From garage on a binge: success stories of the biggest IT-businesses that started from the scratch
Today almost every Internet user knows people like Jack Ma, Richard Branson, Michael Dell and, of course, Bill Gates and Steve Jobs. If some of these names don’t ring a bell, you’ve certainly heard of Alibaba Group, Virgin Group, Dell, Valve Corporation, Microsoft and Apple. These companies are giants in a market that they themselves, in many ways, shaped. And many of them started literally from a garage.
One of the flagships of Chinese business, the Alibaba Group, which owns the online store AliExpress, the popular Chinese payment system AliPay and even part of Yahoo!, was founded not by some privileged son of a member of the Chinese Politburo or another lucky man born “with a silver spoon in his mouth” but by a simple English teacher. The story of the Alibaba Group, and later the world’s main “flea market,” began with Ma’s trip to the United States in 1999. It was there that he became acquainted with the Western Internet and came to the conclusion that there was money to be made on it. After Ma returned home, he created the Alibaba Group, a directory of Chinese trading companies. Like many others on our list, Ma started with the support of friends, relying on sheer enthusiasm and his own instincts. The company wasn’t doing too well until Ma and his team secured $25 million in funding from Japanese investors who saw the idea coming from a neighbor. In 2010, AliExpress was launched as a response to people’s desire to buy any goods from the comfort of their own homes. There is no point in telling about the further history of AliExpress: now Ma is the richest man in China, his company is developing dynamically, investing in various areas and constantly increasing its turnover.
Although Branson is not the richest man on our list, his story can be called textbook. The future sir began his entrepreneurial experiments in his school years, producing newspapers, growing Christmas trees for sale and raising undulating parrots. Later the future billionaire switched his attention to the audio business and publishing, and the Virgin Group empire began with a small store where informal young people gathered to listen to music and hang out.
Today he has already published a book of memoirs in which he talks about the formation of the Virgin Group empire, was one of the first to talk about space tourism, and even tried his hand at being an airline owner, which, however, mostly burned his money rather than bringing in income. One thing is certain: it all started with fir trees and fluffy parrots, and ended with 400 companies under the Virgin Group brand and a fortune of $5 billion.
The founder of software giant Microsoft held the title of the world’s richest man for years, only recently ceding it to Amazon founder Jeff Bezos. Gates’ first big success was MS-DOS. Everyone has heard that Gates bought DOS for next to nothing, which was the foundation of his corporation.
But in fact it all started much earlier, in 1972. Bill Gates’ biography doesn’t say much about this stage, although if you analyze the facts, it was the defining moment for the businessman himself and the rest of the world that now uses Windows.
In 1972, Gates, along with his friend Paul Allen, founded Traf-O-Data, whose goal was to create an integrated system based on primitive computers and proprietary software. The Traf-O-Data systems, from the name, were planned to be used as an analyzer and controller of traffic flows on the roads. According to Gates and Allen’s idea, the U.S. Highway Patrol was supposed to be interested in their development, but something went wrong. The first venture founded by the two friends went bust.
Maybe this would have been the end of the story, but a few years later, in 1975, Gates and Allen wrote a BASIC interpreter for the Altair 8800. Gates called MITS first, saying that they had an interpreter, and only then did he and Allen create it.
The story of the birth of Apple, one of the most popular examples of a “garage startup”, is in this part just a popular myth. One can argue for a long time about who actually made the decisive contribution to the creation of Apple – manager Jobs or engineer Wozniak – but one thing is certain: it was not born in a garage at all.
In fact, Wozniak worked on his own project in one of HP’s labs. Wozniak honestly offered the fruits of his labor to his employer, and after he refused, he gave them to Apple represented by Jobs. The friends did have a garage in the formative years of Apple but it was used as a gathering place and hangout rather than as a workshop.
But the first joint development by Jobs and Wozniak, the “blue box” – a device that transmitted tones to the telephone network and made it possible to call from “someone else’s” number – can be considered truly “garage”. Moreover, it was not their original idea: the friends got the idea for the Blue Box from an article in Esquire magazine about the hacker Captain Crunch. They assembled the first “box” for fun, and then Jobs offered to sell them for $150 apiece. By the way, Jobs himself thought that Apple started with this student’s work, and not with the Apple I computer, which Wozniak created much later.
