Citizen Goodnight

SAS president exercises influence that is welcomed and resented

Raleigh News and Observer

July 21, 1996

STEVEN EISENSTADT AND ELIZABETH WELLINGTON

One night about 10 years ago Jim Goodnight showed up for a public hearing on a convenience store that someone wanted to build near the wooded campus of SAS Institute Inc. But Goodnight, the software company's president, wasn't there to coax or argue.

He took the owner aside during a break, then told the Town Council, "You can take this off the agenda. I just bought the property"

Goodnight has succeeded a number of times in keeping SAS' neighborhood on North Harrison Avenue the way he likes it --- less congested and more upscale than other parts of the Triangle. "We don't want this end of Cary strip-zoned into wall-to-wall Pizza Huts and Hardee's," he said.

Goodnight is known best for his success as president of SAS, the Triangle's top homegrown high-tech company and Cary's biggest employer. SAS (rhymes with "gas") is renowned internationally both for its hot-selling software and for how well it treats its employees --- offering benefits and perks so generous that almost no one ever quits. Even the mayor Koka Booth, works for SAS.

But Goodnight's influence doesn't stop at the company gates. Since 1980, when he moved SAS to a sprawling tract off Interstate 40, Goodnight has used his wealth and clout to shape the landscape and identity of Cary in ways that have nothing to do with software.

In the past few years, with Cary growing faster than any other North Carolina town, SAS and Goodnight have expanded both their real-estate holdings and their reach in Wake County and the Triangle.

Some employees now live, work and shop almost entirely in what some call SASland - the company campus, its housing developments and its commercial property

Across North Harrison Avenue from SAS, a Missouri developer has broken ground on a 272-room Embassy Suites hotel and conference center on land it bought from the company for $1. SAS made the deal after the town of Cary refused to put public money into the project.

A mile or so away, bulldozers are rumbling on the site of Cary's first private school, which Goodnight is putting up with $10 million of his own fortune because he's dissatisfied with the county public schools.

"Somebody has got to get out front and lead," he says. Goodnight says he has no grand plans for Cary. "My focus is on growing SAS around the world" he said. "It is not Cary."

But Cary is where Goodnight has had his greatest impact.

SAS is the town's largest private landowner, with nearly 1,400 acres in and around Cary as of Jan. 1 (plus another 250 acres in Morrisville). And either the company or Goodnight has bankrolled some of the activities of Cary's most prolific developers, the duo of Tim Smith and Julian "Bubba" Rawl. The Smith-Rawl-Goodnight team recently moved beyond Cary with a deal to buy a 2,000-acre North Raleigh tract.

Goodnight and SAS had a hand in zoning on North Harrison Avenue, once fending off plans for a high-density residential development in the same way as the convenience store --- by buying the land. "We just really wanted a little bit more upscale around our facilities here," Goodnight said.

SAS is responsible for developing Preston, Cary's biggest planned community at 1,400 acres. and the posh Prestonwood Country Club.

The Goodnight touch is evident as well in little details such as the design of a fire station on North Harrison Avenue. The station, built on land that SAS gave the town, has homey features that Goodnight wanted - such as a peaked roof, a small front porch and sidelong garage doors nearly invisible from the road. The tow paid the extra cost.

A razor-sharp mind

The dictionary has two definitions for 'mathematical" --- anything that relates to mathematics, and rigorously exact.

Both apply to Goodnight He holds a doctorate in statistics (besides leading a company whose name stands for "Statistical Analysis Software"). And his standards are as precise as a calculator.

The Jim Goodnight who scrutinized zoning maps and fire-station design is the same Jim Goodnight SAS workers know, respect and occasionally fear: a man who cares about the details.

Philip Busby worked with Goodnight for 10 years before leaving SAS to start his own company in 1992. Busby, who was a manager at SAS, said Goodnight has little patience for bad habits such as showing up late for meetings. He also doesn't want people to arrive early --- "He'll say you're wasting time."

