Spring 2006: Doug Burgum's Prairie Fire 20 Years and Blazing
By Gretchen Heim Olson,
Many North Dakotans have heard of business entrepreneur extraordinaire Doug Burgum, who is now chairman of Microsoft Business Solutions in Fargo. But what impact has he had on the state's attitude about economic development over the past 20 years? In the following exclusive interview, he talks about the uphill battle he faced convincing others that high-tech could be successful in North Dakota.
Traveling long distances, then starting a company in a faraway place, using the resources right outside your door. Risky business. But that's what J.A. Burgum, a Welshman, did when he came to Arthur and founded the town's first elevator in 1906. Douglas J. Burgum, naturally, is a descendent.
As a child in an agricultural family, he spent his days soaking up the lessons that came with a life dependent on commodities, and the price of living in an out-of-the-way place. When he grew up, like so many of his Baby Boomer peers, he left the rural life, attended North Dakota State University, then Stanford University in Palo Alto, California, where he got his MBA. It was certainly a serendipitous choice. He had landed right smack in the middle of a newborn "Silicon Valley."
One could legitimately wonder why he didn't stick around. His friend Scott McNealy did, and was busy founding a start-up company based on a new technological marvel called the Stanford University Network. Instead, Burgum headed back to the Midwest, taking a position with Chicago corporate consultant McKinsey & Company, where he saw how the high-tech paradigm shift was already making an impact. "I learned there's a competition for raw talent. One of McKinsey's competitors was BCG, the Boston Consulting Group. BCG opened up offices in Menlo Park [California] and Boston. They went close to the source of supply, which was Harvard and Stanford, and they were doing perpetual recruiting trying to get all the best people at those locations."
A Phone Call From Fargo
While still in Chicago, Burgum got a call from a young man in Fargo who was selling Apple II computers and software. "Joe Larson kept hearing Doug's name from people he'd talk to in the industry - when they'd explain that our company was in North Dakota they would all reply with 'I know someone from North Dakota' and it was always Doug," says Mike Slette, an early Great Plains employee and Concordia graduate who was part of that first recruiting effort. "Joe said that after he had heard of Doug so many times he figured he should get in touch with him. The rest is history."
In 1983, Burgum mortgaged $250,000 worth of inherited farmland for a stake in the fledgling enterprise. Later, when Turner and Larson decided to move on, he put together a private investor group of mostly family members and bought out the company. That day, in 1984, Burgum became the new president of Great Plains Software. Number of employees - 30.
Pressure From All Sides
From the beginning, there was pressure on all sides. First, the folks who loaned him the money took the commitment seriously. Often their probing came at family picnics. "I grew up in a family that always had high expectations. My mom [Katherine Burgum] went on the board of the elevator after my dad died. Those guys meet four to six times a year to review balance sheets, income statements and talk about investment and ROI...so there was definitely this mentality, I'd say governance and accountability," he remembers. "They hadn't forgot."
He admits, too, to being just plain scared in those early days. "People always talk about entrepreneurial passion, but people don't always talk about the fear - the fear of failure, the fear of the public nature of failure. Entrepreneurs obviously have a higher profile on risk taking, but they generally don't like failing. It's one thing to lose your own money, but then if you start losing your family's money . . ."
When he returned to the state, it was suffering the effects of the farm crisis and attitudes were anything but optimistic. "There was certainly in North Dakota in the 1980s a deep aversion towards risk," Burgum recalls "We had a tremendous increase in farm productivity, which meant you don't need all these towns, and you don't need all the infrastructure, you don't need all the people, you don't need a farm on every section with six kids doing the labor."
Unfortunately, that also meant college graduates had to head to cities far away for work. "There wasn't any sort of industry for them to gravitate towards, so then you had this outmigration of everybody going to primarily [the] Minneapolis area, but being disbursed really across the country."
At the Bottom of Business Surveys
The outlook for economic development was bleak, too. "There were these Inc. magazine surveys that would show that North Dakota was on the complete bottom of the list in terms of new business start-ups. There was this guy saying, 'Yes, your economy is going to die'. . . I think at the same time there was the early research in the '80s that was saying it wasn't big companies that were creating jobs, it was all small and medium. That was where the growth was coming, and North Dakota just wasn't participating."
Burgum's response was to hit the road, "evangelizing" with a message of hope, one that was more than a little confusing to folks used to measuring assets by kicking the tires. In the beginning, he gave speeches at Rotary Clubs and business meetings, sometimes frustrated with the lack of response, occasionally comparing the blank faces in his audience with an oil painting. But he also had a great love and respect for his fellow North Dakotans, and chose to challenge them to look at their own history in the state. "Most of them actually had grandparents who immigrated, so I said, 'We're a state that is all descended from huge risk-takers! Where did the risk-taking go?'
"[It was] sort of a challenging background to try to be involved in a start-up."
