The Secret of My Succession
You know you need a succession plan. But what would it take to get you to actually put one in place? For Manoj Baheti of Yash Technologies Inc. (#8) it was a broken propeller. Last June, while Baheti was taking a flying lesson on a Cessna, six inches of the prop blade snapped off, throwing the plane off balance. Fortunately, Baheti's flight instructor landed the craft safely. Suffering no injuries, Baheti nonchalantly went to work as usual and told no one about the incident. The local papers, however, were less discreet, and the next day Baheti was met at work by a barrage of calls and E-mail from concerned employees. It served as a reminder to Baheti of the 200-plus families who depended on him. He's now implementing a succession plan. "Not for me," he says, "but for those around me." --Nicholas Bazos
|Percentage of 2001 Inc 500 CEOs who started their company with a specific exit strategy in mind.|
Lurking from Home
Jason Denmark was 20 when he burst onto the IT-consulting scene from the privacy of his parents' Staten Island home. Back in 1991 he frequently surfed primitive Internet user groups in search of tech knowledge. There Denmark encountered an abundance of techies in need of work. In other user groups he stumbled across companies that were seeking tech expertise but didn't know how to find it. Denmark hooked the two parties up, charging a fee for his services, and his IT-consulting firm, Intermedia Group (#24), was born. "God forbid that either party knew it was a 20-year-old the whole time," he says. He attributes his early success to his brazen approach. "I could spit out all the tech buzzwords, so I looked like the real thing," he says. --Andrea Forker
|Percentage of 2001 Inc 500 CEOs who started their company from home.|
Se Habla Global Sales
It takes more than a snazzy sales presentation to win business in today's global markets. So when Info Directions (#63) CEO Don Culeton decided to lead his company into South American markets, where personal rapport and trust play a significant role in business relationships, one of the first steps he took was offering companywide Spanish and Portuguese lessons. Although the company can already boast of seven bilingual employees, more than 20% of the remaining staff -- including Culeton -- have signed up for the early-morning on-site classes. While fluency is not necessarily the goal, Culeton hopes to instill in his staff a working familiarity with the languages. "If we're going to serve the markets of South America, we need to have a deeper understanding of the cultures there," he says. --Maria Di Mento
|Percentage of 2001 Inc 500 companies with revenues from international sales.|
Tom Sawyer Lives
Kevin Finn of Iron Hill Brewery & Restaurant (#71) didn't realize he was an entrepreneur at heart until later in life, but he admits that there were telltale signs early on. At 14, with an already industrious past as the ringleader of local newspaper delivery, Finn was offered $2 an hour to paint an enormous Victorian house in his neighborhood. Eager to make some cash but dreading the prospect of completing the job himself, he resorted to classic Tom Sawyer- esque business practices, rotating friends as subcontractors for $1.50 an hour and pocketing 50¢ as the middleman. "I was always trying to maximize my abilities and make the most money," he says. (Finn insists that his Twainian last name is pure coincidence and that he has never answered to "Huck.") --Rebecca Dorr
|Median age of 2001 Inc 500 CEOs when they founded their company.|
You Get What You Pay For
Bootstrapping is a time-honored tradition for the Inc 500, but sometimes penny-pinching tactics can backfire. When Kevin Case first started Case Engineered Lumber Inc. (#113), he resisted the temptation to buy brand-new vehicles, opting instead for a used delivery truck to handle his loads of lumber. The truck experienced engine trouble early on, and after three unsuccessful weeks with a mechanic, it burst into flames upon ignition. Unfazed, Case junked the toasted truck and replaced it, this time with two used trucks -- figuring he'd at least have a backup. "It took me a while to learn that unless you know what you're looking for in used equipment, you're probably buying someone else's problem," he says. Now when Case opens additional locations, he splurges on all-new trucks. --Rebecca Dorr
|Percentage of 2001 Inc 500 companies that were started with less than $1,000.|
