The Breakthrough Company
Keith McFarland

There's No Ugly Penalty for Companies

 

The father of the study of human ugliness is Daniel Hamermesh of the University of Texas. He has collected data on several continents that attractive people (defined as people who have symmetrical features) earn more than ugly people. In the U.S. and Canada, ugly men earn wages roughly 9 percent below average (which he refers to as an "ugly penalty"), while attractive people enjoy a beauty premium of +5 percent. In some cultures the ugly penalty and beauty premium are even more pronounced: In Shanghai the figures for men are -25 percent and +3 percent and for women they are -31 percent and +10 percent.

In our search for The Breakthrough Company, we found no such ugly penalty for business. To achieve breakthrough performance, you don't need to be in an industry that Wall Street considers hip or cool, nor do you need a new-to-the world product like Google's algorithms or the iPhone's slick design. In fact, when we looked at the top nine performing Inc. 500 companies, many of them are in industries that many might consider downright ugly.

Take Fastenal, for instance. Based in the hinterlands of Minnesota, Fastenal has grown from nothing to become one of the top firms in its segment. What does Fastenal do, you ask? It is in the very sexy business of distributing nuts and bolts -- lots of them -- nearly two-billion dollars a year worth. Never heard of Fastenal? That is probably because most business journalists would rather write about MySpace than a nuts-and-bolts distributor. But when it came time for Morningstar to pick its CEO of the year last year -- who do you think it picked? John Chambers of Cisco? Nope. Ken Chenault of American Express? Guess again. That's right -- it picked Will Oberton of Fastenal, who was judged by Morningstar to provide the best value for shareholders nationwide.

A number of the top nine performing companies in our study -- the Breakthrough Companies, we called them -- were in businesses that people don't normally think of as being sexy. They include a commercial real estate broker, a payroll processor, and a temporary staffing firm. It turns out that ugly companies, unlike ugly humans, don't pay an ugly penalty.