(FORTUNE Magazine) – WELCOME to the economy's inner core -- the power pack that provides its energy and testifies to the enterprise and opportunity of Commerce USA. You will find plenty of hardware, software, and health care, of course, but also reminders that we must eat, drink, and be merry too: steakhouses, a chain of coffee bars, and a golf club manufacturer run by a 74-year-old former fabric salesman and winery owner. All metamorphosed the same way, evolving from smoldering pipe dreams into America's fastest-growing companies. Each holds lessons and insights for businesses everywhere. How vital are these 100 enterprises to the U.S. economy's health? Over the past 12 months they sold $40 billion of goods and services, earned $2.8 billion, and hired tens of thousands of new employees -- attention, head of outplacement at IBM. They are also the breeding ground for executive talent -- Bill Gates once had a company just like these -- and they serve as testing sites for America's best new products and management techniques. Most significant, America's entrepreneurial companies are the leading edge of the new economy, the source of innovation that will supersede mature industries. They are clear evidence that the end of growth is not near. Opportunities can be created in a single flash of creativity or through a calculated plan. Take Wellfleet Communications, which tops our list for the second year running. Sales for this maker of computer-networking equipment grew at an average rate of better than 240% annually over the past five years. Founder and CEO Paul Severino planned well. An alumnus of Digital Equipment and Prime Computer, he successfully passed through the startup gantlet twice before with computer equipment companies, Data Translation and Interlan. Severino knew he had to eat, sleep, and drink his market before the launch. ''We did a great deal of research,'' says the 46-year-old engineer. ''It showed that our part of networking would soon be a billion-dollar business.'' He figured the big players in computing might not jump in because that would require hooking up with competitors. Severino was right about the size of the market. Six months after he started Wellfleet in 1986, his team discovered that Cisco Systems (No. 5) was already shipping product. Surprised? ''They weren't even on our radar screens.'' Severino realized he would have to focus Wellfleet initially on a specific segment. He picked the high end, and his engineers moved quickly to produce routers that would appeal to huge companies struggling to connect everything from IBM mainframes to Unix-based workstations to Macs. Unlike competitors' products, Wellfleet's Backbone Node routers were designed to limit downtime to only one sector of the network during a failure and would be easy to upgrade. They were just what customers wanted. Still, a head start is a head start. Cisco is now the industry's big kahuna, with over $554 million in sales and 57% of the market, vs. 17% for Wellfleet. Severino is hardly daunted by the competition: ''What better an incentive?'' Chris Sullivan, 45, CEO of Outback Steakhouse (No. 8), built his Australian- themed restaurant chain -- shark jaws, boomerangs, and other artifacts adorn walls -- by bucking conventional wisdom. ''The experts said people would eat less red meat,'' notes Sullivan, 45, ''but we saw them lining up to get into steakhouses. We believed human behavior, not market research.'' Sullivan interviewed for bank jobs before he realized there was more fun and money in meat. He made his way through the ranks at Steak & Ale, franchised several Chili's, and started Outback in 1987. You want, perhaps, to do lunch with Sullivan? Not at most Outbacks. ''There's not much money in lunch, and it burns out employees,'' he says. A dinner business allows Sullivan to buy real estate close to where people live, which is cheaper than purchasing it close to where they work. Nowadays business is just the way Sullivan likes it: sizzling. If you haven't been to an Outback yet, make sure to pack a few extra bucks for a couple of rounds of Foster's or one of the 15 or so other beers in stock, since you'll likely have to wait 30-plus minutes for a table. Outback has expanded from one restaurant to 117 today, mostly in the Southeast. Sullivan purposely didn't visit Australia before opening. ''I might have tried to bring back authentic Australian food, which Americans don't generally like. Our company sells American food and Australian fun.'' NEW BUSINESSES can be created out of the most unlikely products. ''If I can make it by improving a 300-year-old piece of Scottish athletic equipment, anyone