Last of four articles
In the summer of 2000, Michael Saylor began coming to work late
and leaving early. He spent most weekends in the Hamptons. This is
not unusual for CEOs in summer, but it was uncharacteristic of
Saylor, who rarely went a full weekend without seeing his office at
MicroStrategy Inc. and had not taken a vacation since a 1997 trip to
London with his mother.
Saylor seemed depressed and withdrawn around the office,
repeating platitudes -- "We're working hard, we've got a great team"
-- to people he had known for years. He was "totally checked out,"
one executive said, although given Saylor's fixation with
MicroStrategy's "personal intelligence network," Strategy.com, they
had become accustomed to operating without Saylor's engagement in
the company's main business, data-mining software.
While Saylor seemed increasingly isolated at work, friends said,
he didn't like being alone. He always took a small entourage with
him when he went to Long Island, filling a time-share Hawker jet
with new friends such as venture capitalist Mark Ein, real estate
developer John Mason and the occasional MicroStrategy pal like Paul
Williams.
Despite MicroStrategy's travails, the summer of 2000 was part of
Saylor's ongoing introduction to the moneyed culture. Williams
remembers one of the first weekends they spent in the Hamptons. They
were visiting friends, walking up a stone driveway to a huge house
while a huge American flag waved in a sea breeze over parked
Porsches and Mercedes-Benzes. "How did we get here?" Saylor said to
Williams. "Do we really belong here?"
As the summer wore on, Saylor became more comfortable in that
setting, but something changed. He began to drink, according to
friends, who had always known him as a teetotaler. Alcohol had
carried a strong stigma in the Saylor home when he was growing up.
His maternal grandfather was an alcoholic.
Saylor said that his drinking should be viewed in the context of
his broader personal evolution. "By the summer of 2000, I began
taking a more normal view of what a social life should be," he said.
But what was striking to those who knew him was how drinking
exaggerated his already outsized personality. Friends said he could
be a sloppy, space-taking drunk who nuzzled up too close to people,
putting his arm around them whether he knew them well or not.
After attending a party at the home of rapper Sean "Puffy" Combs,
in which all the guests were required to wear white, he threw a bash
at his home celebrating his own favorite color -- "the black party."
He frequented Cities in Adams Morgan and Cafe Milano in Georgetown.
At least two MicroStrategy officials received calls from people who
were concerned that they had seen Saylor drunk in public, or at
least carrying on loudly, and they were worried about how it might
look, given the company's very public struggles.
Back in the late 1990s, Saylor would tell his new employees that
if they were up to his mission, they could "bend reality through
sheer force of will." But as the Nasdaq continued its crash through
the end of 2000, and the U.S. economy followed in 2001, reality had
become harshly formidable. Longtime employees were leaving
MicroStrategy; morale was tumbling, and so was the stock. By the
beginning of 2001, shares of MicroStrategy had sunk into single
digits. That April, MicroStrategy said it was scaling back plans for
Strategy.com, the subsidiary that Saylor had once considered the
cornerstone of its effort to deliver "information everywhere."
Unlike many Internet highfliers, MicroStrategy had an established
business to fall back on when the bubble popped: The company
refocused on data-mining software, tools that cull information from
databases so businesses can analyze customer habits and trends.
"I sell carburetors" is how Saylor now describes his work,
underscoring the utilitarian dullness of his core product. "If you
ask me about my life, I'm going to say this week I worked on
Carburetor Version 3. Next year, I'll say carburetor Version 4. It's
all about carburetors."
MicroStrategy's annual shareholder meeting last July seemed about
three eras removed from the momentous gatherings Saylor hosted the
year before, such as the massive Super Bowl party MicroStrategy held
at FedEx Field. About 60 shareholders showed up at the Dulles
Marriott, slumped on green felt-covered seats in Salons B and C,
just off the lobby, next to a training session for employees of
Gates Rubber Co. in Salon D.
"We went into the jungle, and the jungle was a pretty ugly
place," Saylor told the shareholders. He took questions -- four
questions that took 40 minutes to answer. When he finished and
thanked everyone for coming and for their continued support, there
was no applause.
