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These Hot Firms Stay Ahead of the Pack

Entrepreneur.com

Let's take a stroll down memory lane. About a decade ago, when entrepreneurs were the toast of the town, Cognetics Research identified a subset of business owners who were the crème de la crème. These leaders of the pack were dubbed "gazelles," after a type of antelope that is not only one of the fastest animals on earth, but is also capable of sustaining high speeds for extended periods of time.

In fact, from 1994 to 1998, one of the prime boom times of the '90s, America's 288,636 gazelles (which comprised about 2% of all U.S. companies at the time) created more than 8 million new jobs, accounting for 68% of all net new jobs at that time. After the dot-com bomb, gazelles were still fueling the U.S. economy (creating more than 200% of American jobs from 1998 to 2002), but no one talked about them anymore; they became a fond memory of "the good times."

It's now time to let the good times roll again. The gazelles are back, and we've got them. Granted, they're not the same old gazelles, so we're calling this generation Gazelles 2.0. Actually, the keeper of the gazelles, GazellesInc.com, is a subsidiary of the National Policy Research Council, Entrepreneur's partner in our annual Hot Cities listing.

Entrepreneur.com is teaming up with NPRC and GazellesInc.com to showcase these next-gen gazelles in the June. Entreprenuer's Rieva Lesonsky spoke with the head of NPRC, Spencer Tracy Jr. (no relation to the famous actor), for insight into the world of Gazelles 2.0.

Rieva Lesonsky: What exactly is a Gazelle 2.0 company, and how many of them are there?

Spencer Tracy Jr. : A Gazelle 2.0 company is a rare species. Of the nearly 18 million businesses operating in the U.S. today, only 341,000 are Gazelle 2.0 companies. These are the 2% of businesses that generate on average a staggering 80% to 90% of all employment growth. Gazelles 2.0 are also industry innovators. They are the companies that spot unique market opportunities and move rapidly to exploit them. In the process, they revolutionize industries by creating entirely new ways of producing their products or services.

How does this generation of gazelles differ from those in the '90s?

There's a change in the average size of a gazelle firm. Eight years ago, the average gazelle company had about 55 employees; today, Gazelle 2.0 companies average about 47 employees.

Does any one industry dominate the Gazelle 2.0 companies?

Gazelles 2.0 are found in every industry. However, within specific periods, Gazelles 2.0 do tend to be found in the more active industries of that time period. For instance, during the dot-com boom, the highest percentage of gazelles was in high-tech. Today, the highest proportion is found in the petroleum industry.

What is one of the outstanding traits of Gazelle 2.0 companies?

Without reservation, their efficiency. Gazelle 2.0 companies generate far more revenue per employee. While non-Gazelle companies are also becoming more efficient, Gazelle 2.0 businesses have become far more efficient, with nearly 60% more revenue per employee than non-Gazelles.