Laughed Out of the Room, Then Laughed All the Way to the Bank: Seven Fortunes Nobody Saw Coming

Here's a pattern that shows up again and again in the history of American business: the ideas that look most obviously wrong at the start turn out to be the ones that change everything. Not always. Plenty of bad ideas are just bad ideas. But there's a specific kind of dismissal — the eye-roll, the polite-but-firm "nobody is going to pay for that" — that has a surprisingly strong track record of being completely wrong.

These seven founders know exactly what that dismissal feels like. They also know what comes after it.

1. Brian Chesky: "Who's Going to Sleep in a Stranger's House?"

In 2008, Brian Chesky and Joe Gebbia were broke San Francisco designers who had rented out air mattresses in their apartment to conference attendees because every hotel in the city was full. They thought maybe there was a business in it. Most of the people they pitched disagreed, loudly.

Photo: San Francisco, via a.cdn-hotels.com

The idea of a platform where ordinary people rented spare rooms — or entire homes — to strangers felt, to many investors, like a liability lawsuit waiting to happen. Who would trust a random person's couch? Who would invite a stranger into their home? One prominent venture capitalist reportedly passed on the opportunity to invest at a $1.5 million valuation. Airbnb's most recent valuation has exceeded $75 billion.

The insight Chesky had — that trust could be built digitally, and that the sharing economy could unlock value sitting idle in people's spare bedrooms — seemed naive in 2008. It turned out to be one of the most important ideas in the history of the hospitality industry.

2. Reed Hastings: "Nobody Wants to Wait Three Days for a Movie"

In 1997, Reed Hastings mailed a DVD to himself. When it arrived intact, he had his proof of concept. A service that let people order movies by mail, keep them as long as they liked, and return them without late fees — that was the original Netflix pitch.

Blockbuster, which was generating billions in revenue partly through those late fees, was reportedly offered the chance to buy Netflix for $50 million in 2000. They passed. When Netflix pivoted to streaming, the same skepticism resurfaced: why would people pay a monthly fee to watch a limited library of content when they could rent exactly what they wanted?

Blockbuster filed for bankruptcy in 2010. Netflix's market cap has topped $300 billion.

3. Marc Lore: "Pet Food on the Internet? Come On."

When Marc Lore and Vinit Bharara launched Pets.com's successor Quidsi — which ran Diapers.com and eventually Soap.com — they were entering a space that Silicon Valley had already written off. The original dot-com era pet food and baby supply companies had crashed spectacularly, and investors were skeptical that anyone could make the economics of shipping heavy, low-margin goods work online.

Lore built the logistics infrastructure anyway, obsessing over delivery speed and customer experience in ways that bigger players weren't. Amazon noticed. In 2010, Amazon tried to undercut Diapers.com by slashing its own prices in a direct assault on the upstart. Then it just bought Quidsi outright for $545 million. The idea that nobody would buy household staples online turned out to be wrong in the most profitable way possible.

4. Sara Blakely: "Women Don't Need Another Undergarment Company"

Sara Blakely spent two years trying to get anyone in the hosiery industry to take her seriously. She was a fax machine saleswoman with no fashion background, no manufacturing experience, and no industry connections. She had an idea — footless pantyhose that would smooth and shape without the discomfort of traditional shapewear — and she couldn't get a single manufacturer to believe women would buy it.

She eventually found a mill owner whose daughters convinced him to give her a shot. Blakely cold-called a Neiman Marcus buyer, demonstrated the product in a department store bathroom, and got a purchase order. Spanx launched in 2000. By 2012, Blakely was the world's youngest self-made female billionaire. The idea that there was no market for better shapewear turned out to be one of the more expensive miscalculations in retail history.

5. Howard Schultz: "Americans Don't Sit Around Drinking Expensive Coffee"

When Howard Schultz came back from a trip to Italy in 1983 convinced that America needed European-style espresso bars, the owners of the small Seattle coffee company he worked for — a little outfit called Starbucks — told him he was wrong. Americans drank coffee at diners. Fast, cheap, functional. The idea of paying three dollars to sit in a café and sip a latte was, to many observers, a cultural transplant that would never take root.

Schultz left, raised money with enormous difficulty, and launched his own espresso bar concept. He eventually bought Starbucks. There are now more than 36,000 Starbucks locations in 80 countries. The "nobody will pay for fancy coffee" prediction turned out to be, charitably, a little off.

6. Jan Koum: "Why Build Another Messaging App?"

In 2009, the app market was already crowded with messaging tools, and Facebook — where Jan Koum had once applied for a job and been rejected — was dominant. Koum and his co-founder Brian Acton (who had also been rejected by both Facebook and Twitter) built WhatsApp anyway. Simple, fast, no ads, no games, no noise. Just messaging.

Venture capitalists largely passed. Sequoia Capital was one of the few that invested, putting in a relatively modest amount. In 2014, Facebook — the company that had rejected both founders — bought WhatsApp for $19 billion. Acton's tweet from 2009, the year he was turned down by Facebook, has become something of a Silicon Valley legend: "Got denied by Twitter HQ. Feeling great."

7. Phil Knight: "Nobody's Going to Buy Running Shoes from the Back of a Car"

Phil Knight started selling Japanese running shoes out of the trunk of his car at track meets in 1964. His pitch to banks for startup capital was, by his own account, a disaster — he had no collateral, no real business plan, and a market that established sporting goods companies already dominated.

Banks turned him down repeatedly. His own accountant told him the business was too risky. Knight kept selling shoes, kept reinvesting every dollar, and kept operating on the financial edge for years. The company he eventually built from those trunk sales is Nike. Annual revenue: over $50 billion.

The Pattern

Look at these seven stories and a few things stand out. None of these founders had the luxury of universal encouragement. Most of them were told, by people who should have known, that their specific idea in their specific market at their specific moment was a bad bet.

What they had instead was a conviction that came from somewhere the skeptics couldn't quite see — a firsthand understanding of a problem, an unmet need, a gap between what existed and what could exist. That gap is hard to explain in a pitch meeting. It's even harder to explain when the room is already shaking its head.

But the room, it turns out, is wrong with surprising regularity. And the founders who get laughed out of it sometimes end up owning the building.