Growth Happens

A senior Inc. writer learns that many Inc. 500 company owners would have never guess their firms would grow so fast.

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Inc.500

What's the surest path to earning a spot on the Inc. 500? For an astounding number of companies, the answer boils down to this: make other plans

Within a year of its founding in 1982, Compaq Computer posted revenues of $111 million--a record for a start-up. In 1995 Inc. 500 company Telegroup Inc., within six years of its founding in 1989, posted revenues of $129 million--nowhere near a record, but at its core a far more spectacular performance. While Compaq's growth was executed by a phalanx of tough and seasoned executives who followed a detailed script and spent wads of investment capital, Telegroup's growth wasn't planned at all; in fact, it wasn't even wished for. "My intention was to do this business to support my family while I decided what to do with the rest of my life," reports Telegroup founder Fred Gratzon, who, besides having started without any sort of plan, also was dead broke at the time.

He's now at $129 million, and he hadn't wanted to grow? Right. And thus Gratzon's example calls into question (or should that be smashes?) the accepted belief that Inc. 500 growth companies are different from yours and mine--that they feel different to operate, require different talents, change their founders' lives in different ways, and most of all, result only from the obsessive, conscious pursuit of growth above all else. The founders of Inc. 500 companies--we assumed--must from the very start have intended to jump onto the fast track; otherwise, how could they make a list composed of such super-fast-growing companies? Indeed, they must have drawn up plans to grow, responded well to each phase of growth, and through it all, been willing to pay a personal price for making all that extra money.

Or so we continued to assume until, in the 15th year of the Inc. 500, our annual questionnaire offhandedly inquired about entrepreneurial vision, asking company founders to reveal whether their original ambition had been to "just survive" (now, what pessimist would pick that?), to stay small, to grow slowly, to grow fast, or to "grow fast enough to make the Inc. 500." The returns uncovered not one or a dozen Fred Gratzons, but 175 of them--35% of the entire list--declaring their wishes for slow and slower growth. Moreover, a startling 13% of the 500 fastest-growing private companies in America initially chose not to grow at all.

So how did they make Inc.'s list? That more than a third of Inc. 500 companies did not aspire to grow fast--or at all--disproves the theory that supergrowth has to be premeditated. Do the experiences of these accidental empire builders challenge other conventional wisdom about growth? To find out, Inc. polled all 175 founders who acknowledged early ambitions of slow to no growth. Their responses (for complete survey results, see below), along with further testimony in follow-up interviews, suggest that more than a few assumptions about growth--about what it takes to achieve it, what it's like when you're experiencing it, and what personal consequences it brings--might be wrong.

FALSE ASSUMPTION 1
To Grow, You Have to Want To

A leading candidate to rewrite the rule that fast growth requires deliberate intent is A. Robert Moog, who cofounded University Games (#494), in Burlingame, Calif., in 1985. For Moog, devising a company was a university game in itself. Fresh out of the Stanford Graduate School of Business, where he "received training that did more harm than good," he figured that operating at unambitious levels was one way to "learn how to run a bigger business by first doing this little business." He and a partner intended to sell the business as a going concern after three years and apply the return to creating a second business--this time in earnest. There was no point in aspiring to anything beyond mere survival, since the two partners were purposely setting out not to make as much money as possible. When their first product--a game called Murder Mystery Party--unexpectedly became a national hit and the founders ran into production problems, Moog extended the company's bailout deadline. "It will require four years to learn what the hell we're doing," he concluded. In 1996, the company's 11th year, University Games grossed $30 million.

Even less driven in terms of business growth was George Copeland, a fiscal neophyte who was dismayed to find himself in Kansas after a big-company reshuffling. So he returned to the East Coast to become the master of his own fate. Since 40% of the 1996 Inc. 500 founders started their own businesses for just that reason, his would be a typical tale--except that Copeland had no idea what endeavor he'd boss himself around in. By chance, an acquaintance in a printing company offered him a year's use of 500 square feet "to do something" in. Copeland founded digital printer Atlantic Documentation Centers (#350) in 1990 in Durham, N.C. Today he's the master of more than 20,000 square feet of his own.

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