Part 1 of 7: Rising to the Challenge: History of Great Plains Software before mergerNearly three decades ago, before the rise of Great Plains Software as a powerhouse, before the billion-dollar deal that brought Microsoft to Fargo, a 26-year-old Doug Burgum got a glimpse of the future.
Nearly three decades ago, before the rise of Great Plains Software as a powerhouse, before the billion-dollar deal that brought Microsoft to Fargo, a 26-year-old Doug Burgum got a glimpse of the future.
The Arthur, N.D., native was a junior employee at a Chicago consulting firm, fresh off a week’s worth of all-night financial number-crunching marathons with the “latest and greatest piece of technology” – an HP-12C calculator.
As he walked bleary-eyed through the office, a co-worker summoned him over to check out something even fancier: An Apple II computer. The personal computer was a novelty in those days – Burgum himself had never used one.
The co-worker fired up VisiCalc, the earliest ancestor of modern spreadsheet programs, and ran a set of numbers. Burgum watched the machine chug along and spit out a set of calculations.
The pace was glacial and the capabilities crude by today’s standards, but Burgum was transfixed.
“I had just spent four hours doing what that thing did in a minute. It was one of those blow-you-away kind of moments,” he recalls. “People say, ‘He was a visionary.’ Well, it’s not hard to have vision when you get hit in the head with a two-by-four.”
The pixilated ledger was still in his mind when he got a phone call soon after from a pair of Fargo entrepreneurs, Joe Larson and Roger Turner.
A few years earlier, the two Concordia College graduates had founded Great Plains Computers, a retail store at 113 Broadway in Fargo. It was the first Apple retailer in North Dakota.
Larson and Turner had expanded the business to include a software division, which focused on small-business accounting programs. Like the PC, the concept of small-business software was in its nascent stages. Most companies hadn’t invested in hardware that ran perhaps $10,000, let alone made the switch to digital bookkeeping.
It wasn’t a fancy operation early on – the building was an old clothing store, and programmers worked in a back room still stocked with shoe shelves. When the company outgrew that space, the next one wasn’t much better: an office at 123 15th St. N. nicknamed the “Dunover Building,” not in homage to any Mr. or Ms. Dunover, but in reference to the fact that it had been redone over and over again.
But in spite of the limited resources and still-young market, Larson and Turner were encouraged by the software’s growth potential – enough so that they shuttered the retail side of the business after two years.
They were looking for a vice president of marketing, and found Burgum because his mother and Larson’s mother worked together. Burgum was interested in moving closer to home, but wanted to join as a partner.
When Burgum visited the Great Plains offices, he was greeted by the sight of orders “flying out the door” faster than employees could keep up. He figured business was booming and hammered out a deal. He mortgaged his portion of the family’s Arthur farmland, inherited from his late father, to put $250,000 into the company (when he says he “bet the farm” on Great Plains, he means it).
Only later did he discover that robust sales weren’t the whole story behind the flurry of activity: On that particular day, the company happened to be tackling a backlog of orders that had been sitting unshipped for weeks.
“I didn’t do all the best due diligence that I could have,” Burgum said.
It wasn’t the only assumption Burgum made that went awry. When he bought into the company, he was convinced the circle of competitors in financial software was tiny.
“The perception I had when I wrote that check out was that there were less than half a dozen,” he said.
When he attended an industry conference shortly thereafter and cracked open the directory, he found there were 53.
By 1984, the company was valued at less than it had been when Burgum bought in, and he was underwater on the mortgage that had financed the deal.
Meanwhile, Larson and Turner had shifted their priorities from growing their own business to cashing out. They were looking to follow the path of a competitor that had been snapped up by investors for a handsome sum.
“Joe and Roger just got dollar signs in their eyes,” said Mike Slette, a college classmate of the founders who joined Great Plains in 1982 as the company controller. “They went on this path of, ‘Well, we’re going to sell out, too.’ ”
Larson died in a plane crash in 1999, and attempts to reach Turner for this story were unsuccessful.
If they had sold to an out-of-state venture capital firm or another dispassionate stranger, “the story would be very different,” Slette said. Instead, they found a buyer in Burgum, who doubled down on his original investment (which already constituted just about all of his net worth) by leading a group of relatives in buying the company outright.
Before taking that leap, however, he did make a key fact-finding call. It was to Steve Ballmer at Microsoft, a classmate from Stanford Business School. To Burgum, Ballmer was something of a hero figure, a brilliant student who went to work for Microsoft after a year in school and never came back.
Burgum wanted to know if Microsoft was going to become a Great Plains rival.
“I was like, ‘I don’t want to do this if you guys are going to get into the accounting software business,’ ” Burgum recalls. “He (Ballmer) said it would be over his dead body.”
That was good enough for Burgum, who took the reins as chief executive and went to work.
Parties and partners
A few weeks after he first bought into Great Plains Software, Burgum joined a delegation from the company at a trade show in Atlanta. Most of the other companies there set up polished, glitzy booths that smacked of Silicon Valley capital.