As a boss, Goodnight has a reputation as a delegator who encourages employees to be independent and creative but who in the end expects things done right. When they're not, look out.

"He has an amazing ability to synthesize information quickly and get to the essence of a problem. And he'll zap you if you're not on the same wavelength," Busby said. "For people who are slow, he doesn't have a lot of patience. If you can't run with him, get out of the race."

Few people choose to. Believing that a happy worker is a productive one, Goodnight showers SAS' 2,200 Cary employees (there are an additional 1,500 worldwide) with an array of perks considered among the best in corporate America.

Included are on-site day care with teachers certified in Montessori instruction methods. A health clinic. A full-service gym. A cafeteria featuring a pianist and dishes such as grilled mahi mahi with herb sauce. And discounts on land in SAS-owned subdivisions.

The company says such extras are a major reason that its annual employee turnover rate hovers between 3 percent and 6 percent, compared with a computer-industry average in the high teens. The payoff for SAS: lower recruiting and training costs.

"A lot of people outside SAS ask if this is like "The Firm,' "said Hilary Yeo, a technical writer referring to the novel and movie about an omnipotent law firm. "They say, 'Does the company own you?' But when you are working there, it's wonderful."

One on one with employees, Goodnight can be unpredictable. Admirers say he is usually affable, with a dry wit. But some have felt his wrath.

Alice Allen, a former SAS publications director; recalled a run-in with Goodnight during her first week at the company in 1980. She was using the office copier when the paper jammed and left to get help just as Goodnight walked by with a visitor.

"The first thing he ever said to me was, 'Girl, don't you walk away from the copy machine when the light is flashing.' The whole floor could hear him," Allen said. "'I don't think he minds telling people what he thinks about them or embarrassing them in front of other people."

Intensely private

Jim Goodnight, 53, lives with his wife and 14-year-old son in a brick mansion beside a lake on a 47-acre estate near the SAS campus --- so near that. standing in his formal English garden at night he can sometimes see the office lights of late-working SAS programmers shining through the trees.

An electric security gate blocks the estate's entrance.

Dr. Goodnight, as he is often called out of deference to his Ph.D. is legendarily private. He doesn't spend much time lunching with other business leaders or giving speeches to civic groups. Even some people who have known him for years find him aloof.

"He's not the kind of person you want to sit around and have a beer with." said Henry Schaefter a professor of genetics at N .C. State University who worked with Goodnight there in the 1970s.

SAS' marketing staff spent years trying to persuade Goodnight to appear in magazine ads. thinking that images of the athletic, 6-foot-5 president would put a distinguished face on the company's hard-to-define software. (See related story.) To their surprise, he gave in last summer. But now the full-page ads-- which show Goodnight moving a gigantic chess piece --- only make him blush. "You won't be seeing them much longer," he said.

Goodnight said he inherited his shy taciturn nature from his father. Albert, a solid man of German stock who owned a hardware store in Wilmington and put his only son to work stocking shelves there as a teenager.

Said Anne Goodnight, his wife of 30 years: "At night, when I tell him about my day and he tells me about his, my part always lasts five or six times longer."

Anne can testify that Goodnight is a man used to getting what he wants. When they met in college --- he was at NCSU, she at Meredith --- she was dating one of his Tau Kappa Epsilon fraternity brothers. For a time, she was uninterested in the serious-looking math student who kept giving her the eye. "But he persevered, and we decided that we really did have a thing for each other," she said.

A portfolio grows

The size of Goodnight's fortune is nearly impossible to estimate because SAS is a private company and releases little financial information about itself. Goodnight won't discuss the subject

Here's what is known: Good-night owns a two-thirds share of the company, which reported $562 million in revenue last year. (SAS doesn't disclose profit figures). His 7,500-square-foot home, with its wine cellar, outdoor pool and 14-acre lake, is worth $824,000, according to tax records, but its market value could be at least three times as high He also owns a ski condo in Steamboat Springs, Colo. And he is able to spend $10 million on the private school.

