On the occasional summer day when John W. Thompson manages to get away from it all, he can be spotted along the riverbanks of Alaska’s waterways. Fishing rod in hand and fly securely tied to hook, he’ll carefully scout the wooded shoreline for the ideal location to cast in hopes of landing the perfect rainbow trout or arctic grayling. Though this is Thompson’s ideal way of relaxing, it uses methods similar to his approach to business.
As chairman and CEO of Symantec Corp., the 55-year-old trolls the waters of Silicon Valley to determine the hottest growth areas within the network security software industry and to identify potential acquisition targets with products that complement his company’s software portfolio. And he’s good at it.
One of Symantec’s recent deals, the $370 million acquisition of Brightmail completed in June, gave it access to a suite of antispam technologies. Before that, there was the $100 million buyout of ON Technology Corp., a provider of software used to rapidly deploy applications and operating systems. Deals such as these are all in a day’s work for Thompson, who’s spearheaded dozens of acquisitions since taking the helm of the company in 1999. “Those were, in essence, about expanding us and moving us into adjacent markets — adjacent to the security space — and expanding the opportunity pool for the company to compete in,” Thompson said from the company’s Cupertino, California, headquarters. “So our business opportunity or addressable market went from about $16 billion to almost $32 billion.”
Thompson successfully transformed Symantec from a $632 million consumer software company into a multinational market leader in enterprise security software with 5,600 employees and projected revenues of $2.41 billion for fiscal 2005. Under his leadership, the company’s stock has risen more than 500% (compared with a loss for the tech-laden NASDAQ over the same period of time). In fact, during the five years since Thompson took over, Symantec stock has not only outperformed the stock of its chief competitors — McAfee, Computer Associates International, and RSA Security — but that of nearly every other major technology company as well, including such bellwethers as Microsoft, eBay, Dell, Cisco Systems, and Intel. These results make a powerful case for Thompson to be recognized as “the Best CEO in Silicon Valley.” For Symantec’s explosive growth in the fast-paced and ever-changing world of network security, BLACK ENTERPRISE has selected Thompson as Corporate Executive of the Year for 2004.
MASTER OF THE TURNAROUND
Thompson’s road to the executive suite of a company best known to consumers for its Norton AntiVirus product was a lengthy one. Growing up in South Florida, Thompson’s parents instilled in him a set of blue-collar values that he still applies today. He worked odd jobs such as cutting grass, and even at an early age, he wanted to become a businessman. “I always had this aspiration of someday being a businessman,” Thompson recalls. “Now, I didn’t know what that meant, because back in those days — in the early to mid-60s — a business leader in the black community … ran the local grocery store [or] might very well have had a dry cleaning service. A business in the black community back then was fairly localized, not something that had national or global scale.”
Thompson would attend Lincoln University in Missouri on a scholarship, until he learned that a condition of the scholarship was that he major in music. “I thought if I fulfilled my commitments to play in the marching band and play in the woodwind ensemble and play in the concert orchestra, that I had in fact fulfilled the obligations under my scholarship — not that I had to major in music,” recalls Thompson. So the following year, he transferred to Florida A&M University, where he majored in business administration, and with the ink from his degree still damp, joined IBM in 1971 as a sales representative.
Thompson had initially planned to work for IBM for two years and then go to law school, but those plans never materialized. “I got hooked, like many young IBMers,” he explains, “on the excitement and success that you can have from a fast-paced career at what, at the time, was a very, very rapidly moving and growing company.” Thompson would hold several positions in his first decade at Big Blue, including regional sales rep, sales manager, regional practices adviser, and regional sales manager.
One of Thompson’s challenges at IBM was to turn around the company’s flailing Midwest region. The division had a high cost of sales and declining revenues, and the solution of Thompson’s predecessors was to cut a percentage of the sales force each year and hope that the cuts were deep enough to offset the declining revenue balance. So Thompson created a system in which there was a set of people, who would remain constant, responsible for customer relationships. Behind this group was a team of product specialists, who would service accounts based on existing demand. The new model lowered costs, improved customer satisfaction, and allowed the business to stabilize its revenue performance, while reducing headcount from roughly 9,000 to 4,400.
