How To Build A Million-Dollar Business Six hall-of-fame entrepreneurs tell how they did it--and how you can, too.

You don't have to be the first or the biggest. Youdon't need the brains of Einstein or the cure for cancer. Youdon't have to be bombastic or even egomaniacal.

Nor is attaining success a question of doing everythingright. Rather, turning your business into a winner is a matter ofvision, intuition, charisma, leadership and character. To build amillion-dollar business, you need the evangelical spark ofSouthwest Airlines Co. CEO Herb Kelleher, the bull's-eyedelivery of Jamba Juice Co. founder Kirk Perron, the innovative eyeof Barnes & Noble Inc. chairman Leonard Riggio, the graciousstamina of Ruth's Chris Steak House founder Ruth Fertel, andthe pioneering spirit of Yahoo! Inc. founders David Filo and JerryYang. Here's how six seemingly ordinary people turned goodideas, real commitment, and perhaps just a touch of irrationaloptimism into real-life tales of fortune.

Southwest Airlines

Making People Count

The pitch went something like this: Rollin King sketched out atriangle on the back of a cocktail napkin with the words"Dallas," "San Antonio" and "Houston"at each corner. With these three routes, the pilot suggested, alean, mean intrastate airline could take flight. Never mind thecompetition. Never mind the red tape. Just fly people safely,cheaply and conveniently between these three cities, and you'llhave a profitable airline. It was brilliant. It was insane. But wasit impossible?

"Rollin, you're crazy," attorney and friend HerbKelleher responded. "Let's do it.'

Do it they did. Nearly three decades later, the airline theyfounded, Dallas-based Southwest Airlines Co., continues to set newstandards for productivity, affordability, profitability and fun inan industry that isn't exactly renowned for its innovation andresponsiveness. Despite what should be unwieldy proportions--49.6million passengers in 1996 and a current staff of more than25,000--Southwest is a miracle of efficiency, boasting the beston-time performance, the fewest customer complaints and the bestbaggage handling in each of the past five years, according to U.S.Department of Transportation statistics.

And that ain't all. Since its founding in 1971, Southwesthas been a maverick in virtually every area of operations. Itoffered air fares so low, it gave bus and car travel companies arun for their money. It eliminated airline meals in favor ofpeanuts--saving money and manpower. It threw out assigned seatingon the principle that customers were capable of finding their ownseats, which cut valuable minutes off its boarding times and turnedits planes around faster. It encouraged flight attendants to crackjokes during the in-flight emergency instructions. It was the firstmajor airline to champion ticketless travel and one of the first toput up a Web site and offer online booking. All this, and Southwestis widely hailed as one of the safest and friendliest airlines inthe skies.

Who's responsible for all this genius? Ask outsiders, andthey'll point to CEO and chairman Kelleher, now 66, whoseleadership has made Southwest one of the most dynamic,responsive--and zaniest--companies in history.

Ask Kelleher, on the other hand, and he'll tell you it'sthe employees who make Southwest great. "Competitors havetried and failed to copy us because they cannot copy ourpeople," Kelleher says. He believes it's as simple asseeking out exceptional employees, treating them with respect, andgiving them the latitude and encouragement necessary to do theirjobs better than anyone knew possible.

What isn't simple is the execution. In an industry fraughtwith competition and rapid-fire change, an intelligent andmotivated work force is everything. Southwest's rules andregulations are kept to a minimum so employees can solve problemson the fly. And at the helm is an entrepreneur who knows the valueof the personal touch.

"I'm always willing to look at [market research], but Inever want to get bogged down in it," says Kelleher. "Weget a lot of employee feedback on what they hear as to ourcustomers' likes and dislikes. I'd rather we be out theredoing things for the customers and gauging their responses on thefront line."

Kelleher's advice to entrepreneurs: "Ask your employeeswhat's important to them. Ask your customers what is importantto them. Then do it. It should be that simple.'

Southwest In A Nutshell

Company: Southwest Airlines Co.

Founded: 1971 by Herb Kelleher and Rollin King

1996 vitals: $3.4 billion in operating revenue,

$207.3 million in net income, 108.4 million bags of peanutsserved

Number of job applications received in 1996: 137,504

Number of new employees hired: 4,857

From co-founder Herb Kelleher: "Don't be afraidto be a maverick. We caution our employees never to rest; theyshould always be looking over their shoulders and seeking new andbetter ways of doing their jobs.'