The Great Plains crew, running on a considerably tighter budget, dressed up as cowboys and cowgirls and offered roping lessons. The hook: “Rope a winner.”
“That’s all we knew how to do,” Burgum said. “We basically from the get-go said, ‘Hey, we’re very proud of our North Dakota roots, and we’re going to use that as a differentiator.’ ”
In the aftermath of that conference, Burgum realized the company didn’t have the resources to stand out based on a sterling product alone. Product development required cash, and Great Plains was far from flush. To bring its own computers to the trade show, the company had to take them away from its software developers because it only had half a dozen to its name.
Instead, Burgum saw an opportunity to compete on service. “In the 1980s,” he said, “the service side of the equation was just awful.” Most software companies subscribed to the idea that technical support should be free – except free, as Burgum describes it, meant “you can call and be on hold for two hours, or you can get a callback a week later and you still won’t get an answer.”
Great Plains eschewed that model in favor of a premium service system where customers paid for guaranteed attention. Meeting those guarantees became paramount – during one stretch, the company went 402 days and more than 160,000 support calls in a row without missing a deadline.
It was a philosophy in line with the values of the Burgum family’s grain elevator business. It wasn’t the first time Burgum drew on those experiences in his career: At Stanford, he kept a picture of the elevator on his desk to remind himself of his roots – and that he could be shoveling grain.
“In a grain elevator, if you piss off somebody, it might be three generations before you get that customer back,” said Jodi Uecker-Rust, who joined the company in 1984 and stayed on until 2004. “It goes to the same idea of customer service and relationship-building.”
To reinforce the service-centric model, Burgum codified a handful of practices. When employees met with customers, they were to ask how their businesses were faring. At events, employees didn’t take a seat until the customers had secured theirs, or get in line for food and drink until the customers had gone through. At one company event, Burgum cracked an egg on his own head to signify his contrition after a buggy product release.
He also tweaked the terminology: In the early 1980s, it was standard to refer to customers as users and product vendors as dealers.
“Dealers and users – what does that evoke?” he said. “It sounds like the guy standing on the street corner.” In Great Plains vernacular, vendors were Partners and buyers were Customers – always with a capital P and a capital C.
The service-driven approach struck gold.
There’s a wall of fake newspaper front pages on the Microsoft campus – celebratory gags loaded with inside jokes – that chronicle Great Plains milestones. The headlines are fake, but the growth was real. In 1984, the company had 50 employees. In 1987, it had 100. By 1990, it topped 300 and was doing $22 million in annual sales.
The torrid expansion also was driven by the company’s young, energetic workforce that worked and played hard.
“It was a party-fest, in a way,” said Diana Wilberscheid, who started at the company as an intern in 1988 and didn’t leave until her position was eliminated by Microsoft 21 years later. “You worked your butt off, and then every night everybody went out to Chub’s Pub.”
Part of the camaraderie was fueled by demographics – in those years, most employees were unmarried 20-somethings who threw themselves into their work and found a thriving social life in the company.
Part of it was fueled by family ties – once Great Plains found a good family, it was said, the company liked to stick with it. When Wilberscheid was hired, her brother-in-law was there; not long after, her own brother and sister joined up.
And part of it was fueled by a culture in which everyone chipped in to do a little bit of everything. When a semi pulled up with a new batch of manuals, everyone from programmers to sales staff dropped what they were doing to help unload the truck. When it was time to ship, everyone set to work assembling and packing the product.
“In those days, people just sort of moved between whatever fire needed to be put out,” said Dave Gaboury, one of the company’s first hires and the longest tenured employee at Microsoft Fargo today.
Stability takes time
In 1993, Great Plains was named one of the 100 best places to work in America in a book by researchers who in later years compiled the same list for Fortune magazine (Great Plains went on to appear on the list multiple times). It had the fewest employees of any company named in the book, and Burgum was fiercely proud of the honor.
Growth wasn’t always stable, though.
“If you’d have seen the profit-loss line (before the company went public), it was kind of wavy,” said Mike Slette, the longtime bookkeeper. In 1994, the company asked investors for cash because “we lost more money in a fiscal year than we had ever lost” developing a Windows-based product, he said.
But Windows caught on, and the balance sheet recovered. A gangbusters public stock offering in 1997 raised more than $50 million and saw the share price double from a $16 opening to close above $32.
By 2000, despite speed bumps and layoffs, the company had annual revenue of about $195 million. The company had become a big fish in its industry, swallowing up a few smaller competitors in quick succession to bring its headcount to 2,200.
Then Burgum got a call from a bigger fish. It was his old business school study-buddy Steve Ballmer, who had just become the chief executive of Microsoft. Ballmer wanted to make a deal.
Tomorrow, find out how a phone call turned into a $1.1 billion merger between Microsoft and Great Plains.
Readers can reach Forum reporter Marino Eccher at (701) 241-5502