The Modest Tycoon Behind America's Biggest Woman-Owned Business

The Modest Tycoon Behind America's Biggest Woman-Owned Business

Forbes | 27 May 2015

This story appears in the June 15, 0205 issue of Forbes.

Thai Lee drives herself to work and parks in the middle of the lot, even when there are spaces open up front. Her small office sits right off a cubicle farm filled with junior employees. There’s no executive assistant at the door keeping interruptions away; she doesn’t have one. Lee keeps her own calendar, books her own travel and does her own filing.

In fact, there’s nothing in trappings or manner to reveal what, until now, has been kept under wraps. Thai Lee owns the largest female-owned business in America, and apparently one of the top three minority-owned ones. And it’s made her a billionaire.

You probably haven’t heard of her or her company, but under Lee’s management SHI International has grown from a failing software reseller with five employees and about as many customers into one of the biggest and best-regarded IT providers in the world, with $6 billion in sales and 3,000 employees worldwide. Selling everything from third-party hardware and software to custom applications and consulting services, SHI has amassed 17,500 customers, including the likes of Boeing, Johnson & Johnson and AT&T. It has posted positive sales growth every year of its existence and exceeded 15% growth in 2014. While the private company won’t reveal profits, Lee, who is CEO, suggests its net margins are approximately 3%.

FORBES’ most conservative estimates place the value of SHI just above $1.8 billion, and that makes 56-year-old Lee–who owns 60% of the company–one of just 18 self-made female billionaires in the U.S. Not that she’d ever brag. On the contrary, when FORBES first contacted her about appearing on our list of wealthiest self-made women, she told her communications team to do whatever it could to get her name removed. When she found out FORBES would proceed without her blessing, she grudgingly agreed to this interview. Later Lee argued unconvincingly that our estimate was too high. And then she deflected any praise.

“A dollar amount could never accurately convey the respect and admiration I have for the employees of SHI,” she says.

Very hokey but also very central to how Lee has built her fortune. She works in an industry where customers frequently dump vendors as soon as someone else offers a lower price. Coddling her employees, who in turn cater to customers, is the key to her success.

When I visited Lee’s office in Somerset, N.J. on a recent Friday, she handed me a printout of her 19 direct reports. On it she had jotted down each person’s start date and written “18 yrs avg tenure” at the bottom. Company marketing materials like to boast about SHI’s sky-high 99% customer retention rate. Because SHI is private, it’s impossible to verify, but the point is clear: Lee is obsessed with keeping her customers and employees happy.

“It’s culture at this point,” she says. “We have no executive parking… We don’t have a special executive compensation plan. We try to make sure that everybody feels valued.” In this social compact they, in turn, create value.

Thai Lee’s first family –the one she was born into, that is– moved around a lot when she was little. She was born in Bangkok, Thailand. Her father, a prominent Korean economist, traveled the world promoting his country’s postwar development plan. Lee, the second of three daughters and one son, spent most of her childhood in Korea. From an early age she developed a reputation as thoughtful, studious and prepared for any eventuality.

“If you’re in Korea, you have to think about what would happen if North Korea invades,” says Celeste Lee, her younger sister, who works at SHI, “and whenever we played together, she was always planning our survival. She’s the most focused person I’ve ever met.”

In her teens Thai and her older sister, Margaret, moved to America, where they lived with a family friend, attended high school in Amherst, Mass. and then enrolled at Amherst College. Lee eventually earned a double major B.A. in biology and economics–subjects she chose, in part, because of her accent and less-than-perfect fluency in English. “I was determined to avoid any and all courses that required writing and speaking in class,” she laughs, “because I was determined to get the best grade possible. I knew then that the best chance of success for me was to start my own business, because after I x-ed out all the professions I could not be successful in, that’s what I was left with.”

Lee chased her American dream with serious intent. After college she returned to Korea and worked at auto parts maker Daesung Industrial Co. in Seoul in order to raise enough money to get an M.B.A. A few years later she was back in Massachusetts and in 1985 graduated from Harvard Business School.

