The Next Generation
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The 30 Inc. 500 CEOs who are 30 or younger are different from their older colleagues. Their claim: the younger you are the better whenit comes to starting a company
Most people who eventually start successful businesses travel a familiar path. They set off after college to get their feet wet in corporate America. Then after a decade or so at other companies, they go off on their own. To one degree or another, the businesses these men and women start are shaped by their experiences. But recently, we've noticed a new wave of businesses begun not by veterans but by brazen young people with no claims to any experience.
It's hard to quantify the phenomenon -- we know of no numbers. But individuals who are in good positions to track this activity (college career counselors, for instance) say a new, more virulent strain of start-up fever has been striking college students and other young adults since the late 1980s, when many big companies began closing doors on entry-level hiring and lopping off tens of thousands from their work forces. With all the concern about how problematic it can be to survive and flourish in established organizations, starting one's own business has emerged as an appealing option, says Marcia Harris, director of career-development services at the University of North Carolina at Chapel Hill. "Young people are saying, 'If we can't count on someone else, we'll hire ourselves.' " For the first time, we're seeing the ripples of this trend in the Inc. 500; this year, 30 company founders (29 men and one woman) are 30 years old or younger, which means most of them began their businesses before their 25th birthdays.
A few, it seems, were born to start companies. Ben Narasin of Boston Preparatory (#416) has been fixated on the notion since childhood, when he watched his father go off to work at IBM. An entrepreneurial-studies major at Babson College, Narasin, now 27, wrote the original business plan for his men's-sportswear-manufacturing business as his senior thesis. And that was after he'd already had a string of other money-making endeavors.
Narasin, however, isn't really typical. Others, rather than organize their lives to become entrepreneurs, studied political science, premed, or art history (three skipped college altogether), and became company founders more accidentally. Jack Mayes of Cardboard Gold (#74) dropped out of the University of California at Irvine, and after striking out selling baseball cards, shifted into selling paraphernalia for baseball-card collectors. Yvonne Cucci of Cucci International (#474) began by printing T-shirts for her father's boat business as an alternative to taking a sales job at the local mall. And Bud Prentice of Applied Computer Technology (#257) spent part of his spare time while a student at Colorado State assembling low-cost personal computers for a widening circle of friends. Only after these founders had been at it awhile did it dawn on them that, lo and behold, they had "businesses."
Getting a business off the ground can be intimidating at 22 or 23. "People had a hard time taking me seriously," recalls Prentice, now 28, echoing others' comments. "A supplier once asked me, 'Where are your parents?' " For many of these founders, a big hurdle was money. Since few of them had personal savings or collateral to borrow against ("What was the bank going to take, our stereos?" asks John Chuang of MacTemps [#12]), there were generally two options: being crafty at bootstrapping, as were Geoff Snelling and Marc Greenberg of Small Systems Management (#223), who started their business on $460 each; or convincing family members that the business was a decent investment. More than a quarter were able to do the latter. Those who managed to get bank loans almost always had to get parents to cosign.
Yet this group doesn't hold grudges against skeptics who may have brushed them off. Memories of doubting bankers and customers have for the most part faded. What you hear now is that one's twenties are really the best time of all to launch a business.* * *
Practically everyone talks about the personal aspects of starting a business while relatively young. Without families or other constraints, these entrepreneurs were free to work 80-hour weeks without worrying about being late for supper or missing Little League games. Living in cheap apartments with roommates -- or, as in the case of Michael Levin of Cadapult Graphic Systems (#72), at home with parents -- they could keep overhead costs low. And if the business fizzled, when else in their lives would they be in as good a position to pick up the pieces? "The worst thing that would happen," figured Bob Roscoe of MBS Communications (#368), "was that I'd have to go out and get a job like other people."
Hearing about the personal pluses of starting in one's twenties isn't surprising. What's remarkable is the extent to which these founders talk about the business advantages of being young and freewheeling. To be sure, a few of them went out of their way to find gray-haired advisers to help them through dicey business situations. Ian Griffis and Buck Blessing, cofounders of Griffis/Blessing (#361), a real-estate-management company, decided relatively early to set up a board of experienced businesspeople to help them gain perspective. "We didn't think we needed to reinvent every wheel ourselves," explains Blessing. But most of these risk takers learned to live by their wits and to depend on those of their closest associates. "We were always looking for new ways to do things," says Eric Crown, founder of Insight Distribution Network (#5), a computer mail-order business. Often, he says, the solutions they found worked at least as well as those competitors came up with -- at a fraction of the cost.
Even those who entered more established industries felt no compulsion to toe any line. Jim Noble of Noble Oil Services (#196), who started his waste-recycling business three years out of high school, had been warned by some industry veterans that he wouldn't be able to find buyers for a certain type of industrial diesel oil. But he produced it anyhow -- and is glad he did. Within six months it accounted for 40% of his business. Since then, he says, he's challenged the way the industry thinks about lots of things. "Unlike people who've been in our business for 10 or 15 years, I didn't carry around a bag of 'You can't do's," says Noble, now 30. "That's given us a big advantage."* * *
If these young founders are at all representative, people starting businesses in their twenties have different notions about work and organizations than their older counterparts do. Not only were these individuals more inclined to launch their companies with at least one partner (65% of the under-30s compared with 58% of the entire list); they also talk more about the importance of fun. That includes having a challenging and supportive environment in which people dress more casually than in most workplaces. John O'Neil of Micro-Frame Technologies (#50) kicks off his shoes the minute he walks into the office. Connected to many founders' definitions of fun is the idea of people doing high-quality work in teams and being rewarded at least as well as employees at other companies.
