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Transcript on deposit at The Southern Historical Collection, The Louis Round Wilson Library
Citation of this interview should be as follows:
“Interview I-0073, in
the Southern Oral History Program Collection #4007,
Southern Historical
Collection, The Wilson Library,
University of North Carolina at Chapel
Hill”
Jim Goodnight describes how he and some colleagues at North Carolina State University turned their number-crunching program into the billion-dollar global corporation SAS. Goodnight describes the slow, steady growth of the company under his laid-back managerial philosophy, some of the important decisions he made at the company's helm, and the past, present, and future of industry in North Carolina.
Jim Goodnight describes the founding and growth of his corporation, SAS.
[START OF TAPE 1, SIDE A]
This is an interview with Dr. Jim Goodnight at SAS Institute in Cary, North Carolina for the North Carolina Business History Series of the Southern Oral History Project. My name is Joe Mosnier. This is July 22, 1999. We're in Dr. Goodnight's office on the SAS Campus in Cary. This is cassette 7.22.99-JG. Dr. Goodnight, thanks again for sitting down [with me]. Let me start with just a few questions of individual biography and education, just for a little bit of background here. I don't mean to take you across ground that you've already plowed. I'm interested in your perspectives as you look back on your primary and secondary schooling and the kinds of experiences you had there and how you made your choice after that point to head on to NC State.
Well, I guess did my elementary school in Greensboro, North Carolina. Then my family moved to Wilmington, North Carolina where I did my junior high and high school. Then in 1961, I decided to come to NC State. I applied to both State and Carolina. I was accepted at both and decided to come to NC State probably for no other real reason than the fact that Roman Gabriel, who was one of our sports stars down in Wilmington, had gone there. I figured if it was good enough for Roman, it was good enough for me. That was probably the main decision that I made.
As you look back, what were the factors that led you to make the choice of course of study that you did?
In high school I did real well in math and science and looking at the available curriculum at NC State, they had a program called Applied Mathematics, which I felt met a lot of the needs that I felt I needed to be moving in that direction.
Let me ask if your perspective on persons who were most important—I imagine your parents would be on this short list—in the process of your early values formation. What got built inside of you to make your core?
I would have to say that certainly my father was heavily involved there. He had a hardware store there in Wilmington and I worked there pretty much all the time after school and the weekends, the entire time I was in junior high and high school. I learned a lot about people and about working because I worked all the time when I wasn't going to school. I guess the other individual that I've always admired was our high school basketball coach, Leon Brogden. Playing team sports, especially under Leon, gave you a great sense of team spirit and wanting to do things for the team and not thinking selfishly.
Let me ask about the broader atmosphere on campus when you got to State in the early '60s. That included the heyday of the Civil Rights direct action phase in North Carolina. Some of that went on in Raleigh as well, particularly in '63. Any recollections that you had at the time of the sense of the evolving broad social change that was underway?
Well, when I went to State in '61, we hardly even had women there. [The
school had] only two or three percent women. As a matter of fact, at
Carolina at the time—I know this because my wife went to school
there—they didn't even allow freshmen women to come in. You had to
transfer your junior year unless you were in nursing. We've seen, not
only the women now seem to have taken over the campuses, but we've got
ample numbers of minorities there as well. It's been a difficult period.
I think especially for some of the kids growing up having to go to
[separate] schools, but by and
Let me ask about that year in Florida briefly. You went down, I guess to work for General Electric. I'm interested in what it was that brought you back north a year later to the graduate program at State. How [did] you made that choice?
I had been working as a programmer since the end of my sophomore year. I worked all that sophomore year and summer and basically put myself through school on my last two years of school. Then I went right on into graduate school that following summer after I graduated. By that fall, I had gotten really tired of working and studying all the time and decided that maybe this was a good time to take a break from graduate school and go ahead out and get a job and work for a while. My fiancée at the time agreed to go with me. We got married in February of 1966 after I had already moved down to Florida. This was an interesting job. I was a programmer for GE. One of the primary things that they did was to support all of the ground stations around the world for the Apollo program. That was part of the area that I was working in, helping to develop wiring programs to take the engineers specs and turn them into instructions for machines that would do the circuitry. What really caused me to come back more than anything else was the fact that my wife's father had cancer. The last three or four months of that year in Florida, she was spending a lot of time back here in North Carolina. I felt maybe it would be good if we just came on back to North Carolina where she could be close to her father. She was very close to him anyway, and this was a very trying time.
Sure. Sure.
She thought that was a great idea. I contacted the stat department at NC State and said I'd liked to come back to school. They said, "Come on back. No problem. You can have your old job back that you had before." So I came back and continued working thirty hours a week and pursuing my Master's and Ph.D.
How did you envision at that point—. Were you already envisioning some particular form of career for yourself? Was it specifically going to involve pursuing your programming work?
Oh, certainly. The year I spent in Florida, I guess I was clearly headed up the programming career without a doubt. After I took my very first course when I was a sophomore—. I took the only course they had at NC State at the time, as a matter of fact. I was absolutely enamored with computing. I just absolutely loved it. There was no question that's exactly what I wanted to do. Matter of fact, my dad wanted me to come back that summer of my sophomore year to work in the hardware store and I said, "Dad, you know I've got a job here that I'm really more interested in."
How neatly did the statistics graduate curriculum dovetail with your programming interests?
