Two weeks after earning her real estate license in 2013, Liz Abrams was leading motivational sessions for more than 70 agents at the brokerage where she worked.
Abrams had surged from the starting gate, nailing 22 listings in her first month on the job. She invited envious colleagues to "wine nights" during which they'd sip chardonnay and watch her work on potential sellers.
"I said, 'I'll make the calls. You guys sit and listen and take notes,'" says Abrams.
Eager to build her own stable of sales stallions, Abrams launched, with her husband, an eponymous realty company in Virginia Beach, Virginia, in 2014. With seven children at home, Liz and Jim Abrams argued over the expense of leasing their first office. "He was like, 'Liz, how can we cover that?'" recalls Abrams. "I said, 'If we build it, they will come.'"
The Abramses built it. And indeed, the clients came. Abrams Realty is No. 254 on the Inc. 500--our annual ranking of America's fastest-growing private businesses--with $2.3 million in revenue and a growth rate of 1,932 percent. Its success reflects, in part, Abrams's outsize confidence, one of 10 strengths that founders of fast-growing companies possess in abundance, according to Gallup.
Over 37 years, the companies on the Inc. 500 have undergone seismic shifts in industries and business models. But one key element hasn't changed: the founders. Their achievements alone--akin to building a Formula One car from scratch and driving it to victory in a Grand Prix--distinguish these entrepreneurs. But there is something distinctive too about how such people think and act and--perhaps most important--react in the particle accelerator that is company building.
In the September 2014 issue of Inc., Gallup confirmed our belief that those who start fast-growing companies are indeed a breed apart. Gallup had previously identified 10 strengths that virtually all entrepreneurs possess in some quantity, ranging from confidence and determination to relationship building and a focus on profits. The organization correlated those strengths with specific business outcomes: exceeding profitability goals, say, or achieving a certain level of revenue. Then Gallup partnered with Inc. to learn whether founders on the Inc. 500 list scored higher on a test of those 10 strengths than did a national sample of more conventional entrepreneurs. They did, by a substantial margin.
The article resulting from that exercise, "Inside the Mind of an Entrepreneur," helped readers understand the psychology and talents of people creating the job and innovation engines of tomorrow. This year, Inc. and Gallup conducted a similar study and broadened it to include founders from the Inc. 5000. Close to 200 entrepreneurs took a deeply detailed assessment comprising more than 100 questions that took half an hour to complete. That number may be too small to produce definitive conclusions. But since the performance gap between fast-growth founders and the national sample is so wide--as it was four years ago--the results strongly suggest that the 5000 are, in fact, unusually gifted.
"Don't go so far out on a limb that you can't come back," says Volt Athletics' Dan Giuliani--who's tops at managing risk.
"The overall talent level for the Inc. 5000 is much higher," says Sangeeta Badal, Gallup's principal scientist for entrepreneurship and job creation and co-author, with Gallup chairman Jim Clifton, of the book Born to Build. Underscoring her point: Twenty-three percent of Inc. 5000 respondents scored in the "exceptional" range on the assessment, compared with just 2 percent of entrepreneurs in the national sample. "People in the exceptional category have the ability to form large businesses--$50 million and above," says Badal.
Inc. 5000 respondents not only scored much higher overall than the national sample; they also scored higher on each individual strength. They beat out conventional entrepreneurs most dramatically on independence and selling. The group's top-ranked strength is risk-taking--not excessive risk tolerance, but rather managing the vagaries of risk--just as it was four years ago.
The assessment also turned up differences between men and women that Gallup considers worthy of further investigation. In a confirmation of certain stereotypes, women were much stronger in relationships than men, and men were much stronger in risk than women. But women also scored significantly higher in determination and independence. "It is possible that, given the lack of role models and support for entrepreneurial women in our society," says Badal, "those who ended up in the Inc. sample are the ones who said nothing is going to stop me."
Gallup identifies three types of company builders critical to a top-functioning leadership team: rainmakers (revenue generators), conductors (managers), and experts (topic specialists). Forty-nine percent of Inc. 5000 founders were classified by Gallup as rainmakers, compared with a third of the national sample. By contrast, 35 percent of the national sample emerged as experts, compared with just 19 percent for the Inc. 5000.
"The only thing standing between you and the sale," says fearless founder Liz Abrams, "is you."
Clearly, the Inc. 5000 were born to execute. But better news lies in Gallup's wider research, which finds that 57 percent of rainmakers exceeded profitability goals, compared with 46 percent of conductors and 32 percent of experts. "There is something about these people that drives not only the top line but also the bottom line," says Badal. "It is not just about sales but, more broadly, an affinity for numbers."
By Gallup's reckoning, Liz Abrams is the quintessential fast-growth entrepreneur, scoring in the top 10 percent in all strengths but risk. Now she's trying to instill some of those same strengths in her sales team. That requires even more confidence than selling herself. "If they see any doubt in you--any self-questioning--it will carry over to them," Abrams says. "I tell them: The only thing standing between you and the sale is you. You have to know you can do it."
