How They Started Read online

  HOW

  THEY

  STARTED

  How 25 good ideas

  became great companies

  Carol Tice & David Lester

  How They Started

  Carol Tice and David Lester

  This epub edition is published in 2012 by Crimson Publishing

  Crimson Publishing, Westminster House, Kew Road, Richmond, Surrey TW9 2ND

  © Crimson Publishing, 2012

  Epub edition 2012 ISBN: 978-1-78059-121-6

  The authors have asserted their moral rights to be identified as the author of this work in accordance with the Copyrights, Designs and Patents Act 1988.

  British Library cataloguing in Publication data

  A catalogue record for this book is available from the British Library

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  Contents

  Acknowledgements

  Introduction

  Chapter authors

  MANUFACTURING

  SPANX

  MEDIA AND ENTERTAINMENT

  Electronic Arts

  Pixar

  SERVICES

  Zipcar

  INTERNET

  eBay

  Etsy

  Groupon

  LinkedIn

  Match.com

  Twitter

  TripAdvisor

  Zynga

  FOOD AND DRINK

  Chipotle Mexican Grill

  Gatorade

  Jamba Juice

  Pinkberry

  Whole Foods Market

  TECHNOLOGY

  BlackBerry (RIM)

  Dropbox

  Google

  AMERICAN CLASSICS

  The Coca-Cola Company

  IBM

  The Walt Disney Company

  KFC

  Microsoft

  Acknowledgements

  We must first thank all the founders of the businesses featured who consented to give detailed, frank and insightful interviews about the very earliest days of their companies. Many revealed stories and information that have not been shared publicly before.

  Many early-stage investors in these brands, founding team members, and other associates of the founders were also generous in sharing their memories and knowledge of the fledgling brands we feature in this book.

  And we must also thank the companies, many of which are no longer run or owned by the original founders. These businesses, in numerous cases, provided additional supporting information and photography that they have kindly agreed to let us use here.

  Finally, it is appropriate to thank those at Crimson Publishing, who have spent a considerable amount of time putting this book together.

  Carol Tice, as co-author, has been instrumental in securing exclusive interviews and personally authored 11 chapters herself. Her dedication, resourcefulness and writing ability have ensured that the stories told here are unique and of the highest quality. But, as she says, “My biggest thanks go to my husband Larry ... without you, nothing gets written.”

  Introduction

  Most of us have come across an idea we think would make an awesome business. That sixth sense, this-is-special moment when you’re standing in a place that’s crying out for a new restaurant/bar/whatever. Or you get that feeling of boiling frustration with a product or experience and think “this should be so much better.” Truth is, most of us don’t act on those would-be killer thoughts.

  This book is about the people who did. It tells the remarkable stories of people who had innovative ideas and built them into some of the hottest businesses on the planet. From afar, the scorching success these companies have had makes it look easy. It’s not. The stories themselves are as compelling as most novels, with more twists and turns than most founders would have anticipated. It’s probably better they didn’t know what lay ahead, or they might never have started at all.

  We decided to write this book to look much more deeply into why and how some of America’s most successful companies got started. It seems much harder to set something up from nothing than to take something that’s working and grow it. And we’ve found it even more fascinating than we’d expected.

  How we selected the companies featured

  Of all the many stand-out companies, how did we come up with this list? We started with the idea that we wanted to write about companies most people knew about. That way, the stories are more real, and also more enjoyable.

  We knew we wanted a variety—some of America’s established corporate giants as well as plenty of more recent, fresh and disruptive startups, which will be more helpful to anyone currently starting up, or thinking about doing so. We also knew we wanted a selection of business types—for all the opportunities and great startups in technology, this nation is home to many young, game-changing companies in other sectors, too. And we wanted founders from a variety of cities and backgrounds. Finally, we wanted entertaining stories—and we weren’t disappointed.

  We hope that after reading this book, many of you will feel more confident about acting on an idea you might have to start or expand a small business. That’s part of the job we hope this book does.

  But some of you will also be struck by how hard it can be to build a business to that level. And how risky. If some of you finish this book and decide that starting up might not be for you after all, then we will still have accomplished something worthwhile.

  We don’t believe everyone should start a business. We are often asked what it takes to start a company and make it a success. Part of what it takes is the resilience and commitment to get through the hard times that almost every startup will face along the way. Not everyone has that.

