Something extraordinary happens when you bring together in one room almost 1,000 leaders of Inc. 500 companies past and present. You can actually feel the entrepreneurial energy that is our nation's ultimate competitive advantage. As I stood at the podium preparing to open this year's Inc. 500 conference, in Columbus, Ohio, I found myself marveling yet again at what that energy can do. Six years ago, after all, most of the companies on the 1993 list were struggling to get started. Today they employ more than 50,000 people and generate more than $8 billion in sales.

This year's conference featured three days of speeches, seminars, roundtables, and workshops led by some of the country's most accomplished business thinkers and doers, on themes ranging from the art of building strategic relationships to the art of keeping personal relationships intact while building a fast-growth company. First, however, came the traditional opening-night sporting event, a game of touch football at Ohio State University Stadium. Governor George Voinovich joined Inc. 500 CEOs and the magazine's staff on the field, while Hall of Famers Sam Huff, Gale Sayers, Sonny Jurgensen, Paul Hornung, Ray Nitschke, and Paul Warfield watched from the sidelines. Midway through the second half, Inc. reporter Karen Carney hauled in a pass on a short down-and-out pattern. "Now that's one for the record books," said Governor Voinovich. "The first woman on the receiving end of a completed pass in Ohio State Stadium." Welcome to the new economy.

"I'm probably the only guy you'll meet who really did mortgage the farm to get his business going."

-- Doug Burgum of Great Plains Software, who borrowed money against a small farm he owned in order to buy out the company's founders

His and Hers: Dick Wilsdon of Western Nugget Transport (#113 in 1989) came to this year's conference as a spouse as well as an alumnus. His wife, Linda, is the founder of All Americas Inc. (#418 in 1993). The Wilsdons' matching Inc. 500 companies are in the same industry and operate out of opposite ends of the same building. I suppose it beats working together.

"I used to be a lawyer. Now I call myself a 'humor consultant.' Whether or not you think the world needs a humor consultant, you have to agree it could use one less lawyer."

-- Malcolm Kushner, who spoke on the topic "Jest for Success"

Our favorite business card at the conference belonged to Terry Tognietti, managing director of domestic operations for Drypers (#1 in 1993). The back of the card was a coupon worth $1 off any Drypers product. When you sell disposable diapers head-to-head against Procter & Gamble, you can't pass up any chance for a sale.

"I consider it the highest compliment when my employees go out and start their own companies in competition with me. I always send them a plant to wish them well. Of course, it's a cactus."

-- Norman Brodsky, founder and CEO of Perfect Courier (#47 in 1984)

Cactus Garden: You can imagine Norm Brodsky's surprise at running into not one but two of his ex-employees at the conference. They'd come to him separately for a raise about seven years ago. He told them they'd have to go into business for themselves if they wanted to make more money. They did, and last year Glenn Cafritz made the list with Global Mail (#399 in 1993), while Albert Hernandez scored with Skynet Worldwide (#60 in 1993).

"My granddaughter refers to me as 'a very important former public serpent," said erstwhile congressman and secretary of housing and urban development Jack Kemp. "Others have called me a witch doctor, a snake-oil salesman, a riverboat gambler, a voodoo economist -- and, hey, that was just coming from my fellow Republicans."

To us, Kemp was the keynote speaker at the 12th annual Inc. 500 Conference, held this year in Columbus, Ohio. He used the occasion to reiterate his belief in a brand of capitalism that allows every individual to aspire to ownership. "Capitalism is faith in the future," he said, using his father's early days in the delivery business as an example. "Talk about faith. He had a one-truck company called the California Delivery Service."

What's a "Bad Job" Anyway? While labor economists wail that the new economy is creating bad jobs, Jeff Soowal told a workshop about launching Old Glory, his $40-million fashion company (#20 in 1993), by selling sweaters on street corners in Philadelphia. And the CEO of Phelps County Bank, Emma Lou Brent, reminded her listeners that she's worked her entire life for the same bank, where she started 25 years ago -- as a teller.

"My title is SOB -- Son of the Boss."

-- Overheard at the family-business roundtable

The best joke of the conference came from -- who else? -- humor consultant Malcolm Kushner. "A businessman sends a floral arrangement to a friend who is opening a new office. When he visits the office, he is horrified to see that the florist has sent over a wreath with a 'Rest in Peace' banner on it. Furious, the man calls the florist to complain. 'It could be worse,' says the florist. 'Somewhere in this town there's a bouquet in a cemetery with a note that says, "Good luck in your new location." ' "

Perestroika: Among the many Inc. 500 founders with new start-ups are Mac McCullar and Audrey Tisdale of First American Rental (#66 in 1988), a furniture-rental company. The couple is participating in three new companies in the former Soviet Union. The businesses? Reinsurance, refitting of offices and apartments, and modular home building.

"When the CEO steps down, everyone gets to move up. I suppose that means people were delighted when I left."

-- Doug Cobb, on his departure from the Cobb Group (#371 in 1990)

What's in a Name: In introducing quality guru Phil Crosby, Daryl White of Compaq Computer noted that his company got its name by combining the words compatibility and quality. That was after its advisers had warned the founders they'd never get anywhere with the original name, Gateway. (Note: Gateway 2000 has been an Inc. 500 company for four years now, placing #2 in 1990, #1 in 1991, #2 in 1992, and #5 in 1993, and leading all other companies with more than $1.1 billion in total revenues.)

"My industry traditionally refers to people who buy software as 'users.' It struck us that the word suggests a relationship to drugs. So we had the radical idea of coming up with another term for people who buy our products. We call them 'customers."