One of the major consumers of computing back in the late '50s, early
'60s, was in fact the statistical community doing data analysis of all
sort of agricultural data. As a matter of fact, that's the group I
worked in at NC State. It was the called the Experiment Station. The
Experiment Station is set up from grants from the USDA [United States
Department of Agriculture]. There are land grant universities all over
the south that have Experiment Stations and the statisticians in these
Experiment Stations have meetings and work with each other. During the
mid-'60s they were looking to NC
When you were set to the task to develop this broadly applicable piece of software—so that project by project folks would be cobbling these things together—was there ever from the outset—. Was this a project of the scope that was so ambitious that you were uncertain that you might be able to pull it off or was this a task that seemed [like], "Okay, we'll get to work and get it done."
Well, the general framework of SAS is one that's very open-ended.
I'm sorry. I'm speaking of that very earliest project in the graduate program at State. What I'm trying to get a sense of was how much of a leap it was to accomplish the construction of that early project.
Well, to go back to talk a little bit about what we did at NC State—.
Back in '64, '65, when I was an undergraduate, I worked with another
person named Jim Barr. Jim was a physics major and working on his
Master's degree. We both had jobs working for the stat department as
programmers. We programmed things like regression analysis and analysis
of variants and various different programs to be used by the different
Experiment Station people. We would always have to recompile the
programs and define the data and everything that was coming into us. It
was quite a bit of a laborious task to have to continuously do that.
Sometime in late '65 Jim Barr left and went to work at the Pentagon. I
left in '66 and went to work for GE. I'd say it was our experiences
while we were away from NC State that certainly broadened both of our
concepts of what we could actually do with computing. Jim at the
Pentagon was working on logistics supply
Were you two social buddies as well as colleagues in this project?
We were to some degree. Not heavily.
As you began to see the market, so to speak, in that context at that time for this product—. You began to get people who were interested and wanted to use it. By '76, who was pushing the idea to incorporate?
I was pushing that idea. Let me work my way up to that. Back in 1968 Jim
and I had finished what we'd call our first release of the SAS system
and announced it to the university statisticians of the Southern
Experiment Stations up at Mountain Lake, Virginia. That was when our
first manual came out. We used a markup language and you could actually
print the manual out on the computer itself. They all began using it
after that. For the next three or four years everybody was quite pleased
and continued to give us input and suggestions. In 1972, though, the
university lost its NIH [National Institute of Health] grant. Almost all
the university computing centers up until 1972 were funded by NIH. It
was their way of trying to stimulate research at the universities. Nixon
came in and made it very clear that NIH was not to give any money away
to universities unless they had a medical program associated with them.
That's where they drew the line. Suddenly we were out of money. We had
never been on state money. We had always been on federal money. In '72
we went to our university Experiment Station people and said, "Look, how
about each of y'all chipping in about $5000 a year out of your budget to
help support us up here while we continue to support this software."
They said, "Fine." They were willing to do that. At the same time, we
began licensing SAS to other companies—a number of the drug companies.
Pharmaceutical companies wanted to get into to use SAS. Then we had a
few insurance companies and banks [that] began to have some interest in
it. This was with no advertising or anything. We had no advertising
budget. By '76 we had hired several other people to work on the project
with
Do you think anybody at the university gave anything more than cursory attention to the licensing departure of this product?
No. No. It was done very quietly, just between the head of the stat department and us.
Let me ask about how the four original equity holders—. None of you had an extensive business background—I think it's probably fair to say—other than through work experience as a younger person. How did you make your choices about how to define your tasks, split up the professional duties and apportion the equity?
We had a fairly well defined set of tasks that we were already doing. I was involved in some of the statistical programming and John was involved in some of the statistics. He was beginning to do some work in economic time series variant. Jane was our writer and Jim was our systems person. We already pretty much knew pretty well what we were going to do. The business about how to run the business, Jim and I had been alternating. I would be head of the project one year at State and then he would be the next year and I would be the next year. We had some experience with dealing with that. Plus, we had had to negotiate contracts with people, so we had a fair amount of business sense about us, I think, at the time. Jim and I both had been doing a lot of consulting work. We had been dealing with a lot of corporations. That's how we put ourselves through school, was doing consulting and also working for the university.
Were there any particular folks who spring to mind—if you think about outside allies or mentors, sources of perspective and advice—in those early years, outside that group of four?
No. I don't think so. We had a neighbor that lived near us that was a
lawyer and we asked him to draw up whatever legal documents that needed
to be drawn up. He did that. Other than that, he had nothing much to do
with it. Another friend, a guy who I
Did it already seem like this was an opportunity to grow a business tremendously? Obviously you had your core group of one hundred that you brought with you from before, but was your sense that "Oh my, we've only just scratched the surface"—or rather, [did you think]that you'd sort of continue with the approximate market that you were already working with?
I don't think that there was any sense that this was going to be a huge company. I believe that most of us felt like we were pretty scared to be cutting the umbilical cord, because the university is a pretty safe place to work. I think our main goal that first year was to try to make it through the first year. We didn't worry about much else. I remember trying to make sure we didn't spend too much money. We had to pack books and ship books. At four o'clock in the afternoon I would quit working on programming and go back and pack books. I was just very resistant to buy what they call "tape shooter." [It is] one of these machines that wets your tape for you and cuts it off. They wanted like $250 for it and that seemed like a lot of money. I just used a paintbrush and a can of water and wet the tape that way. That lasted about two or three months and I finally said, "We've got to have this tape shooter."
