Whether they learned their craft from their families, in school, or through experience, the Inc 500 agree that entrepreneurs are made, not born.
"Education made us what we are," asserted French philosopher Claude Adrien Helvétius. For company builders, that's a matter of contention. The CEOs on this year's list spring from varied academic backgrounds, suggesting that formal study is a way, but not the way, to master business.
One graduate of the school of hard knocks is Jim Sharkey, CEO of $3.5-million Linac Systems (#259), which refurbishes and sells machines that treat cancer. Sharkey, 45, entered the military right after high school and worked as a field-service engineer at Siemens Medical Systems before starting his own company. By contrast, Richard G. Rebh, 48, holds a flock of sheepskins. The CEO and chairman of $59-million Floorgraphics (#39), which provides in-store advertising for retailers, received both a J.D. and an M.B.A. in 1982 from Stanford. He started Floorgraphics after working as a management consultant and for a high-tech company and cofounding two other businesses.
We asked Sharkey and Rebh how their formal schooling -- or lack thereof -- affected their climb to the Inc. 500.
Rebh: In business school I learned the basics: accounting, finance, strategy, how to identify markets and beat competition. It enabled me to think about what business is.
Sharkey: In my 15 years at Siemens, I was tainted toward business school. It seemed as if a lot of the guys running the business had blinders on. I used to chuckle because it was like their saying, "This is the way things are supposed to go," and me thinking, "Well, that's not the real world." For me, what mattered was gut instinct. You needed certain personality traits to be a leader, to manage people.
Rebh: I agree that business school doesn't teach you how to manage people, how to sell, how to work through personal issues with employees. But it does compress much of the foundations of understanding business into two years, so you can contribute at the strategy level right away. If you're trying to raise venture capital, you have to know how to do revenue recognition and put together a financial plan. Floorgraphics was funded initially with about $150,000 from friends and family, but the real financing was $5 million of private equity when the company was two and a half years old. If you're doing venture-backed financing as opposed to bootstrapping, business school gives you the ability to look at a business from the top down.
Sharkey: I've never used venture capital. I just emptied my 401(k) [about $50,000], bought a van because I needed transportation, paid off all the bills I could so my monthly net was down, and winged it from there. But I know that if you go looking for capital, for some reason they like to see degrees.
8 % of the Inc. 500 CEOs surveyed had only a high school education
Rebh: The degree gives VCs comfort, but it also gives the business-plan numbers credibility, because the VC will push around the assumptions in trying to understand how optimistic the numbers are. The degree lets you have a dialogue with the people who are doing that, to defend your plan.
Sharkey: You must be one hell of a good salesman.
Rebh: Business school really does not teach you anything about salesmanship. And salesmanship is probably the most important lesson in life, because life is sales. Sales is probably the most lucratively compensated area in business, and it's one that is largely taught in books and in seminars and on the job.
Sharkey: I'm an avid reader -- books by Mark H. McCormack and Harvey Mackay. Some of it was like "Duh, no kidding." But there was revealing stuff, too. Consider negotiating. I mean, hell, they can't teach you negotiating. But I've picked up a lot of things in books, such as you negotiate your second point first, concede to that one so that you're getting what you really want anyway.
What I learned at Siemens was how to deal with customers on a daily basis. The machines I work on treat cancer. So the first thing I had to do as a field engineer was calm down the customer so I could actually work on the machine. It was people skills.
Rebh: I don't think that business school does a good job of teaching practical marketing, sales, or how to deal with customers. But it does teach you about strategy. We're looking to expand the business, and strategy is very important in thinking through those next moves because they relate to higher-level issues, like competitive dynamics and cost sharing.
Sharkey: I've got a pretty different background. I'm a recovering drug addict and alcoholic, and I've got 15 years clean. Before I got clean, my strategizing was just to keep out of trouble. The way I lived before was my training ground for everything.
For example, at Siemens, when I was using, I wouldn't show up at the site I was assigned to. My only saving grace was that I was great on the equipment, but that only lasts so long. So I had to learn to be very perceptive, to know how far to push things. It was "OK. I'm going to go into the office, and they're going to say this and be pissed, and blah blah blah." I had the whole thing worked out so I could walk out of there and still have a job. So as far as strategizing goes, my mind works in a way where I form an out: figure out the most variables I can in any given situation so I have options as problems come up.
