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EXIT STRATEGIES

Snapshots: Start-up Gluttons

Learn about three Inc. 500 entrepreneurs who have each founded several start-ups.
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Red-Tape Brainstorms

Name: Cherrill Farnsworth
Number of companies founded: Six
Why the big appetite: Irresistible opportunities

Most people don't enjoy reading through government regulations, but Cherrill Farnsworth does it whenever she can. There are too many good ideas buried in those pages of tiny print and bureaucratic cant for an entrepreneur to pass up. "Gosh, when you read through these things, you see dozens of companies you could form," Farnsworth says. Regulatory changes have inspired her to start a bus company, three equipment-leasing businesses, and two radiology-oriented health-care ventures, including HealthHelp (#213).

Farnsworth, 50, who lives in Houston, got started in 1977. She persuaded the Texas Railroad Commission to grant her fledgling company, Suburban Transportation Co., a Houston bus franchise. "After we sold the bus company to the City of Houston, I really sat down and evaluated what I liked best and what I was good at, and it was leasing and putting deals together," she says. That led her to open a series of leasing companies to benefit from investment tax credits and other tax provisions.

In 1983, Farnsworth found an opportunity in marketing magnetic resonance imaging (MRI), a technology that was then so new that hospitals were reluctant to buy their own machines, because Medicare wouldn't reimburse them for the tests. The result was a chain of MRI centers, which Farnsworth called TME Inc. When managed care got hot, in the 1990s, she started HealthHelp, which handles radiology programs for HMOs and other insurers.

Farnsworth has sold all the companies to strategic partners, except HealthHelp, which she still runs as president and CEO. Although each business has been very different from the others, Farnsworth says that she has stuck to the same basic strategy for everything from financing to hiring. "Early in my career, I used to think that entrepreneurship was more an art than a science, that it was a gift or something," she says. "I don't believe that anymore."


Bust-up's Outcome: More Start-ups

Name: Robert Shay
Number of companies founded: Three
Why the big appetite: Need to start over after a split with a partner

Bob Shay didn't exactly plan to become an entrepreneur three times over, but events forced his hand.

In 1982, Shay started Rightfit Sports Inc., a ski-boot retailer, and in 1989 followed up with Alpine International, a company that manufactured and marketed battery-operated heaters for boots called Winter Heat. In 1988, Shay had taken on a partner, Lee Findell, who bought a 50% share in Rightfit. Together the two men built up revenues of $9 million and opened 14 Rightfit stores. But in 1994 the partnership dissolved. Shay sold Findell his share of Rightfit but retained ownership of Alpine International, which he renamed Winter Heat LLC after the product, as well as two former Rightfit stores in Utah, which he renamed Surefoot. For two years Shay did business in only those two stores, thanks to a noncompete agreement he had signed as part of the sale.

"My big worry was that I'd just have a mediocre business," says Shay. While he was toughing it out, Rightfit entered bankruptcy proceedings. Because that made the noncompete agreement effectively obsolete, Shay was back in the game. "I hocked everything I had and didn't take a salary for a year and a half," he says, "and I started one Surefoot store at a time."

Today Surefoot (#306), based in Park City, Utah, has 24 stores and is projecting revenues of almost $13 million for this year. And Shay, 43, says he's learned a hard lesson about sizing up potential partners. "Now I wouldn't even look at you as a person. I would look at you as a business deal," he says. He has come to rely on his brother Russell, 35, who is Surefoot's vice-president and second-in-command. Together they retain 80% ownership of Surefoot.


When Creating Companies Is Habit-Forming

Name: Stanley Adelman
Number of companies founded: Four
Why the big appetite: Potential for new products

There are entrepreneurs who thrive on risk and bet gobs of capital on start-ups, and then there is Stan Adelman. He prefers to start small and secure. His very first venture, Systems Strategies, which he launched in 1976 with $10,000, was a computer consulting company. "You need very little investment capital," says Adelman, 56. "You just go out there and sell services." He sold enough services that Systems Strategies made the Inc. 500 three times in the early 1980s.

Thanks to work that his company performed for Citibank, Adelman turned into a serial entrepreneur. When he developed a computerized system for a bank to handle its securities trading, he realized that other companies might need exactly the same sort of hardware. In 1980 he created a second company, Systems Strategies Equipment Corp., to exploit the idea commercially. A software start-up followed in 1982. "A very safe model," Adelman says, describing his start-up strategy. "Someone paid us a lot of money and essentially told us what the market required, and we went out and built it."

In the mid-1980s, Adelman sold all three companies, two of which eventually became part of NYNEX Corp. Adelman worked for the Baby Bell until 1994, when he founded a new consulting company, Aegis Software (#104), based in New York City.

Now, following his old model, Adelman has adapted a product (a Web-based securities-trading system) that he developed for a client and plans to market it next year through a yet-to-be created company.


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To learn more about the Inc. 500, visit the Inc. 500 area.

Last updated: Oct 15, 2000




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