'I don't think about my weaknesses; it's too easy to turn those into excuses. I don't see obstacles, just minor impediments.'
John Stephens of Movie Systems Inc. calls it "determination." Robert Foster of Ventrex Laboratories Inc. calls it "the ability to stay optimistic when it's raining." John R. Folkerth of Shopsmith Inc. says his wife calls it "pigheadedness." Whatever their education, training, or experience, whatever their strengths and weaknesses, most of the INC. 100 CEOs agree that persistence is the primary prerequisite for success.
A college degree is not required. Although Joe Quick of Nuclear Support Services Inc. may worry that "my lack of a sheepskin really hurts me," 14% of the INC. 100 CEOs left school before graduating from college. Engineers lead the college graduates, with 30% holding bachelor degrees in electrical, mechanical, or chemical engineering. Another 13% hold economics degrees, while only 9% boast business degrees. Charles Haverty of Xonics Inc. studied in a seminary, Elisabeth Claiborne Ortenberg of Liz Claiborne Inc. studied art in France.
Almost half -- 46% -- of the INC. CEOs have advanced degrees, most often in engineering, 31%; followed by business administration, 27%; or law, 12%. Only three hold PhDs. Joe Quick is still going to school, studying by correspondence for a business degree.
Some 16% came from brokerage houses, banks, or accounting firms. A few, 4%, like Quick, came out of the military. Most, however, had a background in business management, usually in the same field as the company they would later run.
Nearly half had some experience in a Fortune 500 company, often developing the product -- or the motivation -- to go independent. Richard Greene had spent 11 years at IBM Corp. when he got the idea for Data Switch Corp. He took it to his corporate superiors first, "but they weren't interested. So after two years of frustration, I went out on my own." Richard Blackmer had been a project engineer at General Electric Co. for 25 years; when GE began to sell off its new ventures, including the project he had been working on, Blackmer founded Oxygen Enrichment Co. Gerhard Von der Ruhr developed the initial idea behind Biochem International Inc. while he was at GE as well, but the decision to go out on his own came earlier, when he was in his early thirties and an international vice-president of Bristol-Myers Co. "I realized I didn't want to spend the next 30 years of my life working for a large corporation," Von der Ruhr remembers. "I didn't seriously aspire to the presidency of Bristol-Myers; instead, I wanted to be in charge of my own destiny and have a stake in the company as well."
The old truism that the quickest way to the CEO's chair is to start the company is proven once again by the CEOs on the list Only 24 are outside managers, brought in an average of 10 years after the launch; the other 76 were present at the creation. On average, the founding CEOs were 37 years old when they set out. The youngest was 19-year-old Konrad Ruckstuhl of SPM Group; the oldest was 54-year-old Raymond Mueller of Comair Inc. The companies they began now average 12 years of age; 71 were founded in the 1970s. Only 6 were formed before 1960.
Two-thirds of the founders had a partner, three-quarters of whom are still in the business. The split, if it came, was most often a parting of directions in the early years. One co-founder of Intelligent Systems Corp., for example, wanted to develop units at a high cost/high performance bias; he left to start his own business. A Ferrofluidics Corp. partner left when the emphasis changed from research and development to marketing; he became a senior scientist at Exxon Corp.
The majority of the founders -- 61% -- considered their company market-driven rather than product-driven at the outset, whether the market involved computers or energy, health care or food. Gedalio Grinberg began North American Watch Corp. when he decided to gamble that people would buy watches as status fashion accessories rather than mere timepieces. The growing number of fashion-conscious women in the work force led Elisabeth Claiborne Ortenberg to set up her own women's sportswear company under the Liz Claiborne label. Merrill Anderson of Consul Corp. had been an investment banker who raised money for a Mexican-hot-sauce business then saw it take off -- and decided to buy into Mexican-food franchises. Harold Katz of Nutri/System Inc., on the other hand, decided to franchise weight-loss centers after following his mother's unsuccessful weight-loss attempts.
Initial funding for the 100 companies most often came from multiple sources. Some 69% of the CEOs raised funds from personal savings, 39% from outside investors, 28% from banks, and 9% from venture capitalists.
For over a third of the founders, insufficient resources were the biggest hurdle at the start. "I didn't even realize at the time just what undercapitalized meant," Leonard Newman, CEO of Diagnostic/Retrieval Systems Inc., says ruefully. B. Robert Jefferson of Jefferson-Williams Energy Corp. remembers being "so undercapitalized that it was one continual crisis."
Life at Oxygen Enrichment was a shock for Richard Blackmer after his 25 years at GE. "With a large corporation, marketing, distribution, and servicing were automatic; we had to learn all of that," he says. "We'd been dealing with almost limitless resources at GE, but when we started out on our own we were operating out of a garage with a screwdriver and a wrench."
Blackmer began with less than $170,000. "If things had gone according to plan, we wouldn't have needed any more." But negotiations with GE stretched out over a year, draining his cash pool. Developing the financial vocabulary and savvy to raise more "felt like going into a foreign country," he says.
One-third of the founders complain of lack of business experience as a hurdle at the outset. "But that inexperience may be a blessing, because you're too dumb to know what you shouldn't do," Dean Sloane of CP Rehab Corp. says. "I'm not very smart," Frank Lasater of Flare concedes. "I've accomplished what I've accomplished by being like a pit bulldog."
