The No.1 Companies From 1982 -- 2005: Where Are They Now?

Seven are still private, twelve have been acquired, three went public, and one was shut down by the Feds.

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The laws of physics describe a relationship between velocity and inertia: The faster something moves, the harder it becomes to change its direction. The laws of business suggest that the more momentum a company achieves, the more strategic options it has. Somewhere between those two laws--and muddled by the vagaries of markets, technology, and human frailty--lies an explanation for the diverse fates of companies that have reached No. 1 on the Inc. 500. Years after that moment of extraordinary momentum, some have stayed on their trajectory to greatness. Some have relaxed into stasis. And some have simply vanished.

There are no general rules to extract from the experiences of these companies, which collectively differ little from the experiences of Inc. 500 companies in general. Of the 23 businesses topping the list since 1982--one company, Cogentrix, topped the list two years in a row--seven are still private, twelve have been acquired, three went public, and one, Equinox International, went the way of other ill-mannered multilevel marketers, closing down in 2000 after an investigation by the Federal Trade Commission. Still, it is instructive for entrepreneurs who have made or who aspire to make the list to see where momentum can take them. The following profiles illustrate some of those possibilities. No company can entirely control whether it ends up as a Kingston Technology or a Drypers--but it is simultaneously sobering and inspiring to recognize that both are possible.

Object Design: A Public Disagreement

In 1994 Ken Marshall, CEO of that year's No. 1 company, Object Design, in Burlington, Massachusetts, expressed relief that investors weren't pressuring the business to go public yet. Marshall, who had joined the $26 million database-management software company 18 months after launch, wanted time to smooth unpredictability out of the system. But like most everyone else, he saw IPO scrawled all over the company's horizon.

One year later, his views had changed. Marshall believed selling the company would generate a greater return. He left, and the company's founders led Object Design to a successful IPO in 1996. "It was a very lucrative outcome," Marshall says, "but I think it would have been more lucrative if they had sold." Object sailed along for a couple of years, then started a slow decline as behemoths like Oracle and Informix introduced competing products. The business merged with another company and was ultimately purchased by Progress Software in Bedford, Massachusetts, for what Marshall says was "a fraction of the IPO value."

As for Marshall, he says running Object Design "gave me the bug to start something from scratch." In 1997, he launched Extraprise, a Boston-based customer-relationship-management business. "We grew it faster than we grew Object Design--to $50 million in four years," he says.

Poised to go public in 2000, Marshall again preferred not to--and this time he got his way. "We very quickly raised another round of venture money, and then after the bubble burst we pretty dramatically downsized," he says. "That's why we survived, compared with 95 percent of the others in our space."

ABC Supply: Making Blue Collars White

The richer Kenneth Hendricks gets, the richer his story becomes. Starting, if not from rags, at least from discount-store jeans, this high school dropout turned utility company worker turned entrepreneur took ABC Supply to No. 1 in 1986 with $183 million in sales. That performance followed two years in which the company could do no better than No. 3 (in 1985) and No. 2 (in 1984). Since then, Hendricks has erased some of that shame by taking his building-supply business, based in Beloit, Wisconsin, to $3.1 billion in revenue, 6,000 employees, and 335 stores. "We want to be a $5 billion business in three years," says Hendricks, "and we have to slow down to get there."

The founder's 100 percent ownership stake has earned him a place on another list: Forbes' annual roster of the wealthiest people in America. "It doesn't make any difference to me: I can't spend it," says Hendricks. "I'd have to sell the company, and I'll sell the company over my dead body."

Hendricks is so possessive because, among other things, he gets a big kick out of providing jobs for the folks of Beloit--including his wife, a son-in-law, and five of his seven children. The greater thrill, though, is transforming collars from blue to white. "We had 600 people at our last managers' meeting, and I asked, 'How many people in this room started as a roof loader, a warehouse person, or a truck driver?" says Hendricks. "We counted: 47 percent of them stood up."

Two decades ago, Hendricks told Inc. "there's a saturation point to all this," but that tune has changed. "I'm 64 years old," he says now, "and I'm as engaged as if I were 20."

Sigal Construction: No Place Like Home

For most of the 1990s, Sigal Construction quacked like a very global company. Gerald Sigal's baby, which hit No. 1 in 1983 with sales of $47.5 million, constructed two universities in South Korea. It built 5,000 houses in Israel, introducing dry wall to a country that had known only cinder block. And it erected the first prefabricated houses in Siberia. "We made them in Columbia, Maryland, and shipped them to Baltimore, where we put them on a boat to St. Petersburg," says Sigal. "Then we put them on the Trans-Siberian Express."

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Leigh Buchanan

Leigh Buchanan is an editor at large for Inc. Magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture, and she contributes Inc.'s capsule book reviews, "A Skimmer's Guide to the Latest Business Books."

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