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CNBC Originals: The Facebook Obsession

Top 10 Dorm-Room Ventures

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Top 10 Dorm-Room Ventures
Who says you need a college degree to start a business? Plenty of people can’t bear to wait that long, so they launch their companies long before graduation day.While the success of these dorm-room ventures can vary widely, there are plenty of student—and former student—entrepreneurs who have become household names. Of course, the most famous one these days is probably Facebook’s Mark Zuckerberg. But many more over the past 50 or so years have become so ingrained in American, if not worldwide, c
Photo: Wikipedia

Who says you need a college degree to start a business? Plenty of people can’t bear to wait that long, so they launch their companies long before graduation day.

While the success of these dorm-room ventures can vary widely, there are plenty of student—and former student—entrepreneurs who have become household names.

Of course, the most famous one these days is probably Facebook’s Mark Zuckerberg. But many more over the past 50 or so years have become so ingrained in American, if not worldwide, culture that we almost take their impact for granted. After all, Google has become a verb, right?

Granted, there is a name here you may not recognize. But that doesn’t make its story any less spectacular.

So, as a nod to CNBC’s “The Facebook Obsession,” we collected what we think of as a top 10 list of these landmark companies. Read on for some inspiration.

Posted 3 January 2011


Facebook
It’s OK, you can say it. You hate Facebook (but you’re on it all the time). And you may have doubts about co-founder Mark Zuckerberg’s notions of privacy (but you want to be him anyway).And who wouldn’t? You can only wish you’d invented a product so seemingly essential to human life that Harvard was getting in the way of you accomplishing your dreams—so you left. And to be sitting on about $7 billion, according to Forbes, on top of it? We’re not sure how Mark pulls himself out of bed in the morn
Photo: Getty Images

It’s OK, you can say it. You hate Facebook (but you’re on it all the time). And you may have doubts about co-founder Mark Zuckerberg’s notions of privacy (but you want to be him anyway).

And who wouldn’t? You can only wish you’d invented a product so seemingly essential to human life that Harvard was getting in the way of you accomplishing your dreams—so you left. And to be sitting on about $7 billion, according to Forbes, on top of it? We’re not sure how Mark pulls himself out of bed in the morning.

The big talk for 2010 was The Social Network, the movie’s “history” of Facebook’s creation, though you may want to Google around a bit for the real story. The big talk for 2011 is when the social-media company will come public. Everyone’s going to want in on that deal, a la Google’s IPO in 2004, so best of luck getting some shares. But if you are lucky, and Facebook’s stock takes off like the search giant did, you may care a little less about those pictures your fraternity brother posted from your freshman year rush.


Microsoft
The story of Bill Gates, arguably Harvard’s most famous dropout before Mark Zuckerberg came along, by now is legend: According to the company’s official history, a scrawny computer geek in 1975 bailed on the Ivy League to form a software company that helped change the world. The result was a slew of people and products that are now household names across the globe: Paul Allen, Steve Ballmer, Windows, Internet Explorer and so on. When the 2010 fiscal year came to a close last June, Microsoft boas
Photo: Mandel Ngan | AFP | Getty Images

The story of Bill Gates, arguably Harvard’s most famous dropout before Mark Zuckerberg came along, by now is legend: According to the company’s official history, a scrawny computer geek in 1975 bailed on the Ivy League to form a software company that helped change the world. The result was a slew of people and products that are now household names across the globe: Paul Allen, Steve Ballmer, Windows, Internet Explorer and so on. When the 2010 fiscal year came to a close last June, Microsoft boasted 88,000 employees, with $62.48 billion in net revenues and $18.76 billion in net income for the 12-month period.

Source: Company documents


Dell
Michael Dell’s vision was to sell custom-built personal computers direct to consumers, something that wasn’t being done in the early 1980s. So, out of his University of Texas at Austin dorm room, he started doing just that.He left school in 1984 to focus on Dell full time, says the company’s website, a year later launched his own Dell-branded PC and by 1988 entered the market as a public company. That IPO rocketed Dell’s market cap from a scant $1,000 to $85 million instantly. Twenty-two years l
Photo: Getty Images

Michael Dell’s vision was to sell custom-built personal computers direct to consumers, something that wasn’t being done in the early 1980s. So, out of his University of Texas at Austin dorm room, he started doing just that.

He left school in 1984 to focus on Dell full time, says the company’s website, a year later launched his own Dell-branded PC and by 1988 entered the market as a public company. That IPO rocketed Dell’s market cap from a scant $1,000 to $85 million instantly. Twenty-two years later that number is up to $26 billion, and Dell computers are near ubiquitous among consumers and businesses alike.

