Questions About The Inc. 500

Inc. Magazine came out with its list of the top 500 fastest growing private companies in America last week.  4500 more are listed on the website for the list obsessed.

This list shines an interesting spotlight on American culture.  It also raises several questions in my mind.  I intend to spend the next few blog posts looking at the Inc. 500/5000.

Inc. says, at the top of their list, "Five hundred reasons to be optimistic about leadership, innovation, and the health of the American dream."  And I suppose they are right.  These 500 companies enjoyed an average 1,739% three year growth rate.  They earned $14.1 billion in total revenues in 2012 and created 44,912 jobs over the last three years.

I think the list raises some significant questions pertaining to important societal issues.  I was surprised and a little thrilled when I read that the best represented industry was the advertising and marketing industry with 58 companies represented.   When you compare it to only 9 manufacturing companies on the list, it seems to confirm that we are becoming a service economy.

Another area that concerned me was the demographics of the Inc. 500 CEOs.  90% are male and 77% are Caucasian.  I don't know how this compares to previous years.  I also don't know if this is because  fewer women and non-Caucasians have the inclination to become entrepreneurs or if it is they don't have access to the resources to start and grow a business.

Finally, and most significantly, I have to question if Inc.'s focus on growth is really the best measure of a private company's success.  When focusing just on growth, the Inc. editors only capture certain types of companies at certain points along the growth curve.   Fuhu, maker of the children's tablet, Nabi, is the number one company on the list this year.  They posted an amazing 42,148% growth over the last three years.  I will be surprised if Fuhu is even on the list in a few years.

The editor of the magazine dubs the 500 list as "an unapologetic celebration of entrepreneurial success."  While there is no doubt a lot to celebrate, there is just as much to ponder and examine.