You're cash flow positive at the outset, obviously. In those first "just finding your way" days, did you encounter critical challenges that had to be overcome? What were the key tasks in front of you to really get the business off and running?
I don't really recall a whole lot. We had several extra offices. We knew the first thing we needed to do was hire somebody—a sales and marketing person. We did that and brought in a fellow named Bill Gjertson. Bill's still with us today. Later on we convinced Herb Kirk, who was at the university, to come join us to head up our education area. We just slowly added one person at the time to take over areas that we felt like we shouldn't be spending all of our time doing. I was out on the road quite a bit in the early days, teaching. We felt like the more people that learned to use SAS, the better chance we had of surviving. I was out on the road teaching a lot.
Can you describe the approximate character of the market you were working in those years, in the late '70s? Was there any comparable product out there that you could identify?
I guess our number one competition in those days was SPSS. There was
also another package called BMDP. I think in the late '70s those were
our main competition. They were a hundred percent stat packages. One of
the things that we felt made SAS more popular was the fact that we had
things to print out reports and do things that aren't just purely
statistical. That gave SAS more flexibility than just a pure packaged
program for statistics. So as we began broadening SAS to do other
things, we added modules for economic and time series data. We added an
OR package later on. We added graphics in the late '70s early 80s, which
really made us quite a bit different than other packages. Graphics back
in those days were fairly primitive. You had these box, these little pin
Tell me a little bit more about the early marketing effort and—you mentioned hiring Bill Gjertsen—how collectively you defined the marketing task and went about it.
Well, marketing to me is something that I just as soon let somebody else
do. We were basically programmers and we don't enjoy selling. I never
did. Jim never did. John certainly never did. What we were interested in
was doing development work. I think we hired Bill and we hired another
fellow about a year later. The two of them began divvying up the country
and hiring sales people. We began hiring more programmers to shed some
of the work that we had. By that time we were maintaining about a
million lines of code. When we left the university we had about 300,000
line of code and over the next few years we had grown to over a million.
Today it's over eight million lines of code and still growing. We
supported one single operating system, called MVS back in those days, on
one computer. So when we left the university it was one computer, one
operating system that was it. Once we left, we decided we needed to run
on one of the other operating systems, CMS. So we did that. Eventually
we hired someone that knew IBM's DOS operating system to work on that.
We began to expand the number of platforms that we ran on. In the early
'80s, we completely rewrote a large part of the core of SAS to give it
more portability. That's when we began running on mini-computers like
VAX's and VG's and Prime's. By the mid-'80s when the PC came
Were you anticipating the PC revolution or just [thinking that] "PCs are another part of our market. Who knows what will become of them." Did it seem that you had already approached this watershed?
The thing about PCs in the mid-eighties is that they were not very much use for anything, but people had their spreadsheets on them. Then they did a little word processing on them. That's the main thing we thought back in those days. Gosh, now they're more powerful than our mainframes. I've got a box sitting over on my desk that runs faster than my mainframe does. We certainly didn't foresee the revolution. If I had, gosh, I'd have bought a chunk of Microsoft.
How did you find your way into this $5,000 agreement with the earliest users of the SAS package? How did you formalize that into your annual licensing agreement approach? Did you ever reconsider that?
No, we've never reconsidered our annual licensing, but at the time—. Remember that in 1976 there was one dominant supplier of computers and software and that was IBM. The IBM licensing agreement was a yearly agreement, so we merely adapted. We hardly even changed any words in it. We just took the IBM agreement and made a few changes to it and said, "Okay, this is the one we'll use." We've used it more or less ever since.
Let me ask a few things about growing the business. What did Barr's departure mean practically to the operations of the company early on?
Well, we had Robert Cross and several other folks that were working under Jim in the systems area. I think at that time we had probably a total of four or five systems people. His departure, although it came as somewhat of a shock to us that he wanted to leave—. We really kept right on going after he left. We had enough backup to continue. I think we even hired a few more systems people to work with the people we had, just to make sure all bases were covered.
Was that the point at which your personal equity stake moved across fifty percent?
Yes.
Yeah. Okay. How about your expanding relationship with John Sall? Can you reflect back a little bit on the early days—how the two of you evolved in terms of your professional relationship in the company?
Well, it seemed like in the early days as I think back on it, John and I
disagreed on a lot of things. I would always ask Jane Helwig, who was
the other
Did your professional tasks in the office have you closely involved day to day or was he doing one set of tasks and you were doing another?
We were pretty much programming, still at that time all the time. That was my number one task, was programming. I was doing some statistical research because I was still publishing papers at the time. We felt it was important. If SAS was going to be known in the statistical world, we ought to do research papers and have them published in scientific journals. I was doing some of that. Mostly I continued to develop the system.
Let me ask about your advance into this world of leader of SAS, I think back around '79, '80, early '80s. I'm presuming from the kinds of things you're telling me, that you wouldn't have stopped at that time and reflected self-consciously on your leadership style. You would've just gone about doing the sorts of things you felt comfortable doing. How do you think folks would've described your leadership style back then? What were your habits and practices?
