. “Now they understood a little about the MicroStrategy fanaticism.”
But beyond all the fun parties, a strong sense of community infuses MicroStrategy. Despite adding 881 new faces in 1999, it avoided becoming a company of strangers. The employee directory on the intranet has detailed profiles of every staff member. “We try to include things that give you a sense of each person,” says Payne. His profile contains his work history before coming to MicroStrategy and names his four children — Kaitlin, Nicole, Alexandra, and Jason. His profile also mentions his love of Duke basketball, which prompted a fellow Dukie to send him regular Blue Devil updates.
The top criterion for recruits — intelligence — has remained the same since the company’s early day. As long as prospective employees have the brains, Gabriele says, they don’t all need technical degrees or a lot of technical experience. Aside from pure intelligence, recruits need a combination of passion, curiosity, and perfectionism. According to Gabriele, no matter how badly a position needs to be filled, the company refuses to compromise its standards. “I’m looking for individuals who match the attitude that I’ve seen since I started here: Never be satisfied, never stop improving, never go through the motions,” he says. “I’ve yet to see a company more focused on being the best. It strives to get better and better and better.”
MicroStrategy is a new kind of company in a new era of business — the Web era. It’s young, aggressive, and quick to react to new markets and to apply the latest technology to its internal and external operations. Here are some of the principles behind MicroStrategy’s success.
Easy come, easy go.
“Our attitude has always been that if it’s easy, it’s not worth doing,” says COO Sanju Bansal, “because everybody else can probably do it too. We look for something more challenging or more interesting. That’s how you add the kind of value that no one else can. From the beginning, we were calculating sophisticated equations. We worked with nonlinear relationships while everyone else was stuck on linear relationships. For instance, we showed the nonlinear relationship between the market adoption of a product and its price. The linear interpretation was an approximation of what actually happens.”
CEO Michael Saylor likes to use a phrase from “The Godfather: Part II”: “Keep your friends close but your enemies closer” because he believes that it also applies to business. “Let’s say,” he suggests, “that you’ve lined up a deal with a large company. But the CEO there has never heard of MicroStrategy, so he asks a buddy, ‘What have you heard about MicroStrategy?’ If he’s heard that someone’s had a bad experience, the deal is off. You don’t want people ‘anti-selling’ you.”
Mission matters too.
“The grander and more noble the mission,” says Saylor, “the more room you have to grow and the more support you’ll have along the way. No government is going to break up a company that’s trying to cure cancer. People will give it a lot more leeway.”
What you don’t know will hurt you.
The folks at MicroStrategy pride themselves on being a transparent organization. This transparency offers a deeper understanding of problems that arise in the workplace.
Recently, employees complained to Bansal that a colleague’s performance wasn’t up to par. While some were ready to fire that person, Bansal decided to dig around the intranet to learn more about the employee’s background. “The poor performance resulted from the job, which did not match that person’s background,” he explains. “So we transferred the employee to a more suitable position. If you have a bureaucracy, you don’t get that sort of information.”
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