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Companies behind America's prosperity
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August 28, 2007

It was August 23, 2006 when John Koten, CEO of Mansueto Ventures, and Ed Sussman, head of our online publishing division, called me into John's office to discuss the 2007 Inc. 500. I'm pretty sure it was Ed who said "Fasten your seat belts."

Our company was a little more than a year old, having been formed by Joe Mansueto, founder of Morningstar, which is itself a five-time Inc. 500 company. After five constrained years as a small part of a multinational conglomerate, we at Inc. were eager to once again walk the entrepreneurial walk that had made the company so successful in the 1980s and 1990s.

Inc. 5,000: The complete list
Slideshow: America's 25 fastest-growing private companies

John and Ed saw an opportunity to expand our journalistic reach. We would build on the magazine's most successful franchise, the Inc. 500 list of the fastest growing privately held companies in America. In fact, we would expand it tenfold, and integrate it with a brand new social network for private companies. Thus was the Inc. 5,000 conceived.

Covering private companies is more difficult than the far more common job of covering public companies. The main reason is that leaders of private companies, unburdened by laws requiring public disclosure, don't have to tell us anything. But that's precisely what makes our reporting so valuable.

For more than 25 years, the Inc. 500 has been the essential guide to the most entrepreneurial companies in America. Now we're digging deeper to explore an even broader cross section of entrepreneurial America. To complete this task, for almost a year we unleashed more than 70 researchers, reporters, editors and interns on the project, and we enlisted the help of dozens of business organizations and trade associations to boldly go where no news organization had gone before, to identify and profile the 5,000 fastest growing companies in America.

And what have we learned? Not surprisingly, the average Inc. 5,000 company had more revenue than the average company on this year's Inc. 500 list -- $38.9 million for the Inc. 5,000 compared to $34.4 million for the Inc. 500.

Slideshow: The 25 youngest CEOs

It had a little over one and a third times as many employees -- 187 for the Inc. 5,000; 138 for the Inc. 500. And it was nearly twice as old, with the average Inc. 5,000 company having been around 15 years, and the average Inc. 500 company just eight years old.

We'll be continuing our analysis for months, but, among other things, we've noticed that the construction and manufacturing industries, historically not particularly well represented on the Inc. 500, are the two largest categories on the Inc. 5,000, with each one constituting more than 10 percent of the list.

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These larger, more substantial firms represent the backbone of the economy, and while they may not produce the gazelle-like growth required to make the Inc. 500, their growth is impressive nonetheless. The median three-year growth for construction firms on the Inc. 5,000 is 108 percent; for manufacturing firms it's 98 percent.

Typical in the construction arena is Ace Asphalt of Arizona, which builds parking lots in the fast-growing Phoenix area and whose revenue has grown from $56.6 million to $95.2 million over the past three years. A nice example of high tech innovation in the traditional manufacturing fields is American Leather, which grew from $50 million to $70.9 million in the last three years, in part from its implementation of a computer-controlled cutting system that enables it to build and ship any of 700,000 possible custom furniture variations within three weeks.

And we can't drop the topic of Manufacturing without a fond mention of perennial Inc. 500 applicant Big Ass Fan Co., which makes, well, these really big ass fans -- anywhere from six to 24 feet in diameter -- that help cool Southern factories inexpensively. The firm has grown from $7.4 million in revenue to $26.9 million over the past three years.

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There are some familiar names on the Inc. 5,000, including some former Inc. 500 companies that are now too large to be growing at a pace fast enough to make the 500. In fact, three of the top five by revenue are former Inc. 500 companies: computer memory product maker Kingston Technology, No. 1 on the 1992 list, took in $3.7 billion last year. Brightstar, a wireless product distributor that was No. 154 on the 2003 list, had $3.6 billion in revenue last year. And ABC Supply, 1986's number one, had almost $3 billion in revenue last year.

ABC is headed by Ken Hendricks, our 2006 Entrepreneur of the Year. His company is now the nation's largest wholesale distributor of roofing, siding, and gutters.

Slideshow: The 25 biggest revenue producers 

You'll find these companies at the top of our list of the companies with the most 2006 revenue. We've carved out all kinds of additional lists: we've got the fastest growing companies in each industry and in each major metropolitan area. There's also a list ranking the companies by dollar amount -- as opposed to percentage -- revenue growth, and a list of companies on the Inc. 5,000 that intend to go public.

For us, the launch of the Inc. 5,000 marks a new era, an era where the discovery will be ongoing and participatory. In September we will launch IncBizNet, our social network for private companies. All of the Inc. 5,000 will become charter members of this network, and any U.S.-based private company can join. Members will be able to connect with other entrepreneurs in the same industry or region.

They'll be able to share their company backgrounds, business philisophies, press releases, and multimedia marketing materials on customizable web pages. They'll be able to discover which vendors other companies trust the most. They'll be able to create company blogs they can export to their own websites. All of these pages will be under the control of the member companies.

In the meantime, please play around with the robust sorting and searching functions we've introduced this year with the Inc. 5,000. Let us know what you discover. We'll be doing quarterly polls of companies on IncBizNet on a variety of issues. Next year's Inc. 5,000 applications will be integrated with IncBizNet.

Applicants will indicate that they want to be considered for the list, and as long as they keep their financials up-to-date on the IncBizNet pages that they will control, they'll be in the running. We look forward to day-to-day contact and development with America's growing private companies in the coming years.

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