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   Technology StocksMicroStrategy Inc. (MSTR)


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To: Howard C. who wrote (688)1/9/2002 6:50:45 PM
From: Glenn Petersen
   of 710
 
Nobody was asking the hard questions. Part IV from the Washington Post:

washingtonpost.com

'Maybe an Older, Wiser Visionary'
Chastened Wonder Boy Back to Business Roots

By Mark Leibovich
Washington Post Staff Writer
Wednesday, January 9, 2002; Page A01

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Saylor seemed depressed and withdrawn around the office, repeating platitudes -- "We're working hard, we've got a great team" -- to people he had known for years.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."

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To: Glenn Petersen who wrote (689)7/14/2002 11:00:38 PM
From: Toby Zidle
   of 710
 
A fascinating series of articles on Michael Saylor, Glenn. Thanks for posting them. I'm somewhat surprised they have drawn so little comment from SI posters. I suppose that can be interpreted that the posters on this thread when it was more active are all long gone and no one on SI cares about the company any more. Given the stock's performance, why would anyone still be interested? Are new longs buying MSTR because they perceive value in its current price, or because they can get a 100% gain in so little price movement compared to where the stock was just months ago?

Part IV cites Saylor's financial situation: "Saylor is still extremely rich. His holdings in MicroStrategy are worth close to $200 million." That was on January 9th. In the bit over six months since then, MSTR stock has fallen another 87.7%. Saylor's holdings are worth only $25 million now (assuming he hasn't partially liquidated again before now).

It would be interesting to see a follow-up story. It's hard to feel sorry for a former billionaire. However, there is really a personal tragedy in this. Saylor's stock has fallen from $300+ to 48 cents per share. This is every bit a loss comparable to what Enron employees suffered. OK, they don't have $25 million to live on, but they were never powerful billionaires either.

Anyway, the articles are a great story. Maybe someone will do a follow-up. I bet there's a TV series there somewhere, like "Barbarians at the Gate". I'd watch it.

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To: Toby Zidle who wrote (690)9/4/2002 11:13:11 PM
From: lilbully
   of 710
 
Why is this stock going up?
Its not because of a deal with a Turkish retailer. What is the deal with the P/E? Is it really making $4.00 a share?
Anyway... I heard a story on NPR today about the FBI and CIA dropping the 9/11 ball because of their archaic computer systems. Basically, the government search engines are pitiful. They really have no good way to access the information they have in the data base without getting 50,000 useless results from a search like "Flightschools"
Someone was quoted as saying its like trying to drink from a firehose.
Isn't that what this company does? Data mining? Just a thought. I'll look at the NPR page and see if I can find the story.

Mike
PS
I thought it was interesting that the price rose yesterday while the market crapped all over itself.

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To: lilbully who wrote (691)9/4/2002 11:25:59 PM
From: lilbully
   of 710
 
This is part of it...
Days before the Sept. 11 attack, an FBI field agent in Phoenix sent a memo to FBI headquarters relaying concern over Middle Eastern men training to fly jets at aviation schools. But the information was never formally evaluated. Earlier this summer, Minneapolis FBI field agent Coleen Rowley testified before a congressional committee about how hard it is to process information at the agency. Her office had also drafted a memo about a Middle Eastern man -- Zacarias Moussaoui -- who had enrolled in a flight school before Sept. 11, but the memos were never linked.

The agency's records are so voluminous, Rowley said, that they're nearly useless. Intelligence analysts sometimes call it drinking from a fire hose.

Analysts working the Pentagon war room are equally flooded with information. Sometimes they get one message a second, says U.S. Rep. Mark Kirk (R-IL), a former Naval intelligence officer.

"An analyst from South America would get 1,400 messages a day," Kirk tells Joyce. "There are huge vacuum cleaners in the sky sucking in information for the foreign intelligence agents, but sometimes we get so far behind in collecting information that we find it too late, as we did with Sept. 11."

The billions of dollars spent on homeland defense will inundate intelligence analysts with information: photos from satellites, intercepted e-mails, banking records. Someone -- or something -- has to separate the information from the noise. There's a growing industry to figure out the best solutions.