  What else does it take? The stories here give us the same answer as the hundreds of other entrepreneurs we have interviewed or gotten to know. Mainly, it takes an innovative idea, passion and commitment. With enough of that, everything else should follow. The other essential qualities include a willingness to work unbelievably hard, getting at least comfortable with simple business finances, and the ability and determination to focus.

  What about luck? “Be lucky.” “Good luck.” We use phrases like this all the time. How important is luck to a startup? You will surely make your own mind up as you read the chapters here. Our sense is that most entrepreneurs make their own luck. As the saying goes—the harder you work, the luckier you get. There are occasions when an entrepreneur gets lucky, but so long as you work hard and do the right things, at some stage “luck” is likely to happen to you, too. The people who appear luckiest are usually the ones who have looked around and seen an opportunity, and have worked their tails off to make it happen.

  One surprising theme in the book is education and money—and in some cases, the lack of both. Sure, both help, but not having a college degree or wealthy parents is no longer a barrier to starting your own business. It’s the American Dream—if you work real hard, you can still come from nothing, build a business of your own, and make it successful.

  For over a hundred years, this country has spawned bold and ambitious companies which have led the world in many different sectors. And arguably, this has never been more true than now, with American entrepreneurs leading the world in many fields. And that is no
coincidence.

  America is a truly great country for a startup. The culture is unusually open to new ventures, which means it is cooler and more acceptable to start a business here than in probably any other country. There is much better access to financing than anywhere else, too—the business angel and venture capital communities are better developed and more open to startups. There are many top-notch business schools and unrivalled support—magazines, websites and blogs, books, and so on. And right now, America offers the biggest market in the world; all-accessible with a common language and robust infrastructure. Taken together, these are huge advantages. Against that, there is probably more competition here than any place else, too.

  There has probably never been a better time to start a new business—there is more affordable technology lowering the barriers to entry, new digital opportunities everywhere and more help and resources to support entrepreneurs than ever before. Today, you can set up faster and cheaper than ever before, and access national and international markets straight away.

  We hope that some of you will read this book and be so inspired you go on to build a great company—and feature in a new edition a few years from now. (Contact us via our website www.howtheystarted.com if you’d like to be considered.)

  But more than anything else, we hope you enjoy reading this book as much as we enjoyed creating it.

  David Lester (editor) and

  Carol Tice (main author)

  Chapter authors

  Spanx

  Carol Tice

  Electronic Arts

  Carol Tice

  Pixar

  Carol Tice

  Zipcar

  Carol Tice

  eBay

  Kim Benjamin

  Etsy

  Carol Tice

  Groupon

  Carol Tice

  LinkedIn

  Kim Benjamin

  Match.com

  Ryan Platt

  Twitter

  Carol Tice

  TripAdvisor

  Jeff Meyer

  Zynga

  Carol Tice

  Chipotle Mexican Grill

  Carol Tice

  Gatorade

  Jeff Meyer

  Jamba Juice

  Carol Tice

  Pinkberry

  Carol Tice

  Whole Foods Market

  Jeff Meyer

  Blackberry (RIM)

  Stephanie Welstead

  Dropbox

  Jeff Meyer

  Google

  Stephanie Welstead

  The Coca-Cola Company

  Beth Bishop

  IBM

  Kim Benjamin

  The Walt Disney Company

  Sara Rizk

  KFC

  Kim Benjamin

  Microsoft

  Kim Benjamin

  SPANX

  Sara Blakely: putting her butt on the line

  Founder: Sara Blakely

  Age of founder: 29

  Background: Fax machine sales, stand-up comedy

  Founded in: 2000

  Headquarters: Atlanta, Georgia

  Business type: Men’s and women’s intimate apparel

  In 1998, Sara Blakely was a 27-year-old, bubbly blonde aspiring lawyer whose day job was selling fax machines. Then one day, she didn’t like how she looked in a pair of white pants.

  Her handcrafted solution would revolutionize the stodgy women’s shapewear category, which hadn’t changed much since Playtex introduced its first rubber girdle in 1940. Sara’s comfortable support undergarments were designed for real women’s figures and marketed with a sassy attitude previously unheard of in women’s lingerie. Launching her product in the strangely male-dominated women’s underwear category would take two years and require scores of prototypes, a brazen shared bathroom visit, and a little help from a red backpack.

  Flunking and faxes

  Sara would later chalk it all up to failing the Law School Admission Test (LSAT). The Florida State University graduate had always wanted to be a lawyer like her father; however, her failing LSAT scores would ultimately point her in a different direction.