How many Inc 500 CEOs are actually frustrated musicians? There's no way to know for sure. But don't be surprised if someday you see George A. Pfenenger's name on something besides his office door at Socket (#136). Pfenenger, who graduated from the music conservatory at the University of Missouri with a dual major in audio engineering and classical guitar, hasn't given up on his dreams of making music a bigger part of his life. "My musical interests are varied," he says. "They range from Mozart and Bach to Collective Soul and the Bodines." Pfenenger is building a 14-by-22-foot home studio that he designed himself and is kicking around the idea of starting his own record company. Stay tuned. --Albert Greenwood
|Percentage of 2001 Inc 500 CEOs who don't expect to be CEO five years from now.|
Bridging the Digital Divide
Reginald Daniel beat the odds, and he wants to make sure that others can do it, too. "Most of the friends I grew up with are in jail, hooked on drugs, or not living," he says. "Some people just don't assimilate into the economy, and the digital divide is a big way that people get left behind." Daniel spends about 10% of his time away from Scientific & Engineering Solutions (SES) (#151), working on his not-for-profit company AIMSE (Assimilate into Mainstream Society Economically). He dedicates about 5% of SES's profits to the foundation, which helps fund such projects as outfitting two Maryland churches with computer-literacy centers. Daniel has also rallied 10 of his entrepreneurial friends to teach low-income people how to start businesses of their own. "If business doesn't support the community, who will?" --Libby Ellis
|Percentage of 2001 Inc 500 companies that spend more than 5% of sales on employee training.|
In a sluggish economy, it's important to keep morale out of the doghouse. At V-Span (#190), esprit de corps is the special domain of Duchess, the com- pany's official "director of morale." Duchess also happens to be chief technology officer John Lytle's nine-year-old English Labrador retriever. Whether she's nuzzling harried employees or welcoming visiting clients, Duchess impresses all with her innate communications skills. In addition to what CEO Kenyon Hayward calls her "daily point-to-point welcome route," Duchess visits the lunchroom every day at exactly 11:45 a.m. to mingle and share a snack or two. Having begun her tenure at age three, Duchess is now easing into semiretirement, but she still makes it to the office two or three times a week to keep spirits high. --Maria Di Mento
|Percentage of 2001 Inc 500 companies that offer flextime.|
Yeah, that's the Ticket
When you're starting a business, there usually isn't much of a safety net. But when Australian native Rob Semaan decided to cofound Access US (#200), he at least wanted to know that if it didn't work out, he'd have some way of getting back home. Semaan and cofounder Victor Mattison, who developed the business plan for their company in a class at Northwestern's Kellogg Graduate School of Management, wanted to give it a real-world try. "Rob asked me what his salary would be," says Mattison. "I laughed at him and said, 'You can stay with my mom, eat her food, and drive her old car." Mattison also threw in $1,000 for necessities and incidentals, but Semaan wanted one more thing: a plane ticket back to Sydney. Semaan has never used the return ticket, but they keep it on hand as a regular reminder of their success. --Libby Ellis
|Percentage of 2001 Inc 500 CEOs who have an M.B.A.|
The Lollipop Kid
You might think that at 25, Eddie Speir was pretty young when he started 3t Systems (#220), in 1995, but 3t was not exactly Speir's first entrepreneurial endeavor. "As a kid I had every scheme imaginable," he says. Speir mowed lawns, sold lemonade, and even painted home addresses on sidewalks for $5 apiece. But he says his most successful business was selling homemade lollipops in grade school. At first, Speir micro- waved Jolly Ranchers and molded them into lollipops. He quickly realized that he could improve his profit margins if he manufactured his own mixture out of corn syrup and flavoring. Speir got to the point where he was selling 50 to 75 pops a day at 50¢ apiece with a 46¢ profit -- a good margin for an entrepreneur of any age. --Albert Greenwood
|Percentage of 2001 Inc 500 companies that are profitable.|
A Marital Contract
Having a CEO for a spouse can be a handful, especially when kids enter the equation and schedules become a hodgepodge of sales pitches and diaper changing. Robert Petrocelli of Heartlab (#242) believes that a CEO's business commitment should be matched by a specific and frank spousal agreement. He and his wife, Elise, have an ever-evolving oral contract. Current highlights include a regular house cleaner ("Everybody's happier when no one has to scrub toilets," says Elise), a baby-sitter once a week, and evenings and weekends at home for Robert. "It may seem rather businesslike, but it works best for us," Robert explains. "If one of us is dissatisfied, we'll talk about it. I like to say we have quarterly arguments." Robert calls Elise the "auditor" and empowers her to enforce contract guidelines when disputes arise. --Rebecca Dorr
