There’s something about the underdog narrative that resonates with people. All throughout history in art, literature, film, poetry, politics, we hear the stories about the little guy, with the odds stacked against him, beating the big guy. We have a look at 7 different incredible businesses, we now all know and love, that were once upon a time underdogs.
Did you know in the business world small start-up companies, from the humblest of beginnings, often take on the market giants, gain loyalty of customers along the way, and find success through perseverance and optimism.
In fact, Neeru Paharia says that customers even have a bias towards companies that have underdog stories, even if they're now big companies. When consumers are led to believe that the company succeeded against numerous disadvantages, they identify with the disadvantaged position and root for it.
And they are a beacon of hope for entrepreneurs.
Below are 7 incredible businesses that were originally underdogs.
1. Ben & Jerry’s
Competing with Haagen-Dazs.
With nothing to do after graduating, Ben Cohen and Jerry Greenfield decided to take a $5 ice cream making course. Fast forward to 1978, the entrepreneurs scraped together $12,000 ($4,000 of which was borrowed) to open their first shop in a renovated gas station, giving birth to the now iconic Ben & Jerry’s. The pair then began to distribute their growing brand from the back of Ben’s Volkswagen.
Ice cream giant Haagen-Dazs attempted to block the newcomers by limiting their distributions in Boston, but failed. In 2000, Ben & Jerry’s sold to Unilever for $326 million, all while maintaining their original brand and social mission.
Today, it’s one of the most recognisable ice cream brands in the world with its colourful branding, and clever flavour names.
Competing against Microsoft.
Apple is one of the most famous underdog stories. In 1976, Apple was incorporated by two young college dropouts, Steve Jobs and Steve Wozniak (and a third partner who sold his shares within the first three months), all from within Jobs’ garage.
At the time, they didn’t stand a chance against Microsoft, the largest electronics and computer company. But Steve put everything he had into creating new and unique technology that outdid them. The Dell CEO, Michael Dell, once said that if he owned Apple, he would shut down the company and give shareholders their money back.
In 2010, Apple exceeded Microsoft in sales. Today, Apple is the largest technology company in the world by revenue.
In the early days of Netflix, there was a struggle to bring in revenue. Netflix executives met with Blockbuster in 2000 and offered to sell the company for $50 million which Blockbuster refused. But Netflix was not disheartened. They focused on their value proposition and started offering more convenience to customers, with streaming services that made movies available on numerous devices.
In 2010, Blockbuster filed for bankruptcy and shut 9,000 stores around the world. Today, Netflix has reached 193 million paid subscribers in more than 190 countries.
Competing against Toyota, Ford and BMW.
When Nikola Tesla predicted global warming 100 years ago, most considered him to be a mad scientist. However, he did manage to inspire the name for an electric car company, Tesla, which was founded in 2003 by Elon Musk.
Elon heard so many ‘no’s’ when he founded Tesla. It would be impossible to make electric cars that people would find cool enough to buy, and the production costs were not sustainable, right?.
Wrong. Tesla isn’t a car company, it’s a software company that makes cars by developing software on unique hardware. This makes innovation the very centre of all that they make.
As of July 2020, the company had a market cap of more than $275 billion. Elon Musk turned the car industry upside down in less than 16 years.
5. The Body Shop
Competing with Revlon, Olay, and Max Factor.
Launching in 1976 on the coasts of Brighton, England, The Body Shop attempted to take on major players like Revlon and Olay. Anita Roddrick’s vision was to only use natural ingredients in their products and to not test on animals. This social awareness resonated with customers and the business experienced rapid growth, expanding at a rate of 50% annually.
The company has revolutionised the cosmetics industry by sticking to natural ingredients and non-animal tested products..The Body Shop was purchased by the L’Oréal group in 2006 for £652.3 million. In 2017, Natura bought the company for £880 million.
Despite the takeover, it has continued to operate by its own unique identity and values.
Competing with Facebook.
When Snapchat was first introduced in 2011, it sparked some small interest, but it certainly didn’t have the 500+ million users Facebook had at the time. However, it easily found its niche audience in young adults, and it wasn’t long before the platform grew.
Snapchat provided a peek into the window of whatever a person was doing at that exact moment, anywhere in the world. And it was instant. Pictures disappearing after a set time phrase was also a very new concept. By August 2012, Snapchat hit a million daily active users. In December 2012, Facebook launched its own competitor, Poke. But it didn’t take off or even compare to Snapchat’s already established user base.
In 2013, Facebook CEO Mark Zuckerberg famously offered Snapchat $3 billion for the company. Snapchat said no. By 2014, investors valued the company at $10 billion.
Competing against Hoover, Electrolux and Oreck.
James Dyson had the idea for a bagless vacuum cleaner in the late 1970’s. Despite many looking forward to his downfall, and after 5 years of trying 5,127 prototypes, the G Force Dual Cyclone arrived. Dyson’s cyclonic wind technology changed the economics of the industry, removing the need for vacuum cleaner bags.
In 2010, Dyson owned 40% of British vacuum sales and was a market leader in the US, Canada, Australia, France, Belgium, Switzerland, Spain, Ireland and New Zealand.
Dyson has continued to stay in its innovative roots, reinvesting hand dryers, fans heaters and hairdryers. By 2012, the company’s annual turnover was $1.7 billion.
The advantages of underdogs
Underdogs are extremely important for society. Joel Chery believes that without the innovation and dedication of underdogs, society would be overrun by massive conglomerates that would influence the economic landscape for the worse.
Therefore, even the most saturated markets have room for newcomers. Underdogs are beneficial for saturated industries because they often disrupt the norm, propelling greater innovation, and thus helping the industry to advance more than it would in a stagnant environment.
Successful underdogs do not compete on features. Instead, they compete by redefining the definition of a better product, forcing big market players to adapt and innovate as well.
We can see this in the 7 incredible businesses discussed that were once underdogs. Every single underdog had something completely new to bring to the market. It’s the force of innovation among all of these underdogs that encourages them to take risks. Often big corporations are not able to take these risks because they have reputations to keep and foundations that run too deep. However, even though some of these businesses have become multi-million dollar corporations that we all know and love today, their branding still remains loyal to their beginnings.
By Catherine Child