can,'' says Ely Callaway. Many thousands of golfers swear that Callaway Golf (No. 14) has brought their game to another level with the Big Bertha driver, the company's flagship product. Bertha's head is almost 25% bigger but not heavier than an ordinary driver's, so even a duffer is better able to launch the ball like power hitter Long John Daly. Bertha has helped make the dollar sales of Callaway clubs the highest in the U.S. This is the third round of business success for the septuagenarian Ely (pronounced EE-lee) Callaway. He worked his way up in the textile business and made it to No. 2 at Burlington Industries, but was passed over for CEO and left in 1973. He then migrated to California and founded Callaway Vineyard & Winery, which he sold to Hiram Walker in 1981 for about $14 million. While puttering around on the golf course, Callaway came across a club he liked so much that he bought the maker. Callaway slapped on his surname and built the company to its present size from almost nothing over ten years. Clubmakers had long dreamed of building a bigger head; Callaway took advantage of a new stainless-steel casting technology to do it and introduced Big Bertha two years ago. It's simple, says this supersalesman in his engaging Georgia twang. ''Being successful means creating products with significantly greater satisfaction to customers. Everyone wants a better product. Companies should give it to 'em!'' When Howard Schultz was brought in by the founders of Starbucks (No. 39) in 1982, the company had four stores selling coffee beans in Seattle. On a trip to Italy the following year, he became convinced that coffee bars would fly in the U.S. Today Starbucks runs 220 of them across the nation, and Schultz, 40, is aiming to do to coffee what Haagen-Dazs did to ice cream: carve out a premium niche with a brand that inspires cultlike customer loyalty. So far he's on track, and Starbucks isn't even facing a Ben & Jerry's-type competitor. The Starbucks philosophy: Only perfection will do. The company scours the world for the best beans, and last year gave to charity some 80,000 pounds of coffee that was no longer completely fresh. Another way Schultz satisfies customers is by asking them what they want. ''We get about 1,500 comments a month, which has been a source for some great ideas,'' says he. Among them: much more seating, longer hours, and even new store locations. Horse sense may be worth more than rocket science when you're trying to construct a superior mouse entrapment device. CEO Scott Cook of Intuit (No. 44) found that financial planning software was a pain in the password, so he created Quicken, which is as simple to use as an automated teller machine. To test it, Cook tried it on the mostly computer- and accounting-innocent Palo % Alto Junior League. ''Our product is for folks who think general ledger was a World War II hero,'' Cook says. ''We are in the consumer products business, not the software business.'' A Harvard MBA and former brand manager of Crisco, Cook, 40, dreamed up Quicken in the early 1980s and hired Stanford senior Tom Proulx to write code on the cheap. ''We went to 20 venture capitalists, and they all turned us down. I can't imagine why,'' he deadpans. ''Tom was just out of college with no job experience, and I was a former fat salesman.'' The team rolled out the software anyway in 1984. It was about as popular as a rubber check. ''In April 1985, I told our employees we couldn't pay them anymore, but we would keep on,'' says Cook. ''Four out of seven stayed. I maxed out my credit cards and jumped back on a plane to drum up business.'' By 1988 the company had $6 million in sales. After an enterprise is successfully booted up, life gets no easier. Count on new competition to provide nasty surprises. And a smart CEO knows that his customers will soon be tugging at his sleeve and asking, ''What have you done for me lately?'' Most fast-track entrepreneurs say staying ahead is the toughest part of the job. Sounding more like Lao-tzu than a software executive, Cook says, ''The trick is recognizing change you don't even see. What works for you last year can be death this year.'' Geoff Yang of Menlo Park's Institutional Venture Partners, which has bankrolled Exabyte (No. 22) and Synoptics Communications (24), agrees. ''The only rule is that things change. Sure, we study business plans, but we really look for managers who can adapt, because they always have to.'' HOW CAN anyone manage these bucking broncos of triple-digit growth? ''It's not easy,'' says Severino of Wellfleet, ''but it's some kind of ride.'' Ask Michael Dell, CEO of Dell Computer (No. 65), who has built