|Percentage of 2001 Inc 500 CEOs who are divorced.|
Monday mornings are always a challenge. But imagine starting your week with a fire that destroys your warehouse and $2 million worth of inventory. On February 28, 2000, Michael Bell of Encore Software (#301) was roused at 5 a.m. by a call from his chief financial officer, who advised him to turn on the local news. What Bell saw: a helicopter shot of 100-foot flames shooting out of his warehouse. "There was no mistaking whose building it was," he says. "You could see the company logo beneath the flames." Bell called an emergency all-staff meeting at the company's untouched headquarters. The first thing Bell said was, "We lost some boxes. We didn't lose the business." Fortunately, the company had already been in the process of building a new warehouse, so Bell's employees were back at work by week's end. --Nicholas Bazos
|Percentage of 2001 Inc 500 companies that provide life insurance for full-time employees.|
It's hard to decide which is more stressful: your first funding event or the birth of your first child. Just imagine both of them happening at once. In November 2000, as Jon Feld of Navigator Systems Inc. (#354) was working to close on his first round of venture capital, he was also awaiting the arrival of his first child, due in January. On December 20, as the capital deal was taking shape, Feld's cell phone rang. His wife, Cecy, was in labor. As Feld rerouted to the hospital, he made arrangements with his chief financial officer, Todd Vick, to facilitate the closing of the capital deal. By the next day there was still no baby, so Vick met Feld in the hospital waiting room for the signing. That night, after 31 hours of labor, Cecy gave birth to their son Jack. Cecy says she didn't mind having business creep into the delivery room -- she owns a stake in Navigator, too. --David E. Weliver
|Percentage of 2001 Inc 500 companies that received venture-capital funds at start-up.|
What Would FDR Do?
The board of directors at Food Concepts Inc. (#372) boasts some rather august names indeed: Frank Lloyd Wright, Abe Lincoln, and Vince Lombardi, among others. The fact that those men are all long dead in no way diminishes their advisory effectiveness. Whenever he's in a bind, president and CEO Brad Duesler turns to what he calls his "virtual board of directors." Call it the secular version of "What Would Jesus Do?" Duesler says that usually, based on his extensive readings about the lives of these figures, he can divine the advice that each would give. "It's a really effective mental exercise to bring multiple perspectives to an issue," he says. And the diverse, superior expertise on his board is just one perk. "Airfare is a lot cheaper because I pay in virtual dollars," he says. --Andrea Forker
|Percentage of time that 2001 Inc 500 CEOs spend on strategic planning.|
'Forget the Resume. Here's My Sales Brochure'
Fledgling business owners often resort to outlandish tactics to achieve their first sale, as Jerry Brooks can attest. Nine years ago, his newly formed Engineering Services Unlimited (#376) faced sure demise unless Brooks could secure his first client. Frustrated by a series of futile sales calls, Brooks spied a help-wanted listing for a weapons-simulation engineer -- his specialty -- at Lockheed Martin. With nothing to lose, Brooks scheduled a job interview with the project manager. After impressing the interviewer with his qualifications, Brooks switched gears and made his sales pitch, proposing that he could better service Lockheed as a contractor instead of a full-time employee. "I worried that they would take offense," he says. But his scheme worked, and the project manager gave Brooks a 60-day trial contract. --Rebecca Dorr
|Percentage of time that 2001 Inc 500 CEOs spend on sales.|
My Fair CEO
At 22, Mike White learned that his East Tennessee accent and colorful backwoods syntax might hinder his business success. Once, when White was a rookie salesman, his regional manager asked if he had racquetball equipment, and White replied, "Yeah, I brung it." Despite having a college education, he admits that his southern drawl made him "a disaster" among image-conscious salespeople. For the next four years White's boss, Jessie Birchfield, coached him during every conversation, and today White says he's thankful. "He had the guts to tell me that if I didn't face my grammatical challenges, I would find myself unable to succeed." Now the CEO of Multi-Media Solutions Inc. (#393), White has also become a regular speaker at trade shows, where he is heralded as both an industry expert and a clear communicator. --David E. Weliver