Afterward she chose jobs to help prepare her for inevitable entrepreneurship: two years at Procter & Gamble working on such brands as Always and Crest, then two years at American Express. “I knew that I wanted to prepare myself, so I allotted myself some time: My entire 20s, I was going to learn all about business,” Lee says. By age 30, the long-term plan went, she’d be running her own company. By 40 she’d have a husband and kids.

As it happened, the husband came first. In 1989 Lee married Leo Koguan, a Columbia-educated lawyer who shared her dream of entrepreneurship–and later that year spotted an opportunity to make it come true. Lautek, a struggling software company in New Jersey, had a tiny division called Software House that sold business licenses to run programs like Lotus 1-2-3. It was down to only a few customers, but some of them were big (like AT&T), and the couple perceived lots of potential value in its relationships with vendors (like IBM). Koguan and Lee paid less than $1 million for that business, funding the purchase with savings and a few small loans. Soon after, they rechristened the company with a name that reflected Lee’s global ambitions: Software House International.

The marriage didn’t survive, but the partnership still exists. The couple, who have two teenage children, divorced in 2002, but Koguan remains nonexecutive chairman and owns the remaining 40% stake in SHI. (FORBES requested to speak to Koguan, but SHI declined. Other attempts to reach him were unsuccessful.)

Lee never had a specific interest in technology. When she was in college and deciding to start a business, she “wasn’t thinking of technology at all.” At that time personal computers weren’t common, so her exposure to them was limited. She’s never been the early-adopter type.

“Actually, I probably would be the last person,” she says. “Gadgets have to provide real utility. I have to extract more out of it than I would put into learning about it.” It might be, she says, that she approaches technology in a way that’s more common among women–she’s practical and wants to see the technology prove its utility before she buys in. (It’s one of only a few times in our conversations that she acknowledges her gender might distinguish her from other CEOs.)

It’s a mind-set that has worked in her company’s favor, especially in the early days, when SHI’s biggest differentiator wasn’t cutting-edge technology but over-the-top customer service.

“We had no inventory, very little money, no market presence, no marketing, no promotion,” says Melissa Graham, SHI’s vice president of new business development, a former Lautek staffer who became SHI’s first hire. “What we did have was someone who wanted to make this thing work. Thai always had her eye on what would make SHI relevant.”

From the start Lee told her staff they could make their own decisions about how to manage their customers. “She took aside the outside sales force, the ones going out and winning new business, and told them, ‘You are the president of your company,’ ” says Graham. “ If you are responsible for a customer, you own that. Being empowered that way, it’s very important.”

Treating customers like partners–instead of just consumers of computer stuff in a box–won their loyalty and their money. “Tech vendors and resellers have a propensity for being flipped quite frequently,” says Anthony Andreou, a leader at Dun & Bradstreet, which has been an SHI customer for over 15 years. “But when you have a good vendor that provides great service, there’s stability and less of a reason to switch.”

Andreou credits Lee’s management as a key reason that Dun & Bradstreet stays with SHI. “Thai is a remarkable leader,” he says. “She is very smart, very focused and humble. She really empowers her employees and allows them the scope and the breadth to serve their customers well.”

Even in the early days of the company, Lee knew that customers would notice if SHI went out of its way to solve their problems–and that’s how the company would expand.

Graham remembers a Friday afternoon when one of SHI’s largest software customers called and said it was spending millions a year buying computer hardware from someone else–but the company liked SHI better, so it wanted to switch vendors and buy computers from SHI, too. Starting Monday.

“I don’t know that we’d ever sold a computer before, but they had a very good relationship with us,” says Graham. “So some of us went to Thai and said, ‘Here’s our opportunity.’ ”

Lee told the team to go for it. “

A bunch of people worked all weekend to figure out how we were going to do that,” says Graham. Fifteen years later that company is now one of SHI’s top three customers.

