Surprising Ways Famous Companies Started (Red Car Theory)
- Will Rainey
- 6 days ago
- 4 min read
In the past, I have shared stories with my daughters about how some companies make a lot of money in ways that are very different from what they are known for.
These have included:
McDonalds is making a lot of money from real estate, not just selling burgers
Starbucks is making a lot of money from their cards and app, not just selling coffee
Red Bull is making a lot of money from owning sporting teams and events, not just selling energy drinks
My daughters find these stories really interesting because they show that companies are always looking for new opportunities to earn money. I want them to think the same way.
This week, I talked to them about how some of the most successful companies did not start out doing what they are famous for today. Again, these examples show the importance of looking out for new opportunities. Later, I share ‘The Red Car Theory’, which is linked to this topic.
Companies that started out doing something different
Netflix
Many people know that Netflix started out by renting DVDs, which they delivered to customers by mail.
Their big breakthrough came when they pivoted into online streaming. They were already in the TV and movie business, so they saw the trend and adapted quickly. Blockbuster Video saw the same trend but believed people would continue to watch movies on DVDs.
As a result, Netflix grew rapidly while Blockbuster eventually disappeared.
Starbucks
Starbucks was always involved in coffee, but it did not begin as a cafe chain.
They started out by selling coffee beans and equipment to cafes. The founders later realised that they could reach more customers by opening their own cafes and creating a place for people to enjoy coffee. That shift changed everything.
Instagram
Instagram began as an app called Burbn. It was designed to help friends meet up, check in at places, and share updates as a group. One small feature allowed users to share photos from their outings.
The founders noticed that people were not using the meet-up and check-in features. However, the photo-sharing feature became extremely popular. So they made a bold decision to pivot. They removed most of the original features and focused entirely on helping people share photos with friends. That change helped Instagram grow into one of the most popular apps in the world.
Play Doh
Play-Doh did not start out as a children’s toy. It was originally created as a wallpaper cleaning putty that helped people remove soot from their walls in the days when many homes used coal heating.
As coal heating declined, the demand for wallpaper cleaner fell sharply. The company seemed to be heading toward a dead end. Then someone noticed that children were using the putty for arts and crafts at school. That small observation sparked a major pivot. The company repackaged the product, added colour, and released it as Play-Doh. It became one of the most successful children’s toys of all time.
YouTube
YouTube did not start as a video-sharing site. It began as a video-based dating website where users could upload videos introducing themselves.
The founders noticed that people simply wanted a place to upload all kinds of videos, not just dating introductions. They pivoted and opened the platform to any video content. That decision turned YouTube into one of the largest websites in the world.
Lessons from these stories
Life is about spotting opportunities. These companies were able to notice new possibilities and change their business to capture them.
There are many examples of companies that did not make these shifts and lost out. Blockbuster is one. Kodak is another. Kodak dominated the photography industry but was slow to embrace digital photography and eventually went out of business.
This idea links nicely to something called the Red Car Theory, which I shared with my daughters.
The Red Car Theory 🚗
What is the Red Car Theory?
If we met and I asked how many red cars you saw on your journey, you probably would not know.
But if I asked you to count red cars before you set off, you would notice them everywhere.
That is the Red Car Theory.
When it comes to money, some people see more opportunities than others. It is not luck. It is because they are tuned in and looking for them, just like noticing red cars.
I use this idea with my kids to help them spot different ways to earn money. Not because I expect them to launch a business next week, but because I want them to get used to noticing what is possible.
Recently, my daughter learned to crochet. It led to a conversation about whether she could create something personalised and sell it to friends at school. She might not act on it right now, and that is completely fine. What matters is that she is starting to see possibilities. I believe that mindset gives her an advantage.
The earlier they start noticing red cars, the more opportunities they will see.
👉 What are you going to read next?
How Redbull makes money. Not just energy drinks
I hope you start talking to your kids about different ways they can earn or grow money.
Thanks for reading,
Will
P.S., if you would like to inspire them with some new ways to earn and grow money, grab them a copy of Grandpa’s Fortune Fables. Available on Amazon.
If you have already read the book and enjoyed it, it would be amazing if you could leave a review, as it really does help the book reach more families.
