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1 GEORGE LEWIS
"When I started this company, I had to learn finance at the age of 54. I had to look good in the eyes of all these bright and shiny M.B.A.s."
The Company Cogentrix is the first company to take the number-one spot on the Inc. 500 for two years in a row.
Credit in part the huge leap in revenues the company had from 1985 to 1986 -- from $133,000 to $17 million -- when its cogeneration facilities began full-tilt production of electricity for utilities and steam for manufacturing com-panies in three North Carolina cities.
Lewis founded Cogentrix on the premises that coal burning can be cleaner than its image and that the supply of coal is more stable than that of oil or gas, a proposition certainly borne out this year.
The Founder Lewis was "born and dragged up in the streets of Brooklyn," son of a teacher and a draftsman. He took his street smarts to Con Edison and then two engineering firms before starting his company.
Despite its size, Cogentrix is a family business: Lewis holds 52% of the equity, and the other 48% is held by his three sons, who are managers.
46 DONALD EMERY
Reference Software International
"I think I was always fascinated but intimidated by the idea of running my own company. I never had that natural affinity."
The Company As a marketing professor, Emery encouraged his students to use word processors. "The papers looked nicer," he says, "but there was still incredibly bad writing, grammar, and spelling." So Emery and partner Bruce Wampler founded a company to solve those problems. They first developed a pop-up dictionary for computers; later came a breakthrough program, Grammatik, which flags awkward phrases in text.
"Most people who don't write for a living don't realize that the skill of writing really is in the revision stage," says Emery. "This program makes it easier to do that."
The company's next step: marketing French and German grammar checkers in Europe.
The Founder Emery did a stint at R. J. Reynolds before getting a Ph.D. in marketing. In 1975 he began teaching; he's now on sabbatical from San Francisco State University.
"Despite all my education, I am a very, very bad speller," he says.
89 RON ZWANZIGER
We were close to running out of cash a number of times. Compared with that, nothing today is very difficult."
The Company When Zwanziger and three other students at Harvard Business School founded their bio-technology company, in 1981, their strategy was to invent and tinker with 10 products. Surely, they figured, one would hit big.
In 1984 MediSense began honing in on one product -- bio-sensors used by diabetics to read their blood-sugar levels. Then the money began pouring in: $60 million from investors so far, used in large part to develop an extensive international direct-sales force. Revenues from the user-friendly line hit $30 million last year, up from just $2 million two years previously. Zwanziger plans to take MediSense public in early 1991.
"A company with a sales force worldwide is a better company in the long run," he says. "And we make more money this way."
The Founder Zwanziger grew up in Cyprus, then was educated in Great Britain. He received an engineering degree from Imperial College at London University before attending Harvard Business School.
108 CLEMON H. WESLEY
"Schools teach African Americans to go out and get 8:00-to-5:00 jobs. Very little suggests to them that they might want to start their own businesses."
The Company TEXCOM, a telecommunications and engineering services firm, takes advantage of the 25 years Wesley spent in the army by pursuing contracting work for the military. Now, with the changing political climate, the company pursues more private-sector jobs. "The whole world is retrenching," says Wesley, "and in this marketplace people are doing whatever it takes to win jobs."
The Founder Wesley's parents were sharecroppers in Texas. He went into the army in 1957, rising from second lieutenant to colonel; he also got an M.S. in communications and a law degree. After leaving the army, he started his company in his basement in 1982.
Today Wesley is president of the National Business League of Southern Maryland and spends time on mentoring programs for the minority community: "I have business mixers, training programs -- all designed to try to get minority businesses into the mainstream of this economy."
136 WILLIAM GINN
Resource Conservation Services
"I do sometimes miss the informality of the early years, working on dead reckoning -- the nautical term for navigating by the seat of your pants."
The Company Ginn was operating a farm in Maine part-time and asked a paper company if he could have some of its wood ash for fertilizer. The company, which had been paying to dump the ash, asked if Ginn wanted all 40,000 tons. Soon he arranged for other farmers to take the ash as well; eventually he had a company that expanded into commercial recycling, composting, and wastewater treatment.
"In truth," says Ginn, "I think we're all astonished at how well RCS has performed."
The Founder Ginn spent 10 years at the Maine Audubon Society, 6 as executive director, taking the budget from $90,000 to $1.5 million. "I think of Audubon as my first start-up."
Farming remains Ginn's first love: "It's very grounding to drive a tractor or rototill a garden or plant a crop. It's an important touchstone with the earth. I don't pretend I'm a great farmer, but it's something I enjoy."