A 'Wake-Up Call'
Saylor's relations with his board of directors had been
deteriorating for several months, culminating last summer, when
MicroStrategy's shares dipped below $4. In one-on-one and group
meetings with Saylor, the board -- which included well-known local
business figures such as WorldCom Inc. Vice Chairman John Sidgmore
and entrepreneur Jonathan Ledecky -- had criticized Saylor for,
among other things, clinging to Strategy.com until it had burned too
much money, for refusing to cut staff and for his apparent
disengagement from the company.
The July 14 shareholder meeting was a pivotal day. Several people
who attended that meeting -- including members of the board -- found
Saylor's performance to be lackluster, unfocused and uninspired. He
was a very different CEO from the wonder boy who had dazzled so many
roomfuls on his way up.
In a heated meeting that followed, the board confronted Saylor
about his slipping performance. He was defensive, according to a
source close to the board, but he took a clear message from the
discussion: The board wanted him to step down as chief executive. He
could stay on as chairman, but MicroStrategy needed someone new to
lead it day-to-day. Several seasoned candidates were
interviewed.
But Saylor refused to relinquish his CEO job to any of them, and
there was nothing the board could do about it. Saylor had designed
MicroStrategy's ownership structure so that he held complete control
of all company decisions. Not only did he own a large majority of
the company's shares, but he also insisted that there be two "tiers"
of shareholders: Class B shareholders (himself and a small group of
company insiders, who received 10 votes on important company
decisions for every one share owned) and Class A shareholders
(everyone else, who received one vote per share).
The board could have voted to fire Saylor anyway. And Saylor
could have then fired his board and brought in a new group. That was
viewed as an endgame scenario by everyone, given the signal it would
have sent to Wall Street -- at least the part of Wall Street that
still paid attention to MicroStrategy. Firing Saylor was never put
to a formal vote. One member described the dispute with Saylor and
his board as a "Mexican standoff."
In retrospect, Saylor said, the board drama was a "wake-up call"
for him to abandon his grandest ambitions. No longer would it be his
mission to spread information everywhere. He would take his job more
seriously, he said, and "abandon blind hope as a strategy."
Today Strategy.com has been shut down. In systematic layoffs,
MicroStrategy's staff has shrunk to 850 (down from a high of 2,400).
Saylor has abandoned his plans to write a book, and he has removed
the articles about himself that he had framed from his basement
wall. They are now stored in his garage, replaced by van Gogh
prints. His office, which once included a sculpture of Rodin's
"Thinker," is now completely unfurnished except for a pillow
embroidered with the words "You never know how many friends you have
until you own a home in the Hamptons."
Saylor remains what he calls "household" -- as in a household
name -- but largely on the strength of his No. 1 ranking in Fortune
magazine's "Billionaire Losers Club" (lost: $13.53 billion) and his
once-grandiose plans.
"For the last 18 months, I've had to deal with everyone in town
wanting to know how my mansion is going," he said one day last
summer over dinner at the Capital Grille in Tysons Corner,
downstairs from MicroStrategy's new, smaller offices. His voice was
rising, and people at adjoining tables were peering back at him.
"There's no house," said Saylor, who instead of the grand house
he once planned lives in a large brick Colonial in McLean. "I've
been ridiculed in the press for expressing the hope of building a
house one day. Like, how much more ridiculous could it get to be
ridiculed not for something you've done, but for something you've
whimsically spoke about doing?"
Saylor is still extremely rich. His holdings in MicroStrategy are
worth close to $200 million. He liquidated about $10 million last
year to diversify his financial holdings and, in the long term,
realize his plan for an online university.
He has become used to a certain lifestyle, stepping out of his
big limousine at the Legg Mason tennis tournament, riding it around
Adams Morgan and Georgetown, inviting people into the back seat to
see a Santana concert on his DVD player. He jetted weekly to the
Hamptons again last summer, this time staying in a large home he
rented in Bridgehampton. He threw a "red party" at Cities to
celebrate his 36th birthday. He wore black leather pants and a new
red sweater that Brian, his butler, bought specially for the
occasion. (Brian the butler has since been replaced by Herman the
butler.)
