FEATURE RAPID- FIRE GROWTH Locked and loaded, Epic Games blasts its way up this year’s ranking of private companies. By Erin Dunn CFO Joe Babcock suits up to show off the motion-capture technology that helps create the lifelike effects his company’s games are known for. PHOTOGRAPHY BY STEVE EXUM FEATURE he deathwatch started in May. Providence, “In one of life’s coincidences, Epic’s revenue, was its release of Gears of War 3 in during the economic downturn,” says Mike R.I.-based 38 Studios LLC, a video-game maker directors had spent the morning discussing September 2011. Originally retailing around Ryan, Grant Thornton LLP’s audit practice started by former Boston Red Sox pitching ace how we’d love to build even more successful $60, 6 million copies have been sold. Epic, leader in the Carolinas. “Today those compa- Curt Schilling, was suffocating under an overly projects with our growing team,” President which declines to release its revenue but was nies are looking for ways to deploy capital ambitious concept for a game and unbridled Michael Capps wrote on the company’s blog, ranked among companies with between $250 and grow their business. Not only are they spending. It was about to default on a $75 “but that we’d need a dramatic infusion of million and $499 million, was the biggest making capital investments that were million loan from the state of Rhode Island, and top talent to do so. Which, we all knew, was gainer on this year’s list. From a business deferred during the recessionary period, T though the governor said he was fighting to impossible.” A few days later on June 7, 38 CEO Tim Sweeney started 21 years ago in keep the company alive, its nearly 400 employ- Studios filed for Chapter 7 bankruptcy. Two his parents’ basement in Potomac, Md., Epic “Companies are looking ees, many of whom hadn’t been paid in weeks, months after that, Epic opened Impossible is now a company with global reach that Epic Games has would be out of a job within a month. Facing Studios in Hunt Valley, Md., hiring 36 of Big employs roughly 300 people. for ways to deploy capital always thrived on an uncertain future, workers at its subsidiary in Huge’s roughly 100 former employees. Though it’s anything but your typical Tar new technology. Its Baltimore, Big Huge Games Inc., hatched a That’s one way for a company to grow, Heel private company, Epic is growing the and grow their business.” mobile-based hit plan to create a new, independent studio. They but the main reason Epic leaped from No. 91 same way that others on the North Carolina Infinity Blade is the approached Epic Games Inc. about using to 30 on Grant Thornton’s North Carolina 100 are: by investing in people, products and they’re considering acquisitions to achieve latest example. one of its games to build a demo on, but the 100, an annual ranking of the state’s closely partnerships. “Successful companies started their growth objectives.” Cary-based company had another idea. held companies based on the previous year’s stockpiling cash and sitting on the sidelines Recruiting talent is especially important in the ultracompetitive gaming industry, but it’s tough for applicants to win their way onto Epic’s payroll. “It’s harder to get a job here than the CIA,” Chief Financial Officer Joe Babcock says, half-joking. Median experi- ence is 10 years, but the 165 employees at Cary headquarters who have made the cut get extras such as in-house fitness classes, a stocked kitchen and pantry and surroundings that exude cool — a giant slide connecting the first and second floors, a rock-climbing wall and a stairway tagged with graffiti depicting many of Epic’s gaming characters. There’s a motion-capture studio where actors are filmed, their movements used to make animation more lifelike. This summer, it reportedly hosted crews filming Iron Man 3, a claim neither denied nor confirmed by the company. But the security code required to enter the building signals that serious research and development is under way. Nestled between a sprawling suburban strip mall and luxury apartments, Epic’s 115,000-square-foot headquarters is identified by no more than a stone marker inscribed with its street number. After moving from Maryland in the late 1990s, its staff grew to the point the 30,000-square-foot building had to be expanded 2½ years ago. The company has always thrived on new technology. A downstairs corridor showcases the covers of the more than 40 games it has released, starting with ZZT, which was distributed on 3½-inch 48 BUSINESS NORTH CAROLINA OCTOBER 2012 49 FEATURE HOW TOP PRIVATE COMPANIES ARE GROWING BreakdownAcquisitions/expansions of companies represented tion technology in the haveNC100 