184 JANET BIRNBAUM
Janet Sand & Gravel
"Our business is not small, but it's not real large yet. It needs expertise, possibly beyond my own. That's a difficult situation because I don't want to make a mistake."
The Company The company, Birnbaum quickly emphasizes, is basic: it produces and places asphalt. In the early days the jobs were mostly driveways and parking lots. Today the company gets state, county, and municipal road work.
Its biggest obstacle? Birnbaum says it's the size and stability of competing companies. "I've tried to diversify to things like putting underground water mains in, to allow me to not be so dependent on the road work. But to be honest, I'm not sure I've really found a new niche."
The Founder Birnbaum grew up on a farm in Birch Run, Mich., helping with the milking and other chores. "I grew up with the mentality that you just did what had to get done." After high school she worked as a secretary at a bank, then as an office manager at a small telephone company. "But while I worked there," she recalls, "I always had visions of getting out of the position of being a subordinate."
232 DAVID FERN AND JACK KNIGHT
Knight Floor Covering
"Going into my first business, I didn't know anything about survival. I was very naïve. This time I'm much more cautious." -- David Fern
The Company How do you find customers for floor covering? One way is to pursue the residential market, bidding on each job individually. Then there's Knight Floor's way: work with property managers who oversee 3 to 10 buildings with 200 to 500 units each. Knight has concentrated entirely on relationships with those managers, offering different styles and colors for each apartment complex, and immediate job turnarounds.
Another edge: Knight Floor trims its costs of materials 6% by paying bills within 10 days, a savings it can pass on to customers.
The Founders After growing up in a middle-class neighborhood in San Lorenzo, Calif., Fern taught for seven years, then became a building developer from 1977 to 1981. His fortunes soared, then he lost everything. A year and a half later he and Jack Knight started this business. Knight handles the technical end, while Fern manages the administration.
240 ALAN ASHTON
"My inspiration is faith. Faith in the future, faith in people, faith from on high."
The Company WordPerfect is one of the largest and perhaps best-known companies on the list. Based in Orem, Utah, the software design and sales company produces software for fields as varied as graphics and office automation; 1989 sales were $276 million.
The key to its success? Customer service, says Ashton. WordPerfect regularly picks up awards from the trade press for its toll-free service, with 680 operators handling 14,000 calls a day.
The Founder Ashton grew up in Salt Lake City and spent two and a half years as a missionary in Germany before graduating from the University of Utah with a Ph.D. in computer science. He taught at Brigham Young University from 1971 to 1985, stopping when the demands of the six-year-old company he'd cofounded became too great.
"It was hard on my family," he recalls. "I'd go to school early, then work, read the kids stories at dinnertime, then do more work. It was like standing on two icebergs drifting apart." Ashton's current goal: to spend more time with his wife and 12 children.
274 ADRIAN LUGO
"Without an education, I am a Mexican farm worker. I see no difference between me and them, except I've learned to ask the right questions."
The Company Lugo and his wife were renovating their house one day in 1974 when a developer inquired how much they wanted for it. An hour later they'd sold the $35,000 house for $70,000 and were in business.
The company started as a general contractor on residential properties and now oversees commercial construction. It has 8a status, which allows it to bid for jobs set aside for minorities.
The Founder Lugo's childhood was spent in rural Texas, as his Mexican-born father found work selling vegetables, fixing cars, and welding. "He was very strict -- excellence was pounded into us," says Lugo.
In 1967 Lugo was drafted and sent to Vietnam, where he was a helicopter gunner. Later he attended the University of California at Irvine, where he graduated cum laude with a degree in art.
"Vietnam showed me how amazing the United States is. The capitalist system -- which in the '60s became a dirty word -- means to me that you can develop capital and partake of the system."
330 BARBARA BEDNAR
Environmental Control Systems
"All of a sudden there's the day you wake up and realize, Hey, I really do know what I'm talking about. I have learned."
The Company Bednar's father founded ECS in 1969 as an adjunct to his boiler-installation business. He wanted to develop a new fuel additive that would dissolve paraffin and sludge-tank buildup. For the next five years ECS distributed the additive. Sales plateaued at about $250,000.
The company hit its real growth cycle when it began taking on service work: cleaning or removing the tanks of clients, testing and removing contaminated soil, remediating groundwater, and testing tanks.
The Owner Bednar never went to college. Instead, she married at 18, had a child, got divorced, and began working as an administrative assistant, then a real estate agent, before coming to ECS in 1975. "I had worked summers for my father as long as I can remember, and I always loved it." She became president in 1984 and was given enough stock over the past two years to make her the controlling owner.
369 GEORGE LUNDQUIST
"My biggest concern is the unpredictable things that could happen. I don't have any fear of our screwing it up."
