SAIC Founder J. Robert Beyster Dies
J. Robert “Bob” Beyster, the nuclear physicist who founded Science Applications International Corp.—the multibillion-dollar government contractor better known as SAIC—died of natural causes yesterday at his home in San Diego. He was 90 years old.
Beyster was a Cold War scientist who founded SAIC to tackle some of the nation’s most-difficult problems in national security—and in the process became an evangelist for employee ownership, technology innovation, and entrepreneurship (and a San Diego Xconomist).
He was born in Detroit, MI, in 1924 and attended the University of Michigan under a wartime Navy officer-training program. After graduating with a doctorate in nuclear physics in 1950, he helped develop nuclear power plants at Westinghouse for the first U.S. nuclear submarines, and later joined the effort to develop the H-bomb at the Los Alamos National Laboratory. In 1957, he moved to San Diego to lead the accelerator physics department at what was then known as General Atomic.
Beyster founded SAIC as a boutique research and engineering firm in 1969, after Gulf Oil acquired General Atomic in 1968. Much of the work involved classified research and contract services for U.S. defense and intelligence agencies. SAIC’s first contract, for example, involved calculating the yield of various nuclear weapons.
The company maintained tight secrecy around its operations, and for many years, Beyster even prohibited signage on the buildings where SAIC maintained its offices.
He created SAIC as an employee-owned business, and expanded initially by recruiting prominent scientists and offering them an ownership stake in the company. Within the first year, his own stake in SAIC went from 100 percent to less than 10 percent. In later years, the company compounded its growth by making scores of acquisitions. SAIC’s annual revenues soared to roughly $11 billion before it was split into two separate companies—SAIC and Leidos—in 2013.
The scientists Beyster recruited usually brought their government-sponsored research with them, and he often gave them leeway to continue overseeing their own research projects. But Beyster also fostered an entrepreneurial culture by requiring them to win new government business, and he managed that business with sometimes-ruthless efficiency. Business units that failed to win new contracts were often shut down and the employees laid off.
The result was a highly unusual corporate culture—a secretive business with a Cold War focus that operated like a federation of businesses. The nuclear scientist Harold Agnew once described it as “a farmers market with central heating.” In some cases, different SAIC business units would submit competing bids for the same government contracts.
Beyster managed this raucous collective by maintaining tight business controls and personal lines of communications throughout the company. David Kay, who worked for SAIC in the 1990s before gaining both fame and notoriety as a U.N. weapons inspector, described Beyster as an “information sponge” who typically sought information from employees irrespective of their rank in the company.
“Bob created a company that did some absolutely amazing and vital things for this country—many of which can still not be fully talked about,” Kay told me in 2006.
Beyster made employee ownership one of his highest priorities at SAIC, and it was one of the few topics he was willing to discuss publicly. In contrast to closely held companies where the leadership elite gained enormous fortunes (think Microsoft), Beyster maintained that “Those who contribute to the company should own it, and ownership should be commensurate with a person’s contribution and performance.”
Beyster even engineered an internal process for determining SAIC’s stock price, which enabled employees to occasionally sell some of their shares. He founded the Foundation for Enterprise Development to promote the advantages of entrepreneurship and employee ownership through its nonprofit work with technologists, entrepreneurs, executives, governments, and educators. In 2004, he founded the Beyster Institute to provide training, education, and consulting in employee ownership and entrepreneurship.
But the unique corporate culture he had created did not outlive Beyster’s 35-year tenure at SAIC.
Former General Dynamics executive Ken Dahlberg, who succeeded Beyster as CEO in 2002 and as chairman in 2004, reorganized the company to operate under a conventional, top-down corporate hierarchy. Dahlberg also dispensed with SAIC’s unusual employee-ownership model by taking the company public through a conventional IPO in 2006.
SAIC moved its headquarters from San Diego to McLean, VA, in 2009.
In 2004, when Beyster withdrew from the company, SAIC had more than 43,000 employees and annual revenues of $6.7 billion. It ranked at No. 276 on the Fortune 500 list of largest U.S. companies, and was second only to Florida’s Publix Supermarkets on the list of biggest U.S. employee-owned companies, according to the National Center for Employee Ownership.
At SAIC, spokeswoman Lauren Presti wrote in an email last night, “We are proud to continue to operate under a name that provided what [Dr. Beyster] called ‘quality work on national security problems at a fair price.’”
At Leidos, CEO Roger Krone said in an email, “Over the past forty years his legacy has inspired the thousands of employees who followed his footsteps and influenced an industry that touches on all facets of American life. Our hearts and thoughts are with his family.”