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5 Companies That Made Big Bets That Paid Off

These businesses hit the jackpot

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Diego Donamaria/Getty Images for SXSW

It’s no secret that to be successful in business or life, you have to sometimes push the boat out and take some risks, whether it’s something as small as spending a little more on your marketing budget during a certain month, or something as large as pivoting the entire business to focus on an entirely different sector, at some stage, all businesses are met with choices, and quite often, it’s how you react to those choices that determine the success or failure of your business.

Below, we’ve outlined five companies that made big bets that eventually paid off.

1. FedEx

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Justin Sullivan/Getty Images

We know FedEx today as the logistical powerhouse that delivers our items in record-setting time, but what most people don’t know is that in the early days of FedEx, the company was mere hours from shutting down, after quickly running out of cash. Down to its last $5,000—and not enough for a $24,000 fuel bill that was due on Monday morning, FedEx CEO Fred Smith traveled to Vegas over the weekend and managed to turn that $5,000 into $27,000, allowing the company to fight another day, or in this case, another month.

Robert Frock, one of the original FedEx executives, describes the instance in his book, Changing How the World Does Business: FedEx’s Incredible Journey to Success - The Inside Story.

“I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust, and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000—how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.”

2. Airbnb

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John Macdougall/AFP via Getty Images

Airbnb is a $35 billion powerhouse that has completely disrupted the tourism industry by making travel more accessible and more of a rounded experience. But back in the early years of “Air Bed and Breakfast,” as it was called back then, things weren’t going as smoothly. Unable to raise money and having maxed out every credit card they had, founders Brian Chesky and Joe Gebbia headed to the end of the road, as they slowly ran out of money. That was until the pair decided to become “cereal entrepreneurs,” Yes, you read that right.

After another failed investment pitch, Chesky and Gebbia decided to take a different route. It was 2008, and the Democratic National Convention was taking place in Denver. The founders came up with the idea of creating a collectible cereal that was related to both candidates at that time, “Obama O’s, the breakfast of change” and “Cap’n McCain’s, a maverick in every bite.”

Incredibly, their plan worked, and they sold more than 1,000 boxes of cereal at $40 a box, generating just over $40,000, which represented their seed round of funding and was enough to get them traction to launch the business.

3. Tesla

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Photo by Sean Gallup/Getty Images

You can’t think of Tesla without thinking of Elon Musk, and you can’t think of Elon Musk, without thinking about Tesla. Today, Tesla trades at $350 a share, has a market cap of $62 billion and is at the forefront of electric-powered vehicles. However, in the late ‘00s, Tesla was mere days away from failing, as it burned through cash while producing its first-ever car, the Tesla Roadster.

At the time, Musk was also running his other company, SpaceX, which also happened to be struggling financially. In late 2008, Musk needed to make a decision, put all his remaining funds toward one project and let the other one fail, or allocate capital to both companies, with the hope that both could survive. When it came to Tesla, there was enough money in the bank to last a couple of weeks, so, with his remaining money from the sale of PayPal, Musk invested $20 million into Tesla, giving the company enough time to recalibrate and get back on its feet. At the same, Musk received the news that SpaceX had been awarded a $1.6 billion contract from NASA to resupply the International Space Station. Miraculously, both companies survived, and have gone on to do incredible things in both the world of electric transportation and space exploration.

4. Dyson

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Known to people around the world as one of the most popular vacuums on the market, Dyson is undoubtedly deserving of its large market share in the industry. But what most people don’t know when they pick their vacuum is that the company almost never existed, had it not been for the persistence and risk taken by its founder, James Dyson. While building his company, it is said that James Dyson took out three mortgages, created more than 5,000 prototypes and was more than $4 million in debt before the first Dyson product was ever released. This put an immense amount of pressure on Dyson's first product, meaning that it had to be a success, otherwise all his collateral would have gone to the bank, and those years of trialing and testing would have all been a waste.

Thankfully, the first product as a hit and James Dyson was able to pay back every penny to the bank within the first five months. It had been such a success that the bank used him as an example to future entrepreneurs when advertising its business loans.

5. TOMS

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Back in the early 2000s, the now trendy footwear brand TOMS was just an idea, and the founder, Blake Mycoskie, was being laughed at by multiple investors with his proposal of one-for-one business model, which means that for every sale the company made, it would give one pair back to kids in developing countries.

Struggling to raise any money or gain any traction, Mycoskie could have easily taken the advice that hundreds of people had given him, which was to go down the traditional apparel business model route. Instead of that, Mycoskie stuck with his idea of rooting social impact and philanthropy into the heart of the business.

It might seem like an obvious move today in 2019, considering a lot of brands are integrating social good into their overall business strategy, but in 2006, giving half of your inventory away seemed like an alien idea—a huge risk. It was a risk that paid off handsomely for Mycoskie. Not only has TOMS become one of the biggest shoe brands of the past ten years, but it also paved the way for large corporations to allocate a portion of their profits to a positive cause.

Like Wayne Gretzky one said, “You miss 100 percent of the shots you don’t take.”

To be successful, you sometimes have to explore the unknown to really find out how far you can go, and it’s evident that these five companies had to go against the status quo to accomplish everything they have accomplished. The biggest risk is taking no risk at all.

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