Jamba Juice

Juice Up Your Image

It's not the lively purple and green graphics, nor thequaint sight of wheat grass growing in the display case that getsyou first. It's the scent of oranges, so piquant and insistentthat your mouth puckers and your stomach starts grumbling in syncwith the blenders. You are in smoothie heaven, swirling in a vortexof delicious dilemmas. Do your taste buds demand raspberries orstrawberries, bananas or oranges? Do you choose the echinacea tocharge up your immunity or the ginseng to boost your energy?Whichever way you go, you'll leave Jamba Juice positivelyvibrating with health and vitality--even if some of that buzzexists only in your mind.

Welcome to Kirk Perron's vision of 21st century marketing,where advertising isn't king. Though the San Francisco-basedJamba Juice Co. does have a marketing program--and a fine one atthat--founder and CEO Perron knows that no direct-mail,coupon-driven, broadcast-based, image-enhancing stunt is going tooutperform the real hook at his outrageous fruit juice and smoothiestores. His secret: It's the experience, stupid.

"I don't consider us to be marketing-driven," saysPerron, 33. "We rely on people to spread the word. Wedidn't invent smoothies or fresh-squeezed juices, but we'vecreated a niche by focusing on a sensory experience."

What's so ingenious about that? Nothing, unless you considerthat Jamba Juice has grown from a single unit--originally calledJuice Club--in the Central California town of San Luis Obispo to asubstantial 59 units in only seven years. Nothing, unless youwitness the mob of groovy patrons, including grandmothers andbaggy-clothed teens, that squeezes into the stores morning, noonand night.

In a universe that's wise to every kind of marketing ploy,Perron's experience-driven philosophy just might be the hardestsell going. Let everyone else promise freshness, flavor, health,nutrition, simplicity, affordability, sweetness and light. JambaJuice skips the promises and delivers--again and again.

Perron's cutting-edge savvy doesn't come from amarketing textbook but from experience. The Jamba Juice storybegins in 1990, when a health-crazed Perron decided to turn his"juicing" habit into a business. His particular brand ofhigh-quality, high-energy Juice Club smoothies and juices became sopopular, expansion was inevitable.

Juice Club tried its hand at franchising in 1993 but quicklychanged its plan and raised money from equity partners so thecompany could maintain better control of its growing retailnetwork.

Though the Juice Club formula had been an unqualified success,Perron felt it could use a little tweaking to compete in anincreasingly crowded environment. "As more stores beganopening, the name started getting lost in all the clutter," hesays, "There was Juice Stop and Juice Connection. We needed aname that was more identifiable," and an image to go alongwith it.

So Juice Club got itself some jamba, a West African wordfor "celebration," and gave itself a hipper, more globalfeeling. What was once a sterile, health-food-store atmosphere hasbeen replaced by vibrant purple, green, orange and hot pink colorsand natural wood.

"This business may look like one where you can buy a fewblenders and make a fortune, but it's more than that,"Perron says. "Our company exists not simply to make money.We're providing enrichment to our customers' lives. Peoplearen't stupid." Nor, he might add, are they susceptible tothe same old marketing hype: "They know what'sreal."

Jamba Juice On Tap

Company: Jamba Juice Co.

Founded: 1990 by Kirk Perron

1996 vitals: 4 million pounds of strawberries purchased,which makes for 14 million strawberry-based smoothies (Note: Nineof the company's 20 smoothie varieties don't containstrawberries.)

Proof of power: Tiger Woods drinks Jamba Juice.

From founder Kirk Perron: "I'm surprised therearen't more companies creating a culture beyond selling,[offering] a soulful experience for the customer. That's beenthe basis for our success.'

Barnes & Noble

Build A Better Mousetrap

Leonard Riggio doesn't simply compel you to buy books; hemakes you fall in love with them. At any of 449 Barnes & Noblesuperstores nationwide, you'll find customers curled up incomfy chairs, sipping cappuccino, or gathered round for poetryreadings. Parents and toddlers are poring over picture books here,and over there is a college student engrossed in her studies.

This is not retailing as usual. "What we've tried to dois develop the bookstore so it's more like a community centerthan an ordinary retail establishment," says Barnes &Noble chairman and CEO Riggio, 56, who might be the world'smost accommodating host in addition to being one of its moreinnovative retailers. Riggio doesn't view lingering, loungingcustomers as a drain on his profits. They're the very reasonhis stores are profitable.

Any bookstore can bring in folks who are looking for books.Barnes & Noble brings in people who are looking forentertainment, or peace and quiet, or--dare we sayit?--intellectual stimulation. It just so happens that whiling awaya few hours of quality time in the world of ideas also inspirespeople to spend money. The proof is in the sales. Revenues atBarnes & Noble stores totaled almost $2 billion for fiscal1996, up from just $921 million for fiscal 1991.

The New York City-based Barnes & Noble chain is part of alarger, $2.45 billion operation that Riggio has grown virtuallyfrom scratch--one that includes 566 B. Dalton Bookseller, DoubledayBook Shops and Scribner's Bookstores; a million-customer mailorder operation; and online commerce via America Online and theInternet.

