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"They never say yes. They never say no. They just take a lot of notes."
-- Ken Marshall, CEO of Object Design (#1 in 1994), on the reluctance of venture capitalists to be the first investors in a deal
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Baking a Bigger Pie: Ken Marshall ran a session showing how Object Design used strategic alliances and venture financing to build its market capitalization to $500 million. "How could you justify the dilution of management's stock, including your own?" asked one attendee. Said Marshall, "We figured we'd rather own 20% of $500 million than 80% of $50 million."
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"Lawyers in Japan actually make it easier for you to do business, rather than simply cost you time and money. They are truly the most helpful people in the world."
-- Scott Montgomery, vice-president of marketing at Cannondale, a manufacturer of high-performance bicycles, who spoke about doing business abroad
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Finding the Best New Employees is largely a matter of talking to the ones who already work for you, said hiring specialist Ed Ryan, founder of MPR. "At any given time, 7 out of 10 employees should have come to your company through networking. This should be far and away your best source of employee referrals."
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"In my experience, cash cows rarely take pleasure in being milked."
-- Mitchell Kertzman of Powersoft
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Stop Us Before We Start Another Business: Herb Myers and his wife, Sloan, of Boxlight (#408 in 1994), in Poulsbo, Wash., said that, in the beginning, they operated their direct-sales business out of their closet. When it outgrew the closet, they relocated it to the garage. The garage soon filled up, and so they built a warehouse on a 30-acre tract they acquired. Then they just kept on building and wound up in the office-park-development business.
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Full-Service Banking: Emma Lou Brent of Phelps County Bank talked about her homegrown "yellow pages" listing the bank's business clients. When a customer applies for a loan to buy, say, office furniture, the loan officer checks the yellow pages for the name of another customer who sells office furniture and then makes the referral.
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"There's a story about a little boy who gets to be four years old and still hasn't talked. His distraught parents take him to specialists, who say there's nothing wrong with him. Finally, one morning, they're eating breakfast and the kid blurts out, 'Mom, the toast is burned.' The mother is ecstatic. 'You talked! You talked! I'm so happy! But why has it taken so long?' The boy says, 'Up to now, things have been OK."
-- Don Peppers, coauthor of The One to One Future, arguing that an absence of customer complaints should be a cause for concern, not celebration
THE 500 SURVEY
As usual, we took the oppor-tunity to poll the Inc. 500 attendees on a variety of topics. Here are some of the more interesting results:
Which of the following are issues that the federal government should be addressing?
Excessive government spending 88%
Tax reform 78%
Reducing the federal deficit 78%
Welfare reform 73%
Education reform 44%
Reducing the trade deficit 26%
Health-care reform 25%
Trade restrictions 16%
Note the low priority of health-care reform -- at a time when Inc. 500 companies are being clobbered by rising health-care costs. Guess that says something about their confidence in Washington's ability to improve the situation.
Would your company join the drive to reform welfare by participating in a program to hire people who want to get off public assistance?
Yes 74% No 7% Not sure 19%
In private, CEOs were adamant in their support for such a program -- with one caveat: "I want legal indemnification if I have to fire someone who just doesn't work."
To which political party do you belong?
Republican 69% Independent 16%
Democratic 6% No answer 9%
Given the answers to the other questions, I have to say that this one did not come as much of a surprise.
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Key Notes
"If you feel you don't have a life, maybe you never wanted one in the first place."
-- Victoria Bondoc of Gemini Industries (#341 in 1994)
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Key Notes
"Control comes from performance, even for CEOs. If you do the job well, you have all the control you need. If you don't, it doesn't matter how much stock you have. You won't be in control of your company."
-- Mitchell Kertzman of Powersoft
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Key Notes
"You need to have personal goals as well as business goals. Without them, your company may grow, but how will you know if you're growing along with it?"
-- Norman Brodsky of Perfect Courier (#47 in 1984)
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R-E-S-P-E-C-T
Forgive us, but we were surprised and pleased when the White House asked about putting together a special preconference briefing for members of the 1994 Inc. 500. Lip service aside, Washington has until now largely ignored the growth companies that (along with start-ups) provide almost all the new jobs commonly ascribed to small business in general. And so we found ourselves in the nation's capital, listening to the case for the Clinton record as presented by Small Business Administration head Phil Lader, presidential assistant Laura Tyson, and Commerce Secretary Ron Brown. They put on a good show. The CEOs in attendance gave high marks to Tyson and Brown for deftly handling some tough questions. Then again, it's doubtful that many votes were changed.
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Creating a Culture of Urgency
This year's award for Outstanding Stand-up Performance by a CEO goes to Hatim Tyabji of VeriFone, a $309-million company that makes transaction-automation products. He spoke about how his company uses technology to change the way people work. Among the highlights:
Wire your customers: VeriFone has hooked 500 customers into its internal electronic-mail system, which includes daily updates on both customers and competitors. The response? "Customers say, 'You know more about our company than we do."
Wire your organization: All administrative functions, from capital spending authorizations to travel reservations, are performed on-line. Sales and marketing information is on-line, too. So are daily reports of company profitability and the schedules of key managers.
Educate everyone: The company provides courses by modem and in learning centers at major locations, but employees are responsible for their own training.
Don't rely exclusively on technology: "E-mail alone doesn't work. Voice mail alone doesn't work. You need human rapport. Technology is baloney if you try to substitute it for face-to-face communication." So, every six weeks, VeriFone brings its far-flung staff together for weeklong meetings, and Tyabji himself visits up to 200 customers a year.
