Once entrepreneurs hire new managers, they must hand over the reins to the new team. "I used to micromanage," confesses Rubio. "I had to learn to delegate, to give people around me the space to succeed or fail on their own merits. And I had to change fast because our business was changing fast."
Judi Paul, co-founder and chair of Renaissance Learning Inc., agrees. "To build an organization, you have to turn things over to your people and let them do their jobs," she says. "I don't have many talents, but I can recognize talent. That way, those around me make me look good."
Paul's Wisconsin Rapids, Wisconsin, company sells software-based learning information systems to teachers of grades K through 12. When she founded the company in 1986, she filled orders from her kitchen table. By 1995, Renaissance Learning crossed $10 million in sales; this year, it will top $100 million.
Get the Green
Fast growth usually means access to capital. Success in finding and deploying that capital is an important step in a company's growth. A public stock offering can often finance that growth. With public shareholders, however, entrepreneurs take on new challenges.
At Stericycle Inc., a leading provider of medical waste management services, Mark Miller's early investors aligned with the company's long-term growth plans. "Our team of employees, management and investors all focused on our specific mission, and that was to be the leading company in [our] industry. To do that, we all had to view our path as a marathon, not a sprint," says Miller, 45. Still, the path was steep: from $2 million in 1992 revenue to $132 million in 1999.
"We sought capital from the public markets in 1996 because we saw the momentum toward consolidation in the industry," says Miller. With capital raised from the public offering on Nasdaq, and a publicly traded stock as currency, Stericycle has acquired 46 companies. In 1999, they bought their largest single competitor, the medical waste division of Browning Ferris Industries Inc., for more than $400 million.
At first, Renaissance Learning grew with internal funds, the company having been profitable from the start. Then in 1997, Paul and her husband, Terry (co-founder and the company's vice chair), decided to take the company public, allowing them to give employees stock options, gain greater visibility and have currency for future acquisitions. The move raised $47 million. But Paul says going public on Nasdaq made the biggest difference in how she managed her company. "Being a public company forces good discipline," she says. "But last December, even though we had a big earnings increase, it was less than analysts' expectations, and our stock decreased. I thought about all the people I know who own our stock. But we learned, and we're always going to strive to stick to our mission and think long-term."
Rubio sought outside capital at the $10 million stage. "We talked with Jack Goodall at Jack in the Box and John Creed at Chart House restaurants for advice," says Rubio. "We got a sense of what [getting capital would] entail with franchising or venture capital."
Rubio decided to look for venture capital and raised $3.5 million through Rosewood Capital in 1995. "Things really accelerated then," Rubio says. "Instead of opening two to three stores a year, we were opening five to six, and then 10 a year." Rubio's went public last year, raising $33 million for national expansion. He concedes, "Rubio's is a very complex business now."