MatthewWellington.co.uk

Founders: Pierre Omidyar

Year of Foundation: 1995

Business Type: Online Auction Site

Country of Origin: USA

Revenue and Net Profit: $9.156 billion and $1.801 billion

In September 1995, Pierre Omidyar developed a small site called AuctionWeb in a small living room in San José, CA. He was looking for an answer to the question “What effect would equal access to information have on the marketplace?”. Little did he know that it would become one of the greatest retail websites in the world. We now know AuctionWeb as eBay.

Pierre was a software developer who had previously worked with Claris developing software for Apple computers. He developed AuctionWeb on the same servers as his page about the Ebola virus. Interest in the site grew and started to take over his website. It become known as eBay, which stands for Echo Bay Technology Group, the same name as his consulting firm.

His first item to be sold was a broken laser pointer for about $15. By 1996, the company was growing fast and needed the skills Jeffrey Skoll, a Stanford MBA graduate. A year later, it secured $5 million in venture capital and in 1998, Meg Whitman put together an experienced team from senior staff at both Pepsi Co. and Disney.

eBay’s vision was to connect people, rather than sell. It further grew in popularity sparked by controversy about the sale of items such as human organs, Nazi memorabilia and ivory, which now sits among a list of banned items. They soon became a leader in the online auction industry, went public in 1998 and Omidyar and Skoll became billionaires.

eBay needed a payment system and, after failing with eBay Payments (formally known as Billpoint), eBay acquired PayPal, a payment application originally built for Palm devices, in 2002. It continues to run the company now, even though it has grown to deal with payments beyond eBay.

Founders: John Pemberton (Inventor) and Asa Griggs Candler (Businessman)

Year of Foundation: 1886

Business Type: Beverage manufacturer

Country of Origin: USA

Net Income and Revenue: $11.81bn and $31.12bn

Everybody knows about Coca-Cola. It is arguably the first Global brand and has been declared the world’s most popular trademark and the world’s most recognisable drink.

In 1886, pharmacist John Pemberton, who lived in Atlanta, Georgia, invented a new drink in a three-legged brass pot in his backyard. He started selling it for five cents a glass in Jacobs’ Pharmacy, claiming it cured diseases such as morphine addiction, dyspepsia and even impotence. In the first year, he sold nine glasses a day, making him about $50 (that’s about $1,140 today), making a loss of $20.

It was first named ‘Pemberton’s French Wine of Cola’, but the alcohol was quickly replaced with sugar. Pemberton’s bookkeper, Frank Robinson, came up with the name Coca-Cola and also wrote the signiture logo still used today. The name came from two key ingrediants, taken from the leaves of the coca plant and the caffiene-rich kola nut. Untill 1905, the drink contained cocaine for the medical effects.

Sales grew when more pharmacies took on the product. All stores that sold the drink had a hand-painted Coca-Cola sign to promote the brand. Pemberton put an advertisment in ‘The Atlanta Journal’ inviting people to try ‘the new and popular soda fountain drink’. He brought on six local businessman to help finance the expansion.

Unfortunatly, Pemberton died in 1888, leaving Asa Griggs Candler to take on the challenge of obtaining all the rights to the drink, which had been given to his son and some local businessmen. Candler had full control of the business in 1891, partnered with his brother, John Candler, and Frank Robinson (Pemberton’s bookkeeper) and raise $100,000. In 1892, the company was incorporated and ‘The Coca-Cola Company’ was born.

They started a nation-wide advertising campaign, giving away coupons in newspaper and getting urns, clocks, calenders and scales bearing the Coca-Cola brand name. Sales grew fast and new plants where set up in Chicago, Dallas and Los Angeles.

Till 1894, Coca-cola was only sold in glasses. Joseph Biedenharn Whitehead, a Mississipi businessman, bottled some Coca-Cola to present to Candler, but Candler didn’t like it. Joseph, along with two lawyers, managed to buy exclusive rights to bottle and sell Coca-Cola for just $1! Candler didn’t even collect the money, as he was convinced it wouldn’t take off.

This started the unusual corporate structure that still exists today. The Coca-Cola Company supplies the syrup, called concentrate, to restuarant and bars, which sell it in glasses, and bottling companies. To reduce the amount of capital needed, Whitehead and his partners sold bottling rights to local entrepreneurs. By 1909, there were 400 Coca-Cola bottling plants.

Candler continued to increase sales, and continued his advertising campaign. Then, Candler’s son, Charles, took a jug of it while on a trip to London and managed to get orders for five gallons. It was first sold in England on August 31, 1900, and gradually made it’s way onto the shelves of Selfridges. The Coca-Cola Company then licenced the bottling rights to other overseas territories, staring with Canada, Cuba and Panama in 1906, and gradually expanded from then. To stop con artists copying them, they kept the recipe top secret and, in 1916, after a design competition, the signiture bottle was created.

