Social Icons

Friday, November 30, 2007

Aiming for the top

Are you on your way to building the next Google or Genentech? A new listing of the fastest-growing private companies in the US gives a little insight into what makes an entrepreneur successful

What does it take to build a business that works? Well, if you bolster your immune system with a mix of 17 herbs and nutrients, process credit card payments quickly and flog some add-ons for the iPod, you stand a pretty good chance of making it.

That, at least, is one conclusion you can draw from the 2006 'Inc. 500' List, a ranking of the fastest-growing private companies in the US just released by the magazine of the same name ( Topping this year's list is Litle & Co., which provides credit card processing services and has grown at a staggering 5629 per cent over the last three years to reach a turnover of $35m. Second was Airborne Health, maker of a snazzy health tablet, and third was Digital Lifestyle Outfitters, which provides accessories for portable devices (including, incidentally, a rather fetching pink case for your iPod nano with a 'workout-ready' armband). DLO was only founded five years ago and now turns over $84 million with 72 employees, which just goes to show what you can achieve if you really work out how to tap into mass market chic.

For the rest of us, labouring in the less flamboyant corners of the tech community, the Inc. 500 list provides some kind of insight into the things that help make businesses succeed. The companies that populate the Top 25 demonstrate that you don't necessarily need to have a great idea - in fact, one or two are terminally dull - but you do need to be tapping into a real need.

So while issues like security will always be a hot topic, it's how useful your security offering is that matters. PatchLink, which pulls together security patches for different types of software and then updates all your computers, seems to have found a sales pitch that combines fear of attack with a way to ease day-to-day IT aggravation, good enough to land it 14th place. Similarly, fear of attack from regulators appears to have propelled OpenPages into 22nd place, based on sales of its corporate governance software. One place behind it - and playing in a somewhat more interesting space - is digital marketing company Booyah Networks, which does search engine marketing for websites and provides an online marketplace for video advertising.

Other companies appear to have got where they are by taking a tried and tested idea and applying it to a new market. San Francisco-based StubHub, number eight in the list, is an online exchange where you can buy tickets for sporting events, theatres and concerts - a sort of eBay for the entertainment business. Sixteenth-placed provides Voice over IP, Internet services and managed network services - nothing new in itself, but it makes its money by specialising in selling to small and medium sized businesses.

And then there are the guys who tried something different in sales or marketing. In sixth place is United Bank Card, another player in the credit card processing game. According to Inc., the company broke the mould in the industry by giving away its terminals to customers rather than forcing them to buy or lease. At number 24 meanwhile, is IT consultancy LanceSoft: Inc. quotes its founder crediting its success to the high rewards its salespeople earn for bringing in customers, suppliers and employees, effectively turning each of them into entrepreneurs.

The list goes on, but it's a fair bet that the messages from companies in slots 26 onwards won't be radically different. All of them have dipped into the melting pot of products, services, market awareness and execution, and somehow managed to pull out the right ingredients to make it work.

What would be just as interesting, of course, would be the list of the bottom 500 performers in the US - the ones whose sales plummeted by record percentages to send them crashing into oblivion. How many people simply gambled on the wrong technologies? How many failed to keep control of their costs? How many had a great idea, threw everything into it, got some early successes and just ran out of time and money? How many hired the wrong people? And how many were just plain unlucky? The top 500 performers have clearly done a spectacular job - but that doesn't necessarily mean there's a huge gulf between them and some of the others who never quite made it.

*Details of the Top 25 performers in the Inc 500 are available at The full list is available to subscribers

By Keith Rodgers, Webster Buchanan Research