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Web fuels lots of growth, but not all of it

Affiliated Managers, Concord Communications share little except rapid rise

By Stephanie Stoughton, Globe Staff, 5/16/2000


1. Affiliated Managers
2. Concord Communications
3. Sapient Corp.
4. Biogen Inc.
5. DeWolfe Cos.

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The Growth 50

f some of the names on this year's Growth 50 list look unfamiliar, there's a good reason: The Web economy has local Internet software and service firms rocketing up the rankings.

Newcomer Concord Communications Inc. of Marlborough, for instance, had previously posted steady gains in profits and sales by monitoring the vital signs of computer networks.

Then came the Internet explosion, which sent Web businesses scrambling to Concord's front door for fix-it help. Concord grabbed the number two position in this year's list of top growth companies, based on average annual increases in sales and income over a two-year period ended Dec. 31.

''I would like to say we were brilliant, but we were also just very lucky,'' chief executive John Blaeser said.

Of course, it's not all about the Net.

Topping this year's list was Affiliated Managers Group Inc., a Boston asset-management company that has fattened up on revenue by gobbling up midsize management firms. The firm's chief executive, William J. Nutt, has an eye for acquisitions that fit comfortably into his empire - and don't eat into his profits.

Like Affiliated Managers, the real estate firm DeWolfe Cos., which climbed 15 rungs to the number five spot, has been on a buying binge. Last year, the Lexington company snapped up 10 brokerage companies, including J.W. Riker Northern Rhode Island Inc.

Biogen Inc., a Cambridge biotechnology firm, kept its name in the top five with strong sales and profits from its multiple sclerosis drug and several vaccines.

Other non-Web successes came from Eaton Vance Corp., a Boston money-management company that made its debut at number eight, and Alpha Industries Inc., a Woburn maker of cellular phone components, at number seven.

But Internet companies may have had the last laugh: They scaled the rankings despite the fact that they had to be profitable to make the list.

In general, the e-business companies topping the list were established firms that provided cyber-storage space, consulting services, software, and research. They don't sell to regular shoppers online, and they don't sell aluminum supplies or tractors on so-called B2B sites.

One of Boston's success stories is Sapient Corp., a hot Cambridge technology consulting firm and software systems integrator that rose to the number three slot, up from number 11 last year.

Sapient's founder and co-CEO, Jerry Greenberg, saw the Internet rounding the corner as early as 1994. Across town, executives at Cambridge Technology Partners Inc. did not. Cambridge Technology has fallen off the list.

At a time when Internet hype has reached an all-time high, Forrester Research Inc. has profited by making sense of it all. Savvy analysts at the Cambridge research firm, which rose six pegs to number 11, make it their business to sniff out the Web's losers and winners.

And cybersnoops, beware! Companies such as RSA Security Inc. of Bedford - up to number six this year from number 15 - want to lock you out with data encryption and other e-business security tools. The firm may be able to track you down, too.

It's anyone's guess which Web-related firms will make next year's list. Both nationally and locally, Internet companies have been widely criticized for hemorrhaging money while spending large amounts of cash to attract attention or expand more rapidly.

The resulting blood bath in the financial markets has hurt many dot-coms, including the Massachusetts companies Mothernature.com and SmarterKids.com. But even software services firms such as FirePond Inc. and NetGenesis Corp. have been dragged down.

At the very bottom of the e-food chain are hundreds of Internet start-ups striving to be the next Concord or Sapient. More are on the way. In the first three months of 2000, venture capitalists invested $2.2 billion in Massachusetts companies, more than triple the amount they paid out in the same period last year, according to the National Venture Capital Association.

''Many companies are starting up, but few will succeed,'' said Alan Clayton-Matthews, a public policy assistant professor at the University of Massachusetts in Boston.


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