Bruce Gjovig, director of the University of North Dakota's Center for Innovation in Grand Forks, remembers commiserating with Burgum in the late-1980s. "We were frustrated that North Dakota was slow to seize the opportunities that were before us in software and information technology," Gjovig recalls. "We were looking for friends and allies in the business world with more open minds. We saw so much talent leaving North Dakota to build great ventures elsewhere and wanted North Dakotans to keep the talent we had through innovation, entrepreneurship and investment. To be competitive in business you need really good, talented people who work hard, and there is an abundance of those here. Rather than North Dakotans building great ventures elsewhere, we thought we could use the same talent to build world-class companies right here. But we needed to change the culture to embrace entrepreneurs."
The Company Thrives
Despite dire predictions outside its boardroom, the company continued to thrive in the hungry world of high tech, so much so, Burgum started getting warnings from older businessmen. "I had people literally coming up and saying, 'Look you're a nice young man, we'd really hate to see you fail.' They couldn't comprehend that we were in a market that was growing super fast."
"I was always a believer that the economics of software would work here. We weren't economically disadvantaged and we had great people . . . The whole point, in terms of technology, was that you could build products that came from people's minds . . . so if everything we make and sell comes out of the minds of our team members, the only thing you have to be close to, from a raw materials standpoint, is talent."
And that he had. Great Plains had developed a reputation as a company that offered superior customer service along with its high-quality software. It was consistently ranked as one of the 100 best companies to work for in America by Fortune magazine. "Great Plains was among the early high-tech companies to thrive in a rural state," Gjovig remembers. "It met the challenge through recruiting regional talent, offering good wages, invigorating and fun culture, family-friendly policies, flexible work schedules, telecommuting, and being in a state that offers great quality of life."
By 1989, Great Plains Software had grown to nearly 250 employees, the vast majority twenty-something natives of North Dakota's rural communities and graduates of its colleges.
Of course, Burgum's influence on the environment around him went far beyond the ever-shifting cubicle walls of Great Plains offices. In 1989, as more public and private leaders around the state recognized the tough economic reality facing its citizens, and the possibilities a high-tech economy offered, they decided to address it by forming Vision 2000. Members of that group, then, did something distinctly uncharacteristic for this region - they got loud. "We did a statewide newspaper insert that said, 'Is North Dakota dying?'" Burgum recalls. "The reaction was huge. We went out and did town hall meetings. 5,000 people showed up and we expected 20."
Internet Makes Geography Irrelevant
As the decade progressed, the introduction of the Internet made their point even more clearly - geography was irrelevant. In 1997, after years of hard work and anticipation, Great Plains Software staged a highly successful initial public offering of its stock, proving further that high tech could happen in North Dakota.
Not surprisingly about this time, state government became enamored with the possibilities. Byron Clark, former legislator from Fargo, and an initial partner in NDSU biotech start-up Aldevron, remembers well the impassioned debates in Bismarck over the state's role in supporting high-tech development. "In the late '90s and early '00s, software companies like Microsoft Great Plains were all the rage. It had a huge impact on how the state did business," he recalls.
That mentality was fueled in some part by the legends created by Burgum himself. "Bruce Furness [Fargo] testified in front of a legislative committee that he once drove to Bismarck with Doug, and it was the longest car trip he ever had. Doug drove him not on the interstate, but cross-country, looking at all the small towns and exclaiming what wonderful places they were."
And not without reason. In 2000, Great Plains Software reported an estimated $200 million in annual revenue and employed more than 2,000 people.
Still, the company was just a tiny blip on the business radar and few people realized North Dakota was home to a thriving high-tech concern. Until 2001, that is, when Microsoft offered a billion dollars to buy the place, a staggering sum even to veterans of Wall Street.
Pundits were skeptical. Kids from little towns like Arthur were laughing all the way to the bank.
State Technology Ventures are Growing
So where does North Dakota stand today, more than two decades after Doug Burgum's return?
Gjovig put it this way: "There is a growing number of technology-based ventures all across the state - rural and urban, east and west - that says we are participating in the new economy."
"Every time I come back I notice new business popping up all over the place," says Clark, who now works for Wells Fargo in Rochester, Minnesota. "The high-tech emergence, the research parks, the improved state programs, and the general level of excitement is providing opportunities that were not there before."
And Burgum's influence? "You cannot argue that his passion has certainly made a huge difference."
Burgum, for his part, wouldn't have done it anywhere else, even though he admits moving to Washington state would have helped his career. "I don't have any plans to go to Redmond." he says, "Anybody here will tell you I'm still running as hard as I ever did."
And? "I get to live on a farm outside of Fargo, in North Dakota, working with guys like Bill Gates and Steve Ballmer. Isn't that the greatest job in the world?"
Gretchen Heim Olson was Doug Burgum's public relations specialist at Great Plains Software in the late 1980s. She is a freelance writer and public relations consultant in Roscoe, Illinois.