The Company Calidad started as a contract manufacturer of circuit boards for another start-up, DSC Communications, and eventually became that concern's principal supplier. Although work for DSC still makes up 60% to 70% of Calidad's annual revenues, that's down from 95% two years ago.
The key to success, says Lundquist, has been providing quick, flexible service. "We're not doing high-volume steady stuff [for DSC]; it's low volume, with rapid changes in design. We're not doing the same thing each month. At any given time we've got 95 to 110 different products in process. Sometimes they change daily."
The Founder Lundquist grew up in Willmar, Minn.; his mother drove a school bus, and his father was a postal clerk. He worked for Texas Instruments and then Haggar, the apparel company, before starting his company in 1985.
His goals are straightforward: "I'm still looking for cash in the bank. I think $2 million to $2.5 million is a nice amount I could survive on."
393 JOHN BERGUSON JR.
Kingdom Tapes & Electronics
"I thought if I expanded my business, some people who were out of work in the area wouldn't have to leave."
The Company When Berguson started his company, in 1981, it was called the American Horse Institute and distributed his personal horse-training tapes. Because he was buying cassette tapes in bulk, he occasionally resold them to churches that recorded services for shut-ins, college students, and servicemen. In 1984 he began offering high-speed duplicating machines and printing in addition to blank tapes, and in 1986 he added video-production services. The company's customer base has expanded to include prisons, courts, and such commercial accounts as GTE, Telex, and Borden's.
The Founder Grandson of a Baptist minister, Berguson relies heavily on his faith, seeing his vocation as a calling to be an "evangelical horseman." In matters of management, he relies on his wife, Juanita: "I'm a terrible manager, but my wife is an excellent one, so she's the general manager. My time is supposed to be spent in advertising and marketing, but I'll jump in and try to solve any problem."
421 STEVEN ANDERSON
"One of the fun things now is, I know we're going to make it. There isn't this constant worry about failure."
The Company When CryoLife was founded, some 85% of human hearts donated for transplant were discarded because getting them quickly to recipients was often not logistically possible. CryoLife's technology "recycles" the valves of those unusable hearts by freezing them for later use.
The company has begun expanding into the preservation of veins, and next year it will seek Food and Drug Administration approval for a new method of freezing whole blood. The freezing technique, says Anderson, has the potential to take the company to $50 million in the next five years; it's a payoff of committing 10% to 12% of revenues to research and development -- two to three times, he says, the industry average.
The Founder Anderson grew up in St. Paul, Minn.; his mother was a bookkeeper, and his father spent his career at one bank. After a stint in the army, Anderson worked for two decades with medical-products firms, including a start-up. A heart-valve salesman passed on the idea that inspired CryoLife.
464 ANITA DIMONDSTEIN AND JOAN COOPER
"We're in transition . . . looking at how we can best continue to do those things we really enjoy."
-- Anita Dimondstein
The Company Dimondstein and Cooper both had young children in 1981, when they discovered an imported soft wool diaper cover, used over washable diapers. For Dimondstein, a midwife, and Cooper, a teacher, the wool cover had more appeal than a plastic one, so "in usual naïve, entrepreneurial fashion," says Dimondstein, "Joan and I looked at each other and said, 'If we can use these, there must be other people who can, too.' "
Their original idea was to be distributors of that single product, but they began worrying about potential import quotas. (The diaper covers are made in Japan.) As protection and in response to customer interest, they have diversified into children's clothing.
The Founders They were roommates in the 1960s at the University of Pennsylvania. As business partners, they're "mutually supportive," says Cooper. "We respect each other quite a lot in our judgment, and we do defer to each other if one feels strongly about something."
486 SUZANNE CLIFTON
"My husband kept pushing. 'Why don't you go into business?' he'd say. And I said, 'You've got to be kidding!' "
The Company When Clifton started her firm, there were five competing temporary personnel agencies in the city. Now there are seven times that many. Clifton competes by making sure the temps she sends out are well trained; the company has a training center to give one-on-one tutorials on different computer programs and systems.
The Founder "I got married and had two children because back in those days, and it wasn't long ago, that was the thing to do. But there were so many things gnawing at me because there was something more that I needed."
In 1971 Clifton was divorced and began teaching full-time. Later she remarried and got a job at Olsten Corp., where she worked for three years before starting her own company -- at the urging of her husband, Larry. He also runs his own company, in janitorial contracting, where Clifton's two sons work. "We now have to have someone clean for us, someone to do the yardwork. We have a different lifestyle. And I don't feel guilty anymore about not making dinner."