As far as honors go, this is one worth celebrating, but perhaps not celebrating too hard. Fast growth often suggests steely entrepreneurship, but it can also suggest a volatile marketplace, one that can pull a company down as quickly as it lifts a company up. The great companies are the ones that stay on the list year after year. The lucky companies are those that hit a good run and then dissolve into the ether.
The company that topped the list in the Corporate Report 100’s first year, for instance, was not even around for year two. For the stockholders, however, that was not necessarily a bad thing. The winner, U.S. Telecom Communications Services Co., merged with the GTE Sprint Communications Corp. to form US Sprint Communications Co. Sprint, to be sure, has had its ups and downs, but its impact on the area has been unparalleled, and the demand for telecommunications services has expanded in ways that few people anticipated.
Indeed, the nearly universal use of cell phones represents one of the two most dramatic innovations in the past quarter-century. Write cell phones into the equation and half the movies made before 2000 would have to be re-scripted. Else Lund calls Rick Blaine at the Paris train station and tells him not to wait any longer. Instead of getting hit by a car in her haste, Terry McKay calls Nickie Ferrante and tells him she will be a little late for their rendezvous on top of the Empire State Building.
The introduction of the cell phone has reshaped life around the world in ways big and small and shifted business fortunes for better and worse.
In 1989, Hall Kimbrell topped the CR 100 list. The company, which was founded in 1982 by David Kimbrell, performed a service that businesses did not even know they needed just a decade earlier: asbestos removal. Although asbestos does not affect too many movie plots, the mandated removal of it had a huge effect on any number of enterprises and, for most, that effect was negative.
For the legal industry, however, safety issues proved to be a gold mine. Asbestos litigation stands as the longest, most expensive mass tort in U.S. history. The number of cases still pending make one’s head spin. The area is still dotted with billboards offering legal windfalls.
Hall Kimbrell did so well with its business model that Chicago-area engineering firm, Professional Service Industries Inc., absorbed the firm that same year and founder David Kimbrell relinquished management control.
Amidst all the change, there were some constants, especially in this part of the world, where the growing, storage, movement, and the packaging of that commodity generically known as “food” has dominated the local economy from the beginning.
In 1986, the year CR 100 started, Richard Thompson started his own company in grand fashion. He built a $50 million state-of-the-art facility that, when later upgraded, could churn out as much as 150 million pounds of pasta a year. Thompson called the business the “American Italian Pasta Company,” and by 1992 the company, was topping the CR 100 chart.
In the decade that followed, American Italian would find a regular place in the CR 100, often very near the top. That would not last. Although operating in a stable market, the company experienced management and accounting problems so severe that the SEC was brought in and the company’s three top executives ushered out.
At this writing, Ralcorp Holdings has announced that the U.S. Federal Trade Commission has granted early termination of a prescribed waiting period, which will enable Ralcorp to purchase American Italian for roughly $1.2 billion on a fully diluted basis. As should be evident, growth depends not only on external variables but also on internal values. For long-term success, the latter would seem to be more important.
Ralcorp, alas, is based in St. Louis, and should the acquisition go through as expected—one lawsuit seeking class-action status to challenge the company’s valuation in that sale—this year’s 13th appearance will be American Italian’s last in the CR 100.
If cell phones are the second-most consequential innovation to become commonplace since 1986, the Internet is clearly first. In 1999, Internet stocks were spiking markets all over the world, and Kansas City was not immune to the fever. Tech companies spiced the CR 100’s Top Ten list that year, and at the very top was a company called Innovision.
A year earlier, in 1998, this start-up showed that people were taking it seriously when American Century announced it would offer online investment tracking service for its customers. Powering that service would be the Innovision Financial Server, a tool that was already being called “the industry-leading financial protocol server for the financial-services industry.”
As it happens, that was the only year Innovision would show up in the CR 100. Although the company avoided the funeral pyre that consumed so many high-tech start-ups, it has reined in its ambitions. Today, the company continues to offer software technology that simplifies information exchange, specifically in the health-care and financial-services fields.
For Ingram’s, the year 2000 was truly the year of the Internet. As we noted, when Bill Clinton had been elected president just eight years earlier, no more than a handful of Americans knew what a Web site was. Neither Clinton nor Bill Gates was among them. There were only five Web sites in existence then. By 2000, there were more than 50 million.
When Clinton was elected to a second term, no one had even heard the phrase “e-commerce.” It was not coined until 1997. By 2000, we at Ingram’s had grown so weary of it that we considered putting a moratorium on its use.
That year we took our top three winners, all of them young and good sports, to Oceans of Fun. At the top of the list that year was NetSales of Overland Park. “We have a great solution,” CEO Bob Fraser told us, half immersed and clutching his surfboard.
Hard behind Fraser was still another tech company, Euronet Worldwide, whose CEO, Mike Brown, was photographed high on a lifeguard chair. In the third spot that year was Peripheral Vision Infosystems (PVI), at the time a 10 year-old company, headed by instant surfer Scot Kane. His company provided comprehensive computing solutions for leading businesses.
When we did that photo shoot, few were expecting that the incipient NASDAQ decline would turn into something of a crash and take a whole lot of tech stocks down with it. But it did. Euronet endured and prospered. It has made 11 appearances on the CR 100 list, but PVI and NetSales would not be as fortunate.
PVI, in fact, was laying off people and struggling to make payroll as the Ingram’s CR 100 came to press. By 2005, PVI founder Scot Kane reportedly had agreed to pay $50,000 from his personal retirement account to compensate former employees still owed their final paychecks. Sic transit Gloria.
Bob Fraser’s life, however, has taken a more uplifting turn. Today, he is a director of the Joseph Company, a ministry of the International House of Prayer, whose mission it is to “restore God’s purpose and vision for the marketplace.” Fraser, in fact, has written a series of books on marketplace Christianity. On the struggling South Kansas City/Grandview marketplace, the International House of Prayer has had a substantial and unexpected impact, almost all of it good.
The CR 100 leader board in the years since 2000 speaks to the economic diversity of the region. It has been topped by companies specializing in staples like propane, real estate and fertilizer products. A market does not get much more grounded than that.
Yet that same decade has witnessed area-leading fast-growth in companies that deal in saunas, staffing, office solutions, and global markets. Of the No. 1 fastest-growing companies, only one has also made the list for most frequent appearances on the CR 100, and that is Inergy LP.
Founded in 1996 by Ferrellgas veteran John Sherman, Inergy today serves roughly 800,000 retail customers through 300 or so customer-service centers nationwide. The company is also focusing increased attention on its natural gas storage and distribution ancillaries. And it is constant attention to business, to detail, to new opportunities, to customer needs, that distinguish the businesses like Inergy, which grow continuously, from those that flash in the night like a nova.
Speaking of which, in 2003, Inergy was nudged out of a Top-Five finish in the CR 100 by a super fast-growing Kansas City company called NovaStar. “The company is burning so brightly that it may some day find itself at the center of the mortgage solar system,” read Ingram’s overheated but oddly predictive profile of the company.
In 2004, NovaStar stock was selling for $70 a share. Then a Wall Street Journal story suggested that a business model based on “high-risk loans to people with poor credit” was not exactly sustainable.
The Journal proved right. In a heartbeat, NovaStar found itself at the center of the meltdown that was collapsing the mortgage industry, and Wall Street along with it, like a dwarf star. By 2007, the stock price had plummeted to $4 a share before being delisted. By year’s end, the company had ceased making loans.
What has made Kansas City so stable over the years is that it has been built around companies like Inergy, not around companies like NovaStar. May the model endure. 