Mike Daniels is living proof that nice guys don’t finish last. He’s probably best known in tech/investor circles for his sale of Network Solutions, a small company in Tysons Corner, VA, for $19.2 billion in 2000. You might think of it as a harmonic convergence of an appreciation of the emerging Internet and the tech bubble.
But there’s more to a successful 40-year career than a one-shot wonder. Mike’s recent fireside chat at Big Idea CONNECTpreneur’s Winter Forum addressed some factors that have enabled him to continue making the right choices.
Over the course of his career, Mike has been involved in creating over $50 billion in shareholder returns in high-growth tech companies. He’s been focused on three long-term change waves that emerged during his 40 years as an entrepreneur: Internet, Mobile, and Global Digitization and have picked up over the last 10 years. Mike said:
“These are three massive change waves that have created hundreds and billions of dollars of investor/shareholder value for every company who figures out how to do this and execute. Those are the waves I’ve focused on…Any entrepreneur today needs to be on one of those three long-term waves or they’ll be left behind.”
Valuing work and service to others
Monumental financial gain might signal the end of a brief but wildly successful career, but for Mike it just meant it was time to find another challenge and opportunity to support American innovators and citizens.
He is moved when he recalls the letters he received from Network Solutions stockholders — many of them “retirees and grandmothers” who thanked him for doubling their retirement funds because they had bought stock in the company he steered.
“Business is about helping people. And, we’re the people who create jobs and wealth and give people quality of life. The government can help us do that but we’re the people who do that. Those are the things you take away from this.”
A solid foundation helps
Mike grew up learning the value of hard work and perseverance. The son of a small business owner, he grew up in Cape Girardeau, Missouri, southwest of St. Louis and north of Memphis. He grew up helping out as a janitor, truck driver, and salesman and in summers during college worked at McDonald’s. He learned the value of work, perseverance, and respect for those who do it at any level. He attended the same high school as Rush Limbaugh, with whom he was paired as co-disc jockey on KGMO radio.
His lifelong interest in technology began when he attended Northwestern University on a debate scholarship and took a lot of courses at the tech institute.
He recalls: “Those were the days we sat in a small data center with punch cards up until midnight to figure out how you programmed everything.” He stayed at Northwestern for graduate school as a Navy Reservist during the Vietnam war, was sent to Washington, DC, to the office of Naval Research, the advanced science and technology part of the U.S. Navy.
That’s when things got really interesting. He recalls:
“Two weeks later they shipped me to some strange place called ARPA, the Advanced Research Projects Agency, which became DARPA, responsible for the internet, stealth technologies, satellite communications — you name it — hundreds of billions of dollars of commercial technology as the advanced science and technology arm of the Department of Defense.”
It was 1969, and Mike happened to be in the first user’s group of the ARPAnet, which is the internet, when they threw the operational switch about two months before. He and his colleagues sat at dumb terminals sending the first emails to communicate with government contractors in places like MIT, Caltech, Northwestern, and Michigan. After the military, he returned to Missouri to add law school to his credentials, but continued watching technology evolve.
He had followed the technology’s progress from ARPA in the 60s, to some use by education in the 70s, and from DARPA to the National Science Foundation in the 1980s. He started going to meetings at NSF in the late 1980s on the continued development of the “Internet.”
“These things take decades to get to the point of fruition. There was no one in the internet business in those days who had any idea of what the Internet could become.”
Mike lived the first half of his 40 years in business in government contracting in Washington, DC, where he moved with his family after law school. “I built major government contractors, kept them, took them public, sold them,” he says.
Mike knew he wanted to be in the tech industry, but attended law school in Missouri for some additional background. Nine months before graduation, Mike got a call with a job offer from a guy he’d met while at DARPA, named Jack London. Jack had become the CEO of CACI, a government contractor in Arlington, VA, which was providing information solutions and services to support national security missions and serving Intelligence, Defense, and Federal Civilian customers.
Mike had watched the government contracting business since the late ‘60s and thought: “This is a big moving train. The federal government is the biggest buyer on earth.”
He moved back to the Washington, DC area to take the job and learned the business by watching his first mentor. Because he’s an entrepreneur, in 1979 he packed up his wife and kids in the car and moved to Rosslyn, VA to start his own business, Computer Systems Management, with a partner. It grew to a business of about 200 people who worked for Defense, Intelligence, and DARPA.
By 1986 he knew it was time to move on.
“It was pretty clear to me I was personally being hopped up all the time because I was signing every banknote to keep 200 people employed and that was a lot of money to me in those days.”
Know when to move on
Mike knew there were tons of things he still wanted to do as a federal government contractor, but he needed more scale, more capability. He decided to sell the company and “get on a bigger train.”
That train was SAIC, which became the largest privately held employee-owned science technology company in the history of the U.S. He uncovered the opportunity by talking to other CEOs in town. One told him to go to La Jolla, CA, to speak with Bob Beyser, the founder of SAIC.
