Told You So!
Glancing at our Hot 100 listings from the past six years, you'd be hard-pressed to make a connection between the companies. From construction and organic foods to telecommunications and pharmaceuticals, these hot companies have run the gamut of industries, seemingly linked only by the fact that they've had a phenomenal start in the business world-millions in sales after less than three years in business.
But probe a little deeper, and you'll find similarities: The owners' love for their industries. Nonstop innovation. Staying one step ahead of both the competition and the times. For some, jumping on the tech and Internet locomotive as it was picking up speed. Strong investments and gratitude for employees. And, of course, the refusal to ever stop thinking about where the future might lead the company.
We've revisited entrepreneurs from each year of our listing to not only see how they're doing, but heck, to see if we picked the right ones after all. As you'll see from the profiles to follow, our record's not half-bad.
Natural Gas Distribution Company
For an idea of exactly how hot our past Hot 100 finalists are, you need look no further than our 1995 No.1 entrepreneur: Dennis G. McLaughlin III, co-founder of Aurora Natural Gas LLC, a natural gas distribution company now held by A & G Holdings LLC in Dallas. A & G Holdings now has five companies in its control, with $393 million in sales last year.
Through the company he began in 1993 with partners Malcolm Smith and Eric Spomer, McLaughlin has created an empire by his mid-30s-and changed the way the natural gas industry thinks about start-ups and emerging technology. A & G Holdings' technological advances-once scorned by investors-have now spun off Aurion Technologies, which is poised for an IPO this year or the next. And true to form, that is what McLaughlin is most excited about.
A & G Holdings-which is comprised of Western Natural Gas, a retail marketing company selling natural gas in Arizona, Colorado, New Mexico and Utah; Aurora Productions, an oil and gas production company; Aurora Field Services, a natural-gas gathering and processing company; natural-gas supply aggregator, Aurora Natural Gas; and Aurion-has succeeded in part because of the founders' commitment to innovation. "We concentrate on bringing in younger people to groom them to be managers as well as leaders in the company," says McLaughlin, 34. "That's really critical if you're going to maintain an entrepreneurial spirit. Reward people for taking risks and don't punish failure when the best foot is put forward to succeed."
In June, one of A & G's innovations provided the sweet spot in a $26 million deal to sell off Aurora Northeast, yet another company that emerged from McLaughlin's umbrella. A & G lured the buyer in by offering a seven-year data-collection contract using Aurion's Amnet technology. "[Such interest] showed confirmation of our theories by the marketplace and by larger utility companies," McLaughlin says.
"A software company has to guess what the customer wants, and then build and modify it," continues McLaughlin, who expects A & G to top $500 million in sales this year, "We actually use this stuff to run our business so we know what the market wants."
It started as all great things do: with beer. In 1994, Douglas Doretti and his brother Dirk, 36, took a hard look at the idea of "of-the-month" clubs and realized the niche was not well-tapped. So with their background in mail order (their father owned a mail-order pharmacy) and a very well-timed idea of offering microbrews, they began the self-funded Great American Beer Club, which hit our listing in 1996 at No. 32 with $2.85 million in sales.
Six years and a name change to ClubsofAmerica.com later, the brothers offer seven clubs through their Web site. "We first started when the micro-breweries were really expanding. Then we thought, why don't we try something new and so we got into the cigars right before the cigar revolution began," recalls Douglas 33, whose Lakemoor, Illinois, company was able to reach more than $5 million in sales last year. The Dorettis' good timing doesn't stop there: "We created our Web site three years ago and that was at the early stage of e-commerce. I was actually very pessimistic about e-commerce because it was in its infant stage. I was like, 'This is so overrated.' But then it started proving itself," says Douglas, who estimates that 50 percent of his company's orders are placed online, with the other half coming from traditional marketing like radio and direct mail.
The Dorettis plan to continue on the path that has led them to success-diversifying their product offerings beyond the current flowers, chocolate, wine, beer, pizza, coffee and cigars. "What we would like is to diversify and have ClubsofAmerica.com be a branded name," says Douglas. "We have a lot of ideas; they're kind of secretive, however." We bet that whatever it is that they come up with will end up being way ahead of its time.
Superstore for the Disabled
Even when Ability Center was first seen in the Hot 100 in 1997, the idea of the superstore was definetely not new. We've all shopped at Wal-Mart or Price Club-but one demographic the megamarts don't cater to is perhaps the one that should be most accessible. Darrell Heath planned to change all that by offering a one-stop shop for merchandise for the disabled-from wheelchairs to converted vans-and in his sixth year of business, nothing stands in his way.