In 1919, Candler sold the business to Ernest Woodruff for S25m (that’s about $341m today) and his son, Robert became president in 1923. It was reincorporated as a Delaware corporation and put on the NYSE, selling 500,000 shares for $40 each.

Woodruff wanted to go worldwide with Coca-Cola, and proceeded to expand into more countries, such as Belgium and Mexico. In 1926, he set up a Foreign Department, which became the Coca-Cola Export Corporation in 1930.

In 1928, Woodruff began a partnership with the Olympic games in Amsterdam. A thousand bottles were shipped along with the US team, and they were sold by vendors at the stadium and local bars and cafes. Vendors wore caps and coats bearing the Coca-Cola logo for everyone to see.

Woodruff started selling six-packs, encouraging people to buy in bulk. Coca-Cola was available in vending machine in 1929 and advertised on radio in 1930. During Christmas 1931, Coca-Cola launched it’s famous red Santa Claus advertising campaign, banishing the previous green Santa into the past.

During World War Two, Coca-Cola offered the drink for five cents to any service person, no matter what country they were from. General Eisenhower himself actually requested Coca-Cola to supply troops with the drink on June 29, 1943.

However, the company still only had the one product. In the 1950s, they introduced their second product, Fanta. This was followed by Sprite in 1961, TAB in 1963 and Fresca in 1966. The comapny acquired the Minute Maid Company in 1960, branching out into juices. At the same time, Coca-Cola spread out into new lines, including larger bottles and metal cans.

The company continued to expand into new countries and international sales grew, taking over US sales in 1969. In 1978, the People’s Republic of China declared The Coca-Cola Company as the only company allowed to sell packaged cold drinks in China.

In 1981, Roberto C Goizueta became chairman and CEO of the company. He introduced Diet Coke on Independence Day 1982. Pepsi had released their diet version in 1963 with great success.

Since the end of World War Two, Coca-Cola’s company share had less than halved, partly due to it’s new rival, Pepsi, which produced a sweeter version, which beated Coca-Cola in a taste test. Therefore, Roberto needed to do something quick. In 1985, he released a new recipe, which didn’t succeed in the marketplace. People wanted the old ‘Coke’ back, and after 79 days of after the New Coke, Coca-Cola started supplying the orginal Coke again, labelled Coca-Cola Classic, which is still used today.

In 1886, The Coca-Cola Company set up Coca-Cola Enterprises Inc to help manage the substantial network of bottlers.

During the 1990s, Coca-Cola sponcered many sporting events, such as the Olympic Games, Fifa World Cup and the Rugby World Cup. By 1997, the company was selling one billion servings of it’s products every day.

One of the last countries to sell Coca-Cola was India, which forbade companies to trade if they withheld trade secret information. In 1993, India changed their laws and Coca-Cola went on sale. However, growth was slow, so the company acquired Indian brands such as Thums Up and Limca. They followed this pattern of growth in other countried too and acquired Barq’s root beer (USA), Inca Kola (Peri) and, in 1999, Cadbury Schweppes plc (which sell drinks like Dr Pepper and Oasis) in various countries, including Great Britain.

Nowdays, The Coca-Cola Company is run by Muhtar Kent, who is the comapny’s president and CEO. It owns more than 400 brands and employs over 90,000 people. It still adds products to it’s brand, like Coke Zero in 2005. It also has it’s own clothing range made from recycled plastic Coke bottles.

Founders: Sergey Brin and Larry Page

Year of Foundation: 1998

Business Type: Search Engine

Country of Origin: USA

Revenue and Net Profit: $29.321 billion and $8.505 billion

Google has to be the most well known website in the world. Everyone has heard of it and use it more than any other website. However, 15 years ago, it didn’t even exist.

Larry Page and Sergey Brin met at Stanford University in the spring of 1995. They where both enrolled on the prestigious PhD Computer Science programme. Both grew up surrounded by technology and science. Larry’s father was actually the first recipient of a computer science degree from the University of Michigan. Sergey moved to the USA from Moscow with his parents, a scientist at NASA and a maths lecturer at the University of Maryland, where Sergey completed his BSc in mathematics and Computer Science at the age of 19.

At the time, there was few search engines and none of the were any good. Jerry Yang and David Filo had developed Yahoo! to try and tackle the problem, but was struggling to keep up with the vastly growing internet. So, ambitious Larry set out to download the entire web onto his PC, to study the relevance of web links, costing the computer science department thousands of dollars. They concluded that the number of links pointing to a site was a measure of it’s popularity and links could be weighted (i.e. a link from a popular site, such as CBS, would be more popular than a less popular site). He could this algorithm PageRank, after himself, and Google was born.

