Where do America's fastest-growing private companies and their founders come from? Not where you think.
Entrepreneurs these days play a mythical role in American culture. They're our risk-taking adventurers. Heroes of the new economy. And the Inc. 500 -- the nation's fastest-growing privately held companies -- are entrepreneurship incarnate, themselves the stuff of myth. You want life on the leading edge? Daring leaps into the unknown? Ask the founders of Inc. 500 companies how they got their start.
Or so we figured.
We certainly posed the questions. By way of an eight-page survey and dozens of follow-up phone calls, we asked Inc. 500 CEOs to recall for us how they came to create a company. We probed their background and experience. We asked them where they got the idea for their business, how they implemented it, and of course how they financed the whole thing. Given the mythology of entrepreneurship, we expected tales of inspiration and imagination, of boldly going where no man (or woman) had gone before.
So much for expectations. Instead of swashbucklers, we found hardworking, experienced businesspeople -- people such as Jim Hanahan, Bobby N. Frost, and the many others you'll meet on the pages that follow. Instead of life on the edge, we found them pursuing their fast-growing ventures in everyday industries, from insurance admin-istration to mirror manufacture.
And instead of iconoclastic individualists, the cowboy capitalists of America's dreams, we found people enmeshed and embedded in industries, with rich networks of contacts and colleagues they could draw on to help them build a business. For most, the secret of successful entrepreneurship seemed to lie not just in individual inspiration but in knitting a dozen different interests into one cooperative endeavor. Creating a company was a matter of knowing customers, suppliers, partners, and sources of capital. It was a matter of knowing a marketplace well enough to notice tiny fault lines of change -- fault lines that would one day become sizable niches in the business landscape.
For us -- we'd better admit it -- this discovery was a little unsettling.
Like the rest of the press, we're constantly on the lookout for heroes. In our case, that means entrepreneurs who are somehow larger than life, who have seemingly inborn traits that allow them to succeed -- and sometimes fail -- in spectacular fashion. We paint verbal portraits of these men and women, hailing them as entrepreneurs of the year or the decade, holding them up as exemplars. The rocketing growth of Inc. 500 companies fits naturally into this scheme of things. We know that somewhere among each year's list will be CEOs who can tell us truly astonishing stories, stories of breathtaking risk and soul-satisfying reward.
But the unemotional numbers of the survey teach a different lesson: that these characters are the exception, not the rule, and that the creators of the Inc. 500 companies are down-to-earth, practical-minded people for whom, more often than not, building a business was simply the next logical step in a career. Jim Hanahan spent 23 years with an insurance company. Then the market shifted ever so slightly, threatening to undercut a small part of his employer's business. Hanahan decided he'd rather switch than fight and set up a company of his own to capitalize on the new environment. Other stories are similar. After 22 years in the industry, Bobby Frost started a mirror-manufacturing company to take advantage of technology that his employer was ignoring. Tom Scholl spent 13 years with Young & Rubicam in Detroit before setting up his own ad agency, seeking out clients he thought Y&R was overlooking.
Risk? Sure -- any of these businesses might have failed. Hard work? That too. "We'd all be president or whatever during the day and work in the plant at night," remembers Frost, who began his business with his brother. Entrepreneurship is never easy. But all these people, like many others we talked to, were venturing into familiar territory with well-delineated risks. If they failed, well, jobs would have been waiting for them elsewhere in their industries. And the steps they took in the earliest stages -- steps you'll hear more about in subsequent sections -- kept the chances of failure to a minimum.
The inescapable conclusion: entrepreneurs are made, not born. Made by their experience. Made by the changing marketplaces in which they find themselves. Granted, maybe there's some quirk of personality, some subtlety of background, that separates these Inc. 500 CEOs from their erstwhile counterparts who kept climbing the corporate ladders. But we don't know how to describe that difference, and we doubt it's the same for everyone. What is the same -- what crops up over and over in the stories we heard -- is what you might call situational entrepreneurship. As individuals, the people aren't so different from the rest of us. But they were working in situations where, thanks to their experience, they knew exactly how to go about building a business. They were smart enough to spot the opportunity and knowledgeable enough to take the right first steps.
It's always tempting to glamorize the dramatic adventurers in the business world; like movie stars and major-league ball players they lend a little pizzazz to everything they touch. But maybe it's not so discouraging to find that entrepreneurship is a more mundane matter than it's sometimes portrayed. As the stories and statistics of our survey show, you don't need to be a person of mythical proportions to be very, very successful in building a company.
TRADE SKILLS
Entrepreneurial Experience
Did your parents run their own business while you were growing up?
Yes 33% No 67%
Did you ever start a serious business as a child or student?
Yes 37% No 63%
Did you start any companies other than your Inc. 500 company?
Yes 41% No 59%
Sources of Skills
What was the single most important source of your skills and abilities as a company builder?
46% Work or professional experience in an industry
23 Family background and childhood experience
9 The experience of starting other businesses
22 All other responses
What was the critical time in your live for acquiring these skills and abilities?
