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The Dinner Club: How the Masters of the Internet Universe Rode the Rise and Fall of the Greatest Boom in History by Shannon Henry


Rating: (Recommended)


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Fly on the Wall

Shannon Henry received a great opportunity when she was permitted to sit as a fly on the wall at the monthly dinner of an investment club in Washington, D. C. attended by some of the key East Coast players in technology. The results of her experience appear in a new book, The Dinner Club. Shannon captures the mood shifts of these mega-players, especially as boom turns to bust for them personally and for their companies. Here’s an excerpt of how Michael Saylor, of MicroStrategy handled his downfall, from Chapter 8, “MicroTragedy” (pp. 167-8):

Saylor is furious at PricewaterhouseCoopers, saying that even though he runs the company, he holds the firm responsible. He says that as a first-time CEO, he did not understand the fine print and expected that the people who he hired to worry about it would take care of it; "If you retain an auditor you have the right, at least I believe you have the right, to expect them to take responsibility for accounting technicalities," said Saylor. "You pay them, right?"

"They misaccounted and they never fessed up, they never so much as said they're sorry, they just did it," says Saylor. "Why wouldn't I blame them? If you started a company and you trusted your auditors to help you manage this stuff and then the books blew up, and you found yourself being attacked left and right by every single person in the world, then [you have] your life taken apart while your auditor basically backed into a corner and scampered off to a vacation in Tahiti and took no responsibility, wouldn't you feel a bit mistreated?"

Saylor compares the situation to a car manufacturer who builds an auto, puts an engine made by another company in the car, and when the car blows up because of the engine, the manufacturer is blamed. "I managed to get myself responsible for all of this when in fact I'm the one who's least qualified to make those decisions. I didn't make any of them. All those decisions were made by auditors."


Regardless of who was to blame, it was clear the restatements were affecting the bottom line. In August of 2000, Microstrategy laid off 234 employees, about 10 percent of its staff. In addition to the pink slip and the severance package, each worker received $10,000 in Microstrategy stock from Saylor's own holdings. The month before, the company had to tell more than 200 new college graduates that jobs they had been offered were no longer available.

In October of 2000, Microstrategy executives agreed to pay $10 million instock as part of a shareholder lawsuit settlement. Then in December, Saylor and two other top executives at the company each agreed to pay SEC fines of $350,000 to settle the accounting fraud case. None of them admitted any wrongdoing. Although the penalties don't take a huge chunk out of Saylor's still-estimable fortune, the SEC said these were the largest fines ever levied in such a case.

If Saylor were just completely obnoxious or rude, he would be easier to understand. But he has friends—not just new ones who rode on his train on the way up, but ones who've known him since high school and college—who say really, he's just a guy who wants to make a difference. He's just got an awkward way of acting that's not socially acceptable. Julie Holdren, founder of software firm the Olympus Group, has known Saylor for years. Her husband and Saylor were fraternity brother at the Massachusetts Institute of Technology. Holdren has done business deals with Saylor and gone to movies with him. She says he's brilliant and kind and incredibly misunderstood. Conventional people will never get Mike, she says. On the other side, however, are those who have written him off. Morino has heard Saylor on the humility campaign these days, and he doesn't buy it. "Do you know what Golda Meir said?" asks Morino. "Don't be humible. You were never that


There were other falls among the Capital Investors, but Saylor's was the hardest. Saylor also learned how his friends in the club would support or ignore him. Some members publicly supported him, especially Russ Ramsey and John Sidgmore. On the other hand, Morino, Fernandez, and Gorog tended to distance themselves. "It's the price you pay for playing the role,"says Fernandez about Saylor's misfortune.

Following the company's problems, Saylor still showed up to almost every Capital Investors dinner, the most vocal member. Saylor says when the restatement occurred, the Washington technology community split in half, for him or against him. "The day before it happened, everybody loved me," he says. "And the day after..." It hit him how things had changed when a news story criticized him for rudely disappearing for ten minutes during a philanthropic event. He was in the bathroom.

"Getting up and going to the bathroom if everybody loves you is a non-issue," Saylor says.


Shannon Henry had a great opportunity in being able to get on the inside, and reading about the players and dinners was interesting. The moguls were ruthless in frilling the executives who came to make presentations at the dinners looking for money. Despite the knowledge and expertise around the table, the investments haven’t paid off.

Readers hear stories, anecdotes, and get a flavor about many of the characters who participated. The Dinner Club isn’t great writing, and leaves readers with little more than a dozen stories of life among some rich, white guys. If that’s what you’re prepared for, proceed. If you expect insight into the time and the issues, you won’t find much here.

Steve Hopkins, February 28, 2003


ã 2003 Hopkins and Company, LLC


The recommendation rating for this book appeared in the March 2003 issue of Executive Times

URL for this review: Dinner Club.htm


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