Dan Giuliani and his co-founder, Trevor Watkins, lived like ascetics for the three years it took to launch Volt Athletics, a Seattle-based developer of performance-training software for sports teams. Both maintained side jobs: Giuliani as a sports broadcaster and strength coach; Watkins as an IT consultant. They took no salaries and lived together to conserve their funds. Before approaching even friends and family for investment they spent a full year developing the product and another year beta-testing it with coaches. "We wanted to build something without putting anybody else's money at risk until we could prove that it could work," says Giuliani. Even after rollout, Giuliani traveled to campus sports facilities, seeking to de-risk the product by proactively scouting potential problems.
Two years after launching Volt, the partners took their biggest gamble: developing a second product for individual athletes, a very different market. But the new product would require most of their attention. Giuliani worried about starving their still-dewy first offering of resources.
After careful analysis, the partners judged they had a sufficient technical lead to forestall competition in the timeframe needed to develop the consumer product. The new back-end code could also be used to improve the team offering, "so no matter what happened, the work would not be wasted," says Giuliani. To keep things moving for their team, they deputized several employees to make decisions normally made by the founders.
A year after launch, the new product represents half of Volt's business and has contributed the lion's share of its growth. "We never stretched ourselves so thin that the company was going to completely fail," says Giuliani, whose father founded Optiva, maker of the Sonicare toothbrush and the No. 1 company on the 1997 Inc. 500. "You don't go so far out on a limb that you can't come back."
Felicite Moorman was intellectually precocious. At 16, she was calculating FICA taxes for the movie theater where she worked. In college, she had four majors. During her first year of law school, she sued AT&T for overcharging her father on roaming charges. When AT&T didn't show up to small-claims court, she won by default. When AT&T didn't pay, she filed a claim against one of its properties. AT&T settled.
Today Moorman is co-founder and CEO of Stratis, a Philadelphia-based business that develops software for remotely controlling lights, locks, and alarms in apartment houses and dorms. The industry is changing fast, and Moorman studies it voraciously, deluging Stratis's Slack channels with articles and white papers.
When she's not in meetings, she is reading industry, trade, and technical publications. "I have three or four dozen Google alerts, which I keep fresh," says Moorman, who likens how she ingests information to "drinking from a fire hose."
Much of Stratis's success derives from the deep dive Moorman did into the nuances of financing apartment buildings and dorms, which included informational interviews with numerous industry leaders. She believes entrepreneurs overvalue selling in the early days and undervalue learning. "I love selling," she says, "but it was doing deep research that established the relationships we have today."
Moorman is a great believer in the power of three. When evaluating a nugget of information, she wants three sources to back it up or provide different perspectives. When working with a customer, she develops relationships with people in three roles--ideally in different departments--to fully understand how Stratis is performing. "Ask one person something, and you get their version," says Moorman. "Ask three people, and you get a better truth."
Natasha Miller, a violinist and jazz vocalist, launched San Francisco-based Entire Productions after helping clients find other performers when she was booked. In the early years, she carried every detail about every band and every musician in her brain. She didn't let her first employee interact with clients for six months. "I thought they had to talk to me," she says.
But when Miller finally relinquished some responsibility, "I felt this surge of energy," she says. "I realized my employee did not need 100 percent of my knowledge to do a good job. She could do it with 30 percent if I set things up well."
So Miller downloaded every scrap of information about the business into a customized Salesforce application accessible to all her staffers. She also started hiring those who can assume her public roles--"people who can go out to the marketing and networking events," she says, "and cajole an artist out of the green room and onto the stage."
When Miller handles a complex or delicate business issue, she will share the correspondence with staff "so they can see the language and tone I use." She has even backed out of sales. Her team is currently fielding 200 RFPs, but Miller refuses to be cc'ed. "That was hard, because there were these pings of adrenaline when I'd see those inbound requests," says Miller. "But I know this is how it should be."
Miller used her freed-up time to open offices in L.A. and London--among other things. "I told my daughter I just got my oil changed and had a manicure," says Miller. "I would never have done that on a workday before."
The idea for Royal Vending (No. 2,531) struck Ryan Harrington one day on a ferry to Canada, as he stood in a long line waiting to buy snacks from a machine. "I was thinking, 'Someone who's not even here is making $20 or $30 in five minutes,'" says Harrington. On a museum ticket stub, he scribbled, "Research vending machines."
Now, Harrington plows through lists of daily and weekly tasks tied to monthly, quarterly, and yearly goals, seeking a five-fold return on every investment for his Tigard, Oregon-based company. He measures everything in search of savings, which led to removing the lift gates and changing the cargo containers on his trucks to reduce fuel and refrigeration costs. "If we send a driver on a 15-minute trip, what money will he pull out of that location?" says Harrington. "Is it worth it?"