“We were supposed to meet for an hour and a half. Five hours later I thought this is the smartest technical entrepreneur I’ve ever met in the U.S.A. He’s got a great model.”
Mike said: “It was one of the best decisions we ever made because when we joined SAIC, it was a $500 million with 5,000 people and we ended up being $11 billion in 28 countries with 44,000 people.”
In 1987, Mike ran all the networking at SAIC. John Woods, the Patton Boggs lawyer who helped him sell his company asked him to speak with a small company five blocks from the SAIC office in Tysons Corner, VA, called Network Solutions. The company was thinking about making an acquisition and his lawyer thought it would be helpful to speak with someone who had just been through the process.
Mike recalls: “I liked them, they had networks and talent, and I started giving them subcontracts.”
Be ready to exploit new opportunities
In 1992, Networks Solutions outbid three other companies for the “exclusive cooperative agreement” from the National Science Foundation to sell .com, .org, .net, .edu to everyone on earth and also handle .gov, .mil and every country code for every nation.
Nobody much cared about the Internet in 1992, and the small company won a fixed price contract. Mike followed the deal with interest. It dawned on him that the Internet could be huge the year before when a corporate transaction lawyer he’d found in Silicon Valley, Jorge Del Cavo, told him about the venture capital community in Silicon Valley’s interest in the Internet.
“I thought like all things in technology, once the VCs in Silicon Valley start rumbling around and kicking the tires you better start paying attention because this might become a commercial thing.”
Over the next year and a half, Mike made Network Solutions five offers to buy the company. They turned him down every time.
“I kept incrementally raising the offer up until they finally gave up and sold me the company in March 1995 for $4.7 million. The dot.com boom started in 1997, we went public in the fall right in the middle of the craziest time that I’ve ever lived through. We raised $69 million at $18 a share, oversubscribed three times, everything was hot.”
In 2000, after raising $779 million in the public markets the previous year, Network Solutions raised $2.3 billion, the largest internet public offering of all time. It still holds a Wall Street record as one of the greatest returns on any investment in a 5 year period from purchase to sale.
“Our appreciation was 3,057%. All I can ever say is the best thing about that was that out of all of that we put $2.2 billion in cash back into the hands of the employee owners…Help the people who work for you and that helps this country.”
Everyone made a lot of money on that deal, including the individuals who purchased the stock.
Mike and Bob Beyster co-authored a book about their experiences: Names, Numbers and Network Solutions: The Monetization of the Internet.
Work with the best and contribute
Mike credits mentors, friends, and associates that remain part of his loyal circle for their role in his journey. He kept in touch with the best and brightest he could find involved with the developing tech industry.
Over the years Mike has served on 22 boards of directors. In the mid-2000s Silicon Valley investors bet on a company in Chantilly, VA, called Mobile365, which brought SMS and MMS messaging technology to the United States.
“They threw out the young CEO and asked me to be CEO and Chairman for awhile and I was smart enough to hire smarter people than I. I tend to do that a lot. I learned I’m not the smartest guy in much of anything. I know a lot and I’ve been able to do things but the thousands of people I’ve worked with in all of these companies are the people that make these things go.”
In 2006, Mobile365, a mobile messaging and content delivery service provider, was sold to Sybase in Silicon Valley, the #4 database management company, in an all cash transaction worth $425 million.
Today, he serves on the board of directors of Blackberry, CACI International, Mercury Systems, Invincea (Chairman), and the nonprofit Logistics Management Institute (Chairman), which has served as defense logistics experts for the Department of Defense since the start of the Vietnam war and during his tenure grown from $80-90 million to $250 million.
Mike continues to give back with service to many organizations. He refers to mentors and leaders who exhibit the traits he admires: honesty and intelligent action: Bob Beyster (SAIC), Jack London (CACI), Dan Bannister (DynCorp), George W. Johnston (George Mason). He calls the leaders who have had an impact on him over the years, “Citizen Business People.”
He explains: “You watch what they do over time; they’re dedicated to a couple of things: Building great companies [/institutions] and helping the United States of America and the Washington, DC region. I tried to do what I watched them do.”
Advice for future leaders
- Stay close to your friends and find the greatest entrepreneurs in America. “You can’t do anything by yourself. You can be the spark plug and do what you do, but you need really good people.”
- Build a network of the smartest human beings that you can, anywhere on the globe, who you speak with to understand the technology waves in depth. “You need to hear from them the context for this and figure out your place.”
- Turn off your devices and get out of this from time to time because we are so inundated with junk in the modern world that you need to get away from this stuff. It’s hard to make long-term decisions when you’re being pounded seven days a week, 24 hours a day by Facebook, the news media, and all this junk that surrounds us.
“Any time you think that the world we live in is going to overpower you or you can’t deal with it, or there are things you can’t do, just hike to the top of a big ridge or any mountain in the world where the wind blows and there’s not a single sound and you will know that you are one tiny spec in the universe and this should give you the feeling that there’s a bigger thing going on here than our everyday junk.”