Updating the Agenda: MicroStrategy Inc.

Indeed, out of necessity, MicroStrategy has made widespread reforms that other Internet companies are now struggling to make to survive the economic downturn. Yes, the company has toughened its accounting practices and scaled back its notoriously lavish spending habits (no more Super Bowl TV ads or all-expenses-paid, company-wide Caribbean cruise every year). But it has also changed its growth strategy, prices, products, management, and leadership style.

Not that the changes were easy, admits Sanju Bansal: "When your stock is at 300 and rising 20 points a day, people think that you're infallible, whether you're making great moves or foolish moves. But when your stock is dropping, people tend to question every reform, even when you're making great moves." (Of course, Bansal adds, "You look at the highfliers, and they're all down 90%. So we no longer stick out like a sore thumb the way we did that first month.")

What Had to Change: Strategy and Selling

MicroStrategy, like all companies that aspire to greatness, was built on a revolutionary idea: that it could convert all different types of information into intelligence, and then distribute that intelligence -- anytime, anywhere -- through wireless personal devices. "We live in an ignorant world," Saylor told Fast Company last year. "Our mission is to purge that ignorance."

But as the world around him got more and more exuberant, the speed with which Saylor pursued his mission started to outstrip the company's capacity to execute. "There was no problem that we thought we couldn't tackle," he says.

Saylor is now content for his company to focus on its forte: making software that analyzes a company's database and identifies trends that can cut costs and increase revenue.

To boost its own revenue, MicroStrategy has also broadened its customer base. Rather than catering almost exclusively to large organizations, as it had in the past, MicroStrategy now wants to sell its data-mining software to virtually any business with a database. But to reach more customers, the company has had to change how it sells its products and how it educates customers. For example, it built a new Internet store where companies can order free copies of the software to evaluate for 30 days before they make a purchase.

Moreover, because data mining involves complicated technologies, particularly for companies that have limited experience in the field, MicroStrategy had relied on in-depth, on-site demonstrations to explain what each application does. But on-site visits aren't economical for smaller clients. The solution? Create online demos that allow customers to do their own learning at their own pace. The installation process had to be simplified as well, so that all customers -- not just those with enough money to hire MicroStrategy consultants -- could get started quickly. Developers have managed to streamline the daylong installation process down to seven minutes.

But perhaps the biggest change concerned pricing, which was at the heart of MicroStrategy's accounting problems with the SEC. The price of the software varied, depending on the number of employees who were using it and on the training or consulting needs. Hoping to get a better deal, companies tended to wait until the last few days of a quarter to negotiate these multimillion-dollar contracts, knowing that MicroStrategy would be eager to make its quarterly estimates.

In its findings, the SEC alleged that Saylor, Bansal, and Lynch had overstated revenue by counting fees for consulting and for other services that are required to be distributed over the term of the contract. In other cases, the SEC reported that the executives had included contracts that hadn't actually been signed within the quarter. Under its new procedure, MicroStrategy sells its software and services separately, eliminating much of the time-consuming negotiation and accounting confusion. The company also catalogs on its Web site how much every application costs, and it includes a standard contract -- something that's uncommon in the industry, according to MicroStrategy. The only deals that require negotiation are those that are worth more than $500,000.