  The Clearwater, Florida, native drove to Disney World in hopes of getting a job playing Goofy, but learned that at 5’6” she was too short. She was offered the role of a chipmunk, but decided to forgo the hot costume for a job selling fax machines door-to-door instead.

  Seven years later, she was at a convention for top-selling fax-machine sales reps. She recalls one motivational speaker at the event giving a speech on how there are no bad products. “I’ll prove it in four words—Teenage Mutant Ninja Turtles!” he shouted. She would think of this speech again a few years later, when she got a product idea of her own.

  Do these pants make my butt look big?

  The trouble began with an expensive pair of chic, cream-colored pants Sara bought in 1998. They sat in her closet, seldom worn, because she felt they made her rear end look a bit lumpy. She had a nice pair of open-toed shoes they would work with, but hesitated to wear the outfit. She realized she probably needed some kind of support undergarment to give the pants a smooth line, but was certainly not about to wear a girdle.

  “Traditional shapers were too thick and left lines and bulges, and underwear leaves a panty line,” she says. “And thongs, I’ll never get—they put the underwear exactly where we have always been trying to get it out of.”

  In a moment of inspiration, Sara took out a pair of scissors and cut the feet off a pair of her support pantyhose. Voila! Her pants looked great, and she still had the naked-foot look she wanted for the shoes. She went to a party in Atlanta’s trendy Buckhead neighborhood that night, feeling fabulous. There was one problem—the cut-off bottoms of the pantyhose kept rolling up her legs all night. Sara thought if she could find a way to keep the legs from rolling up, she’d have a great product.

  “Traditional shapers were too thick and left lines and bulges, and underwear leaves a panty line,” she says. “And thongs, I’ll never get …”

  Little did she know it would be a two-year sojourn from that “Ah-ha!” moment to getting a finished, packaged product ready for sale.

  Learning the ropes

  In her quest to become a successful inventor, Sara was armed with little but an engaging smile and a passionate belief that she had created something women would find supremely useful. She’d never taken a business class in college, had no experience in fashion merchandising and certainly had zero insight into hosiery manufacturing.

  Knowing she’d need a manufacturer to create a prototype of her product, she began looking up hosiery mills in the phone book. She discovered the product-sourcing platform thomasnet.com, which listed all the manufacturers in the US. From there, she learned that there were a lot of hosiery manufacturers located fairly nearby in North Carolina. Over the course of about six months, Sara cold-called all the hosiery makers and asked if they would be interested in making her prototypes. Every single one said no.

  Pressing on, Sara decided to prototype her garment herself while she continued seeking a manufacturer. She stocked up on sewing supplies at Michael’s and other local craft and fabric stores and started sewing. Soon, she had a design that offered the control-top support of typical pantyhose but stopped just below the knee, assuring a smooth line down a woman’s thigh.

  Over the course of about six months, Sara cold-called all the hosiery makers and asked if they would be interested in making her prototypes. Every single one said no.

  As she worked on her prototype, she decided she needed to patent her invention. She looked up three of the top law firms in Atlanta, and made appointments. For her presentations to the lawyers, she brought her product and printed materials in a very special container—her lucky red backpack from college.

  To say the lawyers were not impressed with Sara’s idea would be an understatement. One kept looking around the room while she pitched her product. He later confessed he found her idea so ridiculous that he suspected he was bei
ng filmed for a Candid Camera-type reality TV show.

  All the lawyers quoted Sara upwards of $5,000 to handle her patent paperwork. Since $5,000 was the total savings she had in her bank account, that wasn’t going to work. Instead, Sara headed to Barnes & Noble, got a book on how to write a patent application, and started drafting. She researched hosiery patents at night in the Georgia Tech library.

  The pantyhose tour

  Sara made a list of nearby hosiery and shapewear manufacturers and embarked on a road trip, once again bringing along her lucky red backpack. For several weeks, she drove around, meeting plant managers in person. They were invariably male.

  The conversation followed a similar track at each stop. The plant owner would begin by asking, “And you are … ?”

  “Sara Blakely,” she would reply.

  “And you’re with … ?” they’d ask.

  “Sara Blakely,” she’d say, smiling wider.

  “And you are financially backed by … ?” they’d return.

  Smiling even wider, Sara would say, “Sara Blakely.”

  At each stop, after this exchange, Sara was gently shown to the door.

  “So nice to meet you,” the owner would say. “Best of luck with your idea.”

  But the road trip wasn’t a total loss. On plant tours, Sara learned a lot about how women’s undergarments were made. She learned how various yarns could be combined to give a garment different characteristics.