The company that helped put Tim Walz on the map offers a master class in building a lasting business

Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores leadership practices drawn from interviews with executives and entrepreneurs, and from the pages ofInc.againFast company.If you received this newsletter from a friend, you can sign up to receive it every Monday morning.

In July, a few weeks before Vice President Kamala Harris chose Minnesota Governor Tim Walz as her running mate, Walz gave a passionate speech about the power of maps to a group of analysts, data scientists, software developers, and other experts. in the geospatial field. The presentation helped solidify the reputation of the former geography teacher as a “mapper” who used mapping software to help advance his legislative agenda.

Walz’s comments also drew attention to Esri, a maker of geographic information system (GIS) software and the host of the event where Walz spoke. Founded in 1969 by Jack and Laura Dangermond, the company is well known among those who use, create, and analyze maps. The group includes infrastructure, engineering, supply chain, and academic experts in industries ranging from environmental conservation and humanitarian aid to petroleum and defense. The company is less prominent in wider business circles, perhaps because it has avoided headline-grabbing events such as layoffs, venture capital raises, and IPO road shows.

Purpose over glamor

That’s a shame, because even though it’s not obvious, CEO Jack Dangermond’s quiet approach provides an example of building a sustainable business. “I’m not criticizing other companies and how the business world works, but Esri is different in the sense that we can focus on developing tools and methods and serving our users,” said Dangermond. “The most important thing that we think about here and talk about in all our meetings is our users – not shareholders, but our users.”

To be sure, Dangermond didn’t start Esri (short for Environmental Systems Research Institute) with the goal of building a lasting business. He and Laura, who worked together at Harvard University’s computational mapping and spatial analysis lab, were looking for a way to turn their passion for maps and systems analysis into a paying gig after graduation. They returned to Dangermond’s hometown of Redlands, California, and began making projects and exploring the environment. “It wasn’t a very good idea,” he said with a chuckle.

Lessons in meaningful growth

After a decade or so of project work using computer-based mapping, Esri began selling its software to customers. Dangermond says his decision to start a business is based on ideas he learned at his family’s plant nursery, which he says he never defaulted on and always paid his bills on time. He says: “Laura and I didn’t come from money, and we were very tight-lipped. “We never borrowed money, and we didn’t care about economic growth.”

Still, Esri experienced rapid growth, fueled in part by the explosion of data from sensors, the Internet of Things, and other networked and connected devices. Esri’s enterprise platform helps organizations visualize and analyze that data. Companies can track supplies on their network in real time, use maps and sensors to manage natural resources, or use technology to select store sites or warehouses. Esri’s ArcGIS platform helped power the Johns Hopkins COVID-19 Dashboard, a critical source of information during the pandemic.

But instead of seeking outside investment as many software companies do, Esri has financed its own growth, and Dangermond says the company invests 30% of its revenue in research and development (R&D). He says: “For 40 years we have taken any spare money and poured it into innovation. In comparison, software companies typically invest around 20% in R&D. Esri, which is privately held, does not disclose revenue, but Dangermond said the company has “several billion” in annual sales.

Focus on the core

Dangermond says Esri doesn’t plan to build applications that overlap or compete with its customers, which include Microsoft, Salesforce, and Autodesk. “We are not greedy. We are interested in cooperation to develop other technology companies,” he said. “We can create a much larger ecosystem by focusing on our core.”

While talking to Dangermond, I was reminded of a conversation I had with author Jim Collins a few years ago. Collins is best known for books like thisBuilt to LastagainGood for Grandfatherbut his first book wasBeyond Entrepreneurshipaimed at helping founders turn their businesses into sustainable companies. He also released a book in late 2020, and we talked about the frameworks entrepreneurs should use to build what Collins describes as great companies.

Esri checks many of Collins’ boxes: It invests in itself; plays a leadership role in its industry; and develops a strong reputation with customers. But it’s Esri’s philosophy about its impact that resonates most closely with Collins’ approach to sustainable business. “If you’re going to do something in business, you have to set yourself up to try to build something that’s really worth living for a long time,” Collins told me. “There are people who have built these companies that deserve praise and have had an impact on the world. That’s a level to aspire to.”

Are you building a lasting company?

Is your organization “built to last”? How do you ensure your company makes an impact? Send your information and news to me at stephaniemehta@mansueto.com. I would like to share examples in an upcoming newsletter.

Read and listen: sustainable businesses

• Jim Collins on construction companies to stay
• This 169-year-old company can teach us a lot about venture capitalists
• A podcast based on the history and strategy of Nintendo