If Riggio's domain seems massive and diverse, it is. Andit's all the more impressive when you consider how it allbegan. "I was an engineering student at New YorkUniversity," says Riggio, "and to help pay expenses, Igot a job at the NYU bookstore." That job sparked an interestand led Riggio to open his own bookstore on the NYU campus in 1965with $5,000 in savings. He owned nine college-based stores by 1971,when the opportunity arose to purchase New York's venerableBarnes & Noble bookstore.

The Barnes & Noble of 1971 didn't much resemble thecompany's current format. Founded in 1873, "it had beenbought by a conglomerate and was a shell of its former self,"Riggio says.

So Riggio reshaped it. Realizing that vast selection was one ofBarnes & Noble's biggest selling points, he set aboutcollecting the most comprehensive inventory possible. "We putthat together with a fanatical commitment to customer service andincreased the volume at the store eightfold in five years. [In theprocess,] we brought an energy and enthusiasm to the [book]business that didn't exist before."

New Barnes & Noble locations followed--first in New YorkCity, then in other cities, and finally into the suburbs. Whereverit goes, the Barnes & Noble formula is tough to beat. Theencyclopedic inventory, together with discount pricing, a welcomingenvironment, cultural and educational events, and conscientious,sentient customer service delivers a knockout punch. In somecommunities, book sales have risen as much as 80 percent afterBarnes & Noble moved in.

All because Riggio had the vision and chutzpah to take aperfectly functional industry and improve it--far beyond anyexpectations. What can the average entrepreneur learn from such awild success story?

"Don't look at the megastores of the world vicariouslyand say `I could never do that,' " Riggio advises."An intelligent human being willing to commit himself to agoal can achieve almost anything."

Quick Read On Barnes & Noble

Company: Barnes & Noble

Founded: 1873

Purchased by Leonard Riggio: 1971

1996 vitals: 449 Barnes & Noble superstores, 566 malllocations, $2.45 billion in total sales

Number of titles in an average Barnes & Noble:150,000

From chairman Leonard Riggio: "Don't look atsuccessful people as aberrations. Excellence is out there foranyone.'

Ruths Chris Steak House

Never Give Up

You wouldn't have bet the farm on Ruth Fertel in 1965. Adivorced mom with a degree in chemistry and physics, she wasn'texactly a prime candidate for building an empire of upscalesteakhouses.

Luckily, Fertel didn't realize her apparent limitations."From the very first day, failure just didn't even entermy mind," says Fertel, 70, who now presides over 59 Ruth'sChris Steak Houses worldwide. Last year, sales at the Metairie,Louisiana-based company reached $176 million; this year, Fertel isforecasting sales of $205 million. Not a bad day's work for awoman who has successfully weathered skepticism, food fads, growingpains, natural disasters and every other standard-issueentrepreneurial challenge for more than 30 years.

Fertel bought New Orleans' Chris Steak House from theoriginal "Mr. Chris" in 1965. "I had two teenagesons who needed to go to college,' she says. "I wasworking as a lab technician at Tulane University, and I needed tomake more money." Fertel was skimming the classifieds when shecame across an ad offering the locally known Chris Steak House forsale. "I thought `A steak house?' " she recalls," `I can do that.' " So she mortgaged her home andused the $18,000 to buy the business.

Fertel worked hard. "I thought employees would respect memore if I worked right alongside them, so I did," she says."The hours were terrible, but customers saw how hard I wasworking, and they wanted me to succeed."

But it wasn't just hard work that clinched Fertel'ssuccess. She had a knack for turning misfortune into good fortune."A few months after I bought the restaurant, Hurricane Betsycame through New Orleans," Fertel recalls. "We had noelectricity for a week, and I had a cooler full of steaks thatwould only last three or four days."

Instead of letting the food spoil, Fertel cooked up meals forthe disaster workers and the disaster victims in a neighboringcommunity. "Everyone was appreciative," says Fertel."And many of them became loyal customers."

Ten years later, the restaurant burned down. "I called thebank crying, and it just so happened that a man who didconstruction was in the bank at the time I called," saysFertel. "He said he could get my new location open in aweek--and he did."

The upshot? "The new restaurant had 160 seats, comparedwith 60 seats at the [old] place. People who were discouraged byour two-hour wait suddenly started showing up," Fertel says."Business boomed again."

This, despite the fact Fertel had to scrap the restaurant'swell-known name because her purchase agreement stipulated she couldonly call it "Chris Steak House" at the originallocation. The unusual new name, "Ruth's Chris SteakHouse," has been a blessing. "It's sorecognizable," Fertel explains.

