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What Fortune’s Fastest Growing Companies list says about the economy

Good morning.

David made a nod to Fortune’s Fastest Growing Companies list yesterday, but I want to return to it today, because I think it illustrates a couple of important points about today’s economy.

First, while a tech company—AppFolio—topped the list this year, tech no longer dominates. There were only 20 from the technology sector on this year’s 100, down from 32 both last year and the year before. There were more from finance (24) and industrials (21) than tech.

But don’t misread that. Tech’s effect on business continues to grow at exponential rates. It’s just that “tech” has moved from being an industry to being a competency… of pretty much any successful business today. Most of the companies on the list rely heavily on technology as a differentiator.

Second, but related, while the San Francisco Bay Area continues to lead the way in blitz-scaling, only 17 of the fastest growing companies this year were based there—and that includes only one of the top ten: Netflix (#5). The companies hailed from 24 different states of the U.S., and six countries outside the U.S. That includes companies like Brooklyn-based Etsy (#8) and Illinois-based Paylocity (#9). Alibaba (#14), based in Hangzhou, China, was the top-ranked company outside the U.S.

This year’s endurance record goes to a company you may never have heard of: Patrick Industries, which was founded in 1959 and is headquartered in Elkhart, Ind. The company makes products and materials for manufactured housing and recreational vehicles and has been on the list for seven straight years. It expanded its sales at an annual average of 25{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} over the last three years.

The biggest company on the list is Amazon. It’s not easy to grow so fast when you are as big as Amazon. But the company averaged 28{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} revenue growth for the past three years, and has made the list for four years. It will undoubtedly do so again next year, given yesterday’s earnings report, which showed revenues up 37{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} and profits tripled.

A word about methodology: You have to be traded on a U.S. stock exchange to make this list, and the ranking is based on three years of revenue and earnings growth in the quarters ended on or before April 30, 2020. So largely pre-pandemic.

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Alan Murray

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