Life in the Fast Lane

Highlights from the 19th annual Inc. 500 conference.

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FYI: From the editor

Highlights from our annual Inc 500 conference

Louisville was the site of this year's conference for the leaders of America's fastest-growing private companies, and there could have been no more appropriate location for a celebration of entrepreneurship. This is a city, after all, that has climbed steadily up our annual ranking of entrepreneurial hot spots over the past decade.

The festivities included a visit to Churchill Downs, home of the Kentucky Derby, where some of the most intensely competitive people in business learned a thing or two about competition. They were told, for example, about putting lead weights on jockeys to equalize the load carried by each horse in a race. The phrase "get the lead out" refers to the onetime practice of dumping the weights on the backstretch, thus reducing the horse's load and giving it an advantage. Now jockeys are weighed at the conclusion of each race to make sure they still have their weights. At the conclusion of this year's black-tie award ceremony, which closed the conference, no CEOs were weighed.

"[What we're going through now is] similar to the credit crunch of the 1990s. It doesn't matter that Greenspan is cutting rates to lower the cost of money if no one is lending it." --Scott Adelson, managing director of the investment-banking firm Houlihan Lokey Howard & Zukin

What a Difference a Year Makes
At the last Inc 500 conference, in Vail, Colo., people were still talking about their E-commerce strategies. This year the talk was about near-death Internet experiences, increasingly unfriendly capital markets, and the timing of the next economic upturn (second quarter of 2002, most CEOs told me). There was also discussion of resurgent inflation as Inc 500 companies find themselves dealing with rising energy and health-care costs and commercial rents that are still sky-high. Yet, once again, I came away impressed by the optimism this particular group of business leaders always seem to feel about their own companies' prospects in the coming year.

"This is a world in which everything happens real fast, but you can't bootstrap a brand real fast. You have to be patient. You have to put aside all those brand-building marketing tricks and let the brand develop by word of mouth, without anybody being able to see the fingerprints of the marketer behind it. Otherwise it all collapses pretty damn quickly." --Bill Samuels Jr., president of legendary bourbon distiller Maker's Mark, a strong brand in every sense of the term

Outsmarting the Shakeout
Carlson Wagonlit Travel CEO Andy Holloman was an early Internet devotee, having put his travel agency on the Web in 1995. His sales soared from $800,000 to $2 million a year, with Internet sales accounting for 65% to 70% of the total. But Holloman soon began to notice that almost all his com- pany's Web sales came from one-shot customers who were "driven by pennies." So he used his improved cash flow to expand in a way that might provide lasting benefits: he acquired three other local travel agencies. Meanwhile, he began reducing his reliance on Web-generated revenues. Today online sales account for just 15% of his total sales -- and Holloman hasn't become another victim of the shakeout.

"I've created the kind of company that I used to despise. And I know it's because of my micromanaging. But I can't see how else to get to the next level." --An attendee at a breakout session on "Work/Life"

The Biggest Home-Based Business in America?
Principal Technical Services Inc., in Lake Forest, Calif., is a home-based business with $14 million in sales. Ronald and June Stein started the technical-staffing company in one bedroom of their five-bedroom house and have never felt compelled to expand their facilities, although they've commandeered another bedroom for the company and installed an $11,000 phone system and multiple servers. They currently have 200 employees, only a small percentage of whom have ever set foot in Lake Forest. "I want to see how big we can get without getting a real office," said Ronald Stein. "Let's see if we can do it with $20 million."

"I know the investors are the right ones when I come away from our meeting thinking, 'These guys are really good. They can call you stupid in 50 different ways and never offend you." --Private-equity panelist Rudy Karsan, of Kenexa, explaining how he knew that he'd found the kind of private-equity investors he was looking for

The Perfect Board Member
At a session about boards of directors, Inc 500 CEO Max Carey stressed the importance of having members who will be brutally candid. In response, one person raised her hand. "I need a real asshole on my board," she said, "and since we both live in Atlanta, I'm wondering if you're available." The audience roared with laughter. "I mean, not that I'm calling you an asshole, but you seem to fit some of my needs." Carey reports that the request is "under thoughtful consideration."

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