Indeed, many in the 30-and-younger set take pride in what they describe as a lack of hierarchy within their organizations. The idea of managing from the top down makes many of them uneasy. "People don't like feeling that you're the boss and they're the employees," notes Brian Shniderson, 27, who cofounded Premiere Merchandising (#64) with his cousin Greg Klein, 25, when they were undergraduates at UCLA. "So we give them lots of autonomy and good benefits. We've got lots of deadlines, so it requires a total team effort, or else the road gets pretty bumpy."
For some, a flatter organization is also appealing economically. "Managers and supervisors cost a lot of money," explains Chuang of MacTemps, who recently got his M.B.A. from Harvard. So rather than build up layers, he's investing in technology and computers to handle some of the things supervisors do in other companies. "This way," Chuang says, "our people will be doing more interesting work, and we'll be able to pay them better."
As fervently as young founders talk about the importance of giving employees responsibility, not many have shared ownership with them. Only a third of the group say they have given any equity to employees. And though only a few rule it out, most say they haven't thought much about it. Like Paul Taunton of Athletic Fitters (#323), they're convinced that, for now, young people are more interested in compensation and interesting work than in owning a piece of the business.* * *
And what about these founders themselves? By now most of them have been involved in their businesses for 6 or 7 years. After a blur of 80-hour weeks, some say they really don't feel so young. "My girlfriend says I look 10 years older than I am," notes Cardboard Gold's Mayes, who recently turned 26. While many of their friends are still struggling to get established in their careers, these CEOs are already grappling with questions usually reserved for their elders: What role do they want to play in the business? And where are they needed?
For some, the choice is clear. "I used to be on call at all hours, putting out fires, but now we have other people who can do that," says Roscoe of MBS Communications. He used to go without vacations, but since he got married, last December, he's taken four weeks off. Likewise, Tom Mosey of D&K Enterprises (#137), a publisher of children's books, spends a lot of his time acting as a cheerleader, and he's cut way back on weekend work. "For almost a year my wife and I have been going to our lake house every Friday," he says. "She won't tell me the phone number."
For others, redefining their jobs has been anything but easy. Some who've balked at giving up responsibility are fearful of what might happen if they don't and what might happen if they do; others who've booted themselves upstairs don't seem happy with where they are. "I miss the excitement of the trenches," says Crown of Insight Distribution Network, who says he spends a lot of his time on legal and administrative problems. "It's not nearly as much fun as it was in the first few years."
So what will they do next? About a third of them speculate about selling their companies or taking them public in the next few years, at which point a few think they'd go out and start something else. And what about the ones who don't talk about selling? Well, for the next 10 years or so they plan to work toward taking their businesses to the next stage -- hitting revenues of, say, $40 million or $50 million. Some are thinking about ways to diversify their products, others about exporting. And for many more, the big challenge is learning how to do a better job in the markets they're already in. "I really can't see selling for at least 10 or 20 years," says 30-year-old Michael Koch of Koch International (#315). "I guess I don't know what I'd do with the money."
Money is clearly something most have thought about. But a lot of them profess to be less focused on financial success now than when they started. Maybe it's because they don't have to worry as much about meeting payroll, or because they're already more successful than they'd ever imagined. But what motivates them today has less to do with their net worth and more to do with how they're viewed by others: their customers, their employees, even their competitors. "I don't feel we have to be the biggest," says Noble of Noble Oil, "but I do want to be recognized by people in our industry as being innovative and well managed. That would be very satisfying for me."
In this age of environmentalism, you'd expect this group to have grand visions about their impact on the world -- how their businesses will make the planet cleaner or safer or prettier. But though they talk about their personal commitments to causes -- to the environment and to helping people and communities through charities -- the business, they maintain, needs to be handled separately. It's as if they were saying, "We're not kids, we're businesspeople." And now that they have others counting on them -- customers, employees, spouses, and children -- their first obligation is to make sure the business grows and makes money. As Levin of Cadapult Graphic Systems puts it, "We want to make things better, but we're not Ben & Jerry's."
-- Research assistance provided by Merritt T. Carey,
Christopher P. Fontes, Stephanie Gruner, AndrewS. A. Macaulay, and Rachel S. Tsutsumi* * *
Here, in alphabetical order, are the Inc. 500 companies whose founders were born in 1962 or later.
Applied Computer Technology (#257)
Athletic Fitters (#323)
BitWise Designs (#79)
Boston Preparatory (#416)
Cadapult Graphic Systems (#72)
Cardboard Gold (#74)
Creative Producers Group (#329)
Cucci International (#474)
D.J. King Trucking & Excavating (#123)
D&K Enterprises (#137)
Federal Investment (#36)
Gateway 2000 (#2)
Inside Communications (#239)
Insight Distribution Network (#5)
IVT Limited (#241)
J and M Laboratories (#487)
Koch International (#315)
MBS Communications (#368)
Micro-Frame Technologies (#50)
Noble Oil Services (#196)
Premiere Merchandising (#64)
Small Systems Management (#223)
Southern Audio Services (#255)
Staff Relief (#44)
Summit Marketing Group (#88)
SWFTE International (#166)
Union Pointe Construction (#205)