5 Mega Companies and Their Founding Facts (and Myths)

by Glen Stansberry on 17 September 2010 1 comment
Photo: PeskyMonkey

As business owners, it's easy to be drawn to real-life success stories of businesses that started with nothing and wound up as empires. These stories make great tales, some even fit for the silver screen (see: The Social Network). Occasionally, however, the facts to these founding stories become embellished, turning more into what sounds like a movie script as time goes on. Here are five massive companies that have amazing founding stories, with a few myths sprinkled in.

YouTube

Chad Hurley, Steve Chen, and Jawad Karim founded YouTube in February of 2005. The founders were all former employees of Paypal and started the company with an initial investment of $11.5 million from venture capitalists. The company quickly rose to being the de facto video sharing site on the Internet, quickly serving millions of videos daily to people all over the world. Just over a year later in November of 2006, the video sharing site was sold to Google for $1.65 billion.

The meteoric growth of the company and their quick sale created so much interest in the company that the founding details are a bit sketchy. Legend has it that the three founders were at a dinner party and couldn't figure out an easy way to upload and share videos. This was, supposedly, the moment when the three decided to build a service that would eventually revolutionize video sharing on the Web. This story has circulated widely but has since been disproved. Founder Jawad Karim wasn't even at the party, and he denies that this moment happened at all. Later, a sheepish Chad Hurley would admit in an interview that the founding tale "was probably very strengthened by marketing ideas around creating a story that was very digestible."

Threadless

The apparel company Threadless was founded in Chicago, Illinois in 2000 by two high school graduates, Jake Nickell and Jacob DeHart. Nickell and DeHart created a unique way to create and sell t-shirts based on design submissions and contests. The two friends started the apparel company with only $1,000 in seed money, yet their company has grown from a two-man operation to a major corporation with 80 employees and millions of dollars yearly in sales. By 2008, revenues were climbing by 500% each year.

The story goes that as DeHart and Nickell were in high school, they participated in an Internet contest to design a t-shirt. They liked the idea so much that they decided to build a company on the concept to allow a community to vote on t-shirt designs before they were made. This would ensure that the winning designs would sell. Each founder ponied up $500, and the idea was in motion. The above story is, in fact, true. Nickell and DeHart actually dropped out of college to pursue their innovative business, which has turned the founders into millionaires.

eBay

The popular internet auction site was founded in 1995 by Pierre Omidyar and has grown into a multi-billion dollar operation with operations in 30 countries. One of the myths surrounding the startup is that Omidyar started the online marketplace to help his fiancee find and trade Pez dispensers. Like YouTube's dinner party legend, the Pez story was created by a public relations manager in 1997 to help spark media interest. Regardless, the story worked, and in 1997 the site hosted more than 2,000,000 auctions, up from 250,000 auctions the year before.

Google

Google is actually a true garage-based startup, with an almost too-good-to-be-true startup story. In 1998 two Stanford grads, Sergey Brin and Larry Page, decided that their freshly-funded search engine company needed a slightly bigger operating space than the dorm rooms they had just moved out of. The duo agreed to help a friend Susan Wojcicki with her mortgage of her Menlo Park, CA residence by paying $1,700 rent for her garage. (Wojcicki would later become Google's VP of product management.) Google operated for five months out of the Wojcicki garage, enjoying the luxuries of the estate's hot tub, utilities, and late-night refrigerator raids. For Google's 8th birthday, the company bought the Wojcicki estate in order to preserve the company's legacy.

Dyson

Dyson vacuum cleaners are some of the most popular in the world. Started in 1992, founder Sir James Dyson pioneered the Dual Cyclone vacuum style that relies on centrifugal particle separation. In 2006, Dyson posted profits of £115 million, and the company has continued to grow.

The idea for the vacuum cleaner was born in 1979 out of James Dyson's frustrations with top-of-the-line vacuum cleaners of the time period. Dyson bought what was then the premier vacuum, but couldn't believe how easily the vacuum clogged and lost suction. A visit to the local sawmill gave Dyson the inspiration to fix the vacuum problems. (The sawmill was using two industrial cyclones to remove the sawdust from the air.) Dyson started tinkering with different vacuum prototypes for five years, and after 5,127 prototypes, he eventually developed the world's first bag-free, cyclone-powered vacuum.

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I had always figured that some of these "start-up stories" were either myths or generated by marketing experts.

Nice to know that at least one of them is true.