Sometimes when we think about the household brands that we use today we can overlook the fact that everything has a starting point. Even the greatest of fortunes had a beginning so understanding this if you are an Entrepreneur or Investor its important in your own journey because it doesn’t matter where you start out its where you end up and the experiences you have had along the way.
The below photos exemplify this insight through showing where each of these world famous extremely valuable companies had their start and validate the notion of a “garage startup”.
3 Startup Stories
Shaping the world through investing in next big thing.
In 1998, two young entrepreneurs who were students at Stanford University on the recommendation of their Professor there created an introduction for then to pitch their big idea to well-known Silicon Valley Lead and Angel Investor, Andy Bechtolsheim. The idea was simply to put everything on the Internet in one place and had created an algorithm that facilitated this dream. Andy liked their idea so much he became their first seed investor with $100,000. Because Andy took the lead on the investment the Professor also decided to invest $100,000
Andy’s (and the Professors) foresight, investment and backing these two Entrepreneurs helped change the world because Google has improved our lives and businesses in countless ways. Andy’s investment today is worth over $2 Billion.
In the garage where Google started
The seed capital that revolutionised how we shop
In an interview with a US talk-show host Charlie Rose, Jeff Bezo the interviewer asked him if there has ever been a time since Amazon “gained traction” where he thought he could lose it all, Jeff Bezos answered;
“I’ve been optimistic about Amazon since the early days,” says Bezos. “I was most pessimistic literally at the very beginning. It took sixty meetings to raise a million dollars, which I needed to get the company started. Twenty two people providing around $50,000 each, on average, to get me that million dollars. That was the riskiest time for Amazon, that’s when the whole thing may never have happened. Raising that money was very, very difficult.”
While hindsight is a wonderful thing, back in the dark days of 1994 when Amazon was founded, the Internet was far from the mainstream consciousness, so it’s understandable there would be a lot of hesitation to pump cash into this very early e-commerce initiative.
“The first question people had, was what was the Internet?,” continues Bezos. “Of the forty people I talked to who did not invest…I mean, anyone who knew anything about the book business, for example, did not invest. That was the most fragile moment for Amazon. Since 1997, our immediate destiny has been in our own hands.”
The rest is history. Bezos’ whole motivation for launching Amazon in the first place was his so-called “regret minimization framework”, after having not initially invested in the burgeoning Internet gold rush. The $221bn+ revenue his company reels in today speaks for itself.
Jeff Bezos first desk, a door. He wanted to demonstrate the “lean startup” approach to venture building
Capital drives fast growth
As with any fast-growing business, access to expansion capital is a key to success. Uber is a prime example of this. The founders saw an opportunity to disrupt the global taxi industry through ridesharing combined with technology.
Their challenge though was that they had to move fast to dominate this global opportunity, and this has required massive amounts of capital.
In 2009 it raised $200,000 as a seed round then the following year, an angel round of $1.25 million. In 2011 it raised a Series A round of $11 million and Series B of $37 million. Then, in 2013, a Series C round of $363 million and in 2014, a Series D of $1.4 billion.
In their first 5 years they had raised a total of $1.812 billion and overall, in 10 years as at June 2021, they have raised a total of 30 funding rounds for a combined US$25.1 billion, resulting in a market capitalisation of US$72 billion.
In conclusion, if the founders of Uber weren’t able to attract the initial seed raise of $200k we may have never heard of them!
Ubers first offices
Learnings and insights
Each of these 3 stories when you study them provide key insights and learnings that are important for both Entrepreneurs and Investors to understand about foundation capital and the startup journey. For me these are some powerful takeaways that hopefully may make a difference for you in what you do, which are;
- Start with a big dream then figure out how to make it a reality.
- It doesn’t matter where you start out from its where you take your vision to.
- Find your first backer and true believer then they will bring others on the journey with you and endorse what you are doing
- Challenge the current paradigm, not through attacking it, instead create a better alternative that people will choose instead.
- Rejection is part of getting your idea up so be prepared to pitch your idea to as many people as you need to so you can create traction
- When you have 20 people + buy-in to what you do you have created momentum that will be the rocket fuel to take you to the next level.
- Build a brand that is not contextually bound to one product or service that way you can overtime build an overall ecosystem of offerings. Google and Uber also have also proved this approach.
- Sometimes you just have to act on opportunities so that you don’t regret it in the future
- To defend your position in todays world you have to scale fast. Your greatest emerging competitor is not necessarily in your current market instead they could be on the other side of the world copying you with the view of beating you.
- Capital is the only way you can scale fast as organic cashflow driven growth is not enough when you are trying to dominate an emerging market.
- Once you have dominated one area with your technology then look to other ways you can apply what you do. Eg in the beginning the founders had no idea of the fact they would one day apply their tech and business models to fast food delivery.