a $2.3 billion company before his 30th birthday. Dell's company, which expects a sizable loss for its second quarter, is under pressure as margins in the cutthroat PC business continue to shrink. In street fights like this, you can never have enough good people. Says Dell: ''If I could do it over again, I would have hired more talented personnel in areas like systems and finance earlier on.'' During a company's ultra-mushroom phase, growth can mask festering problems that will put the company at the edge in a matter of quarters. Spotting the infection quickly can mean the difference between corporate life or death. One company that saved itself is Ramsay-HMO (No. 92), which serves mostly Cuban Americans and other Hispanics in southern Florida. Ramsay almost went under in the mid-Eighties after it expanded too aggressively. Crucial capital improvements were never made, cost controls were loose, and computer systems were archaic. Says CEO Luis Lamela, 43, a Cuban- born pharmacist: ''We had to pull out of Palm Beach County even though it meant sacrificing revenues. We didn't have the management strength or the infrastructure.'' Lamela got the company in shape with financial help from Paul Ramsay, an Australian venture capitalist. Retrenchment called for heavy reorganization. Example: Because of poor scheduling, doctors had to drive long distances between clinics, making them late and putting them in foul moods. The M.D.s would often take it out on the customers. Computerized schedules and geographic shrinkage solved the problem. Ramsay is healthy again, and in June the state approved its reentry into Palm Beach. As Intuit climbed toward the $100 million threshold, Scott Cook found himself having less and less contact with his customers. ''If that high-tech bomber blew up my office,'' he postulates, ''customers wouldn't care. But if he bombed the customer service center, our company would be in big trouble instantaneously.'' This morbid realization has made Cook fight even harder to communicate his vision to frontline employees. ''Our company is a circle, with me in the middle. As we grow, my job is to push the locus of decision-making out to the periphery.'' Cook sends all levels of employees out on weeklong national tours where they meet with customers. The ideas they bring back pay off when the next product or version is developed. This kind of management helps keep Intuit from getting bureaucratic, says Cook: ''It's teaching employees how to fish rather than just handing them a fish.'' What happens when Dr. Lightning Bolt, the genius who invented the Product, turns out to be Mr. Muddle as a CEO? Should he be graciously given the boot? Not so fast, says Yang of Institutional Venture Partners. ''A growing company needs a keeper of the vision, not just someone who can execute a business plan. Sometimes one person can do both, but often it takes two people.'' At Parametric Technology (No. 16) tag-team management became the modus of choice. Parametric's groundbreaking CAD/CAM software lets users make changes that flow through an entire design process, much like spreadsheet software for | financial calculations. The company has sold thousands of packages to customers like Caterpillar, Cummins Engine, and Allied-Signal. Company founder Samuel Geisberg, 56, a Russian Ph.D. in mathematics who taught geometry at the University of Leningrad, fled in 1974 and ended up in Boston's high-tech hatching ground along Route 128. After working at a couple of computer companies, Geisberg forged out on his own in 1985. His venture capitalists thought he needed some management expertise, though, and insisted on putting in one of their own, Steven Walske, 41, a graduate of Princeton and the Harvard business school. At first it was like The Odd Couple Goes High Tech. ''There was friction,'' admits Walske, ''but we learned to work together. I told Sam, 'This is your company, not mine.' Now we have a partnership in the truest sense of the word.'' In an unusual sharing of power, Walske is the president and CEO, and Geisberg sits as an executive vice president and chairman of the board. Each reports to the other. Geisberg, the intensely private Mr. Inside, is the technologist, the visionary, the product person, while Walske, Mr. Outside, handles the marketing and the company's constituencies. ''Ninety percent of the time in an arrangement like this, one of the two leaves, and usually it's the entrepreneur,'' says Walske. ''Here we have happily divided the world.'' Adds Geisberg: ''We do have a very good and right sharing of the power. I consider it a cornerstone of our success.'' Entrepreneurs multiply the odds