InterComputer Corporation CEO, Scott M. Volmar, was recently interviewed regarding the company’s progess. “The returns that investors seek usually come from companies with correct fundamentals, effective business plan execution, and great timing,” Volmar said. “Even when those factors are all in place, achieving success in the software industry has never been an ‘overnight’ affair. One look at any of today’s leading software companies, such as Google, Microsoft, Amazon, or E-Bay, demonstrates this fact clearly.”
A brief examination of published histories of the companies Volmar mentioned seems to support his point:
Google (GOOG) began as a research project at Stanford University and sent its first “web crawler” to explore the Internet in March 1996. The company formally incorporated on September 4, 1998 in a garage in Menlo Park, CA. Eight years after its inception, Google went public in 2004 with a market capitalization of $23 billion dollars. The company’s current market capitalization is $152 billion.
Microsoft’s (MSFT) Bill Gates and Paul Allen licensed their first product, a BASIC compiler, to Micro Instrumentation and Telemetry Systems on January 2, 1975. Microsoft’s IPO occurred 11 years later on March 14, 1986, and raised $520 million for the company. Microsoft’s current market capitalization is $225 billion.
Amazon.com (AMZN) was founded by Jeff Bezos in 1994 and incorporated in 1995 as an online bookstore. Riding the dotcom boom wave, the company went public on May 15, 1997, raising $54 million. Amazon’s initial business plan was unusual: the company did not expect a profit for four to five years. Amazon grew steadily in the late 1990s while other Internet companies grew blindingly fast. Amazon’s “slow” growth provoked stockholder complaints that the company was not reaching profitability fast enough. When the dotcom bubble burst, and many e-companies went out of business, Amazon persevered and finally turned its first profit in the fourth quarter of 2001. On November 21, 2005, Amazon entered the S&P 500 index, replacing AT&T after it merged with SBC Communications. On December 31, 2008, Amazon entered the S&P 100 index, replacing Merrill Lynch after it was taken over by Bank of America. Amazon’s current market capitalization is $39 billion.
eBay (EBAY) began as a small website called AuctionWeb in San Jose, CA in September 1995. The company received its first venture capital funding in 1997, during the heady days of the dotcom boom. The IPO occurred on September 21, 1998 and produce a market capitalization of $1.9 billion on day one. The company expects to report revenues of $9 billion for fiscal 2009.
“In every such case I have examined,” said Volmar, “the biggest winners were a team: the corporate leaders who performed and persevered and the investors whose capital enabled that perseverance to take place.”