Shortly thereafter, Thompson ran IBM Americas, a $37-billion-a-year division, where he helped integrate e-commerce into the businesses and services of corporate and government clients throughout North America. While in this role, Thompson began to realize that he wanted a shot at running a company as CEO. “It was clear to me that the itch I had couldn’t be satiated or scratched inside IBM,” Thompson says. “I was going to have to leave to go fulfill what had become my aspirations at that point in time.” So in April of 1999, Thompson left IBM with 27 years, 9 months, and 13 days behind him — just two and a half years away from a gold watch.
BIGGER FISH IN A SMALLER POND
Unknown to Thompson at the time, the board of Symantec felt the company needed to go in a new direction, and a search was under way to find a replacement for Founder and CEO Gordon Eubanks, who was leaving the company. The board enlisted Heidrick & Struggles International, a publicly traded executive search firm, which in turn contacted Thompson. After spending three hours meeting with Robert “Steve” Miller, lead director of Symantec’s board, Thompson, who was curious about the possibilities at a much smaller firm, “became even more curious and decided to pursue it.”
Thompson felt Symantec was a perfect fit for him, as it allowed him to move from a corporate behemoth to a smaller, more nimble company. “I have a sports car, and I have a big sedan. If you just want a nice, comfortable, cruising ride, you take the big sedan,” Thompson says. “But if you want to feel every bump in the road, and you want to have real performance, you take the sports car. Symantec is the sports car. I’ll let you conclude what the other car is.”
In 1999, Symantec was a sort of mid-cap conglomerate in the software business — a company that managed brands, not technology and channels, not customer relationships. Thompson decided to change all that and opted to focus on one technology category: security. And so two years before 9/11 brought security — including network security — to the forefront of the minds of Americans and the global community, Thompson and company jettisoned all technologies that weren’t relevant to securing the Internet infrastructure. “We had Java development tools, we had personal contact management systems,” recalls Thompson. “We had a whole range of things that didn’t relate to anything in common, except they could be moved through the same distribution channel. And my answer is: Who cares about that?”
With the blessing of the board, Thompson had free reign to work his transformation. To this end, many of the firm’s top managers were replaced. Even b
oard members were replaced. “It was clear from the very beginning that if this was in fact going to be a transformation of a company, there was no way that the board could have recruited me or anyone else and not been supportive of the strategy that we were trying to implement,” the CEO recalls. According to Thompson, only two of the directors that were at Symantec when he arrived are still on board.
The turnaround plan was simple but effective: focus on a set of core technologies that target both the consumer and corporate/government entities. “By saying ‘We’re going to become the leader in Internet security,’ it was clear to everybody inside the company and outside what we were trying to get done,” Thompson recalls. “And by saying we have a consumer business and an enterprise business, it was clear that we had to service two very distinctly different markets and had to align our technology, our distribution approach, [and] our development approaches all around how you serve those two diverse markets.”
From there, Thompson’s team spent over $2 billion on a series of acquisitions “all oriented around building up the portfolio or the capacity we have to do a better job of securing the transactions and the Internet infrastructure that customers have put in place,” says Thompson. These acquisitions had a few things in common: they offered products that moved Symantec into new markets or helped the company bring its products to market faster through a unique class of technology. The company quickly began to emerge as the leading player in network security.
Though the company’s revenue growth for the last two years has been north of 30%, Thompson isn’t one to rest on his accomplishments. The CEO points out — tongue in cheek — that fiscal 2005’s growth forecast is merely 29%. One would be hard-pressed to find another software company putting up those kinds of numbers, especially in an environment where technology spending has been sluggish, at best.
Analysts remain positive about the direction in which Thompson has taken the company. “The strategy, the vision, I think is just really effective,” says Daniel Cummins, an analyst for UBS who estimates Symantec’s market share on the consumer side to be in the 60% to 70% range (Thompson does not discuss market share). “If I got John pegged right, I think he likes to keep everybody around him running scared and not complacent. He’s obviously a good executor and manager, and he’s been able to recruit similarly effective managers — some of whom have also come from IBM.”
Among the former IBMers on Thompson’s team are President and Chief Operating Officer John Schwarz, Senior Vice President of Communications and Brand Management Donald E. Frischmann, and Senior Vice President of Worldwide Sales Thomas W. Kendra.