Looking back on his "ordeal," Saylor is sometimes wistful. Since
March 20, 2000, Saylor said, he has grown more humble and less
judgmental and more sympathetic to humanity. On other days, he is
sarcastic and bitter. "No one should articulate any grand notion,"
he said, shaking his head. "And I refuse to apologize for that. Do I
regret that I got bludgeoned? Yes. Do I regret that I got bludgeoned
because I made the mistake of being passionate and idealistic? Yes.
That was my sin. I was youthful and naive."
Saylor often uses metaphor to describe his experience and its
meanings. He was an innocent boy swimming in the ocean, he said,
when a magical tidal wave came, a tidal wave of funding, fame and
techno-mania to go with swells of adulation to reinforce everything
his mother used to tell him: that he was put on earth to "do great
and enormous things."
"The little kid's on a surfboard, and the tidal wave lifts him
300 feet in the air, right? What do you think that child would do?
That child would try his best to stand up on his board."
But instead he crashes violently into the rocks.
"And he deserves something better than for some journalist after
the fact to say, 'Ha, ha, ha, he thought he could ride a 300-foot
wave. Now, look what it got him. . . . Let that be a lesson to other
presumptuous little kids who would dare to stand up on that wave in
the future.' "
But all the little kid wanted to do was surf, Saylor said with a
pleading insistence. "It's like a gleeful satisfaction people take
in order to ridicule idealists who actually wanted to do something
decent."
He turns to music metaphors, craftsman metaphors. He compares
himself to the homecoming queen who tries out for the cheerleading
squad but trips and falls and finds that suddenly everybody hates
her. He spins metaphors of extreme violence -- rape metaphors, a
knifing metaphor. When he is reminded in a later interview that such
graphic comparisons could be distasteful to some, he said, for the
record, that it is not his intention to offend anyone.
He said he hopes these articles will reflect MicroStrategy's
"going-forward attitude" -- how the company has become more focused,
how its software wins technology "bake-offs" against its
competitors. The latest versions of MicroStrategy's software, he
said, are the carburetors, actually the engines, that allow Safeway
to track a package of, say, Chips Ahoy cookies as it passes through
a checkout scanner in the District and alert inventory managers in a
warehouse of a potential "out-of-stock situation" well before the
store runs out of cookies.
Friends say Saylor is fully reengaged at work. His board seems to
agree, and the calls for him to leave as CEO have subsided. He has
returned to his business roots, one executive said, and the burden
of being an "industrialist" has been lifted. "I'm still a
visionary," Saylor said. "I'm a bit more mature, maybe an older,
wiser visionary. And I realize today that if your vision is your
vision, that and a quarter gets you a cup of coffee. But if you can
make your vision your customer's vision, then you have a
business."
Still, Saylor hardly seemed reconciled, often speaking of how
things could have turned out differently.
What would have happened, for example, if John Dirks, the
PricewaterhouseCoopers official who recommended that MicroStrategy
"restate" its financial records in March 2000, had taken a vacation
instead?
He went from being a first-class citizen in Washington to a
fourth-class citizen, Saylor said, and now he has scratched his way
up to being a second-class citizen. He illustrates his boomeranging
fortunes with numbers: He was invited to the White House 10 times in
1999 and early 2000, he said, but not once in 2001.
Even his most avid critics say that Saylor was, in part, a
product of his times. Saylor's sins were more in the realm of
breaking rules he believed he could, said Greg Bruch, the SEC lawyer
who led the investigation of MicroStrategy in 2000.
"As a society, we needed to build Mike up," said Manish Acharya,
an early MicroStrategy employee who left the firm in early 1999.
"What does it take not to be intoxicated? If everyone was given the
kind of press he got, the kind of Wall Street value, how would they
react? Would Mike fall into the top of the spectrum, or bottom? Or
maybe he was average?"
