Mitchell's advice to entrepreneurs who would like to see their companies reach the $800-million mark? Be honest with your bankers, and combine risk taking with strong critical judgment. But his example suggests another lesson as well: keep control and don't think just about short-term profits. Mitchell didn't take his company public until 1972, after he had begun planning the Woodlands, and he rejected an underwriter's suggestion that he could sell more than half the stock and still maintain control. If he had followed that advice, Mitchell says, the company might have fallen victim to a corporate raider at some point during the lean years. Instead, his 63% share of Mitchell Energy has enabled him to run the company according to his long-term vision (while making him one of America's 400 richest people, according to Forbes). At the same time, he continues to plan for the long haul: in 15 out of the last 17 years, Mitchell Energy has increased its natural-gas reserves. (There is, however, one long-term problem that he hasn't solved: succession. He's not in favor of family businesses and says he has four able division presidents. But with a company so driven by one man's vision, it's hard to imagine a successor taking over his role.)
What does one of America's best entrepreneurial visionaries see for the future? Not surprisingly, a strong market for natural gas, his bread and butter. Yet Mitchell is also renowned for his thoughts and concerns about world problems; as far back as 1979 he was warning about the dangers of global warming. In 1989 his advocacy of economic development and sustainable growth won him the Lorax Award, an international environmental prize. That's a true anomaly for an entrepreneur -- and especially for one in the oil industry, not known for its tree hugging. But Mitchell doesn't understand why his business peers don't also look at bigger problems. "If officials of just the top 200 companies would use their skills, all the troubles facing us in the future could be erased," he once said.
His attitude hasn't changed. Combining his trademark vision and can-do spirit, Mitchell has a couple of questions for other CEOs: "If you can't make a planet work with 5.5 billion people, how will you make it work with 10 billion -- for your children and your grandchildren? And why don't you try to do something about it?"
-- Martha E. Mangelsdorf
EMERGING ENTREPRENEUR
Randy J. Daughenbaugh and Dean P. Stull
Hauser Chemical Research
Boulder, Colo.
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The growth of Hauser Chemical Research would give almost any entrepreneur the bends: From $3 million in 1990 to $27 million two years later. Sales on track to double again and hit $60 million in 1993. Margins approaching 20%. The stock, initially offered at a humble nickel a share, trading as high as $27 last year. The company janitor, having exercised his options, paying cash for a house. Are you light-headed yet?
Looking at the numbers, it's obvious why Randy Daughenbaugh and Dean Stull carry away this year's EOY award in the category of emerging companies, although erupting better describes Hauser's growth. What's less obvious is how this once-small contract research-and-development lab positioned itself to seize one promising opportunity after another and eventually score.
Research is at the very heart of the business. Founded in 1983, the entire enterprise was begun as an experiment by the two research chemists to explore whether it was possible to do socially valuable work, have fun, and make money at the same time. "We hadn't even selected a niche," says CEO Stull. "We figured we'd discover it in the process," says president Daughenbaugh. They soon did. Offering contract research and development in chemical and process engineering, the two developed a proprietary extraction technology for isolating and purifying plant and animal compounds at higher yields and lower costs than conventional methods produced.
Applying that technology, they began turning $50 tests into million-dollar accounts. Small R&D contracts led to larger supply agreements. And thanks to their success solving problems in the lab, the two men gradually found themselves drafted into manufacturing, in part to protect their technology.
Hauser's home run is an anticancer drug called taxol -- a natural compound extracted from the bark of Pacific yew trees. Now in the third phase of clinical trials, taxol inhibits tumor growth in ovarian and other kinds of cancer, and has received wide attention because of its unusual promise. Hauser's ability to collect and produce the compound in commercial quantities won it an exclusive $100-million supply contract with pharmaceutical giant Bristol-Myers Squibb, making it the nation's principal supplier. While Hauser's manufacturing division may be the breadwinner in the company, accounting for all but $2 million in revenues, it is the technical-service division that charts Hauser's future. By working on some 1,200 contract projects a year -- any number of which could prove to be the next wonder drug -- the service division flags opportunities that lead to manufacturing downstream. "It's our business-opportunity generator," says Stull. And a surefire way to better the company's odds.
