In an atmosphere ripe with disruption and competition, today’s top private companies are thriving, driving innovation in the process. In fact, private companies are set to grow at rates that far surpass their public company peers, with more than one in five private companies on track to grow between 11% and 25%.
This year, Grant Thornton and Inc. teamed up to create the inaugural Private Titans 1000
list, an exclusive roster of the 1,000 largest, most vital American companies that are not public. The list comprises private companies that have reached the threshold of $250 million in annual sales but continue to thrive. The roster is based on a measurement of each company’s sales and employee growth, as well as its power of social media, an indicator of how effective a company is in reaching its customers or target audience.
Collectively, the private companies that top the list, ranging from iconic companies with a long track record to emerging businesses experiencing rapid growth to family-owned business with well-entrenched histories, demonstrate that with the freedom that comes with private companies, they can steer a course of innovation, agility and growth.
Why are private companies so well positioned to adapt to and drive market disruption, evolve and grow? In reviewing this year’s roster of top companies, it’s clear they share five key characteristics.
1. Private companies are built to innovate
Many private companies are fueled by a passion for innovation. Unlike public companies, they are not burdened by an increasingly complex regulatory environment. As a result, they can invest their time and resources in technology that will help them innovate for the market’s changing needs. In fact, many private company leaders believe that going public could reduce a company’s incentive and ability to innovate.
“Private companies stay close to their customers so they are in a strong position to anticipate what’s next in providing the best possible experiences,” said Doug Gawrych, Grant Thornton national managing partner, Private Company Services. “With an entrepreneurial mindset built into their company DNA, private firms embrace and desire change which leads to new ways of thinking about and doing business.”
Consider the example of WeWork, a company which provides co-working and collaborate office spaces in more than 170 locations across 19 countries. With 10 million rentable square feet, WeWork has invested in machine learning and data analysis to track how its spaces are being used, which has lowered its costs of new office fabrications. It also sponsors the Creator Awards, honoring individuals and companies driving change.
2. Top private companies pursue a mission
A number of private companies which made this year’s Private Titans 1000 list are passionate about pursuing a mission and just as dedicated to a lifestyle as they are to selling products. In fact, a big part of their success is focusing on community, the environment or social causes, something that their private company status allows them to do.
the second largest headphone retailer in the United States and a leading performance and youth culture audio brand, is committed to serving its demographic comprised of risk takers, pioneers and underdogs. Skullcandy seeks to employ people who don’t play by the rules as it works to develop products that serve their customers who are in pursuit of self-expression and a compelling audio experience. It recently launched Now Feel This, a global live steam concert series dedicated to showcasing emerging artists. Skullcandy will broadcast each concert live at intimate venues in the US, Canada and the UK while live streaming on its own Facebook
channels to introduce these artists to its +2.1 million digitally connected fans.
Another private company whose business strategy is strongly tied to its mission is Clif Bar
, a producer of organic foods and drinks. In fact, founder Gary Erickson and wife Kit Crawford walked away from a $120 million offer to sell the company in order to remain private and continue to serve its five core objectives: sustaining the business, brands, people, community and planet. As proof of that commitment, the company is spearheading $10 million in endowments for five chairs in organic research by 2020 and supports innovative small and mid-sized nonprofits that give back to the community.
3. Big doesn’t mean boring
Remaining relevant in a constantly evolving marketplace isn’t just a challenge for entrepreneurial start-ups, but for iconic brands that have a long history. Levi Strauss and In-N-Out Burger are just two such private companies which made this year’s Private Titans 1000 list. While it’s been around for 165 years and counted $4.9 billion in revenue in 2017, Levi Strauss continues to succeed big by constantly evolving. Its latest innovation uses software and lasers to automate the jean-making process by eliminating a number of manual tasks and reducing the number of chemicals required to create the faded and worn finishes of some denim styles.
For 70 years, In-N-Out Burger has thrived by marching to its own drum, even when confronted with a glut of better-burger concepts in the marketplace. One of today’s top restaurant chains, the private, family-owned In-N-Out Burger rings up annual sales over $600 million and boasts a loyal legion of fans. The chain deliberately limits its brand presence to six Western states (California, Nevada, Arizona, Utah, Texas and Oregon) and insists on resisting strategies of other competitors to stay relevant. It maintains its same menu (cooked-to-order burgers, fries, sodas, shakes), refuses to be a player in price wars and rejects franchising and external investors.
Grant Thornton’s Gawrych noted that well-established private companies which continue to remain relevant in the marketplace do so by seeking to solve problems and never failing to retain their willingness to take risks. . “True innovation is notoriously hard, especially in today’s marketplace characterized by constant disruption and increased competition,” he said. “Today’s established successful private companies still look to quench their thirst for changing the rules of the game, not merely tinkering with or tweaking them. Instead, they are willing to flip the conventions of their industries and turn their business models on their head in order to anticipate and meet the needs of a changing customer base.”
4. Private companies take chances
Because private companies are not beholden to Wall Street, they can afford to take greater risks and adopt longer-view strategies that lead to growth and innovation. Consider the case of Airbnb, a company that made a name for itself by luring travelers away from chain hotels and resorts into lodging arrangements that fit their specific tastes and lifestyle. Since its inception a decade ago, the company has delivered more than 260 million home- and room-rentals. The company has now expanded their focus with the aim of getting vacationers off tour buses and into the real world. The company recently introduced Experiences, an assortment of more than 5,000 excursions across 58 cities that expand its host-based hospitality into tours and multiday excursions. The local experiences range from glass-blowing in Chicago to making a kimono in Tokyo to guided meditation in Paris to discovering the hidden stairways in San Francisco. It’s the next step in Airbnb’s mission to reimagine travel and the company is looking to add an additional 25,000 experiences by year end. While only a year old, the Experiences category is on track to net 1 million bookings.
5. Private companies focus on relationship-building
Strong customer and partner relationships are keys to success for a number of this year’s top private companies. They understand the importance of building a strong network of relationships outside of its own walls. As a result, they are often closer to their customers and can prioritize their needs and desires first. This helps fuel their growth and innovative mindset.
One such private company that succeeds at cultivating customer intimacy at scale is Batteries Plus Bulbs
. The private equity-backed company works closely with local franchisees to develop its highly-regarded customer service at its 70 company-run stories (33 more stores are planned for 2018). It provides integrated support to its business owners, ranging from real estate to IT to marketing. With a focus on anticipating customer needs, Batteries Plus Bulbs expanded its offerings in 2010 to include light bulbs and began offering repair services for phones and tablets in 2014. Additionally, it rebranded its in-store repair service “We Fix It” centers in 2017, a business that grew 42% last year and is now the company’s second largest category.
Today’s private companies are creating remarkable experiences for their customers while focusing on innovative ways to grow their businesses and even reimagine their sectors. By focusing on their missions, meeting the needs of their customers and adopting smart growth strategies, they continue to lead the way in today’s competitive marketplace. To learn which private companies are shaping the future of business today, read this year’s Private Titans 1000
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