Updating the Agenda: MicroStrategy Inc.

Read the sidebar: The Reeducation of an Internet CEO

Recognized last year for: People and technology
Home base: Vienna, Virginia
Year founded: 1989

A day after receiving the best news he's heard in months, Michael Saylor isn't exactly ready to celebrate. Too much work remains to be done. The 36-year-old cofounder, CEO, and chairman of MicroStrategy Inc. is sitting in a small conference room adjacent to his corner office on the 14th floor of an office building in Vienna, Virginia. He looks worn and subdued -- like someone who just woke up from a long nightmare and can't quite believe that it's over. Who can blame him? The day before, the U.S. Securities and Exchange Commission announced that it had completed its nine-month investigation into bookkeeping irregularities at MicroStrategy. The investigation ended, as these matters often do, with a settlement. Saylor, along with cofounder and COO Sanju Bansal, 35, and former CFO Mark Lynch, 38, agreed to pay fines and penalties totaling $11 million, without admitting or denying that they did anything wrong.

The ongoing investigation cast an ominous cloud over the company, driving its stock price down more than 90%. The long-awaited settlement is a milestone on the road to recovery. Finally, Saylor hopes, the organization can move beyond the strategic uncertainty, the barrage of negative articles, and the sense of crisis, all of which tested the loyalty of the company's employees and customers -- and made him one of the more infamous ex-billionaires of the Internet meltdown. "You have to get the bullet out in order to get well," he says.

When Fast Company last visited MicroStrategy headquarters a little over a year ago, it was to write an in-depth story for our "Best of the Best" 2000 issue. Saylor and his company seemed to be, as we put it then, "a new kind of company in a new era of business -- the Web era." Sales were booming, the company's data-mining software was winning rave reviews, and the stock was flying unbelievably high on Wall Street.

More important, Saylor himself was a charismatic Internet visionary. Young, smart, wealthy, and unabashedly grandiose, he made national headlines when he announced plans to donate $100 million to create a free online university. MicroStrategy's ultimate mission, he declared, was to build a wireless "personal-intelligence network," an effort he likened to the Roman Empire spreading civilization, because both missions were "timeless, ethical, and imperative."

What a difference a year makes. Saylor is still young, but it seems as though he's aged 10 years in 12 months. His dark hair has started to turn gray. He says that he's much more cautious as a result of MicroStrategy's meteoric rise and fall -- and more humble. While he still answers questions in long, eloquent passages, they sound less like a lecture and more like a confession. "If I was a better manager, if I had had more experience, if I was more careful, if I was more competent, maybe this wouldn't have happened," he concedes. "It's like being a parent whose children were playing in the front yard, and one of the kids got struck by lightning, and now he's dead. You didn't have a lightning rod on your roof, because you were planning to take care of doing that next year. Now people walk by your house, point, and say, 'Look, that's where the kid got struck by lightning.' It's an awful feeling."

The dramatic reversal of fortune began on March 20, 2000, when MicroStrategy announced that it was restating its 1998 and 1999 revenues. Instead of earning $12.6 million in fiscal year 1999, the company had lost nearly three times that much. The reaction on Wall Street was immediate. By the time the market closed, the stock had plummeted 62%, from $226.75 a share to $86.75 a share. Just like that, the company was worth $11 billion less than it had been the day before, and Saylor, its largest shareholder, had personally lost $6.1 billion in paper wealth.

In a matter of months, the company went from symbolizing everything that was new and exhilarating about business in the Internet Age to symbolizing everything that had gone wrong with young companies that had grown too big too fast, without paying careful attention to the fundamentals. But that breathtaking fall from grace was also an opportunity, a chance for Saylor and his colleagues to learn from their mistakes without losing everything that they had worked so hard to build since 1989. "The company is like a wild 20-year-old who gets married at 30 and has a life-changing experience," says Rob Tholemeier, a senior analyst for Wells Fargo Van Kasper who has studied MicroStrategy for 10 years. "The new company has put all of the energy -- and what was perceived as arrogance -- that went into promotionalism into operational excellence."