As for his real-estate dealings in Cary and beyond, Goodnight said they're "strictly an investment" But the size of that investment keeps growing, making it more and more difficult for him to remain so private.

Despite early dabblings such as the convenience store property; Goodnight never imagined himself a player in real estate until Tim Smith stopped by his office one day in the fall of 1991.

Smith, an engineer-turned-developer; first hooked up with Goodnight when he sold SAS three acres for its first Cary office building in 1980. But Smith had a much larger deal in mind: getting together to buy Preston, the golf course community that was intended to embody Cary's easy-living spirit but fell into the hands of the federal government after its owner; a Dallas savings and loan, went under.

Smith earlier had assembled another team of investors to buy Preston. But with banks nervous about extending credit in a slumping real-estate market, they couldn't secure enough financing to make a bid. So Smith turned to Goodnight, one of the few men he knew with pockets deep enough to help. And he found Goodnight was willing.

"It just seemed like a situation that you couldn't lose money at," Goodnight said.

He was right. Goodnight, along with several other top SAS executives, paid $11.2 million in cash for Preston. Smith and his partner; Rawl, handle the development end. Today, Preston is the biggest moneymaker in a SAS real-estate portfolio that Goodnight said brings in $20 million a year:

Included in the purchase was Prestonwood Country Club, which now can cost $30,000 in membership fees and more than $400 in monthly dues.

Other ventures involving SAS and Goodnight include Wessex, a 157-acre subdivision near the company campus with homes starting at $325,000, and Harrison Place, a 70-acre neighborhood with similar prices. Goodnight's growing real-estate interests parallel Cary's explosive growth. The town's population soared to an estimated 77,000 this year; from 44,000 in 1990. That's 15 new people per day.

Now, Goodnight is branching out beyond Cary and may be on the verge of a shift from residential to commercial development.

Anvil Investments, a partnership led by Goodnight, Smith and Rawl, is due to close soon on its purchase of the 2,000-acre Wakefield plantation tract in North Raleigh. The partnership has not disclosed its plans for the land, north of the Neuse River and east of Falls of the Neuse Road.

Last month, Smith said the group was considering buying the sprawling Weston office and industrial park, one of Cary's largest commercial developments, in a deal that could be worth more than $30 million.

And later this month, SAS will take over Carolco Studios in Wilmington, the state's largest film studio, unless another investor tops its $2.5 million bid. The company may use the 32-acre studio to produce videos for computer CD-ROM games.

Goodnight said he stays largely detached from his real-estate doings. "Tim Smith takes care of the all the development work," he said. "We oversee it just slightly." Joked Smith: "I do all the work. They get all the cash."

Academy rankles educators

Goodnight is investing not just money, but strong personal feelings in his latest endeavor --- the private school.

Cary Academy, scheduled to open in fall 1997 and soon grow to 1,000 students in grades six through 12, is believed to be the nation's first private school started by an industrial corporation. Goodnight hopes the school, the first private academy in western Wake County will rival Ravenscroft in North Raleigh and Durham Academy

Although enrollment will not be limited to the children of SAS employees, the project bears the SAS stamp in several ways. Anne Goodnight is overseeing the planning. The headmaster is working out of an office at SAS during the construction. And the school will have a high-tech focus, with one personal computer for every two students and classrooms wired to access the Internet.

John Sall, a SAS co-founder and senior vice president who is so reserved he makes Goodnight seem like John Belushi in "Animal House," is chipping in $5 million toward the $15 million needed to get the school off the ground.

"Quite frankly we are not getting quality education in the public schools " Goodnight said.

"We've lost faith." Goodnight's two grown daughters - Leah, 27, and Susan, 25-attended the Wake County schools. His son, James Arthur; will enter Ravenscroft in the fall.

