The Billionaires Behind The Secret Tech Mecca In America's Heartland
Posted by Forbes on August 8, 2019:
Jim Kavanaugh climbs into a sleek, black-leather-interior Mercedes bus that whisks him away from his company's new headquarters in St. Louis to a squat, one-story outpost nearby. Kavanaugh is retracing the route he has traveled many times with executives from hundreds of America's largest companies, including Citigroup, Verizon and Lowe's. Each of those delegations represented a business that was completely at a loss—baffled by the maze of choices required to outfit multibillion-dollar corporations with the correct IT products. They make the pilgrimage to Kavanaugh's tech Mecca to figure out what in the world they should buy.
Kavanaugh swipes his badge and enters the so-called Advanced Technology Center. Here his company, World Wide Technology, has assembled thousands of hardware and software offerings from Microsoft, Cisco, Dell and more than 100 other tech firms in one place. An army of engineers (3,000 strong) are on hand to run demos, conduct bake-offs and make recommendations. Since 2011, World Wide Technology has plowed roughly $1 billion (between equipment and staffing). Companies come in because they're looking to update wireless networks, put data on the cloud, improve cybersecurity practices or beef up data analytics. They are greeted by this Geek Squad on steroids. "Customers want us to be their independent, trusted advisor and to tell them which products work—and which ones don't," says Kavanaugh, 56, the company's CEO.
Kavanaugh is one half of World Wide Technology. The other is its chairman, David Steward, 68, the salesman to Kavanaugh's wonk. Together, the pair have hit on one of the surest ways to profit from technology and its ever-shifting nature. They make virtually nothing themselves, but they take a cut on every item sold, plus charge a fee for add-on services like consulting, testing and installation. The company serves not only corporate America but also federal, state, local governments, which send their baffled bureaucrats to Kavanaugh and Steward to equip courthouses, military bases, prisons and schools. All those groups beating a path to St. Louis resulted in $11.2 billion in revenue last year and an estimated profit of $700 million. Kavanaugh owns 36% of the company, a $2.1 billion stake, and Steward has 59%, $3.4 billion. For some perspective, Steward's $3 billion stake in World Wide Tech makes him the second-wealthiest African-American in America, richer than Oprah ($2.6 billion) and Michael Jordan($1.9 billion).