My management style is quite laid-back. I believe very much in letting other people take as much responsibility as they want in the company. I would be happy if I just stayed in my office and programmed all day, to tell you the truth. That is my one real love in life is programming. Programming is sort of like getting to work a puzzle all day long. I actually enjoy it. It's a lot of fun. It's not even work to me. It's just enjoyable. You get to shut out all your other thoughts and just concentrate on this little thing you're trying to do, to make work it. It's nice, very enjoyable.
In '80 you moved out to this piece of property. How in the world did you afford 200 acres in 1980?
Oh, we couldn't afford 200 acres in 1980. This was to be an office park. The company called Landmark Engineering, headed up by Tim Smith, they were building their building which is the first building on the right as you come into campus. Then they had subdivided the rest of the—. I think they owned about twenty-five acres and they had subdivided it. We bought the Building A. I think is about two and a half acres. We had looked and looked. We were looking very seriously at a piece behind Crabtree Valley, but our architect talked us out of that piece because it was going to cost way too much to grade and move the dirt around. One day Jane Helwig came in and she said, "I have found a really neat place. It's got a lake behind it and everything." She took 40 [Interstate 40] to go to Chapel Hill at that time because she was living in Chapel Hill. We all drove out and looked at it, and we thought it would be really neat to get out of the city, move out this way. We started building in, I guess, early '79 or late '78—one or the other, probably late '78. We actually moved in in January of 1980. Within about a year, we built this huge building and it would house over fifty people. I think to some extent that was one of the things that sort of scared Jim Barr off. He thought we were crazy building that big of a building. [He thought] that we would never need that much. We were asking the four principles to put up the money for the downpayment on it, which was quite a bit of money.
Any trouble getting the loan?
No. We had a commitment from NCNB—now NationsBank or now Bank of
America—to do it at a fairly good interest rate. By the time it was
finished, the
How did you hire people? What kinds of things mattered to you when you made your choices about who to bring into the firm, company?
Back in the early days, I can't recall hiring more than probably half a dozen people. The people that did the hiring always worked under me as we grew the organization that way. Mainly, we would be looking for people that we felt would fit in and work hard and make a contribution to the company.
No special key recipe or—.
No, not really. I think a lot of that stuff that you hear today is marketing hype about how you're going to go out and set these standards for this, that, and the other. Even today, I think the main thing that we're looking for is people that will fit here. We have tried to maintain our corporate culture over the years, even though we've gotten up to six thousand people now. It's important to be hiring somebody that you feel like they'll fit into the organization.
How speculative and experimental did Art Cooke's first Europe exploration seem at the time? Did you have good opportunities there that seemed certain?
We were talking to a company called CAP/CPP, which was a consulting
company in Europe. Art had visited here at least once. What they were
trying to do was be our representatives in Europe. I had gone to a
little stat trade show called CompStat—I believe the name of it—was back
in the summer of 1980. I had set up a little booth and I had taken a
little tape with me and was printing out all the graphics we do on eight
by
As you think back to this period through the mid-eighties when you're redoing the whole SAS package and C and so forth—. Besides yourself and say John Sall—recognizing that there were no doubt a wide range of folks playing very valuable roles —- were there any in that phase you would look back and identify as absolutely critical to that successful growth phase? In other words, [were there] persons who were innovators or visionaries or who accomplished some particular technical accomplishment?
I would say people like Robert Cross were very inspirational in helping, more or less, take over the entire architecture development. Jeff Polzin was extremely valuable in establishing our entire mini-computer group. Certainly, there are many others. Craig Hales ,who headed up our graphics division, he and I worked very closely the first year or two on graphics. Then I turned it over to him to take over from that point on. He did a wonderful job at that for many years.
How about the evolution of the competitive market place through the early '80s and what the reformulated SAS package and the multi-vendor structure, what did that mean to your competitive position?
We kept getting really stronger and stronger throughout the '80s and the '90s. We've had, I guess—. SPSS is still out there. They're about maybe twenty percent of our size. They are still predominantly thought of as a statistics package—.
If that [much]. I'm not sure they're that big.
Well, they've also taken over BMDP [and] Systat. They bought several
other of the stat packages. They're really a stat package house. We have
tried to go after more of a broader market—this whole area known as data
warehousing and decision support. Lately we've rewritten a number of our
statistical procedures and put them in a new package called Data 90. We
have tried to stay very alert to the new buzzwords in the industry and
what things are new. We try to get there as quickly as we can. We have
customers that we talk to year round through technical support that
provide suggestions and ideas, and once a year we'll send out a ballot
to all of our users and ask them what they would like us to be working
on. Basically, [we] take [the] questions and suggestions that they've
made and put them in a ballot form and let everybody vote on them. We've
been doing that for over twenty years. That's been one of our very most
successful programs. You keep your current users happy and make the
changes and improvements, after all they are paying an annual licensing
fee. They have grown to expect that the kind of things that they want to
see put into the system will be put into the system. We try to respond
to it and get these things in there as quickly as possible. It's been a
great thing not only in trying to satisfy the users, but if you think of
users as almost like an R&D [research and development] group—.
They see other software. They see other people's ideas. If they see
something they really like and they think it should be in the SAS
Anybody ever want to buy the company?
Never. We've had a number of just minor requests that "we represent such and such a firm and we're looking for companies to invest in." We've never had a serious inquiry as to—.
What's the biggest acquisition SAS has ever done?
Oh, a few million dollars at the most.
Quite modest, in other words.
Yeah.
Against the scale of the company—.
