What do we really know about this year's Inc 500? The lowdown on the class of 2001.
The economy may be on one long roller-coaster ride, but you would never know it by looking at the data on this year's Inc 500. Collectively, the class of 2001 coasted to a new record for sales: $12.5 billion. Their average five-year growth rate of 1,933% is also higher than that of any other class in the past five years. At the close of their 2000 fiscal years, the companies on this year's list were still overwhelmingly profitable, still growing, and still hiring.
But as boom turns to bust, will these companies continue their upward climb? It's hard to predict. One thing in their favor: the CEOs of these companies aren't naive. For starters, they don't view the Web through rose-tinted Ray-Bans. And they know how to tighten their belts. The 2001 Inc 500 companies are carrying an average debt of $3.5 million, down from the $7.9-million average reported by the class of 1999.
The CEOs of this year's Inc 500 also believe in leaning on others for help. When launching their companies, they didn't hesitate to hit up friends, family, cofounders, and strategic partners for funding. And 62% of this year's companies were founded by two or more partners, compared with 55% of last year's list.
The 2001 CEOs also are realistic about what lies ahead. Only 38% are considering selling their business to another company in the foreseeable future. The majority, or 74% of this year's CEOs, say their plan is to stay at the helm of their company for the next five years. Only 29% are anticipating an initial public offering, down from 43% among last year's group.
Perhaps there's something about adversity that brings out the inner entrepreneur. For example, Mike Mendiburu, CEO of the #1 ranked company, High Point Solutions, says he never would have started his own business if his previous employers had treated him right. "I'm grateful for the hard times," he says. "I was pushed out of my comfort zone." If discomfort makes entrepreneurial impulses stronger, we expect to see a bumper crop of Inc 500 applications in the coming years.
The Big Picture
The 2001 Inc 500
Average five-year growth rate: 1,933%
Average 2000 sales: $24,976,000
Median 2000 sales: $10,728,000
Collective 2000 sales: $12,487,994,000
Average number of employees: 160
Median number of employees: 64
Collective number of jobs generated: 80,188
Percentage of companies turning a profit: 76%
Number of companies that broke $100 million in sales: 22
Percentage of companies that also made last year's list: 31%
Average age of companies: 8 years
Percentage of companies planning to go public in the foreseeable future: 29%
The CEOs
The More Things Change ...
The more they don't. Although the Inc 500 list turns over completely about every four years, the class of '01 bears an eerie resemblance to the class of '97. This year and that year, about 90% of the CEOs described their background as working-class or middle-class. The list is still predominantly a boys' club, though we know through many anecdotes that wives play a huge supporting role, both emotionally and financially, in building Inc 500 companies.
So what's it like to be the chief exec of an Inc 500 company? Here's how, on average, this year's CEOs say they spend their day. They devote more than 25% of their working hours to handling all the onerous obligations that fall under the category of "managing." Another 9% or so of the time, they get on their knees to pray to assorted angels and bankers. Inc 500 CEOs devote about 21% of their working moments to sales, 19% to strategic planning, 15% to marketing, 14% to product development, and 7% to recruiting. In short, there's not enough time in their day to do everything. Which may explain why, when asked what percentage of his day was devoted to each kind of task, the average Inc 500 CEO's responses added up to 109%! But at least our CEOs are paid well for their time: their median compensation was $215,000 a year.
Money Matters
The paycheck
Number of this year's CEOs who admitted to going without a salary in 1996: 33
Number of this year's CEOs who went without a salary in 2000: 0
Median annual compensation of this year's CEOs: $215,000
Number of this year's CEOs who had compensation of $1 million or more in 2000: 18
CEO equity
Percentage of this year's CEOs who own 100% of the company: 24%
Percentage of this year's CEOs who own less than 50% of the company: 35%
Median equity stake owned by the CEOs on this year's list: 51%
The angels
Percentage of this year's companies that received angel investments: 12%
Percentage of this year's CEOs who've made angel investments in other companies: 20%
Personal Profile of the Class of 2001
Percentage of CEOs who are
Male: 93%
Female: 7%
Median age of CEO: 41
Median age of CEO when company started: 34
Highest level of education completed
High school: 6.90%
Two-year college: 8.49%
Four-year college: 54.38%
M.B.A.: 15.38%
Other advanced degree: 14.85%
Economic background
Poor: 3.97%
Working-class: 31.48%
Middle-class: 57.94%
Affluent: 6.61%
Ethnicity
Caucasian: 87.20%
Asian or Pacific Islander: 8.27%
Hispanic: 2.40%
Black or African American: 1.33%
American Indian or Alaskan Native: 0.8%
