What Successful Companies Started in a Basement?
For many entrepreneurs, basements are a place of possibility. They’re where companies are founded, where innovators work on ideas, and where startups grow their inventory.
Yet in the lore of successful startups, basements haven’t captured nearly as much attention as garages.
For example, we all know of the garage where Steve Jobs built the first Apple computer. In Menlo Park, Google co-founders Larry Page and Sergey Brin rented a garage from Susan Wojcicki. There’s also the suburban garage in Palo Alto where Bill Hewlett and Dave Packard started HP.
But basement startups have also achieved massive success. A surprising number of entrepreneurs who started in a basement are now ruling the boardroom.
Let’s review some of the top tech companies and other firms that have started in basements.
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In 1938, Stanley Kaplan began a tutoring service in the basement of his parents’ Brooklyn home. There were many immigrant families in the area, and students needed help preparing for the NY Regents Exam, a standardized test for several high school courses.
In 1984, he sold the business to The Washington Post Company, now known as Graham Holdings Company. As of 2018, annual revenue was $1.5 billion.
Back in the 1960s, Michael Kittredge II was a teenager who was making candles from melted crayons in his parents’ basement.
He had a job at a burger place, but his candle experiments yielded big results. “Prior to him doing that, scented candles existed. They just were more of a novelty,” his son said when explaining how Yankee Candle Company was founded.
“He put the maximum amount of fragrance in and kind of created a whole ‘nother industry of household fragrance.” Kittredge sold the company in 1998 for $500 million, and the company sold again in 2013 for $1.75 billion.
BASIC programing language
The BASIC programming language has provided an invaluable foundation for today’s modern computing. It was a standard in early personal computers including Microsoft, Commodore, Apple, HP, IBM, and Atari. It all began in the basement of Dartmouth College back in 1964.
Computers were massive back then. While in the basement at 4:00 in the morning, Professor John Kemeny ran the first line of code. The invention of BASIC was the first time anyone was able to write their own computer programs.
Entrepreneur Sir Richard Branson started his first company when he was just 16. He was working on a student magazine out of his co-founder’s basement.
Neither he nor his cofounder had any capital. Then through a stroke of luck, his mother got nearly $125 through an unclaimed lost and found. Today that would be $1,005.84. They used the money to pay the electricity and postage bills. Virgin Group is currently valued at $4.7 billion.
Martha Stewart Living
In 1976, Martha Stewart made her start with a small catering company that she launched from her Connecticut basement.
A year into her home-based business, she was hired to cater a book release event during which she met people in the publishing industry. After pitching an idea of doing a cookbook of catering recipes, her first book was published in 1982.
In its heyday in 1999, Martha Stewart Living Omnimedia was valued at $2 billion. The company has had ups and downs since then, and Forbes reported that she was in federal prison when she became a billionaire the second time. Her personal fortune is estimated to be about $628 million, and the company recently traded in 2019 for $175 million.
Kevin O’Leary, a Shark Tank judge, started his billion-dollar business in a basement.
In 1986, O’Leary founded SoftKey International. His mother gave him $10,000, and he got to work publishing and distributing CD-Roms, an essential media form for several decades. In 1999, he sold the company to Mattel for $3.65 billion. That’s the equivalent of $5.7 billion today.
Melissa & Doug
The toy company Melissa & Doug began as a pipedream in the couple’s Connecticut basement. Their “satellite office” was Doug’s parents’ garage.
When the company launched in 1988, it was selling short films and instructional videos. Their first successful product was a fuzzy puzzle. Now with an inventory of over 2,000 kinds of toys, the company is valued at $400 million.
In 1991, Tim Sweeney started designing video games in his parents’ basement.
At that time, he was a college student at the University of Maryland. On weekends, he’d drive 30 minutes from his dorm room to his parents’ house in Potomac, MD, where he had a personal computer.
As computer games started to be released in 1992, “It was clear that there was some real money to be made in that business,” he said. He came up with the business name Epic MegaGames to help him sound like a big deal. “Of course, it was just one guy working from his parents’ house,” said Sweeney.
The name was later shortened to Epic Games, and it wasn’t until 2017 that Fortnite was launched. Now, the company is valued at $15 billion.
Daymond John, of Shark Tank fame, launched the streetwear label, Fubu, from a basement.
Back in 1992, he started the company with just $40 in capital. He was working out of his mother’s basement in Queens. When he wasn’t using his mother’s sewing machine, he was working at Red Lobster during the day.
To get the word out, he would pitch hip hop artists to wear his clothes in music videos. This captured the young urban music scene and led to its eventual business success with a $6 billion company valuation.
Before Jeff Bezos launched his upstart e-commerce business, he was working out of a two-car garage in Bellevue, WA. However, after purchasing the first domain name in September 1994, he needed more physical space.
