What are the secrets to becoming a successful company? It turns out there almost are as many secrets as there are members of the 2008 list of Fastest Growing Private Companies in Los Angeles County. Rob Tolleson got the idea for CPO Commerce while returning a thermostat at Home Depot and noticing the full return bin. He now sells returned, discontinued and other home improvement products online. Tiger Bitanga's secret is toughness. He co-founded Web site maker Design People in the midst of the dot-com bust and stuck it out. Then there's Greg Sinaiko, whose Coding Source converts X-rays and other medical procedures into insurance codes so doctors and hospitals can get paid. Sounds obscure, but Sinaiko notes there are plenty of niches not taught in business schools that can grow into solid companies. Indeed, this latest list of fast growers is a widely diverse group, though certain industries stand out, such as marketing and online services. Companies were ranked by revenue growth from 2005 through 2007 and qualified for consideration if they had revenue of at least $5 million in 2007. Overall, the top 100 companies saw aggregate revenue growth of 93 percent. But sustaining growth is hard, with only 49 companies returning from last year. Then again, the 51 newcomers prove there's always another crop of entrepreneurs ready to make a go of it.


4 - Coding Source LLC
Los Angeles
Provides medical coding services and training to physician groups, hospitals and health care organizations
Founded: 2002 - Growth Rate: 417% (No. 2 last year)
2007 Revenue: $18.5 million

Update: (Profiled last year) The company hired a national sales force of independent representatives to expand our clientele from the West Coast to the rest of the country. Also, large health plans a sector that historically has never emphasized coding have come aboard as new clients. (Coding is the process of converting descriptions of medical procedures into coded numbers sent to insurance companies and government agencies.) Externally, there's lots of pressure from the federal government to cut health costs, and they do it by ratcheting down reimbursements. Health providers need to capture every dollar, and coding is the mechanism for payment. So if there should be three codes and the coder only puts in two, the provider will lose revenue. Before, accurate coding was important now it's vital.

What's Next: Our job is to keep clients up to date in terms of government compliance and insurance reimbursement issues. There are likely to be changes under the new presidential administration. Those kinds of changes will lead to new services we can provide. For example, we recently introduced audit services where we review what doctors are submitting and then talk to them face to face.

Early Days/Financing: I was working for the health care consulting firm started by my father when I saw a glaring need for improved medical coding services. While there is a standardized set of codes, it's a tedious procedure because a heart surgery might involve dozens of codes. In the medical groups we were dealing with, the physicians and their staffs didn't receive the training they needed up front to handle this coding. I convinced my father and other owners of the company to put in some seed money, less than $250,000. We differentiated ourselves (from other coding service companies) by providing training so the medical groups could do it in-house.

Big Breaks: Landing two big medical group clients in the company's first year. Then in 2004, Medicare changed the way it reimbursed HMO plans, making medical codes more important.

Biggest Challenge: We quickly discovered a national shortage of qualified medical coders. We developed bottlenecks as we had people waiting to be trained but few qualified coders to train them. Now we have a new in-house recruiting team to find and hire the best coders from around the country.

Sage Advice: Fill a niche. Medical coding isn't taught in business schools, but you can develop a good-sized business in an industry not well-known to the general community.


5 - Platinum Wireless
Los Angeles
Wholesale distributor of cellular phones, activation services and air time
Founded: 1997 - Growth Rate: 363%
(No. 44 last year)
2007 Revenue: $139 million


Early Days: We sold our first phones in 1998 on the B2B side of the business, selling fleets of phones to corporate, government and small enterprise buyers. Then in 2002, we realized that as long as we have an in-house sales force, we have constant costs and responsibilities. So we turned our employees into independent dealers. Now they are responsible for their performance, and we can manage thousands of them. The decision shifted the liability to those dealers, but limited our profitability. Over time we moved into selling to retailers. Today, about 70 percent of our clients are cell-phone retail stores, and the remaining 30 percent are B2B dealers.

Financing: We started off self-financed, then brought in venture capitalists. Eventually we got a bank loan to buy out the VCs, then paid off the loan and now we're debt free.

Big Break: We got into the electronic distribution of prepaid air time. Instead of buying a card with $30 of prepaid time, as with Boost Mobile, customers can visit a terminal in the retail stores. The machine issues a PIN number and the dealer doesn't have to sit on a piece of plastic that cost him $25 and he hopes to sell for $30. Prepaid air time now accounts for $50 million to $60 million of our revenues.

