James McKenzie reflects on what hi-tech start-up businesses need to get off to a flying start
What do Apple, Amazon, Microsoft, Hewlett Packard and Google have in common? Answer: they’re all billion-dollar businesses that started life in someone’s garage. Indeed, three of them have gone on to become the first trillion-dollar companies. So what can we learn from them and is it a coincidence that they all have a garage in common?
Apple is the company that I’m most familiar with, not least because I’ve watched various films and documentaries about the life of its co-founder Steve Jobs. Apple started out in California in 1976 when Jobs and his friend Steve Wozniak designed the first Apple I Computer for $500. When a local retailer in Mountain View – the Byte Shop – asked for 50 computers, the two entrepreneurs got all the parts and put together the 50 machines in 30 days. Famously, they did the work from inside Jobs’ parents’ garage in Los Altos, California. (When I lived there, I confess I drove past and took pictures.)
In August 2018 Apple became the first company to have a market capitalization of $1 trillion and was joined in this elite club by Amazon shortly after. Amazon was started by Jeff Bezos in 1994 initially as an online bookstore, operating from a garage in the Bezos’ family home in Bellevue, Washington. It took almost an entire year for Amazon to sell its first book, but the firm soon started to grow exponentially. For better or worse, it has revolutionized the bricks-and-mortar high street.
The third trillion-dollar company is Microsoft, which was founded by Bill Gates and Paul Allen in 1975 – again in a small garage, where the pair had few resources to work with. What the founders did have in abundance, though, were strong programming skills and by 1980 Microsoft had entered the operating-system business with its own version of Unix. The firm’s development of MS-DOS – and a contract with IBM in the early 1980s to provide an operating system for IBM’s upcoming Personal Computer – put Microsoft on the fast track to success.
Perhaps the next trillion-dollar company is being built in a garage near you
As for Hewlett Packard, it started out as a small technology club called “Silicon Valley”, founded by Bill Hewlett and Dave Packard in a rented garage in 1938, just 10 miles from the Jobs house. Initially producing electronic test equipment, it was, for several decades, one of the world’s largest computer manufacturers. And given that Google was started by Larry Page and Sergey Brin in YouTube chief executive Susan Wojcicki’s garage in 1998, maybe the question we should ask is: who can afford *not* to set up their business in a garage?
Into the garage
The beauty of a garage is that it keeps overheads low. There’s usually no rent to pay if your family already owns the premises. A garage is the ultimate, low-risk, minimal-damage environment, where you can try things away from prying eyes without having to explain yourself. A garage gives firms time to put themselves on a sound commercial footing before moving to somewhere more permanent.
But is a garage really the right place for “deep-tech” businesses – those that have physics (rather than circuits or software) at their core? I doubt it would be the right place for, say, a nuclear company. Still, there are many success stories from such humble beginnings for physics-based companies, including from garden sheds. That’s where Martin and Audrey Wood set up Oxford Instruments while living in north Oxford in 1959. It’s now a massively successful scientific-equipment manufacturer.
These days, with so many resources available online, being in a garage or shed is even easier. There are websites like eBay to source equipment and parts. Skilled specialists can be hired from anywhere around the world as short-term freelancers through sites like Upwork, Freelancer and Fiverr. And there are countless cloud-based design tools for CAD, circuit design and mathematical modelling – all available on a pay-as-you-go basis or even free. Knowledge is so accessible and searchable too.
Of course, nothing can replace the drive, determination and ideas of the entrepreneurs who’ve had the guts to set up their own businesses.
Mentors and money
Not everyone needs advice, but it can help. Surely it’s better to have a friendly mentor iron out the problems with your business plan before you seek funding – rather than having all the embarrassing flaws pointed out by an investor when the opportunity might have slipped through your grasp. But how can you afford the advice and experience in the first place? How, in other words, do you grow or fund your business so you have enough money to pay for the advice you need, mentoring from investors and board members. How do you get an experienced and well-rounded management team?
Fortunately, there is a huge range of incubator and mentoring programmes offered by universities, all following tried-and-tested approaches, to help wannabe business leaders of the future. Even our beloved Institute of Physics has launched an attractively priced incubator scheme of its own. As well as offering space to small companies at its new headquarters in King’s Cross, London, the scheme gives firms access to its business accelerator programme and an extensive network of members and fellows (beta.iop.org/iop-accelerator).
So who knows? Perhaps the next billion-dollar or trillion-dollar company is being built right now in a garage near you. And, if not a garage, maybe it’s in a hi-tech incubator somewhere.
- Got a great story about how you started a business? E-mail the Physics World editorial team at pwld@ioppublishing.org