By 1995, Amazon was operating out of a 2,000-square-foot basement warehouse in Seattle. There was a handful of employees who were working in the basement in the evenings after their day jobs. Bezos once said, “We were packing on our hands and knees on a hard concrete floor.”
Now, that basement startup is valued at $1 trillion, and it’s one of the biggest companies in the world.
In 1996, 24-year-old Kevin Plank was working out of his grandmother’s basement in Washington, D.C., to design T-shirts made of moisture-wicking fabric.
The business idea hit him when he was playing fullback at the University of Maryland. He noticed that his cotton T-shirts were getting soaked with sweat while the synthetic fibers of his compression shorts stayed dry.
His teammates wore the prototypes, and when they went on to the NFL, he got his big break. When USA Today carried a front-page photo of Oakland Raiders quarterback Jeff George wearing an Under Armor shirt, the orders started to flow in. Now the business is valued at $3.5 billion.
In 2002, the $11.1 billion software company Qualtrics was started by two brothers, Ryan and Jared Smith, working in their parents’ basement in Utah.
The business was a family endeavor. Their father came up with the idea of software for academics who were conducting field research. Ryan convinced his brother Jared to quit his job at Google to write the code and manage the business’s technical side. Jared sold the software to customers, which eventually expanded to private sector companies.
In 2015, Voltage Security had $39 million in funding before being acquired by HP for an undisclosed amount. The company started 13 years earlier in the basement of Stanford University.
At Stanford, the three co-founders were working on a new type of network security for a computer science class research project. After incorporating in June 2002, they worked out of a basement office in Stanford’s Packard Engineering Building for about a year.
Their business plan then won the Stanford BASES Entrepreneurs Challenge, earning them $150,000 in capital. They moved from the basement to regular offices a few months later.
The cloud-based accounting software FreshBooks is now valued at $172 to $258 million. However, when it was founded in 2004, Mike McDerment was running the business out of his parents’ basement in Toronto.
He worked from the basement for three and a half years to keep his operations lean. He focused on the niche of invoicing, and for the first two years, he had 10 customers paying $9.99 per month.
Now, FreshBooks’ user count is more than five million, and the collective invoice amounts top $8 billion each year.
Another basement startup success story, Mashable is currently valued at $50 million.
When Pete Cashmore was 19, he started a blog from his parents’ basement in northern Scotland. It was 2005 and the early days of digital publishing.
He realized that to capture the attention of an American audience, he needed to be in their time zone. So in the darkened basement, he would sleep from about 6:00 or 7:00 a.m. until midday. For about 18 months he kept this blogging schedule, during which he earned two million monthly readers.
Bold Commerce may be currently valued at $16.5 million, but it was started in a basement.
Started in 2012 in Winnipeg, Canada, the company’s early offices cycled through the basements of three out of the four co-founders’ homes.
First, they worked in Eric Boisjoli’s basement, which had walls that were made of a moisture barrier sheeting similar to the vapor barrier that JES Foundation Repair uses for crawl space encapsulations. Next, they worked in Stefan Maynard’s basement, which had finished walls and carpeting. When Jason Myers bought a house that had an unfinished basement, they worked there.
In the last basement office, they had to be quiet so they wouldn’t wake up Myers’ wife, who was five months pregnant at the time.
Cards Against Humanity
The first game of Cards Against Humanity was played in a basement.
In 2008, the company’s founders were hosting a New Year’s Eve “party for misfits” and needed a structured party game for about 30 to 40 people. The high school friends were back home in Chicago during the semester break.
They drafted up the first set of questions in a school notebook before typing them up in MS Word. The first game was played in Max Temkin’s parent’s basement. He recalled it was “enough fun that the next morning we wanted to work on it more.”
After their Kickstarter launch in 2010, Cards Against Humanity reached $12 million in revenue within two years.
In 2013, RXbar founders Peter Rahal and Jared Smith made the first bar. They were working in the kitchen and basement of the suburban Chicago home of Rahal’s parents.
Their business model was to sell directly to individual CrossFit franchises, which would keep their overhead low and give them virtually no competition. In the beginning, the inventory was in Tupperware containers and the bars had DIY labels that were made in PowerPoint.
Soon afterward, the business moved out of the basement and into a commercial kitchen. In 2017, the company was bought by Kellogg’s for $600 million.
Boolean Girl Tech
After a successful Kickstarter campaign in 2016, Boolean Girl Tech was preparing to ship its first order. However, there were more backers than expected.
Co-founder Ingrid Sanden had just 60 days to fulfill 180 orders. It was an impossible feat for the two founders. Sarden came up with a solution: “We hired a bunch of my 16-year-old daughter’s friends and made an assembly line in my basement.”
What’s happening in your basement? JES Foundation Repair can help you prepare your space for your next big idea. Contact us today for your free inspection and estimate, and learn how you can have a safe, healthy, and stable basement and home!