Biggest Challenge/Secret of Success: The hardest part is to sell the Platinum brand, even though we're selling the same phones and carrier service as everybody else. My Motorola phone is the same as the next dealer's, and my Sprint coverage isn't any larger. So we built the company by offering support to the dealers on marketing, inventory management, sales training, even financial investment advice.

What's Next: We will expand the existing lines because there's plenty of room to grow there. But we're also adding diversifying to offer accessories to dealers.

Sage Advice: Stay focused on your line of business. Many entrepreneurs try to do everything. In the wireless business, there are so many areas where you could make money, but you won't make any unless you concentrate on what you do best.

6 - Hydra LLC
Beverly Hills
Online advertising network based on a "cost-per-action" model that allows advertisers to pay only for verified sales or customer contact information
Founded: 2003
Growth Rate: 333% (No. 3 last year)
2007 Revenue: $69.3 million

Update: (Profiled last year) We keep growing despite the economy because we have a strong sales message. We tell advertisers that we can run an ad in front of hundreds of millions of consumers, and they only pay for the customers they get. Also, this year we developed compliance teams and software that monitor campaigns to make sure the ads appear where they should. It provides a degree of safety for advertisers.

What's Next: We're investing in technology to build a new interface for (publishers) so they can easily find the best-performing ads. Also, we'll open a creative advertising service. We never wanted to become an ad agency, but all along provided consulting to our clients, and we found it's a lot faster to make the ads ourselves.

Early Days/Financing: Zac Brandenberg had done well at another Internet venture and founded the company in July 2003 for under $100,000. Actually, two companies came together. We had about nine businesses going between us, but we put our heads together and decided to focus on building a performance-based ad network. We were profitable within a few months.

Big Break: In online advertising, there has been a migration away from paying for impressions toward paying for customer acquisitions. That has worked in our favor.

Biggest Challenge: Managing growth. We had a high-touch way of communicating with advertisers and Web publishers. Now we have to manage higher volumes of business but still maintain a high level of personal, human service. As you become bigger, you must resist bureaucracy and red tape. We went from three people at launch to 70 today. The growth also involved technology upgrades. Some months we deliver 2 million new customers to 300-plus advertisers. The databases behind those transactions can't mess up.

Sage Advice: Make sure you provide an added value. A lot of people on the Internet try to buy low-priced ad inventory and sell it at a higher price. They're going under now. Unless you add value to the process, you shouldn't be in business.


7 - CPO Commerce Inc.
Pasadena
Develops and operates online outlet stores for new, closeout, discontinued and refurbished home improvement products
Founded: 2004 - Growth Rate: 301%
2007 Revenue: $22.1 million

Early Days: I was returning a thermostat to Home Depot that I had not used. After getting my refund, I noticed that the cashier threw the returned item into a holding bin. They were sending the returned products back to the manufacturer. Then I started thinking, maybe there are manufacturers that have a lot of these unused returned products, which people might be interested in buying. So I decided to partner with leading brands in the home improvement industry to set up online outlet stores to sell their returned products.

Financing: For the first six months, I was putting all the expenses on my credit cards. However, after we got our first deal with Bosch Power Tools, we were able to raise seed capital from wealthy individuals. Now we have 22 (online) outlet stores.

Big Breaks: Hiring the company's Chief Operating Officer Brooke Abercrombie several years ago. Having a partner who can help manage company growth and people has made a huge difference.

Biggest Challenge: Finding people to keep up with the company growth is always challenging. We are constantly hiring, but it is hard to find the right people. It seems to be getting a little easier as we are moving beyond the startup phase.

Secret of Success: We started with what turned out to be a good concept. But the growth has been driven by very good people who work really hard. This is not a 9-5 operation. Our team is very dedicated and there has been very low turnover. In addition to hard work, we guide the company with a core principle of respect: respect for our customers, our brands and for each other. Our biggest asset is people, and we invest in them. Individuals can do amazing things when given the proper resources, guidance and opportunity.

What's Next: We are adding more leading brands. Five more brands are launching in the next five months. We are also expanding into new markets, including international.

Sage Advice: Don't underestimate the power of persistence.


8 - Media Temple Inc.
Culver City
Web hosting and software application services company
Founded: 1998 - Growth Rate: 283% - 2007 Revenue: $13.4 million

Early Days: In the beginning of my career, I was working in the special-effects industry in the movie business. Then I worked as an information technology manager. When the mid-'90s Internet and dot-com business boom started, I thought Web hosting would be a good marriage of my interest in digital art and my skills in information technology. I started my own company in my apartment. A Web designer in my neighborhood was one of my first clients. Having worked in the creative industry, I knew how to work with creative people and enjoy the collaboration. Eight years ago, as I was expanding my business, I got in contact with Media Temple, which was then headed by two people, and we merged.