“Doing things we never did before, that was exciting,” she says. “We were fearless builders. And then we would replicate, go to other customers and say, ‘Now we can do this.’ ”

The ideas came from all over. Hal Jagger, an acquaintance who was then an executive at enterprise software firm Business Objects, came to Lee with the idea of creating a new division aimed at serving small and midsize businesses. The fact that it was during the economic recession of 2008 didn’t faze her.

“
The total available market was $150 billion to $200 billion,” says Jagger. “Even if that number declined by 3% or 4%, there was still a huge market out there for companies like SHI to attack.”

Lee hired Jagger as SHI’s VP of corporate sales, and over the next two years they constructed the new business unit from scratch. Lee paid for the expansion–the biggest in SHI’s history, according to the company, though it won’t disclose a dollar amount– without incurring any debt and by using only cash on hand.

It was a gamble, but it paid off. Seven years later Jagger’s division has revenues of more than $1.6 billion. And the expansion didn’t come at the expense of the rest of the organization: Over the same seven-year period revenue from SHI’s other business groups–enterprise, public sector and international–collectively doubled in size.

The best thing about hitting $6 billion in revenue, according to Thai Lee, is that there is still plenty of room to grow. The potential market for SHI–and competing IT providers, like CDW and Insight–is huge. Technology research firm IDC predicts that global spending on IT products and services will reach $2.16 trillion in 2015, up 3.4% year-over-year. But it’s clear that SHI will need to keep developing new lines of business, because the way that money is being spent is getting turned on its head.

In the past large IT departments depended on companies like SHI to handle functions like acquiring new software because the process was complicated–it required the acquisition of physical product like floppy disks or CDs, negotiation of licensing agreements and lots of bureaucracy to pay the bills. But now software vendors are making it easier for customers to get their product. Anyone can download a program from the Internet and pay for it with a credit card.

As a result, the software reselling business is changing fast, according to Darren Bibby, a vice president at tech research firm IDC. And cloud technologies are making the problem even more acute. “If all your customers have to do is go to Salesforce.com to be up and running, your value just went away,” he says.

SHI is still moving lots of software–$3.5 billion in sales last year. But in anticipation of a shift, Lee has spent recent years building out SHI’s service business, offering products like asset management, which tracks the moving parts of customers’ IT infrastructure, like which employee has what laptop and who is allowed to run a particular program; data center management, where SHI oversees the operations of a company’s back-end servers and storage; and network security checks, where SHI figures out if a company is vulnerable to hackers, viruses or other digital threats.

Of course, as SHI and its competitors start moving up the chain and offering more services, that rattles big consulting firms like Accenture, Capgemini and Deloitte. “If all of these resellers are deciding they’re going to sell services, the service guys will start reselling,” Bibby says. Lee is unfazed, having adapted her business many times over the years. She predicts SHI’s sales will reach $10 billion by 2019. “We already went through a ten-year period where we doubled in size every year,” she says. “This doesn’t seem as challenging.”

Lee’s entire life for the past quarter-century has been wrapped up in her two families: her two kids at home and her 3,000 employees at the office. Lee, who has lived in the same house in Lebanon, N.J. for 20 years, often works seven days a week. Outside of that, she donates time and money to favorite causes–she’s interested in educational charities and is a supporter of cancer research societies (her older sister Margaret is a pancreatic cancer survivor).

Still she’s already accomplished most of what she set out to do. “I’ve checked off all the things that I needed to achieve,” she laughs. “Start a business, get married, have children.” Now her primary goal is to make sure SHI can outlast her–not that she’s leaving anytime soon. There is always the chance of an IPO or acquisition.

“We’ve been approached many times,” she says, “but it hasn’t been attractive, because we’re so well positioned. We don’t really need a partner.” An ownership change could be a good way to secure the company’s post-Lee future, though. It would also give her a convenient exit.

“I certainly don’t want to work for somebody else at this point,” she says. “I haven’t for twentysomething years.”

“But I would like to unwind on weekends,” she adds. “I need to find hobbies. That’s one of my goals now. I have a really big pile of books that I want to read.”