Before they were famous, the world’s biggest companies had to start somewhere.
We here at Star Investing cover small cap stocks, and we’re proud of that. These are companies that are out on the market trying to make things happen, employing people, and trying to generate a return to shareholders.
While they may not all succeed, it is always worth remembering that the world’s largest and most successful companies were once small businesses. Once upon a time they too were pre-revenue and without a milestone achievement in sight.
In short, they just look like companies that are making it up as they go along — because, largely, they are.
The unlikely origins of the world’s largest companies reminds us that it’s not how these companies start that matters — but where they’re heading.
Here are the unlikely beginnings for 10 huge companies from Australia and abroad.
You know that whole trope about multi-billion dollar companies being started in garages? This (and Apple) is where it comes from.
Famously started with seed capital from Jeff Bezos’ parents, the company began when Bezos saw the enormous rise in internet traffic circa 1994.
“The wake up call was finding this startling statistic that web usage in the spring of 1994 was growing at 2,300 percent a year. You know, things just don’t grow that fast. It’s highly unusual, and that started me thinking, ‘What kind of business plan might make sense in the context of that growth?'”
So, selling books. Books weren’t about to go out of style, and there were way more books than any one physical location could hold.
The story goes that Amazon was booking $20,000 in revenue per month within a few months of starting up, but it didn’t actually make a profit until 2001 (it went public in 1997).
Goes to show that profit can be overrated.
This one has become a little bit disputed in recent times, but it’s still a really great story no matter which way you slice it.
The story goes that Reed Hastings was outraged about a $40 fee from Blockbuster for returning Apollo 13 late and decided to do something about it — but that has been disputed by co-founder Marc Randolph in recent years.
While it was building ‘the Amazon.com of something’, it was thinking bigger picture.
Much like Bezos, Hastings had looked at the increasing speed of the internet and forecasted that streaming video would be a massive opportunity.
It also helped that postage rates were going up, giving Netflix both a carrot and a stick to start its evolution.
READ: Our latest tech stories
The origin story of BHP Billiton isn’t the story of just one company, but two.
As you’ve probably guessed, those companies are BHP, and Billiton.
BHP stands for Broken Hill Proprietary and, you guessed it, it started out life as a minerals explorer and producer at Broken Hill in 1885. It got its start in 1883 when Charles Rasp was working as a boundary rider in the area — he found silver and lead and paid for a mining lease.
Two years later he listed the company on the public stock exchange.
Meanwhile, Billiton got its start when Dutch explorers discovered tin on the island of Billiton in Indonesia in 1855. NV Billiton Maatschappij was formed in the Netherlands in 1860 — with mining licenses awarded to the company.
They would come together in 2001 — making the merger one of the biggest deals in mining history.
Entertainment behemoth Disney started in a back-office where rent was $10 a month.
In 1923 Walt Disney and his brother Roy produced a series of live-action/animation shorts known as the Alice Comedies.
It saw some initial success and decided to move next door to a bigger office where the ‘Disney Studios’ sign went up for the first time.
It moved again, but the major move would come about 14 years later when its first feature-length animated film Snow White and the Seven Dwarves came out and was a smash hit.
The company bet big on the future of animation by taking the profits from Snow White and buying 51 acres in Burbank to create a studio specifically designed to pump out animated features.
The rest, as they say, is history.
Yes, Coca-Cola once contained cocaine.
It was invented by confederate soldier John S Pemberton in 1885, who had a passing interest in pharmacy and invented a nerve tonic as a way to cure his morphine addiction.
He originally marketed the beverage as “Pemberton’s French Wine Coca” highlighting it as a mixture of coca, kola nut, and damina.
Over the next few years the formula was refined (the wine was taken out due to prohibition laws) but it was still sold primarily as a health tonic.
It was a switch to make the stuff available for soda fountains which was a game-changer for Coca-Cola, jumping on an appetite for carbonated beverages (this was the late 19th century and people were going nuts for it).
Once the company had found a way to bottle and distribute the beverage it started to market heavily for a mass audience.
Once Pemberton had passed, a bitter tussle broke out for the rights to the drink — a tussle that was won by Asa Candler — who became the founder of the Coca Cola company.
This one is such a perfect startup story that it’s hard to imagine it’s not entirely confected.
It began life in 2007 in San Francisco, where the numerous tech companies in the area had started to make properties available for rent scarce — and this was even more true when a design conference rolled into town.
