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FYI: Life in the Fast Lane

Highlights from the 2002 Inc 500 conference.
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FYI

The site of this year's conference was Albuquerque, and New Mexico governor Gary E. Johnson welcomed the leaders of America's fastest-growing private companies at a special reception. All governors who host Inc 500 conferences claim to be entrepreneurs. Johnson is one of the few who actually was one. Starting out as a handyman in 1974, he built a commercial and industrial construction company that now has 1,000 employees.

These days, when Johnson isn't handling his official duties, he likes to ride his motorcycle around the state. He told about stopping at a diner in his biker body armor one day. The waitress said, "You look like the governor. A lot of people must tell you that."

"They do," he said.

"Must piss you off," she said.

The attendees needed body armor of their own to weather the turbulent economy of the past year, and yet a more resilient group of people you'd be hard-pressed to find. For all that they'd been through, they retained their optimism about the future -- and their sense of humor about the past. Said Mary Naylor, founder of Capitol Concierge, a 1994 Inc 500 company, and now CEO of VIPdesk: "At my company we used to think we were playing Who Wants to Be a Millionaire? But now we've realized we're really on Survivor."


"The best way to get people to think out of the box is not to create the box in the first place." --Martin Cooper, CEO of ArrayComm

Name That Company
Which of the following companies is not
a current or former Inc 500 company?

A. Just Bikinis
B. Advanced Hair Removal
C. Erection Specialties
D. Royal Waterbeds

A question posed by Cranium cofounders
Whit Alexander and Richard Tait in an all-
conferencegame of Cranium for Inc 500 CEOs.
Answer at end of article.


One step back, two steps forward
Keynoter Thomas G. Stemberg, cofounder and chairman of Staples, talked about opportunity in adversity, an appropriate theme for this crowd. Staples, he noted, often took its biggest and most important strides in response to situations that looked like disasters at first blush. As for economic downturns, he noted that there was never a better time to find and hire great people.

It's also a great time to put together a board. "It's amazing," Stemberg said. "If you have a nifty idea, crazy as it sounds, people will open their doors for you. And today, if a nifty public company comes to me and a nifty private company comes to me, I would choose to work with the nifty private company. Three years ago, I'm not sure, but today definitely."

In response to a question from the audience about establishing Staples as a brand name, Stemberg said: "Actually, the name was a problem in the beginning. We had to keep explaining who we were and what we did. But I had a member of my board of directors who was a very smart guy. He said, 'Run it right, and Staples will become a recognized brand."

Someone else asked for Stemberg's advice on going back to school to earn an M.B.A. "Experience overcomes education by a three-to-one ratio," Stemberg said. "You're better off taking special education courses in a specific area or maybe entering one of the weekend M.B.A. programs."


Less is more
PowerBar cofounder Brian Maxwell said he'd wanted $250,000 to launch the company and found he couldn't get it because the venture capitalists thought that it wasn't enough to start a packaged-food business. "They said, 'If you asked for $2.5 million or $25 million, we could take you seriously," he related. So he made do with what he had. Now, as an angel investor, he tells people, "You really don't want my money. You'll do better without it. The lack of money will force you to do things you wouldn't think of otherwise."


"Venture capitalists want to choose management. Private-equity investors want to buy management." --Tom Shattan of the Shattan Group, explaining one of the differences between going for venture capital and seeking private equity

Return on doing good
In lean times, companies may be tempted to cut back in the area of social responsibility, but Richard Foos, cofounder of Rhino Entertainment, noted that the most important thing Rhino had done from that standpoint hadn't cost the company anything at all. Employees had been pushing Rhino to let them take off the week between Christmas and New Year's, something the rest of the industry was already doing. Finally, he said, "OK, but the deal is that everyone has to do 16 hours of community service a year, and we're going to monitor it." He said the policy turned out to be a major factor in attracting and retaining good people.

