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ENTREPRENEUR PROFILES

1.4.00
Top Entrepreneurs of 1999
Handbags to hardware — seven rising stars and their businesses  

Bill Gates, watch your back. Here comes ROBERT F. YOUNG. In just four years, the former newsletter publisher has made his Red Hat Inc. ( RHAT) the first name in the burgeoning Linux software movement. It's not only a growing threat to Microsoft; it was also one of the hottest IPOs of 1999. With shares up roughly 1,800% since August, Young, 45, now sports a net worth of more than $2 billion to go along with his trademark red fedora. His masterstroke was securing early support from such heavyweights as Compaq, Oracle, and IBM. Though revenues were only around $18 million in 1999, they're projected to soar to $43 million next year. Even better, losses should shrink from $12 million to $5 million. That's clearly enough for Wall Street, which is betting Red Hat will stay red hot.

Bags of Money

Most women put their money in their handbags—that's where trendy designer KATE SPADE is making hers. Spade's line of elegant and whimsical bags, which range from pink herringbone carryalls and velvet tiger-print shoppers to simple nylon totes, are among fashion's hottest must-haves. A former Mademoiselle magazine editor, Spade, 37, and her husband, ANDY, 37, started Kate Spade in 1993 with $35,000 of his 401(k) savings. Midwestern innocence meets European runways in Kansas City native "Katie," who favors hoop skirts and kitten heels. She has scored big by making handbags fashionable as well as functional. Last year, sales doubled to $50 million as Kate Spade branched out into stationery, shoes, and a line of men's bags from creative director Andy. In February, the company pocketed $33.6 million when Neiman Marcus Group Inc. bought a 56% stake.

Covad Operations

As CEO of Covad Communications ( COVD), ROBERT E. KNOWLING JR. has turned copper phone wires into gold. Knowling, 44, runs the most successful of a crop of new phone companies that sell speedy digital Internet connections. Surging demand has sent Covad's revenues skyrocketing, from $5.3 million in 1998, to an expected $60 million in 1999, though the company is still in the red. Covad's subscribers should grow to 290,000 this year, up from 55,000 in '99. Knowling—a veteran of the Baby Bells who joined the three-year-old Covad in 1998—oversaw its IPO last January. The stock has since more than quintupled, to around 60, giving Covad a market cap of $5.6 billion. For Knowling, who grew up in poverty in rural Missouri, the sixth of thirteen children, entrepreneurialism has brought sweet success indeed.

Wireless Wonder

In five years, ALAIN ROSSMANN's Phone.com ( PHCM), formerly known as Unwired Planet, has wormed its microbrowsers into the wireless phones offered by just about every major cell-phone maker. Rossmann, 43, has positioned his company as the leader in developing technology that provides wireless subscribers with access to Internet services such as news, stocks, weather, and e-mail. Indeed, Rossmann, a one-time Apple Computer exec, is in the enviable spot of having the most popular microbrowser by far as demand for on-the-go Net services is soaring. Rossmann makes his money selling servers to phone companies that offer Internet access. Revenues, just $13.4 million this year, could reach $41 million next year and $73.3 million in 2001. Wall Street is impressed. Phone.com stock has soared 1,500%, to around $130, since its June initial public offering.

eToy Story

More than two years ago EDWARD C. "TOBY" LENK, 38, stunned toy industry leaders when his eToys Inc. ( ETYS) began luring customers away from crowded stores to its friendly Web site. Lenk realized earlier than most that the Internet is a hassle-free way for parents to buy toys for their kids. Today, the company sells 100,000 different toys, books, videos, music, and software products. Analysts expect eToys' revenues to top $120 million for the year ending in March, up 300%. Lenk, CEO and self-styled "Uncle of the Board," quit a job as a strategic planner for Disney to start the e-tailer. Though the shares have taken a hit as big players such as Toys 'R' Us and Wal-Mart have entered the market, eToys remains the player to beat in this fast-growing field.

Infosys: Indian Jewel

Soft-spoken N.R. NARAYANA MURTHY, 53, chairman of $120 million Infosys Technologies ( INFY), built the software developer from scratch, starting in 1981 with seven partners and $1,000 in savings. The Bangalore, India-based company provides Internet and e-commerce software services to U.S. clients such as Aetna and Nortel. Since listing with Nasdaq in March, Infosys' American depository receipts have risen about 840%—giving it a market capitalization of $19 billion. Using Western management techniques, this humble engineer from South India is redefining the standard for performance in Corporate India.

Freeplay's Fast Track

Not every hot entrepreneur these days comes from the high-tech world. Take privately held Freeplay Energy Group co-CEOs RORY STEAR, 40, and CHRISTOPHER STAINES, 38. The South African duo have built a fast-growing business—and stayed true to a belief in social justice—selling wind-up radios that don't need batteries or electricity. To help educate people about preventing AIDS, they began to distribute them through agencies in the developing world. Recently, they've begun to sell the radios—for $80—to campers and boaters at Radio Shack, Sharper Image, and Sports Authority. Doing good while doing well is a lucrative combo: From $18.5 million in 1998, sales should hit $50 million this year.


This article was originally published in the January 10, 2000 print edition of Business Week


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