of success if others at their companies share their passion and commitment to the business. How to get that? It's empowerment, and it works for owners as diverse as Chris Sullivan of Outback and Gordon Binder, CEO of biotech giant Amgen (No. 23). Decentralized management has been critical to Outback's success, says Sullivan. Though all the restaurants have the same Down Under look and medium- priced steaks ($11.95 for a 12-ounce sirloin), most decisions are made locally. ''We let franchisees wear many hats,'' says Sullivan. ''They are involved in real estate, marketing, purchasing, and people management.'' Restaurant managers have most of the same responsibilities, coupled with a juicy cut of equity: Each must buy a 10% interest in her or his business for $25,000 and also sign a five-year employment agreement. ''Managers aren't worried about compensation programs or bonuses,'' says Sullivan. ''We tell them, 'This is what you get, 10% of your business's cash flow. Now go for it.' '' This philosophy helps keep management turnover at under 10%, vs. up to three times that of competitors. More important, it makes managers into partners. Howard Schultz of Starbucks has learned to cultivate customer contentment by exalting his employees. Memo to CEOs who've just learned to focus on customers and shareholders: Think again. ''Our people come first,'' says Schultz, ''then customers, then shareholders. It may sound out of order, but we can't exceed the expectations of our customers unless we exceed it for our employees first.'' Schultz isn't just blowing steamed milk. His company has granted stock options to all its 3,500 employees. One hundred percent of them -- even the 60% who are part-timers. Lucky them. Since Starbuck went public in June 1992, the stock has more than doubled. A soft-spoken former Xerox salesman who grew up in the Canarsie section of Brooklyn, Schultz learned about work from his late father. ''He drove trucks and taxis and worked in factories,'' says Schultz. ''When my father retired, he had no pension, no insurance, no anything. I was always struck by how little his life's work was valued. That has had a powerful effect on how I treat people.'' Each month the company receives about 500 inquiries from potential franchisees. These requests are all politely refused. Says Schultz: ''They wouldn't treat our employees as well as we do.'' Amgen's Gordon Binder employs hundreds of scientists and says, ''These people are like top pro athletes -- they come self-motivated right out of the box. We don't have to spend one second or one penny to get them going.'' Amgen's challenge, says Binder, is making sure it doesn't demotivate them. For example, Binder invites the future occupants of a new office or plant to take part in the planning and design. ''They actually get the blueprints out and go through them,'' he says. Result: The employees get just what they need to work best. ''The beauty of it is, once we've gotten rid of something that bugs these employees, it usually results in a cost savings too.'' The ultimate goal is to maintain small-company values in a burgeoning big company. Severino of Wellfleet holds quarterly employee meetings to go over operations, set goals, and mostly answer questions. His unpretentious style also helps. ''We all live by the same rules here,'' says he. ''When I go on vacation I fill out a request form.'' The faster the growth, the harder it is to keep those values alive. In the early days, says Severino, attendance at employee meetings was typically 100%. But over the past year the head count doubled to 700, and with offices in Paris and Tokyo, only the Massachusetts crowd comes. And it's a chore even to keep up with them. A sign in Wellfleet's lobby welcomes eight new employees. Says a receptionist: ''We have to change that every week.''

BOX: HOW WE CHOSE THEM

To find America's 100 fastest-growing companies, FORTUNE asked William O'Neil & Co., an investment research firm in Los Angeles, to scan its database of public firms. We eliminated those that lost money during the past two quarters or over the past year as a whole, even though that excluded at least one hot company formerly on the list, Silicon Graphics, which showed a one- time loss due to an acquisition. To round the list to 100, we lopped off companies with sales under $88 million. We ranked the finishers by rate of annual sales growth over the past three years or, if available, five. (Financial companies, for which sales figures are a less meaningful measure of growth, were excluded.) An alphabetical index appears at the end of the article.

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