Chaos Theory

The Fastest-Growing Private Company In America

Never mind playing by the rules. Justice Technology won't even commit to a particular game

David Glickman remembers having lunch with a veteran telecommunications executive three years ago and casually mentioning that his own long-distance phone company had a "hot cut" planned for the next day. That is, the company's customers' phone traffic would be rerouted from one electronic hub to a new one over a period of a few minutes, even while customers continued to make calls.

The executive burst into laughter. "I've never heard anyone utter the phrase hot cut so calmly," he said.

"Really? Why not?" asked Glickman, a trim, animated man who comes off like something of a cross between Mel Gibson and Richard Simmons.

The executive peered at Glickman strangely. "Don't you know how many phone companies have gone out of business because of hot cuts that ended up taking days?"

Well, no--Glickman didn't. He was almost entirely ignorant about hot cuts, even though he had bet his company's existence on one.

And that, insists Glickman, epitomizes one of Justice Technology Corp.'s keys to success. "We never knew enough to know what it was we weren't supposed to be able to do," he says. "We just went ahead and did it."

Tom Peters exhorted companies to embrace chaos, but even he probably didn't have this wild a ride in mind. Not only does Justice, the #1 company on this year's Inc. 500 list, refuse to play by the rules; it won't even commit to a particular game. To make sure it stays that way, Glickman, who is 33, has stocked his company with people in his own image: young, brash, and a little off-the-wall. It's as if the cast of Rent had moved to L.A. to take over the phone industry. The result is a restless organization that keeps redefining its products and even its core strategy and market, letting technological innovation and personality fill in the gaps.

Not surprisingly, all this tumult is a double-edged sword. There are any number of ways Justice could get burned, including unexpected changes in regulation, technological miscues, and a sudden urge on the part of big competitors to swat it aside. While most successful, growing companies occasionally flirt with failure, Justice has in a sense been at the brink of disaster since it was founded, and hasn't strayed that far from it along the way.

The upside? Growth. A lot of growth. Incorporated in 1993, Justice has since rocketed to revenues of $55 million, parlaying success in a teeny niche market to virtual domination of certain segments of the global phone business. If you call other countries, there's a good chance you've already done business with Justice. In the not-too-distant future, if current plans pan out, you may be using Justice to call next door. "In some ways we're starting to look like a real phone company," says Glickman, with mixed emotions.

To show you what the world is coming to, the fastest-growing company in America is one whose products can't be fully explained without a short course in telecommunications.

It started with a simple-enough service. Glickman, having earned a bachelor's degree in economics from the Wharton School and then a master's in psychology from UCLA, had decided to live in Argentina for a while as a change of pace. Though he was clearly not the world's most focused individual, American Express's Argentine office hired him as a management trainee and put him in charge of reducing overhead. Glickman, 27 at the time, quickly zeroed in on phone costs: like almost all countries other than the United States, Argentina had a state-run phone company that charged an arm and a leg for international calls, and Amex Argentina was running up a monthly bill of $25,000 in international calls. It was then that Glickman stumbled across an article that described a new type of U.S.-based phone offering known as a "callback" service.

Here's how callback works: You're based in a country that's not the United States, and you want to call another country. You start by dialing a number in the United States that's connected to a callback-service-operated "switch"--that is, a computerized version of the old-fashioned switchboards that telephone operators used to sit in front of, manually plugging one phone line into another to make a connection. You hang up while the phone is still ringing. Even though the switch hasn't answered the phone, it recognizes your phone number as that of a customer and calls you back. Your phone rings. You pick it up, and the switch connects you to a dial tone--a U.S. dial tone. Now you can dial your international party, and the switch will connect--or, in the parlance of the telecommunications industry, "terminate"--the call. When you're through, you owe your local, exorbitantly priced phone company nothing because your initial call to the United States was never terminated. You owe the callback service the cost of the switch's call from the United States to you, and the cost of your call from the United States to your party. Since international calls placed from the United States are dirt cheap compared with international calls from most other countries, the cost of the two U.S.-originated calls combined is far less--typically 50% to 75% less--than it costs to call your party directly. (Would this be a bad time to remind you that this is the simple part?)

Excited by the discovery, Glickman presented the idea of callback to his bosses, only to be told that Amex had no interest in risking irritating Argentina's only phone company; it essentially regarded its outrageous phone bills as insurance that its telephone service would remain at least semireliable. "I was amazed," he recalls. "I thought this service made so much sense that I decided I wanted to sell it to other companies." After obtaining his bosses' approval, Glickman wrote the callback-service provider to propose that it let him serve as what he called a "cocktail-party rep"--that is, someone who pitches the service to businesspeople at social gatherings.