I think we've made probably a total of four acquisitions. It very seldom ever works. We have never tried to buy a company for market share. We've bought them for technical reasons because they had something that we liked, [something]we thought we needed from a technical point of view.
Why's it been so difficult? I'm thinking now about the question of expanding SAS from the level of ten million dollars of sales in the late '70s to the kind of scale that's at play now. Why has it been so difficult across that span to build relative portion of your sales outside of Europe and North America? Is it a fixed feature or is it going to change?
Outside of North America, we continue to do right about fifty percent
revenue, and we have for the last four or five years. In fact, Europe
and Asia would be ahead of us right now, if it weren't for the weakness
of the currencies. Those countries
I'm sorry, I think I misspoke. I was trying to distinguish North America and Europe—.
[END OF TAPE 1, SIDE A]
[START OF TAPE 1, SIDE B]
[This is side] B of the first cassette [tape interview] with Dr. Goodnight.
We have expanded throughout Asia, but you've got to remember that Asia is a huge place. The actual cost of doing business there is quite high because of the expansive territory. Flying from Japan to Australia is just a huge, huge area. The one thing that we have in the US and Europe is the compactness of the territories. It makes it easy to move a marketing person that has an expertise in particular area. You know if you're in Poland and you need him in Hungary, it's not a big travel issue. They can be there in half a day or less. That's one of the biggest problems I think we have with Asia is it's just very difficult to move around. The new market is not as advanced as the US and Europe. There are still so many places that aren't even using computers in those areas.
Given the essential character of the SAS product, does that help reduce or eliminate the entire issue of somehow transcending cultural barriers because you're in the end talking about statistical manipulation of data?
I certainly think so. Plus, we go to a great extent to, a great effort, to make sure that SAS is converted to whatever language we're running in. If we're in China, you'll see a lot of Chinese characters on the screen. If we're in France, you'll see French. In Germany, you'll see German. We have a very active translation department that translates our software. We developed methods, many, many years ago, that essentially everything—any words or phrases that are printed out—has got to be stored in external files so that, if we want to convert to a foreign language, we don't have to reprogram anything. We just have to go change the external files that have the phrases and words in them.
Let me step away from some of the closer questions of SAS's evolution as business to some issues of broader perspective of business and society—certain aspects of the philosophy of running a business and so forth. Let me ask first about—. This is a question that I've put to all these folks who have participated in this series. As you look back, what do you consider some of the most important sources of perspective, construed broadly in your life? I'm especially interested in sources upon which you have drawn which might not necessarily be those closely related to the industry.
Well, what I've drawn on more than anything else is really industry trade magazines. I really have not looked outside to any great philosophy or anything else. What's going on in our industry is pretty well represented by trade books that come out every weekend. I read them. I take them home with me and read four or five of those a week. Pretty fast, I'm flipping through them looking for articles of interest. That's how you keep up with the trends when your industry is moving. You've got to do that.
Have you spent much time doing something as fancy as strategic visioning? Do you sit down and try to map out where you're going to be more than a couple of years ahead? Is it that the business just won't allow that—the nature [of the business]?
No we never have done that. The business moves too fast. You really
cannot map out something that long. Now, version eight of our software
that we're going to be shipping later this year, we've been working on
that for five years. But during that five-year period, we have changed
directions several times as the Internet became a more and more
important factor. We wanted to make sure that all of our output was
available as HTML so that we could put information directly out on the
web from our software. So things like that, even as you're doing
development on a very concise plan, we still have to
How about the issue of how an average work day for you has evolved across time and what that might suggest about how SAS has evolved?
In the early days when we first started SAS and even earlier before SAS
Institute was founded, our typical workday would be from nine in the
morning until about ten at night. Back in the days of mainframe
computers, you were very lucky if you got one turn around a night. In
other words, you would submit your deck of cards. They would take that
along with a thousand other people's submitted deck of cards and they
would run them through the machine one at a time. You just had to wait
until your output came back. That usually meant that you were lucky if
you got one maybe two turn arounds a day. That meant at five o clock we
would go home for dinner, and then we would come back at seven and see
if our jobs had run and if so we could change them and correct the
problems and resubmit and might get another turn around that same
evening. The fact was that the batch computing system of those days just
made it almost mandatory, if you were going to get anything done, you
really did have to come back for a sort of second partial shift after
dinner. Today, as computers have gotten faster and faster, I can get
fifty turn arounds a day on my machine, if I want. I just sit there and
make changes, do a compile a bill and test it and just keep rolling
right along. With today's computing power, that's the one thing we
always do is keep the maximum sized machine at each desk so that they've
got all the power they need. That's one of the great things of working
here at SAS, I believe. We believe in an environment that allows for
How about the way in which leadership tasks generally, managerial tasks impinged on your original programmers' schedule? When did your calendar begin to fill up a lot more with managerial stuff?