Financing: When I first started my business, I depended on my savings account. After my initial company was acquired by Media Temple, we built the business through small amounts of loans and various equity funds. We bill our customers in advance so that we can operate and buy servers. Now we finance through the cash flow of the business.

Big Breaks: It wasn't a single event. The big break for the company was when our services were accepted by the creative community.

Biggest Challenge: Effective communication. We are running a 24/7 company that never turns off. There's no holiday for Web hosting. It's really exciting and challenging to build an organization on the same page all the time.

Secret of Success: We keep our business simple and relevant. Often times in the technology world, companies offer things that their customers are not asking for. We listen to our customers and accommodate them with 24/7 service and innovative products. Some people call us the Apple of the Web hosting industry. Like Apple did, we figured out how to make technology easy to use and enjoyable to work with.

Sage Advice: Common sense. I see a big difference in traditionally trained business people and untraditionally trained people. I am one of the people who did not have a traditional business background. That's what makes me question the traditional business practice all the time.


9 - Design People Inc.
Marina del Rey
Designs, develops and licenses industry-specific Web sites and online marketing campaigns
Founded: 1999 - Growth Rate: 261% (No. 8 last year)
2007 Revenue: $8.2 million

Update: (Profiled last year) We've had to look at our processing and see what makes us efficient and have been saving on things. The funny thing is right now when people are losing jobs we've hired at least 30 people within the last 60 days. We've also maintained our growth by marketing a little harder.

Secret of Success: Hiring and training the right people to be a part of our team. We have to keep up with Google and Yahoo, and when they change we have to change. Within the last year we figured out a way to market ourselves better online and we share our knowledge with our clients so as to help them market their products and sell better. Also, making sure we keep up with the technology and online trends.

What's Next: We're going to open to the dental industry this month, and we have plans for other verticals such as legal, accounting and restaurants. The biggest thing we are doing is expanding globally. We've done Web sites in almost every country in the world, and the biggest thing for us is to market in these countries individually so we tailor products and services that speak to that specific geographic area.

Biggest Challenges: This year the biggest challenge for us was the recession. The real estate market consists of 95 percent of our business and we got affected, but our client retention rate is still high as ever.

Advice: Keep at it and you'll get there eventually. It's much harder to start out than it is to keep going but that's how you learn to handle it later.

10 - Midnight Oil Creative
Burbank
A full-service creative agency that develops advertising, online campaigns, packaging and other marketing materials
Founded: 2002 - Growth Rate: 260%
2007 Revenue: $9 million

Early Days/Financing: Dan Stillwell, Tom Stillwell and myself started Midnight Oil Creative back in 2003. We execute the strategies starting from creative concept, in both interactive and print media, from soup to nuts. We're financed mostly through bank loans, and we're constantly reinvesting from our own pockets as we see the potential. What has helped MOC grow from our early days has been our ability to recognize each other's strengths: Dan's specialty is finance and he's the CEO; Tom, who is the creative executive, has a team approach which allows for everyone to have a voice; and then there is me, the new-business development person.

Big Breaks: Five years ago when we started the business we had what's called "laser focus." We had an idea of where our clients were headed, what types of services and solutions they were looking for. And we could execute the deliverables in-house, which most agencies can't do. Most agencies come up with the concept and other people deliver it. Our clients could see a savings of 30 to 40 percent by our company handling the entire campaign.

Biggest Challenges: With the economy you never know what's going to happen. At the same time, we're right there ready to assist with new and existing business opportunities. Other challenges are the rapidly changing clients and what's most important for them with changing technology and as a brand to market. While you're going in one direction, technology can come in and change that direction in a matter of days.

Secret to Success: Our plan has always been, first, listen to the client; and, second, offer creative that exceeds their expectations. We believe what has made MOC valuable over the years is our vision of bringing the client value. In the economy today, companies are looking at their budgets, how to maximize their dollars and how to get the most from their marketing campaigns. We're in a perfect position to offer them a full-service approach that other companies cannot do.

What's Next: Our company is very engaged in interactive media, Web sites, search engine optimization and mobile gaming. We have also kept our finger on the pulse with the 3-D revolution coming to theaters. We recognize the future of consumer products, entertainment and gaming is 3-D. We are proud to be pushing the envelope with 3-D content creation.

Profiles written by Yoo Mi Chin, Alexandria Hinojosa, Lauren Alicia Mendoza and Joel Russell.

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