There's always a lot of music at our annual Inc. 500 conference, but this year's event in Nashvillerocked the house. The festivities got under way with country-music star Jo Dee Messina and wrapped upwith the Pink Flamingos, the official band of the Inc. 500.

Overall, the 17th Inc. 500 conference proved to be one of our liveliest, most upbeat ever,thanks in no small part to the hospitality shown by Governor Don Sundquist and his fellow Tennesseans. Funaside, the conference gave us a chance to find out what's on the minds of some of the country's mostdynamic company builders.

This year, like last year, the number one topic of discussion was the continuing shortage of goodpeople--indeed, of any people--available to be hired. The labor squeeze just keeps getting tighter, with theresult that companies are going to extraordinary lengths to attract and retain employees, as you can seefrom the accompanying conference notes.

Meanwhile, a new challenge has arisen: the burgeoning world of E-commerce. Bear in mind that acompany has to have been in business for at least five years to qualify for the Inc. 500, so thecompanies at the conference typically were started seven or eight years ago--that is, before the Internetboom. As a result, talk focused on the efforts of successful, established growth companies to adapt to thedigital economy. Appropriately enough, the conference was kicked off by a presentation on that subject byTed Leonsis, group president of AOL Interactive Properties.

Life in the fast lane

Highlights from our annual Inc. 500 conference

"When Microsoft came at AOL, people asked me if I was afraid of Bill Gates. I said I was more afraid ofJerry Seinfeld. We could actually see how the number of people on-line would plummet between 9 and 9:30on Thursday nights. Fortunately, the numbers always picked up about 9:40 or so, when people went backon-line to talk about what Kramer had said, or whatever."

--Keynote speaker Ted Leonsis, group president of AOL Interactive Properties, former president ofAOL Services Co.

Jim Bernard, CEO of U.S. Energy Corp., inAlpharetta, Ga., named his number one problem: finding people. He's turning business away for lack of staff.His number two problem? Deciding how fast to grow, and what it will cost--but that really gets back toproblem number one, he said.

So he's considering every available option, including equity participation. The competition, he says, isbrutal. There's a software company down the street from him that gives every employee, even thereceptionist, a BMW. The company leases the cars, but the employees have them for their own personaluse. You go by the company, and you see 45 brand-new BMWs in the lot. And this is in Georgia....

Like many companies, Research Triangle Consultants setup a recruiting team in response to the labor shortage. The team worked so well that president and CEO JeffLeRose turned it into a profit center: the three recruiters now help the company's clients with their hiring.

"When you get yourself in shape for a climb, you spend several hours a day working out on aninclined treadmill with a heavy pack strapped to your back. You look goofy. You smell. It's an ugly scene. That's always true. The road to success is not pretty. When you get to thetop of the mountain, you look beautiful, but it's all the other stuff that gets you there, and it's realugly."

--Keynote speaker Jamie Clarke, adventurer, author, and entrepreneur, on the preparation for hissuccessful ascent of Mount Everest in 1997

"Revenues are just a distraction."

--Keynote speaker Ted Leonsis quoting the founder of an Internet company with no revenues thatAmerica Online recently bought for $400 million

Don Dennis, president and CEO of AVT Inc., in Littleton, Colo., said hewas a "total non-believer" in E-commerce until recently. The General Electric veteran first sat up and tooknotice when he saw an article in an industry publication about GE's plans to move all procurement to theInternet, amounting to about $1 billion in on-line sales.

Dennis decided to see how good the Internet was at lead generating. He was already advertising in the Thomas Register. Why not try a listing on the Thomas Register Web site? He didn't have timeto do anything fancy, so he just took his published material and put it on-line.

In 45 days, he was getting more leads from the Web site than he'd gotten from the print version afterone and a half years. In fact, of the 10 or 11 lead generators he has, the Web is now his foremost source ofleads.

"Real creativity has nothing at all to do with casual days. The absence of discipline and standardsdoesn't drive creativity. In fact, it's almost the opposite."

--Keynote speaker Robert Lutz, CEO of Exide and former vice-chairman and president of Chrysler

Casey Sweet of Quesst Qualitative Research, in Brooklyn,N.Y., talked about hosting real-time on-line chats that work as focus groups. Not only are they lessexpensive (owing to low travel costs) and more convenient than conventional focus groups, she said, butthey often work better because of the anonymity of an Internet chat room: people are more likely to saywhat they really think about a product.

"You are never completely worthless. You can always set a bad example."

--Keynote speaker Dr. Robert Payne, statistician and trend tracker (a.k.a. Durwood Fincher,professional double-talk artist), on the subject of leadership

One technique for keeping people is offering great perks, and GaryQuick, president and CEO of Quick Solutions Inc., in Columbus, Ohio, was the Perk King by acclamation. Hisstrategy: "When you affect the family, you get more mileage out of your perks. A television set from thecompany, for example, will sit in front of the family for the next five to seven years."

