Recent figures indicate that as many as 8 out of 10 new businesses fail in the first 18 months. In fact, if you’re any good at the game you have a better chance of walking away from the blackjack table in Vegas a winner then you do of starting a successful business.
But there’s no need to abandon your business plans and start buying lottery tickets just yet, because one of the least talked about secrets to entrepreneurial success isn’t angel investors, it’s good old fashioned persistence. If you can weather the storm at the point when most people would be toss the towel you might just come out the other side on top.
Here are 6 companies that were staring into the abyss but stuck it out to become big time winners.
1. Apple – Few remember it now but there was a time in the late 20th century when Apple was on the verge of going under. It was 1997 and the company had just re-hired founder and former CEO Steve Jobs to help pull it out of a death spiral that had started in 1985 when Jobs walked away to pursue other interests. What he returned to was a company on the verge of bankruptcy; one in desperate need of capital to jumpstart new initiatives.
Where Jobs found that capital sent more than a few Apple nerds running to the freezer for a pint of Ben and Jerry’s to soothe their wounded psyches. Because to rescue his now fledgling company Jobs turned to the evil empire itself: Microsoft. Bill Gates agreed to invest $150 million in Apple and Jobs used the money to launch the iMac and perform a branding makeover that started the company on a now 20 year run of market dominance. The moral here? Never be so full of yourself that you are unable to act in your own self-interest.
2. SpaceX – Seems like a month doesn’t go by these days when we don’t see video of a SpaceX launch. The company has become a beacon to an up-and-coming generation of forward-thinking, outward-looking designers, engineers and visionaries. But it wasn’t always that way.
In 2008 the company was just getting its legs when the global financial crisis hit and knocked it for a loop. Investment capital dried up and founder Elon Musk contemplated closing the company down, or closing down his other startup, Tesla, and folding resources from that company into SpaceX to keep it flying.
Unwilling to accept defeat Musk instead submitted a bid to NASA to supply the Space Station and wound up beating out the competition. The $1.6 billion he received from that contract reinvigorated SpaceX and allowed him to keep Tesla afloat as well.
3. FedEx – FedEx was the brainchild of Fred Smith who proposed the idea in a paper when he was a college student during the 60s.
His professor thought the concept untenable and gave the paper a C but Smith was undeterred. In 1971, shortly after leaving college, he started Federal Express. But 2 years later the company was haemorrhaging cash and heading for bankruptcy. After General Dynamics turned him down for emergency financing, Smith took a flight to Vegas on a lark and won $27,000 playing – you guessed it – blackjack (the equivalent of $153,000 in 2017 dollars).
He used that money to meet payroll and shortly after secured an estimated $60 million in venture capital that allowed him to turn his stumbling delivery experiment into what is today the world’s largest delivery company and 4th largest airline by number of planes.
4. Reddit – Reddit today is a household name and reddit.com the 9th most visited website in the world. But it almost didn’t make it out of the starting gate. For months after launching in 2005 the website had a hard time attracting any more than the occasional accidental visitor.
Things were looking desperate and bankruptcy loomed when the founders decided that if the mountain wouldn’t come to them, they’d have to go to the mountain. They established a slew of fake Reddit accounts and began to hold fake conversations on the site that slowly began to attract some real attention.
Once the number of visitors hit critical mass the fake accounts were deleted and, well, the rest is history.
5. Airbnb – Airbnb is a company formed around a single airbed and an idea for creating lodging for travelers unable to secure rooms in overbooked or overpriced hotels. It had the unfortunate luck however to launch just as something called credit default swaps began swallowing the economy bones and all.
As such, the company’s founders were shunned by investors left and right who were turning inward and focusing on short term survival. They had a number of opportunities early on to fold up their tent and go home. Instead they pulled out all the stops in order to raise enough money to build a website and spread the word (including creating custom breakfast cereals based on the 2008 presidential candidates).
Their machinations worked and in 2009 they were able to raise nearly $9 million in venture capital. Today the company has 150,000,000 users and is valued at $31 billion. Pass the milk.
6. Uber – Depending on who is talking, Uber is either the greatest thing since sliced bread or Satan’s personal vendetta against taxi drivers. And yet without some incredible persistence on behalf of founders Travis Kalanick and Garrett Camp it certainly wouldn’t have made it into this discussion.
You see being perceived as the devil’s favourite company has a way of attracting negative attention and the company has had plenty. From cease and desist orders to class action and wrongful death lawsuits to charges of operating an illegal taxi business and even charges of sexism. It’s been a steady barrage of negativity levelled at the company but Kalanick and Camp have kept the blinders on and today sit atop a company that generated $6.5 billion in revenue in 2016 and operates all over the world.
The Bottom Line
Success in business requires a good idea hitting the market at the right time. In some cases though persistence – the simple refusal to take “no” for an answer – is every bit as important to avoiding bankruptcy as the idea itself.