Tom Golisano Goes Public

Golisano has spent the last 20 years building his company, Paychex, into a phenomenally successful business. Now he wants to spend much of the next 20 years rebuilding his community

Tom Golisano is a man with an abiding belief in the power of numbers. Show him an annual report and he'll start reading it from the back, crunching his way through the numbers, burrowing into the footnotes to root out the essence buried in the fine-print prose that is as hard to read as it is to see. For Golisano, numbers always tell the tale. They offer a clear, objective window into the health of a business.

Golisano, in a literal sense, owes his prosperity to numbers, having built a hugely successful company that provides payroll-processing services to small companies. Paychex, based in Rochester, N.Y., and founded in 1971, today has 152,000 clients. (The average Paychex client company has 14 employees; 98% have fewer than 100 employees.) Last year Paychex rang up revenues of $161 million, and its net income has grown over the past 10 years at a compound annual rate of about 30%. The company went public in 1983, and the stock has risen eightfold since. And still, Paychex's best numbers, arguably, lie ahead of it. The market it addresses and clearly dominates -- companies with from one to 100 employees -- numbers some 5 million just in the U.S. markets Paychex currently serves. Golisano puts the total potential market at double that figure.

Against that backdrop, you'd expect Tom Golisano to be an ebullient, self-confident man. But reserved and reflective are better words to describe him, as these days other, less felicitous numbers compete for his attention. Golisano can rattle off the number of teenage mothers who give birth in Rochester each year; the percentage of the city's schoolchildren who are on public assistance; and the percentage of arrests in the city that involve alcohol or drugs.

Golisano delivers those figures in a matter-of-fact, deadpan style. Scratch the surface, though, and you'll see an energized concern for an afflicted America. He believes that decades of economic sloth, coupled with the present penchant for ducking tough political issues, have left the country wounded. "We are so reactive and not proactive as a country," he complains, sitting one recent day behind his desk, slipping into stream of consciousness. "I'm frustrated by that. There are some basic problems in this country we have not faced up to. I'm talking about a burgeoning lower class, the graying of the work force, the lack of competitiveness in certain manufacturing areas. We are headed for a long-term downward economic spiral unless we can change these things."

Golisano, now 51, has set out to do just that. In recent years he has been drawn ever further into community problems and has devoted increasing amounts of his time and wealth to their solution.

Three years ago Rochester community leaders formed a 35-member coalition, Rochester Fights Back (RFB), to combat the plague of illegal drugs that had befallen the city. Golisano was among that group. A year ago, after much deliberation and not much action, the former head of the coalition resigned. It was then proposed that Golisano take the job. He did. "He gets into something in a very in-depth way or not at all," says Richard Miller, vice-president of external affairs at the University of Rochester and an RFB member, as well as a longtime friend of Golisano's. "Tom's very pragmatic, very direct, and very impatient."

Under Golisano, RFB, with an annual budget of $300,000, has set up a number of specialized task forces to attack the problem from different angles. Those tactics include gaining media attention; reaching out to the schools; running workplace seminars on substance abuse; organizing neighborhoods to combat the drug trade; diverting first-time offenders away from the criminal-justice system and into treatment; supporting a network of treatment centers around the city; and building a 24-hour-a-day crisis center.

Golisano, like any smart entrepreneur, has a nose for the leverage point and a bias toward action. He wants to act quickly and with force. That does not always sit well with the coalition's more politic members, namely local government and business leaders. Golisano's "impatience" stems from RFB's emphasis on illegal drugs, which draws attention away from a legal and widely used one. "It took me a year and a half to get them to even say the word alcohol," Golisano notes wryly. Golisano (who doesn't drink) believes alcohol wreaks far more social -- and economic -- havoc than illegal drugs do, and he has pushed to get alcohol abuse on RFB's agenda. He is offended by the hypocrisy of beer companies' sponsoring sporting events, particularly since alcohol so clearly impedes athletic performance. "If I had my way, I'd ban all alcohol advertising," he says flatly.

That has ruffled a few feathers on the coalition. Miller, an RFB member who also sits on the board of Rochester-based Genesee Brewing, labels Golisano "a hawk on alcohol."

Bob King, also on RFB and a Monroe County executive, says of Golisano, "He's all business and doesn't care much for the nuances of government. That has frustrated a few people."

Golisano contends that government needs a greater sense of accountability and a bias toward action, qualities that are commonplace in the private sector. "Rochester Fights Back is very different from Paychex. You can't tell volunteers to do something when you want it done." Conversely, he notes, in business "when there are differences of opinion over how to make profits, someone always has the final decision."