"We have seen an amazing decline in the public schools from the time our daughters went through," he said. "If you want to be 'in' now; you've got to not want to study and want to be dumb. And the schools have dumbed down to the point where they're accepting this kind of attitude."

Public school leaders said they're outraged by those remarks, which means Cary Academy is the first of Goodnight's extracurricular activities to ruffle some feathers.

"The fact is," said Wake Board of Education member John Gilbert, "that this school system is recognized as one of the top systems in the state, and high-tech companies like his have come to this area because of the quality of the public schools."

William McNeal, associate superintendent for instruction, said he found Goodnight's comments "demeaning."

Rooms for speculation

Goodnight also has pushed his company's interests in supporting the hotel and convention center being built on Harrison Oaks Boulevard, near the SAS campus. John Q. Hammons, a Springfield, Mo., hotel developer; approached town officials last summer and asked for $4.5 million in public money to help pay for the $35 million project. The town said no, but Hammons found another benefactor in Goodnight, who sold the developer 18 acres of land for a nominal $1. (The land was part of a 36-acre parcel valued at $2.3 million.) In return, SAS will have hotel rooms and large meeting spaces available within walking distance of its offices, and will get a discount on them. But some think the Cary convention center could siphon off some of the midsize and small conferences that are the lifeblood of the Sheraton Imperial in Research Triangle Park and the North Raleigh Hilton. "This particular project surfaced not because of a demand but because it is being driven" by SAS, said Reyn Bowman, director of the Durham Convention and Visitors Bureau.

An accommodating Cary

In Cary; SAS' growing clout and impact have been received enthusiastically by local leaders.

Besides providing jobs and fighting strip development, SAS also has paid for millions of dollars in road and sewer upgrades, moves that have eased the strain of its development projects on the infrastructure. Examples the company cites include $2.1 million in improvements to High House Road and $1.2 million to extend Cary Parkway through Preston.

"They have always been good corporate citizens, and they have done a lot for the town," said Regina McLaurin, a former Town Council member.

Perhaps the most telling example of how SAS' and Cary's fortunes have become interwoven is a 63-year-old West Virginia native named Koka Booth - part-time mayor of Cary and full-time SAS employee.

Booth had been mayor for eight years in 1993 when Goodnight hired him for the new job of community relations specialist, in charge of managing volunteer efforts by SAS employees.

Goodnight said he offered the job because Booth needed it:

Aeroglide Corp., a Cary food-processing equipment maker where Booth had worked for more than three decades, was in trouble after its chairman, James F Kelly; was convicted of defrauding the federal government. Booth said he took the job because "if I could write the story of the best place in the world to work," it would be about SAS.

But being a SAS employee and the mayor has forced Booth to sit silently at many a Town Council meeting. Hardly one goes by without some decision involving SAS, from housing developments to roads, coming before the board. And Booth refrains from discussing or voting on every one of them

A review of council meeting minutes since Booth's hiring at SAS shows he has abstained more than 30 times. "I don't think I'm a pawn for anybody;" he said. But not everyone agrees Booth can work for SAS and be an effective mayor.

"I think it's very difficult to serve two masters," said Jim DePoy, Booth's opponent in the last election.

During the campaign, which included a debate between the candidates at Prestonwood Country Club, DePoy raised Booth's dual role as a concern. But it apparently didn't register much with voters. Booth won a third four-year term with 62 percent of the vote, to DePoy's 33 percent.

Although SAS projects come up at council meetings more and more these days, Goodnight seldom goes to watch. But his sway still can be felt as strongly as the night he charged in and stopped the convenience store.

Last winter, SAS executives went before the council to ask approval of its construction plans for the private school. There was one problem: The company's plans ignored a proposed extension of Cary Parkway putting a parking lot where the road would go.

Cary's planning and zoning departments would not approve the plan because of the conflict. But the SAS executives said they would pay to remove the parking lot later if need be, and the council gave its unanimous approval.

The road was moved.