|Percentage of 2001 Inc 500 CEOs who grew up poor or working-class.|
Oops, We're in Business
One swift kick in the butt and Payne, Lynch & Associates (#406) was off the ground -- a few months ahead of schedule. Patrick Lynch and Todd Payne were tossing around the idea for their company when Payne answered an ad for rental space. "I talked to this woman Pat about how I was starting a business with my brother and a friend," he says. "We arranged a time to meet, and not a minute after I hung up, the phone rang." It was the vice-president of the company that both Payne and Lynch were working for at the time. Turns out Pat was also known as the VP's wife, and she evidently blew the whistle on the cofounders' covert entrepreneurial activities. Lynch and Payne started their company two weeks later -- in a different building. "In hindsight it was a blessing in disguise that we were forced into action," says Lynch. --Libby Ellis
|Percentage of 2001 Inc 500 CEOs who started their company with a cofounder.|
Dave Thompson was tired of seeing his employees' efficiency fall prey to viral illnesses. After calculating that his company was losing as much as $1,000 a day per absent employee in lost productivity, the CEO of Spectrum Astro Inc. (#437) decided to fight back. Earlier this year the company broke ground on a new $39-million facility. In the process, Thompson is hoping to create what he calls the "factory of the future," with a state-of-the-art ventilation system, hyperefficient air filters, and mold-and bacteria-killing ultraviolet lighting, among other health-promoting amenities. Thompson is convinced that the new features -- which he estimates have increased the building's cost by 10% to 20% -- will cut nasty airborne microbes by 90%, leading to a direct decrease in employee absenteeism. --Nicholas Bazos
|Average employee turnover for 2001 Inc 500 companies.|
Always on his Toes
When his 15-year-old daughter beat out thousands of other ballerinas for a spot in the Juilliard School of American Ballet, in New York City, Barry Zungre and his wife agreed that it was a rare opportunity. But there was no chance that the tight-knit Pittsburgh family was going to ship its young Pavlova to a stark dorm room all alone. So Barry Zungre packed up his family and moved to New York, taking half of his software-consulting company, CEI (#480), along. The resourceful CEO immediately began seeking out new accounts and building the company's consulting staff in the Big Apple. Zungre spends Monday through Wednesday in the Pittsburgh office, then jets back to New York for the end of the week. Meanwhile, CEI cofounder D. Raja manages the business on the home front. "We try to be there for events that are important to our kids," says Zungre. --Andrea Forker
|Percentage of 2001 Inc 500 companies that allow employees to telecommute.|
How the 2001 Inc 500 were selected
This year's Inc 500 list is the 20th annual ranking of the 500 fastest-growing privately held companies in the United States. To be eligible for this year's list a company had to
- Be an independent, privately held corporation, proprietorship, or partnership. Regulated banks, utilities, and holding companies were excluded;
- Have had sales of at least $200,000 in 1996;
- Have a five-year operating or sales history that included an increase in 2000 sales over 1999 sales.
The ranking is based on a company's percentage increase in sales from 1996 through 2000. Applicants had to submit completed qualification forms and documentation of sales by May 7, 2001. Sales figures were verified using the companies' tax returns and financial statements (audits or reviews prepared by an outside accountant or auditor) for 1996, 1999, and 2000. Sales are total net sales. Profit ranges are those reported by the companies and have not been verified. Employment numbers refer to full-time employees.
The 2001 Inc 500 list was compiled under the direction of Inc editorial information manager Charlene Niles. Inc research editor Sally Chicotel, CPA, advised the team.
For information about how to apply for the 2002 Inc 500, go to www.inc.com/inc500.
Please note that the information published in the list is the only information Inc will make available about the ranked companies.
The 2001 Inc 500 research team: Nicholas Bazos, Ethan Ceplikas, Maria Di Mento, Rebecca Dorr, Libby Ellis, Andrea Forker, Albert Greenwood, Amit Ramsinghani, David E. Weliver, and Kathy Yang.
View the 2001 Inc 500 list .
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