India has positioned itself as the third-largest ecosystem for startups worldwide, and its growth trajectory suggests continuous expansion. While contributing to India's success, it's crucial to pause, acknowledge, and derive insights from both failures and success stories. National Startup Day (January 16), is an opportune time to delve into major companies that had a modest start, encountered setbacks, yet evolved into significant successes. Here is a list of organisations that nearly faltered but have since flourished!
10 startups that almost failed
Airbnb experienced a remarkable journey from its challenging beginnings. During its inception in 2008, the company faced significant adversity, encountering rejection from several prominent Silicon Valley investors. In an interview, Airbnb co-founder Brian Chesky also talked about the rejection emails from seven investors who initially dismissed the concept.
However, despite this initial setback, Airbnb navigated its path to becoming one of the world's most highly valued startups. The company's unconventional approach to securing funding involved creating unique cereal boxes, namely "Obama O's" and "Cap’n McCains," themed after the 2008 presidential candidates. Crafted from cardboard and hot glue, these inventive cereal boxes helped Airbnb raise the necessary funds, amounting to tens of thousands of dollars, crucial for sustaining the business during its early stages.
Once more, the company encountered challenges during the onset of the pandemic. In response, Airbnb found itself compelled to reassess its strategies and took proactive steps by unveiling plans to introduce several enhancements to its short-term rental booking platform. This initiative significantly contributed to its recovery. A significant boost for the company also came from the Work from Home trend.
Bob Parsons, the founder of GoDaddy, experienced various challenges in life, including his time in the Vietnam War, before venturing into entrepreneurship. Surprisingly, it was during his service in Vietnam that Parsons developed a mindset beneficial for both combat and business endeavours—a mindset centred on adapting his perspective. In Vietnam, Parsons learned that survival relied on taking each day as it came. He once shared with Inc. how adjusting his mindset helped him navigate through challenging situations. Fast forward to 2001, four years after the launch of GoDaddy, the company was struggling, and Parsons contemplated shutting it down to prevent a complete loss of his fortune.
However, a moment in Hawaii shifted his focus once more. Observing the cheerful demeanour of valets parking cars, Parsons had an epiphany. He realised that even if he went bankrupt, his worst-case scenario would involve becoming a valet. This shift in perspective alleviated the perceived severity of failure, making it easier for him to maintain a positive attitude. Soon after this change, reports indicated that GoDaddy became profitable within a few months.
Uber condensed a lifetime’s worth of drama into its initial year of existence. Though conceived by co-founders Travis Kalanick and Garrett Camp in early 2009, the first UberCab app didn’t arrive until the summer of 2010. Shortly after its debut, UberCab received its first cease-and-desist letter, prompting a name change to Uber. Within a year, a funding deal between Uber and Marc Andreessen, the Netscape co-founder of Andreessen Horowitz, collapsed (Details about the situation remain undisclosed.)
Over the years, Uber faced an array of challenges: a wrongful death lawsuit, a class-action suit, allegations of illegal operations, protests, claims of sabotage, accusations of sexism and misogyny, privacy complaints, and safety concerns, among others. Despite this laundry list of issues, Uber continues to expand. The company is also embarking on numerous new initiatives.
Who would have imagined Tesla's potential failure? Well, let's start with Tesla's own founder, Elon Musk. "I didn't really think Tesla would be successful," Musk admitted. "I thought we would most likely fail. But I thought that we at least could address the false perception that people have that an electric car had to be ugly and slow and boring like a golf cart." Tesla didn't initially position itself as a direct competitor to traditional cars.
This disruptive mindset brought its fair share of challenges. In 2008, the company grappled with significant quality issues and narrowly escaped bankruptcy. Continual missed deadlines scared away potential customers. Additionally, Musk's tweets led to clashes with the Securities and Exchange Commission, and a significant number of 41 executives departed between January and September of 2018. Despite facing doubters and detractors, Tesla continues to flourish.
While acknowledging critics as a risk in their 2019 annual report, the company gained a slew of high-profile admirers, with Volkswagen CEO Herbert Diess acknowledging Tesla as a formidable competitor. Now, with declining battery prices and Tesla's growing mastery of economies of scale, the outlook appears promising.
