Companies listed on the Fortune 500 did not magically generate billions of dollars over night.  Some of these businesses may have been created by people who were already well established and had an endless amount of funds.  Other companies started with little to nothing when it first started and became so successful as to be featured in the Fortune 500.  So, how did they do it?  How did these companies make it big?  Well, it all starts with an idea and, most importantly, how the company got funded.

Mattel, Inc.

In this years Fortune 500 issue, Mattel was listed as #388 for the year 2011, which is up a few spots from 2010.  They generated around 6 billion dollars in revenue, which is a 7% increase from 2010.  This company did not become a Fortune 500 company overnight, but started off in a garage.

Mattel was created by Elliot and Ruth Handler along with their partner Harold Matson in 1945 out of the Handler’s garage.  The company initially sold hand-made picture frames, but Elliot Handler started making doll house furniture from scraps, which became instant hits.  After buying out Harold Matson’s share of the company, Elliot and Ruth decided that an emphasis in toys was a more lucrative industry for Mattel to focus on.  All of their business ventures were self funded and honestly, they had very little capital to work with.

Even with the limited amount of capital, the Handler’s were able to create hit toys such as their first toy line Uke-A-Doodle and more famously, the Barbie doll.  In 1960, Mattel became a publicly owned company and in 1963 was listed in the New York Stock Exchange and Pacific Coast Stock Exchange.  It took twenty years, but the Handler’s were able to get their business listed as a Fortune 500 company in 1965.

Starbucks Corporation

At #227, Starbucks Corporation had raised 11.7 billion dollars in revenue in 2011, giving it a 9.3% increase from the previous year.  Before Starbucks was even labeled as a Fortune 500 company it was created by three Seattle based teachers in 1971.

Jerry Baldwin, Zev Siegal, and Gordon Bowker were inspired to sell high-quality coffee beans and after each of them personally invested $1,350, the first Starbucks was opened.  They sold dark roast coffee beans and would be hands on with customers by showing them how to grind and brew coffee at home.  According to the article 10 Fortune 500 Companies that Started With Next to Nothing, by Business Pundit, “Shortly after opening, and to continue their operations, the three borrowed another $5,000 from the local bank”.

The founders eventually brought on Howard Shultz as director of retail operations and marketing, who would convince them to start offering brewed coffee.  After agreeing, the first Starbucks Caffe Latte was served and became a huge success.  In 1987, Shultz acquired Starbucks with the help from a few local investors and changed the company’s name to the Starbucks Corporation.

Starbucks was the first privately owned U.S. company to offer a stock option program to all of its employees, even the part-time workers.  Then a year later, in 1992, the company finally went public on the New York Stock Exchange was said to be the most successful IPO offering that year.  According to the Business Pundit, “With the infusion of public capital, Starbucks began to strategically expand all over the US, at one point, at the rate of opening one new store per day”.

Apple, Inc.

Jumping up almost ten spots from 2010, in 2011 Apple was listed as #17 in the Fortune 500, putting the company #2 in the computers/office equipment industry.  It is no surprise when Apple brought in roughly 108 billion dollars in revenue and is ranked #1 in market value.

In April of 1976, two business partners got together to start a company that would sell personal computers; those men were Steve Jobs and Steve Wozniak.  After getting a local electronics store owner to agree to purchase 50 units, Jobs and Wozniak purchased the parts on credit from a local computer parts store and would start building in a garage.  The personal computer was creating a lot of buzz and, in 1977, Apple would get their first big investor, Mike Markkula.  Markkula offered the young company valuable business expertise and would put up $250,000 into the company.

In 1980, Apple went public, which made many investors instant millionaires.  The initial offering was 4.6 million shares at $22 each and the follow year Apple made another offering of 2.6 million shares; all of which sold out quickly.  Apple’s IPO’s generated more capital than that of Ford Motor Company in 1956.

What did these three Fortune 500 companies have in common?  They all eventually went public so that they could use the capital generated from IPOs to expand the business.  These three are just a few of many companies that successfully went public.  Today, it is going to be easier for small businesses to go public with the recently passed JOBS Act.  Keep in mind that not all small businesses qualify to go public under the JOBS Act.  If this is the case, you need to raise capital through other means, which may include self-funding, bank loans, investors, and soon crowdfunding.

Further Reading

Understanding the Basics of the JOBS Act

Crowdfunding in the JOBS Act: Should you be Skeptical?

By | 2017-09-14T11:21:27+00:00 June 11th, 2012|