SHI: America’s Largest Woman-Owned Business

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Good morning! It's Thursday, September 7th. Not many people have heard of Software House International. However, it’s one of America’s biggest software companies with clients ranging from Boeing to Microsoft. Let’s take a look!

THE FEATURE

SHI: America’s Largest Woman-Owned Business

When Thai Lee was a teenager, her father sent her to America in the hopes she’d find opportunities unavailable to her in Korea.

Not only did Lee find opportunities, but she made history as the first Korean woman to graduate from Harvard Business School and the founder of America’s largest women and minority-owned business.

On top of all that, Lee is America’s 5th richest self-made woman with a $5.3B net worth.

So, What’s the Business?

Upon graduating from Harvard, Lee wanted to become an entrepreneur but didn’t have the cash to start a business. For a few years, she saved money and worked at P&G and American Express until she found a golden opportunity.

This opportunity was Software House, a software reseller on the verge of bankruptcy. While other potential buyers viewed Software House as virtually worthless, Lee confidently purchased the company for approximately $1M.

Software House critics weren’t wrong in their assessment of the company, but they failed to appreciate its small IT division that had big clients like IBM and AT&T. As it turns out, gaining access to these clients was Lee’s primary interest in purchasing the company.

Lee’s first moves were unorthodox. She turned the entire company’s focus towards fulfilling the software needs of its biggest clients. To superficially bolster the company’s image, she gave the title of vice president to every sales rep working with important customers and changed the company name to Software House International to reflect global ambitions.

For Lee, the “fake it until you make it” plan worked. SHI is now a leading international technology solutions provider and grossed $14B in sales last year. SIH has expanded greatly from its software reselling days and now has revenue streams to service both commercial and public sectors:

• Product Sales: SHI sells IT products and hardware such as computers and networking equipment to businesses and government agencies.

• Software Licensing: Customers pay SHI to procure and manage software licenses.

• Cloud Services: Clients like Microsoft and HP pay a subscription fee to use SHI’s cloud service databases.

• Consulting Services: SHI agents provide consulting on IT implementation and optimization.

Over the years, Lee’s business model for SIH constantly shifted and grew, but she kept one thing the same– an intense focus on meeting client demands. As a result, SHI has a stunning 99% customer retention rate.

Lee’s Playbook for Sustainable Growth

When the company first hit $1B in annual sales, it was an important landmark. But Lee wasn’t content and developed a plan to add an additional billion dollars to the company’s revenue every 2-3 years.

The plan was simple, SHI would aggressively pursue new avenues for growth. This is what most companies wish to do, but SHI pulled it off organically without acquisitions, mergers, selling equity, or taking out debt.

SHI grew by consolidating a substantial market share within its domain before finding adjacent markets to dominate. This involved expanding its customer base from only Fortune 500 companies to small businesses and then to government agencies.

The tech industry has shifted substantially since Lee purchased Software House in 1989, but her company always invested heavily in research and development to stay ahead. For example, they developed their cloud system services before the popularization of the iPhone. In doing so, their cloud solutions division generated $250M in its first three years.

Key Observation

Thai Lee has spoken at length about her Darwinian view of the business world, believing only the companies that continually evolve can survive.

When Lee discusses evolution, she is referring to an entrepreneur's ability to effectively scale a business and then differentiate it into a niche to stay ahead of competitors. Whether it's SHI’s expanding its product offerings or its customer base, Lee’s business philosophy is highly visible throughout the company’s history.