The Prize -- And The Cost
It is rarely the dollars, although they are considerable. Nor is it the power or status. Instead, for most of the CEOs of the INC. 100, the continuing challenge of growth is the fuel that keeps them going. But growth means change, and every benefit has a cost.
M.J. Blumenfeld started out single-handedly in 1971, a 24-year-old former professional baseball player selling tennis nets from the back of his car. He now heads BSN Corp., making and marketing $8.5 million in sporting goods and managing a staff of 140.
"It used to be the thrill of making a buck that motivated me," Blumenfeld notes. "But now, it's the recognition of success. The ego trip. And the best recognition is not from your peers, but from yourself. Everybody has the initial thrill of making his first million, but once he reaches a certain threshold, money is no longer the objective."
"It's the game," agrees Gus Constantin of Phoenix American. "I do what I do for the fun of it. I could sell this organization and retire, but that would be boring. I want to see how far I can go, to see if I can be the best. It's like a test."
For James Hoak of Heritage Communications, the test is "creating productive growth," measured in new jobs, satisfied customers, and prosperity. For Charles Haverty, brought in at Xonics in 1979, the test was pulling the company "out of the mud," away from serious trouble to $87 million in sales. "It's the satisfaction of defining a goal, seeing that goal met, then defining another one," Vern Rees of St. Jude Medical says. "If there are no goals ahead of you, there's nothing. Nothing rewarding, nothing exciting. Nothing."
There may well be sunshine and a pot of gold at the end of the entrepreneurial rainbow. But there is drizzle aplenty getting there.
"It seems I spend all my time in meetings," says John R. Folkerth, founder of Shopsmith. "I'm now the captain of the ship, guiding the course, instead of spending my time down below stoking the furnace."
Folkerth's regret is widely echoed. And going public, many add, has only exacerbated the problem, with constant reporting, meetings with accountants and lawyers, and calls from curious analysts. "There is a period when you go public where you are totally tied up with accountants and underwriters," complains Sheldon Razin of Quality Systems Inc. "Your financial responsibilities are suddenly expanded and complicated. Every time you want to do something, you have to ask your accountants and lawyers if it's okay.
"I spend too much of my time processing paper' says Robert Jefferson, cofounder of Jefferson-Williams Energy "I miss the opportunity to spend time with all of our people. When we had only five or six employees, I was better able to improve each individual's productivity."
Lack of personal contact with employees is a common lament of the 100 CEOs. When Dean Scheff and his partner found ed CPT in 1971 they had two salesmen hawking office equipment in the Minneapolis area. Today, Sheff has 1,368 employees marketing automated office systems around the world.
"Sometimes I see people walking through the halls, and I don't know whether they work for me or a competitor," he says. "We didn't envision worldwide marketing, hundreds of employees, and international manufacturing plants when we started. We've had to expand our horizons substantially. We've learned the hard way that you have to let go, hire people to do things for you, even though you have this feeling that you can do things better than anyone else.
"As you bring in more and more people, it gets harder and harder to maintain excellence, and you get closer and closer to producing average people. Average people don't accomplish anything."
More business almost always means more bureaucracy, with decisions that affect a far wider circle. Elmer R. Easton, founder of Compucorp, a $36 million computer manufacturer in Santa Monica, has expanded his payroll from 12 employees in 1976 to nearly 500. "When I travel and meet new people and realize that they're working for the company, I'm thrilled. There are people 8,000 miles away who have decided to cast their lots with us. That's a long lifeline," Easton says. But beneath his enthusiasm is the concern that "I may not be tough enough" to handle the responsibilities of evaluating, hiring, and, particularly, firing those who "cast their lots" with Compucorp.
"One of the realities of a growing business," says Easton, "is that no rule says all the individuals will grow the same way. What fit yesterday may not fit tomorrow. Sometimes you can modify the structure to fit the individual; other times you must get a different person to do the job. It's fairly rare to find a person who can stick with a company from the first dollar to the first billion dollars."
Barry Bronfin has seen Scientific Leasing grow to $11.5 million in sales, and he has seen the need for structures and systems grow accordingly. "Now we need formal personnel reviews and other corporate trappings," he says. "We need to reward people when it's appropriate. To do that, we now have forms and committees. We try to minimize it, but we still need it. You can't know 53 people personally."
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