So every four weeks he sends house cleaners to the homes of employees who've been with him for 36months or more. He pays $1,200 toward their vacations. When new employees sign on, he sends a bigbasket of food to their homes. All managers, as well as recipients of the company's outstanding-achieverawards, get a week per year in the company condo on Sanibel Island, Fla. Employees who refer six otherpotential recruits get the use of a Camry for two years. All the employees have their own business cards.And every Tuesday morning there's a ceremony at which administrative people are given $10 for everynew hire and $3 for every new deal the company has made--a total of between $2,000 and $3,000 eachyear. Next February, if key managers meet their goals, Quick will take them and their spouses to Maui. He'salso in the process of starting up an in-house concierge service for his employees. "We're really into thiswarm-and-fuzzy thing," says Quick.

"The brand is the amusement park. The product is the souvenir."

--Keynote speaker Nicholas Graham, founder of Joe Boxer Inc.

Brands, Ted Leonsis pointed out, fall into one of two categories. Eitherthey're loved (like Disney) or they're needed (like AT&T). In the early days of America Online, hestruggled to figure out which category AOL fell into. Then, on a sailing trip with his family in theMediterranean, he was forced to stop in Positano, Italy, where he mentioned to a shopkeeper that he waswith AOL. The man pulled out a newspaper with the headline "AOL del Morte." AOL had been down for 19hours, and Leonsis hadn't known because he was on the boat. When he got back, his wife said, "I told youyou'd be sorry if you went ashore." But he found out that the AOL brand was needed, not loved.

"I talked to the CEO of a company recently who said, 'I mow my own lawn because it's the only timeof the week when I can look ahead and know where I'm going and look behind and know where I've been. Inmy business I just can't tell."

--Kenneth W. Lowe, CEO and founder of Home & Garden television network, now valued at between $1.5billion and $2 billion

Former senior vice-president Steve Plotkin displayed a cherished andwell-worn Inc. cap at the session he and his wife, former CEO Marcia Plotkin, ran on "ExitStrategies from the CEO's Perspective." Since selling their Inc. 500 company, they've madenumerous treks to such exotic destinations as Botswana, Antarctica, and the Great Wall of China. Stevesays he always wears his Inc. cap--a reminder of what got him there.

At a CEO roundtable, the central topic was--surprise,surprise--recruiting, hiring, and keeping good people. Several West Coast CEOs lamented the dilemma posedby drug testing. "You can have 20 people with great rÉsumÉs," said one, "and after the drugtest it's down to two." Another company owner said that at one time he had 50 vacancies he couldn't fill.Now he keeps five or six recruiters in-house. Everyone agreed that advertising in newspapers is the leasteffective way to attract people.

"On every great adventure--as in every great company--you need poets along to record thelegend."--Keynote speaker Jamie Clarke

At the end of the black-tie awards ceremony, as the audience cheeredwildly and members of the 1998 Inc. 500 posed for the camera with their trophies held high andtheir faces bursting with pride, Norm Brodsky turned to his wife, Elaine, and said, "Just look at those guys.It makes me want to start another company." To which his stunned wife, in a no-nonsense tone of voice,replied, "No, honey, please. Not again."

Stand up and deliver

This year's much-coveted award for "Outstanding Stand-up Performance by a CEO" goes to RichardTuck of Lander International, an Inc. 500 executive-search firm, whose unusual managementpractices we wrote about in last year's Inc. 500 issue. After the article appeared, Tuck received1,000 rÉsumÉs. Some highlights from his breakout session:

  • "Here's a tip. Call up some of the good people who've left your company and have been gone for awhile. I'm talking about the people you didn't want to see leave, whose values are the same as yours. Invitethem out to lunch and ask them why they left. You want honest feedback here. Maybe you're Attila the Hun.If so, you ought to know."
  • "The Gen-X attitude is: life is short. In any case, they want it now; they don't want to wait. They'rea nonbusiness generation, if not an antibusiness generation. They don't take business courses. They're notparticularly interested in business. They major in the humanities, and they believe life comes first."
  • "Team hiring is fine, but you shouldn't have just anyone be part of the team. For interviewers I wantonly people who have a great record of hiring on their own."
  • "Think about giving people the option of having a three-day workweek. I've done it, and it works.Why? Consider how much work people get done the day before they go on vacation. They work hard, they'rewell organized and very efficient. Then they come back and settle into their old ways. Well, what if everyweekend were a four-day weekend? You'd get the same phenomenon. People would accomplish as much asthey do in five days, and they'd be much happier."

Hot topic: Doing business on-line

You can always tell what's hot at the Inc. 500 conference by noticing which sessions overflowinto the hallway. This year, one of the most overcrowded sessions was "Marketing on the World Wide Web,"with Internet-marketing specialist Jim Sterne. Among his words of wisdom:

  • Companies doing the best on-line customer support make smart use of chat rooms, which allow you toaddress several customers at once, in real time, rather than shoot off the same E-mails over and overagain.
  • In designing a Web site, it helps to be self-effacing. For example, you'll get more feedback from abutton labeled, "Click here to criticize our site," than from one labeled, "E-mail us with your comments."
  • "The job of the marketing vice-president is not to know what the customer wants. His job is to askwhat the customer wants. As soon as he knows what the customer wants, he's wrong--because thecustomer keeps moving."
  • On the technology for tracking customers: "Microsoft no longer has to ask, 'Where do you want to gotoday?' It knows."
  • " Ski Europe has discovered that you're three times more likely to makepeople customers by engaging them in an E-mail conversation than by just asking them for an order."