Discussion of the 100 fastest-growing small public companies in the U.S.
The 100 fastest-growing small public companies of 1994 -- those most highly evolved growth companies -- paint a picture of an ever more finely niched U.S. economy that puts a premium on information exchange, value pricing, and as always, smart management
The late great Sam Walton, who revolutionized retailing by introducing everyday low pricing with his spectacularly successful Wal-Mart stores, has been one-upped. Ron Olson, CEO of Grow Biz International, has taken value pricing one step beyond the master from Bentonville, Ark.
The 339 Play It Again Sports stores that anchor Olson's retail company -- the number one company on the 1994 Inc. 100 -- buy and sell, sometimes on consignment, both new and used sporting goods. It's a simple though surprising twist that has fueled stunning growth for Olson's company. "We are able to provide the best value because our starting price points begin with used products," he explains.
Launched in 1988 with $100,000 of Olson's personal savings, Grow Biz now surpasses $51 million in sales annually. What's more, the company has expanded its franchising concept from sporting goods to children's clothing (with 46 Once Upon a Child stores and more planned) and is now rolling out the same concept with computers and musical instruments. "When we got involved with this, I didn't realize we would be on the cutting edge of a new trend in retailing," Olson says. He and his team simply took a new idea and went to work.
Grow Biz and Lone Star Steakhouse & Saloon (#2) show that whether a company's product is as high tech as data compressors or as meat-and-potatoes as, say, meat and potatoes, it succeeds only when it follows this maxim from the Lone Star annual report: "Find a need and fill it."
That could be the motto for the Inc. 100, which comprises the country's loudest, fastest, quickest-morphing public companies. Many are on the cutting edge of industries that have yet to be recognized as industries. Taken as a group, the Inc. 100 companies can bring nascent trends into focus:
Information is big business. The much-heralded convergence of information technologies is taking place with a vengeance. This year's list is swamped with companies that tie together different information technologies, apply them in new ways, or incorporate them to create novel products.
Networking companies -- hardware and software -- continue to dominate the list, as they did last year. Five of the top 10 fall into this category. Infrastructure builders include Wellfleet Communications (#16), a producer of equipment that links networks, which topped the list last year. CrossComm (#72) develops and sells local-area-network (LAN) products. Xircom (#4) produces products that connect personal computers to LANs. PairGain Technologies (#3) makes the equipment that connects fiber-optic lines to the end-user.
Networking applications abound. Two companies returning to the list, PictureTel (#98) and Vtel (#55; formerly VideoTelecom) supply videoconferencing equipment, enabling far-flung businesses to conduct group meetings, or universities to hold multisite seminars. Megahertz (#68) produces wireless modems enabling PCs to send information without being plugged into anything. Premiere Page (#38) is riding the crest of the personal-pager wave by servicing pagers and voice-mail products.
Many of the networking companies on the list enable productivity-driven customers to leverage their investment in existing technology. Wall Data (#33) makes software that links workstations and networks with other computers. And Avid Technology (#5), which claims to do for video what word processing does for text, enables film and video companies to cut, copy, and paste video text, saving huge amounts of time and money in the logistically complicated process of video editing.
Other companies are delivering productivity gains by applying information technology to traditional functions: PeopleSoft (#30), which produces human-resources software, enables businesses to computerize specific administrative functions such as employee benefits and payrolls.
Health-care entrepreneurs are also applying sophisticated business practices such as networking and supercomputing to save money for big customers like hospitals, drug companies, and governments. CliniCom (#90), for instance, has blossomed by creating bedside databases for patients (did we mention that they're networked?), giving doctors and nurses immediate access to information where they need it.
You can still make a lot of money selling good stuff cheap . . . Value pricing has wreaked havoc on many of the economy's best brand names and created opportunities for new companies with affordable consumer goods and without administrative baggage. Hence the success of number one company Grow Biz or number two Lone Star Steakhouse, which offers a reasonably priced high-quality steak dinner. Petsmart (#77), a "category killer" that's transforming pet stores, benefits from economies of scale that enable it to sell pet supplies at a low everyday price.
. . . or good stuff at a premium. Paradoxically, several companies are growing by finding consumers who will pay premium prices for "affordable luxuries," like the products of Monterey Pasta (#43) or Vermont Teddy Bear (#21).
Opportunity begets opportunity. Of course, just as the list provides tea leaves for reading the future, it also embodies as much history as an archaeological dig does. There are links between this year's winners and companies on previous Inc. 100 lists. In some cases founders have reappeared with new companies. In others, savvy upstarts are capitalizing on opportunities created by their predecessors. Consider the ubiquity of home shopping today: the two pillars of the industry -- QVC and HSN -- were, respectively, gold and silver medalists on the 100 roster in years past. Today companies such as the Score Board (#76) attribute their success to being able to sell via those distribution channels, which in 1994 have already become conventional weapons in the marketing arsenal. Likewise, you can look at the networking companies as builders of the infrastructure on which future winners will thrive.