Foos also mentioned a Rhino rule he intends to enforce at the new recording label he's starting in Los Angeles: a strict ban on employee-to-employee E-mail. His staffers can freely trade messages with people outside the company. But to chat with each other, they have to hike down the hallway instead of hitting the keyboard. The benefits: less isolation, fewer misunderstandings, fewer overlooked messages -- and everyone knows everyone else by face as well as by name.


"We're so focused on our company's mission that we could pee through a straw." --Richard Tait, cofounder of Cranium, which became the fastest-selling independent board game in U.S. history


Top-gun training
Jim Murphy, founder and CEO of Afterburner Seminars, ran a session showing companies how to apply the mission-planning skills of fighter pilots to business. His mantra is "Brief, execute, debrief." That's simple enough, Murphy noted, but most companies miss the most important part: debriefing. How often do people ask themselves why a product launch went well or why it failed or what was good about that client meeting?


"I agree that there's some hypocrisy around the work-love-play stuff. Kinko's mission statement says, 'We believe in work, love, and play,' but we're going to change it because it's bullshit." --Kinko's CEO Gary Kusin, in response to a question about the tendency of companies to promise more than they deliver in terms of work-life balance


Leading with your financials
Mark Stiffler took open-book management to the next level at Synygy, which received a Hall of Fame award for its five appearances on the Inc 500 list. In an effort to convince customers that his company wasn't going to disappear and leave them to service their incentive-plan software on their own, he began sharing his financials with them. In releasing the data, Stiffler issued a press release saying: "Over the past few years, many customers that purchased software have been burned by their vendors going out of business, having to lay off software developers and cut back on promised development plans, or being sold to another company without the same strategic vision or support for the product. We encourage prospective customers to review audited financials from all vendors and verify that the vendors are profitable, have the financial strength to continue to support a high level of investment in R&D, and have a strong balance sheet."


"My wife, Cranium ... I mean, Karen ..." Cranium cofounder Richard Tait. "There's that work-life balance you look for." --His partner, Whit Alexander


Be careful what you wish for
A recent study found that a majority of downsized big-company executives wanted to work in smaller businesses, but PowerBar cofounder Brian Maxwell said that hiring managers who were "too big for the company" was his biggest mistake. Turned out that big-company executives couldn't adjust to life at PowerBar, and within months they were all gone.


"I don't give a damn about the legend. It's the living part that's important to me." --Climber Todd Skinner, after being introduced as a "living legend" in the field of mountain climbing


The importance of being persistent
Kinko's CEO Gary Kusin reminisced about starting his first company, one of the earliest retailers of electronic games. "The mall owner wouldn't even meet with us, so we camped out on his car. We figured he had to show up there eventually, and he did. He laughed at our aggressiveness and gave us a space in the mall. I have to say it was a space he hadn't been able to lease in 25 years."

Asked if he had a mentor, Kusin said yes: Ross Perot. It turns out that Perot was the graduation speaker at Kusin's high school, in Texarkana, where Kusin was the student-body president. Perot asked him if he would like to fly back to Dallas on his jet. Perot has been Kusin's mentor ever since.

When Kusin started his second company, a cosmetics supplier, he had trouble raising start-up capital. Perot insisted on giving him what he needed. Kusin was reluctant to accept it. "I'm not going to take your money and risk losing your friendship," he said.

"It's my money," Perot replied, "and I can decide for myself what to do with it." Kusin gave in. Perot gave him the money under one condition: "You can't let anyone know I'm backing you. If they know that, this will be all about me, and it should be all about you."


"Stay constantly irritated. When you walk through your business, focus on what's wrong. What's right is what you pay your staff for." --Evan Cole, cofounder and president of retailing phenomenon ABC Carpet & Home, on what it takes to stay ahead of the curve


Write to George Gendron at george.gendron@inc.com.

Answer: B. Advanced Hair Removal


Please E-mail your comments to editors@inc.com.




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