Today, around 80 percent of Royal Vending's business is micromarkets: cases of sandwiches, drinks, and snacks, coupled with a checkout kiosk, that companies install onsite as a perk for employees. Through testing, Harrington discovered he could charge 20 percent more for products in such aesthetically and experientially appealing markets than he could for identical products in vending machines. Reducing service calls further boosts the bottom line: "You don't lose your quarter" in such markets, says Harrington. "You don't shake the machine to get your chips to fall."
The business still offers vending services, but those compete on price. Harrington prefers the micromarkets, where "95 percent of the new accounts have never asked for a price list." A micromarket may generate five times the daily revenue of a machine in the same location. "We looked at that," says Harrington, "and realized this is the ticket."
Bo Brustkern imagines his industry peers as a Venn diagram. Circle one comprises industry experts. Circle two comprises fans of surfing or biking or snow sports. Circle three comprises leaders he'd like to hang with.
From the intersection of those circles, Brustkern--co-founder and CEO of the New York City-based conference business LendIt Fintech--gins up invite lists for the adventure getaways he's hosted for the past decade. Once or twice a year, around 30 fintech leaders head off to ski the backcountry in Steamboat Springs or ride the waves in Cabo.
"If there is no shop talk, that is perfectly fine--even preferred," says Brustkern. "I'm taking the business edge off so everyone really gets to know each other."
Brustkern's business is dedicated to relationships. He and three partners--all newbies to fintech--launched LendIt when they couldn't find adequate education and networking opportunities in the peer-to-peer lending sector. LendIt's events typically attract 5,000 attendees, many of whom Brustkern gets to know.
"But 5,000 people aren't relationships," says Brustkern, who prefers cultivating small groups to relentless networking. Brustkern introduced invitation-only getaways at his first business, Arcstone Partners, a financial firm specializing in valuing complex securities. He built that business on referrals from a network of hundreds of corporate attorneys whom he assiduously cultivated. Everyone who sent him a client received a handwritten thank-you letter and a bottle of wine.
Today, he writes those letters to companies that sponsor LendIt events. "Investing in those relationships in a thoughtful way made a pretty material impact," says Brustkern. "People appreciate being appreciated."
Ken McElrath recalls the day, four years ago, when he decided to hire a CTO. "I walked to where the engineers were working, and they put their heads down and tried to hide," says McElrath. "I said, 'What is going on?' They said, 'We cannot handle any more ideas. Please, just let us alone so we can execute what we have.'"
As founder and CEO of the Chattanooga, Tennessee-based Skuid (No. 635), whose platforms let people build apps without knowing how to code, McElrath is constantly coming up with new ideas. Such as: a feature called Skuid (pronounced "squid") Ink that lets users apply--with one click--design elements like color and font across multiple screens in an app. He reckons he generates five ideas a day. "My CTO is a buffer between my engineers and my incessant flow of ideas," says McElrath.
McElrath came up with the idea for Skuid at his previous business, which made educational software. Many clients were nonprofits or educators that could not afford developers to customize the product. "I posed the question: Is there any way to create applications that are gorgeous that our customers can just change to their hearts' content without writing a single line of code?" he says.
There was, and Skuid now counts many Fortune 100 companies as clients. But McElrath doesn't limit his creativity to his company's products. One problem that arose: "Skuid is so easy to use that you can build really bad applications just as well as really good ones." So he created teams to go out and train clients on Ideo-style design thinking, in which he is certified.
The company was adding new features and capabilities so fast that customers had trouble keeping up. "What I am learning," says McElrath, "is we have to pace ourselves so that the market can absorb what we have already built."
McElrath, who holds three art degrees, recalls a photo a professor once gave him of that professor standing on his head to gaze at a painting. That image still influences how he keeps his torrent of new ideas flowing. "You look at something from a totally different perspective," he says, "and all of a sudden it starts making sense."
Gallup has identified 10 traits that best characterize entrepreneurs. In an exhaustive survey, Inc. and Gallup zeroed in on founders from this year's Inc. 5000 who best embody them.
Knowledge: You deploy your expertise to secure competitive advantage, always strive to acquire in-depth information about your organization and industry
Delegation: You assign tasks to others, proactively collaborate, ensure team members contribute
Independence: You depend on yourself to get the job done, can manage every aspect of an organization
Confidence: You believe you have what it takes, know yourself, know others, take initiative
Relationships: You possess high social awareness, build mutually beneficial relationships
Selling: You speak boldly on behalf of your organization, make cases effectively, influence people
Risk: You enjoy challenges, effectively manage high-risk situations, mitigate rather than seek risk
Determination: You possess a tremendous work ethic, can overcome obstacles, are undeterred by failure
Profitability: You establish clear goals, measure progress, are a good judge of opportunities
Disruption: You constantly dream up new products and services, have a mind that fires off many ideas