I don't think it ever has, really. I try to minimize the number of
managerial tasks. I let other people run the company as much as they
want to. They can run it all. We'll have a monthly budget meeting and
we'll take a look at where we stand financially as [to] what are our
expenses, what's our income, are things looking good? Do we need to slow
down hiring a little bit or let it go? This year, for example, I've
tried to put a damper on hiring. We've had a twelve percent a year for
the last three years— compounded twelve percent a year of new staff. I
was a little concerned, last year our expenses crept up a little bit
more percentage wise than our income did. So this year, my goal is very
simple. I want revenues to grow faster this year than expenses, so we
can get back into kilter because they used to be pretty much the same. I
have always tried to keep income, growth and expense growth, at about
the same level. This year revenue growth is going to be more than
expense growth. That's one of my measurements that I use to determine
how we're doing. SAS is fortunate in the fact that we've got this annual
renewal stream of income that we can count on ninety-nine percent of
coming. There's no doubt how much revenue we're going to get from
renewals. That represents about eighty percent of our income that is
pretty much guaranteed as long as we continue to meet the expectations
for the customer. The only real variable is how many new
Let me turn to the landscape we're in here, the campus and the broad model upon which SAS operates as a business entity. What is the genesis as you look back? When did you first start conceiving of operating a business that was becoming a much larger and more substantial business on this campus model with—.
Well campus models start with the fact that you build a building and
fill it up, and you need more space. That's what happened to us after
about a year and a half of being out here. Right after Jim left, we
hired more programmers to make sure that all of those areas of
responsibility were covered up. At the same time I said we're going to
increase development staff, so we must increase sales staff because
you've got to keep the two in balance. You can't just grow your
development group without thinking about the additional revenue it's
going to take to pay for it. I've always tried to keep them both growing
at the same time. So we needed more space by '82. We built a new
building to cover [that need]. The architect called it "Building B"
because the first one was the SAS building, so the next one was "SAS
Building B." That's how the letters got started out here. Basically,
that's what the architect had labeled the next building. We have used
the same architect the entire time we've been here. As we were finishing
and moving into Building B, the folks across from the Landmark
Engineering people were building a spec building across the street,
which is now called "Building C." When that was halfway finished, we
realized that we desperately needed a warehouse space. We negotiated
with them to buy the building, even though it was only half completed.
We expanded the plans and made it a little bit bigger. That's how we got
that building. At that point, all
That happened about when?
I would say that was probably about '82.
'82.
Then we expanded. Our daycare was filled up, so on part of this new piece of property we decided to build a new daycare. Then our computing room was filled up in Building A, so we decided we'd build a new building to put R&D in and move the computing facility over there so that was Building E. The basement of that was set aside for computers and the other floors were all the R&D people. That's when R&D moved over there.
When did you acquire the rest of the property, incrementally or—?
A large chunk of it we got just a year or so later. The state of North
Carolina was putting all of this land—maybe eighty acres over here—they
had it up for auction. This was once part of the Umstead Park land and
they decided to auction it off because I-40 had since sliced this off
from the park. We didn't do anything about it until the very last day.
We said, "Why don't we do this?" It was about five thousand dollars an
acre they were asking for it. We said, "Why don't we do that." So right
before the closing time to turn in the bids, we took our bid down there.
At that time nobody else would bid because the interest rates were like
twenty percent. They were way up there, really high. We had enough cash
that we could do it. After that we just—. There was always this next
[It is] as many as that now. So that happened on sort of an incremental basis, it sounds like. You needed some more space, an opportunity came up, you took those steps. Similar sort of incremental approach to the evolution to what is now a very comprehensive set of perks. That's too trivial a word for a series of serious things you provide employees.
I would say all of that has been very incremental. After our first year, I guess it was half a year, July to the end of the year, we were actually able to squeeze out a little bit of a profit. The next year, it was very clear that we were going to be profitable. We started thinking of ways—. We no longer had a retirement system like we had when we were across the street at the university. We said, "We need to do something about that." We looked at the available options and decided to set up a profit sharing program. At that time it was not that hard of a decision because the company was primarily populated by the owners of the company. So a decision [like], should we keep it or should we give it to the government, it was a pretty straightforward decision. I still feel that way today. I'd rather give it to the employees than give it to the government. That's certainly been one of the guiding—in back of my mind – concepts. I don't want to make a huge profit so I can send it to Washington. I'd rather make a smaller profit to send to Washington and make sure the employees are well taken care of with all the benefits we can afford to give them.
Any particularly important influences in guiding the evolution of this series of benefits—health care, elder care, childcare?
Well, the childcare was my idea. Jane Helwig had announced that she was going to have yet another baby. She seemed to love to have babies. She liked to cuddle them, or something like that. When she told us that, we were trying to figure out how we could keep her because she was talking about leaving the company at that time. We said, "Well we're building Building B now. What if we set aside an area in the basement for a child care facility?" She thought that would work out okay, so we did that. It was finished. She'd had her baby and she tried to keep it—. As I recall, even then she didn't want to put her baby in there after all. But we had five or six others that had signed up to it, so at that time we started a daycare with about six kids.
How transferable is this model that you've put together here, do you think, to other industrial and business contexts?
I think it's transferable because you've got to realize—. I think a
recent Harvard Business Review article, a guy from Stanford wrote the
article, he estimated that we save fifty million dollars a year in
turnover costs. The idea [is] that if we did not retain as many
employees as we do, that we would have to have loss of productivity,
loss of function, while a person is out or after a person has left. We
would have to spend money training people, hiring people. Then that
person, once they're on board, you're paying them for the first six
months, and you're not getting any value out of them. If you add up all
those costs that it costs to replace people, it makes very good business
sense to try to set up a program that encourages people to stay. I guess
I look around at some of our benefits. I think one of our best benefits,
to me, that makes a reminder to people
Ever attempt an introduction of a certain type of benefit that just didn't pan out [and] that you had to abandon?
