Where Have All the Garage Start-Ups Gone?
Entrepreneurs built this country, and in honor of National Entrepreneurship Month this November, it’s time to take a few minutes to recognize some of the visionary entrepreneurs of generations past and present. In 1938, famed entrepreneurs William R. Hewlett and David Packard hunkered down in a garage in Palo Alto, California, to develop their first product. As the Hewlett-Packard (HP) company grew into its own, it birthed the legend of the garage start-up — a business that comes from humble roots, yet goes on to take the world by storm.
We don’t hear much about garage start-ups these days, which begs the question: Where have they all gone? As an experienced entrepreneur and CEO of Black Dragon Capital, I contend that they haven’t disappeared at all. From AppSumo and Product Hunt to Payveris, you’ll find plenty of garage start-ups making their mark on the world.
Innovation begins with finding a problem to solve
The process of founding a new company is highly creative, requiring deep reflection and out-of-the-box solutions. It all begins with identifying a problem, considering why that problem exists, and figuring out how to solve it. After identifying a workable solution, entrepreneurs should then develop an elevator pitch, a clear and concise explanation of their idea. It’s also essential to take a step back and consider how competitors would view this idea.
It is inevitable that challenges will arise when building a start-up, and of course, they can’t all be anticipated. However, savvy entrepreneurs take the time to brainstorm a list of potential obstacles they are likely to encounter. The next crucial step is considering the possible solutions to these obstacles. The last phase of a well-thought-out entrepreneurial process is integral to the decision of whether or not to move forward to implementation. Within this phase, entrepreneurs must conduct a full evaluation of the financial landscape, including the required initial investment and the expected return.
A garage in Connecticut: the birthplace of Payveris
Every entrepreneur’s journey begins with identifying a problem to solve. In the financial services industry, there is a problem with competition limiting investments in technology. As the big banks (focused largely on profits) keep getting bigger, the smaller banks (focused largely on the needs of customers) have trouble competing. They aren’t able to invest in the financial technology that would allow them to compete effectively. This prompted me to found Payveris in 2011. In keeping with the traditional spirit of garage start-ups, Payveris came from humble roots, but had grand aspirations. It’s a FinTech garage company with the mission of helping community financial institutions flourish.
Yes, Virginia, there are still garage start-ups
However, not all of them begin in an actual garage. In truth, it doesn’t matter where you start your company; it can still be considered a garage start-up if it embraces the true spirit of that sort of venture. A garage start-up is about the rugged determination to succeed despite a lack of start-up funding or similar obstacles. A start-up can begin anywhere — a kitchen table, the breakroom at a day job, and yes, even mom’s basement.
AppSumo — a daily deals site — got its start in Noah Kagan’s mom’s basement. Its initial funding was $50, including a $20 investment from Noah’s mom. A skeptic taking a look at AppSumo’s first landing page and email list would likely doubt its potential. Yet, within one year of Noah asking his mom for a $20 loan, AppSumo made its first million bucks.
Product Hunt is another gem of a garage start-up, founded by Ryan Hoover. In 2010, Hoover moved to San Francisco and accepted a job at a gaming company. In his spare time, he would browse other countries’ app stores and similar sites in search of the next great product. Hoover soon realized that there was no central place where people could swap ideas and info about the latest launches of cool new products. Hence, Product Hunt was born.
Before he launched his “baby,” Hoover did his legwork. He performed market research by creating a collaborative email list (the beta version of Product Hunt) and invited people he knew to join and share their latest product findings. The list took off, enabling Hoover to build the full-fledged version of Product Hunt with confidence that it would be successful.
As you can see, garage start-ups are alive and well, although you may not always find them in an actual garage. This begs the question: Can idea labs and innovation hubs be considered garage start-ups? These initiatives are taking flight in recent years. Nestled within larger corporations, these labs have the feel of a start-up, namely because they intend on developing disruptive products and services, and because they nurture out-of-the-box thinking and creative energy.
One such example of a successful project that got its start in an idea lab is a social media website you may have heard of. Twitter, now worth billions, is widely thought to have been a side project developed by a team within Odeo, a podcasting company. In actuality, Twitter was more like a Plan B than a side project. Odeo’s once-promising technology began to look a lot less profitable when Apple announced that iTunes would feature a podcasting platform. So, the team was charged with developing another use for their technology, and Twitter was born.
Another wildly successful idea lab is Lab126, established by Amazon in Sunnyvale, California. Amazon was itself a garage start-up that began by selling books. In 2003, the company charged the team at Lab126 with the mission of reinventing the book. Four years later, the first Kindle was released, and it sold out in a matter of hours. The innovation team at Lab126 is also responsible for all of Amazon’s other popular hardware, including Fire TVs and the Amazon Echo.
Innovation hubs and idea labs can certainly be successful for corporations. However, these hubs cannot replicate the authenticity of the entrepreneurial journey. A hub provides a security blanket; the intrapreneurs, employees who are set up to act as an entrepreneur within a company, understand they are working for a corporation — not for themselves. This can impede the ideation and actualization processes, and it can hamper innovation. There is nothing quite like the experience of being an entrepreneur — of sacrificing your time and energy, and of taking a significant risk for the sake of something you truly believe in.
Innovation hubs and idea labs may seem appealing to those with an entrepreneurial spirit. Yet, to spark true innovation, it’s necessary to forego that security blanket. Instead, nurture your own entrepreneurial spirit and authenticity as you build your own start-up, whether you choose to build it in the garage or at the kitchen table.
The new cottage industry
The spirit of the garage start-up hasn’t gone away, and Payveris, Product Hunt, AppSumo, and so many others are proof of that. You’ll find the next great idea being built at kitchen tables, hideaway desks, and co-working spaces. The pandemic has greatly fueled the acceptance of the idea that innovation and productivity can happen anywhere. As a result, we’re re-entering the era of the cottage industry (only with much better technology).
Now more than ever, it is a great time to be an entrepreneur. It has become culturally acceptable to quit a job in the pursuit of a dream to make a community better through new ideas. Today’s aspiring entrepreneurs can benefit more from failure than their predecessors because it has become culturally accepted to quit a job, become an entrepreneur, and fail at it.
But to do so, you can’t let the fear of failure hold you back. Each hurdle is crucial for future success. Each setback teaches you something important that you can incorporate moving forward. Every time you overcome difficult challenges, you plant the seeds for the next endeavor. There’s never been a better time to cultivate your start-up ideas.
Louis Hernandez Jr. is the Founder & CEO of Black Dragon Capital, a minority-led investment capital company focused on software and technology. With a commitment to supporting future leaders, Hernandez is also Founder of the non-profit organization, For a Bright Future.
Connect with Louis Hernandez Jr. on Facebook, Instagram, or Twitter to learn more.