Source: Company documents


Nike
Nike wasn’t started by a college dropout. In fact, Phil Knight earned his M.B.A. from Stanford before forming the company. But it was during his time at business school that he wrote a term paper about the potential for quality Japanese running shoes to compete with more established German brands. Not long after getting his degree, Knight struck a deal to distribute Onitsuka Tiger sneakers in the States, and Blue Ribbon Sports was born.Any discussion of Nike would be remiss if there were no ment
Photo: Getty Images

Nike wasn’t started by a college dropout. In fact, Phil Knight earned his M.B.A. from Stanford before forming the company. But it was during his time at business school that he wrote a term paper about the potential for quality Japanese running shoes to compete with more established German brands. Not long after getting his degree, Knight struck a deal to distribute Onitsuka Tiger sneakers in the States, and Blue Ribbon Sports was born.

Any discussion of Nike would be remiss if there were no mention of Bill Bowerman, the legendary University of Oregon track and field coach. Knight ran middle distances for Bowerman while an undergraduate at the U of O, and Bowerman was the first person Knight tried to sell his sample Tigers to when they arrived from Japan. Bowerman, who had long experimented with ways to make running shoes better, one-upped his former student and offered to become a partner. The two men kicked in $500 a piece for their first order, and that’s how Blue Ribbon came to be.

The name Nike arrived in 1971, thanks to Knight’s former Stanford classmate Jeff Johnson—the company’s first full-time employee. What followed were a series of iconic products, ad campaigns and endorsements that are forever emblazoned on the American psyche: The Swoosh, Michael Jordan, Air Max, Just do it, Bo Knows, Tiger Woods, Lance Armstrong.

Source: Company documents


FedEx
Like Phil Knight, CEO Fred Smith didn’t start FedEx as a student. But the concept was born in a term paper written during his undergrad tenure at Yale. In in 2004, Smith described the seed idea this way: “As society automated, as people began to put computers in banks to cancel checks—rather than clerks—or people began to put sophisticated electronics in airplanes—society and the manufacturers of that automated society were going to need a completely different logistics system.”That was 1965. W
Photo: Getty Images

Like Phil Knight, CEO Fred Smith didn’t start FedEx as a student. But the concept was born in a term paper written during his undergrad tenure at Yale.

In an interview with then BusinessWeek in 2004, Smith described the seed idea this way: “As society automated, as people began to put computers in banks to cancel checks—rather than clerks—or people began to put sophisticated electronics in airplanes—society and the manufacturers of that automated society were going to need a completely different logistics system.”

That was 1965. When Smith finished his post-college stint in the Marine Corps, he returned to the idea and incorporated FedEx in 1971. The first profit was seen four years later, but in that BusinessWeek interview Smith says that expansion really took off after the U.S. government deregulated the air cargo business in 1977 and then later in 1980 deregulated the trucking industry.

FedEx now is, along with UPS, synonymous with logistics, and analysts expect profits for fiscal 2011 to total $1.63 billion. All that from what Smith joked was probably a “C” paper.

Source: Bloomberg BusinessWeek, company documents


Kinko's
In 1970, Paul Orfalea, despite a lifetime struggle against dyslexia and attention deficit hyperactivity disorder, opened the first Kinko’s in a 100-square-foot space on the University of California Santa Barbara campus. The company’s goal? To bring to the masses a technology that few at the time could access: a copy machine.Orfalea wasn’t a UCSB student, though. He eventually graduated with the class of ’71 from the University of Southern California in Los Angeles, where he got the idea for Kink
Photo: E. Charbonneau | WireImage | Getty Images

In 1970, Paul Orfalea, despite a lifetime struggle against dyslexia and attention deficit hyperactivity disorder, opened the first Kinko’s in a 100-square-foot space on the University of California Santa Barbara campus. The company’s goal? To bring to the masses a technology that few at the time could access: a copy machine.

Orfalea wasn’t a UCSB student, though. He eventually graduated with the class of ’71 from the University of Southern California in Los Angeles, where he got the idea for Kinko’s after seeing a copy machine in the school library. Copies at that first Santa Barbara location went for 2.5 cents, and just five years later there were 24 total locations throughout the Golden State. By 1979, there were close to 80.

Kinko’s—it was Orfalea’s nickname in college because of his curly red hair—has come along way since those pennies for copies. In 2000, FedEx bought the company for $2.4 billion in cash and changed the name to FedEx Office.