fueled itsrevenue helped categories it move from sixth to fourth $600 million effort to rebrand and Concord, which made its debut on Centennial Campus to take over product mix and is searching for for a $1.3 billion recapitalization Peak 10 Inc. This Charlotte double-digit annual growth in in the ranking. It now operates remodel its department stores. the list this year at No. 19, spent Raleigh-based software maker a site for a new production and so AmWINS can grow organi- company has kept adding data revenue and net #income. of companies more than% 420 of stores total in the South, Concord Hospitality $7 million in the first quarter of Red Hat Inc.’s former headquar- distribution operation. cally and through acquisitions. $500 millioncenters, or which more it operates in revenue for VPS Convenience Store Midwest11 and Mid-Atlantic. 11% Enterprises Co. The Raleigh- 2012 on renovations. ters. One of its most-anticipated In September, the company $250 millionsmall- toand $499medium-size million compa- Group LLC In January, the 24 24% based operator of more than 80 products is a phone that lets users New partners announced it would purchase Reinvesting/rebranding New products make calls over a Wi-Fi network. Stevens Point, Wis.-based Special $150 millionnies in to midmarket $249 cities. million Peak will Wilmington-based owner of the 15 15% hotels invested $18.5 million reno- AmWINS Group Inc. The Char- soon open its 24th and is in talks Scotchman and Village Pantry Belk Inc. The Charlotte-based vating more than a quarter of them Bandwidth.com Inc. The fast- It’s in the testing phase. lotte-based wholesale insurance Markets Insurance Consultants $100 million to $149 million 23 23% to build a 25th at an undisclosed chains bought seven convenience retailer and largest company on the last year and more than $6 million growing Cary communications- S&D Coffee Inc. The Concord distributor teamed up this year Inc., which underwrites insurance $60 millionlocation, to $99 CEO Dave million Jones says. stores in central Illinois, its third list, with15 revenue of $3.7 15% billion its converting a 32,000-square-foot technology company is moving coffee roaster and distributor is with New York-based private-eq- for schools, youth groups and $36 millionCompanies to $59 outsourcing million informa- acquisition in about a year, which last fiscal12 year, is in the 12% midst of a building into its new headquarters. this fall to N.C. State University’s adding more lines of tea to its uity group New Mountain Capital sports associations. diskettes, to its latest hit, the Infinity Blade venture is a new studio in Seattle, a U.S. It’s not easy to get a NC100 REVENUE series for mobile devices. It’s a reminder that gaming hub. It will hire at least seven job at Epic, but those every Epic product must surpass not only developers there, tapping talent to work who make the cut are Industry # of NC100 companies % of NC100 companies $500 million competitors but also its previous games. “It’s on its newest software, Unreal Engine 4. treated to perks such or more 11% Wholesale distribution very30 hard to succeed as an independent30% game Unreal Engine is an important part of Epic’s as a climbing wall at Manufacturing$250 million developer,”15 Babcock says. “It’s a15% high-risk success story. It’s not a game but a platform its headquarters. Real estate,to $499construction million 24% & hospitality business.18 Most game developers have18% a hard the company developed that allows design- time making it. If their game isn’t as success- ers to make their own games and create Retail $150 million 14 14% Services $249 million 15% ful as6 they hoped, they wind up having6% to effects such as reflections and shadowing as close their doors.” well as establish how characters interact Technology 12 12% $100 million to That’s how Epic wound up with the Big with surroundings. Epic began licensing its $149 million 23% Transportation Huge5 Games employees, who are helping5% it technology in the mid-1990s, but business $60 million to expand in mobile gaming. Epic is betting its really took off in 2006 with the introduction Total $99 million 15% complex,100 graphics-rich games will100% set it apart of Unreal Engine 3. It has spawned more than $36 million to from other popular offerings. “Angry Birds is 300 games. In addition to Epic’s own Gears of $59 million 12% doing very well, but Angry Birds is a casual War series, they include Quincy, Mass.-based game,” Babcock says. “We’re trying to bring Irrational Games LLC’s BioShock and a series that AAA experience, that high-quality of Batman games by United Kingdom-based game play and stunning visual graphics, to Rocksteady Studios.