Confessions From A Crash

Gone are the double-breasted suits and the copy of the Renaissance painting on the wall. Gone, too, is most of the $10 billion fortune, as well as roughly half of the 2,400 staffers he once employed. Michael Saylor, the CEO of the Vienna, Va.-based MicroStrategy, took one of the most spectacular dives in the dot-com crash. He is still worth about $100 million on paper, but reporters rarely come around these days seeking his vision of the future, and he notes, a little sullenly, that on the charity-ball circuit he has been dumped from the A list "to the B or C list." Last week he sat down with NEWSWEEK to recount, for the first time, what he calls his "near-death experience." He wanted to come clean, to tell a cautionary tale for the age, but he may have revealed more about his pride than his fall.

Saylor was having "the best week of my life," he says, when the ominous phone call came. It was mid-March 2000; the Nasdaq was peaking, and Saylor was in Houston, pitching investors on a $2 billion stock offering, the largest IPO by a software company ever. The week before, Saylor had promised to use $100 million of his own money to start an online university. He had just turned 35, old enough to run for president of the United States, and his friends had thrown him a flag-draped "presidential" birthday party--"half joking," said Saylor. And why not? He was a master of the universe, featured in the pages of The New Yorker and NEWSWEEK, citing Caesar and Einstein as his role models and vowing to "purge ignorance from the planet."

The phone call was from MicroStrategy's accountants, PricewaterhouseCoopers. A partner in the accounting firm was on the line explaining that MicroStrategy might have to issue what is gingerly known as a "restatement." Saylor's company, it appeared, had been losing, not making, money for the previous two years. Saylor knew that, unfairly or not, the restatement would be seen as an admission that MicroStrategy had been cooking its books. Saylor felt, he recalled, like a "water skier. Everything's perfect. Everyone's staring at you. But you can feel the edge of the ski begin to give out, and you're going to pound face first into the water at 60 miles an hour."

The restatement caused MicroStrategy's stock to plunge 60 percent in a day. (A share, once worth more than $300, now sells for about $3.50.) The company has been forced to settle a wave of lawsuits from angry investors. Accused of fraud by the SEC, Saylor himself had to pay a $350,000 fine and give up about $8 million of "ill-gotten gains."

Saylor says he has become more "humble" and "practical." After vowing to essentially wire the world with all the information anyone would ever need or want to know, MicroStrategy has returned to the more prosaic (but sounder) business of producing software to help businesses manage their inventories. Though he admits to "overexpanding," he gripes about the press, his accountants and lawyers. (Pricewaterhouse denies any wrongdoing, though it recently settled a lawsuit by MicroStrategy shareholders for $55 million.)

When he was on the way up, Saylor had boasted about reading Machiavelli and ancient history (in his bookshelf, alongside Letitia Baldrige's "Complete Guide to Executive Manners," is a thick volume on the Romans). Did he have any premonition that he was guilty of hubris? No, he says. Indeed, he insists that "but for a technicality"--the restatement from his accountant--"we would have won." Saylor cannot help but blame bad luck--"a fluke."

Saylor has become "less bombastic," says his No. 2 and former MIT frat brother, Sanju Bansal. But grandiosity dies hard. Now he compares himself, without any apparent irony, to Ernest Shackleton, the indomitable Antarctic explorer who saved his crew after his ship was broken by the ice. Or Napoleon, who, Saylor notes, "dragged his Army back from Moscow, dragged another Army back from Egypt."

Saylor envies other dot-com entrepreneurs who "jumped through the window" to the "pot of gold" before the window--by which he means the stock market--"slammed [shut]." Toward the end of the interview, NEWSWEEK asked Saylor, "would you do it again, take a shot?" "Yeah," he says, "but I would probably manage the risk better." He observes that "The Right Stuff" pilot Chuck Yeager was "not the first person to go through the sound barrier. He was just the first person to go through the sound barrier and live... The fact that I snapped off a wing," he says with a slight smile, "doesn't change my love for aviation."