Ruth's Chris has become synonymous nationwide with graciousdining, impeccable service and tender, hearty beef that makes youfeel well-nourished and invincible. Fertel started franchisingRuth's Chris in 1976, and now has 35 franchised locations. Shehas since stopped issuing new franchises but plans to continueexpanding with company-owned locations.

"I've always tried to operate on the KISSprinciple--keep it simple, stupid," says Fertel. "The keyis focus," even when that means ignoring froufrou food anddishing up meat and potatoes. And even when it means staring badluck in the eye until, finally, it blinks.

Serving Up Ruths Chris

Company: Ruth's Chris Steak House

Founded: 1927

Purchased by Ruth Fertel: 1965

1996 vitals: $176 million in sales

Number of steaks served daily: 11,000

From CEO Ruth Fertel:"I've been so luckyto fall into a business that I really love. The hard work is nevera chore.'

YAHOO!

Unconventional Thinking

In 1994, David Filo and Jerry Yang were in typical start-upmode--working 20 hours a day, sleeping in the office, juiced on theidea that people were discovering their concept and plugging in.There was only one difference between them and most newentrepreneurs: They weren't making any money. We're nottalking about an absence of profitability. We're talking aboutan absence of revenue. There were no sales. None. And, the fact is,the Yahoo! founders didn't care. Filo and Yang were workinglike maniacs for the sheer joy of it.

Their mission? Bringing order to the terrible, tangled WorldWide Web. Back then--in the prehistory of the Internet--plenty ofinteresting Web sites existed. But the forum wasn't organized;there was no system that enabled people to find the sites theywanted in an easy, orderly way.

Even Yang and Filo, who were studying for their Ph.D.s incomputer engineering at Stanford University in Palo Alto,California, found the Web cumbersome. "We had started lookingat Web sites, but we couldn't keep track of the good placeswe'd been," says Filo, 31. So the two created a list oftheir favorite Web sites, along with a framework for organizing theWeb and a search engine that made finding the right site as simpleas typing in the right keywords. They dubbed their service Yahoo!,an anagram for Yet Another Hierarchical Officious Oracle.And it took off.

By 1995, the service had become so popular, the partners wereable to raise $1 million in venture capital to expand the business.There was no trail to follow, however; back then, Internet commercewas still in its infancy. But the partners knew they had a tiger bythe tail. "What we did took 20 hours a day," says Yang,29. "But we were one of the first to [try to organize theWeb], and we did it better than anyone."

And the consensus is, they still do. Now based in Santa Clara,California, Yahoo! gets an astronomical 1 billion hits per month.Compare 1997 first-quarter ad sales of $9.5 million to lastyear's first-quarter sales of $1.7 million, and it's acinch that this year's ad revenues will beat last year's$19 million by a sizeable margin.

Good as it sounds, inventing a new industry has presentedchallenges at every turn. The first and most basic: How to makemoney. Even as the Internet was gaining popularity, efforts tocommercialize it met with more than a little resistance. To makematters worse, Yang and Filo were among those who believed inkeeping the Internet accessible--and therefore free.

"It was tough," Yang admits. "We reallydidn't know which business model would work, and we consideredeverything," including systems that would simply support theoperation without generating a profit, such as promoting companiesin exchange for some of their hardware.

Though advertising emerged as the clear choice (allowing Yahoo!to eschew user fees), it wasn't clear that advertisers would gofor the idea. That Yahoo! has landed sponsorship from such diversecorporate giants as IBM, American Express, Lexus, British Airwaysand Guinness is a testament to its momentum.

But can the momentum continue? Keeping the service fresh,fascinating and at the fore isn't easy. Every day, expectationsrise, and new companies enter the fray. Then again, Yang and Filohave more than investment capital, a nifty computer program and 225employees to help them stay online and on target. They've alsogot commitment. "We believe the Internet can changepeople's lives," says Yang. It certainly changedtheirs.

Setting Sites On YAHOO!

Company: Yahoo! Inc.

Founded: 1995 by David Filo and Jerry Yang

1996 vitals: $19 million in advertising revenues; $35million public offering

Number of entries in Yahoo! directory: 600,000 plus

From co-founder Jerry Yang: "This company isn'treally about technology; it's about solving people's basicneeds for efficiency, effectiveness and simplicity. From thatstandpoint, we're really like a lot of othercompanies.'

Contact Sources

Jamba Juice Co., 1700 17th St., San Francisco, CA94103-5136, (415) 865-1100

Ruth's Chris Steak House, http://www.ruthschris.com

Southwest Airlines Co., (800) 435-9792, http://www.iflyswa.com

Yahoo! Inc., (408) 731-3300, http://www.yahoo.com