'Collecting Experience'
While Saylor has made new friends in the past two years, he has
also lost a lot of friends -- many of whom once made up his adult
fraternity at MicroStrategy. Several of those he still considers
friends are quick to speak critically of him, usually not for
attribution. Some have gotten married and had children and have
moved on to new chapters, enriched, in many cases, by the millions
of dollars they made at MicroStrategy in better days. They are a
close-knit group who have kept in touch, have hired one another for
companies they've joined or started and are mostly grateful for the
exhilarating times they spent at MicroStrategy. Nearly all of them
say that Saylor is brilliant and they would never count him out.
But many of them left MicroStrategy feeling worn down by Saylor,
tired of his abuse and angered by the restatement crisis. They also
evince a sense of sadness when they speak about Saylor. "A lot of
people who worked at MicroStrategy alternate between seeing Mike as
this incorrigible ball of hubris and also feeling sorry for him as a
human being," said Mark Bisnow, Saylor's personal publicist.
One longtime MicroStrategy executive compared Saylor to an
addict. In a period of addiction, he said, a person's emotional and
social development gets stunted. "Over 12 years, Michael became
addicted to power and control," the former executive said. It made
it impossible for him to grow into a normal adulthood.
Another former executive recalls seeing Saylor, along with dozens
of present and former employees, at the wedding of longtime
MicroStrategist Sid Banerjee last summer. Saylor was in a gregarious
mood and kept mentioning that he had a bottle of tequila out in his
limo. As if he was in tycoon high school, the former executive said,
"like it was just so cool to have this bottle of tequila in his
limo."
A few friends, business associates and at least one board member
have expressed concern to Saylor about his increased drinking. But
in an interview last week, Saylor said he has no problem with
alcohol. He drinks only on weekends, he said, and it has had no
effect on his work. He said he has never drunk in front of his
parents.
The restatement crisis showed him how quickly money could vanish,
he said. He has become more "epicurean" in recent months. He has
begun to define security in terms of "collecting experience," not
collecting money. Now, he goes out and he meets friends at clubs. He
has come to see that business is no longer the life-and-death matter
that he once believed it was, even just a few months ago.
Saylor said he has also become more "spiritual and
philosophically complex," more pragmatic and existential. "In the
Air Force, they get promoted by taking a test, showing discipline.
In my world, business, it's like politics, and who you know and what
you said and quantum weirdness and random stuff."
Saylor said he agreed to be interviewed for these articles only
because they were going to be written regardless of his
participation. He is trying hard, he said, to be boring. "When
you're seeking to build a business and no one knows who you are," he
said, "the key is to be interesting, say interesting things in order
to get attention." He's trying to only say "extremely uninteresting
things."
One afternoon in early September, Saylor was sitting in a
conference room at his office and trying to achieve his goal. He
kept invoking carburetors, saying that the only people he wants to
talk to are "technologists who are building analytical applications"
he said. "Tools for techies," he repeated several times.
Then he began talking about the nature of public life and the
elaborate web that is spun between the idealists and the cynics and
how it creates a brutal system of checks and balances that can
result in "human carnage."
"Your 2:45 is here," his assistant, Glenda Thomas, interrupted,
poking her head in.
"Five minutes," Saylor said before going on for 20 more,
describing his ideas on the economic and cultural "ecosystem" he
inhabits, and why he admires Oracle Corp. founder Larry Ellison for
rebounding after a dreadful accounting restatement by Oracle in the
early 1990s.
Thomas, who would soon be leaving for a new job at AOL, poked her
head in again.
Saylor led the reporter out, spinning more opinions on "the
system," and then followed the reporter to the elevator bank,
talking for 10 more minutes. The 2:45 stood in the lobby a few feet
away, having now waited 35 minutes. He is, in Saylor's words, "the
CFO of one of our VARs," meaning the chief financial officer of one
of MicroStrategy's "value-added resellers." A carburetor guy,
checking his watch.
As the elevator opened, Saylor followed the reporter halfway in
and declared that he had learned many lessons about life, leadership
and humanity over the past two years. "They can all be valuable," he
said by way of goodbye. "I'll be better prepared for my next life,
whether it's in politics or whatever."
•
Reporter Mark Leibovich
discusses the Saylor series