Well, I can't really think of one. We have benefits like daycare. We're
up to five hundred kids there. Believe it or not, there are some people
that resent that. The ones that don't have children feel like the other
people are getting a benefit that they
Let me ask you a couple of questions of a sort of broad—. These are more philosophically oriented. What's your personal perspective on the proper corporate role in relation to the community for the broader public good?
Well, I've not thought a whole lot about that. In essence, to me, my
philosophy has always been to be very much concerned about the employees
and look after the employees. The employees, if they're happy and making
good money, they themselves will become involved with the community.
We've got volunteer programs here. We actually have a head of volunteer
programs so that people want to volunteer as a group and work together
on that. Lately, though, I've felt that it's important that somebody's
got to be involved in education. That's one of the things that I'm
trying to spearhead right now, is more involvement of the companies in
education. I'm trying to sort of set an example for that. Our schools
are just falling further and further behind. Gosh, the taxpayers of Wake
County just voted down a bond issue to improve the schools. The schools
are just terribly overcrowded. That's one of the first things we need to
try to do for the schools, is try to cut the class size down to a
maximum of twenty kids. It's hard to be a nurturing teacher when you've
got thirty-five kids in your class. You
So the things you've witnessed haven't diminished in any way your commitment to the public schools?
No. I've got about forty-five people right now that are working on digital computer-based educational materials that we are making available to public schools, not only here in North Carolina but all over the company. We're partnering with counties up in Virginia, Florida, Texas, California to try to get them to use the work that we've done.
I've seen SAS criticized in some press piece, somewhere on the Cary Academy front, saying that represented too great a step away from public education. I don't know, it sounds to me as if you might see that as a venture to demonstrate a particular educational model, it sounds like.
That's certainly the case. I don't particularly worry about what's in the paper. I don't even read our local paper. I just refuse to. It's just so inaccurate over the years that I've read it. They've got such biases against things that they just come right out and are blatantly biased against stuff. I just quit reading the News and Observer many years ago and all of their associate papers, like The Cary News.
How about another one of these broad sort of philosophical things? [What is] your view of the role of the state, of government, in influencing and regulating the business marketplace? Has North Carolina been, in your judgement, a good place to do business? Have you been happy with the nature of the state's involvement in—.
North Carolina's been a good place to do business. My only real
complaint about it is they take taxpayer dollars that we put in to pay
other companies to come here.
The software industry isn't so much subject to these concerns, but any particular political or regulatory decision taken that had any real impact on the company?
Regulatory? Not really. I think we've seen some benefits from things like the R&D tax credit that we had. North Carolina has just recently passed the approval to continue that regardless of whether the federal government does or not. That's been a very good boon for us. Basically, it reduces the amount of taxes we have to pay.
Have you had to spend much of your time or much of your money trying to influence anybody in Raleigh or anybody up in Washington over time?
No, not much at all. I guess in the last few years I have paid a little bit more attention to politics because the politicians all have come to me wanting money.
I'll return to that in a minute. One last question about that. Let me ask about the remaining issue of the philosophy of business in relation to the broader public arena. SAS evolved at a time when the entry of women and minorities in the work place was really sort of beginning to unfold. Any insights as you look back or particularly vivid memories about the participation of women and minorities at SAS, early pioneers, decisions you had to take maybe to cross a certain threshold?
Not really. One of our first partners was Jane Helwig. When we started SAS, there were three guys and two women there. We had never purposefully looked for men or women for a particular position. What we were basically looking for was qualified people, male or female certainly didn't matter. Later on and by the late '70s, I think, some of the integration that had taken place had begun to pay off, and we were actually getting some college graduates that had some computer science skills that were minorities. This is a very high tech company. Gosh, it doesn't matter to us what your beliefs are or any of that stuff. The main thing is, will you fit in and can you do a good job? We are quite well represented with minorities and women.
I mean, historically as a manager that was never a particular challenge that took up a lot of your time? It's hardly the case for example—
No, not really. Throughout to this day human resources does send around a notice that says that we're a little weak in this particular category on minorities or women—sort of a friendly reminder to the manager that if you've got an equal choice, the company would appreciate it if you would go with the minority or the female. That's really a part of the societal laws that we live under right now, that you have to be cognizant of that stuff.
Did SAS take any or did you take any particular heat or criticism at the point where you expanded certain employee benefits to domestic partners?
We didn't talk a lot about that.
When did that happen?
It was about two years ago. Yeah, there were certainly no press releases
on that one. We've got a lot of good people here that do have a domestic
relationship with
Here at SAS?
Yeah.
Was the decision taken for reasons of business necessity? Was it important in retaining certain people or did you philosophically commit to this?
No, this was purely philosophical. Specifically, I know one of the ladies, extremely hard working person that has been here for years. It's more philosophical than anything else, and fairness.
Let me wrap up here with another five or ten minutes. I know you are being very generous [with your time], so if we can spend that much time, I want to ask some questions about your perspective on the wider economic transition in the state. You mentioned a moment ago that here in the RTP —or the Triangle, maybe—you think we've got enough built business space now in relation to the infrastructure. It reminded me that I wanted to ask your perspective on how far along this evolutionary trajectory has North Carolina come in itself from its traditional economic character—textiles, agriculture, tobacco manufacturing, furniture—to the high tech future. Is North Carolina there?