The government has created an Information Awareness Office at its Defense Advanced Research Projects Agency (DARPA) to do just that. And researchers with the National Science Foundation are working with the CIA on systems that dig through mountains of information, looking for patterns.

But there is a danger to improving information gathering and analysis. Better technology will give the government more information -- about everybody. At the moment, laws such as the Federal Privacy Act limit how much personal information federal agencies can share with each other. But Ben Shneiderman, a computer scientist at the University of Maryland, warns that may change.

"The mood is somewhat shifted, and the feeling is, well, if one state agency collects certain data they should share it with another agency," Shneiderman tells Joyce. "In fact, the criticism of the FBI and the CIA was for not sharing."

The imminent danger is that the government's disorganized database system could actually get much better, according to many computer experts. Scientists are ready to fix the database, and money is on the way. What those experts worry about is whether the technology will outrun the public's ability to control it.

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To: lilbully who wrote (691)9/5/2002 2:56:20 AM
From: Toby Zidle
   of 710
 
I don't know why MSTR has been improving. I no longer follow the stock. SI doesn't even link a chart to this thread any more. (Perhaps that's because of the reverse split.)

Prompted by your question, I checked out the chart on StockCharts.com. Amazingly, MSTR may be about to form a cup-with-handle pattern.
stockcharts.com

You posted a very interesting article in msg #692. Yes, the federal government has always been at the toe of the learning curve when it comes to computer systems and system integration.

You can be talking about the CIA/FBI, the INS, Air Traffic Control, or the Postal Service. About the only branches that seem 'competent' are the military, NASA, and (oddly enough) the Weather Bureau (NOAA).

Perhaps this is because computer geniuses would prefer to work for a glamor Silicon Valley company rather than in a government bureaucracy. Or perhaps it's the fact that government bidding requirements place such onerous workforce conditions on bidders that the technology leaders just won't bid. The result is that contracts go to small companies that have neither the staffing nor the overall experience to come up with a truly first-rate computer system. Such stuff happens when the rules and regs are more important than the outcome of the project.

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To: lilbully who wrote (692)9/5/2002 10:33:19 AM
From: Howard C.
   of 710
 
That's just a sorry excuse. The information was there, clear as day. A government worker did not want to "rock the boat" and jeapordize his pay level. Then he tried to cover up his mistake. Then the lawyers would not let the CIA and FBI exchange information and look at the suspect's computer. The Axis of Evil includes Ourselves. Evil and Incompetence ride hand in hand. Just look at the results.

Anyway, MSTR is my only stock that is up today. Who knew?

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To: Toby Zidle who wrote (693)9/5/2002 10:49:22 AM
From: Howard C.
   of 710
 
Thanks for the compliment, I happen to work (contractor) for one of those three agencies that you mentioned in a positive way.

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To: Howard C. who wrote (694)9/5/2002 8:47:31 PM
From: lilbully
   of 710
 
I had no intentions of sparking a political debate.
My only reason for posting that was my curiosity about how the so called "war on terrorism" might possibly profit this company.
My question still remains unanswered. Doesn't this company do data mining? Is that their main business? The government is investing in their infrastructure, of that I have no doubt.
Clearly... This stocks chart has demonstrated a change in character. I'm fishing for a reason why. Its not an accident when a troubled company goes up on triple average volume on a day like today. The NASDAQ got fairly well abused.
Thanks for the responses guys. I'll tell you what. If this chart is in a valid uptrend, there is a whole lot of overhead resistance on this baby!
Mike

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To: Howard C. who wrote (695)9/5/2002 8:49:43 PM
From: lilbully
   of 710
 
Hey look! Theres a chart for mstr! lol

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To: lilbully who wrote (697)9/7/2002 11:55:16 PM
From: Toby Zidle
   of 710
 
What do you know? A chart!

What I see there is a double top without a breakout. A rather negative "M" formation.

I don't think I'd invest until either

1) a breakout above the double top. (P&F charts show those rather nicely. StockCharts.com, furthermore, annotates its P&F charts with Alerts.)

or

2) Confirmation that the bottom of the middle segment of the "M" holds support, in which case MSTR can fall into a "trading range" categorization for its movement.

If support at the mid-point low of the "M" (about $9.50) doesn't hold then I'm back to looking at other stocks for investment. MSTR then becomes an "avoid".

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