"I really don't see any limitations to what we are capable of doing," says Heath, 37, who currently offers both new and used converted vans, wheelchairs, scooters, and commercial and home improvements at his company, Ability Center, located in San Diego. "I have a vision to have a place where a disabled person can come and get everything they need, instead of going one place for medical supplies, another to get wheelchairs, one more to buy vans and even one more place to get the house all fixed up."
Since 1994, Heath has been building the retail van conversion operation he was able to buy for $15,000 (from a hand-control manufacturer he'd been working for since he was just a teenager) into the superstore he imagines, offering new services to his clientele and also increasing sales of the vans from 26 in '94 to about 180 last year. The company landed on our Hot 100 in 1997 at No. 41 with $1.4 million in sales in its third year of business, and Heath isn't anywhere near slowing down. "I've just [always] been driven by these kinds of ideas that I feel I need to bring to fruition," he says.
"With all these vans in stock, customers can say, 'I'll take the blue one.' It makes it more mainstream. As opposed to having their van for umpteen years, they're able to go out and get a new car and drive it for three or four years and trade it in and get something new," explains Heath, who estimates Ability Center will bring in $7 million this year, after reaching $5.1 million last year.
A consignment store may seem like an unlikely million-dollar business-that is, until you look at Consignment Plus Home Furnishings Inc. at No. 50 on our 1998 list. Patti Evans, 46, and her brother Tom Hunter, 41, have broken the boundaries of their industry by building stores in the affluent San Francisco Bay area and treating them, in all respects, like normal furniture stores, focusing on display and customer service. "When in the past you heard of a used furniture store, you automatically associated it with a thrift store," says Evans. "From the very beginning, we were very careful to create this environment that was a more traditional approach. Our stores are carpeted; they're painted with the newest colors. We have designers on our staff who do our displays, and oftentimes they work so well, a customer will buy all the furniture [in a display]."
Evans entered the consignment field after 20 years in the utility industry; her company was downsizing and she seized the opportunity to use her severance package and education (she has a B.A. in interior design) to become an entrepreneur. "People-due to moving, downsizing [their homes], remodeling or just redecorating-had this wonderful furniture that they simply no longer had a need for," says Evans, whose company made $4.1 million in sales last year and expects more than $5.5 million this year. "They didn't want to have a garage sale; they don't have time. So we saw an opportunity to set up a consignment furniture business."
Since opening their Walnut Creek, California, store in 1996, the partners have added a Pleasanton, California, location and plan to expand even further. "The difficulty of expansion is internal control," says Hunter, who first entered the business when they opened the second location in 1997. "When you start spreading the management more thin, it becomes more difficult to keep consistency. Once we get to the point [of three or four locations,] it's gonna be a test for the systems that we have in place. And once we successfully do that, then it's possible to seek other expansion avenues."
Perfume, Health- and Beauty-Care Products Distributor
From zero to $35 million in three years-can success be much sweeter? If Steve Meltzer, owner & principal, has his way, it will be. "Within the next five years, [the company will be at] more than $100 million," predicts Meltzer, the 41 year-old entrepreneur behind Utopia, a Coconut Creek, Florida, wholesale distributor of perfume, health- and beauty-care products. You can count acquisition and diversifying on his list of goals as well.
From stock clerk to executive to president, Meltzer learned all of the ins and outs of wholesale distribution. "Three years ago, I felt it was time to put my money where my mouth was," recalls Meltzer, who, with COO William Gerber, 34, built accounts with such industry giants as Walgreens, Eckert Drugs, Rite Aid and J.C. Penney, and hit our Hot 100 in 1999 at No. 14, with $18.71 million in sales.
"I look at business as a chess game. You've got to understand what the next three or four moves are going to be," says Meltzer.
Asked about Utopia's greatest accomplishment, Meltzer laughs and answers, "That we made money." But seriously? "The reputation I earned with my customers," he says. "People are calling me instead of me having to call them. When I tell a customer I'm going to do something, I get the job done. My word is everything."
Are You My Mentor?
Fifty-nine percent of our Hot 100 entrepreneurs claim they don't have a mentor. Of the 32 percent who do, 6.4 percent named their dad as a guide; 1.3 percent thanked their moms. Of course, not everyone cited obvious role models-one entrepreneur claimed Tony Robbins was his source of wisdom; another emulated Fred Smith of FedEx. --by Devlin Smith
Entrepreneurs Who Love People
In our first survey, the total number of workers employed by our Hot 100 was 1,095, for an average of 11 employees per company. This year, that total is 3,226 workers-an average of 32 per company. And apparently Hot 100 entrepreneurs expect their people to work a lot, but not quite as much as themselves-employees worked an average of nine hours per day. --by Devlin Smith