Thompson, whose compensation package for fiscal 2004 was $2.71 million, enjoys hearing analysts laud his business acumen but doesn’t dwell on it. “We don’t run our business solely for Wall Street. We run our business first for customers, then for investors, and then for employees,” he points out. “And if we manage that triumvirate very well, then everybody can be satisfied and happy with the results.”
While the tragic events of Sept. 11, 2001, had an enormous impact on the security industry, the event of Sept. 18, 2001, had an even greater effect on Symantec. On that day, the Nimda worm was released. This computer virus caused massive delays on the Internet by creating huge amounts of traffic as it spread across cyberspace, and it spawned legions of copycats as hackers, crackers, and worm writers tried to one-up each other. “Since that time, we’ve seen both the rate of attacks and the complexity of the attacks continue to increase,” says Thompson. “So the time between the attacks is getting shorter, and the complexity of each of the attacks is becoming much more daunting. And hence, that’s propelled both our consumer business and our enterprise business for terrific performance.”
FIVE YEARS IN THE VALLEY
Half a decade after taking Symantec’s reins, Thompson remains the only African American heading a major technology company, but that’s not something he likes to focus on. “There are brilliant people in the technology sector who are people of color,” Thompson says, pointing out Mark Dean, vice president of systems at IBM. (Dean holds three of IBM’s nine original patents for personal computers.) “There just aren’t enough of us. I think the more that people like me, like Mark Dean and others, can do to suggest that you can build an absolutely fantastic career in this industry — that this is not an industry that has its doors closed — the better. This is a meritocracy.”
Despite his stellar track record, Thompson is not perfect. When Symantec anted up $925 million of its own stock for firewall and intrusion detection system manufacturer AXENT Technologies in 2000, some analysts doubted whether the purchase was worth the price. “A lot of the product lines in the enterprise space weren’t really that successful,” says Jonathan Rudy, a software analyst at Standard & Poor’s Equity Research. “The key driver to Symantec’s success over the last few years has been their consumer business, primarily their consumer antivirus business.”
But for the most part, Thompson finds a way to make it work. “He combines two things that you usually find [only] one or the other [of] in people,” says Richard A. Clarke, chairman of Good Harbor Consulting, a homeland and cyber security advisory firm, and former special adviser for cyber security under President George W. Bush. When Clarke was tapped by then-President Bill Clinton as the national coordinator for security, infrastructure protection, and counterterrorism in 1998, he worked with Thompson on cyber security issues. “[Thompson has] the ability to make everybody like him and want to be with him in that sort of winning salesman personality, which is what he was — he was a salesman. But he combines that with a hard-nosed, make-it-happen determination and a real understanding of the detail and technology.”
When not focusing on challenges on the business front, Thompson has been spending time becoming more politically active, supporting Democratic presidential candidate Sen. John Kerry. “It’s taken me a long time to reach the point where I decided that I want to be … not an activist, but at least not passive,” he says. “And in this particular case, I feel very, very strongly that we do need to take our country in a different direction — a different direction in terms of our standing as a global economic leader, a different direction in terms of the notion of a balanced budget.”
Thompson says he’s always looking ahead to the next challenge and keeps his eye on the prize at all times — whether at a political fundraiser, a corporate boardroom, or fly-fishing in the woodlands of Alaska.
- FULL NAME John Wendell Thompson
- TITLE Chairman and CEO of Symantec Corp.
- BORN April 24, 1949, in Fort Dix, New Jersey
- FAMILY Thompson has a wife, Sandi, and two adult children from a previous marriage.
- EDUCATION B.A., business administration, Florida A&M University (1971); M.S., management science, MIT’s Sloan School of Management (1983)
- RESIDENCE Woodside, California. Also has a vacation home in Hawaii.
- HIDDEN TALENTS Initially was a music major and plays clarinet.
- BREAKING GROUND Thompson is the only African American leading a large technology company.
- QUOTE “Philosophically, I believe that business is personal, that if you don’t take it personally, you won’t get anything out of it. If you don’t get personally involved in what you get done — if you’re not emotionally committed to it — it’s unlikely that you’re going to have a high degree of success.”
— Additional reporting by Erin Straker