Photo by Steve Niedorf

FAR OUT IN FARGO

What's a $95 million company doing in a place like this? Doug Burgum bet the farm on a funky little software startup smack dab in the middle of nowhere.

SO YOU'RE WORKING AT one of the hottest companies in Silicon Valley. You love your job on the front lines of the techno-revolution, but this evening, like every other, the traffic on El Camino Real is never-ending. You just want to get home. That's another problem: home. You start brooding about the heart-stopping Bay Area real estate market and that humble three-bedroom house just out of your price range at $700,000. Ah, the expensive, egocentric, and congested Silicon Valley lifestyle. Is there any other?

Here's one possibility. Point your car east and drive for approximately three days. At Omaha, cut north and make for North Dakota. Take in the amber waves of grain; admire the fruited plain. When you arrive in the laid-back town of Fargo (three-bedroom house: $90,000), head for 44th Avenue SW. Just down the road from the lumber store, you'll find a two-story brick building in the middle of a 48-acre parcel of farmland, some of it planted with crops. Park your car anywhere --there's plenty of space. Welcome to the brand new corporate campus of Great Plains Software.

There's something wonderfully improbable about the success of this folksy yet highly innovative 18-year-old business software company plopped down in the middle of the prairie. Sales jumped 50 percent last year, and although January temperatures in Fargo can plummet to 30 below, Great Plains has made its way onto Fortune's "Best Companies to Work For" list two years in a row. As Fortune quoted one Great Plains employee in 1998: "Work feels a lot more like hanging out with your friends than going to work." So what's a little snow?

There's really just no reason in the world that a company like Great Plains should exist, or that it should exist precisely here, or that it should be, by all accounts, such a terrific place to work. Except that one person, Doug Burgum, really wanted it all that way.

Burgum, MBA '80, who is 43, says he knew all throughout business school and a three-year job with consulting giant McKinsey & Co. that he eventually wanted to go back to North Dakota. He just wasn't sure when or how. He is a native of the tiny town of Arthur (pop. 400), just northwest of Fargo, where his family has been in the grain elevator business since 1906. "My parents had pretty strongly impressed upon me the importance of being a contributing member of the community," says Burgum. "And my sense was that North Dakota was my community."

But back 20 years ago, when he was starting his career, there wasn't much for Burgum--or any other ambitious young person--to do in that particular community. North Dakota was one of the few states where the population was actually declining. While its public schools were--and remain--excellent, there weren't a lot of promising jobs. "North Dakota was creating engineers and exporting them to Honeywell in Minneapolis," says Burgum. "I used to joke when I came out of North Dakota State University in 1978 that my choices were either shoveling grain or going to business school."

HE CHOSE BUSINESS SCHOOL, of course. In early 1978 Burgum was running a chimney sweeping business in Fargo and finishing up his bachelor's degree in university studies when a professor gave him a magazine story on MBA programs. Before that, he says, he hadn't even known what an MBA was. During a spring break ski trip, he completed applications to a handful of the nation's top schools and mailed them off at the last minute. Accepted by all the programs to which he applied ("I think some kind of geographic diversity was mandated"), he chose Stanford. It was the photograph of Palm Drive, he says, that clinched it. And all throughout that first year at the GSB,Burgum had trouble dragging himself to class when the weather was good. For a native North Dakotan, he says, that seemed like most of the time.

After graduating from the GSB, he took a summer off to travel around the world with classmate Bob Fisher (now president of Gap Division), then went to work in McKinsey's Chicago office. It was a very promising, very impressive, and very safe first step down a traditional MBA career path.

Then, in 1983 he was approached by a couple of young engineers in Fargo who had started a little firm that wrote and sold software. They offered him the opportunity to put up some seed capital and become a partner. It wasn't exactly an irresistible offer: Burgum had a job he enjoyed with an enormous and prestigious company. Great Plains was a struggling, cash-strapped 15-person startup. What made the decision even harder was the fact that Burgum didn't actually have the cash to invest. What he had was farmland he'd inherited from his father. If he wanted to join Great Plains, he'd have to mortgage it.

"You're talking about land your grandfather and great-grandfather homesteaded and paid off with a hundred years of labor. Then you come along and say: 'Hey, there's some equity here, I'm going to put some debt against this! Let's go!'" says Burgum. "At the time it seemed a little bit risky."

He wasn't the only one who thought so. He asked the advice of GSB friends like Steve Ballmer, who had dropped out of business school to join Bill Gates at Microsoft. Ballmer, for one, thought Burgum was taking a chance with this software company in the middle of nowhere. How would he ever convince talented people--a tech company's greatest asset--to work there? But Ballmer also said he thought the software industry had a smashing future. That was enough for Burgum. He moved back to Fargo and took out that mortgage. Doug Burgum literally bet the farm on a software startup. A year later he dug himself in even deeper. When his partners wanted to sell, Burgum convinced his mother, brother, sister, and cousins to buy the rest of the company. Talk about pressure!

He has spent the last 15 years making good, turning the floundering firm into a leading vendor of business management software for the mid-market, with clients like Adidas and the Detroit Lions, offices from Singapore to South Africa, 1,000 famously contented employees, and annual sales that analysts expect will top $120 million this fiscal year. "The company was not an impressive deal when he bought it," says Ballmer. "It wasn't some barn burner business. Doug crafted it into what it is today."