Well it's hard to say. I think we're still one of the biggest turkey
producers and biggest hog producers in the country. We're still having
an awful lot of agriculture here in this state, and that's not going to
go away. A lot of it's becoming more corporate though, than anything
else. We're seeing these huge companies with hog farms down east. I
think it'll continue to be a blend of these, but you know these
agri-businesses that
Have you had much trouble over the years buying the sorts of professional services, for example, that you might need to push SAS's interests along—legal, accounting, consulting, high tech oriented [services]?
All services we try to provide internally. We don't go outside that often. If we need something, it's always been my philosophy, "Well, if we're going to need it, let's do it ourselves. Let's learn what we need to learn to do it ourselves." That [decision] came many years [ago]. I can remember, even back on Hillsborough Street, I said, "Look, let's get rid of this ad agency. We don't need them." They would come out and write our ideas down and type them up. They would take them over to a printer. The printer would produce a mock up of an ad and they would bring it back to us and they would say, "What do you like about this or don't like [about this]?" We would tell them. They would take it back. We were paying a fortune for this. I just told the people, the one or two ladies at the time that we had in PR [public relations], "Let's just do it ourselves." They were just petrified at the idea, but I said, "No. You can do this. It's no big deal. You can make your own ads up. We created our own ad agency so that we could get a fifteen percent discount on placement of ads."
When did that happen?
Oh gosh, that was probably about 1980 that we started that. It was right after we moved out here.
What factors do you think— if you look at the economic transition that's under way in North Carolina right now—what factors are most responsible? Why has this happened in North Carolina? It's happening elsewhere too, certainly.
I think if you go back to the foundation of the Research Triangle Park, as far as this area is concern, that had a huge impact. It took a while to get going, but the last ten years we've seen quadrupling of the number of companies that are out there. The state just needs now to make the commitment to get the roads and the infrastructure up to date to see that people can get to and from the Triangle to go to work. This is a strange area. People leave town to go to work. In most other cities, people are trying to get into town to go to work. Here, people are trying to leave town. It's a different phenomenon.
Across these years, have you been uniformly comfortable with the pattern and style of growth in North Carolina?
Yes. I think it's been slow and steady. We just need to find the
resources to take care of the infrastructure. Schools and roads are the
two things that I look at, over the next few years, that we need to try
to put a lot of emphasis on as far as spending money. I guess, to that
extent, one of my real concerns about the country as a whole is the fact
that our entire tax system is so upside down. It should be the local
government that collects the most money, the state the second most, and
the federal the least. I think that the most money should stay closest
to home, and the least money should go furthest from home.
Unfortunately, our entire system has been turned upside down by the
federal government wanting to collect money from people that have it and
give it to people that
You mentioned a moment ago that more and more politicians have come calling in recent years, seeking your support in their campaigns. Have you looked back and reflected on the process by which you were courted and drawn in to those wider circles of influence as SAS reached a particular level of prominence and you at its helm?
Well, I don't think we've reached any level of being drawn in. I'm still very peripheral on this. I have found over the years that there's not a whole lot of influence that you have on politics. They just seem to wander in the direction that they want to wander in. You get to Washington and everything is totally dominated by what party you belong to. It's the head of the party that makes most of the decisions about the direction. I don't know. I don't think it's worth a lot of time being spent trying to pay for influence. I just don't think that one single person can do that.
It's interesting. You read these days about the modern CEO of the new global corporation. Many analysts would point to that person as having heretofore unattained influence—that this is a new level of scope and scale that hasn't really previously been in existence. I was going to ask you a question about sense of the modern CEO of a globe-spanning enterprise. What it is to wear that hat, to be asked to play that role?
Well, I am perhaps unlike other pure CEOs. As a matter of fact, I don't
even have that as a title. I'm just president of SAS. A CEO's job of a
large corporation these
I'll extend this question of the modern person at the helm of this modern enterprise. Are you sought out much as a certain kind of oracle or sage on issues removed from the business? Often times persons in those roles today are sought out as persons of a unique sort of broad expertise.
I'm not that sought out, no. I'm not really a great public speaker, although I guess this last year I've probably done more than I ever have before. As we're trying to move SAS into this billion dollar plus company, I am in fact being called on more to give talks. What I've been asked for more this past year, more than anything else, is to talk about work/family values. The kind of things that we do here at SAS—that give us our low turnover rate. I've done a lot of talking about that. I'd rather be out talking about what great software we have—you know trying to sell software—but I'm being asked more and more to talk about the benefits.
This final question. This is on a point of regional distinctiveness and the persistence of something that was once known as "the South." Is SAS ever a southern company?
No, not really, although we started as a supplier to the southern universities. Jim Barr who was from New Jersey. Jane Helwig—I'm not sure where Jane is from. John is from Ohio. Half of the firm was from not in the south. Some of our early biggest customers [included] Abbott Labs Chicago. Some of our early customers were up north. The distinction between north and south—. Certainly in Cary, we probably have more people from New Jersey than any other town around. This is because of our proximity to Research Triangle. Cary has been the place where these people that work for other companies, when they come to work in the Triangle, this is where they move to. We've got a lot of non-southern influences here.
Can you find the old North Carolina of your boyhood down the backroads of North Carolina, or is that largely gone as well?
I think that's probably largely gone. You'll certainly find it in some small town folks.
Well, thank you very much for sharing all this time.
Sure.
END OF INTERVIEW