Their goal wasn’t to set up a business. They did this for a thesis and called it BackRub. It was renamed in 1997 to Google, after the mathematical term Googol (one followed by 100 zeros). They launched in on the university’s intranet and it’s popularity soared. Realising the potential, they attempted to sell it to Excite, Yahoo! and, the market leader at the time, Alta Vista for up to $1M before patenting it. surprisingly, all of the companies passed up on the offer, as it didn’t present clear revenue opportunities. Convinced they had something people needed, Larry and Sergey took Google to market themselves.

They met private investor Andy Bechtolsheim in 1998, who was so taken with the idea that he wrote out a $100,000 check to Google Inc, compelling Larry and Sergey to incorporate. Google was officially born.

Instead of investing in expensive advertising campaigns, they decided to spend the money on adding more off-the-shelf PCs to the network to ensure their fast searching with the growing number of web users. Friends and family quickly got onboard and they were able to raise $1M. The decided to move from their garage, where they hired their first staff, to offices in Palo Alto in 1999. A mention in PC Magazine helped them to reach 500,000 searches a day.

However, they needed more funding. With the recent success of Netscape, valued at $3bn after their first day of trading, Wall Street was on the look out for more interest successes. In 1999, they got financial backing from two prestigious venture capitalist firms, Sequoia Capital and Kleiner Perkins. They each put up $12.5M, and neither had controlling interests.

With this money, Google continued to grow. Their business model so far was to licence their search technology to partners. This wasn’t bringing in enough revenue to sustain the business, so they had to think of something else. They were hesitant to display ads, so they thought it would drive searchers away, and they didn’t want companies to pay to rank higher either, unlike other search engines at the time. They eventually decided to display relevant ads on the side of the search results. They soon evolved to the pay-per-click model they currently use today. This was great for the advertiser, as it was easy and targeted, and they were able to implement it with little investment. Advertisers got excellent results.

In 2000, they hired Dr Eric Schmidt to take over the day-to-day running of the business. They were hesitant at first to hand of control, but they quickly realised it was the right thing to do. Eric helped expansion overseas. Although 60% of searches came from overseas, only 5% of ad revenue did. He established sales offices in London, Hamburg, Tokyo and Toronto and revenue soared as a result.

By 2004, Google had released Google Images, GMail and Google News. 2004 was also the year Google reluctantly went public. Although it raised $1.2bn, it meant that financial information was open to competitors. However, US law stated they had to do this even if they didn’t go public, as they were such a big company. Going public would additionally give investors some money back.

Google’s share price gradually declined, however. Overture, a subsidiary of their largest competitor Yahoo!, claimed that Google stole their idea of pay-per-click advertising. Not wanted the huge negative effect of a court case, Google gave Yahoo! 2.7 million shares in an out-of-court settlement. Also, advertising prospects with GMail was slammed by privacy bodies, which stated that the scanning of email and matching of ads infringed people’s privacy. Google’s IPO (Initial Public Offering) was just $85 per share.

Luckily, Google’s share prices became to rise and was $100 by the end of the first day of trading, valuing the business at $23.1bn. Like many other Silicon Valley companies, early employees were given share options to cut down costs. They were now millionaires.

Another factor of Google’s growth is Adsense. It has become very popular, even appearing on such sites as AOL and the New York Times.

Two months after the IPO, Google’s share price hit $135. Since then Google’s share price has risen with it’s revenue. With it’s success, Google has made a number of acquisitions, including Youtube and Blogger. Sergey and Larry moved their headquarters to Mountain View, California, in 2004, where it still is today. If you have ever seen or heard about it, you would know how amazing it must be to work there. They have swimming pools, pool tables and even an electric car terminal on what they like to call their campus.

In a decade, they went from nothing to everything. They are the fastest growing company I have ever seen. If only it was as easy as it sounds…

In memory of the beloved inventor Steve Jobs, my first case study is going to be on Apple. In these case studies, I will tell you how they started and what makes them successful. So, without further ado, here is how Apple began…

Founders: Steve Jobs and Steve Wozniak

Year of Foundation: 1976

Business Type: Computers

Country of Origin: USA

Revenue and Net Profit: $65.23bn and $14.01bn

It all started with a friendship. Steve Jobs and Steve Wozniak’s first venture was selling ‘Blue boxes’, electronic devices that could make free phone calls by imitating dial tone signals made by the phone company, from dorm to dorm at Berkeley.

But Wozniak had always dreamed of building his own computer and, by early 1976, he had completed his first design, based on a cheap MOS Technology 6502 processor. He showed it to the Homebrew Computer Club and Jobs realised the business potential.

