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My office was a trailer: Start-ups that started from nothing

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Start-ups that started up from nothing

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Successful businesses look calm from the outside.

Behind the scenes, it's often a different story. Their creation can be protracted and plagued with turmoil, and involving irregular meals, office spaces in bad neighborhoods and a pervasive fear that it could all fall apart at any moment.

CNBC.com spoke with entrepreneurs who lived this reality and started businesses from threadbare beginnings. Today you would never know how much they struggled to bring their companies to life, but as they'll tell you themselves, it was a lot harder than it looks.

Read ahead to find out just how hard it was.

—By CNBC's Daniel Bukszpan
Posted 4 Feb. 2014

Tuesday nights have more bite with back-to-back episodes of "Shark Tank" on CNBC.

Biz2Credit

Rohit Arora, Biz2Credit
Image Source: Biz2Credit

Rohit Arora is an Indian immigrant who arrived in the U.S. with $200. While studying lender portfolios at the Deloitte professional services firm, he saw that there was a lot of money in small business lending. He and his brother Ramit founded Biz2Credit, which helps immigrants apply for small business loans.

"Coming from India, I had no family support in the U.S.," he said. To spread the word, "we used to travel to various Hindu and Sikh temples in the area during the winter to distribute fliers because we didn't have money to do proper marketing." The work paid off. The brothers were named top entrepreneurs of 2011 by Crain's NY Business, and Arora said that the company had recently surpassed the $1 billion mark in loans arranged for entrepreneurs.

CampusBookrentals.com

Image Source: CampusBookRentals.com

In 2007, Alan Martin was a married college student with one child and another on the way. After suffering extreme sticker shock when buying his textbooks, he took out $250,000 in credit card debt, bought an arsenal of books and rented them out to other students.

With that, CampusBookrentals.com was born. Now, the company projects $50 million in revenue for 2014. Martin credits his early challenges with helping the company get this far.

"We fought so hard in the early days, that it taught us discipline," he said. "We had to be scrappy, thoughtful, and become profitable to survive."


DNA 11

Image Source: Canvaspop

If you've ever wanted hyper-personal art—made from the image of your DNA sequence, you're in luck. DNA 11 provides this unique service. It has three locations and 60 employees and has generated over $1 million in sales, according to co-founder Adrian Salamunovic. That's a world away from the days when he and co-founder Nazim Ahmed had to move into a 600-square-foot apartment and put their remaining $2,000 into a business with no guarantee of success.

"We had to convince people to invest in our idea and purchase what we were selling. Then we would make it and ship it after the orders came through," Salamunovic said. "It was the definition of 'bootstrapping' and the lean start-up principles. … If it was easy everyone would be running their own business."


Edmunds.com

Edmunds.com employees look on at the 2013 Hackomotive event
Image Source: Edmunds.com

The online car-pricing company was founded in 1966 and purchased by the Steinlauf family in the late 1980s. At the time, it was a niche print publication with four employees and run out of the family's garage. But as an experiment, it ventured into a newfangled realm called "the Internet," and things changed drastically.

"From 1994 to 1999, our revenue grew 229 percent, and that was largely due to the website," CEO Avi Steinlauf said.

The company, which now employees nearly 600 people, has since continued to experiment as a way of finding success. Its employees participate in Hackomotive, a "competition between innovative teams to create products and services that improve the car shopping experience," Steinlauf said.

Gravity Payments

Dan Price, Gravity Payments
Image Source: Gravity Payments

Gravity Payments provides credit card processing services to over 10,000 independent businesses and handles about $5 billion in volume, according to CEO Dan Price. He founded it in 2004—at age of 19 from his Seattle Pacific University dorm room, with no seed money, no backers and no disclosure to clients that he wasn't even old enough to buy beer.

"There was one time when I was on the phone with the CFO of a major auto retailer," Price said. "My roommate was loudly playing a violent video game, which made my dorm room sound like World War III. ... My only option was to duck into a closet." Despite the inauspicious beginnings, the company went on to be successful, and in 2010 Price was named National Young Entrepreneur of the Year by the U.S. Small Business Administration.

HourlyNerd

L-R: Peter Maglathlin, CFO; Pat Petitti, Co-CEO; David Connolly, CTO; Joe Miller, COO; Rob Biederman, Co-CEO, Hourly Nurd
Image Source: HourlyNurd

Professor Clayton Rose of Harvard Business School had a unique course requirement for his students—start a business. Rob Biederman, Peter Maglathlin, Joe Miller and Patrick Petitti, all students in their 20s, decided to link small businesses with MBA students via the Internet for freelance consulting. They sank $5,000 into the endeavor and christened it HourlyNerd. Despite the shaky beginnings, the business got off to a good start.

"I received an email from a company that was considering hiring a 'Big Three' consulting firm, was quoted $130,000, and instead hired an MBA on our platform for just over $1,000 and found the work to be 90 percent of what a major consulting firm would deliver," said Petitti, who is second from the left in the photo that also shows HourlyNerd's co-founders and CTO David Connolly. "We are providing an amazing value that businesses around the world have never had access to."

MediaTakeOut

Fred Mwangaguhunga
Johnny Nunez | WireImage | Getty Images

Fred Mwangaguhunga founded the celebrity gossip site MediaTakeOut in 2006 after identifying an untapped market.

"There were hundreds of successful celebrity news websites floating around, but none that understood the interest and the lingo of the urban community," he said.

He paid $25 to register the domain name and $1,000 to build it, and for six months, the site gathered cobwebs and generated no income. But he believed in it and rode out the lean times, and it eventually found its audience. Today it attracts 16.5 million readers a month, and Mwangaguhunga said that it is now a multimillion dollar company.



Psi Health Solutions

Image Source: Psi Health Solutions

When Romy Taormina was pregnant, she suffered from frequent, debilitating morning sickness. Knowing full well that she was not alone, she appointed herself "Nausea Relief Chief" of Psi Health Solutions, which makes acupressure wristbands to relieve that seasick feeling associated with some pregnancies. But getting the product off the ground wasn't easy.

"When we learned that we needed to have FDA clearance to market our product, this required a large investment," she said. However, she conceded that it was worth it, and today the company has realized more than $1 million in gross sales. It's distributed in such locations as CVS, Babies 'R' Us, Whole Foods and REI, with Target stores to follow in April.


Vivint

Todd Pedersen, Vivint
Image Source: Vivint

Todd Pedersen is founder of Vivint, a home automation services provider. He founded it after being passed over for a door-to-door pest control sales job, and in the early days it was as low-rent as it gets. It was run out of a trailer that doubled as his residence, and since it didn't have a shower, he was reduced to bathing in the local swimming pool. However, those days are now just an unpleasant memory.

"Vivint has evolved from what I believe was a groundbreaking idea into one of the fastest-growing smart home companies, with more than 800,000 customers and 7,000 employees," Pedersen said. "We've achieved 825 percent customer growth during the last five years, and in 2012 after selling to Blackstone Capital for $2 billion, we reported annual revenue of $450 million."


Tuesday nights have more bite with back-to-back episodes of "Shark Tank" on CNBC. The business-themed reality series features the sharks—tough, self-made multimillionaire and billionaire tycoons—who give budding entrepreneurs the chance to make their dreams come true and secure deals that could make them millionaires.