-- Doug Burgum, CEO of Great Plains Software

More proof that the SBIR program is, dollar for dollar, one of the federal government's most effective tools for stimulating economic growth: Robert Fischer told us that his company, Optics I (#254 in 1993), got started with 10 Phase I and 3 Phase II Small Business Innovation Research grants -- and has another Phase II on the way.

"Forget referrals. Forget credentials. Go with someone who shares your values."

-- Pat Lancaster III, CEO of Lantech, on how to choose a consultant

Making Millionaires: Among the happier, and prouder, attendees was Pat Kelly, CEO of Physician Sales & Service (#302 in 1988), in Jacksonville, Fla. Ten days earlier Kelly had sold 28% of his employee-owned company in an initial public offering. The stock went out at $11 and rose to $14.50 before settling at about $13.50. Eleven employees wound up with equity holdings worth close to $1 million each.

Clothes tell everything about the maturity of an industry, according to John Street of Telephone Express (#13 in 1992). In an industry's early stages, he said, you see lots of polyester suits, worn by flashy characters looking to make a fast buck. As the industry matures, company leaders emerge, and you see Italian wool suits and silk ties. Those eventually give way to casual sweaters and open-collar shirts, once the industry has fully matured and everyone's made lots of money.

The Open-Book Revolution: We were struck once again by the sea change in attitudes about sharing financial information with employees. Among the newer companies on the Inc. 500, opening the books is no longer a very radical idea. We asked attendees at a roundtable on open-book management how many shared their financials with employees. About 50 people, half of those present, raised their hands. Then we asked how many thought employees understood the information. One person raised her hand. All of which strengthens our belief that, while growth leaders have lost faith in the traditional ways of managing and motivating people, they haven't yet figured out how to use the new ones.

"No, we don't believe in this open-book stuff. When we have a good year, we just walk around the plant and hand each person a check for $10,000. Helluva way to motivate people and reduce turnover. I can't remember the last time someone quit on us."

-- Overheard at the roundtable on open-book management

Self-managed work teams were a hot topic of conversation, but experienced practitioners sounded a note of caution to those about to embark on a team-based reorganization. "In our first year of teams, we lost 35% of our employees," said Steve Ashton of Ashton Photo, "and I've heard almost that exact same statistic from every CEO I know who's installed teams." When the audience murmured in disbelief, Emma Lou Brent of Phelps County Bank spoke up. "Our numbers were worse. We lost 40% of all nonmanagement people and 20% of our managers."

"The deadbeats end up going to your competitors."

-- Ken Hendricks of ABC Supply (#1 in 1986), on the hidden value of demanding high credit standards of your customers

The Game: Vectra CEO Craig Taylor talked about the unusual way he launched his version of the Great Game of Business, by offering employees a choice of compensation for 1993. They could have a 5% base-salary increase and a bonus pool of $200,000, or no raise but a chance to play for a $400,000 bonus pool. Employees voted 48 to 6 in favor of the big-bonus option. For all but a handful, it turned out to be a smart bet, as most employees wound up with more money in their pockets by the end of the year. Meanwhile, five of the six big-bonus naysayers have left the company.

"These days for-profit businesses perform many of the services traditionally handled by nonprofits," noted futurist Edith Weiner in a speech about significant new trends. Illustrating the point was conference guest Scott Shickler, formerly with the National Foundation for Teaching Entrepreneurship, a nonprofit that helps inner-city kids set up their own microbusinesses. Now Shickler runs the EDGE (Educational Designs That Generate Excellence), an organization that prepares young people for economic success through entrepreneurship camps, seminars, and teacher training. It's a for-profit company. "I just got tired of hitting up businesses, foundations, and individuals for money," explained Shickler. He's planning to use part of the profits from an entrepreneurial camp this summer to provide scholarships for inner-city kids who want to learn entrepreneurship. (The EDGE can be reached at 800-879-3343.)

We couldn't resist the opportunity to poll the Inc. 500 attendees on a variety of topics. Here are some of the most intriguing results:

Does the American education system provide you with enough qualified labor?
Many CEOs expressed the view that the shortage of workers with basic literacy and numeracy skills was the biggest obstacle to their current and future growth.

Yes 39% No 52% No comment 9%

Is Congress in touch with today's small-business needs?
In three days we couldn't find a single soul who would admit to being among the 2% that answered yes to this one.

Yes 2% No 91% No comment 7%

Do you see current proposals by the Clinton administration as having a positive or a negative effect on the future of small business?
The president didn't fare much better than Congress. Perhaps the only surprise here was the depth of the feelings of betrayal expressed at the conference by CEOs who had voted for Clinton.

Positive 7% Negative 77% Neutral 16%

Could you start your business again and be successful in today's economy?
News media covering the conference thought the percentage of CEOs answering yes to this question was high. We thought it was low -- and an indication of just how punishing today's economic environment is perceived to be, even by a group as successful as this one.

Yes 69% No 14% No comment 17%

Creating a Great Workplace

The conference award for Outstanding Stand-up Performance by a Chief Executive belonged to Emma Lou Brent, the president of Phelps County Bank, in Rolla, Mo. Here's some of her advice on moving from a traditional to a participative organization.

On getting started: Start small. "Ideas are like rabbits. Get yourself two, take care of them, and pretty soon you'll have a dozen."

On helping current employees adapt: "We stand at the door before meetings and make people swear an oath as they enter that they won't allow their feelings to be hurt."

On bringing in new people: Every new employee at Phelps County Bank gets a mentor from outside his or her department. They go to lunch the first day and stay in close touch thereafter.

On the importance of commitment: "We believe in the Mark Twain school of management. Put all your eggs in one basket and then watch that basket."