Howard Schultz, Starbucks' CEO, initially launched an Italian-themed coffee venture named II Giornale. In its early stages, he pitched the concept to venture capitalists. Out of 242 individuals approached, 217 declined. Nonetheless, II Giornale triumphed and eventually acquired Starbucks. However, by 2008, Starbucks faced potential bankruptcy. Through strategic and innovative decisions, the company managed to overcome this crisis.The enterprise transitioned from near insolvency to billion-dollar triumphs.
Harland Sanders, the founder of KFC (Kentucky Fried Chicken), established a globally renowned fast-food chain. However, there was a critical juncture where Colonel Sanders contemplated abandoning the KFC brand due to a significant setback. KFC originated as a solitary roadside restaurant managed by Sanders. Unfortunately, the construction of a larger road nearby diverted traffic away, severely impacting his business. Facing desperation, Sanders embarked on a mission, visiting over 1000 restaurants in an attempt to sell his special recipe. Initially met with disinterest, he eventually succeeded at the age of 75, selling his recipe for $15 million. Though he didn't attain worldwide fame during his lifetime, Sanders' legacy lives on through the iconic KFC logo, even after his passing at the age of 90.
Arguably one of the most renowned tales among startups that teetered on the brink of failure is the saga of FedEx. Founded in 1971 by Frederick W. Smith, the venture relied on his personal fortune of $4 million, supplemented by an additional $90 million in fundraising to kickstart the enterprise. FedEx's core vision aimed at pioneering the first-ever global parcel delivery service with overnight shipping. However, three years into its inception, escalating fuel costs posed a severe threat. The company was bleeding $1 million per month and stood on the precipice of bankruptcy.
Amid this dire situation, the company's account dwindled to a mere $5,000, insufficient to fuel the planes for the upcoming Monday. To avert this crisis, Smith, after being denied extra funds, took a daring step. He flew to Las Vegas over the weekend, staking the company's last $5,000 on a game of Blackjack. Remarkably, by Monday morning, the company's account surged to $32,000, enabling it to continue operations for a few more days. During this critical period, Smith secured an additional $11 million in capital, providing a lifeline to FedEx. Today, FedEx stands as a corporate behemoth.
Achieving success in the business realm hinges on recognising opportunities and effectively capitalizing on them. Netflix, on its path to global dominance, exemplifies this through several pivotal moments. The first breakthrough emerged when the founders discerned the potential in renting DVDs to customers via the internet. Another significant leap occurred with the realisation of the streaming prospects.
Yet, Netflix encountered a precarious situation when addressing these two facets of its business. A proposed company split sparked discontent among subscribers, resulting in the departure of 800,000 users. A swift reversal of this decision became necessary. Despite this setback, Netflix burgeoned into a colossal force in streaming and content creation, underscoring the importance of acknowledging and rectifying mistakes promptly.
No matter where you find yourself, the presence of an Apple product is highly probable, even if you aren't an owner. Surprisingly, the world's first trillion-dollar company faced imminent collapse before the introduction of the iPhone or iPad. Established in a garage by Steve Jobs and Steve Wozniak, Apple initially carved a niche as a home computer creator. Despite early triumphs, the company encountered turmoil by the mid-to-late 1990s. During Jobs' absence in the 1980s, upon his return, he discovered Apple teetering on the brink of insolvency, mere days away from financial collapse. A sequence of significant victories with products like the iMac, iPod, iPhone, and iPad not only resurrected Apple's fortunes but also left an indelible mark on the world's technological landscape.
It's not uncommon for success to emerge from failure, as evidenced by all the companies listed above. Throughout Ford's lifetime, the company predominantly consisted of continual triumphs and expansion. However, as the 21st century unfolded, the American motor industry plunged into a downturn, affecting Ford. The repercussions included job cuts, plant closures, and the necessity to divest several acquired brands from previous decades. A government-backed rescue plan became imperative. Nonetheless, Ford swiftly rebounded, embarking on a path of growth and recovery. This resurgence culminated in the announcement of record profits exceeding $10 billion in 2015.