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James Goodnight’s software company, SAS, appeared on Inc.’s first list of fast-growing companies, in 1981, and it has grown every year since. Here’s a conversation with the quintessential Inc. 500 CEO.
Company: SAS Institute
1986 Rank: No. 429
3-Year Growth: 604%
1985 Revenue: $71 million
The typical Inc. 500 company is young, vital, and giddy with potential. SAS is the company Inc. 500 winners want to be when they grow up.
Thirty years ago, SAS—employees pronounce it Sass—was No. 15 on our inaugural ranking of fast-growth private companies. (It made the Hall of Fame in 1985, after six consecutive appearances.) Most of SAS's fellows on that early honor roll have since met orderly or disorderly ends, or been altered beyond recognition by acquirers. SAS, by contrast, is a $2.4 billion business-analytics juggernaut, with 12,000 employees and an unbroken 35-year track record of revenue growth. In 2010 and 2011, its celebrated culture vaulted it to the top spot on Fortune's list of Best Companies to Work For. You want frosting on that cake? SAS is still private.
SAS (Statistical Analysis Software) was founded in 1976 by James Goodnight and several colleagues from North Carolina State University. Originally designed to mine agricultural research, SAS's software was quickly adopted by corporate, government, and academic customers. As advances in computing allowed organizations to begin frenetically hoovering up data, SAS was there to help tweeze meaning from it all. Its software is now installed at more than 50,000 customer sites.
Unlike many entrepreneurs, Goodnight hasn't talked much over the years about changing the world. He has been too busy creating one, on the company's 900-acre campus in Cary, North Carolina.
Goodnight likes to say that, given the nature of his business, "95 percent of my assets drive out the gate every evening." Touring the campus with an employee, a visitor can understand why those assets are so eager to return. We drive by the two subsidized day care centers; the site of the annual summer camp; the work-life offices, where eight social workers assist with drawing up wills, arranging elder care, and the like; the health center, with its 57 doctors, nurses, physical therapists, nutritionists, and psychotherapists. There are soccer and softball fields, tracks, and a tennis court. In the aquatic center, employees splash across a 75-foot pool. In the aerobics studio next door, a cardio class is just getting started. The indoor basketball and racquetball courts are deserted at the moment, but the weight machines and pool tables are busy. So is the hair salon, where Goodnight gets his own locks cropped. (Both Goodnight and co-founder John Sall have homes adjacent to the campus.) Sculptures surprise the eye at every turn. The buildings are awash in paintings, some created at an on-campus studio. Subsidized meals served in four sleek, airy cafeterias are cheap and surprisingly good. Children eat alongside their parents. In one, a piano player tinkles, "I Only Have Eyes for You."
"Really, you just have to give people a great place to work."
Dr. G, as he is affectionately known to staff, is as modest as his benefits are munificent. Emerging from his office in the company's brand-new six-story tower, he greets an assistant and tells her he wants coffee-can he make her some while he is getting his own? At 6-foot-4, Goodnight looms without intimidating and sometimes speaks so softly, he is difficult to hear. He answers questions succinctly, elaborating only when the subject is some technology that excites him or the problems of U.S. education.
Surrounded by glass cases that display the geodes and minerals he collects, Goodnight spoke with editor-at-large Leigh Buchanan about building a business whose promise hasn't dimmed in 35 years.
SAS was No. 15 on Inc.'s very first ranking of fast-growth companies, in 1981. What was the company like back then?SAS was five years old when Inc. started doing the list. We were growing 100 percent a year for the first six years, I think. We were very busy writing programs and trying to expand. There wasn't a sales and marketing department at first. We just waited for the phone to ring. So many customers were calling to get our software that after a while, it started to affect our programming productivity. So we had to hire a salesperson to answer sales questions. We finally got a marketing department in the late 1970s.
To what extent was the company's direction carefully planned, and to what extent was it improvisation and luck?The software and technology industries move very rapidly. We don't even try to plan out more than two years, because from start to finish, that's about the time it takes us to do anything really big. We just think in terms of what's the most important thing to be working on now.
Was there a watershed moment, when you knew the company would be successful?It was profitable in six months. We never had any doubt it would be successful.
Is there anything you wish you had spent more time on back then?We worked pretty intensely those first 20 years or so. I would usually come back to work after dinner. I wish I'd spent more time with my kids.
SAS is famous for its culture and benefits. How did you lay the foundations for that?Right off the bat, we decided we were going to invest in making the work environment as pleasant as possible. The first thing we put in was health care, because we'd all had that at the university and we all had families. After the first year, we added profit sharing. Profit sharing is a wonderful thing. We added child care because one of the owners of the company was pregnant. She said she really wanted to stay at home with her baby and not work anymore. We didn't like that idea.
Leigh Buchanan is an editor at large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture. @LeighEBuchanan
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