The computer, which had no monitor, but was designed to connect to the user’s TV, would eventually retail at $650. Jobs persuaded Wozniak to pitch to his boss at HP, where Wozniak worked, but it was declined. Jobs decided to go it alone.

For capital, Jobs sold his beloved Volkswagen van and Wozniak sold his beloved HP 65 programmable calculator, bringing in $1,750. Jobs soon came up with the infamous name: Apple Computer, and soon they had their first investor, Ron Wayne, but pulled out two weeks later due to Jobs ‘erratic’ personality.

They got their first order soon after, from Paul Jay Terrell, for 50 computers at $500 each, paid on delivery. Only problem was that he wanted them fully assembled, cases and all.

This didn’t halt Jobs, who quickly got a loan for $5,000 and extended credit for $15,000 worth of supplies. They made their delivery and a $8,000 (about $31,000 today) profit. This raised the interest of Mike Markkula, a business angel who went on to invest $92,000 into the company. The early profit helped them to secure $250,000 line of credit at the Bank of America.

In the early years, Jobs was mainly driven by money, whereas Wozniak just wanted to make the best computer. In fact, only a month after the first computer hit the stores, Wozniak had already finished his second prototype. Only problem was that it cost hundreds of dollars to produce. To fund it’s production, Jobs tried to sell the company to Commodore Business Machines, but asked for too much money, and was rejected. But it was at this point that Markkula came in with his investment, and the company incorporated on January 3, 1977.

Product development was fast, but Jobs was concerned about looks. He got a professionally made case for the computer and enlisted the help of Regis McKenna, who designed the logo we know today. The computer went on sale in March 1977 for about $1,300 ($4,680 today) and was instantly successful.

In 1978, a year after the computer was released, Apple released two more products; the Disk II drive, which allowed more storage space, and a piece of software called VisiCalc, originally known as Calculedger, which was the introduction of electronic spreadsheets. It sold 200,000 copies in it’s first year, boosting sales of the Apple II, so customer’s had the hardware to use VisiCalc.

However, in 1978, they announced the Apple III, supposed to mark Apple’s foray into new technologies, but it ended up leaving their reputation in pieces.

In 1979, Jobs visited the Xerox’s Palo Alto Research Center (PARC), which introduced him to the new mouse operated operating system. He called it ‘revolutionary’ and instructed his development team to concentrate on developing a similar interface. In 1980, Jobs took control of a new projected called the Macintosh. Jef Raskin, the manager at the time, clashed with this decision, but Jobs had too much control to worry. He took the project out of Apples main office and took it to ‘Texaco Towers’. The Mac was later released and was mor compact and cheaper than the previous failure of Lisa, although it had all the same technology.

Jobs envisioned something too different to Raskin, forcing him to resign in 1982. The Mac was launched two years later, and people loved it. By 1981, after the failure of the Apple III, Apple was forced to lay off 40 employees. Wozniak soon left, after a plane crash left him with serious injuries, making him reassess his options. He went on to music festivals, which left him out of pocket, taking a job as a teacher. Although he went back to Apple in 1983, it was as an engineer, not an executive.

The board of directors soon got tired of Jobs erratic and arrogant leadership style and was forced to resign. He started an education software business, NeXT, which was later brought by Apple, leaving Jobs to go to Pixar.

Apple was in trouble. Bill Gates, a former Apple employee, released an operating system suspiciously like Apple’s own. It took Gates to court, but made an out-of-court settlement, after finding a loophole in their agreement, permitting Gates to compete with Apple. He was cheaper than Apple, which lead him to sell three million copies of Microsoft 95 in the first five weeks.

In 1996, Jobs was forced to return, but he had lost the hostility he had back when he was CEO before. NeXT and Pixar had calmed him down. Apple was close to bankruptcy, so Jobs was forced to close down many projects that were sapping money. He recruited Jonathan Ive, a product designer from London, who redesign the Macs into the simple, but stylish, iMacs. People loved them and many Window’s users converted to the Mac.

This ignited a new line of good-looking products, boosting it’s profitability and market share dramatically. Apple also launched the iPod in 2001. This literally revolutionised the music industry. It’s sales exploded in 2003 with the release of iTunes. This was an easy to use website which allowed people to buy music one at a time, without the need to buy an album. In 2008, Apple announced that over five billion songs had been brought on iTunes.

Now, Apple have many different product lines, from phones to iPods to PCs to tablets. But, as we all know, Steve Jobs died at the beginning of October 2011 , due to pancreatic cancer and respiratory arrest. Will it have a huge effect on the company, like before? Will Apple survive without Steve Jobs? Only time will tell, but in the mean time, I would love to hear your views in the comments thread below.