How did he do it? That's a long and complicated story, of course, but it helps to think for a moment about the company's mission statement: "To improve the lives and business success of partners and customers." If that sounds too good to be true, remember, this is the Heartland. And it really does appear that Burgum built Great Plains by making his customers and employees very, very happy.

If there is any doubt that he has taken this mission seriously and personally, consider: In 1993, after approving the premature release of some still-glitchy software, Burgum stood up in front of a group of employees and resellers, smashed three eggs on his head, and apologized. He is, by all reports, warm, funny, and approachable, the antithesis of the aloof and arrogant CEO.Everyone at Great Plains calls him by his first name, and he is famous for always wearing white tennis shoes--even when he testified before Congress about Microsoft's competitive practices last year. "Dress shoes are nothing but an expensive, uncomfortable, senseless waste," Burgum told the Minneapolis Star Tribune in 1996. Needless to say, every day is casual day at Great Plains.

And how's this for treating your company like a community and your employees like friends: In 1991, when he married Karen Stoker, Burgum invited every single employee--there were several hundred--to his wedding reception. And yes, he wore his white tennis shoes.

"He's this unpretentious, normal kind of guy, but you walk away from a meeting with him totally energized," says Heidi Roizen, MBA '83, cofounder and former CEO of the software company T/Maker, who now sits on the Great Plains board. "Those tennis shoes are just such a good symbol for him--always ready to run. I've never seen him without them."

He's had to do a lot of running. How, Burgum wondered early in the game, was he going to set his company apart from the pack of hard-driving firms trying to get a foothold in the business software industry? He didn't want to slash prices and decimate his retailers' margins. Nor did he want to make products ever flashier, tacking on feature after feature that customers might not want or need. He had a better idea. Why not solve what seemed to be the biggest problem customers had with business software in those days: the terrible service that came along with it.

Historically, software support was free. And historically, it was awful. Busy corporate customers who ran into problems would call technical support and sit on hold indefinitely, listening to bad music, doodling angrily, and if enough time went by, hanging up. Even if they stuck around, the anonymous technician who eventually picked up the phone was very likely overworked and unhelpful. And who could really blame that poor technician?

"In 1980 one of the lousiest jobs in the industry was working in customer support, talking to someone who'd been on hold for an hour," says Burgum. A recent survey finds it's still a horrible job: 83 percent of computer support personnel have had clients who became violent--hurling monitors across the room or smashing keyboards. But then again, who could really blame a psycho customer? There's nothing more infuriating than waiting on hold for half a day and then not being able to have a problem solved. "It really reduced your ability to build a positive relationship with a customer," says Burgum. "We had this theory that customers would gladly pay for service if it was accurate and responsive."

In 1987 Great Plains began asking customers to pay for support, and they started pricing service contracts based on response time. It was a whole new paradigm. A customer would pay more for a guaranteed one-hour call-back on a problem, say, than for a three-hour response time. This new model allowed Great Plains to actually earn money by solving customers' problems quickly, and as the money started to roll in (service maintenance and support now account for some 40 percent of revenues), the firm was able to invest in a superb infrastructure for dealing with customer calls. There's no more mandatory waiting on hold. Great Plains technicians pick up half of all incoming calls immediately, and if they don't, customers can leave a message and go about their business. And as it turns out, the average time before a customer is called back isn't one hour and it isn't three hours: it's 17 minutes. Plus, there's no more switching from one technician to another, having to explain your problem repeatedly. Customers can get to know one technician on a first-name basis.

He is famous for always wearing white tennis shoes--needless to say, every day is casual day at Great Plains. Photo by Steve Niedorf

So Burgum had found one key way to improve the lives of customers, and it paid off. Great Plains grew steadily, year after year, throughout the 1980s, selling software solutions to a growing cadre of small businesses. By 1992, recognizing the increasing power of PCs and Microsoft, the company invested heavily in building a strong next-generation product for companies with up to $200 million in sales. In June 1997 Great Plains went public. And all employees, from administrative assistants to vice presidents, were granted stock options. What's even more unusual: all full-time employees are still granted options upon being hired.

Which addresses the other half of the mission statement. How was Burgum going to attract the kind of people to build a first-rate company? By treating them exceedingly well. "I thought it would be tough for him to get the best people to work in Fargo," says Ballmer. "I'm amazed at his ability to hire and recruit excellent people."

The company makes a point of trying to let people live where they want. If a valued employee's spouse decides to go to law school in Texas, the company will do what it can to set up the employee to telecommute. "If we were maybe somewhat disadvantaged in hiring by distance or latitude, we've made up for it in terms of flexibility and innovation," says Burgum. Some 20 percent of its Fargo-based employees telecommute from locations around the United States. Those who actually work in Fargo are given keys to the building and allowed to set their own hours. "We hire great people and work hard to get them to stick around," says Burgum.

Turnover at Great Plains is an enviable 6 percent--well below the technology industry average. The company has probably instituted a lot of its employee-friendly policies because it has had to. But in one of those strange twists of fate, the company's very location--initially a drawback--has turned into an asset. While Great Plains might miss out on the synergy of being headquartered in the heart of Silicon Valley, it has been able to develop some totally unique strengths. Frequent trips to California and other high-tech hubs keep Burgum and Great Plains up to date with where the industry is headed. But this is one software company where the innovation goes way beyond the technology.

"You fly into this little airport and you think you're going to have to explain to people how everything works," says Roizen. "But I always walk away in awe of the professionalism of the place. There's a sense of community that's very strong, and then you look underneath the hood, and there's a technical powerhouse."