But for startups, success isn’t always about challenging established leaders. For companies like Airbnb, it’s about creating entirely new ways of doing business. Faced with a market completely dominated by hotels and guesthouses, founder Brian Chesky thought outside of the box and developed a whole new model for hospitality. Airbnb allows people to connect online to find private lodging while traveling.
Although the company’s share of the hotel market is still small (Airbnb has $100 million of a $1 billion industry), established companies have taken note. Airbnb poses such a threat to the traditional way of doing business that the hotel industry is counting on government regulation to curb the company’s growth.
In the case of any demanding, competitive venture, success is primarily a matter of patience. And Dropbox creator Drew Houston ‘s story epitomizes the lesson. Houston always knew what he wanted to do when he was only 14 years old. His hand shot up when a teacher asked his classmates what they wanted to be when they grew up: “I want to run a computer business,” he said.
From that point forth, he never gave up pursuing that dream. As a high school student, Houston started working as a beta tester for an online game. The company spotted his talent and hired him as a network programmer. Later in college, Houston worked for five more tech startups.
And so Dropbox was born one day: Houston had to pull up a couple of files, but found they were on a different computer. He immediately started to work on his concept, designing the basic technologies that would allow him to synchronize files over the Internet.
Five years later, Houston has a $600 million stake in his $4 billion company — and he’s made his childhood dream come true. Of course, many aspiring entrepreneurs experience failure on their path to success. This was the case for Sean Parker, the former president of Facebook and founder of Napster.
The direction of Parker was fraught with disappointment. For instance, when he was Facebook president, in a house that was rented under his name, police found cocaine. Although the incident prompted him to resign from the social network, Parker didn’t give up.
He went to the super-successful music streaming service Spotify, which was in its early days at the time. Parker helped win deals with significant record labels such as Universal and played an instrumental role in the integration of Spotify’s social network. Parker did not let challenges hold him back, as you can see.
It’s easy to feel protective of a company you’ve started, but resisting change will get you nowhere. The most successful companies know how to be flexible and respond to what their customers want.
Kevin Systrom, co-founder of Instagram, exemplifies this principle. Today, Instagram is an incredibly successful photo-sharing network, which was recently purchased by Facebook for $1 billion. But when it first started, Instagram was a very different kind of company.
Instagram was first developed by Systrom and his co-founder as a hybrid of Foursquare, enabling users to “check-in” their location and a photo-sharing site. This idea fell short: the overall product was sluggish and cumbersome, and the check-in feature did not respond to individuals.
But then, while they were vacationing in Mexico, Systrom had an idea. Why not add filters to the photography feature? These filters would allow users to add instant nostalgia or poignancy to everyday pictures. Within a month of introducing the filters, Instagram’s user base grew to one million.
Another perfect example of a scalable startup is Facebook’s most latest acquisition, WhatsApp (which was acquired for $19 billion in 2014). Jan Koum, the brainchild behind Whatsapp, came from Ukraine as a poor immigrant. Initially, he and co-founder Brian Acton launched their business as an iPhone address book that allowed users to update their status (e.g. “at the gym,” “battery low”).
Although the initial idea didn’t win over users, things changed when Joum and Acton combined the concept with Apple’s new “push notification” feature. Now every time you updated your status, all your WhatsApp contacts would get a notification about it.
Remarkably, people started using the app in a completely different way than originally intended, as an instant messaging service. WhatsApp quickly changed its focus, and its user base grew to 480 million before it was acquired by Facebook in 2014.
And now that we’ve seen how a few tech billionaires have succeeded in turning simple concepts into billion-dollar enterprises, it’s time to figure out what it takes to keep that level of success going. And it’s not enough to stop at a billion-dollar valuation for tech wunderkinds. Consider a story by Palmer Luckey. (We have already talked about how Luckey was able to transform his virtual reality system design into a company, Oculus Rift, that sold $2 billion to Facebook.)
Despite his immense success, Luckey (who still runs Oculus Rift, even after the sale to Facebook) still faces a challenge in keeping his company at the top of the market. There are plenty of competitors encroaching on his turf: For one, electronic giant Sony is developing its own VR headset for its latest console, Playstation 4.
Amazon is also rumored to be entering the market. The e-commerce company may be planning to create VR shopping malls. So instead of just looking at a photograph of an item, these “malls” would allow you to virtually pick up a product, look at it in detail and even try it out.
Because of rivals like Amazon and Sony, the job never ends for Luckey. He continuously has to search for new ways to stay ahead of the competition. And that’s precisely why he used the cash from the Oculus sale to buy other companies that might help him to develop his product. RakNet, an open source game networking engine (which enables individuals to build and distribute their own games), and Carbon Design Company, a product design studio, were among his purchases.
There are plenty of prospects for success in today’s era of rapid technological progress. And all you need is one brilliant idea and the bravery and dedication to bring it to life, as we can see from the stories of today’s top tech billionaires.
Check out my related post: Is co-living the future of housing?