Although the name Dell is on everyone’s lips around the world because Michael Dell is the only person on our list who chose to name the company after himself, his story is the least known to the public. But it is closest to the “garage startup” archetype. But even that is not entirely accurate: Dell began in his student dorm room, in which he rebuilt and upgraded IBM computers and then resold them. Word of mouth and newspaper ads did the trick: the room soon became a full-fledged workshop, and Dell was maxed out on orders.
At the same time, as a first-year student, Michael Dell dropped out of school and founded PC’s Limited, which would later become Dell Computer Corporation. Unlike other “colleagues,” Dell didn’t have to rethink his approach to work, and his business was based on a customer-centric approach. From day one in the small office he rented, Dell worked on the principle of “Sell the user not what he had in stock, but what he needed. And cheaper than others.” Dell originally worked on modifications of IBM computers, adding features that users needed on demand. Michael Dell’s habit of working “to order” was eventually projected into entire personal computer factories.
However, if you thought this was an example of the business success with which the entrepreneur began, it is not. Like Gates, Branson, Jobs and dozens of other businessmen, Dell earned his first real money ($18,000) selling subscriptions to a local newspaper to newlyweds. It was then that he developed the idea of a personalized approach (all sales letters were original, for a particular couple), which helped him build the Dell Computer Corporation.
About the unlucky ones
What unites the stories of “those who could” is a coincidence of factors: a strong idea and strong marketing.
Gates, Jobs and everyone else were in the right place at the right time – a time of explosive technological growth when the world was just learning about the “personal computer” and preparing for the advent of the Internet.
Michael Dell’s work from day one was built on the principle of “do what people need, not what you want. The world had a need for a new operating system, and Gates gave the world MS-DOS and then Windows. Branson discovered talents like the Sex Pistols, and Jack Ma met the need for an online catalog of Chinese-made goods stores.
Behind every success story, however, there are tens, if not hundreds of thousands of “garage” businesses that end up going bust. The typical “survivor’s mistake” is not to think or talk about those dolphins pushed away from shore.
It is not enough to have a good idea and ability to build an empire – every time it is an unimaginable coincidence of circumstances often beyond the control of the future billionaires themselves. There are many “failure stories” on the web, which, like mushrooms after the rain, have sprung up in the last few years.
There are far more savvy engineers and inventors than you can imagine. On Kickstarter alone there are over 130 thousand successfully financed projects, the fate of which no one knows. The reasons for the “post-Kickstarter” stupor may be different – but not the least of them is that not every Wozniak has met his Jobs. That is why the majority of successfully launched technical projects on Kickstarter and Indiegogo are closed after fulfilling their obligations to backers without finding additional sales channels.
Inventors and engineers have an impossible burden of marketing, which not everyone can cope with, and frankly, not everyone wants to bother with it, hoping that “somehow it will solve itself. There is no place for them on Amazon or AliExpress – a few months without sales simply kill the young business, and now it’s almost impossible to break through with something really unique via numerous products of no-name manufacturers that just copy solutions of successful brands. Only a fraction of startups go through this “valley of death” and find retailers, collaborating with other small chains and retailers, trying to survive somehow.
Marketplace for the new Jobs
The indie electronics market is ripe for a solution that will instrumentalize the transition of projects from the garage and niche production stage to confident mass sales. This is the concept offered by the Hamster Marketplace project, founded by Denis Bulavin, a Russian manufacturer of children’s PlayPad tablets. Working in the niche electronics segment, he saw a demand for a platform that would enable other independent manufacturers to find their customers and expand sales without the ruinous struggle for a limited number of shelf and window marketplace spaces with large vendors and non-original manufacturers. Pre-sales of Hamster Marketplace tokens will begin in December. To make sure you don’t miss the start of registration, sign up for the newsletter on the project’s website.
If you want to get more information about Hamster Marketplace first-hand, welcome to our Russian-language channel in Telegram.