Airbnb co-founders Joe Gebbia and Brian Chesky figured out that the city’s hotel room were fully booked and short-term rentals unavailable — so they threw down airbeds in their living room floor and charged $80 a night for them.
They created airbedandbreakfast.com the next day, having seen the kernel of what could come.
They then enlisted the help of Nathan Blecharczyk to help with the code, and the first iteration of airbnb was live.
They initially targeted festivals and large conferences to build traction and an inventory of people with spare rooms — with the company gaining the attention of angel investors after targeting the Democratic National Convention in 2008, where Barack Obama was speaking.
With a bit of marketing and the market demand generated by Obama’s appearance, the Airbnb team had the perfect playbook to get investors interested.
Qantas is now one of the largest aviation companies in the world, but started because of a broken axle in outback Queensland.
The story goes that back in the 1920s, a grazier by the name of Fergus McMaster was driving across the Cloncurry River bed but broke his axle — which would be repaired by Paul McGinness.
McGinness and Hudson Fysh had already been looking into the prospect of an aviation service after hearing about a competition to win 10,000 pounds to fly from London to Australia within 30 days — which would have been a massive improvement on the six-month boat trips.
But now they had somewhat of a wealthy benefactor who was sympathetic to hearing about how flight could help avoid being stuck with a broken axle.
They pitched McMaster on the idea of a private air service — and long story short, the papers for the Queensland and Northern Territory Air Service were drawn up and signed at the Gresham Hotel in Brisbane in 1920.
All because of a broken axle.
Before it started destroying ‘mom and pop’ stores (small family run retail stores) by undercutting them, Walmart began as a…mom and pop store.
The story begins in 1945 when Sam Walton purchased a Ben Franklin retail franchise store, and helped turn a store with sales of $80,000 to one with $225,000 — largely by discounting, which was taking off in the US at the time.
However, he failed to convince the franchisors to allow him to discount even further to gain market share — leading him to open his own store, the Walton’s Five and Dime.
95 percent of the capital from that store came from Walton and his wife, with investors not really digging the whole ‘let’s erode our margins to the point of no return’ thing.
It was literally a mom and pop store.
But, those early stores were a success — leading Walton to open 14 of his early stores between 1951 and 1962 and the snowball of bargains only grew from there.
When Ernest Hemingway set out to write Moby Dick, he probably didn’t think about there being a monument to a minor character on almost every corner or that a major US coffee chain would commandeer one of its character’s names.
The first Starbucks opened in Pike Place market in Seattle in 1971, after three students at the University of San Francisco (Jerry Baldwin, Zev Siegl, and Gordon Bowker) were introduced to coffee roasting entrepreneur Alfred Peet — and were enamoured with his style of roasting beans.
They started out by buying beans from Peet, but quickly moved to buying beans from other suppliers.
Fun fact: they didn’t originally sell coffee from their stores — just the beans. They only originally made coffee for customers wanting a sample of the brew that the beans would result in.
Another fun fact: they originally wanted to call the store Pequod, a reference to Captain Ahab’s boat in Moby Dick, but ‘have a cup of Pequod’ didn’t quite sound right. Instead, they took inspiration from Ahab’s first mate, Starbuck.
There was a literal movie about this, recently, but we’ll give you the short version below.
In 1937 a man by the name of Patrick McDonald opened a food stand in California, with his sons Maurice and Richard moving the store three years later — initially selling BBQ.
They eventually realised that the hamburgers were the things selling well, and they came up with a system to cook them quickly — leading to the first incarnation of ‘McDonalds’ in 1948.
The brothers started to slow path of franchising, mostly within California, in the 1950s — when Ray Kroc, then a milkshake machine salesman, caught wind of the restaurant’s success when its original store ordered eight machines.
He convinced the brothers to let him franchise outside California, setting up the first store near Chicago.
Thanks to some fancy legal footwork Kroc was able to franchise using the ‘outside of California’ license — setting it on the path to turbo-charged growth.
What did we learn?
From broken axles to airbeds, the biggest companies in the world sometimes come from the most improbable of places.
They generally don’t come from big companies, they come from the small companies doing seemingly random stuff.
In the case of Amazon or Netflix, they see technological change as a way to open entirely new business models.
In the case of Ray Kroc or Sam Walton, they took on bigger risks than established businesses were willing to.
It’s easy to fob off the dreams of smaller companies as way too risky, or not having enough capital to get off the ground but there’s always one or two diamonds in the rough which have the potential to become something really big.
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