Source: paulorfalea.com


Google
Can you believe there was a time when Google was profitless? While the search engine was a hit, co-founders and former Stanford computer science Ph.D. candidates Larry Page and Sergey Brin hadn’t found a way to monetize the technology. Then they entered the advertising business, and that changed everything.Now Google earns the bulk of its revenues from advertising thanks to initiatives like AdWords and the Google Display Network, which services both mobile and display ads. In the third quarter o
Photo: Getty Images

Can you believe there was a time when Google was profitless? While the search engine was a hit, co-founders and former Stanford computer science Ph.D. candidates Larry Page and Sergey Brin hadn’t found a way to monetize the technology. Then they entered the advertising business, and that changed everything.

Now Google earns the bulk of its revenues from advertising thanks to initiatives like AdWords and the Google Display Network, which services both mobile and display ads. In the third quarter of 2010, the company reported $7.29 billion in sales, 97 percent of which came from ads. Not bad for a once-scrappy outfit that went by the name of “BackRub.”

Source: Company documents


Yahoo!
Do you Yahoo!? Well, maybe not as much since Google came on the scene. But there was a time when this was the “it” search engine on the Internet.Started as a collection of favorite links by Jerry Yang and David Filo, two electrical engineering Ph.D. students at Stanford, “Jerry and David’s Guide to the World Wide Web” morphed into Yahoo! in 1994 as the portal grew more and more popular. The name is, in fact, an acronym—Yet Another Hierarchical Officious Oracle—but the company says the two founde
Photo: Getty Images

Do you Yahoo!? Well, maybe not as much since Google came on the scene. But there was a time when this was the “it” search engine on the Internet.

Started as a collection of favorite links by Jerry Yang and David Filo, two electrical engineering Ph.D. students at Stanford, “Jerry and David’s Guide to the World Wide Web” morphed into Yahoo! in 1994 as the portal grew more and more popular. The name is, in fact, an acronym—Yet Another Hierarchical Officious Oracle—but the company says the two founders insist they just liked the word’s definition: “rude, unsophisticated, uncouth.” Both guys had a reputation for being, well, forward.

A successful IPO came in 1996, with the share price jumping to $43 from $13 in a single day. But of course, those were the heady days of the dot-com boom, which is why Yahoo! was valued at as much as $300 million despite 1996 revenues coming in at just $20 million. The stock price eventually peaked in early January 2000 at $475 a share, or $118.75 in today’s shares when adjusted for dividends and splits. Following the bust, YHOO fell to as low as $8.11, or $4.05 when adjusted for any splits and dividends. Still, Yahoo! remains a major presence on the Web, with over 600 million unique visitors.

Source: International Directory of Company Histories, Vol. 70. St. James Press, 2005; Google Answers, company documents


Citadel
A September 2001 cover story in talks of Kenneth Griffin’s quest to get a satellite dish installed in his Harvard dorm room back in 1987. But not for a full load of TV channels. No, Griffin wanted access to real-time stock information to successfully run the investment funds he was running out of Cabot House. He got it just in time to short the October crash that rocked the markets that year.By the time the story ran just after the turn of the century, Griffin’s Citadel was managing $6 billion
Photo: citadelgroup.com

A September 2001 cover story in Institutional Investor talks of Kenneth Griffin’s quest to get a satellite dish installed in his Harvard dorm room back in 1987. But not for a full load of TV channels. No, Griffin wanted access to real-time stock information to successfully run the investment funds he was running out of Cabot House. He got it just in time to short the October crash that rocked the markets that year.

By the time the Institutional Investor story ran just after the turn of the century, Griffin’s Citadel was managing $6 billion—and he hadn’t yet turned 33. Almost 10 years later, at 42, that number has nearly doubled to $11 billion. Forbes put his net worth as of September 2010 at $2.3 billion, ranking Griffin number 159 on its 400 Richest Americans list.

Source: Institutional Investor, Forbes


Napster
He’s not on any rich list, but Napster creator Shawn Fanning may have knocked some media execs down a few pegs. While studying at Boston’s Northeastern in 1999, he built a peer-to-peer network through which his friends could share music, a new technology that brought record companies to their knees. At its peak, Napster served as many as 80 million registered users, , but by that year the company had been sued into oblivion by the industry it had undercut. At least in its original form. Now Nap
Photo: Getty Images

He’s not on any Forbes rich list, but Napster creator Shawn Fanning may have knocked some media execs down a few pegs. While studying at Boston’s Northeastern in 1999, he built a peer-to-peer network through which his friends could share music, a new technology that brought record companies to their knees. At its peak, Napster served as many as 80 million registered users, Wired.com reported back in 2002, but by that year the company had been sued into oblivion by the industry it had undercut. At least in its original form. Now Napster is Best Buy’s (legal) digital music service.

Source: Wired.com